Activision Blizzard (ATVI)

Certain Federal Income Tax Consequences of the 2003 Plan

The following is a brief summary of the principal federal income tax consequences of awards under the 2003 Plan. The summary is based upon current federal income tax laws and interpretations thereof, all of which are subject to change at any time, possibly with retroactive effect. The summary is not intended to be exhaustive and, among other things, does not describe state, local or foreign tax consequences.

If non-qualified options are granted to a participant, there are no federal income tax consequences at the time of grant. Upon exercise of the non-qualified option, the participant must report as ordinary income an amount equal to the difference between the exercise price and the fair market value of the shares of common stock on the date of exercise. The Company will receive a tax deduction in like amount. Any appreciation in value after the time of exercise will be taxed as capital gain and will not result in any deduction by the Company.

No income will be realized by a participant in connection with the grant of any SAR. The participant must include in ordinary income the amount of cash received and the fair market value on the exercise date of any shares of common stock received upon the exercise of an SAR. The Company will be entitled to a deduction equal to the amount includable in such participant's income by reason of the exercise of any SAR.

Except as described in the following paragraph, a grant of restricted stock or restricted stock units does not constitute a taxable event for either a participant or the Company. However, a recipient of restricted stock will be subject to tax, at ordinary income rates, based on the fair market value of the shares of common stock when they are no longer subject to a substantial risk of forfeiture or they become transferable. The Company will be entitled to take a commensurate deduction at that time. A recipient of restricted stock units will be subject to tax, at ordinary income rates, when the recipient receives the underlying common stock (or cash), based on the then fair

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market value of the shares of common stock. The Company will be entitled to take a commensurate deduction at that time.

A participant may elect to recognize taxable ordinary income at the time restricted shares are awarded in an amount equal to the fair market value of the shares of common stock at the time of grant, determined without regard to any forfeiture restrictions. Any such election must be filed with the Internal Revenue Service within 30 days of the date of grant. If such an election is made, the Company will be entitled to a deduction at that time in the same amount. Future appreciation on the restricted shares will be taxed as capital gains when the common stock is sold. However, if, after making such an election, the restricted shares are forfeited, the participant will be unable to claim any loss deduction.