Document:

Exhibit 10.4

 

Service Agreement

 

 

 

 

 

Date:          November 2, 2015

 

 

Parties:

 

(1)                              Activision Blizzard, Inc.

 

&

 

(2)                              Riccardo Zacconi

 

 

Table of Contents

 

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
1.
    	
Definitions
    	
1
    
	
 
    	
 
    	
 
    
	
2.
    	
Commencement   and Duration
    	
5
    
	
 
    	
 
    	
 
    
	
3.
    	
Role   and Duties of the Executive
    	
6
    
	
 
    	
 
    	
 
    
	
4.
    	
Place   of work
    	
8
    
	
 
    	
 
    	
 
    
	
5.
    	
Remuneration
    	
9
    
	
 
    	
 
    	
 
    
	
6
    	
Expenses
    	
11
    
	
 
    	
 
    	
 
    
	
7
    	
Holidays
    	
11
    
	
 
    	
 
    	
 
    
	
8
    	
Absence   from work
    	
11
    
	
 
    	
 
    	
 
    
	
9
    	
Sick   pay
    	
11
    
	
 
    	
 
    	
 
    
	
10
    	
Pension
    	
11
    
	
 
    	
 
    	
 
    
	
11
    	
Insured   benefits
    	
12
    
	
 
    	
 
    	
 
    
	
12
    	
Restrictions   during his employment
    	
12
    
	
 
    	
 
    	
 
    
	
13
    	
IP   and Confidential Information
    	
13
    
	
 
    	
 
    	
 
    
	
14
    	
Termination
    	
13
    
	
 
    	
 
    	
 
    
	
15
    	
Garden   Leave
    	
21
    
	
 
    	
 
    	
 
    
	
16
    	
Obligations   after Employment
    	
22
    
	
 
    	
 
    	
 
    
	
17
    	
Directorship
    	
24
    
	
 
    	
 
    	
 
    
	
18
    	
Disciplinary   and Grievance procedures
    	
25
    
	
 
    	
 
    	
 
    
	
19
    	
Standards   of conduct and performance
    	
25
    
	
 
    	
 
    	
 
    
	
20
    	
Data   Protection and Communications
    	
25
    
	
 
    	
 
    	
 
    
	
21
    	
Notices
    	
26
    
	
 
    	
 
    	
 
    
	
22
    	
Former   contracts of employment
    	
26
    
	
 
    	
 
    	
 
    
	
23
    	
Indemnification
    	
28
    

 

	
 
    

1

 

	
24
    	
Assignment
    	
28
    
	
 
    	
 
    	
 
    
	
25
    	
Entire   Agreement
    	
29
    
	
 
    	
 
    	
 
    
	
26
    	
General
    	
29
    
	
 
    	
 
    	
 
    
	
27
    	
Choice   of law and submission to jurisdiction
    	
29
    
	
 
    	
 
    	
 
    
	
28
    	
Waiver
    	
29
    
	
 
    	
 
    	
 
    
	
29
    	
Headings
    	
29
    
	
 
    	
 
    	
 
    
	
30
    	
Forfeiture
    	
28
    

 

SCHEDULE 1

 

SCHEDULE 2

 

SCHEDULE 3

 

	
 
    

2

 

THIS AGREEMENT is made the 2 day of November 2015

 

BETWEEN

 

(1)       Activision Blizzard, Inc., with its head address at 3100 Ocean Park Blvd., Santa Monica, CA 90405, USA (“Activision Blizzard”);

 

(2)        Riccardo Zacconi of c/o Midasplayer.com Limited, 1 St. Giles High Street, London WC2H 8AG (the “Executive”).

 

THE PARTIES AGREE as follows:

 

1.         Definitions

 

1.1       Definitions

 

In this Agreement unless the context otherwise requires the following expressions have the following meanings:

 

	
Words and expressions
    	
 
    	
Meaning
    
	
 
    	
 
    	
 
    
	
“Act”
    	
 
    	
The   Employment Rights Act 1996 as amended;
    
	
 
    	
 
    	
 
    
	
“Activision Blizzard”
    	
 
    	
Activision   Blizzard, a Delaware corporation and the ultimate parent company of King Digital   Entertainment Public Limited Company (“King”);
    
	
 
    	
 
    	
 
    
	
“Businesses”
    	
 
    	
any   trade or commercial activity which is carried on by the Company or any Group   Company;
    
	
 
    	
 
    	
 
    
	
“Change of Control”
    	
 
    	
means   the Group Companies ceasing to Control the Company;
    
	
 
    	
 
    	
 
    
	
“Change of Control Period”
    	
 
    	
means   a period that commences on the date that falls three months prior to the   execution and exchange of contracts in relation to any transaction that gives   rise to a Change of Control and terminates on the date that falls 18 months   immediately after the completion of the transaction that gives rise to the   Change of Control;
    
	
 
    	
 
    	
 
    
	
“Change of Control Termination”
    	
 
    	
means   the termination of the employment of the Executive during a Change of Control   Period where:

 

(a) Activision   Blizzard serves notice to terminate the employment of the Executive, save   where the employment of the Executive is terminated summarily in accordance   with Clause 14.2; or
    

 

	
 
    

3

 

	
 
    	
 
    	
(b) the   Executive terminates his employment with or without notice (pursuant to   Clause 2.1) for Good Reason (other than in circumstances where Activision   Blizzard has reasonable grounds for summary termination under clause 14.2)   provided that the Executive must, before he terminates his employment for   Good Reason, and if (on a reasonable view) the circumstances that constitute   Good Reason are remediable, have first given Activision Blizzard a written   notice stating clearly the event or circumstance that constitutes Good Reason   in his belief, acting in good faith, and given Activision Blizzard a period   of not less than 15 working days to cure the event or circumstance allegedly   constituting Good Reason and no Good Reason shall exist if on a reasonable   view the event or circumstance is cured by Activision Blizzard;
    
	
 
    	
 
    	
 
    
	
“Company”
    	
 
    	
King   and/or the King division of Activision Blizzard;
    
	
 
    	
 
    	
 
    
	
“Competing Unquoted Interest”
    	
 
    	
means   shares or stock or other equity in any company or other entity not quoted or   dealt in on a Recognised Investment Exchange which is (i) involved in   the development, production, marketing, publishing, distribution or sale of   online, mobile or console games or otherwise in competition with or preparing   to compete with the Company or any Group Company or (ii) a Group   supplier, vendor, or partner;
    
	
 
    	
 
    	
 
    
	
“Control”
    	
 
    	
means   in relation to the Company, the power of a person, whether directly or   indirectly, to secure that the affairs of the Company are conducted in   accordance with the wishes of that person:

 

(a) by   means of the holding of shares, or the possession of voting power, in or in   relation to the Company; or

 

(b) as   a result of any powers conferred by the articles of association or any other   document regulating the Company.
    

 

	
 
    

4

 

	
“Good Reason”
    	
 
    	
means   any of the following:

 

(i)    a change in location of the Executive’s primary place of work from the   Company’s existing office location to a location outside of the current   London Transport Zone One (“London Zone”),   which change lasts longer than four consecutive weeks in any twelve-month   period;

 

(ii)    either (x) the Executive’s total compensation is unilaterally and   materially reduced by Activision Blizzard, including a reduction arising from   a change in the Profit Sharing Plan, below the TC Baseline or (y) the   King Awards are not provided to the Executive as envisaged by Clause 4 of the   Transaction Agreement. Notably, should the total compensation increase after   the Completion Date, Activision Blizzard may thereafter reduce the total   compensation provided such reduction does not result in total compensation   below the level of the TC Baseline;

 

(iii)    Activision Blizzard is in material breach of this Agreement and has not cured   pursuant to Clause 14.5 below

 

(iv)    the following (measured according to the Executive’s scale and scope of   responsibility and level as set out at Clause 3 below and not the   Executive’s scale and scope of responsibility prior to the Completion Date,   (hereinafter, the “Baseline”),   are materially reduced: (x) the scope of the Executive’s role or   authority; or (y) the level or status attached to the Executive’s role.   Notably, should either (x) or (y) increase after the Completion   Date, Activision Blizzard may thereafter reduce either (or both) — provided   there is no material reduction from the Baseline; or

 

(v)    upon a Change of Control, the Executive is not provided by the acquiring   entity options, compensation or equity of at least the same value (taking   into account the terms of such options, compensation or equity), as the value   of any options, compensation or equity, including any King Awards (taking   into account the terms of such options, compensation or equity) held by the   Executive which are no longer capable of vesting or being exercised after   such sale;
    

 

	
 
    

5

 

	
“Group”
    	
 
    	
The   Company and the Group Companies;
    
	
 
    	
 
    	
 
    
	
“Group Company”
    	
 
    	
Activision   Blizzard and any company which is for the time being a subsidiary or holding   company of Activision Blizzard and any subsidiary of any such holding   company;
    
	
 
    	
 
    	
 
    
	
“Investment”
    	
 
    	
means,   if permissible pursuant to Activision Blizzard’s Code of Conduct and conflict   of interest principles and process (as set out at Clause 3.1.3 below), the   making or holding (whether directly, indirectly or jointly, including through   any member of his family, household or otherwise), for passive investment   purposes only: (1) up to five percent of the shares or stock of any   class of any public company quoted or dealt in on a Recognised Investment   Exchange, units, interests or shares in any unit trust, open ended investment   companies, funds or other collective or shared investment scheme, provided   that any such interest is not in (x) a supplier, vendor or business   partner to any Group Company, or (y) a Competitor (as defined in Clause   16.6), and/or (2) up to one hundred percent of the shares or stock or   other equity in any company or other entity not quoted or dealt in on a   Recognised Investment Exchange, in each case which is not a Competing   Unquoted Interest provided that the Executive does not provide active   management of the entity while employed pursuant to this Agreement (which for   the avoidance of doubt does not include the arrangements currently in place   for the managing of the Executive’s investments which have been disclosed to   Activision Blizzard);
    
	
 
    	
 
    	
 
    
	
“King Awards”
    	
 
    	
means   all and any equity incentive awards, which are outstanding immediately prior   to the Effective Date, which may include: King Options; King Linked Options;   EMI Options; King RSUs; King Restricted Shares; King Performance Options;   King Linked Shares; King Under-Water Options; King CEO and COO Linked Options   and/or any money held in escrow representing the proceeds of the sale of any   King shares released for sale in connection with the above equity incentive   awards pursuant to the Transaction Agreement and any awards by Activision   Blizzard resulting from the assumption and/or conversion of any of the above   pursuant to the Transaction Agreement;  
    

 

	
 
    

6

 

	
“Material Interest”
    	
 
    	
means   the following:

 

(a)        the holding of any position (whether employed   or engaged) or provision of services as director, officer, employee,   consultant, adviser, partner, principal or agent or volunteer;

 

(b)        the direct or indirect control or ownership   (whether jointly or alone) of any shares (or any voting rights attached to   them) save for any Investment; or

 

(c)        the direct or indirect provision of any   financial assistance;
    
	
 
    	
 
    	
 
    
	
“Recognised Investment Exchange”
    	
 
    	
means   a recognised investment exchange as defined by Section 285 of the   Financial Services and Markets Act 2000;
    
	
 
    	
 
    	
 
    
	
“Staff Handbook”
    	
 
    	
the   handbook setting out the Group’s policies and procedures for the Executive’s   guidance, as updated and/or amended from time to time;
    
	
 
    	
 
    	
 
    
	
“TC Baseline”
    	
 
    	
means   the sum of the Base Salary plus an amount equal to the Guaranteed Minimum (as   defined herein) calculated based on the funding formula of the percentage of   funding set forth in the King Profit Sharing Plan in effect as of the   Effective Date;
    
	
 
    	
 
    	
 
    
	
“Termination Date”
    	
 
    	
the   effective date of the Executive’s termination of employment;
    
	
 
    	
 
    	
 
    
	
“Transaction Agreement”
    	
 
    	
the   Transaction Agreement between Activision Blizzard and King, dated as of ____   November 2015.
    

 

1.2       References to clauses and schedules are unless otherwise stated to clauses of and schedules to this Agreement.

 

1.3       The headings to the clauses are for convenience only and shall not affect the construction or interpretation of this Agreement.

 

1.4       Unless the context otherwise requires, references in this Agreement to the masculine gender shall, where appropriate, be deemed to include the feminine and vice versa.

 

	
 
    

7

 

1.5       Unless otherwise indicated, the word “includes,” “including” and other similar forms of “include” are not intended to be limiting and shall be deemed to be followed by the words “without limitation.”

 

1.6       Capitalized terms used, but not defined, herein shall have the meanings ascribed to them in the Transaction Agreement.

 

2.         Commencement and Duration

 

2.1       The Executive’s employment under this Agreement shall commence on the “Completion Date” as such term is defined in the Transaction Agreement (the “Effective Date”) and shall run for an initial period of 3 years from the Effective Date (unless otherwise terminated earlier in accordance with Clauses 14.2- 14.6) (the “ Fixed Term”). Thereafter the parties agree that this Agreement and the Executive’s employment shall continue indefinitely unless and until terminated pursuant to  Clauses 14.2- 14.6 or by either party giving to the other party twelve months’ prior written notice (the “Notice Period”), such notice not to expire prior to the fourth anniversary of the Effective Date. Except as set forth in this Agreement, upon the  date on which the Executive’s employment is terminated all obligations and rights under this Agreement shall immediately lapse save as otherwise provided under this Agreement.

 

2.2       For the purposes of the Act, the Executive’s period of continuous employment commenced on 14 July 2004.

 

2.3      Aside from the Executive’s immediately prior Service Agreement with Midasplayer.com Limited, the Executive represents and warrants that he is not bound by or subject to any court order, agreement, arrangement or undertaking which in any way restricts or prohibits him from entering into this Agreement or from performing his duties under it.

 

2.4       The Executive and Activision Blizzard agree that, with effect from the Effective Date, the terms of this Agreement shall supersede and replace the terms of the Service Agreement dated March 9, 2014 (and any subsequent amendments), between the Executive and Midasplayer.com Limited.

 

3.         Role and Duties of the Executive

 

The Executive shall serve Activision Blizzard as Chief Executive Officer, of the Company. The Executive shall report directly to the Chief Operating Officer, Activision Blizzard (or such other executive of the Group as may be determined from time to time by it, provided that such other executive reports to the Chief Executive Officer of Activision Blizzard or is the Chief Executive Officer of Activision Blizzard (“Replacement Executive”)) and shall have such duties commensurate with the Executive’s position and shall dedicate suitable time for such duties as may be reasonably assigned to the Executive from time to time by the Chief Operating Officer, Activision Blizzard, or such Replacement Executive, taking into account the Executive’s time commitments.

 

3.1      Prior to commencing his employment with Activision Blizzard and as part of an initial “onboarding” process, Activision Blizzard shall provide to Executive the Group’s relevant policies, including, for example, the Code of Conduct and Staff Handbook.  The Executive shall certify that he has received, read and understood all such policies.  Activision Blizzard shall provide additional or amended policies to the Executive as and when they become available and the Executive agrees to read and comply with all such policies.  During his employment the Executive shall:

 

	
 
    

8

 

3.1.1   devote the whole of his time, attention and skill to the business and affairs of the Company and the Group both during normal business hours (which are 9.00 am and 5.30 pm Mondays to Fridays) and during such additional hours as are reasonably necessary for the proper performance of his duties or as Activision Blizzard may reasonably require from time to time including any requirement to undertake duties that are reasonably consistent with the Executive’s position and capabilities within any business area of the Group;

 

3.1.2    at all times place the Group’s interests above his own, not take any actions that would conflict with the Group’s interests and perform all the Executive’s duties for the Group with the highest duty of care;

 

3.1.3    without prejudice to Clause 12, not, directly or indirectly, render services of any kind to any other person or organization, whether on the Executive’s own behalf or on behalf of others, without the prior written consent of Activision Blizzard pursuant to its then-current process(es) for the review of conflicts of interest, or otherwise engage in activities that would interfere with the Executive’s faithful and diligent performance of his duties hereunder; provided, however, that (x) the Executive may serve on civic or charitable boards or engage in charitable activities without remuneration if doing so is not inconsistent with, or adverse to, the Executive’s employment hereunder and (y) the Executive may make an Investment, provided that such proposed Investment is approved where required, pursuant to Activision Blizzard’s then-current process(es) for the review of conflicts of interest (such approval only to be denied in the case of a genuine conflict of interest and not to be unreasonably withheld), except that the Investments that the Executive currently holds as of the date of this Agreement and are listed in the attached Schedule 3 are expressly approved by Activision Blizzard.  Activision Blizzard shall provide its approval or rejection of each Investment request within two weeks after submission of appropriate materials.  The Executive shall immediately on becoming aware inform Activision Blizzard if an Investment or other interest or concern for which consent has previously been granted under this clause becomes a Competing Unquoted Interest or otherwise interferes with, conflicts or competes with the proper performance of the Executive’s obligations to Activision Blizzard or any Group Company and the Executive shall promptly comply with any instructions provided by Activision Blizzard (pursuant to its then-current conflict of interest procedures) as are reasonably necessary in the circumstances to reduce or eliminate any risk or conflict of interest to the Company or Group, including the divestment of any such Competing Unquoted Interest;

 

3.1.4    without prejudice to Clause 12, owe a duty of loyalty to the Group, which includes the Executive not competing in any manner, whether directly or indirectly, as a principal, employee, agent, owner, or otherwise, with any entity in the Group; provided, however, that nothing in this Clause 3.1.4 shall limit the Executive’s right to make an Investment (“Duty of Loyalty”).

 

	
 
    

9

 

3.1.5    faithfully and diligently perform such duties and exercise such powers consistent with his status as CEO of the Company and as may from time to time be assigned to or vested in him by Activision Blizzard with regard to the Group;

 

3.1.6    use all reasonable endeavours to promote and protect the interests of the Group and not do or knowingly permit to be done anything which is harmful to those interests;

 

3.1.7    obey the reasonable and lawful directions of the Group;

 

3.1.8    comply with all applicable Group’s rules, regulations, policies and procedures from time to time in force, including, , the Staff Handbook and the Code of Conduct; provided those have been brought to his attention;

 

3.1.9    subject to the governance practices of Activision Blizzard in effect from time to time, the Executive shall have autonomy to make decisions on behalf of the Company in his capacity as CEO of the Company, while keeping Activision Blizzard (and, as applicable, the Group) at all times promptly and fully informed (in writing if so requested) of his conduct of the business of the Company and any Group Company and provide such explanations in connection with it as the Group may require.  By way of example, but not limitation, such examples of Activision Blizzard’s governance practices currently in effect include the following processes: 3-year planning process, annual operating planning process, signing authority, decision-making authority, franchise planning process and greenlight process;

 

3.1.10  comply with every rule of law and every regulation of the Group for the time being in force, including in relation to dealings in shares or other securities of the Company or any Group Company.

 

3.2       The Executive agrees that the average maximum weekly working time of 48 hours in Regulation 4 of The Working Time Regulations 1998 does not apply to him.  The Executive may terminate the opt out at any time by giving Activision Blizzard three months’ notice of his wish to do so.

 

3.3       The Executive shall, subject to his prior written consent, which shall not be unreasonably withheld, delayed or conditioned, and without any further remuneration, other than as specified in this Agreement or unless the parties otherwise agree in writing:

 

3.3.1    carry out duties on behalf of any other Group Company; and

 

3.3.2    act as a director or officer of any other Group Company;

 

provided that the above-referenced duties or acts are commensurate with the Executive’s duties as the head of a division/business unit within Activision Blizzard and the time available to the Executive in which to fulfil his duties.

 

	
 
    

10

 

4.         Place of Work

 

4.1       The Executive’s normal place of work shall be the Company’s offices at 1 St. Giles High Street, London WC2H 8AG (and from January 2016, the Ampersand Building, 178 Wardour Street, London W1F 8FY) but Activision Blizzard may require the Executive to work at any place within the London Zone for such periods as the Group may from time to time require, but not outside of the London Zone for periods exceeding four consecutive weeks in any twelve months, without the Executive’s prior consent.

 

4.2       If Activision Blizzard changes the Executive’s principal place of work, and this requires the Executive to move house, Activision Blizzard shall reimburse the Executive all his relocation expenses in accordance with the terms of Activision Blizzard’s relocation policy in place at that time from time to time.

 

5.         Remuneration

 

5.1       Activision Blizzard shall pay to the Executive a salary of £400,000 per annum (“Reference Salary” or “Base Salary”), payable in equal monthly instalments, on or before the 15th day of each calendar month by credit transfer to his bank account.

 

5.2       The rate of salary shall be reviewed annually on an upward basis by Activision Blizzard, and it is anticipated that the first such review to take place in March of the year following the Effective Date of this Agreement. Such review shall occur at the same time as other similarly-situated executives of Activision Blizzard. There is no obligation to award an increase.

 

5.3       The Executive shall be eligible to receive additional performance-based cash compensation on an annual basis based on a share of the earnings generated by King’s business. The Executive’s profit sharing compensation (a “Profit Share Bonus”) shall be based on a share of the “Profit Sharing Pool” that is created pursuant to the King Profit Sharing Plan as in effect from time to time (the “Profit Sharing Plan”) and in accordance with the Profit Sharing Plan. The Executive’s Profit Share Bonus shall entitle the Executive to six percent (6%) of the Profit Sharing Pool (if any) that is generated under the Profit Sharing Plan; provided, however, that the Compensation Committee of the Board of Directors of Activision Blizzard (the “Compensation Committee”), retains the right, in its sole discretion and at any time, to exercise negative discretion with respect to the Executive’s Profit Share Bonus to reduce the amount of the Executive’s actual annual percentage interest in the Profit Sharing Pool to not less than three and one-half percent (3.5% or the “Guaranteed Minimum”). The Executive understands that, except for the Executive’s guaranteed minimum 3.5% participation in the Profit Sharing Pool under the Profit Sharing Plan, the Executive’s actual bonus amount under the Profit Sharing Plan is dependent upon the amount of such Profit Sharing Pool being established thereunder, if any, as well as the terms and conditions of the then current Profit Sharing Plan and the actual personal performance of the Executive, including  the Executive’s

 

	
 
    

11

 

achievement (or lack thereof) of specific metrics, goals and objectives which have been timely communicated to the Executive. If no amounts are generated under the Profit Sharing Pool with respect to any performance year (e.g., due to lack of earnings for the King business as determined under the Profit Sharing Plan), then the Executive shall not be entitled to receive any Profit Share Bonus for such year.  Further, although Activision Blizzard retains the discretion pursuant to the terms of the Profit Sharing Plan to amend (or even terminate) the Profit Sharing Plan at any time, Activision Blizzard agrees that for purposes of calculating the Executive’s Profit Sharing Bonus for a particular Plan Year, Activision Blizzard shall apply the version of the Profit Sharing Plan in effect at the beginning of such Plan Year.  Thus, any changes that are made shall only apply to payments to the Executive with respect to a subsequent Plan Year. Notwithstanding the timing of payments under the Profit Sharing Plan for other participants thereunder, the Executive’s Profit Share Bonus (if any) shall be paid to the Executive within 90 calendar days following the end of the relevant Plan Year, consistent with the timing of payments to similarly-situated executives within the Group.   In the event of any discrepancy between the Profit Sharing Plan and this Agreement, the terms of this Agreement shall prevail.

 

5.4       Except as provided for in Clause 14 below, in order to be eligible to receive a Profit Share Bonus (if any), the Executive must be employed on the relevant payment date.  Where the Executive’s employment terminates between the end of the Plan Year and the relevant payment date, he will be deemed to have been employed on the relevant payment date and will be eligible to receive a bonus in respect of that Plan Year.  Subject to the application of Clause 5.3 to payments to the Executive, Activision Blizzard reserves the right to withdraw, modify, vary or amend the Profit Sharing Plan at any time.

 

5.5       Notwithstanding that the Effective Date will be part way through the 2016 Plan Year, the Executive shall be entitled to receive a full entitlement under the Profit Sharing Plan for 2016 in connection with his services provided to the Company, Activision Blizzard or any Group Company in 2016 without any pro-rating, provided such entitlement is the sole bonus opportunity made available to the Executive.  For the avoidance of doubt , to the extent the Executive has not received any bonus payment which falls outside of the Profit Sharing Plan and to which he has been awarded by the King Compensation Committee in the normal course of business in respect of the bonus period July 1, 2015 through  December 31, 2015, such bonus shall remain payable on the usual payment date, and the relevant provisions of the Executive’s immediately prior service agreement with Midasplayer.com Limited shall remain in effect for this purpose only, until such payment is made.

 

5.6       The Executive authorises Activision Blizzard to deduct from the Executive’s Reference Salary and any other sums due to the Executive under this Agreement, during the Executive’s employment or upon its termination, any sums owing by him, including any outstanding loan(s), any overpayment of Reference Salary, expenses or other erroneous payment(s) that may have been made to the Executive, any other sums which the Executive may owe to Activision Blizzard or any Group Company  at any time and any sums which Activision Blizzard or any Group Company is required by law to deduct (including, for example, income tax and national insurance contributions).  Before making any such deduction, Activision Blizzard shall provide details of the proposed deduction to the Executive in writing and allow him a reasonable opportunity to challenge it.

 

	
 
    

12

 

5.7      The Executive may at any time transfer all or any part of the King Awards (or the benefit thereof) to a family or charitable trust or to a company controlled by the Executive or by any such family or charitable trust on condition that (a) the proposed recipient agrees to be bound by the terms of and to comply with all obligations of the Executive under such King Awards and the Group’s policies and procedures related to the holding, transfer and sale of equity and (b) such proposed transfer does not cause any adverse tax consequences on Activision Blizzard or Group Company as a result of such transfer in respect of a family trust.  Any future equity agreements which replace the agreements governing the King Awards shall include a term to this effect.

 

5.8       The King Awards shall continue to be governed by the agreements evidencing such awards as in effect immediately prior to the Completion Date, subject to the Transaction Agreement and this Agreement, and provided that with respect to the share option granted to the Executive by King on 1 January 2014, as assumed by Activision Blizzard pursuant to the Transaction Agreement, with respect only to the Type B Option Shares described in Schedule 1, Part B, to the Individual Option and Subscription Agreement governing such option, from the Completion Date the provisions of Schedule I, Part B, to such agreement shall be replaced in their entirety by the provisions of Schedule 4 to this Agreement, and such agreement shall be deemed to have been amended accordingly.

 

5.9      In consideration for the remuneration provided for in this Clause 5, the Executive agrees to comply with Activision Blizzard’s Executive Stock Ownership Guidelines (including, but not limited to, all of the limitations on equity awards described therein), which are attached as Schedule 2.

 

6    Expenses

 

6.1       Activision Blizzard shall reimburse the Executive promptly for all reasonable business expenses exclusively and properly incurred by the Executive in the proper performance of the Executive’s duties, provided that the Executive complies with the provisions of the Group’s expense and other applicable policies (as amended from time to time).

 

7    Holidays

 

7.1       In addition to the public/bank holidays in England & Wales, the Executive is entitled to 30 days’ paid holiday in each calendar year, accruing at a rate of 2.5 days per completed month’s employment. The Executive shall consult the COO of Activision Blizzard (or the Replacement Executive) on the timing of his holiday.  Up to seven days’ paid holiday may be carried forward from one calendar year to the next.

 

7.2       If, on the termination of his employment, the Executive has taken more than his accrued holiday entitlement, Activision Blizzard shall deduct the excess from any sums due to him.  If no such sums are due, the Executive shall repay such excess to Activision Blizzard on termination.  If the Executive has any unused holiday entitlement, Activision Blizzard may require the Executive to take such unused holiday during any notice period or make a payment to him in lieu of it on termination.

 

	
 
    

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8    Absence from Work

 

8.1      Please refer to the Working Hours and Absences Policy (located in the Staff Handbook) for further information on absence reporting requirements.

 

9    Sick Pay

 

9.1      Please refer to the Staff Handbook for further information on sick pay.  Notwithstanding the provisions of the Staff Handbook the Executive shall be entitled to receive his usual remuneration for a period of up to six months’ sick leave in any period of 12 months and thereafter half his usual remuneration for an additional three months’ sickness absence in any period of 12 months.  Thereafter the Executive shall receive such remuneration as Activision Blizzard shall in its discretion determine for any period of sickness absence.  The Executive shall remain entitled to his benefits during any period of sickness absence.

 

9.2       Any salary payable by Activision Blizzard to the Executive during sick leave shall be reduced by any sums which the Executive receives pursuant to any Group benefits or insurance and shall also be inclusive of statutory sick pay.

 

10  Pension

 

10.1     Activision Blizzard shall comply with the employer pension duties in accordance with Part 1, Pensions Act 2008, and shall provide pension benefits to the Executive which comply with any applicable requirements set forth in the Transaction Agreement.

 

10.2     The Executive shall be provided with details about pension benefits separately. Should the Executive wish to participate in the applicable pension plan, all of the Executive’s contributions to it shall be made by way of deduction from the Executive’s salary unless the Executive agree an alternative method of payment with Activision Blizzard in writing.

 

10.3     A contracting-out certificate pursuant to the Pension Schemes Act 1993 is not in force.

 

11  Insured Benefits

 

11.1     Any eligibility for any of the Group’s benefits schemes (“Schemes”), including health insurance, income protection and/or life assurance plans) is subject to:

 

11.1.1  the rules of each of the Schemes, from time to time; and

 

11.1.2  the Executive having satisfied any applicable requirements of the Schemes’ insurers.

 

11.2     Subject to Clause 11.1, Activision Blizzard shall continue to provide the same insured benefits to the Executive, his spouse and dependents as provided to them prior to the Effective Date. Notwithstanding the foregoing statement, if any of 

 

	
 
    

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the Schemes’ insurers refuses, for any reason, to allow the Executive to participate in the relevant Scheme, Activision Blizzard shall not be liable to provide the Executive with any replacement benefit of the same, or of a similar kind, but shall pay to the Executive a sum equal to the previous insurance premium payable. Activision Blizzard’s obligations in respect of the Schemes are to apply for benefits in a timely and prompt fashion on behalf of the Executive to make good faith efforts to support the Executive in remaining eligible to participate in any income protection scheme, including for example, considering keeping the Executive employed on national minimum wage or otherwise so that the Executive is still classed as an employee for the purposes of such scheme, to pay the premiums required by the Schemes’ insurers and to pay the Executive such sums (if any) as may be received from any such insurer in respect of any claim made by the Executive.

 

11.3     Details of the Schemes are available from HR although Activision Blizzard reserves the right to change the provider of any of the Schemes provided the benefit entitlements enjoyed by the Executive and his dependents should be no less favourable to the Executive and his dependents than those benefits provided before the change in benefit provider.

 

12  Restrictions During his Employment

 

12.1     In addition to complying with Activision Blizzard’s conflict of interest policies and Code of Conduct, during his employment the Executive shall not directly or indirectly:

 

12.1.1  be employed, engaged, concerned or interested in (including the setting up of) any other business, activity, trade, or undertaking; or

 

12.1.2  hold any Material Interest in any entity which:

 

12.1.2.1     is or shall be wholly or partly in competition with any of the Businesses or any customers, suppliers, licensors, licensees, partners and/or suppliers of any Business;

 

12.1.2.2     impairs or might reasonably be thought by Activision Blizzard to impair his ability to act at all times in the best interests of the Group; or

 

12.1.2.3     requires or might reasonably be thought to require him to disclose or make use of any Confidential Information (as defined in Schedule 1) in order properly to discharge his duties to or to further his interest in that person;

 

12.1.3  Activision Blizzard acknowledges that the Executive may make Investments as set out in Clause 3.1.3;

 

12.1.4  at any time (whether during or outside normal working hours) take any preparatory steps to become engaged or interested in any capacity whatsoever in any business or venture which is in or is intended to enter into competition with any of the Businesses;

 

	
 
    

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12.1.5  at any time knowingly, after reasonable inquiry, make any untrue or misleading statement in relation to the Group.

 

13  IP and Confidential Information

 

The Executive is bound by the obligations relating to confidentiality, inventions and other intellectual property set out in Schedule 1 to this Agreement.

 

14  Termination

 

14.1     For the purposes of this Agreement, the following terms shall have the following meanings:

 

14.1.1        “Basic Severance” shall mean (1) payment of any Base Salary earned but unpaid at the Termination Date; (2) provision of benefits (e.g. insurance) to the Termination Date (3) any business expenses incurred but not reimbursed under Clause 6 at the Termination Date; and (4) payment in lieu of any holiday accrued under Clause 7 but unused at the Termination Date.  Payments under (1), (3) and (4) above shall be made within 28 days of the Termination Date, except that any business expense reimbursement shall be paid in accordance with Activision Blizzard’s then-current policy.

 

14.1.2        “Bonus Severance” shall mean payment of the following, in accordance with the rules of the Profit Share Plan in force at the start of the relevant Plan Year and in accordance with the Guaranteed Minimum provided for in Clause 5.3:

 

(i)        an amount equal to the Profit Share Bonus that Activision Blizzard determines the Executive would have received in accordance with Clause 5.3 for any Plan Year that ended prior to the Termination Date and calculated on the basis that the Executive remained employed on the date such bonus would have otherwise been paid (in the event that the Executive’s Termination Date occurs before such bonus would have been paid).  Such bonus shall be paid in a lump sum at the same time that such discretionary bonuses are generally paid to other similarly-situated executives for the Plan Year to which the underlying amount relates; and

 

(ii)       an amount equal to the Profit Share Bonus that Activision Blizzard determines the Executive would have received in accordance with Clause 5.3 for the Plan Year in which the Executive’s Termination Date occurs had the Executive remained employed on the date such bonus would have been paid (in the event that the Executive’s Termination Date occurs before such bonus would have been paid), multiplied by a fraction, the numerator of which is the number corresponding to the calendar month in which the Termination Date occurs and the denominator of which is 12.  Such bonus shall be paid in a lump sum at the same time that such discretionary bonuses are generally paid to other similarly-situated executives for the Plan Year to which the underlying amount relates.

 

	
 
    

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14.1.3  “Salary Continuation” shall mean payment to the Executive or his heirs or estate (as applicable) of an amount equal to the Base Salary (at the rate in effect on the Termination Date) and such further amount as is equal to the cost to Activision Blizzard of any benefits (e.g. insurance) that the Executive was eligible for as of the Termination Date that the Executive would have received had the Executive remained employed through the date falling 12 months after the last day of the Fixed Term or, in the event that termination of the Executive’s employment occurs after the Fixed Term, then through the end of the Notice Period pursuant to Clause 2.1 (or the remainder thereof if the Executive has worked or was on garden leave through part of the Notice Period pursuant to Clause 2.1) or for a period of 12 months in the event the Executive terminates his employment without notice for Good Reason or due to the Executive’s death, or for a period of six months in the event the Executive’s employment is terminated pursuant to clause 14.3 (the “Salary Continuation Period”). Such amount shall be paid in equal monthly installments commencing no later than the second payroll date following the Termination Date in accordance with Activision Blizzard’s payroll practices as in effect from time to time, provided that this amount shall be reduced by any net payments which the Executive receives under any Group-sponsored long-term disability/income protection plan.

 

14.1.4  “King Award Agreements Accelerated Vesting” shall mean that the Executive is entitled to accelerated vesting on the Termination Date of all and any unvested, outstanding King Awards held by the Executive at the Termination Date calculated on the basis that all and any targets, performance criteria and objectives have been met but not exceeded.  In respect of options within the definition of King Awards, the Executive shall be permitted, in accordance with the terms set forth in the Transaction Agreement, to exercise such options and to sell any shares resulting from such exercise. Notably, acceleration contingent upon “Good Reason” or “Good Leaver” provisions shall be governed by the definition of Good Reason in this Agreement (as opposed to any prior definition associated with the agreements pursuant to which King Awards were granted). In respect of options within the definition of King Awards, notwithstanding any provision of the agreements evidencing the options, in the event that during the period after the Termination Date in which the Executive is entitled to exercise such options according to  such agreements (the “Exercise Period”) the Executive is prohibited from or restricted in making dealings in relation to shares of the common stock of Activision Blizzard pursuant to any rules, regulations, or codes of practice applicable to the dealing in securities and inside information as applicable to Activision Blizzard or any Group Company from time to time, the period of such prohibition or restriction being a “Restricted Period”, the Exercise Period shall be tolled for the duration of the Restricted Period.

 

	
 
    

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14.1.5 “Equity Impact” shall mean that upon termination of employment (under any circumstances except pursuant to Clauses 14.4-14.6), any outstanding and unvested King Awards which are not subject to King Award Agreements Accelerated Vesting shall cease to vest and be cancelled immediately. Any vested King Awards shall be treated in accordance with the terms of the award agreement(s). In respect of options within the definition of King Awards, notwithstanding any provision of the agreements evidencing the options, in the event that during the period after the Termination Date in which the Executive is entitled to exercise such options according to  such agreements (the “Exercise Period”) the Executive is prohibited from or restricted in making dealings in relation to shares of the common stock of Activision Blizzard pursuant to any rules, regulations, or codes of practice applicable to the dealing in securities and inside information as applicable to Activision Blizzard or any Group Company from time to time, the period of such prohibition or restriction being a “Restricted Period”, the Exercise Period shall be tolled for the duration of the Restricted Period.

 

14.2    Notwithstanding any other provision of this Agreement or the Staff Handbook or Code of Conduct, Activision Blizzard may terminate the Executive’s employment for “Cause” immediately and without further payment or any payment (other than Basic Severance), if (as determined by Activision Blizzard) the Executive:

 

14.2.1        shall have committed any serious breach or repeated or continued any other breach of the Executive’s obligations under this Agreement;

 

14.2.2        is guilty of serious misconduct or is convicted of any criminal offence involving dishonesty or where a custodial penalty is imposed;

 

14.2.3        is guilty of any fraud or dishonesty or acts in any manner which in the reasonable opinion of Activision Blizzard brings or is likely to bring the Executive or the Company or any Group Company into serious disrepute or is materially adverse to the interests of the Company or any Group Company;

 

14.2.4        is, in the reasonable opinion of Activision Blizzard, seriously negligent or incompetent in the performance of his duties;

 

14.2.5        becomes or is declared insolvent or commits any act of bankruptcy or convenes a meeting of or makes or proposes to make any arrangement or composition with creditors;

 

14.2.6        in Activision Blizzard’s reasonable belief has failed to perform the Executive’s duties to a satisfactory standard, after having received a written warning from Activision Blizzard and been provided with sufficient time to improve such performance;

 

14.2.7        has been disqualified from being a director by reason of any order made under the English Company Directors Disqualification Act 1986 or any other enactment;

 

14.2.8        is guilty of a serious breach of any rules issued by the Group from time to time regarding its electronic communications systems; or

 

	
 
    

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14.2.9        ceases to be entitled to work in the relevant jurisdiction in which he is expected to conduct his duties; or

 

14.2.10      is guilty of a serious breach of the rules, regulations or codes of practice (as amended from time to time) applicable to the dealing in securities and inside information as applicable to Activision Blizzard or any Group Company from time to time.

 

For the avoidance of doubt, any of the circumstances referred to at Clauses 14.2.1 to 14.2.10 is “Cause” for the purposes of this Agreement.  In the case of any Cause that is curable, Activision Blizzard shall give the Executive at least thirty (30) days written notice of its intent to terminate the Executive’s employment for Cause; provided, that in no event shall any Cause pursuant to Clause 14.2.2 of the definition of Cause be deemed curable. The notice shall specify (x) the proposed effective date of the Executive’s termination and (y) the particular acts or circumstances that constitute Cause for such termination.  The Executive shall be given the opportunity within fifteen (15) days after receiving the notice to explain why Cause does not exist or to cure any basis for Cause (other than any Cause pursuant to Clause 14.2.2 of the definition thereof).  Within fifteen (15) days after any such explanation or cure, Activision Blizzard shall make its final determination regarding whether Cause exists and deliver such determination to the Executive in writing.  If the final decision is that Cause exists and no cure has occurred, the Executive’s employment with Activision Blizzard shall be terminated for Cause with effect from the date specified in the original notice.  If the final decision is that Cause does not exist or a cure has occurred, the Executive’s employment with Activision Blizzard shall continue and the notice of intent to terminate shall be withdrawn. In the event of termination of the employment pursuant to this Clause 14.2, the King Award Agreements Accelerated Vesting shall not apply. Further, the Equity Impact outlined in Clause 14.1.5 shall apply.

 

Any delay by Activision Blizzard in exercising any right of termination shall not constitute a waiver of it.  Further, if the Executive’s employment terminates for any reason other than a termination by Activision Blizzard for Cause, at a time when Activision Blizzard had Cause to terminate the Executive (but was not or could not reasonably be aware of the facts establishing Cause at that time) under Clauses 14.2.1, 14.2.2, 14.2.3 or 14.2.8 of the definition of Cause, provided Activision Blizzard observes the notice and cure provisions (where applicable) set out in the preceding paragraph, the Executive’s termination shall be treated as termination by Activision Blizzard for Cause.

 

14.3     If Activision Blizzard determines that the Executive is incapable by reason of mental disorder of executing his duties, then Activision Blizzard may terminate his employment by giving him not less than 6 months’ written notice to that effect such period of notice to be paid in full and the payment provisions provided for in Clause 14.6 shall apply.

 

14.4     Activision Blizzard reserves the right in its absolute discretion to terminate this Agreement and the Executive’s employment with immediate effect (otherwise than pursuant to Clause 14.2) at any time (and such termination shall not be deemed a breach by Activision Blizzard of any term of this Agreement or any other duty or obligation, expressed or implied, which Activision Blizzard may owe to the Executive pursuant to any principle or provision of law).  If Activision Blizzard exercises this right by notifying the Executive in writing, then it shall make payments to the Executive, which shall consist of:

 

	
 
    

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14.4.1  Basic Severance (to be paid at the time(s) specified in Clause 14.1.1);

 

14.4.2  Bonus Severance (to be paid at the time(s) specified in Clause 14.1.2);

 

14.4.3  Salary Continuation (to be paid at the time(s) specified in Clause 14.1.3 and subject to the remainder of this Agreement, including Clause 14.13); and

 

14.4.4  the King Award Agreements Accelerated Vesting shall apply.

 

further provided that payments and vestings pursuant to Clauses 14.4.2 through 14.4.4  are conditioned upon the Executive’s or the Executive’s legal representative’s execution of Activision Blizzard’s standard (and then current) waiver and release form which shall be prepared by Activision Blizzard and provided to the Executive within ten (10) days of Activision Blizzard’s notice pursuant to this Clause 14.4. No other payments by Activision Blizzard to the Executive shall be due and owing.

 

14.5     At any time, the Executive may terminate his employment if the Executive has Good Reason to do so and the Executive must (i) provide Activision Blizzard with written notice of the Executive’s intent to terminate the Executive’s employment under this Clause 14.5 and a description of the event the Executive believes gives the Executive the right to do so within thirty (30) days after the initial existence of the event or, if later, the Executive becoming aware of the event and (ii) Activision Blizzard shall have thirty (30) days after the Executive provides the notice described above to cure any such default (the “Cure Period”).  If no such cure occurs, the Executive shall have ten (10) working days following the end of the Cure Period to terminate his employment without notice, after which the Executive’s ability to terminate the Executive’s employment under this Clause 14.5 shall no longer exist.  The only payments due to the Executive upon termination of employment pursuant to this Clause 14.5 shall be as follows:

 

14.5.1  Basic Severance (to be paid at the time(s) specified in Clause 14.1.1);

 

14.5.2  Bonus Severance (to be paid at the time(s) specified in Clause 14.1.2);

 

14.5.3  Salary Continuation (to be paid at the time(s) specified in Clause 14.1.3 and subject to the remainder of this Agreement, including Clause 14.13); and

 

14.5.4  The King Award Agreements Accelerated Vesting shall apply.

 

further provided that payments and vestings pursuant to Clauses 14.5.2 through 14.5.4 are conditioned upon the Executive’s or the Executive’s legal representative’s execution of Activision Blizzard’s standard (and then current) waiver and release form which shall be prepared by Activision Blizzard and provided to the Executive within ten (10) days of the Executive’s notice (following the Cure Period) pursuant to this Clause 14.5. No other payments by Activision Blizzard to the Executive shall be due and owing.  Further, for purposes of clarity, the remedies set forth in this provision shall be the sole remedies available to Executive in the event that Good Reason is triggered due to the acts set forth in Clause (iv) of the definition of Good Reason.

 

	
 
    

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14.6     In the event of the Executive’s death or termination pursuant to Clause 14.3 above, or in the case of a Change of Control Termination, Activision Blizzard shall pay the Executive or the Executive’s legal representative:

 

14.6.1  Basic Severance (to be paid at the time(s) specified in Clause 14.1.1);

 

14.6.2  Bonus Severance (to be paid at the time(s) specified in Clause 14.1.2);

 

14.6.3  Salary Continuation (or in the case of death or long-term disability, in lieu of Salary Continuation, any payments to which the Executive may become entitled upon death or long-term disability under any Activision Blizzard -sponsored plan, provided these sums are no less than the sums received pursuant to such plans.  If the Executive is not eligible for such payments for whatever reason, Salary Continuation will be provided for the relevant period (set out in clause 14.1.3) to be paid at the time(s) specified in Clause 14.1.3 and subject to the remainder of this Agreement, including Clause 14.13; and

 

14.6.4  the King Award Agreements Accelerated Vesting shall apply.

 

further provided that payments and vestings pursuant to Clauses 14.6.2 through 14.6.4 are conditioned upon the Executive’s (or his personal representatives if applicable) or the Executive’s legal representative’s execution of Activision Blizzard’s standard (and then current) waiver and release form which shall be prepared by Activision Blizzard and provided to the Executive’s legal representative as soon as reasonably practical under the applicable circumstances (which in the case of a Change of Control Termination will be not more than ten (10) days). No other payments by Activision Blizzard to the Executive shall be due and owing.

 

14.7     In the event the Executive’s employment terminates following notice given by either party in accordance with clause 2.1 and none of clauses 14.2 - 14.6 apply, at the end of the Notice Period Activision Blizzard shall pay the Executive or the Executive’s legal representative:

 

14.7.1  Basic Severance (to be paid at the time(s) specified in Clause 14.1.1);

 

14.7.2  Bonus Severance (to be paid at the time(s) specified in Clause 14.1.2); and

 

14.7.3  the Equity Impact outlined in Clause 14.1.5 shall apply..

 

further provided that payments pursuant to Clause 14.7.2 are conditioned upon the Executive’s (or his personal representatives if applicable) or the Executive’s legal representative’s execution of Activision Blizzard’s standard (and then current) waiver and release form which shall be prepared by Activision Blizzard and provided to the Executive’s legal representative as soon as reasonably practical under the applicable circumstances (which in the case of a Change of Control Termination will be not more than ten (10) days). No other payments by Activision Blizzard to the Executive shall be due and owing.

 

	
 
    

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14.8     Upon the termination of employment of the Executive for any reason other than those set out in Clauses 14.2-14.7, no further payment(s) or any payment(s) (other than Basic Severance or payments in respect of the Notice Period if applicable) shall be due to the Executive, the Equity Impact outlined in Clause 14.1.5 shall apply, and Activision Blizzard shall have no further payment obligation or liability to the Executive.

 

14.9     Activision Blizzard reserves the right to suspend the Executive on full pay and other benefits as it may think fit, for a maximum of three months, during any investigation into alleged acts or defaults of the Executive. If such suspension leads to termination the noncompetition obligations in Clause 16 shall be reduced by the period of time for which the Executive was suspended pursuant to this clause.

 

14.10   The Executive shall not, without the prior approval of his manager as to the timing and manner of any communication about his departure, inform any of his colleagues about the proposed termination of his employment hereunder.

 

14.11   Clauses 1, 5, 13, 14, 16 and 20 through 30 and Schedule 1 shall survive and remain in full force and effect after termination.

 

14.12   On termination of the Agreement for any reason, the following shall apply:

 

14.12.1 the Executive shall not have (save as provided for in this Agreement) any claim for breach of contract by Activision Blizzard in respect of the loss of any rights or benefits under any share option, bonus, long-term incentive plan or other profit sharing scheme operated by the any Group Company in which he may participate which would otherwise have accrued during any period of notice;

 

14.12.2  The Executive’s liability to Activision Blizzard and any Group Company under or in connection with the Agreement shall be limited to an aggregate sum equivalent to $20 million (USD) for all and any liability arising out of any actual or alleged breach of contract or tort; provided, however, the forgoing limitation of liability shall not apply to:

 

14.12.2.1   personal injury caused by the Executive;

 

14.12.2.2   fraud by the Executive,

 

14.12.2.3   theft by the Executive,

 

14.12.2.4   breach of the Executive’s obligations in respect of confidentiality as set out in Schedule 1 to this Agreement, other than inadvertent breaches;

 

14.12.2.5  breach of the Executive’s obligations in respect to misappropriation or infringement of Intellectual Property as defined in Schedule to this Agreement;

 

	
 
    

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14.12.2.6   the Executive’s indemnity obligations set forth in Clause 23.2; and

 

14.12.2.7   breaches of fiduciary duty or statutory duty set out in sections 170-177 of the Companies Act 2006 (or the local equivalent in any country where the Executive becomes a director and owes a statutory duty to any Group Company) by the Executive; provided, however, Activision Blizzard acknowledges and agrees that the Executive’s resignation or other termination of employment (even if a breach of contract) does not, by itself, constitute a breach of fiduciary or statutory duty,

 

and such limitation of liability shall be without prejudice to, and shall not override nor detract from, the indemnity cover in clause 23.1 or any directors’ and officers’ insurance cover in place.

 

14.12.3 The Executive acknowledges the right of Activision Blizzard to monitor and control the performance of its employees and acknowledges the fiduciary and statutory obligations attaching to his position and owed to all entities within the Group Companies, including Activision Blizzard.

 

14.13   Notwithstanding anything to the contrary contained herein, if, at any time during the Salary Continuation Period, the Executive obtains subsequent employment and/or provides services of any kind for compensation, whether as an employee, consultant or advisor, to any person, company, venture or other person or business entity, the Executive must promptly notify Activision Blizzard of the net amount received as Base Compensation from such activity and a sum equivalent to such net amount shall be refunded by the Executive to Activision Blizzard (to the extent already paid) and shall be offset (to the extent payable in the future) against any amounts due under clauses 14.3 to 14.6.  “Base Compensation” shall mean the net amount of the Executive’s base salary or, if applicable, wages the Executive earns (or is paid or granted), excluding directors’ fees, dividends and investment income, during or with respect to any subsequent employment or services arrangement.  Activision Blizzard may request, and the Executive agrees to provide, reasonable documents and descriptions of his Base Compensation and total compensation.  If Activision Blizzard reasonably and in good faith determines that the Executive’s Base Compensation has been set at an artificially low level in relationship to his total compensation based on similarly situated employees or market benchmarks, then Activision Blizzard reserves the right to obtain a greater refund from the Executive and/or decrease the amount of Salary Continuation consistent with such determination.

 

15   Garden Leave

 

15.1    At any time during the Executive’s employment, including after notice to terminate the employment has been given by Activision Blizzard or the Executive, for a period of no more than six months, Activision Blizzard may, require the Executive:

 

15.1.1  to perform no or only specified duties (including research projects) consistent with his status;

 

	
 
    

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15.1.2 not to have any contact or deal (save on a purely social basis or for the purposes of seeking alternative employment) with any officer, employee, client, supplier or other business contact of the Group;

 

15.1.3 to disclose to his manager and Activision Blizzard any attempted contact (other than purely social contact) with him made by any officer, client, employee or supplier with whom the Executive has been required to have no contact;

 

15.1.4  to take any accrued holiday entitlement;

 

15.1.5 not to enter any premises of the Group nor to visit the premises of any of the Group’s suppliers or customers save any premises which are open to the public generally (e.g. retail premises) or for the purposes of seeking alternative employment;

 

15.1.6  to resign as a director or from any other office held by him in the Group;

 

15.1.7 to provide such reasonable assistance as the Group may require to effect an orderly handover of his responsibilities, and to make himself reasonably available to deal with requests for information, provide assistance, be reasonably available for meetings and to advise on matters relating to work, should the Group request this.

 

15.2    During any period in which Activision Blizzard exercises any rights under Clause 15.1, also referred to as “garden leave”, the Executive shall continue to receive his full salary, benefits and shall remain entitled to his Profit Share Bonus and the King Awards. During Garden Leave, the Executive shall remain an employee and bound by all terms of this Agreement and his duty of good faith. For the avoidance of doubt, on termination of employment whilst on Garden Leave and at the expiry of the six month garden leave period Activision Blizzard shall make such payments as are required pursuant to Clauses 14.3-14.6 respectively above.

 

15.3     During any period of garden leave the Executive must not work for any other person or on his own account (save where consent has previously been given by Activision Blizzard) and must remain readily contactable and available to work for the Group.  The Executive may however explore new business opportunities, make Investments and look for other paid work.

 

16   Obligations after Employment

 

16.1     In order to protect the Group’s business interests, Intellectual Property (as defined in Schedule 1) business connections and Confidential Information (all of which the Executive shall have had access to as a result of his employment), the Executive shall not do the following for the duration of the Restricted Period:

 

16.1.1  be employed by or involved with a Competitor within the Restricted Territory;

 

	
 
    

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16.1.2  on behalf of a Competitor (i) solicit or attempt to solicit the customers of, (ii) deal with or attempt to deal with, or (iii) facilitate any actual or attempted solicitation of any Industry Partner such that that  Industry Partner would be at risk of terminating its relationship with the Group provided that nothing in this Clause 16.1.2 shall be deemed to prohibit the seeking or doing of business which is not in competition with the Business;

 

16.1.3  (i) induce, or attempt to induce, any Industry Partner to (a) terminate their relationship with the Group, or (b) reduce the amount of business which they do with the Group, or (ii) otherwise interfere or attempt to interfere with the relationship of any Industry Partner with the Group;

 

16.1.4  (i) solicit or entice away, or (ii) endeavour to solicit or entice away, or (iii) assist any other person, whether by supplying names or expressing views on suitability or otherwise, to solicit or entice away, from the Group, any Employee, whether or not such a person would be in breach of contract by reason of his leaving service, provided only that this clause shall not apply to Employees who are made redundant or otherwise terminated by the Group;

 

16.1.5  (i) employ or engage, (ii) offer to employ or engage, or (iii) otherwise deal with or attempt to deal with any Employee (except in a purely personal capacity), whether or not such a person would be in breach of contract as a consequence, provided only that this clause shall not apply to Employees who are made redundant or otherwise terminated by the Group.

 

16.2    The restrictions in Clause 16.1 apply to the Executive (i) whether the Executive acts alone, jointly with another or on behalf of another, (ii) acting in any capacity, and/or (iii) even if the Executive does not receive direct benefit; however, none of the restrictions in this clause 16 prevent the Executive from making and holding or being otherwise interested in (1) up to five percent of the shares or stock of any class of any public company quoted or dealt in on a Recognised Investment Exchange, units, interests or shares in any unit trust, open ended investment companies, funds or other collective or shared investment scheme or, and/or (2) up to one hundred percent of the shares or stock or other equity in any company or other entity not quoted or dealt in on a Recognised Investment Exchange and provided that it is not a Competing Unquoted Interest.

 

16.3    The Executive acknowledges and accepts that the restrictions contained in this Clause 16 are reasonable and necessary for the protection of the legitimate commercial interests of the Group and may be enforced by the Group.

 

	
 
    

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16.4    If any of the restrictions in this Clause 16 is unenforceable for any reason, but would be enforceable if part of the restriction were deleted, that restriction shall apply with such deletions as may be necessary to make it valid and enforceable. Also, each restriction is intended to be read and construed independently of the other restrictions so that if one or more are found to be void or unenforceable, the remaining restriction(s) would not be affected.

 

16.5     If the Executive receives an offer to be employed by, or otherwise involved with, a Competitor at any stage during their employment with Activision Blizzard (or any Group Company) or during the Restricted Period, the Executive shall give the person or the organisation making that offer a copy of this Clause 16 and if such offer being accepted shall inform their manager and HR of the identity of that the person/organisation making that offer and the main terms of that offer as soon as possible, provided that doing so shall not breach the Executive’s obligations to any third party.

 

16.6     For the purposes of this Clause 16, the following definitions apply:

 

Business: the business of developing, marketing, promoting, distributing, publishing and/or selling electronic games, interactive entertainment products and interactive entertainment software (or, in each case, services) for computers, mobile devices, on-line use or play, consoles and/or handheld devices carried on by Activision Blizzard and/or any Group Company and with which the Executive was materially involved, or about which the Executive had substantial Confidential Information, in the last 12 months of his employment and/or any other business, or parts of the business, carried on by the Group with which the Executive was materially involved in or about which the Executive had substantial Confidential Information, in the last 12 months of their employment.

 

Competitor: any person, organisation or business which is, or intends to be, in competition with the Business.

 

Industry Partner: any person, organisation or business who was in the habit of dealing with the Group and with whom the Executive had material dealings, or about whom the Executive had Confidential Information, during the last 12 months of his employment.

 

Employee: anyone employed or engaged by the Group with whom the Executive had material dealings during the last 12 months of his employment who was (i) at Director level or higher, and/or (ii) working in sales or business development capacity at the level of Senior Manager (or equivalent) or higher.

 

Restricted Period: the period of 12 months from the Termination Date, less any period of time immediately prior to the Termination Date which the Executive spent on garden leave or was otherwise suspended.

 

Restricted Territory: England, Scotland, Wales, Northern Ireland, together with any other country in which the Group carried on, or intended to carry on, any Business during the last 12 months of the Executive’s employment.

 

	
 
    

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In addition, “be involved with” shall include being engaged as a director, principal, member of a limited liability partnership, partner or consultant or being a shareholder.

 

17   Directorship

 

17.1     During his employment, the Executive shall be also be required to act as a statutory director of any Group Company.

 

17.2     The Executive shall, if so required: (i) comply with the articles of association of any Group Company from time to time, (ii) abide by all statutory, fiduciary or common-law duties, and (iii) not knowingly do anything which might cause him to be disqualified from acting as a director of such Group Companies.

 

17.3     The Executive’s basic Reference Salary is deemed inclusive of all and any fees due to them as a director or officer of the Company and/or any Group Company.

 

17.4     Except with the prior written approval of the applicable board of directors, or as provided for in the articles of association of any company in the Group of which the Executive is a director/officer, or if he considers his position to be untenable, the Executive shall not resign from that position. If during their employment, the Executive ceases to be a director/officer of any Group Company (otherwise than by death, resignation or disqualification pursuant to the relevant company’s articles of association — as amended from time to time), this Agreement (but excluding this Clause 17) shall continue in full force and effect with the Executive as an employee only. The Executive shall have no claims in respect of the cessation of any such office/directorship.

 

17.5     Upon termination of his employment, howsoever arising and for whatever reason, the Executive shall, upon request of Activision Blizzard, resign from office as a director of any Group Company.

 

17.6     The Executive shall be entitled to take independent legal advice in respect of his negotiations of this Agreement and Activision Blizzard shall pay a contribution of up to £20,000 plus VAT towards such advice.

 

18   Disciplinary and Grievance Procedures

 

If the Executive has any grievance in relation to his employment or is dissatisfied with any disciplinary decision taken against him he should seek redress in accordance with Activision Blizzard’s grievance and/or disciplinary procedures (together, the “Grievance Procedures”), copies of which are set out in the Staff Handbook.  Notwithstanding the foregoing, the Executive agrees that in addition to involvement by the manager pursuant to the Grievance Procedures, Activision Blizzard reserves the discretion to involve and obtain the input of any additional member of Activision Blizzard’s senior management team, as it deems appropriate, and the Executive agrees that in addition to any obligation to contact or notify HR under the Grievance Procedures that he shall simultaneously provide such notice to his manager as well. The Staff Handbook, including these procedures, is not contractual.

 

	
 
    

27

 

19   Standards of Conduct and Performance

 

Rules and procedures governing standards of conduct and performance are necessary in order to promote fairness and consistency in the treatment of all employees.  The Executive’s attention is drawn to Activision Blizzard’s and the applicable Group’s disciplinary rules, performance standards and other rules and standards with which the Executive is expected to comply as set out in the Staff Handbook.

 

20   Data Protection and Communications

 

20.1     The Executive consents to the Group holding and processing both electronically and manually, personal data, including sensitive personal data (as defined in the Data Protection Act 1998) and information contained in e-mail and e-mail attachments) it collects, stores and/or processes, which relates to the Executive for the purposes of the administration and management of its business and as may be required by law.  It may also be necessary for a Group Company to forward such personal information to other offices it may have or to another Group Company outside the EEA where such company has offices or storage for the processing and/or for administrative purposes and the Executive consent to such Group Company doing so as may be necessary from time to time.

 

20.2    To ensure regulatory compliance and for the protection of its workers, clients/customers and business, the Group reserves the right to monitor, intercept, review and access the Executive’s telephone log, internet usage, voicemail, e-mail and other communication facilities provided by the Group which the Executive may use during the Executive’s employment with us.  The Group shall use this right of access reasonably but it is important that the Executive are aware that all communications and activities on the Group’s equipment or premises cannot be presumed to be private and remain the property of the Group. Please check the intranet for specific policies relating to the use of Group provided communications devices and technology.

 

20.3    For the purposes of general employment administration and the day to day conduct of its business, the Group may make such data or information available to third parties who provide products or services to it or any other Group Company, such as external advisers, external benefits providers, external information technology providers (including “cloud” based services), regulatory authorities, potential or future companies, governmental or quasi-governmental organisations.

 

20.4    The Executive also irrevocably grants the Group the right, but not the obligation, to use the Executive’s name or nickname, official biography and any official photograph or other image of them, any recording (video and/or voice) of them, the Executive’s mannerisms and/or the Executive’s likeness in any products made by the Group, for any publicity, marketing or advertising purposes (in any medium now known or hereafter existing) or internally as part of the Executive’s Activision Blizzard online profile, without the right to compensation or credit.

 

	
 
    

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21   Notices

 

21.1     Any notice given under this Agreement shall be in writing signed by or on behalf of the party giving it and shall, unless delivered to a party personally, be hand delivered, or sent by prepaid first class post or facsimile or email, with a confirmatory copy sent by prepaid first class post to the Executive at his last known residential address or, in the case of Activision Blizzard, the Company Secretary at Activision Blizzard’s registered office.

 

21.2     A notice shall be deemed to have been served:

 

21.2.1  at the time of delivery if delivered personally to a party or to the specified address;

 

21.2.2  on the second working day after posting by first class prepaid post;

 

21.2.3  two hours after transmission if served by facsimile on a business day prior to 3.00 pm or in any other case at 10.00 am on the business day after the date of despatch; or

 

21.2.4  simultaneously with transmission if served by email and so long as confirmed pursuant to Clause 21.1 within 5 days.

 

22   Former Contracts of Employment

 

22.1     This Agreement is conditional on:

 

(A) the completion of the Transaction Agreement; and

 

(B) the Executive being employed by King (or the King group) and not under notice (whether given by the Executive, King or the King group) on the Effective Date.

 

Unless both of the above conditions are satisfied, this Agreement shall lapse and be of no effect.

 

22.2     With effect from the Effective Date, this Agreement shall be in substitution for any previous contracts, whether written, oral or implied, relating to the employment of the Executive (including all bonus and option arrangements), which shall be deemed to have terminated by mutual consent as at the Effective Date and the Executive agrees with, and acknowledges to Activision Blizzard and each other Group Company that he has and shall have (i) no outstanding claims of any kind against King, Activision Blizzard or any Group Company in respect of any such contract, except with respect to the Transaction Agreement with respect to the Executive’s role as a director of King and (ii) no entitlement to any payment (or otherwise) under any such contract arising out of or in connection with its substitution by this Agreement and/or termination as referred to in this clause.

 

	
 
    

29

 

23   Indemnifications

 

23.1     Activision Blizzard agrees that it shall indemnify and hold the Executive harmless to the fullest extent permitted by English law (or other applicable law in the case where the Executive is serving as a director or officer of a non-UK entity within the Group) from and against any and all third party liabilities, costs and claims, and all expenses actually and reasonably incurred by the Executive in connection with any acts or omissions taken within the scope of the Executive’s employment (so long as such acts or omissions were consistent with the Executive’s obligations to the Group), including all costs and expenses actually and reasonably incurred by the Executive in defence of litigation and the cost of responding to internal and external enquiries, criminal investigations, and appearances before parliamentary committees and enquires, arising out of the Executive’s employment or anticipated employment hereunder. Nothing outside the scope of this provision shall be covered by this indemnification, and, for clarity (and not by way of limitation), the indemnification provided herein shall not be applicable to any wilful breaches of the Executive’s duties pursuant to the Agreement, including, Clauses 3, 12, 13, 16 and 22. The indemnification envisaged under this Agreement is in addition to Activision Blizzard’s directors and officers liability insurance, and supersedes any prior agreement(s) concerning indemnification between the Executive and King (or any affiliated entity).

 

23.2     In circumstances where the Executive is or becomes subject to US tax in the US (otherwise than at Activision Blizzard’s request), the Executive agrees to be exclusively responsible for the payment of any and all US income tax, excise tax, and/or employee social insurance or similar contributions (“Accelerated Linked Options Liability”) due by the Executive or Activision Blizzard or any Group Company in respect of the CEO and COO Accelerated Linked Options, and in respect of the Consideration paid in respect of the Linked Option Exercise of any such Accelerated Linked Options, and in respect of the release of any such Consideration from escrow.  Further, the Executive agrees to indemnify on demand and keep indemnified Activision Blizzard and each and every Group Company (on an after tax basis) against any and all liability for the payment of such Accelerated Linked Options Liability and against any and all liability for related tax penalties and interest (save to the extent caused directly by any delay act or omission on the part of Activision Blizzard or any Group Company in dealing with a relevant demand, assessment or determination from any relevant tax authority).  Activision Blizzard shall promptly notify the Executive in writing of any and all demands, assessments and determinations it receives from the relevant tax authority relevant to this clause.  If the Executive expresses a desire to challenge any such demand, assessment or determination, Activision Blizzard will allow the Executive a reasonable opportunity to do so, and give the Executive reasonable assistance in making any such challenge.

 

	
 
    

30

 

24   Assignment

 

This Agreement and the rights and obligations hereunder shall not be assignable or transferable by the Executive without the prior written consent of Activision Blizzard.  Activision Blizzard may assign this Agreement or all or any part of its rights and obligations under this Agreement at any time and following such assignment all references to Activision Blizzard shall be deemed to refer to such assignee and Activision Blizzard shall thereafter have no obligation under this Agreement.  Furthermore, Activision Blizzard may second the Executive to serve as an employee of another Group Company, subject to Clauses 3 & 4.

 

25   Entire Agreement

 

This Agreement (including the Schedules), together with the equity award agreements (and by incorporation any documents referenced therein), relevant provisions of the Staff Handbook and the Code of Conduct, constitute the entire agreement between the Executive and Activision Blizzard.  In the event of any conflict between this Agreement and the Staff Handbook and the Code of Conduct, the provisions of this Agreement shall prevail.

 

26   General

 

26.1   The Executive acknowledges that the provisions of this Agreement constitute separate undertakings given for the benefit of each Group Company and may be enforced by any of them.

 

26.2    This Agreement constitutes the written statement of the terms of employment of the Executive provided in compliance with Part I of the Act.

 

26.3    Save as otherwise set out in this Agreement there are no terms or conditions relating to requirements to work abroad and no collective agreement has any effect upon the Executive’s employment under this Agreement.

 

26.4     The Contracts (Right of Third Parties) Act 1999 shall only apply to this Agreement in relation to any Group Company and no person other than the Executive and Activision Blizzard and any Group Company shall have any right under it.

 

27   Choice of Law and Submission to Jurisdiction

 

27.1    This Agreement shall be governed by and interpreted in accordance with English law without regard to the choice of law provisions thereof.

 

27.2    The parties submit to the exclusive jurisdiction of the English courts; provided, however, Activision Blizzard reserves the right to apply for interim injunctive relief in respect of alleged breaches of Clause 16 in any jurisdiction in which there are reasonable grounds to assert that the Executive is engaging in acts or omissions in violation of Clause 16.  English law would apply to such an application.

 

	
 
    

31

 

28   Waiver

 

No waiver by the Executive or Activision Blizzard at any time of any breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.  No waiver of any provision of this Agreement shall be implied from any course of dealing between or among the parties hereto or from any failure by any party hereto to assert its rights hereunder on any occasion or series of occasions

 

29   Headings

 

The headings in this Agreement are included for the purpose of identification only and not for the purpose of construing the meaning of the provisions of this Agreement.

 

30   Forfeiture

 

If the Executive breaches any material obligation in Clause 12 (Restrictions during his employment), 15 (Garden Leave), 16 (Obligations after Employment) or Schedule 1, Activision Blizzard’s obligation to make any further payments, to the extent permitted by law, shall cease. Before any such forfeiture takes effect, Activision Blizzard shall notify the Executive of the alleged breach in writing and give him a reasonable opportunity to respond to such allegation or to cure such breach.

 

IN WITNESS whereof this Agreement has been executed as a deed by the Executive the day and year first written above.

 

 

	
Signed by Chris Walther for and
    	
)
    	
 
    
	
on behalf of Activision Blizzard
    	
)
    	
/s/ Chris B. Walther.......................................
    
	
 
    	
 
    	
CLO
    
	
 
    	
 
    	
 
    
	
Executed and delivered as a Deed by
    	
)
    	
 
    	
 
    
	
the Executive in the presence of
    	
)
    	
 
    	
/s/ RZ.........................................................
    
	
 
    	
 
    	
Riccardo Zacconi
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/ Hope F Cochran.................................
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Witness Signature
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Witness name: Hope F   Cochran
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Witness address:   [_____________]
    	
 
    	
 
    

 

	
 
    

32

 

SCHEDULE 1

 

Intellectual Property and Confidentiality

 

1.            The following definitions shall apply to this Schedule, the Agreement and any other Schedules:

 

	
Words and expressions
    	
 
    	
Meaning
    
	
 
    	
 
    	
 
    
	
Board
    	
 
    	
the   board of directors for the time being of Activision Blizzard or any committee   of directors appointed by the board for the time being;
    
	
 
    	
 
    	
 
    
	
Confidential   Information
    	
 
    	
(i) all   information in whatever form (including, in written, oral, visual or   electronic form or on any magnetic or optical disk or memory and wherever   located) relating to the business, products, Intellectual Property,   affairs and finances of the Company or of any Group Company and all technical   data and Know-how of the Company or of any Group Company for the time being   confidential to it or to them or treated by it or them as such; and including   any trade secrets (as such term may be construed under the laws of any   relevant jurisdiction from time-to-time) including technical data and   Know-how relating to the business of the Company or of any Group Company or   any of its or their suppliers, clients, customers, agents, distributors,   shareholders or management, or other information which is confidential,   commercially sensitive and is not in the public domain relating or belonging   to the Company or any Group Company including information relating to the   business methods, corporate plans, management systems, finances, new business   opportunities, research and development projects, marketing or sales of any   past, present or future product or service, secret formulae, processes,   inventions, designs, Know-how discoveries, technical specifications and other   technical information relating to the creation, production or supply of any   past, present or future product or service of the Company or any Group   Company, lists or details of clients, potential clients or suppliers or the   arrangements made with any client or supplier;
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(ii) all   confidential information of any third party (including any supplier,   customer, client or collaborator of the Company or any Group Company) in the   possession of the Company or any Group Company; and
    

 

	
 
    

 

 

	
 
    	
 
    	
(iii) all   Intellectual Property (including for the avoidance of doubt all copyright   material and all software codes and applications) and all data, reports,   information, summaries or presentations, created, developed, received or   obtained by the Executive, wholly or partially, in the course of the   Executive’s employment whether before or after the date hereof; and
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(iv) all   Intellectual Property (including for the avoidance of doubt all copyright   material and all software codes and applications) and all data, reports,   information, summaries or presentations, created, developed, received or   obtained by the Executive, wholly or partially, (whether or not during   working hours and whether at the offices of the Company or elsewhere) by use   of any such information referred to in (i), (ii) and/or   (iii) above; and
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(v) all   and any copies of any of such information or Intellectual Property, whether   made by the Executive, wholly or partially, or any third party, referred to   in (i), (ii), (iii) and/or (iv) above;

 

whether   or not such information or Intellectual Property (if in anything other than   oral form) is marked confidential, and including extracts, analysis, studies,   plans, compilations or any other way of representing or recording and   recalling information which contains, reflects or is derived or generated   from such Confidential Information,
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
PROVIDED   THAT Confidential Information shall   exclude only any such part of such information as shall enter into the public   domain otherwise than by reason of any breach by the Executive of their   obligations hereunder, any breach by any other employee of Activision   Blizzard or any Group Company of any obligation of confidentiality, or by   reason of any breach by Activision Blizzard or any Group Company of any   obligation of confidentiality;
    
	
 
    	
 
    	
 
    
	
Intellectual   Property
    	
 
    	
all   patents, claims in patents, trade-marks and trade names, domain names,   service marks, copyright and related rights, database rights, topography   rights, rights to inventions, confidential information (including Know-how),   rights existing in any software code, rights in get-up, goodwill shall and   the right to sue for passing off, unfair competition rights, rights in   designs, rights in computer software, rights to use and preserve the   confidentiality of information (including Know-how and trade secrets (as such   term may be construed under the laws of any relevant jurisdiction from   time-to-time)) and any other intellectual property rights, in each case   whether registered or unregistered and including all applications (or rights   to apply) 
    

 

	
 
    

 

 

	
 
    	
 
    	
for   and be granted, renewals or extensions of, and rights to claim priority from,   such rights and all similar or equivalent rights or forms of protection which   subsist or shall subsist now or in the future in any part of the world;;
    
	
 
    	
 
    	
 
    
	
Invention
    	
 
    	
any invention,   idea, discovery, development, improvement or innovation, whether or not   patentable or capable of registration, and whether or not recorded in any   medium;
    
	
 
    	
 
    	
 
    
	
Know-how
    	
 
    	
all   information not in the public domain of any nature including ideas,   discoveries, inventions, data, formulae, techniques, procedures for   experiments and tests, designs, sketches, records, information comprising or   related to concepts, methods, models, designs for experiments and tests and   results of experimentation and testing, processes, specifications, reports,   and information contained in submissions to authorities or otherwise, and   confidential analyses and interpretations of information which is in the   public domain;
    
	
 
    	
 
    	
 
    
	
Moral   Rights
    	
 
    	
all   present and future moral rights which arise under Part I Chapter IV of   the Copyright Designs and Patents Act 1988 and all similar rights under   existing judicial or statutory law of any country or jurisdiction in the   world, or under any treaty regardless of whether or not such right is called   or generally referred to as a “moral right”.
    

 

2.                Confidential Information and Group Company documents

 

2.1    Without prejudice to the Executive’s common law duties, the Executive undertakes that in relation to all Confidential Information which may be within or come into their possession in connection with their employment or in the course of their employment by Activision Blizzard or which the Executive may create, wholly or partially, during the term of their employment by Activision Blizzard the Executive shall:

 

2.1.1                both during the term of their employment and thereafter without limit of time, keep the same secret and confidential; and

 

2.1.2                not at any time for any reason whatsoever divulge, communicate or disclose or permit the same to be divulged, communicated or disclosed to any third party save as may be required in connection with the performance of their obligations in the course of their employment, unless any company in the Group has (i) given the Executive its written consent to do so, and (ii) obtained from the recipient third party appropriate obligations of confidentiality in respect of such of the Confidential Information disclosed and shall use their best endeavours to prevent any such disclosure of any Confidential Information to any third party;

 

	
 
    

 

 

2.1.3                use the same only as may be required in the proper performance of their obligations in the course of their employment;

 

2.1.4                unless expressly authorised by Activision Blizzard, not remove any Confidential Information from the Company premises and shall not store any Confidential Information on any computer network outside the sole control of the Company or accessible by any third party without Activision Blizzard’s authorization, and not make or use any copies of any Confidential Information;

 

2.1.5                immediately upon termination of their employment (howsoever caused or arising) deliver up to Activision Blizzard all Confidential Information within their possession and in the event that the Executive may have been authorised under Clause 2.1.4 to store to store (or may have stored without such authorisation) any Confidential Information on any external computer or on any magnetic or optical disk or memory, including personal computer networks, personal e-mail accounts or personal accounts on websites, and all matter derived from such sources which is in their possession or under their control outside the Company’s premises, shall certify in writing that no copies thereof, capable of electronic retrieval in any manner remain on such computer;

 

2.1.6                at any time during the course of their employment and thereafter without limit in time, promptly upon receipt of a written request from Activision Blizzard , deliver up to Activision Blizzard such part of any Confidential Information in their possession as may be specified in any such request;

 

2.1.7                not use any Confidential Information for their own purposes or for any purposes other than those of the Company or any Group Company; and

 

2.1.8                through any failure to exercise due care and diligence, shall not permit or cause any unauthorised disclosure of any Confidential Information.

 

2.2    The Executive acknowledges that all books, notes, memoranda, records, lists of customers and suppliers and employees, correspondence, documents, computer and other discs and tapes, data listings, codes, designs and drawings and other documents and material whatsoever (whether made or created by the Executive, wholly or partially, or otherwise) relating to the business of the Company or any Group Company (and any copies of the same) shall be Confidential Information for all purposes under the Agreement and

 

2.2.1                all such material containing Confidential Information shall be and remain the property of the Company or the relevant Group Company; and

 

2.2.2                all Confidential Information shall be handed over by the Executive to Activision Blizzard or to the relevant Group Company on demand and in any event on the termination of their employment and the Executive shall certify that all such property has been handed over on request by the Board and agree that they shall take all reasonable steps to prevent the disclosure of the same and the Executive shall provide a signed statement that they have complied fully with their obligations under this Clause 2.

 

	
 
    

 

 

2.3    The Executive shall be responsible for protecting the confidentiality of the Confidential Information and shall:

 

2.3.1              use their reasonable endeavours to prevent the use or communication of any Confidential Information by any person, company or organisation (except in the proper course of their duties, as required by law or as authorised by Activision Blizzard); and

 

2.3.2                inform Activision Blizzard immediately on becoming aware, or suspecting, that any such person, company or organisation knows or has used any Confidential Information.

 

2.4    The foregoing obligations in this clause 2 shall not prevent the Executive from disclosing information where required to do so by a competent court, regulatory authority or under the rules of a relevant stock exchange, provided that where legally permitted the Executive shall provide Activision Blizzard with written notice of such request so that Activision Blizzard may take such action as it deems reasonably necessary to limit or contest such disclosure with the party making such request.

 

2.5    The Executive may also disclose Confidential Information to his professional advisers who are bound by duties of confidentiality (a) for the purpose of the Executive being able to seek legal advice or (b) in order to enforce his legal rights hereunder.

 

3.            Inventions and other Intellectual Property

 

3.1       The Executive acknowledges that all Intellectual Property and Confidential Information, of any nature made, originated or developed, wholly or partially, by the Executive at any time in the course of their employment with Activision Blizzard (whether or not made, originated or developed during working hours or using Company premises or resources, whether or not recorded in material form, and whether before or after the date of the Agreement) and all materials embodying them (“Works”) shall automatically belong to and vest in the sole and exclusive ownership of Activision Blizzard absolutely to the fullest extent permitted by law, and to the extent they do not vest in Activision Blizzard automatically, the Executive shall hold for the benefit of  the Company on trust all such Works  until the same are vested absolutely in the Company.

 

3.2       For the avoidance of doubt the Executive acknowledges that any Intellectual Property or Confidential Information made, originated or developed, wholly or partially, by the Executive at any time, shall be deemed made, originated or developed in the course of their employment and shall be Works for all purposes in this Clause 3.

 

3.3       The Executive acknowledges for the purpose of Section 39 of the Patents Act 1977 (as amended) or otherwise that because of the nature of their duties and the particular responsibilities arising from the nature of their duties they have and at all times in the course of their employment with Activision Blizzard shall have a special obligation to further the interests of the undertakings of Activision Blizzard and of any Group Company.

 

	
 
    

 

 

3.4        The Executive undertakes: (i) to notify and disclose to Activision Blizzard in writing full details of all Works promptly upon creation, whether or not in material form, (ii) (without prejudice to the provisions of Clause 3.1) to promptly whenever requested by Activision Blizzard and in any event upon the termination of their employment to give to  Activision Blizzard  all originals and copies of correspondence, documents, papers, data, information, materials and records on all media which record or relate to any Works.  For the avoidance of doubt all such originals and copies shall be Confidential Information for all purposes under the Agreement; and (iii) not to attempt to register any Works nor patent any Works unless requested to do so by Activision Blizzard; and (iv) to keep confidential the Works unless Activision Blizzard has consented in writing to their disclosure by the Executive.

 

3.5        The Executive acknowledges that save as provided by law no remuneration or compensation in addition to that payable under the terms of the Agreement is or may become due to them in respect of their compliance with this Schedule, the terms of the Agreement or by statute. This clause is without prejudice to the Executive’s rights under the Patents Act 1977.

 

3.6        The Executive shall, at the reasonable expense of Activision Blizzard, execute all such documents, make such applications, give such assistance and do such acts and things (if any) in the course of and after their employment with Activision Blizzard as may, in the  reasonable opinion of Activision Blizzard, be necessary and desirable to vest all rights in the Works in the Company (or if required by it in any Group Company) and to enable Activision Blizzard to: (i) obtain registered protection in respect of any of the Works in the name of Activision Blizzard (or if required by Activision Blizzard in any Group Company) (in the United Kingdom or elsewhere throughout the world); and (ii) otherwise to protect, maintain and enforce all rights in the Works for the benefit of the Company and/or any such Group Company. Such documents may, at Activision Blizzard’s request, include waivers of all and any statutory Moral Rights relating to any copyright works which form part of the Works.

 

3.7        To the extent that by law any Intellectual Property of any nature made, originated or developed by the Executive at any time during the term of their employment since the continuous service date specified in clause 2.2 (whether or not made, originated or developed during normal working hours and whether before or after the date of the Agreement) which relates to the business of Activision Blizzard/any Group Company and which might be used or exploited in the business of Activision Blizzard (“Employee Works”) do not vest in or belong to the Company as Works under Clause 3.1 of this Schedule the Executive agrees promptly on any Employee Works coming into existence to notify Activision Blizzard in writing with details of such Employee Works and with such notice to offer to Activision Blizzard a right of first refusal to acquire the same on arm’s length market terms to be negotiated in good faith and agreed by the Executive and Activision Blizzard within 60 days of the date of such notice and in the absence of such agreement within such 60 day period; the Executive may offer the Employee Works for sale 

 

	
 
    

 

 

to a third party, or, the Executive and Activision Blizzard may agree that such arm’s length market terms shall be referred to an independent expert (“Expert”) agreed by the parties or failing agreement such Expert to be appointed by the President of the British Computer Society (www.bcs.org.uk) (whose decision shall, in the absence of manifest error be final and binding on the parties and whose costs shall be borne by Activision Blizzard unless otherwise determined by such Expert). The parties shall be entitled to make submissions to the Expert and shall provide (or procure that others provide) the Expert with such assistance and documents as the Expert reasonably requires for the purpose of reaching a decision. The Executive acknowledges and agree that all information and Know-how relating to any Employee Works shall be deemed Confidential Information until such time as the Executive is entitled to offer them for sale as permitted hereunder, save that the information and Know-how may be disclosed to the Expert as set out above.

 

3.8        The Executive acknowledges and agrees that any Employee Works that are protectable by copyright are considered to be works made during the course of their employment with Activision Blizzard within the meaning of the Copyright, Design and Patents Act 1988 (“Employment Created Works”). In the event that any rights to the Employment Created Works are deemed not to be works made in the course of their employment, or in the event that the Executive should, by operation of law be deemed to retain any rights to the Employment Created Works, the Executive irrevocably assigns, without any further consideration and regardless of any use by Activision Blizzard or any Group Company of any such Employment Created Work, all of their rights), title and interest, if any, in and to such Employment Created Works to King.com Limited (or its successors or assigns)., as the owner of all rights to the Employment Created Works and any derivative works of such Employment Created Works and to use, reproduce, publish, print, copy, create derivative works of, market, advertise, distribute, transfer, license, sell, publicly perform and publicly display and otherwise exploit by all means now known or later developed, such Employment Created Works and derivative works anywhere throughout the world. The Executive hereby waives all Moral Rights in the Employment Created Works and agrees not to assert such rights against any Group Company, any Group Company’s assignees, successors in title or licensees, or any other third party, and not to support, maintain or permit any claim for infringement of Moral Rights in the Employment Created Works, such waiver being effective upon the creation of such Employment Created Works. By signing this Schedule, the Executive expressly acknowledges that products derived from or services using all or any part of the Employment Created Works may be the result of many parties’ contributions. If this waiver of Moral Rights is not effective, the Executive agrees to exercise such Moral Rights in a manner that recognises the contribution of, and shall not have a material adverse effect upon, such third parties.  Nothing in this clause 3.8 will prevent the Executive from identifying any Employment Created Works or any derivative works which are in the public domain as being their work.

 

	
 
    

 

 

4.                Maintenance of records

 

The Executive agrees to keep and maintain reasonable records of all Inventions made, originated or developed, wholly or partially, by them at any time in the course of their employment with Activision Blizzard (including in the form of notes, sketches, computer code and drawings as may be specified by the Group), which shall be available to and remain the sole property of the relevant Group Company (as determined by Activision Blizzard) at all times.

 

5.            Breach of the obligations in this Schedule

 

A breach of any of the provisions of this Schedule by the Executive shall be considered to be a fundamental breach of the Agreement and the Executive  may, at Activision Blizzard’s absolute discretion, be liable to disciplinary action including termination of their employment.

 

	
 
    

 

 

SCHEDULE 2

 

Executive Stock Ownership Guidelines

 

 

	
 
    

 

 

SCHEDULE 3

 

The Executive’s Investments as at the date of this Agreement

 

 

	
 
    

 

 

SCHEDULE 4

 

“Part B”

 

Performance Vesting

 

This Part B of Schedule 1 shall apply to 1,500,000 of the Option Shares (the “Type B Option Shares”), being those Option Share to which Part A does not apply.

 

1.                                             As to 50% of the Type B Option Shares (the “OI Option Shares”), subject to the Subscriber remaining employed by (or a director of) the Company or any member of the Group, the OI Option Shares shall vest as follows:

 

a.                                             One-third of the OI Option Shares (the “First Tranche OI Option Shares”) shall vest on the day prior to the third anniversary of the date on which the acquisition of King by Activision Blizzard is completed (the “Completion Date”), if, and only if, the Compensation Committee of the Activision Blizzard Board of Directors (the “Compensation Committee”) determines that the Non-GAAP Operating Income for 2016 (“2016 OI”) for King is 100% or more of the 2016 OI objective established for King by the Board of Directors of Activision Blizzard (the “2016 OI Objective”).  If the 2016 OI is less than 100% of the 2016 OI Objective, then the First Tranche OI Option Shares will not vest and the Option shall lapse as to those Option Shares.;

 

b.                                            One-third of the OI Option Shares (the “Second Tranche OI Option Shares”) shall vest on the day prior to the third anniversary of the Completion Date, if, and only if, the Compensation Committee determines that the Non-GAAP Operating Income for 2017 (“2017 OI”) for King is 100% or more of the 2017 OI objective established for King by the Board of Directors of Activision Blizzard (the “2017 OI Objective”).  If the 2017 OI is less than 100% of the 2017 OI Objective, then the Second Tranche OI Option Shares will not vest and the Option shall lapse as to those Option Shares; and

 

c.                                              One-third of the OI Option Shares (the “Third Tranche OI Option Shares”) shall vest on the day prior to the third anniversary of the Completion Date, if, and only if, the Compensation Committee determines that the Non-GAAP Operating Income for 2018 (“2018 OI”) for King is 100% or more of the 2018 OI objective established for King by the Board of Directors of Activision Blizzard (the “2018 OI Objective”).  If the 2018 OI is less than 100% of the 2018 OI Objective, then the Third Tranche OI Option Shares will not vest and the Option shall lapse as to those Option Shares.  .

 

2.                                             As to the other 50% of the Type B Option Shares (the “EBITDA Option Shares”), subject to the Subscriber remaining employed by (or a director of) the Company or any member of the Group, the EBITDA Option Shares shall vest  as follows:

 

a.                                          One-third (1/3) of the EBITDA Option Shares (the “First Tranche EBITDA Option Shares”) shall vest on the day prior to the first anniversary of the Completion Date if, and only if, the Compensation Committee determines that King’s earnings before interest, taxes, depreciation and amortization (“EBITDA”) for King’s financial year ending 31 December 2016 exceeds King’s management plan which has been agreed in writing by 

 

	
 
    

 

 

Activision Blizzard, and the Option shall lapse on the first anniversary of the Completion Date as to the First Tranche EBITDA Option Shares in the event that such target is not exceeded;

 

b.                                          One-third (1/3) of the EBITDA Option Shares (the “Second Tranche EBITDA Option Shares”) shall vest on the day prior to the second anniversary of the Completion Date if, and only if, the Compensation Committee determines that King’s EBITDA for King’s financial year ending 31 December 2017 exceeds King’s management plan which has been agreed in writing by Activision Blizzard, and the Option shall lapse as to the Second  Tranche EBITDA Option Shares on the second anniversary of the Completion Date in the event that such target is not exceeded; and

 

c.                                            One-third (1/3) of the EBITDA Option Shares (the “Third Tranche EBITDA Option Shares”) shall vest on the day prior to the third anniversary of the Completion Date if, and only if, the Compensation Committee determines that King’s EBITDA for King’s financial year ending 31 December 2018 exceeds King’s management plan which has been agreed in writing by Activision Blizzard, and the Option shall lapse as to the Third Tranche EBITDA Option Shares on the third anniversary of the Completion Date in the event that such target is not exceeded.”Exhibit 10.5

 

 

 

 

 

 

 

 

MIDASPLAYER INTERNATIONAL HOLDING COMPANY P.L.C.

 

AND

 

RICCARDO ZACCONI

 

INDIVIDUAL OPTION AND

SUBSCRIPTION AGREEMENT

 

 

 

 

 

 

 

 

 

 

 

 

	
 

THIS   DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

 

When considering   what action you should take, you are recommended to seek your own independent   financial advice from your own stockbroker, bank manager, solicitor,   accountant or other independent financial adviser.

 

This   Agreement and all other documentation received from the Company are not, and   should not be taken as, a recommendation to purchase shares.

 

This Agreement and the   accompanying documents from the Company are submitted on a confidential basis   and the offer contained in them is personal to the recipient and may not be   transferred or assigned by the recipient.

 

 
    

 

 

CONTENTS

 

 

	
1
    	
DEFINITIONS
    	
2
    
	
 
    	
 
    	
 
    
	
2
    	
GRANT   OF OPTION
    	
9
    
	
 
    	
 
    	
 
    
	
3
    	
MANNER   OF EXERCISE OF OPTIONS
    	
11
    
	
 
    	
 
    	
 
    
	
4
    	
TAXATION   MATTERS
    	
13
    
	
 
    	
 
    	
 
    
	
5
    	
TAKEOVERS,   LISTINGS, ASSET SALES AND LIQUIDATIONS
    	
15
    
	
 
    	
 
    	
 
    
	
6
    	
VARIATION   OF SHARE CAPITAL
    	
17
    
	
 
    	
 
    	
 
    
	
7
    	
EXCHANGE   OF OPTION FOR NEW OPTION
    	
17
    
	
 
    	
 
    	
 
    
	
8
    	
ADDITIONAL   PROVISIONS
    	
19
    
	
 
    	
 
    	
 
    
	
9
    	
POWER   OF ATTORNEY
    	
19
    
	
 
    	
 
    	
 
    
	
10
    	
VARIATION   AND RELATED MATTERS
    	
22
    
	
 
    	
 
    	
 
    
	
11
    	
MISCELLANEOUS
    	
23
    

 

 

AGREEMENT DATED                                                   31 January                              2014

 

BETWEEN:

 

(1)          MIDASPLAYER INTERNATIONAL HOLDING COMPANY P.L.C., company number C40465, a public limited company whose registered office is at Aragon House Business Centre, Dragonara Road, St Julian’s, STJ 3140, Malta (the “Company”) and;

 

(2)          RICCARDO ZACCONI of XX (the “Subscriber”).

 

RECITALS

(A)         The Subscriber is a key employee and/or director within the Group at the date of this Agreement.

 

(B)         The Company wishes to grant to the Subscriber an option to acquire up to 1,200,000 D1 ordinary shares of €0.000149 each in the capital of the Company upon and subject to the terms of this Agreement.

 

(C)         The Subscriber may also acquire Linked Shares.

 

(D)      The Subscriber agrees to hold any Linked Shares subject to the terms of the Articles and this Agreement.  Pursuant to the provisions of this Agreement and the Articles, the Linked Shares, or any shares for which they are exchanged or into which they are converted in connection with a listing of the Company’s shares on a securities exchange or otherwise, (or a proportion thereof) may, in certain circumstances and at certain times, become subject to compulsory transfer under this Agreement and/or the Articles or be converted into Deferred Shares.

 

1             DEFINITIONS

 

1.1         In this Agreement the following words and expressions shall have the following meanings and, unless the context requires otherwise (or the term is otherwise defined herein), the terms defined in the Articles shall have the same meanings in this Agreement:-

 

“Acquiring Company”

means a company which acquires shares in the capital of the Company pursuant to a Sale;

 

“Articles”

means the articles of association of the Company in effect from time to time;

 

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“Asset Sale”

means the disposal by any one or more members of the Group of assets (whether together with associated liabilities or otherwise and as part of an undertaking or otherwise) which represent 50% or more (by book value) of the consolidated gross assets of the Group at that time but excluding any such disposal to another member of the Group;

 

“Auditors”

means the auditors for the time being of the Company (acting as experts and not as arbitrators);

 

“Board”

means the board of directors of the Company or a duly constituted committee thereof;

 

“Change of Control Period”

means a period that commences on the date that falls three months prior to the date of exchange of contracts in relation to an applicable Sale and terminates on the date that falls 18 months immediately after the completion of an applicable Sale;

 

“Change of Control Termination”

means the termination of the employment of the Subscriber during a Change of Control Period where:

 

(a)         the Company or other relevant member of the Group serves notice to terminate the employment of the Subscriber, save where it summarily terminates the Subscriber’s employment without notice or payment in lieu of notice under the Service Agreement; or

 

(b)       the Subscriber terminates his employment with the Company or any relevant member of the Group with or without notice for Good Reason (other than in circumstances where the Company or other relevant member of the Group has reasonable grounds for summary dismissal without notice or payment in lieu of notice under the Service Agreement) provided that the Subscriber must, before he terminates his employment for Good Reason, and if (on a reasonable view) the circumstances that constitutes Good Reason are remediable, have first given the Company or relevant member of the Group a written notice stating clearly the event or circumstance that constitutes Good Reason in his belief, acting in good faith, and given the Company or relevant member of the Group a period of not less than 15 working days to cure the event or circumstance allegedly constituting Good Reason and no Good Reason shall exist if on a reasonable view the event or circumstance is cured by the Company or relevant member of the Group;

 

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“Code”

means the United States Internal Revenue Code of 1986, as amended, and any applicable regulations and administrative guidelines promulgated thereunder;

 

“Company Conversion Information Notice”

the meaning given in paragraph 2.4 of schedule 2;

 

“Company Transfer Date”

the meaning given in paragraph 2.2 of schedule 2;

 

“Company Transfer Notice”

the meaning given in paragraph 2.2 of schedule 2;

 

“Conversion Date”

the date to be specified by the Subscriber in the relevant Conversion Notice for the Linked Shares (or a proportion thereof) to convert into Deferred Shares, being the date determined in accordance with paragraph 2.4.2 of schedule 2;

 

“Conversion Number”

means the number of Linked Shares which are to be the subject of the relevant Conversion Notice, as calculated in accordance with paragraph 2.4.1 of schedule 2;

 

“Date of Exercise”

means the date on which the Company receives both the written notice and any payment (if required) referred to in clause 3.1;

 

“Dealing Code”

means any code or regulations adopted by any relevant listing authority or stock exchange which restrict dealings in securities issued by the Company and/or such other rules and regulations adopted by the Company, which govern dealing in Shares, interests in Shares, options or rights over Shares or interests in Shares;

 

“Drag Along Notice”

means a Drag Along Notice as defined in the Articles;

 

“EBT Transfer Date”

the meaning given in paragraph 2.3 of schedule 2;

 

“EBT Transfer Notice”

the meaning given in paragraph 2.3 of schedule 2;

 

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“Effective Date”

1 October 2015;

 

“Eligible Person”

means an individual who is an employee or director of a member of the Group;

 

“Employee Benefit Trust”

means an employee benefit trust established by the Company in connection with its employee share incentive arrangements;

 

“Encumbrance”

means a mortgage, charge, pledge, lien, option, restriction, equity, right to acquire, right of pre-emption, third party right or interest, other encumbrance or security interest of any kind or any other type of preferential arrangement (including, without limitation, a title transfer and retention arrangement) having similar effect;

 

“Exercise Price”

means the sum of USD $18.66 per Option Share, adjusted if appropriate pursuant to clause 6;

 

“Fair Price”

the meaning assigned in the Articles;

 

“Good Leaver”

means the Subscriber ceasing to be an employee and/or director of any member of the Group:

 

(a)        as a result of his death, permanent incapacity due to ill health or retirement in accordance with his contract of employment; or

 

(b)       due to dismissal of the Subscriber by the Company or any member of the Group without notice or payment in lieu in circumstances where the Company or other member of the Group is not entitled to summarily dismiss; or

 

(c)        in circumstances where the Board determines (subject to the Investor Director voting in favour of such determination) in its absolute discretion the Subscriber to be a Good Leaver; or

 

(d)       in circumstances where either (i) the Company or other relevant member of the Group serves notice to terminate the employment of the Subscriber; or (ii) the Subscriber serves notice to terminate his employment with the Company or relevant member of the Group for a Good Reason; in each case in circumstances other than where the Company or relevant member of the 

 

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Group summarily terminates the Subscriber’s employment without notice or payment in lieu of notice under the Service Agreement; or

 

(e)        in circumstances where the termination of the Subscriber’s employment by the Company or any member of the Group constitutes a Change of Control Termination;

 

“Good Reason”

means grounds that entitle the Subscriber to treat himself as being constructively dismissed (within the meaning of section 95(1)(c) of the Employment Rights Act 1996) as may be determined by a court of competent jurisdiction.  Examples of such grounds may include, but are not limited to, circumstances where the Subscriber is required to permanently relocate outside of Greater London, where the Subscriber’s pay is unilaterally reduced, where the member of the Group that is the Subscriber’s employer is in material breach of the Service Agreement, where the scope of the Subscriber’s role is materially reduced, where the level or status attached to the Subscriber’s role is reduced or where on a Sale the acquiring entity did not give the Subscriber options, compensation or equity of at least the same value as the value of any shares under option (net of exercise price) held by the Subscriber which are no longer capable of vesting or being exercised after such Sale;

 

“Grant Date”

12 November 2013;

 

“Group”

has the meaning given in the Articles and “member of the Group” shall be construed accordingly;

 

“HMRC”

means HM Revenue & Customs (or any other taxation or other authority in any other jurisdiction, as applicable);

 

“Investor Director”

has the meaning given in the Articles;

 

“ITEPA”

means the Income Tax (Earnings and Pensions) Act 2003;

 

“Linked Shares”

means shares acquired by the Subscriber which, in the relevant Letter of Allotment, are expressed as being “Linked Shares” for the purposes of this Agreement (or any other shares into which the same are converted);

 

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“Liquidation”

whether voluntary or compulsory, means the passing of a resolution for the winding-up of the Company;

 

“Listing”

means :

 

(a)        the admission of all or any of the shares in the capital of the Company to trading on a market for listed securities designated by the Financial Markets Act (Cap. 345 of the laws of Malta) as a Recognized Investment Exchange (as defined in the Articles), together with the admission of such shares to the relevant Official List (as defined in the Articles); or

 

(b)        if the Investors (as defined in the Articles) in their absolute discretion so determine, the admission of such shares to, or to trading on, any other market wherever situated together, if necessary, with the admission of such shares to listing on any official or otherwise prescribed list maintained by a competent or otherwise prescribed listing authority;

 

“Market Value”

means on any day the market value of a share of the relevant class determined in accordance with the provisions of Part VIII of the Taxation of Chargeable Gains Act 1992 or, if shares of the relevant class are quoted on the official list of a Recognized Investment Exchange, the average of the middle market quotations of such a share as derived from the relevant Official List for the three immediately preceding dealing days or, if the Option is being exercised in the context of a Sale, the market value shall be determined by reference to the price to be paid for a share of the relevant class by the Acquiring Company;

 

“Option”

means the right to acquire Option Shares granted under this Agreement;

 

“Option Shares”

means the 1,200,000 Shares which are the subject of the Option;

 

“Released”

means “Released” pursuant to paragraph 1.1 of schedule 4 (the effect of which being, amongst other things, that certain restrictions on transfer referred to in paragraph 3 of schedule 2 may cease to apply to the Linked Shares that are Released);

 

“Relevant Transferred Shares”

the meaning given in paragraph 2.6 of schedule 2;

 

7

 

“Sale”

has the meaning given to it in the Articles save that unless the Board (and the Investor Director) determine otherwise, it shall not constitute a Sale where the person (or Connected Persons or group of persons Acting in Concert (as defined in the Articles)) acquiring or obtaining shares in the circumstances giving rise to the “Sale” are (in the reasonable opinion of the Board) Apax entities;

 

“Service Agreement”

the Subscriber’s service agreement with Midasplayer.com Ltd, dated 14th June 2004, as amended or replaced from time to time;

 

“Share”

means a D1 ordinary share of €0.000149 in the capital of the Company (or such other nominal value as may be determined by the Company in general meeting from time to time);

 

“Tax Liability”

means any income tax, withholding tax and employee national insurance contributions (or their equivalent outside of the United Kingdom) in respect of which any Group Member has to make a payment to HMRC and which arise by reference to:

 

(a)        the issue of any Linked Shares;

 

(b)        the transfer of any Linked Shares or any of the Linked Shares being treated as Released;

 

(c)        the redemption or conversion of any Linked Shares;

 

(d)       any other event giving rise to a charge under Part 7 of the Income Tax (Earnings and Pensions) Act 2003 (or any similar provision of law applicable in a jurisdiction other than the United Kingdom) occurring in connection with the acquisition, holding or disposal of the Linked Shares by the Subscriber during the ownership of any Linked Shares by the Subscriber;

 

(e)        the Subscriber exercising the Option or acquiring Option Shares pursuant to such exercise; and/or

 

(f)        any gain realised or deemed to have been realised by the Subscriber in respect of the Option or the Option Shares;

 

provided that employer’s national insurance contributions (or foreign equivalents) shall not constitute Tax Liabilities and such amounts shall be payable by the Company or other member of the Group;

 

8

 

“Transferred Shares”

the meaning given in paragraph 2.6 of schedule 2;

 

“Unreleased Shares”

means Linked Shares that have not been and are no longer capable of being Released.

 

1.2         So far as not inconsistent with the context:-

 

1.2.1      Any reference herein to any enactment shall be construed as a reference to that enactment as for the time being amended or re-enacted.

 

1.2.2      All references to the masculine gender shall be deemed also to be references to the feminine gender and all references to the singular include the plural and vice versa.

 

1.2.3      All references to clauses or sub-clauses are unless the context otherwise requires to clauses or sub-clauses of this Agreement.

 

1.2.4      The headings to clauses of this Agreement are for convenience only and have no legal effect.

 

1.3         In this Agreement, the Subscriber shall be deemed to cease to be an employee and/or director of a member of the Group on the Relevant Cessation Date.  For these purposes, the “Relevant Cessation Date” shall be the date on which the Subscriber ceases to be an employee, consultant or director of or to any member of the Group for any reason (including death or bankruptcy) without remaining or immediately becoming an employee, consultant or director of or to any other member of the Group or the date of occurrence of a repudiatory breach by the Subscriber of the Service Agreement (or his contract of engagement) that is accepted by his employer (or the company of which he is a director or to which he is a consultant), resulting in the termination of the Subscriber’s employment, directorship or consultancy (whichever is the earlier).

 

1.4         The recitals to this Agreement have no legal effect and shall not affect the construction or interpretation of this Agreement (save that terms defined therein shall have the same meanings for the purpose of this Agreement).

 

2             GRANT OF OPTION

 

2.1         The Company hereby grants to the Subscriber the right, upon the terms and subject to the conditions of this Agreement exercisable to the extent that the Option has vested in accordance with, and on the dates specified in, schedule 1, to purchase the Option

 

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Shares for the Exercise Price.  For the avoidance of doubt, this clause 2.1 is subject to the provisions of clause 3 and schedule 4.

 

2.2                            The Option is granted on the Grant Date.

 

2.3                            The Option may be exercised in whole or in part but (from and following a Listing) the Option may not be exercised at any time when such exercise is prohibited by any Dealing Code. Further, from and following a Listing, the Option may not be exercised at a time when the Subscriber is, or is presumed to be,  a “person acting in concert” for the purposes of the Irish Takeover Rules and the issuance of Shares pursuant to such exercise (after taking into account the provisions of Schedule 4) may, in the reasonable opinion of the Board, result in the Subscriber and/or any person acting, or presumed to be acting, in concert with the Subscriber becoming obliged under the Irish Takeover Rules to make an offer for the Company (“a Concert-Party Offer”), unless the Company is in receipt of a confirmation, direction or ruling from the Irish Takeover Panel that satisfies the Board that the exercise of the Option would not result in an obligation to make a Concert-Party Offer, provided that if the Option would lapse under any provision of this Agreement upon the expiration of any period in which the Subscriber would have been entitled to exercise the Option (a “Normal Exercise Period”) but is prevented from so doing by reason of this provision then, notwithstanding any other provision of this Agreement, the Option shall continue in effect for such additional period after the Normal Exercise Period as the Board determines appropriate in order to allow the Subscriber a reasonable period during which to exercise the Option in circumstances in which the Board is satisfied would not result in an obligation to make a Concert-Party Offer.   Alternatively, the Board may determine that the Option shall be cancelled on the date on which the Normal Exercise Period expires, in consideration for the right of the Subscriber to receive from the Company a cash payment in the amount equal to the Market Value of the number of Shares that would have been issuable upon exercise of the Option on such date (after taking into account the provisions of Schedule 4) over the Exercise Price.

 

2.4                            The Option is personal to the Subscriber.  It may not be transferred, assigned or charged or otherwise alienated and any purported transfer, assignment, charge or other alienation shall cause the Option to lapse forthwith.

 

2.5                            The Option shall lapse automatically (in so far as it has not been exercised) on the earliest of:-

 

2.5.1       the tenth anniversary of the Grant Date;

 

2.5.2       the date on which it lapses under clause 2.4;

 

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2.5.3       unless the Company otherwise decides (it being able to impose such conditions as it sees fit in the event that it exercises its discretion in this regard), 40 calendar days after the Option has become exercisable in accordance with clause 5 (but excluding clause 5.2) save that where the Subscriber is employed by a member of the Group on the date of a Sale and such Sale would otherwise cause the Option to lapse under this clause 2.5.3 the Option shall lapse only in respect of such of the Option Shares as have vested as at the relevant lapse date, the balance of the Option lapsing under this clause 2.5.3 18 calendar months after the date of the Sale;

 

2.5.4       the Subscriber being adjudicated bankrupt by a court of law;

 

2.5.5       forthwith upon the Subscriber ceasing to be an Eligible Person other than in circumstances where the Subscriber is a Good Leaver;

 

2.5.6       the date falling 90 calendar days after the Subscriber ceases to be an Eligible Person in circumstances where the Subscriber is a Good Leaver (or such longer period as may be specified in Part B of Schedule 1 or as the Board, having obtained the consent of the Investor Director, may determine in its absolute discretion);

 

2.5.7       the date on which the Option has lapsed in its entirety under clause 3 and/or schedule 4;

 

2.5.8       unless the Board determines otherwise, on completion of any Exchange if the Subscriber has not entered into an agreement for the grant of a New Option in accordance with clause 7.

 

3                                        MANNER OF EXERCISE OF OPTIONS

 

3.1                            To the extent that the Option has become exercisable pursuant to this Agreement, the Option may be exercised (in whole or in part) by the Subscriber, or as the case may be his personal representatives, giving prior notice in writing to the Company specifying the number of Shares in respect of which the Subscriber wishes to exercise the Option accompanied by:

 

3.1.1      the payment of the total Exercise Price due in respect of the number of Shares specified in the exercise notice, save to the extent that the Subscriber has made other arrangements for the payment of the total Exercise Price (such as, after Listing, the Subscriber selling sufficient number of the Shares as generates proceeds to pay the Exercise Price and using those proceeds to satisfy the same) which are satisfactory to the Company or the Company permits the cashless exercise of the Option pursuant to clause 3.6; and

 

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3.1.2      if required by the Company, the amount due under clause 4.1 in respect of any Tax Liability.

 

The Subscriber acknowledges that, despite the number of Shares specified in the written notice, the Option may actually be exercised over a lower number of Shares by virtue of the operation of clause 3.3 and schedule 4 below.

 

3.2                         Where the Option has been properly exercised, the Shares in respect of which the Option has been exercised (after taking account of the provisions of schedule 4) shall be issued and allotted or transferred pursuant to a notice of exercise within 30 calendar days of the Date of Exercise.  Where any Dealing Code prohibits the issue or transfer of the relevant Shares during such 30 day period, such 30 day period shall be extended by the number of days (plus three further days) during which the prohibition applies.

 

3.3                         Where the Subscriber has acquired Linked Shares, if the Option (or any part thereof) is properly exercised but not all of the Linked Shares have been Released, schedule 4 shall apply to determine:

 

3.3.1      the number of Linked Shares (if any) that shall be Released;

 

3.3.2      the actual number of Option Shares in respect of which the Option shall be treated as exercised at that time and which are therefore to be issued and allotted or transferred to the Subscriber; and

 

3.3.3      the extent to which the Option shall be deemed to have lapsed in respect of a specified number of Option Shares.

 

3.4                            Any calculation (including but not limited to the determination of the Option Gain and the Remaining Linked Shares Value) to be carried out under clause 3.3 and schedule 4 shall be performed by the Board (whose determination shall be final and binding).  The Board shall notify the Subscriber of the number of the Remaining Linked Shares which shall be treated as Released, the number of Option Shares in respect of which the Option shall be treated as exercised and the number of Option Shares in respect of which the Option shall be treated as lapsing.  Examples of the intended operation of clause 3.3 and schedule 4 are contained at Appendix 1 for illustration purposes.

 

3.5                            If and to the extent that the Subscriber:

 

3.5.1      serves a valid exercise notice specifying a number of Option Shares to which the exercise relates; and

 

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3.5.2      makes a payment of an Exercise Price calculated by reference to such number; but

 

3.5.3      the Option is treated as having been exercised in respect of a reduced number of Option Shares (pursuant to clause 3.3 and schedule 4),

 

then the Company shall arrange for the return or repayment to the Subscriber of the relevant part of the Exercise Price.

 

3.6                            Notwithstanding any other provision of this Agreement, if a Subscriber serves a valid exercise notice and, as a result, the Company is obliged to issue or transfer a number of Shares to the Subscriber in exchange for the payment of a corresponding Exercise Price then the Company shall, at its sole discretion, be entitled to satisfy that obligation by issuing, transferring or procuring the transfer to the Subscriber (at no cost to the Subscriber or at a cost which reflects only the nominal value of the relevant Shares) such reduced number of Shares as will (in the opinion of the Board) deliver equivalent value to the Subscriber.

 

3.7                            The Subscriber hereby agrees that if the Option is exercised prior to a Listing the Subscriber shall, as a condition of such exercise, enter into a subscription agreement in respect of the Option Shares and deed of adherence to a shareholders agreement in the form approved by the Board.

 

3.8                            In the event that:

 

3.8.1      the Board becomes aware that either (i) a General Offer has been (or is to be) made to the shareholders of the Company for the purposes of Article 14.1.1.1 or (ii) an Approved Offer (as defined in the Articles) has been (or is to be) made to the shareholders of the Company), and the Subscriber will not otherwise receive notice of that General Offer or Approved Offer (as the case may be); and

 

3.8.2      any of the Option Shares have vested under Schedule 1,

 

the Board shall (where it considers it reasonable to do so) give notice to the Subscriber that such a General Offer or Approved Offer has been (or is to be) made.

 

4                                        TAXATION MATTERS

 

4.1                            In the event that a Tax Liability becomes due on the exercise of the Option, the Option may not be exercised unless:-

 

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4.1.1      the Company or other member of the Group is able to deduct or, where possible, withhold, an amount equal to the whole of the Tax Liability from the Subscriber’s net pay for the next pay period; or

 

4.1.2      the Subscriber has paid to the Company or other member of the Group an amount equal to the Tax Liability; or

 

4.1.3      the sum of the amount that the Subscriber has paid to the Company or other member of the Group in respect of the Company’s  or other member of the Group’s obligation to satisfy the Tax Liability and the total amount that the Company or other member of the Group is able to deduct from the Subscriber’s net pay for the next pay period is equal to or more than the Tax Liability; or

 

4.1.4      the Subscriber enters into such other arrangements for the satisfaction of the Tax Liability as are acceptable to the Company.

 

4.2                            The Subscriber agrees that if requested to do so by the Board he shall immediately upon exercise of the Option enter into an irrevocable joint election with his employing company (or the company of which he is a director) pursuant to section 431 of ITEPA (or any similar provision of law applicable in a jurisdiction other than the United Kingdom, including section 83(b) of the Code) in a form specified by the Board that for the relevant tax purposes the market value of the Shares acquired is to be calculated as if the Shares were not restricted securities (as defined in section 423 of ITEPA (or any similar provision of law applicable in a jurisdiction other than the United Kingdom) and sections 425 to 430 of ITEPA (or any similar provision of law applicable in a jurisdiction other than the United Kingdom) are not to apply to such Shares.

 

4.3                            The Subscriber hereby covenants to pay to the Company (or such other member of the Group as the Company directs) an amount equal to any Tax Liability.  Without prejudice to the right of any person to enforce the covenants to pay in any other way:

 

4.3.1      the Subscriber hereby authorises (for all purposes, including Part II of the Employment Rights Act 1996 if and where applicable to the Subscriber) the person entitled to receive payment under this clause 4.3 (or the company which employs him, or of which he is a director, if different) to deduct (to the extent permitted by law) sufficient funds which, in the reasonable opinion of the person, would be equal to the amount due from the Subscriber from any payment made to or in respect of the Subscriber by the relevant company or the relevant person on or after the date of the event which gives rise to the Tax Liability; and

 

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4.3.2      the Subscriber hereby agrees (to the extent permitted by law) to pay to the relevant person (or relevant company) an amount sufficient to satisfy all Tax Liability (in respect of which the Subscriber is liable under this clause 4.3) to the extent that such liabilities are not recovered from the Subscriber pursuant to clause 4.3.1 or otherwise to enter into such arrangements as the Company may consider appropriate to recover from the Subscriber the amount of any Tax Liability for which the Subscriber is so liable.

 

5                                        TAKEOVERS, LISTINGS, ASSET SALES AND LIQUIDATIONS

 

5.1                            Sale or Asset Sale

 

5.1.1      In the event that a Sale or an Asset Sale takes place, the Option may be exercised within 40 calendar days of such Sale or Asset Sale (as applicable) occurring (but, unless the Board in its absolute discretion determines otherwise, only to the extent the Option has vested pursuant to schedule 1).

 

5.1.2      In the event that the Board becomes aware that an offer has been made which, if completed, would lead to the Option becoming exercisable under clause 5.1.1 above, it may at its absolute discretion resolve that the Option becomes exercisable under clause 5.1.1 (but, unless the Board in its absolute discretion determines otherwise, only to the extent the Option has vested pursuant to schedule 1) within such period as is determined by the Board and notified to the Subscriber (prior to any Sale or Asset Sale as mentioned in clause 5.1.1) and, in the event that the Option is not exercised during this period, it shall lapse to the extent provided by clause 2.5.3 but as if the reference to “40 calendar days after the Option has become exercisable in accordance with clause 5 (but excluding clause 5.2)” in that clause reads “on the expiry of the period determined by the Board under clause 5.1.2”.

 

5.2                            Listing

 

5.2.1      An Option may be exercised on or following a Listing in accordance with clause 5.2.2 (but, unless the Board in its absolute discretion determines otherwise, only to the extent the Option has vested pursuant to schedule 1).

 

5.2.2      As soon as the Board has become aware that firm negotiations have been entered into or firm proposals have been made for the Listing, the Board may notify the Subscriber that such negotiations or proposals have been entered into or made.  Within one week of such notification, the Subscriber may exercise the Option (but, unless the Board in its absolute discretion determines otherwise, only to the extent the Option has vested pursuant to 

 

15

 

schedule 1).  The Board may specify in the notification that the exercise of the Option under this clause 5.2.2 shall be conditional upon completion of the Listing (and for the purposes of this clause 5.2, “completion” in relation to a Listing shall be the admission or granting of permission referred to in the definition of “Listing”) and in such a case, in the event that the Listing does not proceed, the notice of exercise shall be deemed never to have been served.

 

5.3                            Exchange of Options

 

5.3.1      In the event that a Sale takes place, the Subscriber may at any time within six months of the Sale by agreement with the Acquiring Company release his rights under the Option (in this clause referred to as “the old rights”) in consideration for the grant to him of rights (in this clause referred to as “the new rights”) which are equivalent to the old rights but relate to shares in a different company.

 

5.3.2      The new rights referred to in clause 5.3.1 above shall not be regarded for the purposes of this clause 5 as equivalent to the old rights unless:

 

5.3.2.1              the new rights are granted to the Subscriber by reason of his employment or office (as director) with the Acquiring Company or any of its 51% subsidiaries;

 

5.3.2.2              the total Market Value of the Shares which are the subject of the Option immediately before the release of the Subscriber’s old rights is substantially equivalent to the total Market Value of the shares (which are the subject of the new rights) immediately after the grant of the new rights to the Subscriber; and

 

5.3.2.3              the total amount payable by the Subscriber for the acquisition of shares in pursuance of the new rights is substantially equivalent to the total amount that would be payable for the acquisition of Shares which are the subject of the Option in pursuance of the old rights.

 

5.3.3                          Where any new rights are granted pursuant to this clause 5.3 this Agreement shall in relation to the new rights be construed as if references to the Company and to the Shares were references to the Acquiring Company or as the case may be to the company in whose shares the new rights relate and to the shares of the Acquiring Company or of the other company in whose shares the new rights relate.

 

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5.4                            Liquidation

 

If the Company passes an extraordinary resolution for dissolution and consequential voluntary winding up of the Company, the Option may be exercised until the commencement of such winding up (but, unless the Board in its absolute discretion determines otherwise, only to the extent the Option has vested pursuant to schedule 1) at the expiry of which period it shall lapse.

 

6                                        VARIATION OF SHARE CAPITAL

 

6.1                            In the event of any capitalisation or rights issue or any consolidation, sub-division or reduction or other variation of the share capital by the Company, or if any of the shares in the Company are to be converted to shares of another class pursuant to the provisions of the Articles (including, but not limited to, a conversion of ordinary “D1” shares into “A” ordinary shares and/or Deferred Shares immediately prior to a Listing), the limit on the number of Shares available under the Option, the number, class and nominal amount of Shares subject to the Option (the definition of “Shares” being adjusted accordingly), the Exercise Price for each of those Shares and the number of Option Shares referred to in paragraph 1 of each of Part A and Part B of Schedule 1 may, at the discretion of the Company, be adjusted in such manner as the Board considers reasonable PROVIDED THAT:-

 

6.1.1                          the aggregate amount payable on the exercise of an Option in full is not increased (subject to clause 6.1.2); and

 

6.1.2                          the Exercise Price for a Share is not reduced below its nominal value.

 

7                                        EXCHANGE OF OPTION FOR NEW OPTION

 

7.1                            If the Company is or is to be the subject of a transaction whereby all or substantially all of the issued share capital of the Company is or is to be exchanged for issued share capital in another company or body corporate, wherever incorporated, (the “New Company”) with the result that (in the reasonable opinion of the Board) the beneficial ownership of the issued share capital in the New Company is (or is to be) substantially the same as the beneficial ownership of the issued share capital in the Company immediately prior to such transaction (the “Exchange”), the Subscriber shall (if so requested by the Company) release his rights (including his right to acquire Shares) under this Agreement (the “Old Option”) in consideration for the grant to him of equivalent rights granted by the New Company (including a right to acquire shares in the New Company) (the “New Option”).  The determination of such equivalence shall be made in the sole discretion of the Board whose decision shall be final and binding.

 

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7.2                            The New Option shall be on terms and conditions that are (in the opinion of the Board) equivalent to the terms and conditions of this Agreement save that where a provision in this Agreement refers to the Company the corresponding provision in the agreement governing the New Option (the “New Option Agreement”) shall (unless the Board considers the context requires otherwise) instead refer to the New Company, provided that:

 

7.2.1                                  the number (and class) of shares in the New Company subject to the New Option may be different to the number (and class) of Shares subject to the Old Option, provided that (in the opinion of the Board) there shall be no material enlargement or dilution of the Subscriber’s interest; and

 

7.2.2                                  the exercise price payable per share of the New Company under the New Option may be different to the Exercise Price per Share under the Old Option, provided that (i) the exercise price per share of the New Company under the New Option shall be at least the nominal value of such share and (ii) the aggregate exercise price for all of the shares of the New Company subject to the New Option immediately after the Exchange shall be substantially equivalent to the aggregate Exercise Price of all of the Shares subject to the Old Option immediately prior to the Exchange.

 

7.3                            Where a New Option is to be granted, the New Option Agreement shall contain provisions which (in the opinion of the Board) are equivalent to those contained herein (including for the avoidance of doubt those contained in schedule 2) relating to Linked Shares, but instead relating to shares (“New Shares”) for which any Linked Shares have been exchanged and (without limitation) the terms of the relevant agreement may:

 

7.3.1      reflect the fact that the New Shares relate to another corporation or company, including a foreign corporation or company, as the case may be, (rather than the Company); and

 

7.3.2      take account of any other matters (such as, without limitation, variations between the Articles and the constitutional documents governing the  corporation or company in which the New Shares are issued and in the case of the corporation or company being incorporated in another jurisdiction, differences between the laws of Malta and the laws applicable to such company or corporations) that the Board considers necessary or desirable to give effect to the commercial intention of the arrangement envisaged by this Agreement.

 

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8                                        ADDITIONAL PROVISIONS

 

The provisions of schedule 2 apply and relate (amongst other things) to the terms of the Subscriber’s holding of any Linked Shares, certain restrictions relating to the same and matters relating to the conversion of shares.

 

9                                        POWER OF ATTORNEY

 

9.1                            The Subscriber:

 

9.1.1      hereby irrevocably appoints the Company as his attorney (“Attorney”) for all purposes referred to in this Agreement or any New Option Agreement and irrevocably authorises the Attorney (on the Subscriber’s behalf) to execute any and all document(s) and to do any and all acts and things as the Attorney in its absolute discretion considers necessary or desirable in order to give full effect to the terms of this Agreement, the New Option Agreement, the terms of the Articles (or the articles of association of the New Company) or the release of the Old Option and grant of the New Option in connection with the Exchange.  Every attorney that may be appointed by virtue of this clause shall be considered to act singly as the true and lawful attorney of the Subscriber with full power of substitution as specified herein;

 

9.1.2                          agrees that the Attorney may in his name or otherwise on the Subscriber’s behalf:

 

9.1.2.1   execute any stock transfer form and any other documents and do all things necessary in order to transfer any Linked Shares or New Shares in accordance with this Agreement or the Articles (or the articles of association of the company in which the New Shares are issued) including, without prejudice to the generality to the foregoing, any transfer pursuant to a Drag Along Notice;

 

9.1.2.2   accept any Company Transfer Notice or EBT Transfer Notice served in accordance with this Agreement or the New Option Agreement and execute any stock transfer form and any other documents and do all things necessary in order to transfer Unreleased Shares pursuant thereto;

 

9.1.2.3   accept any Company Conversion Information Notice (or other document) served in accordance with this Agreement or the New Option Agreement;

 

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9.1.2.4     serve a Conversion Notice (or other document) in accordance with this Agreement or the New Option Agreement;

 

9.1.2.5     receive and comply with a Drag Along Notice;

 

9.1.2.6     make any tax filing or claim for relief or exemption that the Attorney considers necessary or desirable in connection with any transfer referred to at 9.1.2.1 above;

 

9.1.2.7     execute any New Option Agreement on the Subscriber’s behalf;

 

9.1.2.8     approve any alteration to this Agreement or the New Option Agreement pursuant to clause 10 (or equivalent provisions of the New Option Agreement);

 

9.1.2.9     accept and retain any share certificate issued in respect of any Linked Shares or New Shares;

 

9.1.2.10  sign any written resolution of the shareholders of the Company or New Company (or of the holders of the relevant class of shares in the Company or New Company) that the Board considers to be necessary or desirable for the purposes of or in connection with the IPO (as defined in schedule 2 but as if the reference to “Company” in such definition were to “Company or New Company”) or any pre-IPO restructuring, reconstruction or amalgamation involving the share capital of the Company or New Company (“Resolutions”) including without prejudice to the generality of the foregoing any reorganisation, conversion or reclassification of all or any of the share capital of the Company or New Company and/or the alteration, abrogation or variation of the rights attached to any Linked Shares or New Shares; and/or

 

9.1.2.11  in lieu of signing a written resolution as aforesaid, to appoint a proxy to attend and vote on his or her behalf on any Resolutions to be proposed at a general meeting of the Company or New Company at the discretion of the Attorney and to approve, in writing or otherwise, any consent to the convening of any such meeting at short notice.

 

9.2         The Subscriber hereby authorises the Attorney to:

 

9.2.1           delegate one or more of the powers conferred on the Attorney by this power of attorney (other than the power to delegate or appoint a substitute

 

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attorney) to an officer or officers appointed for that purpose by the board of directors of the Attorney, by resolution or otherwise, and vary or revoke such delegation at any time; and

 

9.2.2           appoint one or more persons to act as substitute attorney for the Subscriber and to exercise one or more of the powers conferred on the Attorney by this power of attorney and revoke any such appointment,

 

provided that neither of the above appointments shall constitute the appointment of a new attorney (for the same business of the mandate created by virtue of clause 9.1 or otherwise) or the revocation of the said mandate given to the Attorney.

 

9.3         The Subscriber undertakes:

 

9.3.1           to promptly notify the Attorney of, and deliver to the Attorney, anything received by the Subscriber in its capacity as the registered holder of any Linked Shares or New Shares;

 

9.3.2           to ratify and confirm whatever any Attorney does or purports to do in good faith in exercising the powers conferred by this power of attorney and hereby ratifies and confirms and agrees to ratify and confirm any act whatsoever the Attorney shall lawfully do or cause to be done and all documents executed by the Attorney in the exercise or proposed exercise of all or any of his powers; and

 

9.3.3           to indemnify and hold each Attorney harmless against all claims, losses, costs, expenses, damages or liability incurred by it as a result of acting in good faith (but not acting negligently or fraudulently) pursuant to this power of attorney (including any costs incurred in enforcing this indemnity).

 

9.4         The Subscriber declares that a person who deals with the Attorney in good faith may accept a written statement signed by the Attorney to the effect that this power of attorney has not been revoked as conclusive evidence of that fact.  The Attorney is expressly authorized to act under this Power of Attorney.

 

9.5         The Subscriber agrees that the Attorney shall not accept any responsibility and shall not be under any liability for any act or omission of the Attorney or any of its representatives (save in the case of the Attorney’s own fraud, negligence or wilful misconduct).

 

9.6         The Subscriber agrees that the power of attorney and other authorities on the terms conferred by or referred to in this Agreement (including but not limited to the

 

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authority granted in terms of paragraph 1.2.5 of schedule 2) are given by way of security for the performance of the obligations of the Subscriber and are irrevocable, to the extent permitted by applicable law, in accordance with section 4 of the Powers of Attorney Act 1971 and, in terms of Maltese law in so far as it may be applicable, article 1887 of the Civil Code (Cap. 16 of the Laws of Malta).  Such power of attorney shall be irrevocable except with written consent of the Attorney.

 

9.7         The Board shall notify the Subscriber as soon as reasonably practicable following the Exchange of the release of the Old Option and the grant of the New Option or of any pre-IPO restructuring, reconstruction or amalgamation involving the share capital of the Company or New Company.  Notwithstanding such release the power of attorney granted under this clause 9 shall remain valid, binding and in existence.

 

9.8         The power of attorney granted under this clause 9 is without prejudice (and in addition) to any power of attorney contained in the Articles (or the articles of association of the New Company).

 

10           VARIATION AND RELATED MATTERS

 

10.1       The terms of this Agreement shall in all respects be administered by the Board, and in the event of any dispute or disagreement as to the interpretation of this Agreement, or as to any question or right arising from or related to this Agreement, the decision of the Board shall be final and binding upon all persons. It is expressly agreed and understood by and between the parties to this Agreement that: from time to time during the term hereof there may be information relating to the Company and/or the Group which is considered by the Board to be of a commercially sensitive nature and/or which it would not be in the best interests of the Company to disclose to all shareholders of the Company, and accordingly disclosure of such information to the Subscriber should be withheld; the determination as to what information shall fall within this category is considered to constitute a question related to this Agreement on which the decision of the Board shall be final and binding upon all persons as aforesaid; and that for all intents and purposes the Subscriber hereby grants his unconditional waiver to the right to receive such information as the board of directors may determine from time to time, including during or for the purposes of a general meeting of the shareholders of the Company.

 

10.2       Subject to clause 10.4 and 7.3, the board of directors for the time being of the Company may at any time and from time to time make any alteration to this Agreement which it thinks fit provided that:

 

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10.2.1      any alteration to this Agreement which is necessary to comply with or to take account of any applicable legislation or statutory regulations or any change in them, or any requirements of any tax authority or to obtain or maintain favourable taxation, exchange and/or regulatory treatment for the Company, any Group member or the Subscriber, may be made without the consent of the Subscriber; and

 

10.2.2      (subject to clause 10.2.1) no alteration which would materially and unfairly increase the liability of the Subscriber or materially and unfairly decrease the value of his subsisting rights under this Agreement shall be made without the Subscriber’s prior written consent.

 

10.3       Subject to clause 10.2, clause 10.4 and clause 7.3, no variation of this Agreement shall be valid unless it is in writing and signed by or on behalf of each of the parties to this Agreement.

 

10.4       In the event that any Linked Shares or New Shares are to be converted pursuant to the provisions of Article 7.6 of the Articles (or the equivalent provisions in relation to New Shares) in connection with a Listing, then the Board may (by simple board resolution) make any alteration to this Agreement or the New Option Agreement, as the case may be, which it thinks fit so that the provisions of this Agreement or the New Option Agreement, as the case may be, apply (from and after the relevant conversion) to the shares into which such Linked Shares or New Shares have converted including but not limited to, providing that any Linked Shares or New Shares that would have been the subject of a Company Conversion Information Notice under this Agreement in connection with a Sale shall instead be subject to compulsory transfer to an Employee Benefit Trust or other party nominated by the Company or to the acquiring entity in such Sale for no (or nominal) consideration.

 

11           MISCELLANEOUS

 

11.1       This Agreement shall be binding upon each party’s successors and assigns and personal representatives (as the case may be) but except as expressly provided herein none of the rights of the parties under this Agreement may be assigned or transferred.

 

11.2       Notwithstanding any other provision of this Agreement:

 

11.2.1   this Agreement shall not form part of any contract of employment or office between the Company or any other member of the Group and the Subscriber and the rights and obligations of the Subscriber under the terms of his office or employment with the Company or any other member of the Group shall not be affected by this Agreement and this Agreement shall afford the

 

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Subscriber no additional rights to compensation or damages in consequence of the termination of such office or employment for any reason whatsoever; and

 

11.2.2   this Agreement shall not confer on the Subscriber any legal or equitable rights (other than those constituting the Option) against the Company or any other member of the Group directly or indirectly, or give rise to any cause of action at law or in equity against the Company or any other member of the Group; and

 

11.2.3   the Subscriber shall not be entitled to any compensation or damages for any loss or potential loss which (s)he may suffer by reason of being unable to exercise the Option (or have any Linked Shares Released) in consequence of the loss or termination of his office or employment with the Company or any other member of the Group for any reason whatsoever.

 

11.3       Any notice or other communication under or in connection with this Agreement may be given:

 

11.3.1   by personal delivery or by sending the same by post, to the Subscriber at his last known address, or to the address of the place of business at which he performs the whole or substantially the whole of his duties of his office or employment, and to the Company at its registered office and where a notice or other communication is given by first class post, it shall be deemed to have been received 48 hours after it was put into the post properly addressed and stamped; or

 

11.3.2   to the Subscriber by electronic communication to his usual business address or to such other address for the time being notified for that purpose to the person giving the notice.

 

11.4       This Agreement constitutes the whole agreement between the parties hereto.  The Subscriber agrees that in entering into this Agreement he does not rely on, and shall have no remedy in respect of, any statement, representation, warranty or understanding other than as set out in this Agreement.  The only remedy available to the Subscriber in respect of any such statement, representation, warranty or understanding shall be for breach of contract under the terms of this Agreement.  Nothing in this sub-clause shall operate to exclude liability for fraud.

 

11.5       The Subscriber shall be responsible for obtaining any governmental or other official consent that may be required by any country or jurisdiction in order to permit the grant or exercise of the Option.  Neither the Company nor any other member of the

 

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Group shall be responsible for any failure by the Subscriber to obtain any such consent or for any tax or other liability to which the Subscriber may become subject as a result of his exercise of the Option.

 

11.6       After exercise of the Option and acquisition of the Option Shares, the Subscriber shall become bound by the provisions of the Articles (a copy of which is appended to and forms part of this Agreement) and in particular in relation to the provisions relating to the transfer of shares which are contained in the Articles.

 

11.7    The Subscriber consents that the Company shall collect and process his/her personal data for the purposes set out in this Agreement and in terms of the Data Protection Act (Cap. 440 of the Laws of Malta) or similar laws in other applicable jurisdictions. The Subscriber further consents to the processing and release of the information contained herein by the Company (including, but without prejudice to the generality of the foregoing, such person’s name, address, age and salary details) to any other members of the Group or any third parties in connection with the administration of this Agreement or for the purpose of complying with any legal obligations. To the extent required by law, the Subscriber has the right to access data which the Company holds about him, and, where applicable, the right to ask for a rectification or erasure of such data.

 

11.8       This deed may be executed in any number of counterparts each of which shall constitute an original but all of which shall constitute one and the same instrument.

 

11.9       A person who is not a party to this Agreement shall have no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Agreement, save that any person which is obliged to account for any Tax Liability shall be entitled to enforce clause 3 and that any holding company of the Company (from time to time) may enforce any of the provisions of this Agreement (“holding company” having the meaning given in section 1159 Companies Act 2006 for this purpose (but, for the purposes of section 1159(1) of the Companies Act 2006, a company shall be treated as a member of another company if any shares in that other company are registered in the name of either (a) a person by way of security (where the company has provided the security) or (b) a person as nominee for the company)).  This clause does not affect any right or remedy of any person which exists or is available otherwise than pursuant to that Act.  The Company may assign any of its rights under this Agreement.

 

11.10    This Agreement (including the power of attorney granted hereunder) shall be interpreted and construed in accordance with the laws of England and Wales.  The parties irrevocably agree that the courts of England shall have exclusive jurisdiction to settle any dispute which may arise out of or in connection with this Agreement and that accordingly, any suit, action or proceedings arising out of or in connection with this Agreement shall be brought in such courts.

 

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IN WITNESS whereof the parties have executed this Agreement as a Deed on the date set out above.

 

 

 

	
EXECUTED AS A DEED by
    	
)
    	
 
    
	
MIDASPLAYER INTERNATIONAL
    	
)
    	
 
    
	
HOLDING COMPANY P.L.C.
    	
)
    	
 
    
	
acting by a director in the presence
    	
)
    	
 
    
	
of a witness:-
    	
)
    	
 
    
	
 
    	
 
    	
.../s/ Marius McKeon...............................................
    
	
 
    	
 
    	
Director
    
	
 
    	
 
    	
 
    
	
Witness’ Signature:
    	
.../s/ M Schembri............................................
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Witness’ Name:
    	
...Michael Schembri...................................
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Witness’ Address:
    	
[                             ]
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Witness’ Occupation:
    	
Assistant Accountant
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
EXECUTED AS A DEED by
    	
)
    	
 
    
	
RICCARDO ZACCONI
    	
)
    	
..../s/ ..RZ...................................................................
    
	
in the presence of:-
    	
)
    	
 
    
	
 
    	
 
    	
 
    
	
Witness’ Signature:
    	
.../s/ Rob Miller..............................................
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Witness’ Name:
    	
......Robert Miller............................................ 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Witness’ Address:
    	
[                             ]
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Witness’ Occupation:
    	
Solicitor
    	
 
    	
 
    	
 
    

 

26

 

Schedule 1

 

Part A

Time-based Vesting

 

For the purposes of this Agreement:

 

1.            this Part A of Schedule 1 shall apply to 600,000 of the Option Shares (the ‘Type A Option Shares’);

 

2.            one twelfth of the Type A Option Shares shall vest 3 months after the Effective Date;

 

3.            a further one twelfth of the Type A Option Shares shall vest 6 months after the Effective Date with an additional one twelfth vesting after each 3 month period thereafter (with the intent that 100% of the Type A Option Shares will have vested 36 months after the Effective Date),

 

and the Option shall be exercisable in relation to the Type A Option Shares at any time after the date it has first vested (to the extent vested in respect of the Type A Option Shares).

 

Notwithstanding any of the above:

 

(a)          no Type A Option Shares shall vest after the date on which the Subscriber ceases to be employed by (or a director of) the Company or any member of the Group (“Cessation Date”) unless the Board (having obtained the consent of the Investor Director) determines otherwise save that:

 

(i)           in the event that the relevant member of the Group that is the Subscriber’s employer terminates his employment (otherwise than in circumstances where it is entitled to do so summarily under the terms of the Service Agreement) and the Subscriber’s employer makes a payment in lieu of any part of the contractual notice period, any Type A Option Shares that would have vested under paragraphs 2 and 3 above during the period that would otherwise have been the notice period shall be treated as having vested on the Cessation Date; and

 

(ii)          in the event of a Change of Control Termination, 100% of any of the Type A Option Shares that would have vested under paragraphs 2 and 3 above during the period of three calendar years commencing on the date of the Change of Control Termination shall be treated as vested on the Cessation Date; and

 

(b)          no Type A Option Shares shall vest after the date of a Sale (save to the extent the Board, having obtained the consent of the Investor Director, determines otherwise and save to the extent they vest under paragraph (a)(ii) above);

 

and, if any of the Type A Option Shares are no longer capable of vesting, the Option shall lapse immediately with respect to those Type A Option Shares that shall not vest.

 

 

Part B

 

Performance vesting

 

For the purposes of this Agreement:

 

1.                                    this Part B of Schedule 1 shall apply to 600,000 of the Option Shares (the ‘Type B Option Shares’) being those Option Shares to which Part A does not apply;

 

2.                                    in the event that:

 

(a)                               at any point during the First Minimum Service Period the average of the Closing Prices over any period of six consecutive calendar months meets or exceeds the Target Price; or

 

(b)                              at any point after the First Minimum Service Period ends but prior to the expiry of the First Performance Period the average of the Closing Prices over any period of three consecutive calendar months meets or exceeds the Target Price; or

 

(c)                               at any point from the start of the First Minimum Service Period until the expiry of the First Performance Period a Sale occurs and the price being paid by the Acquiring Company for each share in the Company as part of that Sale meets or exceeds the Target Price in the opinion of the Board, acting reasonably;

 

then 33% of the Type B Option Shares (rounded down to the nearest whole number) shall vest (in the case of paragraph 2(a), on the earliest of: (i) the last day of the First Minimum Service Period; (ii) the Subscriber becoming a Good Leaver (provided that the condition in paragraph 2(a) had been met by that date); and (iii) immediately prior to a Sale; in the case of paragraph 2(b), immediately the condition in that paragraph is satisfied; and in the case of paragraph 2(c), immediately prior to the Sale);

 

3.                                    in the event that:

 

(a)                               at any point during the Second Minimum Service Period the average of the Closing Prices over any period of six consecutive calendar months meets or exceeds the Target Price; or

 

(b)                              at any point after the Second Minimum Service Period ends but prior to the expiry of the Second Performance Period the average of the Closing Prices over any period of three consecutive calendar months meets or exceeds the Target Price; or

 

(c)                               at any point from the start of the Second Minimum Service Period until the expiry of the Second Performance Period a Sale occurs and the price being paid by the Acquiring Company for each share in the Company as part of that Sale meets or exceeds the Target Price in the opinion of the Board, acting reasonably;

 

 

then a further 33% of the Type B Option Shares (rounded down to the nearest whole number) shall vest (in the case of paragraph 3(a), on the earliest of: (i) the last day of the Second Minimum Service Period; (ii) the Subscriber becoming a Good Leaver (provided that the condition in paragraph 3(a) had been met by that date); and (iii) immediately prior to a Sale; in the case of paragraph 3(b), immediately the condition in that paragraph is satisfied; and in the case of paragraph 3(c), immediately prior to the Sale);

 

4.                                    in the event that:

 

(a)                               at any point during the Third Minimum Service Period the average of the Closing Prices over any period of six consecutive calendar months meets or exceeds the Target Price; or

 

(b)                              at any point after the Third Minimum Service Period ends but prior to the expiry of the Third Performance Period the average of the Closing Prices over any period of three consecutive calendar months meets or exceeds the Target Price; or

 

(c)                               at any point from the start of the Third Minimum Service Period until the expiry of the Third Performance Period a Sale occurs and the price being paid by the Acquiring Company for each share in the Company as part of that Sale meets or exceeds the Target Price in the opinion of the Board, acting reasonably;

 

then a further 34% of the Type B Option Shares (rounded down to the nearest whole number) shall vest (in the case of paragraph 4(a), on the earliest of: (i) the last day of the Third Minimum Service Period; (ii) the Subscriber becoming a Good Leaver (provided that the condition in paragraph 4(a) had been met by that date); and (iii) immediately prior to a Sale; in the case of paragraph 4(b), immediately the condition in that paragraph is satisfied; and in the case of paragraph 4(c), immediately prior to the Sale);

 

and the Option shall be exercisable in relation to the Type B Option Shares at any time after the date it has first vested (to the extent vested in respect of the Type B Option Shares).

 

Notwithstanding any of the above:

 

(a)                               no Type B Option Shares shall vest after the date on which the Subscriber ceases to be employed by (or a director of) the Company or any member of the Group unless the Board (having obtained the consent of the Investor Director) determines otherwise save that:

 

(i)                                  in the event that the relevant member of the Group that is the Subscriber’s employer terminates his employment (otherwise than in circumstances where it is entitled to do so summarily under the terms of the Service Agreement) and the Subscriber’s employer makes a payment in lieu of any part of the contractual notice period then, for the purposes of clause 2.5.6, the Option shall not lapse under that clause 2.5.6 in respect of the Type B Option Shares until the date falling three calendar months after the expiry of the contractual

 

 

notice period and Type B Option Shares shall continue to be capable of vesting in accordance with the provisions of this Part B during the period that would otherwise have been the notice period and shall cease to be capable of vesting on the last day of the period that would otherwise have been the notice period; and

 

(ii)                              in the event of a Change of Control Termination that occurs prior to a Sale, 100% of any of the Type B Option Shares that become vested under paragraphs 2(c), 3(c) and 4(c) of this Part B in relation to that Sale shall be treated as vested immediately prior to the Sale;

 

(b)                              no Type B Option Shares shall vest after the date of a Sale (save to the extent the Board, having obtained the consent of the Investor Director, determines otherwise);

 

(c)                               no Type B Option Shares shall vest (including under paragraph (a) above) prior to the occurrence of a Listing;

 

and, if any of the Type B Option Shares are no long capable of vesting, the Option shall lapse immediately with respect to those Type B Option Shares that shall not vest.

 

For the purposes of this Agreement:

 

“Closing Price” means the closing price for a Share as derived from the relevant Official List;

 

“First Minimum Service Period”, “Second Minimum Service Period” and “Third Minimum Service Period” means such periods as commence on the date of completion of a Listing and end on the third, fourth and fifth anniversary of such date respectively;

 

“First Performance Period”, “Second Performance Period” and “Third Performance Period” means such periods as commence on the date of completion of a Listing and end on the fifth, sixth and seventh anniversary of such date respectively;

 

“Target Price” means:

 

(a)                               in the case of paragraph 1, $65 reduced by the amount of any dividends paid on a Share during the First Performance Period;

 

(b)                              in the case of paragraph 2, $80 reduced by the amount of any dividends paid on a Share during the Second Performance Period;

 

(c)                               in the case of paragraph 3, $95 reduced by the amount of any dividends paid on a Share during the Third Performance Period;

 

in each case as calculated at the sole discretion of the Board (who may make such amendments to the definition of Target Price as they deem necessary, acting reasonably, in the event of any consolidation, sub-division, bonus issue, reduction of capital, share buy-back or other reorganisation of shares in the Company).

 

 

Schedule 2

 

Linked Shares

 

 

Schedule 3

 

Company Conversion Information Notice

 

Conversion Notice

 

 

Schedule 4

 

1                                                  CALCULATION TO BE PERFORMED ON EXERCISE

 

 

Appendix1: Examples of operation of clause 3.3 and schedule 4

 

 

Appendix 2: Section 431 election

 

 

Appendix 3: Articles of Association of the Company

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