Document:

Exhibit 10.40

 

Exhibit [      ]

 

EXECUTIVE
STOCK OPTION AGREEMENT

 

	
  Stock Option
  #                     

  	
   

  	
  For                     Shares

  

 

 

Issued Pursuant to the

2003 Incentive Plan of

 

ACTIVISION, INC.

 

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

 

1.                                       Terms of the Plan.  The Option is granted pursuant to, and is subject to the
terms and conditions of, the Company’s 2003 Incentive Plan (the “Plan”), the
terms, conditions and definitions of which are hereby incorporated herein as
though set forth at length, and the receipt of a copy of which the Holder
hereby acknowledges by his signature below. 
Capitalized terms used herein shall have the meanings set forth in the
Plan, unless otherwise defined herein.

 

2.                                       Expiration.  This Option shall expire on [                 ],
unless extended or earlier terminated in accordance herewith.

 

3.                                       Exercise.  [(a)]  Except as
otherwise permitted under the Plan or the Holder’s written employment agreement
with the Company, if any, this Option may be exercised or surrendered during
the Holder’s lifetime only by the Holder or his/her guardian or legal
representative.  EXCEPT AS OTHERWISE
PERMITTED UNDER THE PLAN OR THE HOLDER’S WRITTEN EMPLOYMENT AGREEMENT WITH THE
COMPANY, IF ANY, THIS OPTION SHALL NOT BE TRANSFERABLE BY THE HOLDER OTHERWISE
THAN BY WILL OR BY THE LAWS OF DESCENT AND DISTRIBUTION.  With the Company’s consent which may granted
or withheld in its sole discretion, Options may be transferred to certain
permitted assignees, such as certain relatives of, or entities controlled by,
the Participant, as more fully set forth in Section 8.3 of the Plan;
provided, however, such consent shall only be required in the event any such
transfer is not otherwise permitted under the Plan or the Holder’s written
employment agreement with the Company, if any.

 

This Option
shall vest and be exercisable as follows:

 

	
  Vesting Date

  	
   

  	
  Shares Vested at Vesting Date

  	
   

  	
  Cumulative Shares

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [vesting
  schedule]

  	
   

  	
   

  

 

 

This Option
shall be exercised by the Holder (or by her executors, administrators, guardian
or legal representative) as to all or part of the Shares, by the giving of
written notice of exercise to the Company, specifying the number of Shares to
be purchased, accompanied by payment of the full purchase price for the Shares
being purchased.  Full payment of such
purchase price shall be made at the time of exercise and shall be made (i) in
cash or by certified check or bank check or wire transfer of immediately
available funds, (ii) with the consent of the Company, by tendering
previously acquired Shares (valued at their then Fair Market Value (as defined
in the Plan), as determined by the Company as of the date of tender) that have
been owned for a period of at least six months (or such other period to avoid
accounting charges against the Company’s earnings), or (iii) with the
consent of the Company, a combination of (i) and (ii).  Such notice of exercise, accompanied by such
payment, shall be delivered to the Company at its principal business office or
such other office as the Company may from time to time direct, and shall be in
such form, containing such further provisions as the Company may from time to
time prescribe.  In no event may this
Option be exercised for a fraction of a Share. 
The Company shall effect the transfer of Shares purchased pursuant to an
Option as soon as practicable, and, within a reasonable time thereafter, such
transfer shall be evidenced on the books of the Company.  No person exercising this Option shall have
any of the rights of a holder of Shares subject to this Option until
certificates for such Shares shall have been issued following the exercise of
such Option.  No adjustment shall be made
for cash dividends or other rights for which the record date is prior to the
date of such issuance.

 

[(b)                             Reload Option.  Add
provision for reload feature for those key executives who qualify for such
feature, as follows:  Upon exercise of
the Option pursuant to clause (a), above, the Holder shall receive a new option
(the “Reload Option”) to purchase at the option price equal to the Fair Market
Value of the Shares on the date of Option exercise, all or any part of that
number of Shares equal to (i) the number of Shares delivered to the
Company by the holder, or withheld from Shares otherwise issuable to the holder
upon exercise, in payment of the exercise price of the Option or the tax
withholding obligations attributable thereto and/or (ii) that number of
Shares with a then Fair Market Value equal to the amount of the withholding
obligations paid in cash by the holder. 
The Reload Option shall expire                                              unless
extended or earlier terminated in accordance herewith.  [Reload Options shall fully vest immediately
upon issuance.]  All other terms and
conditions (other than the vesting schedule) of this Agreement and the Plan
apply to the Reload Options.]

 

4.                                       Termination of Employment.  In the event of the termination of employment or separation
from service of the Holder for any reason (other than death or disability as
provided below), this Option, to the extent not previously exercised or
expired, shall be deemed cancelled and terminated on the day of such
termination or separation, unless (i) the Holder’s written employment
agreement with the Company, if any, provides otherwise, in which case the terms
contained in such employment agreement shall control or (ii) the Company
decides, in its sole discretion, to extend the term of this Option, subject to
the terms of the Plan.

 

5.                                       Death.  In the event the Holder dies while employed by the Company
or any of its subsidiaries or affiliates, or during his term as a Director of
the Company or any of its subsidiaries or affiliates, as the case may be, this
Option, to the extent not previously expired or exercised, shall, to the extent
exercisable on the date of death, be exercisable by the estate of the Holder or
by any person who acquired this Option by bequest or inheritance, at any time
within

 

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one year after the death of the Holder,
unless the Holder’s written employment agreement with the Company, if any,
provides otherwise, in which case the terms contained in such employment
agreement shall control, provided, however, that
if the term of such Option would expire by its terms within six months after
the Optionee’s death, the term of such Option shall be extended until six
months after the Optionee’s death, provided further, however,
that in no instance may the term of the Option, as so extended, exceed
the maximum term established pursuant to Sections 4.5(b)(ii) or 4.5(c) of
the Plan (if applicable).

 

6.                                       Disability.  In the event of the termination of employment of the Holder
or the separation from service of the Holder due to disability, the Holder, or
her guardian or legal representative, shall have the unqualified right to
exercise any portion of this Option which has not been previously exercised or
expired and which the Holder was eligible to exercise as of the first date of
total disability (as determined by the Company), at any time within one year
after such termination or separation, unless the Holder’s written employment
agreement with the Company, if any, provides otherwise, in which case the terms
contained in such employment agreement shall control, provided,
however, that if the term of such Option would expire by its terms
within six months after such termination or separation, the term of such Option
shall be extended until six months after such termination or separation, provided further, however, that in no instance may the term
of the Option, as so extended, exceed the maximum term established pursuant to Section 4.5(b)(ii) or
4.5(c) of the Plan (if applicable). 
The term “disability” shall, for purposes of this Share Option Agreement,
be defined in the same manner as such term is defined in the Holder’s written
employment agreement with the Company, if any. 
In the event (i) such term is not defined in the Holder’s
employment agreement with the Company or (ii) the Holder does not have a
written employment agreement with the Company, the term “disability” shall have
the same meaning as “total disability” in Section 22(e)(3) of the
Internal Revenue Code of 1986, as amended.

 

7.                                       Change of Control.  If the Holder is an active employee of the Company or any of
its subsidiaries at the time there occurs a “Change of Control” of the Company
and the Holder’s employment is terminated by the Company or any of its
subsidiaries other than for Cause (as defined below) within twelve (12) months
following such Change of Control, or such longer period as the Committee may
determine, the portion, if any, of this Option with respect to which the right
to exercise has not yet accrued, shall immediately vest and be exercisable in
full, effective upon such termination, for a period of 30 days thereafter, or
such longer period as the Committee may determine.  Notwithstanding the foregoing, in the event
the Holder has a written employment agreement with the Company which contains
terms relating to a “Change of Control,” all such terms shall supplement this Section 7,
and to the extent that there may be conflicting terms between this Option and
the terms of such employment agreement, the terms of such employment agreement
shall govern the treatment of this Option in the event of a “Change of Control”
of the Company.  For purposes of this
Option, “Change of Control” shall have the meaning specified in the Holder’s
written employment agreement with the Company, if any.  In the event (i) such term is not
defined in the Holder’s employment agreement with the Company or (ii) the
Holder does not have a written employment agreement with the Company, a “Change
of Control” of the Company shall be deemed to occur if:

 

a.                                       there shall have occurred a
Change of Control of a nature that would be required to be reported in response
to Item 6(e) of Schedule 14A of Regulation 14A

 

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promulgated under the Securities Exchange Act
of 1934, as amended (the “Exchange Act”), as in effect on the date hereof,
whether or not the Company is then subject to such reporting requirement, provided, however, that there shall not be
deemed to be a Change of Control of the Company if immediately prior to the
occurrence of what would otherwise be a Change of Control of the Company (i) the
Holder is the other party to the transaction (a “Control Event”) that would
otherwise result in a Change of Control of the Company or (ii) the Holder
is an executive officer, trustee, director or more than 5% equity holder of the
other party to the Control Event or of any entity, directly or indirectly,
controlling such other party;

 

b.                                      the Company merges or
consolidates with, or sells all or substantially all of its assets to, another
company (each, a “Transaction”), provided,
however, that a Transaction shall not be deemed to result in a
Change of Control of the Company if (i) immediately prior thereto the
circumstances in (a)(i) or (a)(ii) above exist, or (ii) (1) the
shareholders of the Company, immediately before such Transaction own, directly
or indirectly, immediately following such Transaction in excess of fifty
percent (50%) of the combined voting power of the outstanding voting securities
of the corporation or other entity resulting from such Transaction (the “Surviving
Corporation”) in substantially the same proportion as their ownership of the
voting securities of the Company immediately before such Transaction and (2) the
individuals who were members of the Company’s Board of Directors immediately
prior to the execution of the agreement providing for such Transaction
constitute at least a majority of the members of the board of directors or the
board of trustees, as the case may be, of the Surviving Corporation, or of a
corporation or other entity beneficially directly or indirectly owning a
majority of the outstanding voting securities of the Surviving Corporation; or

 

c.                                       the Company acquires assets of
another company or a subsidiary of the Company merges or consolidates with
another company (each, an “Other Transaction”) and (i) the shareholders of
the Company, immediately before such Other Transaction own, directly or
indirectly, immediately following such Other Transaction 50% or less of the
combined voting power of the outstanding voting securities of the corporation
or other entity resulting from such Other Transaction (the “Other Surviving
Corporation”) in substantially the same proportion as their ownership of the
voting securities of the Company immediately before such Other Transaction or (ii) the
individuals who were members of the Company’s Board of Directors immediately
prior to the execution of the agreement providing for such Other Transaction
constitute less than a majority of the members of the board of directors or the
board of trustees, as the case may be, of the Other Surviving Corporation, or
of a corporation or other entity beneficially directly or indirectly owning a
majority of the outstanding voting securities of the Other Surviving
Corporation, provided, however, that
an Other Transaction shall not be deemed to result in a Change of Control of
the Company if immediately prior thereto the circumstances in (a)(i) or
(a)(ii) above exist.

 

For purposes
of this Section 7, “Cause” shall mean (unless a different definition is
used in the Holder’s written employment agreement with the Company, if any, in
which case such different definition shall apply to the Holder) any of the
following:

 

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x.                                        material breach by the Holder of
his or her employment agreement, if any, or material failure by the Holder to
perform his or her duties (other than as a result of incapacity due to physical
or mental illness) during his or her employment with the Company after written
notice of such breach or failure and the Holder failed to cure such breach or
failure to the Company’s reasonable satisfaction within five (5) days
after receiving such written notice;

 

y.                                      material breach by the Holder of
his or her Employee Proprietary Information Agreement or other similar arrangement
entered into by the Holder in connection with his or her employment by the
Company; or

 

z.                                        any act of fraud,
misappropriation, misuse, embezzlement or any other material act of dishonesty
in respect of the Company or its funds, properties, assets or other employees.

 

8.                                       Employment Violation.  In consideration of the granting and by acceptance of this
Option, the Holder hereby agrees that the terms of this Section 8 shall
apply to the Option.  The Holder
acknowledges and agrees that each exercise of this Option and each written
notice of exercise delivered to the Company and executed by the Holder shall
serve as a reaffirmation of and continuing agreement by the Holder to comply
with the terms contained in this Section 8.

 

The Company
and the Holder acknowledge and agree that if the Holder materially breaches his
or her employment agreement (it being understood that any breach of the
post-termination obligations contained therein shall be deemed to be material)
for so long as the terms of such employment agreement shall apply to the Holder
(each an “Employment Violation”), the Company shall have the right to require (i) the
termination and cancellation of the unexercised portion of this Option, if any,
whether vested or unvested, and (ii) payment by the Holder to the Company
of the Recapture Amount (as defined below). 
The Company and the Holder further agree that such termination of
unexercised Options and payment of the Recapture Amount, as the case may be,
shall be in addition to, and not in lieu of, any other right or remedy
available to the Company arising out of or in connection with any such
Employment Violation including, without limitation, the right to terminate the
Holder’s employment if not already terminated, seek injunctive relief and
additional monetary damages.

 

For purposes
of this Section 8, the “Recapture Amount” shall mean the gross gain
realized or unrealized by the Holder upon each exercise of this Option during
the period beginning on the date which is twelve (12) months prior to the date
of the Holder’s Employment Violation and ending on the date of computation (the
“Look-back Period”), which gain shall be calculated as the sum of:

 

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

 

5

 

b.                                      if the Holder has exercised any
portion of this Option during the Look-back Period and not sold any of the
Shares acquired on exercise thereafter, with respect to each of such Shares an
amount equal to the product of (x) the greatest of the following: (1) the
Fair Market Value per Share on the date of exercise, (2) the arithmetic
average of the per Share closing sales prices as reported on NASDAQ for the
thirty (30) trading day period ending on the trading day immediately preceding
the date of the Company’s written notice of its exercise of its rights under
this Section 8, or (3) the arithmetic average of the per Share
closing sales prices as reported on NASDAQ for the thirty (30) trading day
period ending on the trading day immediately preceding the date of computation,
minus the exercise price per Share times (y) the number of Shares as to which
this Option was exercised and which were not sold;

 

provided,
however, in lieu of payment by the Holder to the Company of the Recapture
Amount determined pursuant to clause (b) above, the Holder, in his or her
discretion, may tender to the Company the Shares acquired upon exercise of this
Option during the Look-back Period and the Optionee shall not be entitled to
receive any consideration from the Company in exchange therefor.

 

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

 

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

 

11.                                 Withholding.  In the event that the Holder elects to exercise this Option
or any part thereof, and if the Company or any subsidiary or affiliate of the
Company shall be required to withhold any amounts by reasons of any federal,
state or local tax laws, rules or regulations in respect of (a) the
issuance of Shares to the Holder pursuant to this Option, or (b) the
exercise or disposition (in whole or in part) of the Option, the Company or
such subsidiary or

 

6

 

affiliate shall be entitled to deduct and
withhold such amounts from any payments to be made to the Holder.  In any event, the Holder shall make available
to the Company or such subsidiary or affiliate, promptly when requested by the
Company or such subsidiary or affiliate, sufficient funds to meet the
requirements of such withholding; and the Company or such subsidiary or
affiliate shall be entitled to take and authorize such steps as it may deem
advisable in order to have such funds available to the Company or such
subsidiary or affiliate out of any funds or property due or to become due to
the Holder.

 

12.                                 Reservation of Shares.  The Company hereby agrees that at all times there shall be
reserved for issuance and/or delivery upon exercise of this Option such number
of Shares as shall be required for issuance or delivery upon exercise hereof.

 

13.                                 Rights of Holder.  Nothing contained herein shall be construed to confer upon
the Holder any right to be continued in the employ of the Company and/or any
subsidiary or affiliate of the Company or derogate from any right of the Company
and/or any subsidiary or affiliate of the Company to retire, request the
resignation of, or discharge the Holder at any time, with or without
cause.  The Holder shall not, by virtue
hereof, be entitled to any rights of a shareholder in the Company, either at
law or in equity, and the rights of the Holder are limited to those expressed
herein and are not enforceable against the Company except to the extent set
forth herein.

 

14.                                 Exclusion from Pension
Computations.  By acceptance of the grant of
this Option, the Holder hereby agrees that any income realized upon the receipt
or exercise hereof, or upon the disposition of the Shares received upon its
exercise, is special incentive compensations and, to the extent permissible
under applicable law, shall not be taken into account as “wages”, “salary” or “compensation”
in determining the amount of any payment under any pension, retirement,
incentive, profit sharing, bonus or deferred compensation plan of the Company
or any of its subsidiaries or affiliates.

 

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

 

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

 

THE SECURITIES REPRESENTED BY
THIS CERTIFICATE MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE
TRANSFERRED EXCEPT

 

7

 

PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”),
OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT, THE AVAILABILITY
OF WHICH IS ESTABLISHED BY AN OPINION FROM COUNSEL TO THE COMPANY.

 

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

 

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

 

18.                                 Interpretation.  A determination of the Committee as to any questions which
may arise with respect to the interpretation of the provisions of this Option
and of the Plan shall be final and binding. 
The Committee may authorize and establish such rules, regulations and
revisions thereof as it may deem advisable.

 

19.                                 Miscellaneous.  In the event of a conflict between any of the
terms contained in this Option and the terms contained in the Holder’s written
employment agreement with the Company, if any, the terms set forth in such
employment agreement shall govern.

 

[Remainder of page intentionally blank.]

 

8

 

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

 

	
   

  	
  ACTIVISION, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Option Holder

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  City

  	
  State

  	
  Zip Code

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Social Security Number

  	
   

  
								

 

9Exhibit 10.41

 

FORM OF NQO AGREEMENT

 

STOCK OPTION AGREEMENT

 

	
  Stock Option
  #                     

  	
   

  	
  For                     Shares

  

 

Issued
Pursuant to the

2003 Incentive Plan of

ACTIVISION,
INC.

 

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

 

1.                                       Terms of the Plan.  The Option is granted pursuant to, and is subject to the terms and
conditions of, the Company’s 2003 Incentive Plan (the “Plan”), the terms,
conditions and definitions of which are hereby incorporated herein as though
set forth at length, and the receipt of a copy of which the Holder hereby
acknowledges by his signature below. 
Capitalized terms used herein shall have the meanings set forth in the
Plan, unless otherwise defined herein.

 

2.                                       Expiration.  This Option shall expire on [                       ],
unless extended or earlier terminated in accordance herewith.

 

3.                                       Exercise.  [(a)]  Except as otherwise permitted
under the Plan, this Option may be exercised or surrendered during the Holder’s
lifetime only by the Holder or his/her guardian or legal representative.  EXCEPT AS OTHERWISE PERMITTED UNDER THE PLAN,
THIS OPTION SHALL NOT BE TRANSFERABLE BY THE HOLDER OTHERWISE THAN BY WILL OR
BY THE LAWS OF DESCENT AND DISTRIBUTION. 
With the Company’s consent which may granted or withheld in its sole
discretion, Options may be transferred to certain permitted assignees, such as
certain relatives of, or entities controlled by, the Participant, as more fully
set forth in Section 8.3 of the Plan.

 

This Option shall vest and be exercisable as
follows:

 

	
  Vesting Date

  	
   

  	
  Shares Vested at Vesting Date

  	
   

  	
  Cumulative Shares

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [vesting
  schedule]

  	
   

  	
   

  

 

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

 

1

 

against the Company’s earnings), or (iii) with the consent of the
Company, a combination of (i) and (ii). 
Such notice of exercise, accompanied by such payment, shall be delivered
to the Company at its principal business office or such other office as the
Company may from time to time direct, and shall be in such form, containing
such further provisions as the Company may from time to time prescribe.  In no event may this Option be exercised for
a fraction of a Share.  The Company shall
effect the transfer of Shares purchased pursuant to an Option as soon as
practicable, and, within a reasonable time thereafter, such transfer shall be
evidenced on the books of the Company. 
No person exercising this Option shall have any of the rights of a holder
of Shares subject to this Option until certificates for such Shares shall have
been issued following the exercise of such Option.  No adjustment shall be made for cash
dividends or other rights for which the record date is prior to the date of
such issuance.

 

[(b)                             Reload Option.  Add
provision for reload feature for those key executives who qualify for such
feature, as follows:  Upon exercise of
the Option pursuant to clause (a), above, the Holder shall receive a new option
(the “Reload Option”) to purchase at the option price equal to the Fair Market
Value of the Shares on the date of Option exercise, all or any part of that
number of Shares equal to (i) the number of Shares delivered to the
Company by the holder, or withheld from Shares otherwise issuable to the holder
upon exercise, in payment of the exercise price of the Option or the tax
withholding obligations attributable thereto and/or (ii) that number of
Shares with a then Fair Market Value equal to the amount of the withholding
obligations paid in cash by the holder. 
The Reload Option shall expire                                      unless
extended or earlier terminated in accordance herewith.  [Reload Options shall fully vest immediately
upon issuance.]  All other terms and
conditions (other than the vesting schedule) of this Agreement and the Plan
apply to the Reload Options.]

 

4.                                       Termination of Employment.  Upon termination of the Holder’s employment for any reason (except death
or disability which are described in paragraphs 5 and 6 below), the following
terms shall apply to this Option:

 

(a)                                  In the event of
termination of the Holder’s employment for Cause, or by the Holder’s breach of
the [employment agreement] and/or [the Employee Proprietary Information
Agreement] between the Company and the Holder then in effect, this Option, whether
or not vested, shall expire immediately and shall be deemed cancelled and no
longer continue to vest or be exercisable as of the date of such
termination.  The term “Cause” shall be
defined as the Holder’s (i) willful, reckless or gross misconduct or fraud,
(ii) gross negligent performance of job responsibilities, and (iii) conviction
of or pleading no contest to a felony or crime involving dishonesty or moral
turpitude;

 

(b)                                 In the event of
termination of the Holder’s employment by the Company without Cause, this
Option shall cease to vest immediately as of the date of such termination, the
unvested portion of this Option shall be cancelled and only the vested portion
of this Option shall continue to be exercisable until the earlier of (i) the
end of the 30th day after the date of such termination of
employment, or (ii) the expiration of this Option pursuant to the terms
set forth herein; and upon the expiration of such period, such portion of this
Option then remaining unexercised shall be cancelled; and

 

2

 

(c)                                  In the event of
termination of the Holder’s employment for any reason not otherwise described
in paragraphs 4(a) and (b) (except for death or disability), this
Option shall cease to vest immediately as of the date of such termination, the
unvested portion of this Option shall be cancelled and only the vested portion
of this Option shall continue to be exercisable until the earlier of (i) the
end of the 30th day after the date of such termination of employment,
or (ii) the expiration of this Option pursuant to the terms set forth
herein; and upon the expiration of such period, such portion of this Option
then remaining unexercised shall be cancelled.

 

5.                                       Death.  In the event the Holder dies while employed by the Company or any of its
subsidiaries or affiliates, or during his term as a Director of the Company or
any of its subsidiaries or affiliates, as the case may be, this Option, to the
extent not previously expired or exercised, shall, to the extent exercisable on
the date of death, be exercisable by the estate of the Holder or by any person
who acquired this Option by bequest or inheritance, at any time within one year
after the death of the Holder, provided,
however, that if the term of such Option would expire by its terms
within six months after the Optionee’s death, the term of such Option shall be
extended until six months after the Optionee’s death, provided further, however, that in no
instance may the term of the Option, as so extended, exceed the maximum term
established pursuant to Sections 4.5(b)(ii) or 4.5(c) of the Plan (if
applicable).

 

6.                                       Disability.  In the event of the termination of employment of the Holder or the
separation from service of the Holder due to total disability, the Holder, or
her guardian or legal representative, shall have the unqualified right to
exercise any portion of this Option which has not been previously exercised or
expired and which the Holder was eligible to exercise as of the first date of
total disability (as determined by the Company), at any time within one year
after such termination or separation, provided,
however, that if the term of such Option would expire by its terms
within six months after such termination or separation, the term of such Option
shall be extended until six months after such termination or separation, provided further, however, that in no
instance may the term of the Option, as so extended, exceed the maximum term
established pursuant to Section 4.5(b)(ii) or 4.5(c) of the Plan
(if applicable).  The term “total
disability” shall, for purposes of this Share Option Agreement, be defined in
the same manner as such term is defined in Section 22(e)(3) of the
Internal Revenue Code of 1986, as amended.

 

7.                                       Employment Violation.  In consideration of the granting and by acceptance of this Option, the
Holder hereby agrees that the terms of this Section 7 shall apply to the
Option.  The Holder acknowledges and
agrees that each exercise of this Option and each written notice of exercise
delivered to the Company and executed by the Holder shall serve as a
reaffirmation of and continuing agreement by the Holder to comply with the
terms contained in this Section 7.

 

The Company and the Holder acknowledge and
agree that if the Holder materially breaches his or her employment agreement
(it being understood that any breach of the post-termination obligations
contained therein shall be deemed to be material) for so long as the terms of
such employment agreement shall apply to the Holder (each an “Employment
Violation”), the Company shall have the right to require (i) the
termination and cancellation of the unexercised portion of this Option, if any,
whether vested or unvested, and (ii) payment by the Holder to the Company
of the Recapture Amount (as defined below). 
The Company and the Holder further agree that such termination of
unexercised Options and payment of the Recapture Amount, as the

 

3

 

case may be, shall be in addition to, and not in lieu of, any other
right or remedy available to the Company arising out of or in connection with
any such Employment Violation including, without limitation, the right to
terminate the Holder’s employment if not already terminated, seek injunctive
relief and additional monetary damages.

 

For purposes of this Section 7, the “Recapture
Amount” shall mean the gross gain realized or unrealized by the Holder upon
each exercise of this Option during the period beginning on the date which is
twelve (12) months prior to the date of the Holder’s Employment Violation and
ending on the date of computation (the “Look-back Period”), which gain shall be
calculated as the sum of:

 

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

 

(b)                                 if the Holder has
exercised any portion of this Option during the Look-back Period and not sold
any of the Shares acquired on exercise thereafter, with respect to each of such
Shares an amount equal to the product of (x) the greatest of the following: (1) the
Fair Market Value per Share on the date of exercise, (2) the arithmetic
average of the per Share closing sales prices as reported on NASDAQ for the
thirty (30) trading day period ending on the trading day immediately preceding
the date of the Company’s written notice of its exercise of its rights under
this Section 7, or (3) the arithmetic average of the per Share
closing sales prices as reported on NASDAQ for the thirty (30) trading day
period ending on the trading day immediately preceding the date of computation,
minus the exercise price per Share times (y) the number of Shares as to which
this Option was exercised and which were not sold;

 

provided, however, in lieu of payment by the Holder to the Company of
the Recapture Amount determined pursuant to clause (b) above, the Holder,
in his or her discretion, may tender to the Company the Shares acquired upon
exercise of this Option during the Look-back Period and the Optionee shall not
be entitled to receive any consideration from the Company in exchange therefor.

 

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

 

4

 

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

 

10.                                 Withholding.  In the event that the Holder elects to exercise this Option or any part
thereof, and if the Company or any subsidiary or affiliate of the Company shall
be required to withhold any amounts by reasons of any federal, state or local
tax laws, rules or regulations in respect of (a) the issuance of
Shares to the Holder pursuant to this Option, or (b) the exercise or
disposition (in whole or in part) of the Option, the Company or such subsidiary
or affiliate shall be entitled to deduct and withhold such amounts from any
payments to be made to the Holder.  In
any event, the Holder shall make available to the Company or such subsidiary or
affiliate, promptly when requested by the Company or such subsidiary or
affiliate, sufficient funds to meet the requirements of such withholding; and
the Company or such subsidiary or affiliate shall be entitled to take and
authorize such steps as it may deem advisable in order to have such funds
available to the Company or such subsidiary or affiliate out of any funds or
property due or to become due to the Holder.

 

11.                                 Reservation of Shares.  The Company hereby agrees that at all times there shall be reserved for
issuance and/or delivery upon exercise of this Option such number of Shares as
shall be required for issuance or delivery upon exercise hereof.

 

12.                                 Rights of Holder.  Nothing contained herein shall be construed to confer upon the Holder any
right to be continued in the employ of the Company and/or any subsidiary or
affiliate of the Company or derogate from any right of the Company and/or any
subsidiary or affiliate of the Company to retire, request the resignation of,
or discharge the Holder at any time, with or without cause.  The Holder shall not, by virtue hereof, be
entitled to any rights of a shareholder in the Company, either at law or in
equity, and the rights of the Holder are limited to those expressed herein and
are not enforceable against the Company except to the extent set forth herein.

 

13.                                 Exclusion from Pension
Computations.  By acceptance of the grant of this Option, the
Holder hereby agrees that any income realized upon the receipt or exercise
hereof, or upon the disposition of the Shares received upon its exercise, is
special incentive compensations and, to the extent permissible under applicable
law, shall not be taken into account as “wages”, “salary” or “compensation” in
determining the amount of any payment under any pension, retirement, incentive,
profit sharing, bonus or deferred compensation plan of the Company or any of
its subsidiaries or affiliates.

 

14.                                 Registration; Legend.  The Company may postpone the issuance and delivery of Shares upon any
exercise of this Option until (a) the admission of such Shares to listing
on any stock exchange or exchanges on which Shares of the Company of the same
class are then listed

 

5

 

and (b) the
completion of such registration or other qualification of such Shares under any
state or federal law, rule or regulation as the Company shall determine to
be necessary or advisable.  The Holder
shall make such representations and furnish such information as may, in the
opinion of counsel for the Company, be appropriate to permit the Company, in
light of the then existence or non-existence with respect to such Shares of an
effective Registration Statement under the Securities Act of 1933, as amended,
to issue the Shares in compliance with the provisions of that or any comparable
act.

 

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

 

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

 

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

 

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

 

17.                                 Interpretation.  A determination of the Committee as to any questions which may arise with
respect to the interpretation of the provisions of this Option and of the Plan
shall be final and binding.  The
Committee may authorize and establish such rules, regulations and revisions
thereof as it may deem advisable.

 

[Remainder
of page intentionally blank.]

 

6

 

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

 

	
   

  	
  ACTIVISION,
  INC.

  
	
   

  	
   

  
	
   

  	
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  Title:

  
	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Option Holder

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  City

  	
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  Social Security Number

  	
   

  
								

 

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