Document:

EX-10.5 TIME WARNER INC. 1998 RESTRICTED STOCK

 

Exhibit 10.5

As Amended through

October 25, 2007

TIME WARNER INC.

1988 Restricted Stock and Restricted Stock Unit Plan For

Non-Employee Directors

          1.      PURPOSE. The purpose of the Plan is to supplement the compensation paid to Outside
Directors and to increase their proprietary interest in the Company and their identification with
the interests of the Company’s stockholders, by grants of annual awards with respect to Common
Stock.

          2.      CERTAIN DEFINITIONS.

                    (a)      “Time Warner” shall mean Time Warner Inc. (formerly named AOL Time Warner Inc.), a
Delaware corporation, and any successor thereto.

                    (b)      “Average Market Price” shall mean the average (rounded to the nearest cent) of the means
between the high and low sales prices of a share of Common Stock as reported on the New York Stock
Exchange Composite Tape for the ten consecutive trading days ending on the date of the annual
meeting of stockholders of the Company for the year with respect to which an annual grant of
Restricted Shares or Restricted Stock Units is made pursuant to paragraph 5 of the Plan.

                    (c)      “Board” shall mean the Board of Directors of the Company.

                    (d)      “Commission” shall mean the Securities and Exchange Commission.

                    (e)      “Common Stock” shall mean the Common Stock, par value $.01 per share, of the Company.

                    (f)      “Company” shall mean (i) with respect to periods prior to January 11, 2001, Historic TW
Inc. (formerly named Time Warner Inc.) and (ii) with respect to periods on and after January 11,
2001, Time Warner.

                    (g)      “Grant Date” shall have the meaning set forth in paragraph 5 of the Plan.

                    (h)      “Outside Director” shall mean a member of the Board of Directors of the Company who, as of
the close of business on the date of the annual meeting of stockholders of the Company, is not an
employee of the Company or any subsidiary of the Company. For the purposes hereof, a “subsidiary”
of the Company shall mean any corporation, partnership or other entity in which the Company owns,
directly or indirectly, an equity interest of 50% or more.

 

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                    (i)      “Plan” shall mean this 1988 Restricted Stock and Restricted Stock Unit Plan for
Non-Employee Directors of the Company.

                    (j)      “Retained Distributions” shall mean distributions which are retained by the Company
pursuant to paragraph 6(b) and (c) of the Plan.

                    (k)      “Restricted Shares” shall mean shares of Common Stock granted to an Outside Director
pursuant to paragraph 5 of the Plan.

                    (l)      “Restricted Stock Units” means a contingent obligation of the Company to deliver shares of
Common Stock granted to an Outside Director pursuant to paragraph 5 of the Plan.

                    (m)      “Restriction Period” shall mean the period of time specified in paragraph 6(a) hereof
applicable to all awards granted under the Plan.

          3.      SHARES SUBJECT TO THE PLAN. Subject to the provisions of paragraph 9 hereof, the maximum
aggregate number of Restricted Shares and Restricted Stock Units which may be issued under the Plan
in any calendar year, commencing with calendar year 1999, shall be equal to .003% of the shares of
Common Stock outstanding on December 31st of the preceding calendar year. Any
Restricted Shares and Restricted Stock Units available for grant in any calendar year which are not
granted in that calendar year shall not be available for grant in any subsequent calendar year and
any Restricted Shares and Restricted Stock Units awarded in any calendar year that are forfeited by
the terms of the Plan in any subsequent calendar year shall not again be available for awards. No
fractional shares of Common Stock shall be granted or issued under the Plan.

          Shares utilized in respect of Restricted Shares or Restricted Stock Units may be, in whole or
in part, authorized but unissued shares of Common Stock or shares of Common Stock previously issued
and outstanding and reacquired by the Company.

          4.      ELIGIBILITY. Subject to the last sentence of paragraph 5 hereof, the only persons eligible
to participate in the Plan shall be Outside Directors.

          5.       ANNUAL GRANTS. Subject to the provisions of paragraph 3 hereof, each Outside Director
shall automatically be granted under the Plan, as of the conclusion of each annual meeting of
stockholders of the Company (the “Grant Date”), (a) for Grant Dates occurring during calendar years
1990 through 1998, that number of Restricted Shares equal to $30,000 divided by the Average Market
Price of the Common Stock on the Grant Date and (b) for Grant Dates occurring during calendar year
1999 and thereafter, that number of Restricted Shares or Restricted Stock Units, as determined by
the Board prior to the Grant Date, as is equal to a dollar amount determined by the Board of
Directors on or before the Grant Date divided by the Average Market Price of the Common Stock on
the Grant Date, and except as hereinafter provided, the Company shall promptly thereafter issue
such Restricted Shares or Restricted Stock Units, in each case without any further action required
to be taken by the Board or any

 

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committee thereof. The Company shall not be required to issue fractions of Restricted Shares
or Restricted Stock Units and in lieu thereof any fractional Restricted Share or Restricted Stock
Unit shall be rounded up to the next whole number. Notwithstanding the foregoing, in the case of
an Outside Director who, as of any Grant Date, has not continuously served as a member of the Board
for a period of at least six consecutive months (a “new Outside Director”), the Restricted Shares
or Restricted Stock Units granted to such new Outside Director on such Grant Date shall not be
issued in such new Outside Director’s name until six months after such new Outside Director shall
have first become a new Outside Director. An individual who shall become an Outside Director
subsequent to the date of the annual meeting of stockholders of the Company for any year shall
first become eligible to participate in the Plan commencing on the date of the next annual meeting
of stockholders of the Company.

          6.      RESTRICTION PERIOD; RESTRICTIONS APPLICABLE TO RESTRICTED SHARES AND RESTRICTED STOCK
UNITS; CERTIFICATES REPRESENTING RESTRICTED SHARES; DIVIDEND EQUIVALENTS APPLICABLE TO RESTRICTED
STOCK UNITS.

                    (a) Restricted Shares and Restricted Stock Units granted to an Outside Director pursuant to
the Plan shall be subject to the possibility of forfeiture for a period (the “Restriction Period”)
commencing on the date such Restricted Shares or Restricted Stock Units shall have been granted to
such Outside Director pursuant to paragraph 5 of the Plan and ending on the earliest of the
following events:

                         (i)      (A) the date such Outside Director ceases to be a director of the Company by reason
of mandatory retirement pursuant to any policy or plan of the Company applicable to Outside
Directors, or (B) with respect to Restricted Stock Units only, the date such Outside
Director ceases to be a director of the Company, provided the Outside Director has either
(x) completed at least five years of service as a director, in the aggregate or (y) served
as a director of the Company for at least five consecutive annual meetings of stockholders
of the Company;

                         (ii)      the date such Outside Director, having been nominated for reelection, is not
re-elected by the stockholders of the Company to serve as a member of the Board or, having
been re-elected by fewer than a majority “for” votes of the votes cast by the stockholders
at a stockholders’ meeting in an uncontested election of directors, the date such Outside
Director’s offer to resign from the Board is accepted by the Board;

                         (iii)      the date of death of such Outside Director;

                         (iv)      the date such Outside Director terminates service on the Board on account of
medical or health reasons which render such Outside Director unable to continue to serve as
a member of the Board;

 

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                         (v)      the occurrence of a Change in Control of the Company (as defined in paragraph 6(c)
below); or

                         (vi)      in each of the four years following the date of grant, on the first day of the
month in which a grant of Restricted Shares or Restricted Stock Units was made to an Outside
Director pursuant to paragraph 5 of the Plan with respect to 25% of the number of Restricted
Shares or Restricted Stock Units in such grant, beginning with grants made in 2003;

provided, however, that, in the discretion of the Board on a case by case basis,
the Restriction Period applicable to all Restricted Shares and Restricted Stock Units granted to an
Outside Director shall end and be deemed completed for all purposes of the Plan in the event an
Outside Director (a “withdrawing Outside Director”) terminates his or her service as a member of
the Board (A) for reasons of personal or financial hardship; (B) to serve in any governmental,
diplomatic or any other public service position or capacity; (C) to avoid or protect against a
conflict of interest of any kind; (D) on the advice of legal counsel; or (E) for any other
extraordinary circumstance that the Board determines to be comparable to the foregoing; provided
that in the case of a Restricted Stock Unit, the payment of the shares shall not occur before the
first date on which a payment could be made without subjecting the Outside Director to tax under
the provisions of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”). The
withdrawing Outside Director shall abstain from participating in any determination made by the
Board with respect to any matter relating to the foregoing.

                    (b)      Restricted Shares, when issued, will be represented by a stock certificate or certificates
registered in the name of the Outside Director to whom such Restricted Shares shall have been
granted. Each such certificate shall bear a legend in substantially the following form:

“The shares represented by this certificate are subject to the terms
and conditions (including forfeiture and restrictions against
transfer) contained in the Time Warner Inc. 1988 Restricted Stock
and Restricted Stock Unit Plan for Non-Employee Directors. A copy
of such Plan is on file in the Office of the Secretary of Time
Warner Inc.”

                    Such certificates shall be deposited by such Outside Director with the Company, together with
stock powers or other instruments of assignment, each endorsed in blank, which will permit transfer
to the Company of all or any portion of the Restricted Shares and any securities constituting
Retained Distributions that shall be forfeited or that shall not become vested in accordance with
the Plan. Restricted Shares shall constitute issued and outstanding shares of Common Stock for all
corporate purposes. The Outside Director will have the right to vote such Restricted Shares, to
receive and retain all regular cash dividends paid on such Restricted Shares and to exercise all
other rights, powers and privileges of a holder of Common Stock with respect to such Restricted
Shares, with the exception that (i) the Outside Director will

 

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not be entitled to delivery of the stock certificate or certificates representing such
Restricted Shares until the Restriction Period shall have expired and unless all other vesting
requirements with respect thereto shall have been fulfilled; (ii) the Company will retain custody
of the stock certificate or certificates representing the Restricted Shares during the Restriction
Period; (iii) other than regular cash dividends, the Company will retain custody of all
distributions (“Retained Distributions”) made or declared with respect to the Restricted Shares
(and such Retained Distributions will be subject to the same restrictions, terms and conditions as
are applicable to the Restricted Shares) until such time, if ever, as the Restricted Shares with
respect to which such Retained Distributions shall have been made, paid or declared shall have
become vested, and such Retained Distributions shall not bear interest or be segregated in separate
accounts; (iv) an Outside Director may not sell, assign, transfer, pledge, exchange, encumber or
dispose of any Restricted Shares or any Retained Distributions during the Restriction Period; and
(v) a breach of any restrictions, terms or conditions provided in the Plan or established by the
Board with respect to any Restricted Shares or Retained Distributions will cause a forfeiture of
such Restricted Shares and any Retained Distributions with respect thereto.

                    (c)      If the Company shall pay any regular cash dividend on its shares of Common Stock, the
Outside Director will have the right to receive and retain an amount equal to the dividends paid on
the number of shares of Common Stock equal to the number of Restricted Stock Units held by the
Outside Director on the dividend record date (“Dividend Equivalents”). If the Company shall pay
any dividend other than a cash dividend on its shares of Common Stock, the Outside Director will
not have the right to receive an amount equal or equivalent to such distribution with respect to
the Restricted Stock Units outstanding on the record date for such distribution (the “RSU Retained
Distribution”), but the Company will retain custody of such RSU Retained Distributions (and such
RSU Retained Distributions will be subject to the same restrictions, terms and conditions as are
applicable to the Restricted Stock Units) until such time, if ever, as the Restricted Stock Units
with respect to which such RSU Retained Distributions shall relate shall have become vested, and
such RSU Retained Distributions shall not bear interest or be segregated in separate accounts. An
Outside Director may not sell, assign, transfer, pledge, exchange, encumber or dispose of any
Restricted Stock Units or any RSU Retained Distributions during the Restriction Period. A breach of
any restrictions, terms or conditions provided in the Plan or established by the Board with respect
to any Restricted Stock Units will cause a forfeiture of such Restricted Stock Units and any RSU
Retained Distributions with respect thereto. Notwithstanding anything else contained in this
paragraph 6(c), no payment of Dividend Equivalents or RSU Retained Distributions to an Outside
Director shall occur before the first date on which a payment could be made without subjecting the
Outside Director to tax under the provisions of Section 409A of the Code.

                    (d)      A “Change in Control” means the occurrence of any of the following
events:

                    (i) any “Person” within the meaning of Section 13(d)(3) or 14(d)(2) of
the Act (other than the Company or any company owned, directly or
indirectly, by the shareholders of the Company in substantially the same

 

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proportions as their ownership of stock of the Company) becomes the
“Beneficial Owner” within the meaning of Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”) of 30% or
more of the combined voting power of the then outstanding securities of the
Company entitled to vote generally in the election of directors;
excluding, however, any circumstance in which such
beneficial ownership resulted from any acquisition by an employee benefit
plan (or related trust) sponsored or maintained by the Company or by any
corporation controlling, controlled by, or under common control with, the
Company;

          (ii) a change in the composition of the Board since October 25, 2007
(the “Initial Date”), such that the individuals who, as of such date,
constituted the Board (the “Incumbent Board”) cease for any reason
to constitute at least a majority of such Board; provided that any
individual who becomes a director of the Company subsequent to the Initial
Date whose election, or nomination for election by the Company’s
stockholders, was approved by the vote of at least a majority of the
directors then comprising the Incumbent Board shall be deemed a member of
the Incumbent Board; and provided further, that any individual who
was initially elected as a director of the Company as a result of an actual
or threatened election contest, as such terms are used in Rule 14a-12 of
Regulation 14A promulgated under the Exchange Act, or any other actual or
threatened solicitation of proxies or consents by or on behalf of any person
or entity other than the Board shall not be deemed a member of the Incumbent
Board;

          (iii) a reorganization, recapitalization, merger or consolidation (a
“Corporate Transaction”) involving the Company, unless securities
representing 60% or more of the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors of the Company or the corporation resulting from such Corporate
Transaction (or the parent of such corporation) are held subsequent to such
transaction by the person or persons who were the beneficial holders of the
outstanding voting securities entitled to vote generally in the election of
directors of the Company immediately prior to such Corporate Transaction, in
substantially the same proportions as their ownership immediately prior to
such Corporate Transaction; or

          (iv) the sale, transfer or other disposition of all or substantially
all of the assets of the Company.

 

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          7.      COMPLETION OF RESTRICTION PERIOD; FORFEITURE. Upon the completion of the Restriction
Period with respect to Restricted Shares or Restricted Stock Units of an Outside Director, and the
satisfaction of any other applicable restrictions, terms and conditions, such Restricted Shares
issued to such Outside Director and any Retained Distributions with respect to such Restricted
Shares shall become vested and shares of Common Stock subject to Restricted Stock Units shall be
thereafter delivered to the Outside Director. The Company shall promptly thereafter issue and
deliver to the Outside Director new stock certificates or instruments representing the Restricted
Shares and any other Retained Distributions related to such Restricted Shares registered in the
name of the Outside Director or, if deceased, his or her legatee, personal representative or
distributee, which do not contain the legend set forth in paragraph 6(b) hereof.

                    If an Outside Director ceases to be a member of the Board for any reason other than as set
forth in clauses (i) through (v) of paragraph 6(a) hereof or as the Board may otherwise approve in
accordance with paragraph 6(a), then those Restricted Shares and Restricted Stock Units granted to
such Outside Director and all Retained Distributions with respect to the Restricted Shares or
Restricted Stock Units that have not satisfied the Restriction Period because the time periods set
forth in clause (vi) of paragraph 6(a) have not passed, shall be forfeited to the Company, and the
Outside Director shall not thereafter have any rights (including dividend and voting rights) with
respect to such Restricted Shares, Restricted Stock Units and Retained Distributions with respect
thereto.

          8.      STATEMENT OF ACCOUNT. Each Outside Director shall receive an annual statement, on or about
June 1st, showing the number of Restricted Shares and Restricted Stock Units granted to such
Outside Director for that year and the aggregate number of Restricted Shares and Restricted Stock
Units that have been granted to such Outside Director under the Plan in or after 2003.

          9.      ADJUSTMENT IN EVENT OF CHANGES IN COMMON STOCK. In the event of a recapitalization, stock
split, stock dividend, combination or exchange of shares, merger, consolidation or liquidation or
the like, the aggregate number and class of Restricted Shares and Restricted Stock Units available
for grant under the Plan and the number and character of shares subject to any outstanding award
thereunder shall be appropriately adjusted by the Board, whose determination shall be conclusive.

          10.      NO RIGHT TO NOMINATION. Nothing contained in the Plan shall confer upon any Outside
Director the right to be nominated for reelection to the Board.

          11.      NONALIENATION OF BENEFITS. No right or benefit under the Plan shall be subject to
anticipation, alienation, sale, assignment, hypothecation, pledge, exchange, transfer, encumbrance
or charge, and any attempt to anticipate, alienate, sell, assign, hypothecate, pledge, exchange,
transfer, encumber or charge the same shall be void. No right or benefit hereunder shall in any
manner be liable for or subject to the debts, contracts, liabilities or torts of the person
entitled to such benefit. If any Outside Director or beneficiary hereunder should become

 

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bankrupt or attempt to anticipate, alienate, sell, assign, hypothecate, pledge, exchange,
transfer, encumber or charge any right or benefit hereunder, then such right or benefit shall, in
the discretion of the Board, cease and terminate, and in such event, the Board in its discretion
may hold or apply the same or any part thereof for the benefit of the Outside Director, his or her
beneficiary, spouse, children or other dependents, or any of them, in such manner and in such
proportion as the Board may deem proper.

          12.      APPOINTMENT OF ATTORNEY-IN-FACT. Upon the issuance of any Restricted Shares hereunder and
the delivery by an Outside Director of the stock power referred to in paragraph 6(b) hereof, such
Outside Director shall be deemed to have appointed the Company, its successors and assigns, the
attorney-in-fact of the Outside Director, with full power of substitution, for the purpose of
carrying out the provisions of this Plan 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 shall be irrevocable and coupled with an interest. The Company as
attorney-in-fact for the Outside Director may in the name and stead of the Outside Director make
and execute all conveyances, assignments and transfers of the Restricted Shares and Retained
Distributions deposited with the Company pursuant to paragraph 6(b) of the Plan and the Outside
Director hereby ratifies and confirms all that the Company, as said attorney-in-fact, shall do by
virtue thereof.

                    Nevertheless, the Outside Director shall, if so requested by the Company, execute and deliver
to the Company all such instruments as may, in the judgment of the Company, be advisable for the
purpose.

          13.      SECTION 4999 RULES. Notwithstanding any provisions to the contrary contained in the Plan,
if the Payment (as hereinafter defined) due to the Outside Director hereunder upon the occurrence
of a Change in Control of the Company would be subject to the excise tax imposed by Section 4999
(or any successor thereto) of the Code, then any such Payment hereunder payable to the Outside
Director shall be reduced to the largest amount that will result in no portion of the aggregate of
the Payments from the Company being subject to such excise tax. The term “Payment” shall mean any
transfer of property within the meaning of Section 280G (or any successor thereto) of the Code.

                    The determination of any reduction in Payments under the Plan shall be made by the Outside
Director in good faith, and such determination shall be conclusive and binding on the Company. The
Outside Director shall have the right to determine the extent to which the aggregate amount of any
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 Outside Director would otherwise have been entitled under the
Plan, the extent to which the Payments hereunder and any other payments due to the Outside Director
from the Company shall be reduced, and whether to waive the right to the acceleration of any
portion of the Payment due hereunder or otherwise due to the Outside Director from the Company, and
any such determination shall be conclusive and binding on the Company. To the extent that Payments
hereunder are not paid as a consequence of the limitation contained in this paragraph 13, then the
Restricted Shares, Restricted Stock

 

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Units and Retained Distributions not so accelerated shall be deemed to remain outstanding and
shall be subject to the provisions of the Plan as if no acceleration had occurred.

                    If (a) the Company shall make any Payments pursuant to the Plan to the Outside Director, (b)
an excise tax under Section 4999 (or any successor thereto) of the Code is in fact paid by the
Outside Director (or is claimed by the Internal Revenue Service to be due) as a result of any such
Payment, either alone or together with any other Payments received or to be received by the Outside
Director from the Company, and (c) if nationally recognized counsel to the Outside Director or the
Company shall have given an opinion of counsel that repayment of all or a portion of such Payments
would result in such excise tax being refunded to the Outside Director (or, if not paid, in such
excise tax not being imposed), then the Outside Director shall repay to the Company all or such
portion of such Payments so that such excise tax will be refunded (or will not apply).

                    The Company shall pay all legal fees and expenses which the Outside Director may incur in any
contest of the Outside Director’s interpretation of, or determinations under, the provisions of
this paragraph 13.

          14.      WITHHOLDING TAXES.

                    (a)      At the time any Restricted Shares or Retained Distributions become vested, or amounts
become payable pursuant to a Restricted Stock Unit, each Outside Director shall pay to the Company
the amount of any Federal, state or local taxes of any kind required by law to be withheld with
respect thereto.

                    (b)      If an Outside Director properly elects (which, apart from any other notice required by
law, shall require that the Outside Director notify the Company of such election at the time it is
made) within 30 days after the Company grants Restricted Shares to an Outside Director to include
in gross income for Federal income tax purposes an amount equal to the fair market value of such
Restricted Shares at the Grant Date, he or she shall pay to the Company at the time of such
election the amount of any Federal, state or local taxes required to be withheld with respect to
such Restricted Shares.

                    (c)      If an Outside Director shall fail to make the payments required hereunder, the Company
shall, to the extent permitted by law, have the right to deduct from any payment of any kind
otherwise due to such Outside Director any Federal, state or local taxes of any kind required by
law to be withheld with respect to such Restricted Shares and Restricted Stock Units.

          15.      AMENDMENT AND TERMINATION OF PLAN. The Plan shall have a term of 10 years from the date
stockholder approval regarding the Plan was last obtained and, therefore, the Plan shall terminate
on May 19, 2009, and no further Restricted Shares or Restricted Stock Units may be granted pursuant
to the Plan after that date. The Board may terminate the Plan at any time prior to such
termination date and may make such amendments to the Plan as it shall deem advisable;
provided, however, that no termination or amendment of the

 

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Plan shall adversely affect the right of any Outside Director (without his or her consent)
under any grant previously made and any amendment shall comply with all applicable laws and
regulations and stock exchange listing requirements.

          16.      GOVERNMENT AND OTHER REGULATIONS. Notwithstanding any other provisions of the Plan, the
obligations of the Company with respect to Restricted Shares and Restricted Stock Units shall be
subject to all applicable laws, rules and regulations, and such approvals by any governmental
agencies as may be required or deemed appropriate by the Company. The Company reserves the right
to delay or restrict, in whole or in part, the issuance or delivery of Common Stock pursuant to any
grants of Restricted Shares or Restricted Stock Units under the Plan until such time as:

                    (a) any legal requirements or regulations shall have been met relating to the issuance of such
shares or to their registration, qualification or exemption from registration or qualification
under the Securities Act of 1933 or any applicable state securities laws; and

                    (b) satisfactory assurances shall have been received that such shares when delivered will be
duly listed on any applicable stock exchange.

          17.      NONEXCLUSIVITY OF PLAN. Neither the adoption of the Plan by the Board nor the submission
of the Plan to the stockholders of the Company for approval shall be construed as creating any
limitations on the power of the Board to adopt such other incentive arrangements as it may deem
desirable, including without limitation, the awarding of stock otherwise than under the Plan, and
such arrangements may be either generally applicable or applicable only in specific cases.

          18.      GOVERNING LAW. The Plan shall be governed by, and construed in accordance with, the laws
of the State of New York.

          19.      EFFECTIVE DATE OF THE PLAN. The Plan shall become effective on a date which is the latter
of (i) the date the Plan is approved by the stockholders of the Company entitled to vote at the
annual meeting of stockholders of the Company to be held in 1988, or any adjournment thereof; and
(ii) the date on which the Company receives a favorable interpretative letter from the Commission
to the effect that (x) the grant of Restricted Shares under the Plan is exempt from the operation
of Section 16(b) of the Exchange Act and (y) Outside Directors who receive Restricted Shares under
the Plan will continue to be “disinterested persons” within the meaning of Rule 16b-3 under the
Exchange Act with respect to administration of the Company’s other stock related plans in which
only employees of the Company (including officers, whether or not they are directors) and its
subsidiaries may participate.

          20.      BENEFICIARIES. The Outside Director’s beneficiary in the event of his or her death shall
be his or her estate.

 

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          21.      SECTION 409A.

                    Notwithstanding other provisions of the Plan or any award agreements thereunder, no award
shall be granted, deferred, accelerated, extended, paid out or modified under this Plan in a manner
that would result in the imposition of an additional tax under Section 409A of the Code upon a
participant. In the event that it is reasonably determined by the Board that, as a result of
Section 409A of the Code, payments in respect of any award under the Plan may not be made at the
time contemplated by the terms of the Plan or the relevant award agreement, as the case may be,
without causing the participant holding such award to be subject to taxation under Section 409A of
the Code, the Company will make such payment on the first day that would not result in the
participant incurring any tax liability under Section 409A of the Code; which, if the participant
is a “specified employee” within the meaning of the Section 409A, shall be the first day following
the six-month period beginning on the date of participant’s termination of Employment. The Company
shall use commercially reasonable efforts to implement the provisions of this Section 21 in good
faith; provided that neither the Company, nor the Board, nor any of the Company’s employees,
directors or representatives, shall have any liability to participants with respect to this Section
21.EX-10.6 FORM OF RESTRICTED STOCK UNITS AGREEMENT

 

Exhibit 10.6

Time Warner Inc. 2003 Stock Incentive Plan

RSU Agreement, Version 1

For Use from October 2007

Restricted Stock Units Agreement

General Terms and Conditions

          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 restricted stock units (the “RSUs”) 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” means, “Cause” 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 is no such agreement, “Cause” means (i) Participant’s continued failure
substantially to perform such Participant’s duties (other than as a result of total or
partial incapacity due to physical or mental illness) for a period of ten (10) days
following written notice by the Company or any of its Affiliates to the Participant of
such failure, (ii) dishonesty in the performance of the Participant’s duties, (iii)
Participant’s conviction of, or plea of nolo contendere to, a crime constituting (A) a
felony under the laws of the United States or any state thereof or (B) a misdemeanor
involving moral turpitude, (iv) Participant’s insubordination, willful malfeasance or
willful misconduct in connection with Participant’s duties or any act or omission which
is injurious to the financial condition or business reputation of the Company or any of
its Affiliates, or (v) Participant’s breach of any non-competition, non-solicitation
or confidentiality provisions to which the Participant is subject. 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, to the extent that such definition also
constitutes such Participant being considered “disabled” under Section 409A(a)(2)(C) of
the Code.
	 
	 	c)	 	“Good Reason” means “Good Reason” 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 is no such agreement, “Good Reason” means (i) the failure of the
Company to pay or cause to be paid the Participant’s base salary or annual bonus
when due or (ii) 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 (i) and
(ii) 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.
	 
	 	d)	 	“Plan” means the Time Warner Inc. 2003 Stock Incentive Plan, as the
same may be amended, supplemented or modified from time to time.
	 
	 	e)	 	“Retirement” means a voluntary termination of employment by the
Participant (i) following the attainment of age 55 with ten (10) or more years of
service as an employee or a director with the Company or any Affiliate or (ii) pursuant
to the retirement plan or program of the Company or any Affiliate that is applicable to
the Participant.
	 
	 	f)	 	“Severance Period” means the period of time following a termination of
Employment during which a Participant is entitled to receive both salary continuation
payments and continued participation under the health benefit plans of the Company or
any of its Affiliates, whether pursuant to an employment contract with, or a severance
plan or other arrangement maintained by, the Company or any Affiliate. For the
avoidance of doubt, unless otherwise determined by the Committee, the Severance Period
shall not include any time period following the date on which a Participant commences
employment with a subsequent employer that is not an Affiliate, regardless of whether
the Participant continues to receive salary continuation payments from the Company or
any Affiliate after such date.
	 
	 	g)	 	“Vesting Date” means each vesting date set forth in the Notice.

	2.	 	Grant of Restricted Stock Units. The Company hereby grants to the Participant (the
“Award”), on the terms and conditions hereinafter set forth, the number of RSUs set
forth on the Notice of Grant of Restricted Stock Units (the “Notice”). Each RSU
represents the unfunded, unsecured right of the Participant to receive a Share on the date(s)
specified herein. RSUs do not constitute issued and outstanding shares of Common Stock for
any corporate purposes and do not confer on the Participant any right to vote on matters that
are submitted to a vote of holders of Shares.
	 
	3.	 	Dividend Equivalents and Retained Distributions. If on any date while RSUs are
outstanding hereunder the Company shall pay any regular cash dividend on the Shares, the
Participant shall be paid, for each RSU held by the Participant on the record date, an

2

 

amount of cash equal to the dividend paid on a Share (the “Dividend Equivalents”) at
the time that such dividends are paid to holders of Shares. If on any date while RSUs are
outstanding hereunder the Company shall pay any dividend other than a regular cash dividend
or make any other distribution on the Shares, the Participant shall be credited with a
bookkeeping entry equivalent to such dividend or distribution for each RSU held by the
Participant on the record date for such dividend or distribution, but the Company shall
retain custody of all such dividends and distributions unless the Board has in its sole
discretion determined that an amount equivalent to such dividend or distribution shall be
paid currently to the Participant (the “Retained Distributions”); provided,
however, that if the Retained Distribution relates to a dividend paid in Shares, the
Participant shall receive an additional amount of RSUs equal to the product of (I) the
aggregate number of RSUs held by the Participant pursuant to this Agreement through the
related dividend record date, multiplied by (II) the number of Shares (including any
fraction thereof) payable as a dividend on a Share. Retained Distributions will not bear
interest and will be subject to the same restrictions as the RSUs to which they relate.
Notwithstanding anything else contained in this paragraph 3, no payment of Dividend
Equivalents or Retained Distributions shall occur before the first date on which a payment
could be made without subjecting the Participant to tax under the provisions of Section 409A
of the Internal Revenue Code of 1986, as amended (the “Code”).

	4.	 	Vesting and Delivery of Vested Securities.

	 	a)	 	Subject to the terms and provisions of the Plan and this Agreement, no later
than 60 days after each Vesting Date with respect to the Award, the Company shall issue
or transfer to the Participant the number of Shares corresponding to such Vesting Date
and the Retained Distributions, if any, covered by that portion of the Award. Except
as otherwise provided in paragraphs 6 and 7, the vesting of such RSUs and any Retained
Distributions relating thereto shall occur only if the Participant has continued in
Employment of the Company or any of its Affiliates on the Vesting Date and has
continuously been so employed since the Date of Grant (as defined in the Notice).
	 
	 	b)	 	RSUs Extinguished. Upon each issuance or transfer of Shares in
accordance with this Agreement, a number of RSUs equal to the number of Shares issued
or transferred to the Participant shall be extinguished and such number of RSUs will
not be considered to be held by the Participant for any purpose.
	 
	 	c)	 	Final Issuance. Upon the final issuance or transfer of Shares and
Retained Distributions, if any, to the Participant pursuant to this Agreement, in lieu
of a fractional Share, the Participant shall receive a cash payment equal to the Fair
Market Value of such fractional Share.
	 
	 	d)	 	Section 409A. Notwithstanding anything else contained in this
Agreement, no Shares shall be issued or transferred to a Participant before the first
date on which a payment could be made without subjecting the Participant to tax under
the provisions of Section 409A of the Code.

3

 

	5.	 	Termination of Employment.

	 	(a)	 	If the Participant’s Employment with the Company and its Affiliates is
terminated by the Participant for any reason other than those described in clauses
(b) and (c) below prior to the Vesting Date with respect to any portion of the
Award, then the RSUs 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, unless otherwise provided in an employment agreement between the
Participant and the Company or an Affiliate.
	 
	 	(b)	 	If the Participant’s Employment terminates (i) as a result of his or her death
or Disability or (ii) as a result of his or her Retirement or is terminated by the
Company and its Affiliates for any reason other than for Cause on a date when the
Participant satisfies the requirements for Retirement, then the RSUs for which a
Vesting Date has not yet occurred and all Retained Distributions relating thereto
shall, to the extent the RSUs were not extinguished prior to such termination of
Employment, fully vest on the date of any such termination and Shares subject to the
RSUs shall be issued or transferred to the Participant, as soon as practicable, but
no later than 90 days following such termination of Employment.
	 
	 	(c)	 	If the Participant’s Employment is terminated by the Company and its Affiliates
for any reason other than for Cause (unless such termination is due to death or
Disability), then a pro rata portion of the RSUs that were scheduled to vest on the
next Vesting Date, and on any subsequent Vesting Dates that occur during a Severance
Period, and any Retained Distributions relating thereto, shall, to the extent the RSUs
were not extinguished prior to such termination of Employment, become vested, and
Shares subject to such RSUs shall be issued or transferred to the Participant on each
such Vesting Date following such termination of Employment, determined as follows:

	 	(x)	 	the number of RSUs covered by the portion of
the Award that were scheduled to vest on such 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 Grant if
there was no prior Vesting Date) during which the Participant either
remained in Employment or was within a covered Severance Period, and
the denominator of which shall be the number of days from the last
Vesting Date (or the Date of Grant if there was no prior Vesting Date).

If the product of (x) and (y) results in a fractional share, such fractional
share shall be rounded to the next higher whole share.

4

 

The RSUs and any Retained Distributions related thereto that have not vested shall
be completely forfeited on the date of any such termination.

For purposes of this paragraph 5, 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 Participant’s payroll status during such leave of absence if
such leave of absence is approved in writing by the Company or any Affiliate; provided, that
such leave of absence constitutes a bona fide leave of absence and not a Separation From
Service under Treas. Reg. 1.409A-1(h)(1)(i). Notice of any such approved leave of absence
should be sent to the Company at One Time Warner Center, New York, New York 10019,
attention: Director, Global Stock Plans Administration, but such notice shall not be
required for the leave of absence to be considered approved.

In the event the Participant’s Employment with the Company or any of its

Affiliates is terminated, the Participant shall have no claim against the Company with
respect to the RSUs and related Retained Distributions, if any, other than as set forth in
this paragraph 5, the provisions of this paragraph 5 being the sole remedy of the
Participant with respect thereto.

	6.	 	Acceleration of Vesting Date. In the event a Change in Control, subject to
paragraph 7, has occurred, to the extent that any such occurrence also constitutes a change in
ownership or effective control of the Company, or in the ownership of a substantial portion of
the assets of the Company, within the meaning of Section 409A(a)(2)(A)(v) of the Code (a “409A
Change of Control Event”), (A) the Award will vest in full upon the earlier of (i) the
expiration of the one-year period immediately following the Change in Control, provided the
Participant’s Employment with the Company and its Affiliates has not terminated, (ii) the
original Vesting Date with respect to each portion of the Award, or (iii) the termination of
the Participant’s Employment by the Company or any of its Affiliates (I) by the Company other
than for Cause (unless such termination is due to death or Disability) or (II) by the
Participant for Good Reason and (B) Shares subject to the RSUs shall be issued or transferred
to the Participant, as soon as practicable, but in no event later than 60 days following such
Vesting Date, along with the Retained Distributions related thereto; provided, however, that
notwithstanding the foregoing, to the extent that any such occurrence does not constitute a
409A Change of Control Event, the RSUs shall vest as described under this paragraph 6, but the
issuance of Shares shall be made at the times otherwise provided hereunder as if no Change of
Control had occurred. 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 treated as the Vesting
Date.

	7.	 	Limitation on Acceleration. Notwithstanding any provision to the contrary in the
Plan or this Agreement, if the Payment (as hereinafter defined) due to the Participant hereunder
as a result of the acceleration of vesting of the RSUs pursuant to paragraph 6 of this
Agreement, either alone or together with all other Payments received or to be received by
the Participant from the Company or any of its Affiliates (collectively, the “Aggregate
Payments”), or any portion thereof, would be subject to the excise tax

5

 

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 Participant after all taxes on
the Aggregate Payments are paid would be greater than the net amount that would be
retained by the Participant 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 Participant shall be entitled to receive the
Aggregate Payments.
	 
	 	b)	 	If, however, the net amount that would be retained by the Participant 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 Participant 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 Participant, 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 Participant would 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 7, then the RSUs 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 Participant
terminates Employment for Good Reason or is terminated by the Company or any of its
Affiliates without Cause, the RSUs and Retained Distributions related thereto (to the extent
that they have not already become vested) shall become immediately vested in their entirety
upon such termination and Shares subject to the RSUs shall be issued or transferred to the
Participant, as soon as practicable following such termination of Employment, subject to the
provisions relating to Section 4999 of the Code set forth herein.

The Company shall promptly pay, upon demand by the Participant, all legal fees, court costs,
fees of experts and other costs and expenses which the Participant incurred in any actual,
threatened or contemplated contest of the Participant’s interpretation of, or determination
under, the provisions of this paragraph 7.

6

 

	8.	 	Withholding Taxes. The Participant agrees that,

	 	a)	 	Obligation to Pay Withholding Taxes. Upon the payment of any Dividend
Equivalents and the vesting of any portion of the Award of RSUs and the Retained
Distributions relating thereto, the Participant will be required to pay to the Company
any applicable Federal, state, local or foreign withholding tax due as a result of such
payment or vesting. The Company’s obligation to deliver the Shares subject to the RSUs
or to pay any Dividend Equivalents 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 the Dividend Equivalent, Shares issued in connection with the
vesting or Retained Distribution, as applicable, or any payment of any kind otherwise
due to the Participant any Federal, state, local or foreign withholding taxes due with
respect to such vesting or payment.
	 
	 	b)	 	Payment of Taxes with Stock. Subject to the Committee’s right to
disapprove any such election and require the Participant to pay the required
withholding tax in cash, the Participant shall have the right to elect to pay the
required withholding tax associated with a vesting with Shares to be received upon
vesting. Unless the Company shall permit another valuation method to be elected by the
Participant, Shares used to pay any required withholding taxes shall be valued at the
average of the high and low sales price of a Share on the New York Stock Exchange on
the date the withholding tax becomes due (hereinafter called the “Tax Date”).
Notwithstanding anything herein to the contrary, if a Participant who is required to
pay the required withholding tax in cash fails to do so within the time period
established by the Company, then the Participant shall be deemed to have elected to pay
such withholding taxes with Shares to be received upon vesting. Elections must be made
in conformity with conditions established by the Committee from time to time
	 
	 	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.

	9.	 	Changes in Capitalization and Government and Other Regulations. The Award
shall be subject to all of the terms and provisions as provided in this Agreement and in the
Plan, which are incorporated by reference herein and made a part hereof, including, without
limitation, the provisions of Section 10 of the Plan (generally relating to adjustments to
the number of Shares subject to the Award, upon certain changes in capitalization and
certain reorganizations and other transactions).

	10.	 	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 RSUs or any Dividend Equivalents and Retained Distributions relating thereto, except as

7

 

waived by the Board or the Committee, will cause a forfeiture of such RSUs and any Dividend
Equivalents or Retained Distributions relating thereto.

	11.	 	Right of Company to Terminate Employment. Nothing contained in the Plan or this
Agreement shall confer on any Participant 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 Participant at any such time, with or without cause,
notwithstanding the fact that some or all of the RSUs and related Retained Distributions
covered by this Agreement may be forfeited as a result of such termination. The granting of
the RSUs under this Agreement shall not confer on the Participant any right to any future
Awards under the Plan.
	 
	12.	 	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, New York, NY 10019, attention
Director, Global Stock Plans Administration, and to the Participant 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 Participant, as the case may be, by notice to the other may
designate in writing from time to time.
	 
	13.	 	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 Participant under this Agreement without
his or her consent.
	 
	14.	 	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 Participant and his or her legatees, distributees and personal
representatives.
	 
	15.	 	Copy of the Plan. By entering into the Agreement, the Participant agrees and
acknowledges that he or she has received and read a copy of the Plan.
	 
	16.	 	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.
	 
	17.	 	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.

8

 

	18.	 	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 12 hereof.

	19.	 	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 grants of RSUs (including number of grants,
grant dates, vesting type, vesting dates, and any other information regarding RSUs that have
been granted, canceled, vested, or forfeited) 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 on the
Participant’s behalf by a broker or other third party with whom the Participant may elect to
deposit any Shares acquired pursuant

9

 

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.

10

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