Activision Blizzard will not, and will cause each of its subsidiaries (with exceptions for certain specified joint venture entities and the extent of Activision Blizzard’s obligations with respect thereto) not to, among other things:
- amend or otherwise change the organizational documents of Activision Blizzard or any of its subsidiaries, other than, with respect to its wholly owned subsidiaries, immaterial or ministerial amendments;
liquidate, dissolve or reorganize;
issue, sell, deliver or grant any shares of capital stock or any options, warrants, commitments, subscriptions or rights to purchase any similar capital stock or securities of Activision Blizzard or any of its subsidiaries, subject to certain exceptions, including for the issuance and sale of shares of Activision Blizzard common stock pursuant to Activision Blizzard options or Activision Blizzard stock-based awards in accordance with their terms;
except in consultation with Microsoft, terminate any employee at the level of senior vice president or above (other than for cause) or hire any new employee at the level of senior vice president or above;
enter into, adopt, amend (including accelerating vesting), modify or terminate any employee benefit plan;
settle, release, waive or compromise certain legal proceedings;
enter into, modify or terminate certain contracts other than in the ordinary course of business;
waive, grant or transfer any material right of Activision Blizzard or its subsidiaries;
effect certain layoffs affecting any site of employment or employee located in the United States;
voluntarily recognize any labor union, works council or similar employee organization or enter into a collective bargaining agreement;
enter into any new business segment that is not reasonably related to Activision Blizzard’s and its subsidiaries’ existing business segments on the date of the merger agreement;
enter into, authorize or commit to enter into, an agreement to take any of the foregoing actions.
In connection with the merger, Activision Blizzard and Microsoft agreed that if the Workplace Responsibility Committee of the Activision Blizzard Board of Directors concludes and reports publicly that Activision Blizzard has made appropriate progress toward the achievement of the transformational gender-related goals and other commitments described in Activision Blizzard’s press release on October 28, 2021 (e.g., launching new zero-tolerance harassment policy, increasing the percentage of women and non-binary people in Activision Blizzard’s workforce by 50%, investing $250,000,000 to accelerate opportunities for diverse talent, waiving arbitration of individual sexual harassment claims and increasing visibility on pay equity), then the Activision Blizzard Board of Directors may, no earlier than six months after the date of the merger agreement, in its discretion:
grant an annual equity award to Mr. Kotick as set forth in his employment agreement (as may be extended); provided, that any such award may be granted solely in the form of time-based restricted stock units and will have a grant value on the date of grant equal to no greater than the lesser of (x) the 50th percentile of Activision Blizzard’s then applicable group of peer companies’ chief executive officer long-term incentive grants and (y) $22,000,000; and/or
provide cash compensation to Mr. Kotick under the existing terms of his employment agreement (as may be extended) and without regard to any waiver of compensation by Mr. Kotick; provided, that (x) his annualized base salary will not exceed $875,000 and (y) his target annual cash bonus would not exceed 200% of his base salary (pro-rated). Any salary increase would be prospective following the Workplace Responsibility Committee’s conclusion and will not be retroactively applied and any bonus in respect of the calendar year in which the compensation is reinstated will be based on 200% of such increased base salary and prorated in respect of the period following the Workplace Responsibility Committee’s conclusion.