EXHIBIT 10.7
1999 Stock Plan
Annex 1, Version 3
For Awards from February 2005
Restricted Stock Purchase Agreement
General Terms and Conditions
The Award is subject to the following terms and conditions:
1. Certain Definitions. For the purposes of the Restricted Stock Purchase
Agreement of which this Annex 1 is a part (the "Agreement"):
a) the term "Affiliate" means any corporation, company or other
entity whose financial results are consolidated with those of the
Company in accordance with U.S. generally accepted accounting
principles, as determined by the Committee. An entity shall be
deemed an Affiliate of a person only for such periods as the
requisite ownership or control relationship is maintained.
b) the term "Holder" shall mean the employee or prospective employee
of the Company and its Affiliates 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,
repurchase rights and restrictions against transfer) contained in
the Time Warner Inc. 1999 Stock Plan (the "Plan") and a
Restricted Stock Purchase Agreement (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 and the Lapsing Repurchase Right (as
defined in paragraph 6 below) with respect thereto shall terminate.
Except as otherwise provided in paragraphs 6 and 7, the vesting of
such Restricted Shares and any Retained Distributions relating thereto
and the lapsing of the Lapsing Repurchase Right shall occur only if
the Holder is an employee of the Company or any of its Affiliates 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 any
Restriction Period and the Holder hereby ratifies and confirms all
that the Company, as said attorney-in-fact, shall do by virtue hereof,
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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
Affiliates 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 or any of
its Affiliates 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 and the Company or its designee shall be deemed to
have exercised its option, which is not an obligation, to
purchase from the Holder (or his successor in interest) (the
"Lapsing Repurchase Right"), and the Holder (or his successor in
interest) shall be obligated to sell to the Company or its
designee at a price per Restricted Share equal to $.01 per share,
as adjusted pursuant to paragraph 11, the Restricted Shares so
forfeited.
(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, and the Lapsing Repurchase Right with respect
thereto shall terminate, on the date of any such termination.
(c) If the Holder's employment is terminated (i) by the Company or
any of its Affiliates 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 Affiliates of an employment agreement between the Holder
and the Company or any Affiliate, 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,
and the Lapsing Repurchase Right shall terminate, with respect to
such Restricted Shares, 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.
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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 Retained Distributions that have not
vested shall be completely forfeited on the date of any such
termination and the Company or its designee shall be deemed to
have exercised its Lapsing Repurchase Right with respect to such
Restricted Shares.
For purposes of this paragraph 6,
(1) "termination for cause" shall be determined in accordance
with the provisions of Section 11 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;
(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 Affiliate 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 Affiliate; 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 Affiliates 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.
(5) In the event of the exercise of the Company's Lapsing
Repurchase Right, the Company shall be obligated to pay the
Holder the purchase price set forth in paragraph 6(a) for
each forfeited Restricted Share within 90 days after the
date the Restricted Shares are forfeited; provided, however,
that in the event that the Company is prohibited during such
90-day period from making such payment by Section 160 of the
Delaware General Corporation Law, as amended from time to
time (or any successor provision), then the time period for
making such payment, but not the date of forfeiture of the
Restricted Shares, shall be extended until 20 days after
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the date the Company is not so prohibited. Notwithstanding
any other provision of this Agreement or the Plan, any
failure by the Company to pay the purchase price within the
designated time period shall not affect the forfeiture of
the Restricted Shares pursuant to this paragraph 6.
7. Acceleration of Vesting Date. In the event a Change in Control (as
defined in the Plan) has occurred, the Award will vest in full, and
the Lapsing Repurchase Right shall terminate, 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 Affiliates 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
Affiliates 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.
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 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
Affiliates (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
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 Affiliates 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
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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 Affiliates. 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 Affiliates of an
employment agreement between the Holder and the Company or any such
Affiliate or is terminated by the Company or any of its Affiliates 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 and the Lapsing Repurchase Right shall
terminate 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 obligation to deliver the
Restricted Shares or Retained Distributions shall be subject to such
payment. The Company and its Affiliates 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
average of 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").
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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 Affiliates 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 1 and in the Plan, which are incorporated by reference herein
and made a part hereof, including, without limitation, the provisions of
Section 18 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 16 of the Plan (generally relating to the requirements of
securities and other laws).
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 and the Company or its designee
shall be deemed to have exercised its Lapsing Repurchase Right with respect
to such forfeited Restricted Shares.
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 Affiliates and the Company and any such
Affiliate 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 Warner
Center, 16th Floor, New York, NY
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10019, 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 Affiliate, 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.
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
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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
To Annex 1, Version 3 for 1999 Stock Plan
CONSENT OF SPOUSE
I, _______________, spouse of __________________, acknowledge that I have
read the RESTRICTED STOCK PURCHASE 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 and a Lapsing Repurchase Right 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 and the Lapsing Repurchase Right
described in the Agreement and I hereby consent to the repurchase of the
Restricted Shares by the Company and the sale of the Restricted Shares by my
spouse or my spouse's legal representative 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