EXHIBIT 10.10
Annex A, Version 3
to the Restricted Shares Agreement
For Awards starting in February 2005
Restricted Shares Agreement
General Terms and Conditions
The Award is subject to the following terms and conditions:
1. Certain Definitions. For the purposes of the Restricted Shares Agreement of
which this Annex A is a part (the "Agreement"), the term "Holder" shall
mean the employee or prospective employee of the Company and its
Subsidiaries identified in the Agreement. Capitalized terms used but not
defined in this Agreement shall have the same meaning given to such terms
in the Plan. In the event there is any inconsistency between the provisions
of this Agreement and the Plan, the provisions of the Plan shall govern.
2. Restricted Shares. The Restricted Shares will be represented by a Common
Stock certificate, or other evidence of ownership (a "stock certificate"),
registered in the name of the Holder and will constitute issued and
outstanding shares for all corporate purposes. Each stock certificate will
be issued bearing a restrictive legend in substantially the form as
follows:
"The shares represented by this certificate are subject to the
restrictions, terms and conditions (including forfeiture and
restrictions against transfer) contained in the Plan and the
Agreement) between the registered holder hereof and Time Warner Inc.
Copies of the Plan and Agreement are on file in the Office of the
General Counsel of Time Warner Inc."
3. Restriction Period; Rights of Holder; Custody of Stock Certificates and
Retained Distributions. During the Restriction Period with respect to each
portion of the Award, the Holder will generally exercise all the rights,
powers, and privileges of a holder of Common Stock, including the right to
vote the Restricted Shares registered in his or her name and to receive all
regular cash dividends and such other distributions as the Board of
Directors of the Company (the "Board") or any Committee (the "Committee")
to which the Board or any Committee of the Board has delegated such
authority may in its sole discretion designate that are paid or distributed
on such Restricted Shares.
However, until the end of the Restriction Period with respect to each
portion of the Award, the Holder:
a) will not be entitled to take possession of the stock certificate(s)
representing the Restricted Shares covered by that portion of the
Award;
b) may not sell, transfer, encumber or otherwise dispose of the
Restricted Shares covered by that portion of the Award; and
c) will not receive distributions made or declared with respect to the
Restricted Shares covered by that portion of the Award which the Board
or the Committee shall in its sole discretion designate as retained
distributions ("Retained Distributions"). Retained Distributions will
not bear interest or be segregated in a separate account and will be
subject to the same restrictions as the Restricted Shares to which
they relate.
4. Vesting and Delivery of Vested Securities. Subject to the terms and
provisions of the Plan and this Agreement, on each Vesting Date with
respect to the Award, all of the Restricted Shares and the Retained
Distributions, if any, covered by that portion of the Award shall become
unconditionally vested. Except as otherwise provided in paragraphs 6 and 7,
the vesting of such Restricted Shares and any Retained Distributions
relating thereto shall occur only if the Holder is an employee of the
Company or any of its Subsidiaries on the Vesting Date and has continuously
been so employed since the Date of Award.
Subject to paragraph 9 hereof, when any Restricted Shares and any Retained
Distributions vest, the Company will promptly issue and deliver to the
Holder new Common Stock certificates or other evidence of ownership of the
vested securities, registered in the name of the Holder or, if deceased,
his or her legatees, personal representatives or distributees without the
legend set forth in paragraph 2 of this Agreement.
5. Power of Attorney. The Company, its successors and assigns, is hereby
appointed the attorney-in-fact, with full power of substitution, of the
Holder for the sole purpose of carrying out the provisions of this
Agreement and taking any action and executing any instruments which such
attorney-in-fact may deem necessary or advisable to accomplish the purposes
hereof, which appointment as attorney-in-fact is irrevocable and coupled
with an interest. The Company as attorney-in-fact for the Holder may in the
name and stead of the Holder, make and execute all conveyances, assignments
and transfers (including to the Company) of the Restricted Shares and
Retained Distributions relating thereto held by the Company during the
Restriction Period and the Holder hereby ratifies and confirms all that the
Company, as said attorney-in-fact, shall do by virtue hereof, provided that
the foregoing shall be solely for the purpose of carrying out the
provisions of this Agreement. Nevertheless, the Holder shall, if so
requested by the Company, execute and deliver to the Company all such
instruments as may, in the reasonable judgment of the Company, be advisable
for the purpose.
6. Termination of Employment.
(a) If the Holder's employment with the Company or any of its Subsidiaries
is (i) terminated by the Holder for any reason other than those
described in clauses (b) and (c) below or (ii) terminated for cause
(as defined below) by the Company
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or any of its Subsidiaries prior to the Vesting Date with respect to
any portion of the Award, then the Restricted Shares covered by any
such portion of the Award and all Retained Distributions relating
thereto shall be completely forfeited on the date of any such
termination.
(b) If the Holder's employment terminates as a result of his or her (i)
death or (ii) "permanent and total disability" (as defined below),
then the Restricted Shares for which a Vesting Date has not yet
occurred and all Retained Distributions relating thereto shall fully
vest on the date of any such termination.
(c) If the Holder's employment is terminated (i) by the Company or any of
its Subsidiaries for any reason other than for cause, or (ii) by the
Holder as a result of a breach by the Company or any of its
Subsidiaries of an employment agreement between the Holder and the
Company or any Subsidiary, then a pro rata portion of the Restricted
Shares that would vest on the next Vesting Date, and any Retained
Distributions relating thereto, shall become vested determined as
follows:
(x) the number of Restricted Shares covered by the portion of
the Award that would vest on the next Vesting Date
multiplied by;
(y) a fraction, the numerator of which shall be the number of
days from the last Vesting Date (or the Date of Award if
there has not yet occurred a Vesting Date) preceding the
date of such termination of employment through the date of
such termination, and the denominator of which shall be the
number of days from the last Vesting Date (or the Date of
Award if there has not yet occurred a Vesting Date) through
the next succeeding Vesting Date.
If the product of (x) and (y) results in a fractional share, such
fractional share shall be rounded to the next higher whole share.
The Restricted Shares and any Retained Distributions related thereto
that have not vested shall be completely forfeited on the date of any
such termination.
For purposes of this paragraph 6,
(1) "termination for cause" shall be determined in accordance with
the provisions of Section 9.2 of the Plan;
(2) "permanent and total disability" shall have the meaning as
defined in Section 22(e)(3) of the Internal Revenue Code of 1986,
as amended (the "Code"), or such other meaning as the Committee
in its discretion, may adopt from time to time, provided that any
such meaning is more favorable to the Holder;
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(3) a temporary leave of absence shall not constitute a termination
of employment or a failure to be continuously employed by the
Company or any Subsidiary regardless of the Holder's payroll
status during such leave of absence if such leave of absence is
approved in writing by the Company or any Subsidiary; subject to
the other terms and conditions of the Agreement and the Plan.
Notice of any such approved leave of absence should be sent to
the Company at the address set forth in paragraph 14 of this
Agreement, but such notice shall not be required for the leave of
absence to be considered approved.
(4) In the event the Holder's employment with the Company or any of
its Subsidiaries is terminated, the Holder shall have no claim
against the Company with respect to the Restricted Shares and
related Retained Distributions, if any, other than as set forth
in this paragraph 6, the provisions of this paragraph 6 being the
sole remedy of the Holder with respect thereto.
7. Acceleration of Vesting Date. Notwithstanding the provisions of Section 8
of the Plan, the Award will not vest upon the occurrence of any "Approved
Transaction", "Board Change" or "Control Purchase" as such terms are
defined in Section 2 of the Plan. However, in the event a Change in Control
(as defined below in this paragraph 7) has occurred, the Award will vest in
full upon the earlier of (i) the expiration of the one-year period
immediately following the Change in Control, provided the Holder's
employment with the Company or any of its Subsidiaries has not been
terminated, (ii) the original Vesting Date with respect to each portion of
the Award, or (iii) the termination of the Holder's employment by the
Company or any of its Subsidiaries under the circumstances described in
paragraph 6(c) hereof. In the event of any such vesting as described in
clauses (i) and (iii) of the preceding sentence, the date described in such
clauses shall be the Vesting Date.
For the purposes hereof "Change in Control" shall mean the happening of any
of the following events:
a) the acquisition by any individual, entity or group (an "Entity"),
including any "person" within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 30% or more of either (i)
the then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting power
of the then outstanding securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Company
Voting Securities"); excluding, however, the following: (A) any
acquisition directly from the Company (excluding any acquisition by
virtue of the exercise of an exercise, conversion or exchange
privilege unless the security being so exercised, converted or
exchanged was itself acquired directly from the Company), (B) any
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acquisition by the Company, or (C) any acquisition by an employee
benefit plan (or related trust) sponsored or maintained by the Company
or by any corporation controlled by the Company;
b) A change in the composition of the Board since January 12, 2001, such
that the individuals who, as of such date, constituted the Board (the
"Incumbent Board") cease for any reason to constitute at least a
majority of such Board; provided that any individual who becomes a
director of the Company subsequent to January 12, 2001 whose election
or nomination for election by the stockholders of the Company, was
approved by the vote of at least a majority of the directors then
comprising the Incumbent Board shall be deemed a member of the
Incumbent Board; and provided further, that any individual who was
initially elected as a director of the Company as a result of an
actual or threatened election contest, as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Exchange Act, or any
other actual or threatened solicitation of proxies or consents by or
on behalf of any person or entity other than the Board shall not be
deemed a member of the Incumbent Board;
c) A reorganization, recapitalization, merger or consolidation (a
"Corporate Transaction") of the Company, unless securities
representing 60% or more of either the outstanding shares of common
stock or the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors of
the Company or the corporation resulting from such Corporate
Transaction (or the parent of such corporation) are held subsequent to
such transaction by the person or persons who were the beneficial
holders of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such Corporate
Transaction, in substantially the same proportions as their ownership
immediately prior to such Corporate Transaction; or
d) The sale, transfer or other disposition of all or substantially all of
the assets of the Company.
8. Limitation on Acceleration. Notwithstanding any provision to the contrary
in the Plan or this Agreement, if the Payment (as hereinafter defined) due
to the Holder hereunder as a result of the acceleration of vesting of the
Restricted Shares pursuant to Section 8 of the Plan or paragraph 7 of this
Agreement, either alone or together with all other Payments received or to
be received by the Holder from the Company or any of its Subsidiaries
(collectively, the "Aggregate Payments"), or any portion thereof, would be
subject to the excise tax imposed by Section 4999 of the Code (or any
successor thereto), the following provisions shall apply:
a) If the net amount that would be retained by the Holder after all taxes
on the Aggregate Payments are paid would be greater than the net
amount that would be retained by the Holder after all taxes are paid
if the Aggregate Payments were limited to the largest amount that
would result in no portion of the Aggregate
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Payments being subject to such excise tax, the Holder shall be
entitled to receive the Aggregate Payments.
b) If, however, the net amount that would be retained by the Holder after
all taxes were paid would be greater if the Aggregate Payments were
limited to the largest amount that would result in no portion of the
Aggregate Payments being subject to such excise tax, the Aggregate
Payments to which the Holder is entitled shall be reduced to such
largest amount.
The term "Payment" shall mean any transfer of property within the meaning
of Section 280G of the Code.
The determination of whether any reduction of Aggregate Payments is
required and the timing and method of any such required reduction in
Payments under this Agreement or in any such other Payments otherwise
payable by the Company or any of its Subsidiaries consistent with any such
required reduction, shall be made by the Holder, including whether any
portion of such reduction shall be applied against any cash or any shares
of stock of the Company or any other securities or property to which the
Holder would otherwise have been entitled under this Agreement or under any
such other Payments, and whether to waive the right to the acceleration of
the Payment due under this Agreement or any portion thereof or under any
such other Payments or portions thereof, and all such determinations shall
be conclusive and binding on the Company and its Subsidiaries. To the
extent that Payments hereunder or any such other Payments are not paid as a
consequence of the limitation contained in this paragraph 8, then the
Restricted Shares and Retained Distributions related thereto (to the extent
not so accelerated) and such other Payments (to the extent not vested)
shall be deemed to remain outstanding and shall be subject to the
provisions hereof and of the Plan as if no acceleration or vesting had
occurred. Under such circumstances, if the Holder terminates employment as
a result of a breach by the Company or any of its Subsidiaries of an
employment agreement between the Holder and the Company or any such
Subsidiary or is terminated by the Company or any of its Subsidiaries
without cause, the Restricted Shares and Retained Distributions related
thereto (to the extent that they have not already become vested) shall
become immediately vested in their entirety upon such termination subject
to the provisions relating to Section 4999 of the Code set forth herein.
The Company shall promptly pay, upon demand by the Holder, all legal fees,
court costs, fees of experts and other costs and expenses which the Holder
incurred in any actual, threatened or contemplated contest of the Holder's
interpretation of, or determination under, the provisions of this paragraph
8.
9. Withholding Taxes. The Holder agrees that, subject to paragraph 10 hereof,
a) Obligation to Pay Withholding Taxes. Upon the vesting of any portion
of the Award of Restricted Shares and the Retained Distributions
relating thereto, the Holder will be required to pay to the Company
any applicable Federal, state, local or foreign withholding tax due as
a result of such vesting. The Company's
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obligation to deliver the Restricted Shares or Retained Distributions
shall be subject to such payment. The Company and its Subsidiaries
shall, to the extent permitted by law, have the right to deduct from
any payment of any kind otherwise due to the Holder any Federal,
state, local or foreign withholding taxes due with respect to such
vesting.
b) Payment of Taxes with Stock. Subject to the Committee's right to
disapprove any such election and require the Holder to pay the
required withholding tax in cash and subject to paragraph 10 hereof,
the Holder shall have the right to elect to pay the withholding tax
with shares of Common Stock to be received upon vesting or which are
otherwise owned by the Holder. Unless the Company shall permit another
valuation method to be elected by the Holder, shares of Common Stock
used to pay any required withholding taxes shall be valued at the mean
between the high and low sales price of a share of Common Stock as
reported on the New York Stock Exchange Composite Tape on the date the
withholding tax becomes due (hereinafter called the "Tax Date").
c) Conditions to Payment of Taxes with Stock. Any election to pay
withholding taxes with stock must be made on or prior to the Tax Date
and will be irrevocable once made. Any such election must be made in
conformity with conditions established by the Committee from time to
time.
10. Section 83(b) Election. If the Holder properly elects (which, apart from
any other notice required by law, shall require that the Holder notify the
Company of such election at the time it is made) within 30 days after the
Date of Award or, in certain circumstances, within 30 days after the date
any condition precedent to the Award is satisfied, to include in gross
income for Federal income tax purposes an amount equal to the fair market
value of such Restricted Shares on the Date of Award, the holder shall
promptly pay to the Company any Federal, state, local or foreign
withholding taxes due with respect to such Restricted Shares. If the Holder
fails to make such payment, the Company and its Subsidiaries shall, to the
extent permitted by law, have the right to deduct from any payment of any
kind otherwise due to the Holder any Federal, state, local or foreign
withholding taxes due with respect to such Restricted Shares. Holders may
use shares of Common Stock otherwise owned by them to pay such withholding
taxes provided such Holders comply with the provisions of paragraph 9
hereof.
11. Changes in Capitalization and Government and Other Regulations. This
Agreement shall be subject to all of the terms and provisions as provided
in this Annex A and in the Plan, which are incorporated by reference herein
and made a part hereof, including, without limitation, the provisions of
Section 11 of the Plan (generally relating to adjustments to the number of
shares of Common Stock subject to the Award, upon certain changes in
capitalization and certain reorganizations and other transactions); and
Section 15 of the Plan (generally relating to the requirements of
securities and other laws).
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12. Forfeiture. A breach of any of the foregoing restrictions or a breach of
any of the other restrictions, terms and conditions of the Plan or this
Agreement, with respect to any of the Restricted Shares or any Retained
Distributions relating thereto, except as waived by the Board or the
Committee, will cause a forfeiture of such Restricted Shares and any
Retained Distributions relating thereto.
13. Right of Company to Terminate Employment. Nothing contained in the Plan or
this Agreement shall confer on any Holder any right to continue in the
employ of the Company or any of its Subsidiaries and the Company and any
such Subsidiary shall have the right to terminate the employment of the
Holder at any such time, with or without cause, notwithstanding the fact
that some or all of the Restricted Shares and Retained Distributions
covered by this Agreement may be forfeited as a result of such termination.
14. Notices. Any notice which either party hereto may be required or permitted
to give the other shall be in writing and may be delivered personally or by
mail, postage prepaid, addressed to Time Warner Inc., at One Time Xxxxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000, attention Director-Global Stock
Plans Administration; and to the Holder at his or her address, as it is
shown on the records of the Company or its Subsidiary, or in either case to
such other address as the Company or the Holder, as the case may be, by
notice to the other may designate in writing from time to time.
15. Interpretation and Amendments. The Board and the Committee (to the extent
delegated by the Board) have plenary authority to interpret this Agreement
and the Plan, to prescribe, amend and rescind rules relating thereto and to
make all other determinations in connection with the administration of the
Plan. The Board or the Committee may from time to time modify or amend this
Agreement in accordance with the provisions of the Plan, provided that no
such amendment shall adversely affect the rights of the Holder under this
Agreement without his or her consent.
16. Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the Company and its successors and assigns, and shall be
binding upon and inure to the benefit of the Holder and his or her
legatees, distributees and personal representatives.
17. Copy of the Plan. By entering into the Agreement, the Holder agrees and
acknowledges that he or she has received and read a copy of the Plan.
18. Governing Law. The Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York without regard to any
choice of law rules thereof which might apply the laws of any other
jurisdiction.
19. Waiver of Jury Trial. To the extent not prohibited by applicable law which
cannot be waived, each party hereto hereby waives, and covenants that it
will not assert (whether as plaintiff, defendant or otherwise), any right
to trial by jury in any forum in respect of any suit, action, or other
proceeding arising out of or based upon this Agreement.
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20. Submission to Jurisdiction; Service of Process. Each of the parties hereto
hereby irrevocably submits to the jurisdiction of the state courts of the
State of New York and the jurisdiction of the United States District Court
for the Southern District of New York for the purposes of any suit, action
or other proceeding arising out of or based upon this Agreement. Each of
the parties hereto to the extent permitted by applicable law hereby waives,
and agrees not to assert, by way of motion, as a defense, or otherwise, in
any such suit, action or proceeding brought in such courts, any claim that
it is not subject personally to the jurisdiction of the above-named courts,
that its property is exempt or immune from attachment or execution, that
such suit, action or proceeding in the above-referenced courts is brought
in an inconvenient forum, that the venue of such suit, action or
proceedings, is improper or that this Agreement may not be enforced in or
by such court. Each of the parties hereto hereby consents to service of
process by mail at its address to which notices are to be given pursuant to
paragraph 14 hereof.
21. Consent of Spouse. If the Holder is married as of the date of this
Agreement, the Holder's spouse shall execute a Consent of Spouse in the
form of Exhibit A hereto, effective as of the date hereof. Such consent
shall not be deemed to confer or convey to the spouse any rights in the
Restricted Shares that do not otherwise exist by operation of law or the
agreement of the parties. If the Holder marries or remarries subsequent to
the date hereof, the Holder shall, not later than 60 days thereafter,
obtain the new spouse's acknowledgement of and consent to the existence and
binding effect of all restrictions contained in this Agreement by such
spouse's executing and delivering a Consent of Spouse in the form of
Exhibit A.
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Exhibit A
CONSENT OF SPOUSE
I, _______________, spouse of __________________, acknowledge that I have
read the RESTRICTED SHARES AGREEMENT dated as of ___________________ (the
"Agreement") to which this Consent is attached as Exhibit A and that I know its
contents. Capitalized terms used and not defined herein shall have the meaning
assigned to such terms in the Agreement. I am aware that by its provisions the
Restricted Shares granted to my spouse pursuant to the Agreement are subject to
forfeiture in favor of Time Warner Inc. (the "Company") and that, accordingly,
the Company has the right to cause the forfeiture of and to repurchase up to all
of the Restricted Shares of which I may become possessed as a result of a gift
from my spouse or a court decree and/or any property settlement in any domestic
litigation.
I hereby agree that my interest, if any, in the Restricted Shares subject
to the Agreement shall be irrevocably bound by the Agreement and further
understand and agree that any community property interest I may have in the
Restricted Shares shall be similarly bound by the Agreement.
I agree to the forfeiture provisions described in the Agreement and I
hereby consent to the forfeiture of the Restricted Shares to the Company in
accordance with the provisions of the Agreement. Further, as part of the
consideration for the Agreement, I agree that at my death, if I have not
disposed of any interest of mine in the Restricted Shares by an outright bequest
of the Restricted Shares to my spouse, then the Company shall have the same
rights against my legal representative to exercise its rights of repurchase with
respect to any interest of mine in the Restricted Shares as it would have had
pursuant to the Agreement if I had acquired the Restricted Shares pursuant to a
court decree in domestic litigation.
I AM AWARE THAT THE LEGAL, FINANCIAL AND RELATED MATTERS CONTAINED IN THE
AGREEMENT ARE COMPLEX AND THAT I AM FREE TO SEEK INDEPENDENT PROFESSIONAL
GUIDANCE OR COUNSEL WITH RESPECT TO THIS CONSENT. I HAVE EITHER SOUGHT SUCH
GUIDANCE OR COUNSEL OR DETERMINED AFTER REVIEWING THE AGREEMENT CAREFULLY THAT I
WILL WAIVE SUCH RIGHT.
Dated as of the ___ day of __________, ______.
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Signature
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Printed name
