NONQUALIFIED STOCK OPTION AGREEMENT
FOR CORPORATE OFFICERS
----------------------
AGREEMENT made as of the 9th day of March, 1995 (the "Grant Date"),
between Telemundo Group, Inc., a Delaware corporation (the "Company"), and
Xxxxxxx X. Xxxxx (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.
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 30,000 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.
The price at which the Optionee shall be entitled to purchase shares of
Stock upon the exercise of the Option shall be $10.00 per share.
3. DURATION OF OPTION.
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, that the Option may be earlier terminated as provided in
Section 7 hereof.
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4. EARNINGS TARGET.
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, 1995, 1996, 1997 and 1998 (the
"Earnings Targets").
5. EXERCISABILITY OF OPTION.
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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7,500 1995
7,500 1996
7,500 1997
7,500 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.
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
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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.
7.1 TERMINATION OTHER THAN FOR CAUSE OR FOLLOWING CHANGE OF
CONTROL. If the employment of the 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
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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 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 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.
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).
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9. NONTRANSFERABILITY.
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.
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.
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.
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.
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
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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.
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.
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.
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.
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.
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.
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19. RESOLUTION OF DISPUTES.
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.
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: /s/ Xxxxxx X. Xxxxxxxxx
--------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: President and Chief
Executive Officer
/s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx
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EXHIBIT A
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Telemundo Group, Inc.
Option Schedule
(dollars in thousands)
Adjusted Net Contribution1
--------------------------
As of December 31
-----------------
Earnings
Targets 1995 1996 1997 1998
-------- ------- ------- ------- -------
Target $28,858 $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., but determined consistent with the
accounting method for determining "Net Contribution before TeleNoticias"
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.
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