EXHIBIT 10.13
Share Retention Version 2
For Use from January 2005
TIME WARNER INC.
2003 STOCK INCENTIVE PLAN
NON-QUALIFIED STOCK OPTION AGREEMENT
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.
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" includes (and is not limited to) dishonesty with respect to the
Company or any Affiliate, insubordination, substantial malfeasance or
non-feasance of duty, unauthorized disclosure of confidential information, and
conduct substantially prejudicial to the business of the Company or any
Affiliate. The determination of the Committee as to the existence of "Cause"
will be conclusive on the Participant and the Company.
(b) "Disability" means, "Disability" as defined in an employment agreement
between the Company or any of its Affiliates and the Participant or, if not
defined therein or if there shall be no such agreement, "disability" of the
Participant shall have the meaning ascribed to such term in the Company's
long-term disability plan or policy, as in effect from time to time.
(c) "Expiration Date" means the date set forth on the Notice (as defined
below).
(d) "Good Reason" means (i) a breach by the Company or any Affiliate of any
employment or consulting agreement to which the Participant is a party and (ii)
following a Change in Control, (x) the failure of the Company to pay or cause to
be paid the Participant's base salary or annual bonus when due or (y) any
substantial and sustained diminution in the Participant's authority or
responsibilities materially inconsistent with the Participant's position;
provided that either of the events described in clauses (x) and (y) will
constitute Good Reason only if the Company fails to cure such event within 30
days after receipt from the Participant of written notice of the event which
constitutes Good Reason; provided, further, that "Good Reason" will cease to
exist for an event on the sixtieth (60th) day following the later of its
occurrence or the Participant's knowledge thereof, unless the Participant has
given the Company written notice of his or her termination of employment for
Good Reason prior to such date.
(e) "Plan" means the Time Warner Inc. 2003 Stock Incentive Plan, as the
same may be amended, supplemented or modified from time to time.
(f) "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.
(g) "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 (A) by the
Company other than for Cause (unless such termination is due to death or
Disability) or (B) by the Participant for Good Reason.
(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 if the
Participant's Employment terminates due to death, Disability or Retirement, the
unvested portion of the Option, to the extent not previously cancelled or
forfeited, shall immediately become vested and exercisable. 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, and the terms of any employment agreement entered into by the
Participant and the Company or an Affiliate that provides for treatment of
Options that is more favorable to the Participant than clauses (i) - (vii) of
this Section 4(a), the Participant may exercise all or any part of the Vested
Portion of the Option at any time prior to the Expiration Date. Notwithstanding
the foregoing, 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. 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
Disability, 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) Unsatisfactory Performance; Voluntary Termination without Good
Reason. If the Participant's Employment with the Company and its Affiliates
is terminated by the Company or an Affiliate (other than after a Change in
Control as set forth in Section 4(a)(vi)) for unsatisfactory performance,
but not for Cause (as determined in its sole discretion by the Company or
any Affiliate), or the Participant voluntarily terminates Employment at any
time without Good Reason, the Participant may exercise the Vested Portion
of the Option for a period ending on the earlier of (A) three months
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 voluntarily terminate Employment
without Good Reason, then the provisions of Section 4(a)(v) shall control;
(iv) Termination other than for Cause. Subject to the provision of
Section 4(a)(vi), if the Participant's Employment with the Company and its
Affiliates is terminated by the Company or an Affiliate for any reason
other than by the Company or
its Affiliates for Cause, unsatisfactory performance or due to the
Participant's death or Disability, 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;
(v) Termination by the Company for Cause. If the Participant's
Employment with the Company and its Affiliates is terminated by the Company
or an Affiliate for Cause, 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;
(vi) After a Change in Control. If the Participant's Employment with
the Company and its Affiliates terminates after a Change in Control due to
a termination by the Company other than for Cause or due to the
Participant's resignation for Good Reason, 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;
and
(vii) Transfers of Employment. If (i) the Company or any Affiliate
transfers the Participant's Employment to a corporation, company or other
entity that is not an Affiliate or (ii) the Affiliate with which the
Participant has a service relationship ceases to be an Affiliate due to a
sale or other disposition by the Company or an Affiliate, the Option, to
the extent not then vested, shall be immediately canceled by the Company
without consideration and 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 transfer, sale or other disposition and (B) the Expiration
Date.
(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; provided that such Shares have been held
by the Participant for no less than six (6) months (or such other period as
established from time to time by the Committee or generally accepted
accounting principles); (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 (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 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, tax payer'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 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 and the
Plan, 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.
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 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 and the Plan 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 or the Plan.
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.