NONQUALIFIED STOCK OPTION AGREEMENT
FOR CORPORATE OFFICERS
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AGREEMENT made as of the 11th day of June 1996 (the
"Grant Date"), between Telemundo Group, Inc., a Delaware
corporation (the "Company"), and Xxxxxx X. Xxxxxxxx (the
"Optionee").
WHEREAS, the Company has adopted the 1994 Stock Plan
(the "Plan") in order to provide additional incentive to
certain officers and employees of the Company and its
Subsidiaries; and
WHEREAS, the Committee responsible for administration
of the Plan has determined to grant an option to the
Optionee as provided herein;
NOW, THEREFORE, the parties hereto agree as follows:
1. Grant of Option.
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1.1 The Company hereby grants to the Optionee
the right and option (the "Option") to purchase all or any
part of an aggregate of 75,000 whole shares of Stock
subject to, and in accordance with, the terms and
conditions set forth in this Agreement.
1.2 The Option is not intended to qualify as an
Incentive Stock Option within the meaning of Section 422 of
the Code.
1.3 This Agreement shall be construed in
accordance and consistent with, and subject to, the
provisions of the Plan (the provisions of which are
incorporated herein by reference) and, except as otherwise
expressly set forth herein, the capitalized terms used in
this Agreement shall have the same definitions as set forth
in the Plan.
2. Purchase Price.
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The price at which the Optionee shall be entitled to
purchase shares of Stock upon the exercise of the Option
shall be $23.375 per share.
3. Duration of Option.
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The Option shall be exercisable to the extent and in
the manner provided herein for a period of ten years from
the Grant Date (the "Exercise Term"); provided, however,
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that the Option may be earlier terminated as provided in
Section 7 hereof.
4. Earnings Target.
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Set forth on Exhibit A attached hereto are the
earnings targets for Adjusted Net Contribution established
by the Committee for the Company, for the fiscal years
ended December 31, 1996, 1997 and 1998 (the "Earnings
Targets").
5. Exercisability of Option.
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Unless otherwise provided in this Agreement or the
Plan, the Option shall entitle the Optionee to purchase, in
whole at any time or in part from time to time, shares of
Stock covered by the Option to the extent the Option has
become "vested." Except as provided in Section 7, the
Option shall "vest" as to the following shares of Stock
upon the later of (i) certification by the Committee that
the Company has attained 90% of the Earnings Target set for
each fiscal year set forth below, and (ii) the respective
anniversary date of this Agreement immediately following
the end of such fiscal year (such date of vesting referred
to as the "Vesting Date"):
Upon certification
Option vests as to the that Earnings Target
following number of Shares met for fiscal year end:
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25,000 1996
25,000 1997
25,000 1998
To the extent the Company has failed to attain 90% of
the Earnings Target for any fiscal year end, the Option shall
not vest as to the number of shares of Stock related to such
fiscal year end ("Lost Shares") and the Optionee shall not be
entitled under any circumstances to exercise the Option in
respect of such Lost Shares, except as provided in the second
following sentence. Within 30 days after the date the
Company's independent auditors certify the Company's
financial statements for fiscal year, the Committee shall
meet to certify whether or not 90% of the Earnings Target for
such fiscal year has been met. Notwithstanding the
foregoing, any shares of Stock which have not vested as set
forth above shall "vest" nine years from the Grant Date if,
but only if, Optionee has been employed with the Company from
the Grant Date until such time. Each right of purchase shall
be cumulative and shall continue, unless sooner exercised or
terminated as herein provided, during the remaining period of
the Exercise Term.
6. Manner of Exercise and Payment.
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6.1 Subject to the terms and conditions of this
Agreement and the Plan, the Option may be exercised by
delivery of written notice to the Company, at its principal
executive office. Such notice shall state that the
Optionee is electing to exercise the Option and the number
of shares of Stock in respect of which the Option is being
exercised and shall be signed by the person or persons
exercising the Option. If requested by the Committee, such
person or persons shall (i) deliver this Agreement to the
Secretary of the Company who shall endorse thereon a
notation of such exercise and (ii) provide satisfactory
proof as to the right of such person or persons to exercise
the Option.
6.2 The notice of exercise described in Section
6.1 shall be accompanied by the full purchase price for the
shares of Stock in respect of which the Option is being
exercised and by the Withholding Taxes, in cash, by check
or, in the discretion of the Committee, by transferring
shares of Stock to the Company held by the Optionee for
more than six months and having a Fair Market Value on the
day preceding the date of exercise equal to the cash amount
for which such shares of Stock are substituted.
6.3 Upon receipt of notice of exercise and full
payment for the shares of Stock in respect of which the
Option is being exercised and of the Withholding Taxes, the
Company shall, subject to Section 14 of the Plan, promptly
take such action as may be necessary to effect the transfer
to the Optionee of the number of shares of Stock as to
which such exercise was effective, including issuing and
delivering such shares of Stock and entering the Optionee's
name as a stockholder of record on the books of the
Company.
6.4 The Optionee shall not be deemed to be the
holder of, or to have any of the rights of a holder with
respect to, any shares of Stock subject to the Option until
(i) the Option shall have been exercised pursuant to the
terms of this Agreement and the Optionee shall have paid
the full purchase price for the number of shares of Stock
in respect of which the Option was exercised, (ii) the
Company shall have issued and delivered the shares of Stock
to the Optionee, and (iii) the Optionee's name shall have
been entered as a stockholder of record on the books of the
Company, whereupon the Optionee shall have full voting and
other ownership rights with respect to such shares.
7. Termination of Employment.
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7.1 Termination other than for Cause or
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following Change of Control. If the employment of the
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Optionee is terminated by the Company or by the Optionee
for any reason other than for Cause or following a Change
of Control, the Optionee may at any time within one year
after such termination of employment (but in no event after
the expiration of the Exercise Term) exercise the Option to
the extent, but only to the extent, that the Option or
portion thereof was exercisable on the date of such
termination of employment, provided, however, that (a) if
the Optionee and Company enter into or have entered into a
written employment agreement providing for a guaranteed
term of employment, and if Optionee is terminated by the
Company, for any reason other than for Cause (as defined in
the Plan or in such written employment agreement) or
following a Change of Control prior to the expiration of
such guaranteed employment period, then the portion of the
Option that would have been exercisable had employment
continued until the next Vesting Date and had the relevant
Earnings Target been met, shall, regardless of whether such
Earnings Target is met, be deemed to have been exercisable
on the date of such termination of employment; and (b) if
the Optionee's employment is terminated by the Company or
by the Optionee for any reason other than for Cause or
following a Change of Control after the fiscal year end but
before the Committee certifies that the Earnings Target has
been met, the portion of the Option that would have been
exercisable as a result of meeting the Earnings Targets
shall, if the Earnings Targets are met and if the
termination occurred after the relevant anniversary date,
be deemed to have been exercisable on the date of such
termination of employment (and in such case the one year
period referred to in the first sentence of this section
7.1 shall be deemed to commence upon the date of
certification of the Earnings Targets being met). For
purposes of this Agreement, an Optionee's employment will
be considered terminated upon (i) an actual termination,
(ii) a change in the Optionee's status, title, position or
responsibilities (including reporting responsibilities)
which, in the Committee's reasonable judgment, represents a
demotion from his status, title, position or
responsibilities as in effect immediately prior thereto, or
(iii) the assignment to the Optionee of any duties or
responsibilities which, in the Committee's reasonable
judgment, are inconsistent with such status, title,
position or responsibilities. In the event of the
Optionee's death, the Option shall be exercisable, to the
extent provided in the Plan and this Agreement, by the
legatee or legatees under his will, or by his personal
representatives or distributees, and such person or persons
shall be substituted for the Optionee each time the
Optionee is referred to herein.
7.2 Change of Control. If the Optionee's
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employment is terminated by the Company or by the Optionee
following a Change in Control, the provisions of Section 8
shall apply.
7.3 Termination for Cause. Notwithstanding
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anything to the contrary contained herein, if the
employment of the Optionee is terminated for Cause, the
Option shall terminate on the date of the Optionee's
termination of employment whether or not exercisable.
8. Effect of Change in Control.
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Notwithstanding anything contained in the Plan or
this Agreement to the contrary other than the last sentence
of this Section 8, in the event of a Change in Control
(A) all Options outstanding on the date of such Change in
Control (other than the Lost Shares) shall become
immediately and fully exercisable and (B) upon termination
of an Optionee's employment with the Company following a
Change in Control, Options held by such Optionee shall
remain exercisable until the later of (x) one year after
termination and (y) sixty (60) days following the
expiration of the Pooling Period (in the event the Change
in Control constitutes a Pooling Transaction), but in no
event beyond the stated term of the Option. In the case of
a Change in Control which also constitutes a Pooling
Transaction, the Board may take such actions which it
determines, after consultation with its advisors, are
reasonably necessary in order to assure that the Pooling
Transaction will qualify as such, including, but not
limited to, providing that all Options specifically
identified by the Committee shall not become immediately
and fully exercisable on the date of the Change in Control
but rather shall become immediately and fully exercisable
on the date following the last day of the Pooling Period
(whether or not the Optionee is then an employee of the
Company).
9. Nontransferability.
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The Option shall not be transferable other than by
will or by the laws of descent and distribution. During
the lifetime of the Optionee, the Option shall be
exercisable only by the Optionee.
10. No Right to Continued Employment.
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Nothing in this Agreement (as opposed to the
Employee's employment agreement, if any) or the Plan shall
be interpreted or construed to confer upon the Optionee any
right with respect to continuance of employment by the
Company, nor shall this Agreement or the Plan interfere in
any way with the right of the Company to terminate the
Optionee's employment at any time.
11. Adjustments.
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In the event of a Change in Capitalization, the
Committee shall conclusively determine the appropriate
adjustments to the number and class of shares of Stock
subject to the Option and the purchase price for such
shares of Stock. The Committee's adjustment shall be made
in accordance with the provisions of Section 4.5 of the
Plan and shall be effective and final, binding and
conclusive for all purposes of the Plan and this Agreement.
12. Certain Events.
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Subject to Section 8 hereof, upon the effective date
of (i) the liquidation or dissolution of the Company or
(ii) a merger or consolidation of the Company
(a "Transaction"), the Option shall continue in effect in
accordance with its terms and the Optionee shall be
entitled to receive in respect of all shares of Stock
subject to the Option, upon exercise of the Option, the
same number and kind of stock, securities, cash, property
or other consideration that each holder of shares of Stock
was entitled to receive in the Transaction.
13. Withholding of Taxes.
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At such times as an Optionee recognizes taxable
income in connection with the receipt of shares of Stock,
securities, cash or property hereunder (a "Taxable Event"),
the Optionee shall pay to the Company an amount equal to
the federal, state and local income taxes and other amounts
as may be required by law to be withheld by the Company in
connection with the Taxable Event (the "Withholding Taxes")
prior to the issuance, or release from escrow, of such
shares of Stock or securities or the payment of such cash
or such property. The Company shall have the right to
deduct from any payment of cash to an Optionee or Grantee
an amount equal to the Withholding Taxes in satisfaction of
the obligation to pay Withholding Taxes. In satisfaction
of the obligation to pay Withholding Taxes to the Company,
the Optionee may make a written election (the "Tax
Election"), which may be accepted or rejected in the
discretion of the Committee, to have withheld a portion of
the shares then issuable to him having an aggregate Fair
Market Value, on the date preceding the date of such
issuance, equal to the Withholding Taxes, provided that in
respect of an Optionee who may be subject to liability
under Section 16(b) of the Exchange Act either: (i) the
Tax Election is made at least six (6) months prior to the
date of the Taxable Event and the Tax Election is
irrevocable with respect to all Taxable Events of a similar
nature occurring prior to the expiration of six (6) months
following a revocation of the Tax Election; or (ii) in the
case of the exercise of an Option (A) the Optionee makes
the Tax Election at least six (6) months after the date the
Option was granted, (B) the Option is exercised during the
ten (10) day period beginning on the third business day and
ending on the twelfth business day following the release
for publication of the Company's quarterly or annual
statement of sales and earnings (a "Window Period") and
(C) the Tax Election is made during the Window Period in
which the related Option is exercised or prior to such
Window Period and subsequent to the immediately preceding
Window Period. Notwithstanding the foregoing, the
Committee may, by the adoption of rules or otherwise,
(i) modify the provisions of this Section 13 or impose such
other restrictions or limitations on Tax Elections as may
be necessary to ensure that the Tax Elections will be
exempt transactions under Section 16(b) of the Exchange
Act, and (ii) permit Tax Elections to be made at such other
times and subject to such other conditions as the Committee
determines will constitute exempt transactions under
Section 16(b) of the Exchange Act.
14. Employee Bound by the Plan.
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The Optionee hereby acknowledges receipt of a copy
of the Plan and agrees to be bound by all the terms and
provisions thereof.
15. Modification of Agreement.
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This Agreement may be modified, amended, suspended
or terminated, and any terms or conditions may be waived,
but only by a written instrument executed by the parties
hereto.
16. Severability.
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Should any provision of this Agreement be held by a
court of competent jurisdiction to be unenforceable or
invalid for any reason, the remaining provisions of this
Agreement shall not be affected by such holding and shall
continue in full force in accordance with their terms.
17. Governing Law.
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The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws
of the State of New York without giving effect to the
conflicts of laws principles thereof.
18. Successors in Interest.
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This Agreement shall inure to the benefit of and be
binding upon any successor to the Company. This Agreement
shall inure to the benefit of the Optionee's legal
representatives. All obligations imposed upon the Optionee
and all rights granted to the Company under this Agreement
shall be final, binding and conclusive upon the Optionee's
heirs, executors, administrators and successors.
19. Resolution of Disputes.
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Any dispute or disagreement which may arise under,
or as a result of, or in any way relate to, the
interpretation, construction or application of this
Agreement shall be determined by binding arbitration. The
parties may agree to submit the matter to a single
arbitrator or to several arbitrators, may require that
arbitrators possess special qualifications or expertise or
may agree to submit a matter to a mutually acceptable firm
of experts for decision. In the event the parties shall
fail to thus agree upon terms of arbitration within twenty
(20) days from the first written demand for arbitration,
then such disputed matter shall be settled by arbitration
under the Rules of the American Arbitration Association, by
three arbitrators appointed in accordance with such Rules.
Such arbitration shall be held in Miami, Florida. Once a
matter has been submitted to arbitration pursuant to this
section, the decision of the arbitrators reached and
promulgated as a result thereof shall be final and binding
upon all parties. The cost of arbitration shall be shared
equally by the parties and each party shall pay the
expenses of his/its attorneys, except that the arbitrators
shall be entitled to award the costs of arbitration,
attorneys and accountants' fees, as well as costs, to the
party that they determine to be the prevailing party in any
such arbitration.
20. Counterparts.
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This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same
instrument.
TELEMUNDO GROUP, INC.
By:__________________________
Name: Xxxxxx X. Xxxxxxxxx
Title: President and Chief
Executive Officer
__________________________
Xxxxxx X. Xxxxxxxx
EXHIBIT A
Telemundo Group, Inc.
Option Schedule
(dollars in thousands)
Adjusted Net Contribution(1)
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As of December 31
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Earnings
Targets 1996 1997 1998
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Target $34,630 $41,556 $49,867
_______________________________
(1)"Adjusted Net Contribution" means operating income plus
depreciation and amortization determined in accordance
with generally accepted accounting principles, without
giving effect to any income, gain or loss associated
with TeleNoticias del Mundo, L.P.or WSNS, but determined
consistent with the accounting method for determining
"Net Contribution before TeleNoticias and WSNS" on the
Company's internal financial statements in prior periods
and adjusted to eliminate the impact of changes in
accounting principles after the date of this Agreement
and of acquisitions or divestitures of operating units
after the date of this Agreement if taking such
operating units into account would either increase or
decrease the actual Net Contribution by at least 5% of
the Adjusted Net Contribution target in the year of
acquisition or divestiture on an annualized basis and
also adjusted to eliminate: (i) all monetary
compensation paid to executive officers who are
terminated during calendar year 1995 (but only such
compensation paid after such termination); (ii) any
legal fees and costs paid by the Company with respect to
item (i); (iii) $95,000 of expenses in 1995; (iv) the
expense associated with the exercise of options to
acquire common stock held on March 7, 1995 by the
executive officers of the Company, to the extent not in
the Company's budget; (v) the expense associated with
the exercise of options issued to those persons who are
executive officers of the Company on March 7, 1995 in
connection with their termination prior to July 1995, to
the extent not in the Company's budget; (vi) direct
costs incurred in the Company's bankruptcy
reorganization, to the extent not included in the
Company's budget; (vii) direct costs incurred in
settling the Xxxxx litigation, to the extent not include
in the Company's budget; and (viii) certain contingent
expenses relating to Puerto Rico as discussed between
the parties, to the extent not included in the Company's
budget. The adjustments set forth in clauses (i) -
(viii) (other than clause (iii)) shall occur only when
and to the extent actually expensed by the Company and
to the extent considered in the calculation of Adjusted
Net Contribution.
