Document:

EX-10.45 2007 ANNUAL BONUS PLAN

 

Exhibit 10.45

TIME WARNER CABLE INC.

2007 ANNUAL BONUS PLAN

I.     Purpose

     The purpose of the Plan is to establish a program of incentive compensation for designated
officers and/or key executive employees of Company and its subsidiaries and divisions that is
directly related to the performance results of the Company and such employees. The Plan provides
annual incentives, contingent upon continued employment and meeting certain corporate goals, to
certain key executives who make substantial contributions to the Company.

II.     Definitions

     “Board” means the Board of Directors of the Company.

     “Bonus Award” means the award, as determined by the Committee, to be granted to a Participant
based on that Participant’s level of attainment of his or her goals established in accordance with
Articles IV and V.

     “Code” means the Internal Revenue Code of 1986, as amended.

     “Committee” means either (i) the Board or (ii) a committee selected by the Board to administer
the Plan and composed of not less than two directors, each of whom is an “outside director” (within
the meaning of Section 162(m) of the Code). If at any time such a Committee has not been so
designated, the Compensation Committee of the Board shall constitute the Committee or if there
shall be no Compensation Committee of the Board, the Board shall constitute the Committee.

     “Company” means Time Warner Cable Inc. together with each of its subsidiaries.

     “Designated Beneficiary” means the beneficiary or beneficiaries designated in accordance with
Article XIII hereof to receive the amount, if any, payable under the Plan upon the Participant’s
death.

     “162(m) Bonus Award” means a Bonus Award which is intended to qualify for the
performance-based compensation exception to Section 162(m) of the Code, as further described in
Article VII.

     “Participant” means any officer or key executive designated by the Committee to participate in
the Plan.

     “Performance Criteria” means objective performance criteria established by the Committee with
respect to 162(m) Bonus Awards. Performance Criteria shall be measured in terms of one or more of
the following objectives:

 

 

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     (i) earnings before or after taxes, interest, depreciation and/or amortization;

     (ii) net earnings (before or after taxes);

     (iii) net income (before or after taxes);

     (iv) operating income before or after depreciation and amortization (and
including or excluding capital expenditures);

     (v) operating income (before or after taxes);

     (vi) operating profit (before or after taxes)

     (vii) book value;

     (viii) earnings per share (before or after taxes);

     (ix) market share;

     (x) return measures (including, but not limited to, return on capital, invested
capital, assets, equity);

     (xi) margins;

     (xii) share price (including, but not limited to, growth measures and total
shareholder return);

     (xiii) sales or product volume growth;

     (xiv) productivity improvement or operating efficiency;

     (xv) costs or expenses;

     (xvi) shareholders’ equity;

     (xvii) revenues or sales;

     (xviii) cash flow (including, but not limited to, operating cash flow, free
cash flow and cash flow return on capital);

     (xix) revenue-generating unit-based metrics;

     (xx) expense targets;

     (xxi) objective measures of customer satisfaction;

     (xxii) working capital targets;

     (xxiii) measures of economic value added;

     (xxiv) inventory control; or

     (xxv) enterprise value.

The foregoing criteria may relate to the Company, one or more of its Affiliates or one or more of
its or their divisions or units, or departments or functions, or any combination of the foregoing,
and may be applied on an absolute basis and/or be relative to one or more peer group companies or
indices, or any combination thereof, all as the Committee shall determine. In addition, to the
degree consistent with Section 162(m) of the Code (or any successor section thereto), the
Performance Criteria may be calculated without regard to extraordinary items.

Each grant of a 162(m) Bonus Award shall specify the Performance Criteria to be achieved, a minimum
acceptable level of achievement below which no payment or award will be made, and a formula for
determining the amount of any payment or award to be made if performance is at or above the minimum
acceptable level but falls short of full achievement of the specified Performance Criteria.

If the Committee determines that a change in the business, operations, corporate structure or
capital structure of the Company, or the manner in which it conducts its business, or other events
or circumstances render the Performance Criteria to be unsuitable, the Committee may modify

 

 

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such
Performance Criteria or the related minimum acceptable level of achievement, in whole or in part,
as the Committee deems appropriate and equitable; provided, however, that no such modification
shall be made if the effect would be to cause a 162(m) Bonus Award to fail to qualify for the
performance-based compensation exception to Section 162(m) of the Code. In addition, at the time
performance goals are established as to a 162(m) Bonus Award, the Committee is authorized to
determine the manner in which the Performance Criteria related thereto will be calculated or
measured to take into account certain factors over which the Participant has no control or limited
control including changes in industry margins, general economic conditions, interest rate movements
and changes in accounting principles.

     “Performance Period” means the period during which performance is measured to determine the
level of attainment of a Bonus Award, which shall be the fiscal year of the Company.

     “Plan” means the 2007 Time Warner Cable Inc. Annual Bonus Plan.

III.     Eligibility

     Participants in the Plan shall be selected by the Committee for each Performance Period from
those officers and key executives of the Company and its subsidiaries whose efforts contribute
materially to the success of the Company. No employee shall be a Participant unless he or she is
selected by the Committee, in its sole discretion. No employee shall at any time have the right to
be selected as a Participant nor, having been selected as a Participant for one Performance Period,
to be selected as a Participant in any other Performance Period.

IV.     Administration

     The Committee, in its sole discretion, will determine eligibility for participation, establish
the maximum award which may be earned by each Participant (which may be expressed in terms of
dollar amount, percentage of salary or any other measurement), establish goals for each Participant
(which may be objective or subjective, and based on individual, Company, subsidiary and/or division
performance), calculate and determine each Participant’s level of attainment of such goals, and
calculate the Bonus Award for each Participant based upon such level of attainment.

     Except as otherwise herein expressly provided, full power and authority to construe,
interpret, and administer the Plan shall be vested in the Committee, including the power to amend
or terminate the Plan as further described in Article XVI. The Committee may at any time adopt
such rules, regulations, policies, or practices as, in its sole discretion, it shall determine to
be necessary or appropriate for the administration of, or the performance of its respective
responsibilities under, the Plan. The Committee may at any time amend, modify, suspend, or
terminate such rules, regulations, policies, or practices.

V.     Bonus Awards

     The Committee, based upon information to be supplied by management of the Company and, where
determined as necessary by the Board, the ratification of the Board, will

 

 

 
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establish for each
Performance Period a maximum award (and, if the Committee deems appropriate, a threshold and target
award) and goals relating to Company, subsidiary, divisional, departmental and/or functional
performance for each Participant and communicate such award levels and goals to each Participant
prior to or during the Performance Period for which such award may be made. Bonus Awards will be
earned by each Participant based upon the level of attainment of his or her goals during the
applicable Performance Period; provided that the Committee may reduce the amount of any Bonus Award
in its sole and absolute discretion. As soon as practicable after the end of the applicable
Performance Period, the Committee shall determine the level of attainment of the goals for each
Participant and the Bonus Award to be made to each Participant.

VI.     Payment of Bonus Awards

     Bonus Awards earned during any Performance Period shall be paid as soon as practicable
following the end of such Performance Period and the determination of the amount thereof shall be
made by the Committee. Payment of Bonus Awards shall be made in the form of cash. Bonus Award
amounts earned but not yet paid will not accrue interest.

VII.     162(m) Bonus Awards

     Unless determined otherwise by the Committee, each Bonus Award awarded under the Plan shall be
a 162(m) Bonus Award and will be subject to the following requirements, notwithstanding any other
provision of the Plan to the contrary:

	 	1.	 	No 162(m) Bonus Award may be paid for years after 2007 unless and until
the shareholders of the Company have approved the Plan in a manner which complies
with the shareholder approval requirements of Section 162(m) of the Code.
	 
	 	2.	 	A 162(m) Bonus Award may be made only by a Committee which is comprised
solely of not less than two directors, each of whom is an “outside director” (within
the meaning of Section 162(m) of the Code).
	 
	 	3.	 	The performance goals to which a 162(m) Bonus Award is subject must be
based solely on Performance Criteria. Such performance goals, and the maximum,
target and/or threshold (as applicable) Bonus Amount payable upon attainment
thereof, must be established by the Committee within the time limits required in
order for the 162(m) Bonus Award to qualify for the performance-based compensation
exception to Section 162(m) of the Code.
	 
	 	4.	 	No 162(m) Bonus Award may be paid until the Committee has certified the
level of attainment of the applicable Performance Criteria.
	 
	 	5.	 	The maximum amount of a 162(m) Bonus Award is $10 million to a single
Participant.

VIII.     Termination of Employment

 

 

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     Except as otherwise provided pursuant to an employment agreement between the Participant and
the Company, a Participant shall be eligible to receive payment of his or her Bonus Award earned
during a Performance Period, so long as the Participant is employed on the last day of such
Performance Period, notwithstanding any subsequent termination of employment prior to the actual
payment of the Bonus Award. In the event of a Participant’s death prior to the payment of a Bonus
Award which has been earned, such payment shall be made to the Participant’s Designated Beneficiary
or, if there is none living, to the estate of the Participant.

IX.     Reorganization or Discontinuance

     The obligations of the Company under the Plan shall be binding upon any successor corporation
or organization resulting from merger, consolidation or other reorganization of the Company, or
upon any successor corporation or organization succeeding to substantially all of the assets and
business of the Company. The Company will make appropriate provision for the preservation of
Participants’ rights under the Plan in any agreement or plan which it may enter into or adopt to
effect any such merger, consolidation, reorganization or transfer of assets.

     If the business conducted by the Company shall be discontinued, any previously earned and
unpaid Bonus Awards under the Plan shall become immediately payable to the Participants then
entitled thereto.

X.     Non-Alienation of Benefits

     A Participant may not assign, sell, encumber, transfer or otherwise dispose of any rights or
interests under the Plan except by will or the laws of descent and distribution. Any attempted
disposition in contravention of the preceding sentence shall be null and void.

XI.     No Claim or Right to Plan Participation

     No employee or other person shall have any claim or right to be selected as a Participant
under the Plan. Neither the Plan nor any action taken pursuant to the Plan shall be construed as
giving any employee any right to be retained in the employ of the Company.

XII.     Taxes

     The Company shall deduct from all amounts paid under the Plan all federal, state, local and
other taxes required by law to be withheld with respect to such payments.

XIII.     Designation and Change of Beneficiary

     Each Participant may indicate upon notice to him or her by the Committee of his or her right
to receive a Bonus Award a designation of one or more persons as the Designated Beneficiary who
shall be entitled to receive the amount, if any, payable under the Plan upon the death of the
Participant. Such designation shall be in writing to the Committee. A Participant may, from time
to time, revoke or change his or her Designated Beneficiary without the consent of any prior
Designated Beneficiary by filing a written designation with the Committee. The last
such designation received by the Committee shall be controlling; provided,
however, that no

 

 

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designation, or change or revocation thereof, shall be effective unless
received by the Committee prior to the Participant’s death, and in no event shall it be effective
as of a date prior to such receipt.

XIV.     Payments to Persons Other Than the Participant

     If the Committee shall find that any person to whom any amount is payable under the Plan is
unable to care for his or her affairs because of incapacity, illness or accident, or is a minor, or
has died, then any payment due to such person or his or her estate (unless a prior claim therefor
has been made by a duly appointed legal representative) may, if the Committee so directs, be paid
to his or her spouse, a child, a relative, an institution maintaining or having custody of such
person, or any other person deemed by the Committee, in its sole discretion, to be a proper
recipient on behalf of such person otherwise entitled to payment. Any such payment shall be a
complete discharge of the liability of the Company therefor.

XV.     No Liability of Committee Members

     No member of the Committee shall be personally liable by reason of any contract or other
instrument related to the Plan executed by such member or on his or her behalf in his or her
capacity as a member of the Committee, nor for any mistake of judgment made in good faith, and the
Company shall indemnify and hold harmless each employee, officer, or director of the Company to
whom any duty or power relating to the administration or interpretation of the Plan may be
allocated or delegated, against any cost or expense (including legal fees, disbursements and other
related charges) or liability (including any sum paid in settlement of a claim with the approval of
the Board) arising out of any act or omission to act in connection with the Plan unless arising out
of such person’s own fraud or bad faith.

XVI.     Termination or Amendment of the Bonus Plan

     The Committee may amend, suspend or terminate the Bonus Plan at any time; provided that no
amendment may be made without the approval of the Company’s shareholders if the effect of such
amendment would be to cause outstanding or pending 162(m) Bonus Awards to cease to qualify for the
performance-based compensation exception to Section 162(m) of the Code.

XVII.     Unfunded Plan

     Participants shall have no right, title, or interest whatsoever in or to any investments which
the Company may make to aid it in meeting its obligations under the Plan. Nothing contained in the
Plan, and no action taken pursuant to its provisions, shall create or be construed to create a
trust of any kind, or a fiduciary relationship between the Company and any Participant,
Beneficiary, legal representative or any other person. To the extent that any person acquires a
right to receive payments from the Company under the Plan, such right shall be no greater than the
right of an unsecured general creditor of the Company. All payments to be made hereunder shall be
paid from the general funds of the Company and no special or separate fund
shall be established and no segregation of assets shall be made to assure payment of such
amounts except as expressly set forth in the Plan.

 

 

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     The Plan is not intended to be subject to the Employee Retirement Income Security Act of 1974,
as amended.

XVIII.     Section 409A of the Code.

     To the extent applicable, notwithstanding anything herein to the contrary, the Plan and Bonus
Awards issued hereunder (including 162(m) Bonus Awards) shall be interpreted in accordance with
Section 409A of the Code and Department of Treasury regulations and other interpretative guidance
issued thereunder, including without limitation any such regulations or other guidance that may be
issued after the effective date of the Plan. Notwithstanding any provision of the Plan to the
contrary, in the event that the Committee determines that any amounts payable hereunder will be
taxable to a Participant under Section 409A of the Code and related Department of Treasury
guidance, prior to payment to such Participant of such amount, the Company may (a) adopt such
amendments to the Plan and Bonus Awards (including 162(m) Bonus Awards) and appropriate policies
and procedures, including amendments and policies with retroactive effect, that the Committee
determines necessary or appropriate to preserve the intended tax treatment of the benefits provided
by the Plan and Bonus Awards (including 162(m) Bonus Awards) hereunder and/or (b) take such other
actions as the Committee determines necessary or appropriate to avoid or limit the imposition of an
additional tax under Section 409A of the Code.

XIX.     Governing Law

     The terms of the Plan and all rights thereunder shall be governed by and construed in
accordance with the laws of the State of New York, without reference to principles of conflict of
laws.

XX.     Effective Date

     The effective date of the Plan is February 14, 2007.EX-10.46 FORM OF NON-QUALIFIED STOCK OPTION AGMNT.

 

Exhibit 10.46

Time Warner Cable Inc. 2006 Stock Incentive Plan

Non-Qualified Stock Option Agreement,

For Use from February 2007

Time Warner Cable Inc.

Non-Qualified Stock Option 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 Option provided for herein to the Participant pursuant to the
Plan and the terms set forth herein.

     NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties
agree as follows:

     1.     Definitions. Whenever the following terms are used in this Agreement, they shall
have the meanings set forth below. Capitalized terms not otherwise defined herein shall have the
same meanings as in the Plan.

     (a) “Cause” means “Cause” as defined in an employment, consulting, advisory or similar
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) the 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) the 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) the Participant’s
insubordination, willful malfeasance or willful misconduct in connection with the 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) the 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, consulting, advisory
or similar agreement between the Company or any of its Affiliates and the Participant or, if not
defined therein or if there shall be no such agreement, “disability” of the Participant shall have
the meaning ascribed to such term in the Company’s long-term disability plan or policy, as in
effect from time to time.

     (c) “Expiration Date” means the expiration date set forth on the Notice (as defined
below).

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     (d) “Good Reason” means “Good Reason” as defined in an employment, consulting,
advisory or similar 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) a breach by the
Company or any Affiliate of any employment or consulting agreement to which the Participant is a
party and (ii) following a Change in Control, (x) the failure of the Company to pay or cause to be
paid the Participant’s base salary or annual bonus when due or (y) any substantial and sustained
diminution in the Participant’s authority or responsibilities materially inconsistent with the
Participant’s position; provided that either of the events described in clauses (x) and (y)
will constitute Good Reason only if the Company fails to cure such event within 30 days after
receipt from the Participant of written notice of the event which constitutes Good Reason;
provided, further, that “Good Reason” will cease to exist for an event on the
sixtieth (60th) day following the later of its occurrence or the Participant’s knowledge
thereof, unless the Participant has given the Company written notice of his or her termination of
employment for Good Reason prior to such date.

     (e) “Notice” means the Notice of Grant of Stock Option, which has been provided to the
Participant separately and which accompanies and forms a part of this Agreement.

     (f) “Participant” means an individual to whom Options as set forth in the Notice have
been awarded pursuant to the Plan and shall have the same meaning as may be assigned to the terms
“Holder” or “Participant” in the Plan.

     (g) “Plan” means the equity plan, as such plan may be amended, supplemented or
modified from time to time, maintained by the Company that is specified in the Notice.

     (h) “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 Time Warner Affiliate or (ii) pursuant to a retirement plan or
early retirement program of the Company or any Affiliate.

     (i) “Time Warner Affiliate” means Time Warner Inc. and any entity that is consolidated
with Time Warner Inc. for financial reporting purposes or any other entity designated by the Board
in which Time Warner Inc. has a direct or indirect equity interest of at least twenty percent
(20%), measured by reference to vote or value.

     (j) “Vested Portion” means, at any time, the portion of an Option which has become
vested, as described in Section 3 of this Agreement.

     2.     Grant of Option. The Company hereby grants to the Participant the right and option
(the “Option”) to purchase, on the terms and conditions hereinafter set forth, the number
of Shares set forth on the Notice, subject to adjustment as set forth in the Plan. The purchase
price of the Shares subject to the Option (the “Option Price”) shall be as set forth on the
Notice. The Option is intended to be a non-qualified stock option, and as such is not intended to
be treated as an option that complies with Section 422 of the Internal Revenue Code of 1986, as
amended.

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     3.     Vesting of the Option.

     (a) In General. Subject to (i) the terms of any employment, consulting, advisory or
similar agreement entered into by the Participant and the Company, an Affiliate or a Time Warner
Affiliate that provides for treatment of Options that is more favorable to the Participant and
(ii) Sections 3(b) and 3(c), the Option shall vest and become exercisable at such times as are set
forth in the Notice.

     (b) Change in Control. Notwithstanding the foregoing, in the event of a Change in
Control, the unvested portion of the Option, to the extent not previously cancelled or forfeited,
shall immediately become vested and exercisable upon the earlier of (i) the first anniversary of
the Change in Control or (ii) the termination of the Participant’s Employment (A) by the Company
other than for Cause (unless such termination is due to death or Disability) or (B) by the
Participant for Good Reason.

     (c) Termination of Employment. If the Participant’s Employment with the Company, its
Affiliate and any Time Warner Affiliate terminates for any reason (including, unless otherwise
determined by the Committee, a Participant’s change in status from an employee to a non-employee
(other than director of the Company or any Affiliate)), the Option, to the extent not then vested,
shall be immediately canceled by the Company without consideration; provided,
however, that if the Participant’s Employment terminates due to death, Disability or
Retirement, the unvested portion of the Option, to the extent not previously cancelled or
forfeited, shall immediately become vested and exercisable. The Vested Portion of the Option shall
remain exercisable for the period set forth in Section 4(a) of this Agreement. 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, any Affiliate or a Time Warner 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, any Affiliate or any Time Warner Affiliate subject
to the other terms and conditions of the Agreement and the Plan. Notice of any such approved
leave of absence should be sent to the Company, but such notice shall not be required for the leave
of absence to be considered approved.

     4.     Exercise of Option.

     (a) Period of Exercise. Subject to the provisions of the Plan and this Agreement, and
the terms of any employment, consulting, advisory or similar agreement entered into by the
Participant and the Company, an Affiliate or a Time Warner Affiliate that provides for treatment of
Options that is more favorable to the Participant than clauses (i) — (vii) of this Section 4(a),
the Participant may exercise all or any part of the Vested Portion of the Option at any time prior
to the Expiration Date. Notwithstanding the foregoing, if the Participant’s Employment terminates
prior to the Expiration Date, the Vested Portion of the Option shall remain exercisable for the
period set forth below. If the last day on which the Option may be exercised, whether the
Expiration Date or due to a termination of the Optionee’s Employment prior to the Expiration Date,
is a Saturday, Sunday or other day that is not a trading day on the New York Stock Exchange (the
“NYSE”) or, if the Company’s Shares are not then listed on the NYSE, such other stock exchange or
trading system that is the primary exchange on which the Company’s Shares

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are then traded, then the last day on which the Option may be exercised shall be the preceding
trading day on the NYSE or such other stock exchange or trading system.

     (i)     Death or Disability. If the Participant’s Employment with the Company, its
Affiliates or any Time Warner Affiliate terminates due to the Participant’s death or
Disability, the Participant (or his or her representative) may exercise the Vested Portion
of the Option for a period ending on the earlier of (A) three (3) years following the date
of such termination and (B) the Expiration Date;

     (ii)     Retirement. If the Participant’s Employment with the Company, its
Affiliates or any Time Warner Affiliate terminates due to the Participant’s Retirement, the
Participant may exercise the Vested Portion of the Option for a period ending on the earlier
of (A) five (5) years following the date of such termination and (B) the Expiration Date;
provided, that if the Company, its Affiliates or any Time Warner Affiliate has given
the Participant notice that the Participant’s Employment is being terminated for Cause prior
to the Participant’s election to terminate due to the Participant’s Retirement, then the
provisions of Section 4(a)(v) shall control;

     (iii)     Unsatisfactory Performance; Voluntary Termination without Good Reason.
If the Participant’s Employment with the Company, its Affiliates or any Time Warner
Affiliate is terminated by the Company, its Affiliates or any Time Warner Affiliate (other
than after a Change in Control as set forth in Section 4(a)(vi)) for unsatisfactory
performance, but not for Cause (as determined in its sole discretion by the Company), or the
Participant voluntarily terminates Employment at any time without Good Reason, the
Participant may exercise the Vested Portion of the Option for a period ending on the earlier
of (A) three months following the date of such termination and (B) the Expiration Date;
provided, that if the Company, its Affiliates or any Time Warner Affiliate has given
the Participant notice that the Participant’s Employment is being terminated for Cause prior
to the Participant’s election to voluntarily terminate Employment without Good Reason, then
the provisions of Section 4(a)(v) shall control;

     (iv)     Termination other than for Cause. Subject to the provision of Section
4(a)(vi), if the Participant’s Employment with the Company, its Affiliates or any Time
Warner Affiliate is terminated by the Company for any reason other than by the Company, its
Affiliates or any Time Warner Affiliate for Cause, unsatisfactory performance or due to the
Participant’s death or Disability, the Participant may exercise the Vested Portion of the
Option for a period ending on the earlier of (A) one year following the date of such
termination and (B) the Expiration Date;

     (v)     Termination by the Company for Cause. If the Participant’s Employment with
the Company, its Affiliates or any Time Warner Affiliate is terminated by the Company, its
Affiliates or any Time Warner Affiliate for Cause, the Participant may exercise the Vested
Portion of the Option for a period ending on the earlier of (A) one month following the date
of such termination and (B) the Expiration Date; provided, however, that if the Participant
is terminated by the Company, its Affiliates or any Time Warner Affiliate for Cause on
account of one or more acts of fraud,

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embezzlement or
misappropriation committed by the Participant, the Vested Portion of the Option shall
immediately terminate in full and cease to be exercisable;

     (vi)     After a Change in Control. If the Participant’s Employment with the
Company or its Affiliate terminates after a Change in Control due to a termination by the
Company or its Affiliate other than for Cause or due to the Participant’s resignation for
Good Reason, the Participant may exercise the Vested Portion of the Option for a period
ending on the earlier of (A) one year following the date of such termination and (B) the
Expiration Date; and

     (vii)     Transfers of Employment. If (i) the Company or an Affiliate transfers
the Participant’s Employment to a corporation, company or other entity that is not a Time
Warner Affiliate or (ii) the Affiliate with which the Participant has a service
relationship ceases to be an Affiliate due to a sale or other disposition by the Company or
an Affiliate, the Option, to the extent not then vested, shall be immediately canceled by
the Company without consideration and the Participant may exercise the Vested Portion of the
Option for a period ending on the earlier of (A) one year following the date of such
transfer, sale, or other disposition and (B) the Expiration Date.

     (b) Method of Exercise.

     (i)     Subject to Section 4(a) of this Agreement, the Vested Portion of an Option may be
exercised by delivering to the Company at its principal office written notice of intent to
so exercise; provided that the Option may be exercised with respect to whole Shares
only. Such notice shall specify the number of Shares for which the Option is being
exercised, shall be signed (whether or not in electronic form) by the person exercising the
Option and shall make provision for the payment of the Option Price. Payment of the
aggregate Option Price shall be paid to the Company, at the election of the Committee,
pursuant to one or more of the following methods: (A) in cash, or its equivalent; (B) by
transferring Shares having a Fair Market Value equal to the aggregate Option Price for the
Shares being purchased to the Company and satisfying such other requirements as may be
imposed by the Committee; provided that such Shares have been held by the
Participant for no less than six (6) months (or such other period as established from time
to time by the Committee or generally accepted accounting principles); (C) partly in cash
and partly in Shares; provided that such Shares have been held by the Participant
for no less than six (6) months (or such other period as established from time to time by
the Committee or generally accepted accounting principles); or (D) if there is a public
market for the Shares at such time, subject to such rules as may be established by the
Committee, through delivery of irrevocable instructions to a broker to sell the Shares
otherwise deliverable upon the exercise of the Option and to deliver promptly to the Company
an amount equal to the aggregate Option Price. No Participant shall have any rights to
dividends or other rights of a stockholder with respect to the Shares subject to the Option
until the issuance of the Shares.

     (ii)     Notwithstanding any other provision of the Plan or this Agreement to the contrary,
absent an available exemption to registration or qualification, the Option may not be
exercised prior to the completion of any registration or qualification of the

5

 

 

Option or the Shares under applicable state and federal securities or other laws, or
under any ruling or regulation of any governmental body or national securities exchange that
the Committee shall in its sole reasonable discretion determine to be necessary or
advisable.

     (iii)     Upon the Company’s determination that the Option has been validly exercised as to
any of the Shares, the Company shall issue certificates in the Participant’s name for such
Shares. However, the Company shall not be liable to the Participant for damages relating to
any delays in issuing the certificates to the Participant, any loss by the Participant of
the certificates, or any mistakes or errors in the issuance of the certificates or in the
certificates themselves.

     (iv)     In the event of the Participant’s death, the Vested Portion of an Option shall
remain vested and exercisable by the Participant’s executor or administrator, or the person
or persons to whom the Participant’s rights under this Agreement shall pass by will or by
the laws of descent and distribution as the case may be, to the extent set forth in Section
4(a) of this Agreement. Any heir or legatee of the Participant shall take rights herein
granted subject to the terms and conditions hereof.

     (v)     At the discretion of the Board or the Committee, in accordance with procedures
established by the Board or the Committee (including with respect to compliance with Section
409A of the Code), the Participant may be permitted to defer the delivery of Shares
otherwise deliverable upon the exercise of the Option.

     5.     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, any
of its Affiliates or any Time Warner Affiliate, 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 Options covered by this Agreement may be forfeited
as a result of such termination. The granting of the Option under this Agreement shall not confer
on the Participant any right to any future Awards under the Plan.

     6.     Legend on Certificates. The certificates representing the Shares purchased by
exercise of an Option shall be subject to such stop transfer orders and other restrictions as the
Committee may deem reasonably advisable under the Plan or the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange upon which such Shares
are listed, any applicable federal or state laws and the Company’s Articles of Incorporation and
Bylaws, and the Committee may cause a legend or legends to be put on any such certificates to make
appropriate reference to such restrictions.

     7.     Transferability. Unless otherwise determined by the Committee, an Option may not
be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by the
Participant otherwise than by will or by the laws of descent and distribution, and any such
purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void
and unenforceable against the Company or any Affiliate.

6

 

 

     8.     Withholding. The Participant may be required to pay to the Company or its
Affiliate and the Company or its Affiliate shall have the right and is hereby authorized to
withhold from any payment due or transfer made under the Option or under the Plan or from any
compensation or other amount owing to a Participant the amount (in cash, Shares, other securities,
other Awards or other property) of any applicable withholding taxes in respect of the Option, its
exercise, or any payment or transfer under the Option or under the Plan and to take such action as
may be necessary in the option of the Company to satisfy all obligations for the payment of such
taxes.

     9.     Securities Laws. Upon the acquisition of any Shares pursuant to the exercise of an
Option, the Participant will make or enter into such written representations, warranties and
agreements as the Committee may reasonably request in order to comply with applicable securities
laws or with this Agreement.

     10.     Notices. Any notice under this Agreement shall be addressed to the Company in
care of its General Counsel at the principal executive office of the Company, with a copy to the
Manager, Stock Programs, at the principal executive office of the Company, and to the Participant
at the address appearing in the personnel records of the Company for the Participant or to either
party at such other address as either party hereto may hereafter designate in writing to the other.
Any such notice shall be deemed effective upon receipt thereof by the addressee.

     11.     Personal Data. The Company, the Participant’s local employer and the local
employer’s parent company or companies may hold, collect, use, process and transfer, in electronic
or other form, certain personal information about the Participant for the exclusive purpose of
implementing, administering and managing the Participant’s participation in the Plan. Participant
understands that the following personal information is required for the above named purposes:
his/her name, home address and telephone number, office address (including department and employing
entity) and telephone number, e-mail address, citizenship, country of residence at the time of
grant, work location country, system employee ID, employee local ID, employment status (including
international status code), supervisor (if applicable), job code, title, salary, bonus target and
bonuses paid (if applicable), termination date and reason, tax payer’s identification number, tax
equalization code, US Green Card holder status, contract type (single/dual/multi), any shares of
stock or directorships held in the Company, details of all stock option grants (including number of
grants, grant dates, exercise price, vesting type, vesting dates, expiration dates, and any other
information regarding options that have been granted, canceled, vested, unvested, exercisable,
exercised or outstanding) with respect to the Participant, estimated tax withholding rate,
brokerage account number (if applicable), and brokerage fees (the “Data”). Participant
understands that Data may be collected from the Participant directly or, on Company’s request, from
Participant’s local employer. Participant understands that Data may be transferred to third
parties assisting the Company in the implementation, administration and management of the Plan,
including the brokers approved by the Company, the broker selected by the Participant from among
such Company-approved brokers (if applicable), tax consultants and the Company’s software providers
(the “Data Recipients”). Participant understands that some of these Data Recipients may be
located outside the Participant’s country of residence, and that the Data Recipient’s country may
have different data privacy laws and protections than the Participant’s country of residence.
Participant understands that the Data Recipients will receive,

7

 

 

possess, use, retain and transfer the Data, in electronic or other form, for the purposes of
implementing, administering and managing the Participant’s participation in the Plan, including any
requisite transfer of such Data as may be required for the administration of the Plan and/or the
subsequent holding of shares of common stock on the Participant’s behalf by a broker or other third
party with whom the Participant may elect to deposit any shares of common stock acquired pursuant
to the Plan. Participant understands that Data will be held only as long as necessary to implement,
administer and manage the Participant’s participation in the Plan. Participant understands that
Data may also be made available to public authorities as required by law, e.g., to the U.S.
government. Participant understands that the Participant may, at any time, review Data and may
provide updated Data or corrections to the Data by written notice to the Company. Except to the
extent the collection, use, processing or transfer of Data is required by law, Participant may
object to the collection, use, processing or transfer of Data by contacting the Company in writing.
Participant understands that such objection may affect his/her ability to participate in the Plan.
Participant understands that he/she may contact the Company’s Stock Plan Administration to obtain
more information on the consequences of such objection.

     12.     Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York, without regard to conflicts of laws, and any and all
disputes between the Participant and the Company relating to the Option shall be brought only in a
state or federal court of competent jurisdiction sitting in Manhattan, New York, and the
Participant and the Company hereby irrevocably submit to the jurisdiction of any such court and
irrevocably agree that venue for any such action shall be only in any such court.

     13.     Entire Agreement. This Agreement, together with the Notice and the Plan, embodies
the entire agreement and understanding between the parties hereto with respect to the subject
matter hereof and supersedes all prior oral or written agreements and understandings relating to
the subject matter hereof. No statement, representation, warranty, covenant or agreement not
expressly set forth in this Agreement or the Notice shall affect or be used to interpret, change or
restrict, the express terms and provisions of this Agreement or the Notice; provided, that
this Agreement and the Notice shall be subject to and governed by the Plan, and in the event of any
inconsistency between the provisions of this Agreement or the Notice and the provisions of the
Plan, the provisions of the Plan shall govern.

     14.     Modifications And Amendments. The terms and provisions of this Agreement and the
Notice may be modified or amended as provided in the Plan.

     15.     Waivers And Consents. Except as provided in the Plan, the terms and provisions of
this Agreement and the Notice may be waived, or consent for the departure therefrom granted, only
by a written document executed by the party entitled to the benefits of such terms or provisions.
No such waiver or consent shall be deemed to be or shall constitute a waiver or consent with
respect to any other terms or provisions of this Agreement or the Notice, whether or not similar.
Each such waiver or consent shall be effective only in the specific instance and for the purpose
for which it was given, and shall not constitute a continuing waiver or consent.

     16.     Reformation; Severability. If any provision of this Agreement or the Notice
(including any provision of the Plan that is incorporated herein by reference) shall

8

 

 

hereafter be held to be invalid, unenforceable or illegal, in whole or in part, in any
jurisdiction under any circumstances for any reason, (i) such provision shall be reformed to the
minimum extent necessary to cause such provision to be valid, enforceable and legal while
preserving the intent of the parties as expressed in, and the benefits of the parties provided by,
this Agreement, the Notice and the Plan or (ii) if such provision cannot be so reformed, such
provision shall be severed from this Agreement or the Notice and an equitable adjustment shall be
made to this Agreement or the Notice (including, without limitation, addition of necessary further
provisions) so as to give effect to the intent as so expressed and the benefits so provided. Such
holding shall not affect or impair the validity, enforceability or legality of such provision in
any other jurisdiction or under any other circumstances. Neither such holding nor such reformation
or severance shall affect the legality, validity or enforceability of any other provision of this
Agreement, the Notice or the Plan.

     17.     Entry into Force. By entering into this Agreement, the Participant agrees and
acknowledges that (i) the Participant has received and read a copy of the Plan and (ii) the Option
is granted pursuant to the Plan and is therefore subject to all of the terms of the Plan.

     18.     Changes in Capitalization and Other Regulations. The Option 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 Option, upon certain changes in capitalization and certain reorganizations and other
transactions).

9

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