EXECUTION COPY
NONQUALIFIED STOCK OPTION AGREEMENT
FOR CORPORATE OFFICERS
AGREEMENT made as of the 15th day of November, 1996
(the "Grant Date"), between Telemundo Group, Inc., a Delaware
corporation (the "Company"), and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ (the
"Optionee").
WHEREAS, the Company has adopted the 1994 Stock Plan
(the "Plan") in order to provide additional incentive to
certain officers and employees of the Company and its
Subsidiaries; and
WHEREAS, the Committee responsible for administration
of the Plan has determined to grant an option to the Optionee
as provided herein;
NOW, THEREFORE, the parties hereto agree as follows:
1. Grant of Option.
1.1 The Company hereby grants to the Optionee
the right and option (the "Option") to purchase all or any
part of an aggregate of 10,000 whole shares of Stock subject
to, and in accordance with, the terms and conditions set
forth in this Agreement.
1.2 The Option is not intended to qualify as an
Incentive Stock Option within the meaning of Section 422 of
the Code.
1.3 This Agreement shall be construed in
accordance and consistent with, and subject to, the
provisions of the Plan (the provisions of which are
incorporated herein by reference) and, except as otherwise
expressly set forth herein, the capitalized terms used in
this Agreement shall have the same definitions as set forth
in the Plan.
2. Purchase Price.
The price at which the Optionee shall be entitled to
purchase shares of Stock upon the exercise of the Option
shall be $29.875 per share.
3. Duration of Option.
The Option shall be exercisable to the extent and in
the manner provided herein for a period of ten years from the
Grant Date (the "Exercise Term"); provided, however, that the
Option may be earlier terminated as provided in Section 7
hereof.
4. Earnings Target.
Set forth on Exhibit A attached hereto are the
earnings targets for Adjusted Net Contribution established by
the Committee for the Company for the fiscal years ended
December 31, 1996, 1997 and 1998 (the "Earnings Targets").
5. Exercisability of Option.
Unless otherwise provided in this Agreement or the
Plan, the Option shall entitle the Optionee to purchase, in
whole at any time or in part from time to time, shares of
Stock covered by the Option to the extent the Option has
become "vested." Except as provided in Section 7, the Option
shall "vest" as to the following shares of Stock upon the
later of (i) certification by the Committee that the Company
has attained 90% of the Earnings Target set for each fiscal
year set forth below, and (ii) the respective anniversary
date of this Agreement immediately following the end of such
fiscal year (such date of vesting referred to as the "Vesting
Date"):
Upon certification
Option vests as to the that Earnings Target
following number of Shares met for fiscal year end:
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3,333.34 1996
3,333.33 1997
3,333.33 1998
To the extent the Company has failed to attain 90% of
the Earnings Target for any fiscal year end, the Option shall
not vest as to the number of shares of Stock related to such
fiscal year end ("Lost Shares") and the Optionee shall not be
entitled under any circumstances to exercise the Option in
respect of such Lost Shares, except as provided in the second
following sentence. Within 30 days after the date the
Company's independent auditors certify the Company's financial
statements for the applicable fiscal year, the Committee shall
meet to certify whether or not 90% of the Earnings Target for
such fiscal year has been met. Notwithstanding the foregoing,
any shares of Stock which have not vested as set forth above
shall "vest" nine years from the Grant Date if, but only if,
Optionee has been employed with the Company from the Grant Date
until such time. Each right of purchase shall be cumulative
and shall continue, unless sooner exercised or terminated as
herein provided, during the remaining period of the Exercise
Term.
6. Manner of Exercise and Payment.
6.1 Subject to the terms and conditions of this
Agreement and the Plan, the Option may be exercised by
delivery of written notice to the Company, at its principal
executive office. Such notice shall state that the Optionee
is electing to exercise the Option and the number of shares
of Stock in respect of which the Option is being exercised
and shall be signed by the person or persons exercising the
Option. If requested by the Committee, such person or
persons shall (i) deliver this Agreement to the Secretary of
the Company who shall endorse thereon a notation of such
exercise and (ii) provide satisfactory proof as to the right
of such person or persons to exercise the Option.
6.2 The notice of exercise described in Section
6.1 shall be accompanied by the full purchase price for the
shares of Stock in respect of which the Option is being
exercised and by the Withholding Taxes, in cash, by check or,
in the discretion of the Committee, by transferring shares of
Stock to the Company held by the Optionee for more than six
months and having a Fair Market Value on the day preceding
the date of exercise equal to the cash amount for which such
shares of Stock are substituted.
6.3 Upon receipt of notice of exercise and full
payment for the shares of Stock in respect of which the
Option is being exercised and of the Withholding Taxes, the
Company shall, subject to Section 14 of the Plan, promptly
take such action as may be necessary to effect the transfer
to the Optionee of the number of shares of Stock as to which
such exercise was effective, including issuing and delivering
such shares of Stock and entering the Optionee's name as a
stockholder of record on the books of the Company.
6.4 The Optionee shall not be deemed to be the
holder of, or to have any of the rights of a holder with
respect to, any shares of Stock subject to the Option until
(i) the Option shall have been exercised pursuant to the
terms of this Agreement and the Optionee shall have paid the
full purchase price for the number of shares of Stock in
respect of which the Option was exercised, (ii) the Company
shall have issued and delivered the shares of Stock to the
Optionee, and (iii) the Optionee's name shall have been
entered as a stockholder of record on the books of the
Company, whereupon the Optionee shall have full voting and
other ownership rights with respect to such shares.
7. Termination of Employment.
7.1 Termination other than for Cause or following
Change of Control. If the employment of the Optionee is
terminated by the Company or by the Optionee for any reason
other than for Cause or following a Change of Control, the
Optionee may at any time within one year after such
termination of employment (but in no event after the
expiration of the Exercise Term) exercise the Option to the
extent, but only to the extent, that the Option or portion
thereof was exercisable on the date of such termination of
employment, provided, however, that (a) if the Optionee and
Company enter into or have entered into a written employment
agreement providing for a guaranteed term of employment, and
if Optionee is terminated by the Company, for any reason
other than for Cause (as defined in the Plan or in such
written employment agreement) or following a Change of
Control prior to the expiration of such guaranteed employment
period, then the portion of the Option that would have been
exercisable had employment continued until the next Vesting
Date and had the relevant Earnings Target been met, shall,
regardless of whether such Earnings Target is met, be deemed
to have been exercisable on the date of such termination of
employment; and (b) if the Optionee's employment is
terminated by the Company or by the Optionee for any reason
other than for Cause or following a Change of Control after
the fiscal year end but before the Committee certifies that
the Earnings Target has been met, the portion of the Option
that would have been exercisable as a result of meeting the
Earnings Targets shall, if the Earnings Targets are met and
if the termination occurred after the relevant anniversary
date, be deemed to have been exercisable on the date of such
termination of employment (and in such case the one year
period referred to in the first sentence of this section 7.1
shall be deemed to commence upon the date of certification of
the Earnings Targets being met). For purposes of this
Agreement, an Optionee's employment will be considered
terminated upon (i) an actual termination, (ii) a change in
the Optionee's status, title, position or responsibilities
(including reporting responsibilities) which, in the
Committee's reasonable judgment, represents a demotion from
his status, title, position or responsibilities as in effect
immediately prior thereto, or (iii) the assignment to the
Optionee of any duties or responsibilities which, in the
Committee's reasonable judgment, are inconsistent with such
status, title, position or responsibilities. In the event of
the Optionee's death, the Option shall be exercisable, to the
extent provided in the Plan and this Agreement, by the
legatee or legatees under his will, or by his personal
representatives or distributees, and such person or persons
shall be substituted for the Optionee each time the Optionee
is referred to herein.
7.2 Change of Control. If the Optionee's
employment is terminated by the Company or by the Optionee
following a Change in Control, the provisions of Section 8
shall apply.
7.3 Termination for Cause. Notwithstanding
anything to the contrary contained herein, if the employment
of the Optionee is terminated for Cause, the Option shall
terminate on the date of the Optionee's termination of
employment whether or not exercisable.
8. Effect of Change in Control.
Notwithstanding anything contained in the Plan or this
Agreement to the contrary other than the last sentence of
this Section 8, in the event of a Change in Control (A) all
Options outstanding on the date of such Change in Control
(other than the Lost Shares) shall become immediately and
fully exercisable and (B) upon termination of an Optionee's
employment with the Company following a Change in Control,
Options held by such Optionee shall remain exercisable until
the later of (x) one year after termination and (y) sixty
(60) days following the expiration of the Pooling Period (in
the event the Change in Control constitutes a Pooling
Transaction), but in no event beyond the stated term of the
Option. In the case of a Change in Control which also
constitutes a Pooling Transaction, the Board may take such
actions which it determines, after consultation with its
advisors, are reasonably necessary in order to assure that
the Pooling Transaction will qualify as such, including, but
not limited to, providing that all Options specifically
identified by the Committee shall not become immediately and
fully exercisable on the date of the Change in Control but
rather shall become immediately and fully exercisable on the
date following the last day of the Pooling Period (whether or
not the Optionee is then an employee of the Company).
9. Nontransferability.
The Option shall not be transferable other than by
will or by the laws of descent and distribution. During the
lifetime of the Optionee, the Option shall be exercisable
only by the Optionee.
10. No Right to Continued Employment.
Nothing in this Agreement (as opposed to the
Employee's employment agreement, if any), or the Plan shall
be interpreted or construed to confer upon the Optionee any
right with respect to continuance of employment by the
Company, nor shall this Agreement or the Plan interfere in
any way with the right of the Company to terminate the
Optionee's employment at any time.
11. Adjustments.
In the event of a Change in Capitalization, the
Committee shall conclusively determine the appropriate
adjustments to the number and class of shares of Stock
subject to the Option and the purchase price for such shares
of Stock. The Committee's adjustment shall be made in
accordance with the provisions of Section 4.5 of the Plan
and shall be effective and final, binding and conclusive for
all purposes of the Plan and this Agreement.
12. Certain Events.
Subject to Section 8 hereof, upon the effective date
of (i) the liquidation or dissolution of the Company or
(ii) a merger or consolidation of the Company
(a "Transaction"), the Option shall continue in effect in
accordance with its terms and the Optionee shall be entitled
to receive in respect of all shares of Stock subject to the
Option, upon exercise of the Option, the same number and kind
of stock, securities, cash, property or other consideration
that each holder of shares of Stock was entitled to receive
in the Transaction.
13. Withholding of Taxes.
At such times as an Optionee recognizes taxable income
in connection with the receipt of shares of Stock,
securities, cash or property hereunder (a "Taxable Event"),
the Optionee shall pay to the Company an amount equal to the
federal, state and local income taxes and other amounts as
may be required by law to be withheld by the Company in
connection with the Taxable Event (the "Withholding Taxes")
prior to the issuance, or release from escrow, of such shares
of Stock or securities or the payment of such cash or such
property. The Company shall have the right to deduct from
any payment of cash to an Optionee or Grantee an amount equal
to the Withholding Taxes in satisfaction of the obligation to
pay Withholding Taxes. In satisfaction of the obligation to
pay Withholding Taxes to the Company, the Optionee may make a
written election (the "Tax Election"), which may be accepted
or rejected in the discretion of the Committee, to have
withheld a portion of the shares then issuable to him having
an aggregate Fair Market Value, on the date preceding the
date of such issuance, equal to the Withholding Taxes,
provided that in respect of an Optionee who may be subject to
liability under Section 16(b) of the Exchange Act either:
(i) the Tax Election is made at least six (6) months prior to
the date of the Taxable Event and the Tax Election is
irrevocable with respect to all Taxable Events of a similar
nature occurring prior to the expiration of six (6) months
following a revocation of the Tax Election; or (ii) in the
case of the exercise of an Option (A) the Optionee makes the
Tax Election at least six (6) months after the date the
Option was granted, (B) the Option is exercised during the
ten (10) day period beginning on the third business day and
ending on the twelfth business day following the release for
publication of the Company's quarterly or annual statement of
sales and earnings (a "Window Period") and (C) the Tax
Election is made during the Window Period in which the
related Option is exercised or prior to such Window Period
and subsequent to the immediately preceding Window Period.
Notwithstanding the foregoing, the Committee may, by the
adoption of rules or otherwise, (i) modify the provisions of
this Section 13 or impose such other restrictions or
limitations on Tax Elections as may be necessary to ensure
that the Tax Elections will be exempt transactions under
Section 16(b) of the Exchange Act, and (ii) permit Tax
Elections to be made at such other times and subject to such
other conditions as the Committee determines will constitute
exempt transactions under Section 16(b) of the Exchange Act.
14. Employee Bound by the Plan.
The Optionee hereby acknowledges receipt of a copy of
the Plan and agrees to be bound by all the terms and
provisions thereof.
15. Modification of Agreement.
This Agreement may be modified, amended, suspended or
terminated, and any terms or conditions may be waived, but
only by a written instrument executed by the parties hereto.
16. Severability.
Should any provision of this Agreement be held by a
court of competent jurisdiction to be unenforceable or
invalid for any reason, the remaining provisions of this
Agreement shall not be affected by such holding and shall
continue in full force in accordance with their terms.
17. Governing Law.
The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws
of the State of Florida without giving effect to the
conflicts of laws principles thereof.
18. Successors in Interest.
This Agreement shall inure to the benefit of and be
binding upon any successor to the Company. This Agreement
shall inure to the benefit of the Optionee's legal
representatives. All obligations imposed upon the Optionee
and all rights granted to the Company under this Agreement
shall be final, binding and conclusive upon the Optionee's
heirs, executors, administrators and successors.
19. Resolution of Disputes.
Any dispute or disagreement which may arise under, or
as a result of, or in any way relate to, the interpretation,
construction or application of this Agreement shall be
determined by binding arbitration. The parties may agree to
submit the matter to a single arbitrator or to several
arbitrators, may require that arbitrators possess special
qualifications or expertise or may agree to submit a matter
to a mutually acceptable firm of experts for decision. In
the event the parties shall fail to thus agree upon terms of
arbitration within twenty (20) days from the first written
demand for arbitration, then such disputed matter shall be
settled by arbitration under the Rules of the American
Arbitration Association, by three arbitrators appointed in
accordance with such Rules. Such arbitration shall be held
in Miami, Florida. Once a matter has been submitted to
arbitration pursuant to this section, the decision of the
arbitrators reached and promulgated as a result thereof shall
be final and binding upon all parties. The cost of
arbitration shall be shared equally by the parties and each
party shall pay the expenses of his/its attorneys, except
that the arbitrators shall be entitled to award the costs of
arbitration, attorneys and accountants' fees, as well as
costs, to the party that they determine to be the prevailing
party in any such arbitration.
20. Counterparts.
This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
TELEMUNDO GROUP, INC.
By:
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President and Chief
Executive Officer
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
EXHIBIT A
Telemundo Group, Inc.
Option Schedule
(dollars in thousands)
Adjusted Net Contribution(1)
----------------------------
As of December 31
-----------------
Earnings
Targets 1996 1997 1998
------- ---- ---- ----
Target $34,630 $41,556 $49,867
_______________________________
(1) "Adjusted Net Contribution" means operating income plus
depreciation and amortization determined in accordance
with generally accepted accounting principles, without
giving effect to any income, gain or loss associated with
TeleNoticias del Mundo, L.P. or WSNS, but determined
consistent with the accounting method for determining "Net
Contribution before TeleNoticias and WSNS" on the
Company's internal financial statements in prior periods
and adjusted to eliminate the impact of changes in
accounting principles after the date of this Agreement and
of acquisitions or divestitures of operating units after
the date of this Agreement if taking such operating units
into account would either increase or decrease the actual
Net Contribution by at least 5% of the Adjusted Net
Contribution target in the year of acquisition or
divestiture on an annualized basis.