Document:

Exhibit 10.4

 

ACTIVISION BLIZZARD, INC.

AMENDED AND RESTATED

2008 INCENTIVE PLAN

(as amended and restated on June 3, 2010)

 

1.             Purpose. 
The purpose of the Amended and Restated Activision Blizzard, Inc.
2008 Incentive Plan is to attract and retain directors, officers and other
employees of and consultants to Activision Blizzard, Inc., a Delaware
corporation, and its Subsidiaries, and to provide to such persons incentives
and rewards for performance.

 

2.             Definitions.  As used in the Plan:

 

(a)           “Award”
means a grant of a Stock Option, SARs, Performance Shares, Performance Units or
a Senior Executive Bonus or a grant or sale of Restricted Shares, Restricted
Share Units or an award contemplated by Section 10.

 

(b)           “Base
Price” means the price per share specified in an Evidence of Award
of a Freestanding SAR.

 

(c)           “Board”
means the Board of Directors of the Company.

 

(d)           “Code”
means the Internal Revenue Code of 1986, as amended from time to time.

 

(e)           “Committee”
means the Compensation Committee of the Board or such other committee of the
Board responsible for administering the Plan pursuant to Section 11.

 

(f)            “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 12.

 

(g)           “Company”
means Activision Blizzard, Inc., a Delaware corporation, and its
successors.

 

(h)           “Covered
Employee” means an “executive officer” of the Company within the
meaning of Rule 3b-7 promulgated under the Exchange Act (or any successor
rule).

 

(i)            “Date
of Grant” means the date on which the Committee determines the terms
of an Award (including the number of Common Shares to which it pertains, if
any) or such later (but not earlier) date as may be specified by the Committee
as the date on which such Award becomes effective.

 

(j)            “Deferral
Period” means the period of time during which Restricted Share Units
are subject to deferral limitations, as provided in Section 7.

 

(k)           “Director”
means a member of the Board of Directors of the Company.

 

(l)            “Effective
Date” means the date of approval of the Plan by the Company’s
stockholders.

 

(m)          “Evidence
of Award” means an agreement, certificate, resolution or other type
or form of writing or other evidence approved by the Committee that sets forth
the terms and conditions of Awards. An Evidence of Award may be in an
electronic medium, may be limited to notation on the books and records of the
Company and, with the approval of the Committee, need not be signed by a
representative of the Company or a Participant.

 

(n)           “Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder, as such law, rules and regulations may
be amended from time to time.

 

 

(o)           “Exercise
Price” means the purchase price per share payable on exercise of a
Stock Option.

 

(p)           “Fiscal
Year” means the fiscal year of the Company.

 

(q)           “Freestanding
SAR” means a SAR that is not granted in tandem with a Stock Option.

 

(r)            “Incentive
Stock Option” means a Stock Option that is intended to qualify as an
“incentive stock option” under Section 422 of the Code or any successor
provision.

 

(s)           “Management
Objectives” means the measurable performance objective or objectives
established pursuant to the Plan for Participants who have received grants of
Senior Executive Plan Bonuses, or, when so determined by the Committee, Stock
Options, SARs, Restricted Shares, Restricted Share Units, Performance Shares,
Performance Units and other Awards pursuant to the Plan. Management Objectives
may be described in terms of Company-wide objectives or objectives that are
related to the performance of the individual Participant or of a Subsidiary,
division, department or function within the Company or a Subsidiary. The
Committee may provide, in connection with the setting of the Management
Objectives, that any evaluation of performance may include or exclude certain
items that may occur during any Fiscal Year, including, without limitation, the
following: (i) asset write downs; (ii) litigation or claim judgments
or settlements; (iii) the effect of changes in tax laws, accounting
principles or other laws or provisions affecting reported results;
(iv) any reorganization and restructuring programs; (v) extraordinary
nonrecurring items as described in Accounting Standards Codification
Subtopic 225-20 and/or in management’s discussion and analysis of
financial condition and results of operations appearing in the Company’s Annual
Report on Form 10-K for the applicable year; (vi) acquisitions or
divestitures; and (vii) foreign exchange gains and losses. Without
limiting the generality of the foregoing, the Management Objectives applicable
to any Award to a Covered Employee which is intended to be deductible under
Section 162(m) of the Code will be based on specified levels of, or
relative peer company, performance in any one or more of the following
objectives, or any combination thereof, as determined by the Committee in its
sole discretion:

 

(A)          Adjusted net earnings

 

(B)           Appreciation in
and/or maintenance of the price of Common Shares (or any other publicly-traded
securities of the Company), including, without limitation, comparisons with
various stock market indices

 

(C)           Attainment of
strategic and operational initiatives

 

(D)          Budget

 

(E)           Cash flow
(including, without limitation, free cash flow)

 

(F)           Cost of capital

 

(G)           Cost reduction

 

(H)          Earnings and earnings
growth (including, without limitation, earnings per share, earnings before
taxes, earnings before interest and taxes, and earnings before interest, taxes,
depreciation and amortization)

 

(I)            Maintenance of
internal controls over financial reporting and corporate governance practices

 

(J)            Market share

 

 

(K)          Market value added

 

(L)           Net income

 

(M)         Net sales

 

(N)          Operating profit and
operating income

 

(O)          Pretax income before
allocation of corporate overhead and bonus

 

(P)           Quality

 

(Q)          Recruitment and
development of associates

 

(R)           Reductions in costs

 

(S)           Return on assets and
return on net assets

 

(T)           Return on equity

 

(U)          Return on invested
capital

 

(V)           Sales and sales
growth

 

(W)         Successful
acquisition/divestiture

 

(X)          Total stockholder
return and improvement of stockholder return

 

If
the Committee determines that a change in the business, operations, corporate
structure or capital structure of the Company, or the manner in which it
conducts its business, or other events or circumstances, render previously
established Management Objectives unsuitable, the Committee may in its
discretion modify such Management Objectives or the related levels of
achievement, in whole or in part, as the Committee deems appropriate and
equitable, except in the case of a Covered Employee where such action would
result in the loss of the otherwise available exemption of the Award under
Section 162(m) of the Code. In such case, the Committee will not make
any such modification of the Management Objectives or the level or levels of
achievement with respect to such Covered Employee.

 

(t)            “Market
Value per Share” means, as of any particular date, (i) one
hundred percent (100%) of the closing price per Common Share as reported on the
principal securities exchange, association or quotation system on which Common
Shares are then listed or quoted, or (ii) if clause (i) does not
apply, the fair market value of a Common Share as determined by the Committee.

 

(u)           “Optionee”
means the optionee named in an Evidence of Award evidencing an outstanding
Stock Option.

 

(v)           “Participant”
means a person who is selected by the Committee to receive benefits under the
Plan and who is at the time an officer, employee, consultant, advisor or
director of the Company or of any Subsidiary.

 

(w)          “Performance
Period” means, in respect of a Performance Share, Performance Unit
or Senior Executive Plan Bonus, a period of time established pursuant to
Section 8 or Section 9, as the case may be, within which the
Management Objectives or, in the case of a Performance Share or Performance
Unit, other performance criteria relating to such Award are to be achieved. The
Performance Period for a Senior Executive Plan Bonus will be the Fiscal Year
and, unless otherwise expressly provided in the Plan, the Performance Period
for all other Awards will be established by the Committee at the time of the
Award.

 

 

(x)            “Performance
Share” means a bookkeeping entry that records the equivalent of one
Common Share awarded pursuant to Section 8.

 

(y)           “Performance
Unit” means a bookkeeping entry awarded pursuant to Section 8
that records a unit equivalent to $1.00 or such other value as is determined by
the Committee.

 

(z)            “Plan”
means this Amended and Restated Activision Blizzard, Inc. 2008 Incentive
Plan, as may be amended from time to time.

 

(aa)         “Prior
Plan” means any of the following: (i) Activision, Inc.
1998 Incentive Plan, as amended, (ii) Activision, Inc. 1999 Incentive
Plan, as amended, (iii) Activision, Inc. 2001 Incentive Plan, as
amended, (iv) Activision, Inc. 2002 Incentive Plan, as amended,
(v) Activision, Inc. 2002 Executive Incentive Plan, as amended,
(vi) Activision, Inc. 2002 Studio Employee Retention Incentive Plan,
as amended, (vii) Activision, Inc. 2003 Incentive Plan, as amended,
and (viii) Activision, Inc. 2007 Incentive Plan.

 

(bb)         “Related
SAR” means a SAR granted pursuant to Section 5 that is granted
in tandem with a Stock Option.

 

(cc)         “Restricted
Shares” means Common Shares granted or sold pursuant to
Section 6 as to which neither the substantial risk of forfeiture nor the
prohibition on transfers has expired.

 

(dd)         “Restricted
Share Unit” means an award granted pursuant to Section 7 of the
right to receive Common Shares or cash at the end of a specified period.

 

(ee)         “SAR”
or “Share Appreciation Right”
means a right granted pursuant to Section 5 to receive a percentage of the
Spread upon exercise, and includes both Freestanding SARs and Related SARs.

 

(ff)           “Senior
Executive Plan Bonus” means an award of annual incentive
compensation made pursuant to and subject to the conditions set forth in
Section 9.

 

(gg)         “Spread”
means the excess of the Market Value per Share on the date when a SAR is
exercised over the Exercise Price or Base Price provided for in the related
Stock Option or Freestanding SAR, respectively.

 

(hh)         “Stock
Option” means the right to purchase Common Shares upon exercise of
an option granted pursuant to Section 4.

 

(ii)           “Subsidiary”
means a corporation, company or other entity (i) at least 50 percent
of whose outstanding shares or securities (representing the right to vote for
the election of directors or other managing authority) are, or (ii) which
does not have outstanding shares or securities (as may be the case in a
partnership, joint venture or unincorporated association), but at least
50 percent of whose ownership interests representing the right generally
to make decisions for such other entity are, now or hereafter, owned or
controlled, directly or indirectly, by the Company, except that for purposes of
determining whether any person may be a Participant for purposes of any grant
of Incentive Stock Options, “Subsidiary” means any corporation in which at the
time the Company owns or controls, directly or indirectly, at least
50 percent of the total combined voting power represented by all classes
of stock issued by such corporation.

 

(jj)           “2007
Plan” means the Activision, Inc. 2007 Incentive Plan.

 

3.             Shares Available Under the Plan.

 

(a)           Subject to adjustment as provided in
Section 12, the number of Common Shares that may be issued or transferred
(i) upon the exercise of Stock Options, (ii) in payment of SARs,
(iii) as Restricted 

 

 

Shares,
(iv) in payment of Restricted Share Units, (v) in payment of
Performance Shares or Performance Units, (vi) in payment of Senior
Executive Bonuses, (vii) as or pursuant to Awards contemplated by
Section 10, or (viii) in payment of dividend equivalents paid with
respect to Awards made under the Plan will not exceed in the aggregate
100,000,000 Common Shares, plus
the number of Common Shares that were reserved for issuance under the Prior
Plans, other than the 2007 Plan, that were not subject to outstanding awards on
September 27, 2007, plus the
number of Common Shares subject to outstanding awards under the Prior Plans,
other than the 2007 Plan, on September 27, 2007 that became available for
issuance pursuant to the terms of the 2007 Plan prior to the Effective Date, plus the number of shares subject to
awards made under the 2007 Plan that became available for issuance pursuant to
the terms of the 2007 Plan prior to the Effective Date, minus the number of shares subject to
awards issued under the 2007 Plan prior to the Effective Date, which maximum
number will be increased by the following: (A) the number of shares
relating to awards outstanding under any Prior Plan as of the Effective Date
that (1) expire, or are forfeited, terminated or cancelled, without the
issuance of shares, (2) are settled in cash in lieu of shares, or
(3) are exchanged prior to the issuance of Common Shares, for awards not
involving Common Shares; and (B) if the exercise price of any stock option
outstanding under any Prior Plan as of the Effective Date is, or the tax
withholding requirements with respect to any award outstanding under any Prior
Plan as of the Effective Date are, satisfied by withholding shares otherwise
then deliverable in respect of the award or the actual or constructive transfer
to the Company of shares already owned, the number of shares equal to the
withheld or transferred shares.

 

(b)           Under the Plan, (i) if all or
any portion of an Award expires, or is forfeited, terminated or cancelled,
without the issuance of Common Shares, or is settled in cash in lieu of Common
Shares, or is exchanged with the Committee’s permission, prior to the issuance
of Common Shares, for an Award not involving Common Shares, the number of
Common Shares expired, forfeited, terminated or cancelled, or settled or
exchanged, as the case may be, will again be available for issuance or transfer
under the Plan; (ii) if the Exercise Price of any Stock Option granted
under the Plan is, or the tax withholding requirements with respect to any
Award granted under the Plan are, satisfied through the withholding by the
Company of shares otherwise then deliverable in respect of such Award or actual
or constructive transfer to the Company of shares already owned, a number of
shares equal to such withheld or transferred shares will again be available for
issuance or transfer under the Plan; and (iii) if a SAR is exercised and
settled in Common Shares, a number of shares equal to the difference between
the total number of shares for which the SAR was exercised and the number of
shares actually issued or transferred will again be available for issuance or
transfer under the Plan, with the result being that only the number of Common
Shares actually issued or transferred upon exercise of the SAR are counted
against the maximum number of Common Shares available for issuance or transfer
under the Plan. Shares utilized under the Plan may be shares of original
issuance or treasury shares or a combination of the foregoing.

 

(c)           Notwithstanding anything in the Plan
to the contrary, and subject to adjustment as provided in Section 12:

 

(i)                                     The number of
Common Shares actually issued or transferred by the Company upon the exercise
of Incentive Stock Options will not exceed that number of shares equal to the
sum of 70,000,000 and the number of shares available for grant under the 2007
Plan at the time the 2008 Plan is approved by stockholders in the aggregate.

 

(ii)                                  The number of
Common Shares actually issued or transferred by the Company as or pursuant to
Awards other than Options or SARs will not exceed 50,000,000 in the aggregate,
including no more than 20,000,000 in the aggregate as or pursuant to Awards
granted under Section 10.

 

(iii)                               The number of
shares issuable or transferable in respect of Stock Options and SARs granted to
any one Participant in a single Fiscal Year may not exceed 4,000,000 in the
aggregate.

 

(iv)                              The number of
(A) Restricted Shares granted to any one Participant in a single Fiscal
Year and (B) Common Shares issuable or transferable in respect of
Restricted Share Units granted to such Participant in such Fiscal Year, may not
exceed 2,000,000 in the aggregate.

 

 

(v)                                 The number of
Performance Shares granted to any one Participant in a single Fiscal Year may
not exceed 3,000,000 in the aggregate.

 

(vi)                              The value of
Performance Units granted to any one Participant in a single Fiscal Year may
not exceed $6,000,000 in the aggregate (with the value of any such award to be
determined as of the date of such award).

 

(vii)                           The amount of
any Senior Executive Plan Bonuses paid to any one Participant for any single
Fiscal Year may not exceed $6,000,000 in the aggregate.

 

(viii)                        The number of
Common Shares issuable or transferable in respect of Awards contemplated by
Section 10 granted to any one Participant in a single Fiscal Year may not
exceed 3,000,000 in the aggregate. The value of any Awards contemplated by
Section 10 that do not involve the issuance or transfer of Common Shares
granted to any one Participant in a single Fiscal Year may not exceed $6,000,000
in the aggregate (with the value of any such award to be determined as of the
date of such award).

 

(d)           If a Participant has elected to give
up the right to receive compensation in exchange for Common Shares based on
fair market value, such Common Shares will not count against the number of
shares available in Section 3(a) above.

 

4.             Stock Options.  The Committee may, from time to time and upon
such terms and conditions as it may determine, authorize the grant to
Participants of options to purchase Common Shares. Each such grant may utilize
any or all of the authorizations, and will be subject to all of the
requirements, contained in the following provisions:

 

(a)           Each grant will specify the number of
Common Shares to which it pertains.

 

(b)           Each grant will specify an Exercise
Price per share, which may not be less than the Market Value per Share on the
Date of Grant.

 

(c)           Each grant may specify that the
Exercise Price will be payable (i) by bank check or certified check or by
wire transfer of immediately available funds, (ii) through the delivery of
irrevocable instructions, in form acceptable to the Company, to a brokerage
firm approved by the Optionee to sell some or all of the Common 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 Common Shares being purchased, (iii) by a
combination of such methods of payment, or (iv) by such other methods as
may be approved by the Committee.

 

(d)           Successive grants may be made to the
same Participant whether or not any Stock Options previously granted to such
Participant remain unexercised.

 

(e)           Each grant will specify the period or
periods of continuous employment or other service by the Optionee with the
Company or a Subsidiary that is necessary before the Stock Options or
installments thereof will become exercisable. A grant of Stock Options may
provide for the accelerated vesting and exercisability of all or a portion of
such Stock Options in the event of the retirement, death, disability or other
termination of the Optionee’s service or a change of control of the Company or
a Subsidiary (or other similar transaction or event).

 

(f)            A grant of Stock Options may specify
Management Objectives or other performance criteria that must be achieved as a
condition to the exercise of such rights or that may result in the accelerated
exercisability of such rights.

 

 

(g)           Stock Options may be (i) options
that are intended to qualify under the Code as Incentive Stock Options,
(ii) options that are not intended to so qualify, or
(iii) combinations of the foregoing.

 

(h)           The exercise of a Stock Option will
result in the cancellation on a share- for-share basis of any Related SAR
authorized under Section 5.

 

(i)            No Stock Option will be exercisable
more than 10 years from the Date of Grant.

 

(j)            Each grant of Stock Options will be
evidenced by an Evidence of Award. Each Evidence of Award will be subject to
the Plan and will contain such terms and provisions, consistent with the Plan,
as the Committee may approve from time to time. In addition, notice of each
grant of Stock Options will be given to the Optionee no more than one week
after the Date of Grant.

 

(k)           Each Optionee is responsible for complying
with all laws and regulations applicable to recipients and holders of Stock
Options, including any applicable federal or state securities laws, and any
Company policy or procedure that pertains to the trading of the Company’s
securities. The Company will adopt or maintain policies and procedures to
notify Optionees of their obligations under such laws, regulations, policies
and procedures and will monitor Optionees’ compliance therewith.

 

5.             SARs. 
The Committee may also authorize the grant to any Optionee of Related
SARs in respect of Stock Options granted hereunder and the grant to any
Participant of Freestanding SARs. A Related SAR will be a right of the
Optionee, exercisable by surrender of the related Stock Option, to receive from
the Company an amount determined by the Committee, which will be expressed as a
percentage of the Spread (not exceeding 100 percent) at the time of
exercise. Related SARs must be granted concurrently with the related Stock
Option. A Freestanding SAR will be a right of the Participant to receive from
the Company an amount determined by the Committee, which will be expressed as a
percentage of the Spread (not exceeding 100 percent) at the time of
exercise. Each grant of SARs may utilize any or all of the authorizations, and
will be subject to all of the requirements, contained in the following
provisions:

 

(a)           Each grant will specify the number of
Common Shares to which it pertains.

 

(b)           Each grant of Freestanding SARs will
specify the Base Price, which may not be less than the Market Value per Share
on the Date of Grant.

 

(c)           Upon exercise, each SAR will be
payable in Common Shares having an aggregate Market Value per Share equal to
the Spread (or the designated percentage of the Spread).

 

(d)           A grant may specify that the amount
payable on exercise of a SAR may not exceed a maximum specified by the
Committee at the Date of Grant.

 

(e)           A grant may specify waiting periods
before exercise and permissible exercise dates or periods.

 

(f)            A grant may specify that the
exercisability of a SAR may be conditioned on, or may be accelerated in whole
or in part in the event of, the retirement, death, disability or other
termination of the Participant’s service or a change of control of the Company
or a Subsidiary (or other similar transaction or event).

 

(g)           A grant of SARs may specify
Management Objectives or other performance criteria that must be achieved as a
condition of the exercise of such SARs or that may result in the accelerated
exercisability of such SARs.

 

(h)           Each grant of SARs will be evidenced
by an Evidence of Award, which Evidence of Award will describe such SARs,
identify the related Stock Options (if applicable), and contain such other
terms and provisions, consistent with the Plan, as the Committee may approve
from time to time.

 

 

(i)            A grant of Related SARs will provide
that such Related SARs may be exercised only at a time when the related Stock
Option is also exercisable and at a time when the Spread is positive, and by
surrender of the related Stock Option for cancellation. Successive grants of
Related SARs may be made to the same Participant regardless of whether any
Related SARs previously granted to the Participant remain unexercised.

 

(j)            Successive grants of Freestanding
SARs may be made to the same Participant regardless of whether any Freestanding
SARs previously granted to the Participant remain unexercised.

 

(k)           No Freestanding SAR granted under the
Plan may be exercised more than 10 years from the Date of Grant.

 

6.             Restricted Shares.  The Committee may also authorize the grant or
sale of Restricted Shares to Participants. Each such grant or sale will
constitute an immediate transfer of the ownership of Common Shares to the
Participant in consideration of the performance of services or other benefit to
the Company, entitling such Participant to voting, dividend and other ownership
rights, but subject to the substantial risk of forfeiture (within the meaning
of Section 83 of the Code) and restrictions on transfer hereinafter
referred to. Each such grant or sale may utilize any or all of the
authorizations, and will be subject to all of the requirements, contained in
the following provisions:

 

(a)           Each grant will specify the number of
Common Shares to which it pertains.

 

(b)           Each such grant or sale may be made
without additional consideration or in consideration of a payment by the
Participant that is less than the Market Value per Share at the Date of Grant.

 

(c)           Each such grant or sale will specify
the period or periods of continuous employment or other service by the
Participant with the Company or a Subsidiary (or other risk of forfeiture) that
must be satisfied before the restrictions described in Section 6(c) will
lapse and the Restricted Shares will become vested, and/or may provide that all
or a portion of the restrictions on the Restricted Shares will lapse upon the
achievement of Management Objectives or other performance criteria (as provided
in Section 6(d) below).

 

(d)           Each such grant or sale will provide
that, during the period for which the risk of forfeiture continues, the
transferability of the Restricted Shares will be prohibited or restricted in
the manner and to the extent prescribed by the Committee at the Date of Grant
(which restrictions may include, without limitation, rights of repurchase or first
refusal in the Company or provisions subjecting the Restricted Shares to a
continuing substantial risk of forfeiture in the hands of any transferee).

 

(e)           A grant of Restricted Shares may
specify Management Objectives or other performance criteria that, if achieved,
will result in the lapse or early lapse of the restrictions applicable to all
or a portion of such Restricted Shares. Each grant may specify in respect of
such Management Objectives or other performance criteria a minimum acceptable
level of achievement and may set forth a formula for determining the number of
Restricted Shares with respect to which restrictions will lapse if performance
is at or above the minimum level, but falls short of maximum achievement of the
specified Management Objectives or criteria.

 

(f)            Notwithstanding anything to the
contrary contained in the Plan, a grant or sale of Restricted Shares may
provide for the acceleration in whole or in part of the lapse of the
restrictions on the Restricted Shares in the event of the retirement, death,
disability or other termination of the Participant’s service or a change of
control of the Company or a Subsidiary (or other similar transaction or event).

 

(g)           A grant or sale of Restricted Shares
may require that any or all dividends or other distributions paid thereon
during the period of such restrictions be automatically deferred and reinvested
in additional shares of Restricted Shares, which may be subject to the same
restrictions as the underlying Award.

 

 

(h)           Each grant or sale of Restricted
Shares will be evidenced by an Evidence of Award and will contain such terms
and provisions, consistent with the Plan, as the Committee may approve. Unless
otherwise directed by the Committee, all Restricted Shares will be held in
custody by the Company or its transfer agent and registrar until all
restrictions thereon have lapsed.

 

7.             Restricted Share Units.  The Committee may also authorize the grant or
sale of Restricted Share Units to Participants. Each such grant or sale will
constitute the agreement by the Company to deliver Common Shares or cash to the
Participant in the future in consideration of the performance of services or
other benefit to the Company, but subject to the fulfillment of such conditions
(which may include the achievement of Management Objectives or other
performance criteria) during the Deferral Period as the Committee may specify.
Each such grant or sale may utilize any or all of the authorizations, and will
be subject to all of the requirements, contained in the following provisions:

 

(a)           Each grant will specify the number of
Common Shares to which it pertains.

 

(b)           Each grant may specify in respect of
such Management Objectives or other performance criteria a minimum acceptable
level of achievement and may set forth a formula for determining the number of
Restricted Share Units which will vest if performance is at or above the
minimum level, but falls short of maximum achievement of the specified
Management Objectives or criteria.

 

(c)           Each such grant or sale may be made
without additional consideration or in consideration of a payment by such
Participant that is less than the Market Value per Share at the Date of Grant.

 

(d)           Notwithstanding anything to the
contrary contained in the Plan, a grant or sale may provide for the accelerated
vesting of Restricted Share Units and the lapse or other modification of the
Deferral Period in whole or in part in the event of the retirement, death,
disability or other termination of the Participant’s service or a change of
control of the Company or a Subsidiary (or other similar transaction or event).

 

(e)           During the Deferral Period, the
Participant will have no rights of ownership in the Restricted Share Units and
will have no right to vote Common Shares underlying the Restricted Share Units,
but an Evidence of Award may authorize the payment of dividend equivalents on
such Restricted Share Units on either a current or deferred or contingent
basis, either in cash or in Common Shares.

 

(f)            Each grant or sale will specify the
time and manner of payment of the Restricted Share Units that have been earned.
A grant or sale may specify that the amount payable with respect thereto may be
paid by the Company in cash, in Common Shares or in any combination thereof and
may either grant to the Participant or retain in the Committee the right to
elect among those alternatives.

 

(g)           Each grant or sale of Restricted
Share Units will be evidenced by an Evidence of Award and will contain such
terms and provisions, consistent with the Plan, as the Committee may approve
from time to time.

 

8.             Performance Shares and Performance Units.  The Committee may also authorize the grant of
Performance Shares and Performance Units that will become payable to a
Participant upon achievement of specified Management Objectives or other
performance criteria during the Performance Period. Each such grant may utilize
any or all of the authorizations, and will be subject to all of the
requirements, contained in the following provisions:

 

(a)           Each grant will specify the number of
Performance Shares or Performance Units to which it pertains, which number may
be subject to adjustment to reflect changes in compensation or other factors; provided, however,
that no such adjustment will be made in the case of a Covered Employee where
such action would result in the loss of the otherwise available exemption of
the Award under Section 162(m) of the Code.

 

(b)           The Performance Period with respect
to each Performance Share or Performance Unit will be such period of time as
will be determined by the Committee at the Date of Grant, which may be subject
to earlier lapse or other modification in the event of the retirement, death,
disability or other termination of the Participant’s service or a change of
control of the Company or a Subsidiary (or other similar transaction or event).

 

 

(c)           A grant of Performance Shares or
Performance Units will specify Management Objectives or other performance
criteria which, if achieved, will result in payment or early payment of the
Award, and each grant may specify in respect of such specified Management
Objectives or other performance criteria a level or levels of achievement and
will set forth a formula for determining the number of Performance Shares or
Performance Units that will be earned if performance is at or above the minimum
level or levels, but falls short of maximum achievement of the specified
Management Objectives or criteria.

 

(d)           Each grant will specify the time and
manner of payment of Performance Shares or Performance Units that have been
earned. A grant may specify that the amount payable with respect thereto may be
paid by the Company in cash, in Common Shares or in any combination thereof and
may either grant to the Participant or retain in the Committee the right to
elect among those alternatives.

 

(e)           A grant of Performance Shares may
specify that the amount payable with respect thereto may not exceed a maximum
specified by the Committee at the Date of Grant. A grant of Performance Units
may specify that the amount payable or the number of Common Shares issued with
respect thereto may not exceed maximums specified by the Committee at the Date
of Grant.

 

(f)            The Committee may, at the Date of
Grant of Performance Shares, provide for the payment of dividend equivalents to
the holder thereof on either a current or deferred or contingent basis, either
in cash or in Common Shares.

 

(g)           Each grant of Performance Shares or
Performance Units will be evidenced by an Evidence of Award and will contain
such other terms and provisions, consistent with the Plan, as the Committee may
approve from time to time.

 

9.             Senior Executive Plan Bonuses.  The Committee may from time to time authorize
the payment of annual incentive compensation to a Participant who is a Covered
Employee, which incentive compensation will become payable upon achievement of
specified Management Objectives. Subject to Section 3(b)(vii), Senior
Executive Plan Bonuses will be payable upon such terms and conditions as the
Committee may determine in accordance with the following provisions:

 

(a)           No later than 90 days after the
first day of the Fiscal Year, the Committee will specify the Management
Objectives that, if achieved, will result in the payment of a Senior Executive
Plan Bonus for such Fiscal Year.

 

(b)           Following the close of the Fiscal
Year, the Committee will certify in writing whether the specified Management
Objectives have been achieved. Approved minutes of a meeting of the Committee
at which such certification is made will be treated as written certification
for this purpose. The Committee will also specify the time and manner of
payment of a Senior Executive Plan Bonus which becomes payable, which payment
may be made in (i) cash, (ii) Common Shares having an aggregate
Market Value per Share equal to the aggregate value of the Senior Executive
Plan Bonus which has become payable, or (iii) any combination thereof, as
determined by the Committee in its discretion at the time of payment.

 

(c)           The Committee may provide that, if a
change in control of the Company occurs during a Performance Period, the Senior
Executive Plan Bonus payable to each Participant for the Performance Period
will be determined at the highest level of achievement of the Management
Objectives, without regard to actual performance and without proration for less
than a full Performance Period. In such event, the Senior Executive Plan Bonus
will be paid at such time following the change in control as the Committee
determines in its discretion, but in no event later than 30 days after the
date of an event which results in a change in control.

 

 

(d)           Each grant may be evidenced by an
Evidence of Award, which will contain such terms and provisions as the
Committee may determine consistent with the Plan, including without limitation
provisions relating to the Participant’s termination of employment by reason of
retirement, death, disability or otherwise.

 

10.           Other Awards.

 

(a)           In addition to Stock Options, SARs,
Performance Shares, Performance Units, Restricted Shares, Restricted Share
Units and Senior Executive Plan Bonuses, the Committee may, subject to
limitations under applicable law, make other Awards (i) that may be
denominated or payable in, valued in whole or in part by reference to, or
otherwise based on, or related to, Common Shares or factors that may influence
the value of such shares, including, without limitation, convertible or
exchangeable debt securities, other rights convertible or exchangeable into
Common Shares, purchase rights for Common Shares, (ii) with value and
payment contingent upon performance of the Company or specified Subsidiaries or
other business units thereof or any other factors designated by the Committee
(including, without limitation, achievement of Management Objectives), or
(iii) valued by reference to the book value of Common Shares or the value
of securities of, or the performance of specified Subsidiaries or other
business units of the Company. The Committee will determine the terms and
conditions of such Awards. Common Shares delivered pursuant to an Award in the
nature of a purchase right granted under this Section 10 will be purchased
for such consideration, paid for at such time, by such methods, and in such
forms, including, without limitation, cash, Common Shares, other Awards, notes
or other property, as the Committee determines.

 

(b)           Cash awards, as an element of or a
supplement to any other Award made under the Plan, may also be made pursuant to
this Section 10.

 

(c)           The Committee may grant Common Shares
as a bonus, or may make other Awards in lieu of obligations of the Company or a
Subsidiary to pay cash or deliver other property under the Plan or under other
plans or compensatory arrangements, subject to such terms as are determined by
the Committee from time to time.

 

11.           Administration of the Plan.

 

(a)           The Plan will be administered by the
Committee. The composition of the Committee will comply with applicable
independence requirements under the rules and regulations of any
securities exchange, association or quotation system on which Common Shares are
then listed or quoted, and the Board will also consider the advisability of
appointing to the Committee members who satisfy the requirements of
(i) the definition of the term “non-employee director” used
Rule 16b-3 promulgated under the Exchange Act and (ii) the definition
of the term “outside director” used in Section 162(m) of the Code.

 

(b)           The Committee may from time to time
delegate all or any part of its authority under the Plan to a subcommittee of
the Committee or to any other committee of the Board or a subcommittee thereof.
To the extent of any such delegation, references in the Plan to the Committee
will be deemed to be references to such committee or subcommittee.

 

(c)           Notwithstanding any other provision
of the Plan, any Award to a member of the Committee must be approved by the
Board to be effective.

 

(d)           The Committee will have sole
discretion to (i) interpret any provision of the Plan or an Evidence of
Award, (ii) make any determination necessary or advisable for the
administration of the Plan and Awards hereunder, and (iii) waive any condition
or right of the Company under an Award or discontinue or terminate an Evidence
of Award. Without intending to limit the generality or effect of the foregoing,
any decision or determination made by the Committee with respect to the Plan or
an Award, including whether to grant or withhold any required consent, will be
made by the Committee in its sole and absolute discretion, subject to the terms
of the Plan. The interpretation and construction by the Committee of any
provision of the Plan or of any Evidence of Award and any determination by the
Committee pursuant to any provision of the Plan or of any such Evidence of
Award will be final and conclusive.

 

 

(e)           The Committee may delegate to one or
more of its members or to one or more officers of the Company, or to one or
more agents or advisors, such administrative duties or powers as it may deem
advisable, and the Committee, or any person to whom duties or powers have been
so delegated, may employ one or more persons to render advice with respect to
any responsibility the Committee or such person may have under the Plan.
Without limiting the foregoing and subject to applicable law, the Committee
may, by resolution, authorize one or more officers of the Company to do one or
both of the following on the same basis as the Committee: (i) designate
employees to be recipients of Awards under the Plan; and (ii) determine
the size of any such Awards; provided,
however, that (A) the
Committee will not delegate such responsibilities to any such officer for
Awards to an executive officer or any person subject to Section 162(m) of
the Code; (B) the resolution providing for such authorization sets forth
the total number of Common Shares such officer(s) may grant; and
(C) the officer(s) will report periodically to the Committee
regarding the nature and scope of the Awards made pursuant to the authority
delegated.

 

12.           Adjustments.  The Committee will make or provide for such
adjustments in the number of Common Shares authorized under Section 3, in
the number of Common Shares covered by outstanding Awards, in the Exercise
Price of outstanding Stock Options and any amounts payable for Common Shares
under other outstanding Awards, in the Base Price of outstanding SARs, and in
the kind of shares covered thereby, as is equitably required to prevent
dilution or enlargement of the rights of Participants or Optionees that
otherwise would result from (a) any stock dividend, extraordinary
dividend, stock split, combination of shares, recapitalization or other change
in the capital structure of the Company, or (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 any or all
outstanding Awards under the Plan such alternative consideration (including,
without limitation, cash), if any, as it may determine to be equitable in the
circumstances and may require in connection therewith the surrender of all
Awards so replaced. The Committee will also make or provide for such
adjustments in the numbers of shares specified in Section 3(c) as the
Committee in its sole discretion, exercised in good faith, may determine is
appropriate to reflect any transaction or event described in this
Section 12; provided, however, that any such adjustment to the numbers
specified in Sections 3(c)(i) and 3(c)(ii) will be made only if
and to the extent that (i) such adjustment would not cause any option
intended to qualify as an Incentive Stock Option to fail to so qualify and (ii) such
adjustment would not result in negative tax consequences under
Section 409A of the Code. Without limiting the generality of the
foregoing, in the event that the Company issues warrants or other rights to
acquire Common Shares on a pro rata basis to all stockholders, the Committee
will make such adjustments in the number of Common Shares authorized under the
Plan and in the limits contained herein as it may deem to be equitable,
including, without limitation, proportionately increasing the number of
authorized Common Shares or any such limit.

 

13.           Non U.S. Participants.  In order to facilitate the making of any
grant or combination of grants under the Plan, the Committee may provide for
such special terms for Awards to Participants who are foreign nationals or who
are employed by the Company or any Subsidiary outside of the United States of
America or who provide services to the Company under an agreement with a
foreign nation or agency, as the Committee may consider necessary or
appropriate to accommodate differences in local law, tax policy or custom.
Moreover, the Committee may approve such supplements to or amendments,
restatements or alternative versions of the Plan (including, without
limitation, sub-plans) as it may consider necessary or appropriate for such
purposes, without thereby affecting the terms of the Plan as in effect for any
other purpose, and the Secretary or other appropriate officer of the Company
may certify any such document as having been approved and adopted in the same
manner as the Plan. No such special terms, supplements, amendments or
restatements, however, will include any provisions that are inconsistent with
the terms of the Plan as then in effect unless the Plan could have been amended
to eliminate such inconsistency without further approval by the stockholders of
the Company.

 

14.           Transferability.

 

(a)           Except as provided below or as
otherwise determined by the Committee, (i) no Award will be transferable
by a Participant except by will or the laws of descent and distribution and
(ii) Stock 

 

 

Options
and SARs will be exercisable during the Participant’s lifetime only by the
Participant or, in the event of the Participant’s legal incapacity to do so, by
the Participant’s guardian or legal representative acting on behalf of the
Participant in a fiduciary capacity under state law and/or court supervision.
With the consent of the Company, which may be granted or withheld in its sole
and absolute discretion, a Participant may transfer an Award for estate
planning purposes or pursuant to a domestic relations order; provided that such
transferee will be bound by and subject to all of the terms and conditions of
the Plan and the Evidence of Award relating to the Award and executes an
agreement satisfactory to the Company evidencing such obligations; and provided further that such Participant
will remain bound by the terms and conditions of the Plan. Notwithstanding the
foregoing, no Stock Option that is intended to be an Incentive Stock Option or
any Related SAR granted in tandem therewith may be transferred.

 

(b)           The Committee may specify at the Date
of Grant that part or all of the Common Shares that are (i) to be issued
or transferred by the Company upon the exercise of Stock Options or SARs, upon
the termination of the Deferral Period applicable to Restricted Share Units or
upon payment under any grant of Performance Shares, Performance Units or a
Senior Executive Plan Bonus or (ii) no longer subject to the substantial
risk of forfeiture and restrictions on transfer referred to in Section 6,
will be subject to further restrictions on transfer.

 

15.           Withholding Taxes.  To the extent that the Company or a
Subsidiary is required to withhold federal, state, local or foreign taxes in
connection with any payment made or benefit realized by a Participant or other
person under the Plan, and the amounts available to the Company or Subsidiary
for such withholding are insufficient, it will be a condition to the receipt of
such payment or the realization of such benefit that the Participant or such
other person make arrangements satisfactory to the Company for payment of the
balance of such taxes required to be withheld, which arrangements (in the
discretion of the Committee) may include relinquishment of a portion of such
benefit.

 

16.           Compliance with Section 409A of the Code.  To the extent applicable, it is intended that
the Plan and any Awards hereunder comply with the provisions of
Section 409A of the Code. The Plan and any Awards hereunder will be
administrated in a manner consistent with this intent, and any provision that
would cause the Plan or any Award to fail to satisfy Section 409A of the
Code will have no force and effect until amended to comply with
Section 409A of the Code (which amendment may be retroactive to the extent
permitted by Section 409A of the Code and may be made by the Company
without the consent of Participants). Any reference in the Plan to
Section 409A of the Code will also include any proposed, temporary or
final regulations, or any other guidance, promulgated by the U.S. Department of
the Treasury or the Internal Revenue Service.

 

17.           Amendments.

 

(a)           The Committee may at any time and
from time to time amend or suspend the Plan in whole or in part; provided, however,
that, if an amendment must be approved by the stockholders of the Company in
order to comply with applicable legal requirements or the requirements of the
principal securities exchange, association or quotation system on which the
Common Shares are then listed or quoted, then such amendment will be subject to
stockholder approval and will not be effective unless and until such approval
has been obtained. Without intending to limit the generality or effect of the
foregoing, if an amendment to the Plan would increase the number of Common
Shares that may be issued or transferred upon the exercise of Incentive Stock
Options, then such amendment will be subject to stockholder approval and will
not be effective unless and until such approval has been obtained.

 

(b)           The Committee will not, without the
further approval of the stockholders of the Company, authorize the amendment of
any outstanding Stock Option or SAR to reduce the Exercise Price or Base Price.
Furthermore, no Stock Option or SAR will be cancelled and replaced with Awards
having a lower Exercise Price or Base Price without further approval of the
stockholders of the Company. This Section 17(b) is intended to
prohibit the repricing of “underwater” Stock Options and SARs and will not be
construed to prohibit the adjustments provided for in Section 12.

 

 

(c)           Subject to Section 17(b) hereof,
the Committee may amend the terms of any Award under the Plan prospectively or
retroactively, except in the case of a Covered Employee where such action would
result in the loss of the otherwise available exemption of the Award under
Section 162(m) of the Code. In such case, the Committee will not make
any modification of the Management Objectives or the level or levels of
achievement with respect to such Covered Employee. Subject to Section 12,
no amendment to any Award may materially and adversely affect the rights of any
Participant taken as a whole without his or her consent.

 

(d)           If permitted by Section 409A of
the Code, in case of termination of employment by reason of the death,
disability or normal or early retirement, or in the case of unforeseeable
emergency or other special circumstances, of a Participant who holds a Stock
Option or SAR not immediately exercisable in full, or any Restricted Shares as
to which the risk of forfeiture or the prohibition or restriction on transfer
has not lapsed, or any Restricted Share Units as to which the Deferral Period
has not been completed, or any Performance Shares or Performance Units which
have not been fully earned, or any other Award made pursuant to Section 10
subject to any vesting schedule or transfer restriction, or who holds Common
Shares subject to any transfer restriction imposed pursuant to
Section 12(b), the Committee may, in its sole discretion, accelerate the
time at which such Stock Option, SAR or other Award may be exercised, the time
at which such risk of forfeiture or prohibition or restriction on transfer will
lapse, the time when such Deferral Period will end, the time at which such
Performance Shares or Performance Units will be deemed to have been fully
earned or the time when such transfer restriction will terminate, or may waive
any other limitation or requirement under any such Award.

 

(e)           The Committee may, in its discretion,
terminate the Plan at any time. Termination of the Plan will not affect the
rights of Participants or their successors under any Awards outstanding
hereunder and not exercised in full on the date of termination.

 

18.           Governing Law.  The Plan and all Awards and actions taken
thereunder will be governed by and construed in accordance with the internal
substantive laws of the State of Delaware.

 

19.           Term of Plan.  The Plan will be effective as of the
Effective Date. No Award will be made under the Plan more than 10 years
after the Effective Date, but all Awards made on or prior to such date will
continue in effect thereafter subject to the terms thereof and of the Plan.

 

20.           Miscellaneous Provisions.

 

(a)           The Company will not be required to
issue any fractional Common Shares pursuant to the Plan. The Committee may
provide for the elimination of fractions or for the settlement of fractions in
cash.

 

(b)           The Plan will not confer upon any
Participant any right with respect to continuance of employment or other
service with the Company or a Subsidiary, nor will it interfere in any way with
any right the Company or a Subsidiary would otherwise have to terminate such
Participant’s employment or other service at any time. Except as specifically
provided by the Committee, the Company will not be liable for the loss of
existing or potential profit with respect to an Award hereunder in the event of
termination of employment or other relationship, even if the termination is in
violation of an obligation of the Company or a Subsidiary to the Participant.
The Committee’s making of an Award to a Participant hereunder will not confer
upon the Participant any right to receive any other Awards hereunder or under
any other plan or arrangement.

 

(c)           Any Evidence of Award may provide for
the effect on any Common Shares issued or other payment made with respect to
the Award of any conduct of the Participant determined by the Committee to be
injurious, detrimental or prejudicial to the Company or any Subsidiary.

 

(d)           Notwithstanding any other provision
of the Plan or any Award to the contrary, no Award may be effectuated, through
exercise by the holder thereof or otherwise, if the delivery of cash or stock
to the holder of such Award pursuant to the terms thereof would be, based on
advice of counsel to the 

 

 

Company,
contrary to law or the regulations of any duly constituted authority having
jurisdiction over the Plan. Notwithstanding any other provision of the Plan to
the contrary, each issuance of Common Shares to a Participant pursuant to the
Plan or an Award will be made for such consideration as is required by
applicable law to ensure that such Common Shares are validly issued, fully paid
and nonassessable upon such issuance.

 

(e)           Absence on leave approved by a duly
constituted officer of the Company or a Subsidiary will not be considered
interruption or termination of service of any employee for any purposes of the
Plan or an Award, except that no Award may be made to an employee while he or
she is absent on leave.

 

(f)            No Participant will have any rights
as a stockholder with respect to any Common Shares subject to an Award made to
him or her under the Plan prior to the date as of which he or she is actually
recorded as the holder of such Common Shares upon the stock records of the
Company.

 

(g)           The Committee may condition any Award
or combination of Awards authorized under the Plan on the surrender or deferral
by the Participant of his or her right to receive a cash bonus or other
compensation otherwise payable by the Company or a Subsidiary to the
Participant.

 

(h)           If any provision of the Plan is or
becomes invalid, illegal or unenforceable in any jurisdiction, or would
disqualify the Plan or any Award under any law deemed applicable by the
Committee, such provision will be construed or deemed amended or limited in
scope to conform to applicable laws or, in the discretion of the Committee,
will be stricken and the remainder of the Plan will remain in full force and
effect.

 

(i)            Each individual who is or has been a
member of the Board or a committee appointed by the Board will be indemnified
and held harmless by the Company against and from any loss, cost, liability or
expense that may be imposed upon or reasonably incurred by him or her in
connection with or resulting from any claim, action, suit or proceeding to
which he or she may be a party or in which he or she may be involved by reason
of any action taken or failure to act under the Plan and against and from any
and all amounts paid in settlement thereof with the Company’s approval, or paid
in satisfaction of any judgment in any such action, suit or proceeding against
the individual, provided the
Company is given the opportunity, at its own expense, to handle and defend such
claim, action, suit or proceeding before the individual undertakes to handle
and defend such claim, action, suit or proceeding on his or her own behalf,
unless such loss, cost, liability or expense is a result of such individual’s
own willful misconduct or except as expressly provided by statute. The
foregoing right of indemnification will not be exclusive of any other rights of
indemnification to which such individuals may be entitled under the Company’s
Certificate of Incorporation or Bylaws, as a matter of law or otherwise, or any
power that the Company may have to indemnify them or hold them harmless.Exhibit 10.5

 

As
adopted by the Board of Directors on

June 3,
2010

 

Activision
Blizzard, Inc.

 

Non-Affiliated
Director Compensation Program and

 

Stock
Ownership Guidelines

 

 

	
  Non-Affiliated Director

  	
   

  	
  For purposes of this program, a “Non-Affiliated Director”
  is any director of the Company that is not also (i) an employee of the
  Company or any of its subsidiaries or (ii) an employee of a majority
  shareholder or any of its controlled affiliates.

  
	
   

  	
   

  	
   

  
	
  Cash Compensation

  	
   

  	
  Annual Retainers:

   

  ·      Board Member - $55,000

   

  ·      Chairman of the Audit Committee -
  $27,500

   

  ·      Chairman of the Compensation Committee
  - $22,000

   

  ·      Chairman of the Nominating and
  Corporate Governance Committee - $16,500

   

  ·      Audit Committee Member - $11,000

   

  ·      Compensation Committee Member - $5,500

   

  ·      Nominating and Corporate Governance
  Committee Member - $5,500

   

  Meeting Fees:

   

  ·      For each board or committee meeting
  attended in person or by telephone - $3,300

   

  Special Assignment Fees

   

  ·      Per day for special assignments
  required in connection with board duties (including, without limitation,
  litigation-related matters, but excluding days on which a director is
  required to travel to attend meetings) - $5,500

   

  Payment Terms

   

  ·      All cash retainers will generally be
  paid in arrears in equal quarterly installments no later than the 60th day following the last date of the
  applicable quarter; provided, however, that in no event shall fees be
  paid later than the date that is 21⁄2 months following the last date of the
  Company’s fiscal year for which the retainer relates.

   

  ·      Meeting Fees and Special Assignment Fees will
  generally be paid in arrears in equal quarterly installments no later than
  the 60th day following
  the last date of the applicable quarter; provided,
  however, that in no event shall
  fees be paid later than the date that is 21⁄2 months following the last date of
  the Company’s fiscal year for which the retainer relates.

   

  ·      Fees will be prorated for partial years
  of service, with partial months of service credited for full months.

  

 

1

 

	
  Stock Options

  	
   

  	
  New Appointment/Election Option
  Grant

   

  ·      Each newly elected or appointed
  Non-Affiliated Director will receive a grant of 44,000 stock options upon
  initial election or appointment to the Board.

   

  Annual Option Grant

   

  ·      Each Non-Affiliated Director will receive an annual
  grant of 22,000 stock options annually upon re-election to the Board.

   

  Tenth Year Option Grant

   

  ·      In the year that a Non-Affiliated Director completes
  ten continuous years of service on the Board, the director will receive a
  grant of 44,000 stock options.

   

  ·      The tenth year grant is in lieu of the annual grant
  for the applicable year.

   

  Grant Date

   

  ·      Option grants will be made three business days
  following the date of the first board meeting immediately following the
  annual meeting of stockholders.

   

  ·      The exercise price of the options will equal the
  closing price of the Company’s common stock as quoted on the NASDAQ National
  Market on the date of grant.

   

  Vesting

   

  ·      All option grants will vest ratably every three months
  over the one-year period from the date of grant.

   

  ·      Initial and “Tenth-Year” option grants will vest
  ratably every three months over the two-year period from the date of grant.

   

  ·      A director must be in continuous active service on
  each applicable vesting date and vesting will cease upon a termination of
  service; provided, however,
  that vesting will accelerate upon a director’s death or termination due to
  Disability (as defined in Section 22(e)(3) of the Internal Revenue
  Code)

   

  Term

   

  ·      Options will expire on the 10th anniversary of the date of grant.

   

  ·      For so long as director remains in continuous
  service, all options may be exercised by the director through the 10th anniversary of grant.

   

  ·      Upon a cessation of service for any reason other
  than for cause, vested options will remain exercisable until the earlier of
  (i) the 1st anniversary of the date of death or cessation of service and
  (ii) the 10th anniversary of grant.

   

  Change of Control

   

  ·      In the event that the director ceases
  to serve as a member of the Board of Directors pursuant to the terms of any
  business combination or similar transaction involving the Company, the
  options will immediately vest and will remain exercisable until the
  earlier of (i) the 1st anniversary of the date of the director’s cessation
  of service and (ii) the original expiration date.

  

 

2

 

	 
	
   

  	
   

  	
  Award Agreement

   

  ·      Options will be granted pursuant to the Company’s
  2008 Incentive Plan and will be subject to the terms of the applicable
  Non-Affiliated Director stock option agreement as in effect at the time of
  grant.

  
	
   

  	
   

  	
   

  	 

	
  Restricted Stock Units

  	
   

  	
  New Appointment/Election RSU Grant

   

  ·      Each newly elected or appointed Non-Affiliated
  Director will receive a grant of 22,000 RSUs upon initial election or
  appointment to the Board.

   

  Annual RSU Grant

   

  ·      Each Non-Affiliated Director will receive an annual
  grant of 11,000 RSUs annually upon re-election to the Board.

   

  Tenth Year RSU Grant

   

  ·      In the year that a Non-Affiliated Director completes
  10 continuous years of service on the Board, the director will receive a
  grant of 22,000 RSUs.

   

  ·      The tenth year grant is in lieu of the annual grant
  for the applicable year.

   

  Grant Date

   

  ·      RSU grants will be made three business days
  following the date of the first Board meeting immediately following the
  annual meeting of stockholders.

   

  Vesting

   

  ·      All annual RSUs will vest ratably every three months
  over the one-year period from the date of grant.

   

  ·      Initial and “Tenth-Year” RSU grants will vest
  ratably every three months over the two-year period from the date of grant.

   

  ·      A director must be in continuous active service on
  each applicable vesting date.

   

  ·      Vesting will accelerate on the date of a director’s
  cessation of service due to death or Disability.

   

  Settlement

   

  ·      Vested RSUs will settle for shares of the Company’s
  common stock no later than 30 days following the 1st anniversary of the grant date.

   

  ·      50% percent of the Initial and “Tenth-Year” RSU
  grants will settle no later than 30 days following each of the 1st and 2nd anniversaries of the date of grant, to the
  extent vested.

   

  Change of Control

   

  ·      In the event that the director ceases to serve as a
  member of the Board of Directors pursuant to the terms of any business
  combination or similar transaction involving the Company, the RSUs will
  immediately vest and settle as of the date on which the business combination
  or similar transaction is consummated.

  	 

							

 

3

 

	 
	
   

  	
   

  	
  Dividend Equivalents

   

  ·      To the extent dividends are paid on the Company’s
  common stock, dividend equivalents will be paid on RSUs prior to settlement,
  no later than the 45th date following the last date of the
  Company’s fiscal year in which the dividends are paid.

   

  Award Agreement

   

  ·      RSUs will be granted pursuant to the Company’s 2008
  Incentive Plan and will be subject to the terms of the applicable
  Non-Affiliated Director stock RSU agreement as in effect at the time of
  grant.

  
	
   

  	
   

  	
   

  	 

	
  Expenses

  	
   

  	
  Directors receive reimbursement of business and
  travel expenses from time to time in accordance with Company policy.

  	 

	
   

  	
   

  	
   

  	 

	
  Perquisites

  	
   

  	
  Directors do not receive perquisites.

  	 

	
   

  	
   

  	
   

  	 

	
  Affiliated Directors

  	
   

  	
  ·      Directors who are employees of the
  Company or any of its subsidiaries will not be entitled to compensation as a
  director.

   

  ·      Unless otherwise determined by the
  Board of Directors or set forth in the Company’s bylaws, directors who are
  employees of a majority shareholder or any of its controlled affiliates will
  not be entitled to compensation as a director.

  	 

	
   

  	
   

  	
   

  	 

	
  Plan Administration

  	
   

  	
  The human resources and the legal departments will
  administer the Non-Affiliated Directors’ compensation program.

  	 

	
   

  	
   

  	
   

  	 

	
  Non-Affiliated Director Stock
  Ownership Guidelines

  	
   

  	
  ·      Each Non-Affiliated Director is
  required, within four years following his or her first election to the Board,
  to own shares of the Company’s common stock (including any restricted shares
  of common stock or restricted share units payable in shares of the Company’s
  common stock) having an aggregate value at least equal to five times the
  amount of the annual cash Board retainer that we then pay such director for
  regular service on the Board.

   

  ·      For purposes of determining compliance with the
  share ownership guidelines, the aggregate value of the shares owned by the
  director is calculated as of January 2nd of each applicable year (or if
  such date is not a trading date, the next trading date) based on the higher of:

   

  ·      the closing price of the Company’s
  common stock as quoted on the NASDAQ National Market on that day; and

   

  ·      the closing price of the Company’s
  common stock as quoted on the NASDAQ National Market on the date of grant (or
  if such date is not a trading date, the next trading date), for any shares
  awarded to the director by the Company, and the actual cost to the director,
  for any other shares (e.g.,
  with respect to shares acquired through the exercise of stock options, the
  exercise price).

   

  ·      Non-Affiliated Directors are subject to
  these guidelines for as long as they continue to serve on the Board.

  	 

							

 

4

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00176-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00176-of-00352.parquet"}]]