DIRECTV NON-QUALIFIED STOCK OPTION AGREEMENT
Exhibit
10.2
THIS NON-QUALIFIED STOCK OPTION
AGREEMENT (“Agreement”), dated as of
January 4, 2010 (“Effective Date”), is entered
into between DIRECTV a Delaware corporation (“DIRECTV”), and Xxxxxxx X.
Xxxxx (“Executive”).
WHEREAS, at its meeting on
December 21, 2009, the Compensation Committee of DIRECTV’s Board of
Directors (the “Committee”) approved the grant
to Executive of nonqualified stock options to purchase shares of DIRECTV’s Class
A common stock, $.01 par value per share (the “Common Stock”), upon the terms
and conditions set forth herein and subject to the terms and conditions of the
Amended and Restated 2004 Stock Plan of The DIRECTV Group, Inc. (as it
may be amended from time to time, the “Plan”); and
WHEREAS, at its meeting on
November 18, 2009, the Board of Directors of The DIRECTV Group, Inc.
(“Board”) approved the
material terms and conditions of Executive’s employment as President and Chief
Executive Officer of DIRECTV, including the grant of the non-qualified stock
options; and
WHEREAS, the Committee and the
Board each has also approved the terms and conditions of an employment agreement
with Executive effective as of January 1, 2010 (such agreement, as it
may be amended from time to time, is referred to herein as the “Employment Agreement”);
and
WHEREAS, both the Committee
and the Board authorized the Chairman of the Committee to execute this Agreement
on behalf of DIRECTV, in accordance with the resolutions adopted by each of the
Committee and the Board at their respective meetings as referenced
above.
NOW, THEREFORE, in
consideration of the services rendered and to be rendered by Executive and the
mutual promises made herein and the mutual benefits to be derived there from,
DIRECTV and Executive agree as follows:
1. Defined
Terms. Any capitalized term used herein and not otherwise
defined shall have the meaning assigned to such term in the Plan.
2. Grant of
Options. DIRECTV hereby grants to Executive the right and
option to purchase, on the terms and conditions set forth herein, to the extent
exercisable, all or any part of an aggregate of 1,011,100 shares of Common Stock
at a price (“Xxxxx
Xxxxx”) of $33.74 per share of Common Stock (which is the closing market
price on the NASDAQ Global Select Market of a share of Common Stock on the date
hereof), subject to the provisions of this Agreement and the Plan (the “Option”).
3. Exercisability
of Option. The Option shall vest and become exercisable as to
one-third (rounded to the nearest whole share) of the aggregate number of shares
of Common Stock subject to the Option (subject to adjustment as provided in
Section 8 or in accordance with Section 14 of the Plan), on each of
December 31, 2010, 2011 and 2012, subject to the applicable provisions of
the Plan and this Agreement. The Option may be exercised only to
the extent it shall have vested and is exercisable, and, during Executive’s
lifetime, only by Executive. In no event may the Executive
exercise the Option, in whole or in part, after January 4, 2020 (the “Expiration
Date”).
(a) Cumulative
Exercisability. To the extent Executive does not, at the time
of a particular exercise, purchase all the shares of Common Stock that Executive
may then purchase, Executive has the right cumulatively thereafter to
purchase any of such shares of Common Stock not so purchased until the
Expiration Date or, if applicable, the earlier termination of the
Option.
(b) No
Fractional Shares; Minimum Exercise. Fractional share
interests shall be disregarded, but may be cumulated. No fewer
than 100 shares of Common Stock may be purchased at any one time, unless
the number purchased is the total number at the time exercisable under the
Option.
4. Exercise
of Option. To the extent vested and exercisable, the Option
may be exercised by the delivery to DIRECTV of a written exercise notice
stating the number of shares of Common Stock to be purchased pursuant to the
Option accompanied by payment of the Xxxxx Xxxxx multiplied by the aggregate
number of shares of Common Stock to be purchased (such payment to be made in
accordance with Section 5) and the payment or provision for any applicable
employment or other taxes or withholding for taxes thereon. Subject
to Section 7 below, such Option shall be deemed to be exercised upon
receipt and approval by DIRECTV of such written exercise notice accompanied by
the aggregate Xxxxx Xxxxx and any other payments so required, as permitted
pursuant to Section 5.
5. Method of
Payment of Option. Payment of the aggregate Xxxxx Xxxxx shall
be by any of the following, or a combination thereof, at the election of
Executive:
(a) in cash
or by electronic funds transfer, or by check payable to the order of DIRECTV, in
the full amount of the purchase price of the shares of Common Stock so purchased
and the amount (if any) required to satisfy any applicable withholding
taxes;
(b) by
delivery of shares of Common Stock that have been held by Executive for at least
six months, in accordance with Section 7(e) of the Plan, subject to
compliance with applicable law;
(c) payment
may be made in accordance with the cashless exercise program or net
exercise program, if any, of DIRECTV in effect at the time of exercise;
or
(d) in a
combination of payments under clauses (a), (b) and (c).
Other
payment methods may be permitted only if expressly authorized by the
Committee consistent with the terms of the Plan.
6. Continuance
of Employment Required. The vesting schedule requires
continued service through each applicable vesting date as a condition to the
vesting of the applicable Option and rights and benefits under this Agreement
except as otherwise provided in Section 7. Partial service, even
if substantial, during any vesting period will not entitle Executive to any
proportionate vesting or avoid or mitigate a termination of rights and benefits
upon or following a termination of employment or service except as provided in
Section 7 or 9 below or under the Plan.
7. Effect of
Termination of Employment on Exercise Period. If Executive’s
employment by DIRECTV terminates, the following provisions shall apply with
respect to vesting and exercise of the Option after the date of such termination
(the “Termination
Date”), except that in no event may any portion of the Option be
exercised after the Expiration Date:
(a) If
Executive’s employment terminates as a result of Executive’s death or Disability
(as defined in the Employment Agreement), all unvested Options shall vest as of
the Termination Date and Executive (or Executive’s Personal Representative or
Beneficiary, as the case may be) may exercise the Option, in whole or
in part, at any time on or prior to the Expiration Date.
(b) If
DIRECTV terminates Executive’s employment without Cause (as defined in the
Employment Agreement) or if Executive’s employment terminates due to Executive’s
resignation for an Effective Termination (as defined in the Employment
Agreement), that portion (if any) of the unvested Option which is equal to the
product of (i) the fraction (but not greater than one (1)) determined by
adding 18 to the number of calendar months (whole or partial) of Executive’s
employment by DIRECTV, and dividing such number by 36, multiplied by
(ii) the number of shares of Common Stock subject to the Option, shall vest
as of the Termination Date and Executive (or Executive’s Personal Representative
or Beneficiary, as the case may be) may exercise such portion of the
Option, in whole or in part, at any time prior to the Expiration
Date. Accordingly, if the first sentence of this paragraph (b) is
applicable and if Executive’s employment terminates at any time after
June 30, 2011, the entire Option shall be exercisable as provided
above.
(c) If
DIRECTV terminates Executive’s employment for Cause, or if Executive resigns
prior to December 31, 2012, other than for an Effective Termination, any
unexercised portion of the Option shall terminate as of the Termination
Date.
(d) If
Executive resigns after December 31, 2012, other than for an Effective
Termination, Executive (or Executive’s Personal Representative or Beneficiary,
as the case may be) may exercise the Option, in whole or in part, at
any time prior to the third anniversary of the effective date of Executive’s
resignation at which time the Option shall expire.
(e) If, at
any time after the Termination Date and during the applicable period specified
in Section 5.2 (Non-Compete) and 5.4 (Non-Solicitation) of the Employment
Agreement, Executive shall have breached, other than in an insignificant or
insubstantial fashion, any of the covenants set forth in such Sections of
the Employment Agreement, any unexercised portion of the Option shall terminate
as of the date of any such breach.
8. Adjustments
Upon Specified Events. As provided in Section 14 of the
Plan, upon the occurrence of certain events relating to or affecting the Common
Stock as contemplated by Section 14 of the Plan, the Committee shall, in
such manner, to such extent (if any) and at such times as it deems appropriate
and equitable in the circumstances, make adjustments in the number, amount and
type of shares of Common Stock (or other securities or property) subject to the
Option, the Xxxxx Xxxxx and the securities deliverable upon exercise of the
Option (or any combination thereof) or provide for a cash payment or the
assumption, substitution or exchange of the Option or the shares or other
securities subject to the Option, based upon the distribution or consideration
payable to holders of Common Stock generally. Without limiting the
generality of the foregoing, in the event DIRECTV declares or distributes
dividends to its shareholders prior to exercise of the Option in full, DIRECTV,
through action of the Committee, shall appropriately adjust the Option or
otherwise appropriately address the effects of any such
dividends. All rights of Executive hereunder are subject to such
adjustments and other provisions of the Plan.
9. Possible
Early Termination of Award. As permitted by Section 14 of
the Plan, and without limiting the authority of the Committee under any of the
provisions of Section 14 of the Plan, the Committee retains the right to
terminate any portion or all of the Option, to the extent such Option has not
vested, upon a dissolution of DIRECTV or a reorganization event or transaction
in which DIRECTV does not survive (or does not survive as a public company in
respect of its outstanding Common Stock). This Section 9 is not
intended to prevent future vesting (including provision for future vesting) if
the Option (or a substituted Award) remains outstanding following a transaction
described in Section 14 of the Plan.
10. Leaves of
Absence. Absence from work caused by authorized sick leave or
other leave approved in writing by DIRECTV or the Committee shall not be
considered a termination of employment by DIRECTV for purposes of
Section 7, unless otherwise determined by the Committee.
11. No
Limitations on Acceleration; Deferral.
(a) No
Limitation on Acceleration. The Employment Agreement, in particular
Section 4.9 thereof, contains express provisions regarding Section 280G and/or
4999 of the Code of the type described in Section 14(f) of the Plan.
Accordingly, the limitations on acceleration set forth in Section 14(f) of the
Plan shall not apply to this Award. A reduction, if any, to this
Award or other effect related to Section 280G and/or Section 4999 shall be
governed by the Employment Agreement.
(b) Section 409A
of the Code. Notwithstanding anything herein to the contrary,
(i) if, at the time of Executive’s termination of employment with DIRECTV,
Executive is a “specified employee” as defined in Section 409A of the Code,
and the deferral of the commencement of any payments or benefits otherwise
payable hereunder as a result of such termination of employment is necessary in
order to prevent the imposition of any accelerated or additional tax under
Section 409A of the Code, then DIRECTV will defer the commencement of the
payment of any such payments or other consideration hereunder (without any
reduction in such payments or other consideration ultimately paid or provided to
Executive) until the date that is six months following Executive’s termination
of employment with DIRECTV (or the earliest date as is permitted under
Section 409A of the Code) and (ii) if any other payments of money or
other consideration due to Executive hereunder would cause the application of an
accelerated or additional tax under Section 409A of the Code, such payments
or other consideration shall be deferred if deferral will make such payment or
other consideration compliant under Section 409A of the Code, or otherwise
such payment or other consideration shall be restructured, to the extent
possible, in a manner, determined by the Committee or the Board, that does not
cause such an accelerated or additional tax or result in additional cost to
DIRECTV. DIRECTV shall consult with its legal counsel and tax
accountants in good faith regarding the implementation of the provisions of this
Section 11(b), which shall be done only in a manner that is reasonably
acceptable to Executive; provided, however, that
neither DIRECTV, any subsidiary or other affiliate of DIRECTV, nor any of their
employees or representatives shall have any liability to the Executive with
respect thereto.
12. Associated
Stock Rights. Neither Executive nor any other person entitled
to exercise the Option shall have any of the rights or privileges of a
stockholder of DIRECTV as to any shares of Common Stock subject to the Option
until the issuance and delivery to him or such other person of a certificate (or
book entry in lieu thereof) evidencing the shares of Common Stock registered in
his or such other person’s name. No adjustment will be made for
dividends or other rights as a stockholder as to which the record date is prior
to such date of delivery, except as otherwise provided in
Section 8.
13. No
Guarantee of Continued Service. Nothing contained in this
Agreement or the Plan constitutes an employment or service commitment by
DIRECTV, confers upon Executive any right to remain employed by DIRECTV,
interferes in any way with the right of DIRECTV at any time to terminate such
employment or affects the right of DIRECTV to increase or decrease Executive’s
other compensation or benefits. Nothing in this Section 13,
however, is intended to adversely affect any independent contractual right of
Executive under the Employment Agreement (or any other agreement between DIRECTV
and Executive) without his consent thereto.
14. Non-Transferability
of Option. The Option and any other rights of Executive under
this Agreement or the Plan are nontransferable except as provided in
Section 15(i) of the Plan.
15. Notices. Any
notice to be given under the terms of this Agreement shall be in writing and
addressed: to DIRECTV at its office located at 0000 Xxxx Xxxxxxxx Xxxxxxx, Xx
Xxxxxxx, Xxxxxxxxxx 00000, to the attention of the Corporate Secretary; and to
Executive at the address on file with DIRECTV, or at such other address as
either party may hereafter designate in writing to the other.
16. Effect of
Agreement. This Agreement shall be binding upon and inure to
the benefit of any successor or successors of DIRECTV, except to the extent the
Committee determines otherwise.
17. Entire
Agreement; Governing Law. The Plan is incorporated herein and
made a part hereof by this reference. Subject to Section 19
below, the Plan and this Agreement constitute the entire agreement of the
parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of DIRECTV and Executive with
respect to the subject matter hereof. The construction,
interpretation, performance and enforcement of this Agreement and the Option
shall be governed by the internal substantive laws, but not the choice of law
rules, of the State of Delaware.
18. Plan. The
Option and all rights of Executive with respect thereto are subject to, and
Executive agrees to be bound by, all of the terms and conditions of the
provisions of the Plan, to the extent such provisions are applicable to Awards
granted to Eligible Persons. Executive acknowledges receipt of a copy
of the Plan and agrees to be bound by the terms thereof. Unless
otherwise expressly provided in other Sections of this Agreement,
provisions of the Plan that confer discretionary authority on the Committee do
not (and shall not be deemed to) create any rights in Executive unless such
rights are expressly set forth herein or are otherwise in the sole discretion of
the Committee specifically so conferred by appropriate action of the Committee
under the Plan after the date hereof.
19. Employment
Agreement. If any provision of this Agreement is inconsistent
with any provision of the Employment Agreement, the provisions of the Employment
Agreement shall control.
20. Amendment. This
Agreement may be amended in accordance with the terms of the
Plan. Any such amendment must be in writing and signed by
DIRECTV. The terms and conditions of this Agreement may not be
restricted or limited by any amendment of this Agreement or the Plan without
Executive’s consent.
21. Counterparts. This
Agreement may be executed in any number of counterparts, each of which
shall be deemed an original but all of which together shall constitute on and
the same instrument.
22. Section Headings. The
Section headings of this Agreement are for convenience of reference only
and shall not be deemed to alter or affect any provision hereof.
IN WITNESS WHEREOF, DIRECTV
has caused this Agreement to be executed on its behalf by the Chairman of its
Compensation Committee and Executive has hereunto set his hand as of the date
and year first written above.
|
DIRECTV
By: /s/ XXXXXXX X.
XXX
Xxxxxxx X. Xxx
Chairman of the
Compensation
Committee
|
|
|
EXECUTIVE
By: /s/ XXXXXXX X.
XXXXX
Xxxxxxx X. Xxxxx
|
