TIME WARNER INC. NON-QUALIFIED STOCK OPTION AGREEMENT
Exhibit 10.14
Share Retention Version 3, Bewkes Upfront Grant
For Use from October 2007
For Use from October 2007
2003 STOCK INCENTIVE PLAN
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, and such grant is required under Section 3.5 of the Amended
and Restated Employment Agreement dated December 11, 2007 between the Participant and the Company
(such employment agreement, as it may be amended, superseded or
replaced, the “Employment
Agreement”).
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” shall have the meaning as defined in the Employment Agreement.
(b)
“Expiration Date” means the date set forth on the Notice (as defined below).
(c)
“Plan” means the Time Warner Inc. 2003 Stock Incentive Plan, as the same may be
amended, supplemented or modified from time to time.
(d)
“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.
(e)
“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 of Grant of Stock Option (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 pursuant to Section
4.2 of the Employment Agreement.
(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 (i) if the Participant’s Employment terminates due to death or termination by the Company at
the end of the “Disability Period” (as defined in the Employment Agreement), the unvested portion
of the Option, to the extent not previously cancelled or forfeited, shall immediately become
vested and exercisable and (ii) if the Participant’s Employment terminates due to Retirement or
due to termination pursuant to Section 4.2 of the Employment Agreement, then a pro rata portion
of the Options that would vest on the next anniversary of the date of grant shall vest as
follows:
| (x) | the number of Options that would vest on the next anniversary of the date of grant multiplied by; | ||
| (y) | a fraction, the numerator of which shall be the number of days from the last anniversary of the date of grant (or the date of grant if less than one year has elapsed) preceding the effective date of the termination of Employment through the date of such termination of Employment, and the denominator of which shall be 365. |
If the product of (x) and (y) results in a fractional number of Options, such fractional number
shall be rounded to the next higher whole number of Options.
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,
the Participant may exercise all or any part of the Vested Portion of the Option at
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any time prior to the Expiration Date; provided that, 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. Notwithstanding the foregoing, if the Employment
Agreement provides for treatment of Options that is more favorable to the Participant than
clauses (i) – (vii) of this Section 4(a), then the terms of the Employment Agreement shall
apply. 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 termination by the Company at
the end of the Disability Period, 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) Termination other than for Cause or Due to a Material Breach of the
Employment Agreement by the Participant. If the Participant’s Employment with the
Company and its Affiliates is terminated pursuant to Section 4.2 of the Employment
Agreement, 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 be
controlling;
(iv) Termination by the Company for Cause. If the Participant’s Employment
with the Company and its Affiliates is terminated by the Company pursuant to Section 4.1 of
the Employment Agreement, 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.
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(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. However, the Company shall not be liable to the Participant for damages relating to
any delays in issuing the certificates 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
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(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. 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.
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
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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, taxpayer’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. 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
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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, the Plan and the
applicable provisions of the Employment Agreement, 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; provided that the provisions of the Employment Agreement shall govern to the extent set
forth above.
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 of the Employment Agreement 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, the Plan and the Employment Agreement 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, the Plan or the Employment
Agreement.
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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, subject
to Section 13 above.
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