EXHIBIT 10.1
2006 Stock Incentive Plan
Option Agreement
Directors Version 8 (DIR8)
For Use Beginning October 2009
TIME WARNER INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
          Time Warner Inc. (the “Company”), has granted the Participant an
option (the “Option”) to purchase shares of its common stock, $.01 par value per
share (the “Shares”), on the Date of Grant set forth on the Notice (as defined
below).
          The Option is not intended to qualify as an “incentive stock option”
under Section 422 of the Code and shall for all purposes be treated as a
nonstatutory stock option.
          1. GRANT OF OPTION. The Company hereby grants to the Participant the
right and option to purchase the number of Shares set forth in the Notice, on
the terms and conditions and subject to all the limitations set forth herein and
in the Plan, which is incorporated herein by reference. “Notice” means (i) the
Notice of Grant of Stock Option that accompanies this Agreement, if this
Agreement is delivered to the Participant in “hard copy,” and (ii) the screen of
the website for the stock plan administration with the heading “Vesting Schedule
and Details,” which contains the details of the grant governed by this
Agreement, if this Agreement is delivered electronically to the Participant.
          2. EXERCISE PRICE. The exercise price of the Shares covered by this
Option shall be as set forth in the Notice, subject to adjustment as provided in
the Plan.
          3. VESTING AND EXERCISABILITY. Subject to the terms and conditions set
forth in this Agreement and the Plan, so long as the Participant remains an
employee, director or consultant of the Company or an Affiliate, this Option
shall vest and become exercisable ratably in four equal annual installments, on
each of the first, second, third and fourth anniversaries of the Date of Grant
as set forth in the Notice.
          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 Paragraph 3 shall terminate with respect to the Options
evidenced by this Agreement (as well as any Shares issued pursuant to the
exercise of such Options) on the first anniversary of the date the Participant
ceases to be a director of the Company.
          4. TERM OF OPTION. Unless earlier terminated pursuant to the
provisions of this Agreement or the Plan, the unexercised portion of the Option
shall expire and cease to be exercisable at the closing time of trading on the
day preceding the tenth anniversary of the Date of Grant (the “Expiration Date”)
(or at 5:00 p.m. Eastern time on the Expiration Date, if earlier).
          5. TERMINATION OF SERVICE. In the event of the termination of the
Participant’s service relationship (whether as an employee, director or
consultant) with the Company or an Affiliate before the Participant has
exercised the Option in full or the Option has terminated pursuant to
Paragraph 4, the following rules shall apply:
     (a) Cause. If the Participant is removed as a director of the Company for
“cause” (within the meaning of the Company’s Restated Certificate of
Incorporation and By-laws or the provisions of the General Corporation Law of
the State of Delaware), the unvested portion of the Option shall immediately
terminate, and the vested portion of the Option shall remain exercisable for one
(1) month following the Participant’s date of termination and shall not be
exercisable after the end of such one-month period; provided, that if the
Participant is removed for cause on account of one or more acts of fraud,
embezzlement or misappropriation committed by the Participant, the unvested and
vested portions of the Option shall immediately terminate.
     (b) Retirement. If the Participant’s service relationship is voluntarily
terminated by the Participant at any time (i) following the attainment of age 55
with ten (10) years of service with the Company or any Affiliate or
(ii) pursuant to a mandatory retirement program for non-employee directors of
the Company, then the Option shall fully vest and become immediately
exercisable, and shall remain exercisable for five (5) years following the
Participant’s date of termination and shall not be exercisable after the end of
such five-year period; provided, that if the Company has given the Participant
notice that his or her service relationship is being terminated under the
circumstances described in Paragraph 5(a) above prior to the Participant’s
election to terminate under this Paragraph 5(b), then the provisions of
Paragraph 5(a) shall be controlling.
     (c) Disability. If the Participant’s service relationship is terminated as
a result of the Participant’s Disability (as defined in the Plan), then the
Option shall fully vest and become immediately exercisable, and shall remain
exercisable

2

--------------------------------------------------------------------------------

 

for three (3) years following the Participant’s date of termination and shall
not be exercisable after the end of such three-year period.
     (d) Death. If the Participant’s service relationship is terminated as a
result of the Participant’s death, then the Option shall fully vest and become
immediately exercisable, and shall remain exercisable by the Participant’s
designated beneficiary or, if there is no designated beneficiary, the
Participant’s Survivors for three (3) years following the Participant’s date of
death and shall not be exercisable after the end of such three-year period.
     (e) Not Re-elected as a Director. If the Participant’s service relationship
is terminated because (i) the Participant is not nominated by the Company’s
Board of Directors to stand for re-election at an annual stockholders’ meeting
at which directors are to be elected, (ii) having been nominated for
re-election, is not re-elected by the stockholders at such stockholders’
meeting, (iii) having been re-elected by fewer than a majority “for” votes of
the votes cast by the stockholders at such stockholders’ meeting in an
uncontested election of directors, the Participant’s offer to resign from the
Board of Directors is accepted by the Board of Directors, or (iv) any similar
events that result in the Participant ceasing to serve as a director of the
Company, the Option shall fully vest and become immediately exercisable and
shall remain exercisable for three (3) years following the Participant’s date of
termination and shall not be exercisable after the end of such three-year
period; provided, that if at the time the Participant ceases to be a director of
the Company under this Paragraph 5(e), the Participant satisfies the age and
service requirements described in Paragraph 5(b), then the provisions of
Paragraph 5(b) shall be controlling.
     (f) Merger, Reorganization. If the Participant’s service relationship is
terminated by the Company as a result of any corporate reorganization, merger or
consolidation of the Company or because of a reduction in the size of the Board
of Directors, then the Option shall fully vest and become immediately
exercisable, and shall remain exercisable for three (3) years following the
Participant’s date of termination and shall not be exercisable after the end of
such three-year period; provided that if at the time the Participant ceases to
be a director of the Company under this Paragraph 5(f), the Participant
satisfies the age and service requirements described in Paragraph 5(b), then the
provisions of Paragraph 5(b) shall be controlling.
     (g) Certain Resignations. If the Participant’s service relationship is
voluntarily terminated by the Participant (i) for medical reasons, (ii) to
accept a position with any federal, state or local government or any agency
thereof, (iii) on the advice of counsel, due to a conflict of interest or
(iv) in the discretion of the Committee, for any reason the Committee determines
to be similar to the foregoing, then the Option shall fully vest and become
immediately exercisable

3

--------------------------------------------------------------------------------

 

and shall remain exercisable for three (3) years following the Participant’s
date of termination and shall not be exercisable after the end of such
three-year period.
     (h) Other. If the Participant’s service relationship is terminated other
than under any of the circumstances described in Paragraphs 5(a) through 5(g)
above, then the unvested portion of the Option shall immediately terminate
(subject to Paragraph 6 below), and the vested portion of the Option shall
remain exercisable for three (3) months following the Participant’s date of
termination and shall not be exercisable after the end of such three-month
period; provided, that if the Participant’s service relationship is terminated
by the Company other than under the circumstances described in Paragraphs 5(a),
5(c) or 5(d) above, and at the time the Participant ceases to be a director of
the Company, the Participant satisfies the age and service requirements
described in Paragraph 5(b), then the provisions of Paragraph 5(b) shall be
controlling.
          Notwithstanding anything to the contrary in this Paragraph 5, in no
event shall any portion of this Option remain exercisable after the Expiration
Date. If the Participant is a party to any employment or consulting agreement
with the Company or any of its Affiliates, and such agreement provides for
treatment of the Option that is inconsistent with the provisions of this
Paragraph 5, the more favorable provisions shall control. A change in status of
an Participant within or among the Company and its Affiliates shall not affect
the Option, except that a change in status from employee of the Company or an
Affiliate to a consultant of the Company or an Affiliate shall be treated and
have the same effect as if the Participant had ceased to be an employee,
director or consultant of the Company or any Affiliate, unless the Committee
determines otherwise.
          6. CHANGE IN CONTROL; DISSOLUTION AND LIQUIDATION. In the event a
Change in Control (as defined in the Plan) has occurred, the unvested portion of
the Option shall fully vest and become exercisable upon the earlier of (i) the
expiration of the one-year period immediately following the Change in Control,
provided that the Participant’s service relationship with the Company has not
been terminated or (ii) the termination of the Participant’s service
relationship by the Company under the circumstances described in Paragraph 5(h).
Upon the dissolution or liquidation of the Company, the Option shall terminate;
provided that to the extent the Option has not yet terminated pursuant to
Paragraph 4 or Paragraph 5, (i) the Participant or the Participant’s Survivors
shall have the right immediately prior to such dissolution or liquidation to
exercise the Option to the extent that the Option is then currently vested and
exercisable, and (ii) if a Change in Control shall have occurred within the
twelve months immediately prior to the date of such liquidation or dissolution,
the Participant or the Participant’s Survivors shall have the right immediately
prior to such dissolution and liquidation to exercise the Option in full whether
or not the Option is otherwise vested and exercisable as of such date.

4

--------------------------------------------------------------------------------

 

          7. METHOD OF EXERCISING OPTION. Subject to the terms and conditions of
this Agreement, the Option may be exercised through an approved broker/dealer by
written notice on such form as is provided by the Company or pursuant to other
procedures established by the Company. Such notice shall state the number of
Shares with respect to which the Option is being exercised and shall be signed
(whether or not in electronic form) by the person exercising the Option. Payment
of the exercise price for such Shares shall be made (a) in United States dollars
in cash or by check or by wire transfer to the Company, (b) at the discretion of
the Committee, in accordance with procedures established by the Company, by
delivery of Shares, having a fair market value equal as of the date of the
exercise to the exercise price, (c) at the discretion of the Company, in
accordance with a cashless exercise program established with a securities
brokerage firm, and approved by the Company, (d) through such other method of
payment approved by the Company, (e) at the discretion of the Company, by any
combination of (a),(b),(c), and (d) above. The Company shall deliver a
certificate or certificates (or other evidence of ownership) representing such
Shares as soon as practicable after the notice, the exercise price and any
required withholding taxes have been received by the Company, provided, that the
Company may delay issuance of such Shares until completion of any action or
obtaining of any consent, which the Company deems necessary or appropriate under
any applicable law (including, without limitation, state securities or “blue
sky” laws) and such Shares shall be subject to such restrictions as the
Committee may determine in accordance with the Plan. The certificate or
certificates (or other evidence of ownership) representing the Shares as to
which the Option shall have been so exercised shall be registered in the name of
the Participant and if the Participant shall so request in the notice exercising
the Option, shall be registered in the name of the Participant and another
person jointly, with right of survivorship and shall be delivered as provided
above to or upon the written order of the person or persons exercising the
Option. In the event the Option shall be exercised by any person or person other
than the Participant, such notice shall be accompanied by appropriate proof of
the right of such person or persons to exercise the Option. All Shares that
shall be purchased upon the exercise of the Option as provided herein shall be
fully paid and nonassessable.
          8. PARTIAL EXERCISE. Exercise of vested Options in accordance with
this Agreement may be made in whole or in part at any time and from time to
time, except that no fractional Share shall be issued pursuant to the Option.
          9. NON-ASSIGNABILITY. The Option shall not be transferable by the
Participant otherwise than by will or by the laws of descent and distribution,
or as may be permitted under policies that may be adopted from time to time by
the Committee in its sole discretion. The Option shall be exercisable, during
the Participant’s lifetime, only by the Participant (or, in the event of legal
incapacity or incompetency, by the Participant’s guardian or representative) and
shall not be assigned, pledged or hypothecated in any way (whether by operation
of law or otherwise) and shall not be subject to execution, attachment or
similar process. Any attempted transfer, assignment, pledge, hypothecation or
other disposition of the Option or of any rights granted

5

--------------------------------------------------------------------------------

 

hereunder contrary to the provisions of this Paragraph 9, or the levy of any
attachment or similar process upon the Option or such rights shall be null and
void.
          10. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE. The Participant shall
have no rights as a stockholder with respect to Shares subject to this Agreement
until the issuance of the Shares. Except as is expressly provided in the Plan
with respect to certain changes in the capitalization of the Company, no
adjustment shall be made for dividends or similar rights for which the record
date is prior to the date of such registration.
          11. CAPITAL CHANGES AND BUSINESS SUCCESSIONS. The Plan contains
provisions covering the treatment of Options in a number of contingencies such
as stock splits and mergers. Provisions in the Plan for adjustment with respect
to Shares subject to the Option and the related provisions with respect to
successors to the business of the Company are hereby made applicable hereunder
and are incorporated herein by reference.
          12. TAXES. Upon exercise of the Option, the Participant shall be
required to pay to the Company the amount of any applicable federal, state and
local withholding taxes due as a result of such exercise. The Participant agrees
that the Company may withhold from the Participant’s remuneration, if any, the
appropriate amount of federal, state and local withholding attributable to such
amount that the Company believes it is obligated to withhold under the Code,
including, but not limited to, income and employment taxes. Subject to the right
of the Committee to disapprove any such election and require the Participant to
pay the required withholding taxes in cash, the Participant shall have the right
to elect to pay the withholding taxes with Shares to be received upon exercise
of the Option, in accordance with procedures to be established by the Committee.
Unless the Company shall permit another valuation method to be elected by the
Participant, Shares used to pay any required withholding tax shall be valued at
the closing price of a Share as reported on the New York Stock Exchange
Composite Tape on the date the withholding tax becomes due. Any election to pay
withholding taxes with Shares must be made on or prior to the date the
withholding tax becomes due and shall be irrevocable once made. Any such
election must be in conformity with the conditions established by the Company
from time to time. The Participant further agrees that, if the Company does not
withhold an amount from the Participant’s remuneration sufficient to satisfy the
Company’s income tax withholding obligation, the Participant shall reimburse the
Company, in cash, for the amount under-withheld within thirty (30) days after
the Company has given the Participant notice of such under-withheld amount.
          13. NO OBLIGATION TO MAINTAIN RELATIONSHIP OR GRANT OPTIONS. The
Company is not by the Plan or this Option obligated to continue the Participant
as an employee, director or consultant of the Company. The Participant also
agrees and acknowledges that grants of Options under the Plan are

6

--------------------------------------------------------------------------------

 

discretionary and any grant of Options under the Plan does not imply any
obligation on the part of the Company to make any future option grants.
          14. NOTICES. Any notices required or permitted by the terms of this
Agreement or the Plan shall be given by recognized courier service, facsimile,
registered or certified mail, return receipt requested, addressed as follows:

         
 
  If to the Company:   Time Warner Inc.
One Time Warner Center
New York, NY 10019
Attn: Senior Vice President-Global Compensation and Benefits
 
       
 
  If to the Participant:   at the most recent address information set forth in
the Company’s records;

or such other address or addresses of which notice in the same manner has
previously been given. Any such notice shall be deemed to have been given upon
the earlier of the receipt, one business day following delivery to a nationally
recognized overnight courier service or three business days following mailing by
registered or certified mail.
          15. GOVERNING LAW; SUBMISSION TO JURISDICTION. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York,
without regard to its principles of conflicts of laws. The parties further agree
that any and all disputes related to the subject matter of this Agreement shall
be brought only in a state or federal court of competent jurisdiction sitting in
Manhattan, New York, and the parties 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.
          16. BENEFIT OF AGREEMENT. Subject to the provisions of the Plan and
the other provisions hereof, this Agreement shall be for the benefit of and
shall be binding upon the heirs, executors, administrators, successors and
assigns of the parties hereto.
          17. 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.

7

--------------------------------------------------------------------------------

 

          18. MODIFICATIONS AND AMENDMENTS. The terms and provisions of this
Agreement and the Notice may be modified or amended as provided in the Plan.
          19. 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.
          20. 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.
          21. ENTRY INTO FORCE. By entering into this Agreement, the Participant
agrees and acknowledges that the Participant has received and read a copy of the
Plan. This Agreement shall not constitute a valid and binding obligation of the
Company to the Participant until signed or electronically acknowledged and
agreed to by the Participant. The Participant acknowledges and agrees that the
Participant may be entitled from time to time to receive certain other documents
related to the Company, including the Company’s annual report to stockholders
and proxy statement related to its annual meeting of stockholders (which become
available each year approximately three months after the end of the calendar
year), and the Participant consents to receive such documents electronically
through the Internet or as the Company otherwise directs.
          22. DEFINED TERMS. Any terms used but not defined herein shall have
the meanings given to such terms in the Plan.

8