TIME WARNER INC. NON-QUALIFIED STOCK OPTION AGREEMENT
Exhibit 10.3
Time Warner Inc. 2010 Stock Incentive Plan
Share Retention Version 1 (10SOSRV)
For Use from September 2010
Share Retention Version 1 (10SOSRV)
For Use from September 2010
WHEREAS, the Company has adopted the Plan (as defined below), the terms of which are hereby
incorporated by reference and made a part of this Agreement; and
WHEREAS, the Committee has determined that it would be in the best interests of the Company
and its stockholders to grant the Option provided for herein to the Participant pursuant to the
Plan and the terms set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties
agree as follows:
1. Definitions. Whenever the following terms are used in this Agreement, they shall
have the meanings set forth below. Capitalized terms not otherwise defined herein shall have the
same meanings as in the Plan.
(a) “Cause” includes (and is not limited to) dishonesty with respect to the Company or
any Affiliate, insubordination, substantial malfeasance or non-feasance of duty, unauthorized
disclosure of confidential information, and conduct substantially prejudicial to the business of
the Company or any Affiliate. The determination of the Committee as to the existence of “Cause”
will be conclusive on the Participant and the Company.
(b) “Disability” means, “Disability” as defined in an employment agreement between the
Company or any of its Affiliates and the Participant or, if not defined therein or if there shall
be no such agreement, “disability” of the Participant shall have the meaning ascribed to such term
in the Company’s long-term disability plan or policy, as in effect from time to time.
(c) “Expiration Date” means the date set forth on the Notice (as defined below).
(d) “Good Reason” means (i) a breach by the Company or any Affiliate of any employment
or consulting agreement to which the Participant is a party and (ii) following a Change in Control,
(x) the failure of the Company to pay or cause to be paid the Participant’s base salary or annual
bonus when due or (y) any substantial and sustained diminution in the Participant’s authority or
responsibilities materially inconsistent with the Participant’s position; provided that
either of the events described in clauses (x) and (y) will constitute Good Reason only if the
Company fails to cure such event within 30 days after receipt from the Participant of written
notice of the event which constitutes Good Reason; provided, further, that “Good
Reason” will cease to exist for an event on the sixtieth (60th) day following the later
of its occurrence or the Participant’s knowledge thereof, unless the Participant has given the
Company written notice of his or her termination of employment for Good Reason prior to such date.
(e) “Notice” means (i) the Notice of Grant of Stock Option that accompanies this
Agreement, if this Agreement is delivered to the Participant in “hard copy,” and (ii) the screen of
the website for the stock plan administration with the heading “Vesting Schedule and Details,”
which contains the details of the grant governed by this Agreement, if this Agreement is delivered
electronically to the Participant.
(f) “Plan” means the equity plan maintained by the Company that is specified in the
Notice, which equity plan has been provided to the Participant separately and forms a part of this
Agreement, as such plan may be amended, supplemented or modified from time to time.
(g) “Retirement” means a termination of employment by the Participant (i) following
the attainment of age 55 with ten (10) or more years of service with the Company or any Affiliate
or (ii) pursuant to a retirement plan or early retirement program of the Company or any Affiliate.
(h) “Vested Portion” means, at any time, the portion of an Option which has become
vested, as described in Section 3 of this Agreement.
2. Grant of Option. The Company hereby grants to the Participant the right and option
(the “Option”) to purchase, on the terms and conditions hereinafter set forth, the number
of Shares set forth on the Notice, subject to adjustment as set forth in the Plan. The purchase
price of the Shares subject to the Option (the “Option Price”) shall be as set forth on the
Notice. The Option is intended to be a non-qualified stock option, and as such is not intended to
be treated as an option that complies with Section 422 of the Internal Revenue Code of 1986, as
amended.
3. Vesting of the Option.
(a) In General. Subject to Sections 3(b) and 3(c), the Option shall vest and become
exercisable at such times as are set forth in the Notice.
(b) Change in Control. Notwithstanding the foregoing, in the event of a Change in
Control, the unvested portion of the Option, to the extent not previously cancelled or forfeited,
shall immediately become vested and exercisable upon the earlier of (i) the first anniversary of
the Change in Control or (ii) the termination of the Participant’s Employment (A) by the Company
other than for Cause (unless such termination is due to death or Disability) or (B) by the
Participant for Good Reason.
(c) Termination of Employment. If the Participant’s Employment with the Company and
its Affiliates terminates for any reason (including, unless otherwise determined by the Committee,
a Participant’s change in status from an employee to a non-employee (other than director of the
Company or any Affiliate)), the Option, to the extent not then vested, shall be immediately
canceled by the Company without consideration; provided, however, that if the
Participant’s Employment terminates due to death, Disability or Retirement, the unvested portion of
the Option, to the extent not previously cancelled or forfeited, shall immediately become vested
and exercisable. The Vested Portion of the Option shall remain exercisable for the period set
forth in Section 4(a) of this Agreement. If the Participant is absent from work with the Company
or with an Affiliate because of a temporary disability (any disability other than a
Disability), or on an approved leave of absence for any purpose, the Participant shall not,
during the period of any such absence, be deemed, by virtue of such absence alone, to have
terminated Employment, except to the extent that the Committee so determines.
4. Exercise of Option.
(a) Period of Exercise. Subject to the provisions of the Plan and this Agreement, and
the terms of any employment agreement entered into by the Participant and the Company or an
Affiliate that provides for treatment of Options that is more favorable to the Participant than
clauses (i) – (vii) of this Section 4(a), the Participant may exercise all or any part of the
Vested Portion of the Option at any time prior to the closing time of trading on the Expiration
Date (or 5:00 p.m. Eastern time on the Expiration Date, if earlier). Notwithstanding the
foregoing, if the Participant’s Employment terminates prior to the Expiration Date, the Vested
Portion of the Option shall remain exercisable for the period set forth below. If the last day on
which the Option may be exercised, whether the Expiration Date or due to a termination of the
Optionee’s Employment prior to the Expiration Date, is a Saturday, Sunday or other day that is not
a trading day on the New York Stock Exchange (the “NYSE”) or, if the Company’s Shares are not then
listed on the NYSE, such other stock exchange or trading system that is the primary exchange on
which the Company’s Shares are then traded, then the last day on which the Option may be exercised
shall be the preceding trading day on the NYSE or such other stock exchange or trading system.
(i) Death or Disability. If the Participant’s Employment with the Company and
its Affiliates terminates due to the Participant’s death or Disability, the Participant (or
his or her representative) may exercise the Vested Portion of the Option for a period ending
on the earlier of (A) three (3) years following the date of such termination and (B) the
Expiration Date;
(ii) Retirement. If the Participant’s Employment with the Company and its
Affiliates terminates due to the Participant’s Retirement, the Participant may exercise the
Vested Portion of the Option for a period ending on the earlier of (A) five (5) years
following the date of such termination and (B) the Expiration Date; provided, that
if the Company or any Affiliate has given the Participant notice that the Participant’s
Employment is being terminated for Cause prior to the Participant’s election to terminate
due to the Participant’s Retirement, then the provisions of Section 4(a)(v) shall control;
(iii) Unsatisfactory Performance; Voluntary Termination without Good Reason.
If the Participant’s Employment with the Company and its Affiliates is terminated by the
Company or an Affiliate (other than after a Change in Control as set forth in Section
4(a)(vi)) for unsatisfactory performance, but not for Cause (as determined in its sole
discretion by the Company or any Affiliate), or the Participant voluntarily terminates
Employment at any time without Good Reason, the Participant may exercise the Vested Portion
of the Option for a period ending on the earlier of (A) three months following the date of
such termination and (B) the Expiration Date; provided, that if Participant
satisfies the age and service requirements described in the definition of “Retirement,” then
the provisions of Section 4(a)(ii) shall control; provided further, that if the Company or
any Affiliate has given the Participant notice that the
Participant’s Employment is being terminated for Cause prior to the Participant’s
election to voluntarily terminate Employment without Good Reason, then the provisions of
Section 4(a)(v) shall control;
(iv) Termination other than for Cause. Subject to the provision of Section
4(a)(vi), if the Participant’s Employment with the Company and its Affiliates is terminated
by the Company or an Affiliate for any reason other than by the Company or its Affiliates
for Cause, unsatisfactory performance or due to the Participant’s death or Disability, the
Participant may exercise the Vested Portion of the Option for a period ending on the earlier
of (A) one year following the date of such termination and (B) the Expiration Date; provided
that if Participant satisfies the age and service requirements described in the definition
of “Retirement,” then the provisions of Section 4(a)(ii) shall control;
(v) Termination by the Company for Cause. If the Participant’s Employment with
the Company and its Affiliates is terminated by the Company or an Affiliate for Cause, the
Participant may exercise the Vested Portion of the Option for a period ending on the earlier
of (A) one month following the date of such termination and (B) the Expiration Date;
provided, however, that if the Participant is terminated by the Company or
an Affiliate for Cause on account of one or more acts of fraud, embezzlement or
misappropriation committed by the Participant, the Vested Portion of the Option shall
immediately terminate in full and cease to be exercisable;
(vi) After a Change in Control. If the Participant’s Employment with the
Company and its Affiliates terminates after a Change in Control due to a termination by the
Company other than for Cause or due to the Participant’s resignation for Good Reason, the
Participant may exercise the Vested Portion of the Option for a period ending on the earlier
of (A) one year following the date of such termination and (B) the Expiration Date; provided
that if Participant satisfies the age and service requirements described in the definition
of “Retirement,” then the provisions of Section 4(a)(ii) shall control; and
(vii) Transfers of Employment. If (i) the Company or any Affiliate transfers
the Participant’s Employment to a corporation, company or other entity that is not an
Affiliate or (ii) the Affiliate with which the Participant has a service relationship ceases
to be an Affiliate due to a sale or other disposition by the Company or an Affiliate, the
Option, to the extent not then vested, shall be immediately canceled by the Company without
consideration and the Participant may exercise the Vested Portion of the Option for a period
ending on the earlier of (A) one year following the date of such transfer, sale or other
disposition and (B) the Expiration Date; provided that if Participant satisfies the age and
service requirements described in the definition of “Retirement,” then the provisions of
Section 4(a)(ii) shall control.
(b) Method of Exercise.
(i) Subject to Section 4(a) of this Agreement, the Vested Portion of an Option may be
exercised by delivering to the Company at its principal office written
notice of intent to so exercise; provided that the Option may be exercised with
respect to whole Shares only. Such notice shall specify the number of Shares for which the
Option is being exercised, shall be signed (whether or not in electronic form) by the person
exercising the Option and shall make provision for the payment of the Option Price. Payment
of the aggregate Option Price shall be paid to the Company, at the election of the
Committee, pursuant to one or more of the following methods: (A) in cash, or its equivalent;
(B) by transferring Shares having a Fair Market Value equal to the aggregate Option Price
for the Shares being purchased to the Company and satisfying such other requirements as may
be imposed by the Committee; (C) partly in cash and partly in Shares; or (D) if there is a
public market for the Shares at such time, subject to such rules as may be established by
the Committee, through delivery of irrevocable instructions to a broker to sell the Shares
otherwise deliverable upon the exercise of the Option and to deliver promptly to the Company
an amount equal to the aggregate Option Price. No Participant shall have any rights to
dividends or other rights of a stockholder with respect to the Shares subject to the Option
until the issuance of the Shares.
(ii) Notwithstanding any other provision of the Plan or this Agreement to the contrary,
absent an available exemption to registration or qualification, the Option may not be
exercised prior to the completion of any registration or qualification of the Option or the
Shares under applicable state and federal securities or other laws, or under any ruling or
regulation of any governmental body or national securities exchange that the Committee shall
in its sole reasonable discretion determine to be necessary or advisable.
(iii) Upon the Company’s determination that the Option has been validly exercised as to
any of the Shares, the Company shall issue certificates in the Participant’s name for such
Shares or register the Participant’s ownership of such Shares electronically. However, the
Company shall not be liable to the Participant for damages relating to any delays in issuing
the Shares to the Participant, any loss by the Participant of the certificates, or any
mistakes or errors in the issuance of the certificates or in the certificates themselves.
(iv) In the event of the Participant’s death, the Vested Portion of an Option shall
remain vested and exercisable by the Participant’s executor or administrator, or the person
or persons to whom the Participant’s rights under this Agreement shall pass by will or by
the laws of descent and distribution as the case may be, to the extent set forth in Section
4(a) of this Agreement. Any heir or legatee of the Participant shall take rights herein
granted subject to the terms and conditions hereof.
(v) As a condition to the exercise of any Option evidenced by this Agreement, the
Participant agrees to hold, for a period of twelve (12) months following the date of such
exercise, a number of Shares issued pursuant to such exercise, equal to 75% (rounded down to
the nearest whole Share) of the quotient of (A) and (B), where (A) is the product of (1) the
number of Shares exercised by the Participant multiplied by (2) fifty percent (50%) of the
excess of the Fair Market Value of a Share on the date of exercise over the exercise price
and (B) is the Fair Market Value of a Share on the date of exercise. The holding
requirement related to Shares that is established in this Section
4(b)(v) shall terminate with respect to the Options evidenced by this Agreement (as
well as any Shares issued pursuant to exercise of such Options) on the first anniversary of
the date of termination of the Participant’s Employment with the Company or its Affiliates.
5. No Right to Continued Employment or Future Grants of Options. The Participant
understands that nothing contained herein constitutes an employment contract and neither the Plan
nor this Agreement shall be construed as giving the Participant the right to be retained in the
Employment of the Company or any Affiliate. Further, the Company or its Affiliate may at any time
dismiss the Participant or discontinue any other relationship, free from any liability or any claim
under the Plan or this Agreement, except as otherwise expressly provided herein. The Participant
also agrees and acknowledges that grants of Options under the Plan are discretionary and any grant
of Options under the Plan does not imply or create any obligation on the part of the Company to
make any future grants of Options to the Participant.
6. Legend on Certificates. The certificates representing the Shares purchased by
exercise of an Option shall be subject to such stop transfer orders and other restrictions as the
Committee may deem reasonably advisable under the Plan or the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange upon which such Shares
are listed, any applicable federal or state laws and the Company’s Articles of Incorporation and
Bylaws, and the Committee may cause a legend or legends to be put on any such certificates to make
appropriate reference to such restrictions.
7. Transferability. Unless otherwise determined by the Committee, an Option may not
be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by the
Participant otherwise than by will or by the laws of descent and distribution, and any such
purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void
and unenforceable against the Company or any Affiliate.
8. Withholding. The Participant may be required to pay to the Company or its
Affiliate and the Company or its Affiliate shall have the right and is hereby authorized to
withhold from any payment due or transfer made under the Option or under the Plan or from any
compensation or other amount owing to a Participant the amount (in cash, Shares, other securities,
other Awards or other property) of any applicable withholding taxes in respect of the Option, its
exercise, or any payment or transfer under the Option or under the Plan and to take such action as
may be necessary in the option of the Company to satisfy all obligations for the payment of such
taxes.
9. Securities Laws. Upon the acquisition of any Shares pursuant to the exercise of an
Option, the Participant will make or enter into such written representations, warranties and
agreements as the Committee may reasonably request in order to comply with applicable securities
laws or with this Agreement.
10. Notices. Any notice under this Agreement shall be addressed to the Company in
care of its General Counsel at the principal executive office of the Company, with a copy to the
Director, Global Stock Plans Administration, at the principal executive office of the Company, and
to the Participant at the address appearing in the personnel records of the Company for the
Participant or to either party at such other address as either party hereto may
hereafter designate in writing to the other. Any such notice shall be deemed effective upon
receipt thereof by the addressee.
11. Personal Data. The Company, the Participant’s local employer and the local
employer’s parent company or companies may hold, collect, use, process and transfer, in electronic
or other form, certain personal information about the Participant for the exclusive purpose of
implementing, administering and managing the Participant’s participation in the Plan. Participant
understands that the following personal information is required for the above named purposes:
his/her name, home address and telephone number, office address (including department and employing
entity) and telephone number, e-mail address, date of birth, citizenship, country of residence at
the time of grant, work location country, system employee ID, employee local ID, employment status
(including international status code), supervisor (if applicable), job code, title, salary, bonus
target and bonuses paid (if applicable), termination date and reason, tax payer’s identification
number, tax equalization code, US Green Card holder status, contract type (single/dual/multi), any
shares of stock or directorships held in the Company, details of all stock option grants (including
number of grants, grant dates, exercise price, vesting type, vesting dates, expiration dates, and
any other information regarding options that have been granted, canceled, vested, unvested,
exercisable, exercised or outstanding) with respect to the Participant, estimated tax withholding
rate, brokerage account number (if applicable), and brokerage fees (the “Data”).
Participant understands that Data may be collected from the Participant directly or, on Company’s
request, from Participant’s local employer. Participant understands that Data may be transferred
to third parties assisting the Company in the implementation, administration and management of the
Plan, including the brokers approved by the Company, the broker selected by the Participant from
among such Company-approved brokers (if applicable), tax consultants and the Company’s software
providers (the “Data Recipients”). Participant understands that some of these Data
Recipients may be located outside the Participant’s country of residence, and that the Data
Recipient’s country may have different data privacy laws and protections than the Participant’s
country of residence. Participant understands that the Data Recipients will receive, possess, use,
retain and transfer the Data, in electronic or other form, for the purposes of implementing,
administering and managing the Participant’s participation in the Plan, including any requisite
transfer of such Data as may be required for the administration of the Plan and/or the subsequent
holding of shares of common stock on the Participant’s behalf by a broker or other third party with
whom the Participant may elect to deposit any shares of common stock acquired pursuant to the Plan.
Participant understands that Data will be held only as long as necessary to implement, administer
and manage the Participant’s participation in the Plan. Participant understands that Data may also
be made available to public authorities as required by law, e.g., to the U.S. government.
Participant understands that the Participant may, at any time, review Data and may provide updated
Data or corrections to the Data by written notice to the Company. Except to the extent the
collection, use, processing or transfer of Data is required by law, Participant may object to the
collection, use, processing or transfer of Data by contacting the Company in writing. Participant
understands that such objection may affect his/her ability to participate in the Plan. Participant
understands that he/she may contact the Company’s Stock Plan Administration to obtain more
information on the consequences of such objection.
12. Governing Law; Submission to Jurisdiction. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York, without regard
to conflicts of laws, and any and all disputes between the Participant and the Company or any
Affiliate relating to the Option shall be brought only in a state or federal court of competent
jurisdiction sitting in Manhattan, New York, and the Participant and the Company and any Affiliate
hereby irrevocably submit to the jurisdiction of any such court and irrevocably agree that venue
for any such action shall be only in any such court.
13. Entire Agreement. This Agreement, together with the Notice and the Plan, embodies
the entire agreement and understanding between the parties hereto with respect to the subject
matter hereof and supersedes all prior oral or written agreements and understandings relating to
the subject matter hereof. No statement, representation, warranty, covenant or agreement not
expressly set forth in this Agreement or the Notice shall affect or be used to interpret, change or
restrict, the express terms and provisions of this Agreement or the Notice; provided, that
this Agreement and the Notice shall be subject to and governed by the Plan, and in the event of any
inconsistency between the provisions of this Agreement or the Notice and the provisions of the
Plan, the provisions of the Plan shall govern.
14. Modifications And Amendments. The terms and provisions of this Agreement and the
Notice may be modified or amended as provided in the Plan.
15. Waivers And Consents. Except as provided in the Plan, the terms and provisions of
this Agreement and the Notice may be waived, or consent for the departure therefrom granted, only
by a written document executed by the party entitled to the benefits of such terms or provisions.
No such waiver or consent shall be deemed to be or shall constitute a waiver or consent with
respect to any other terms or provisions of this Agreement or the Notice, whether or not similar.
Each such waiver or consent shall be effective only in the specific instance and for the purpose
for which it was given, and shall not constitute a continuing waiver or consent.
16. Reformation; Severability. If any provision of this Agreement or the Notice
(including any provision of the Plan that is incorporated herein by reference) shall hereafter be
held to be invalid, unenforceable or illegal, in whole or in part, in any jurisdiction under any
circumstances for any reason, (i) such provision shall be reformed to the minimum extent necessary
to cause such provision to be valid, enforceable and legal while preserving the intent of the
parties as expressed in, and the benefits of the parties provided by, this Agreement, the Notice
and the Plan or (ii) if such provision cannot be so reformed, such provision shall be severed from
this Agreement or the Notice and an equitable adjustment shall be made to this Agreement or the
Notice (including, without limitation, addition of necessary further provisions) so as to give
effect to the intent as so expressed and the benefits so provided. Such holding shall not affect
or impair the validity, enforceability or legality of such provision in any other jurisdiction or
under any other circumstances. Neither such holding nor such reformation or severance shall affect
the legality, validity or enforceability of any other provision of this Agreement, the Notice or
the Plan.
17. Entry into Force. By entering into this Agreement, the Participant agrees and
acknowledges that (i) the Participant has received and read a copy of the Plan and (ii) the Option
is granted pursuant to the Plan and is therefore subject to all of the terms of the Plan. The
Participant acknowledges and agrees that the Participant may be entitled from time to time to
receive certain other documents related to the Company, including the Company’s annual report
to stockholders and proxy statement related to its annual meeting of stockholders (which become
available each year approximately three months after the end of the calendar year), and the
Participant consents to receive such documents electronically through the Internet or as the
Company otherwise directs.
