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71
Purchase Transaction Matters
In prior periods, the Company reported on litigation related to the Purchase Transaction. During the period ended June 30, 2015, the
cases were resolved and dismissed with prejudice. As part of the resolution of the claims, we received a settlement payment of
$202 million in July 2015 from Vivendi, ASAC, and our insurers. We recorded the settlement within “Shareholders’ equity” in our
consolidated balance sheet as of December 31, 2015.
Other Matters
In addition, we are party to routine claims, suits, investigations, audits and other proceedings arising from the ordinary course of
business, including with respect to intellectual property rights, contractual claims, labor and employment matters, regulatory matters,
tax matters, unclaimed property matters, compliance matters, and collection matters. In the opinion of management, after consultation
with legal counsel, such routine claims and lawsuits are not significant and we do not expect them to have a material adverse effect on
our business, financial condition, results of operations, or liquidity.
20. Related Party Transactions
Transactions with Vivendi and Its Affiliates
As part of the Business Combination in 2008, we entered into various transactions and agreements, including cash management
services agreements, a tax sharing agreement and an investor agreement, with Vivendi and its subsidiaries. In connection with the
consummation of the Purchase Transaction, we terminated the cash management arrangements with Vivendi and amended our
investor agreement with Vivendi. We are also party to a number of agreements with subsidiaries and other affiliates of Vivendi,
including music licensing and distribution arrangements and promotional arrangements, none of which were impacted by the Purchase
Transaction. None of these services, transactions, and agreements with Vivendi and its affiliates were material, either individually or
in the aggregate, to the consolidated financial statements as a whole. As discussed in Note 1 of the Notes to Consolidated Financial
Statements, on May 28, 2014, Vivendi sold 41 million shares, reducing its ownership interest below 10%, and is no longer considered
a related party. Subsequent to December 31, 2015, Vivendi sold their remaining shares of our common stock.
Transactions with ASAC’s Affiliates
Pursuant to the Stock Purchase Agreement, the Company and each of Mr. Kotick, the Company’s Chief Executive Officer, and
Mr. Kelly, the Company’s Chairman of the board of directors, entered into a waiver and acknowledgement letters (together, the
“Waivers”), which provide, among other things, (i) that the Purchase Transaction, Private Sale, any public offerings by Vivendi and
restructurings by Vivendi and its subsidiaries contemplated by the Stock Purchase Agreement and other transaction documents, shall
not (or shall be deemed not to) constitute a “change in control” (or similar term) under their respective employment arrangements,
including their employment agreements with the Company, the Company’s 2008 Incentive Plan or any award agreements in respect of
awards granted thereunder, or any Other Benefit Plans and Arrangements (as defined in the Waivers), (ii) (A) that the shares of our
common stock acquired by ASAC and held or controlled by the ASAC Investors (as defined in the Waivers) in connection with the
Transactions (as defined in the Waivers) will not be included in or count toward, (B) that the ASAC Investors will not be deemed to
be a group for purposes of, and (C) any changes in the composition in the Board of Directors of the Company, in connection with or
during the one-year period following the consummation of the Transactions will not contribute towards, a determination that a
“change in control” or similar term has occurred with respect to Messrs. Kotick and Kelly’s employment arrangements with the
Company, and (iii) for the waiver by Messrs. Kotick and Kelly of their rights to change in control payments or benefits under their
employment agreements with the Company, the Company’s 2008 Incentive Plan or any award agreements in respect of awards
granted thereunder, and any Other Benefit Plans and Arrangements (in each case, with respect to all current and future grants, awards,
benefits or entitlements) in connection with or as a consequence of the Transactions.
Also pursuant to the Stock Purchase Agreement, on October 11, 2013, we, ASAC and, for the limited purposes set forth therein,
Messrs. Kotick and Kelly entered into the Stockholders Agreement. The Stockholders Agreement contains various agreements among
the parties regarding voting rights, transfer rights, and a standstill agreement, among other things. In connection with the settlement of
the litigation related to the Purchase Transaction, the parties to the Stockholders Agreement amended that agreement on May 28,
2015.
10-K Activision_Master_032416_PrinterMarksAdded.pdf 71 3/24/16 11:00 PM