Amended Employment Agreement with John Martin – Time Warner
AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) made July 29,
2011 effective as of January 1, 2011 (the “Effective Date”) between TIME WARNER
INC., a Delaware corporation (the “Company”), and John Martin (“You”). You are
currently employed by the Company pursuant to an Amended and Restated Employment
Agreement made April 29, 2010, effective as of January 1, 2010, which amended
and superseded an agreement made December 19, 2008, effective as of December 1,
2008, and an agreement made December 20, 2007, effective as of January 1, 2008
(the “Initial Effective Date”) (the “Prior Agreements”). The Company wishes to
amend and restate the terms of your employment with the Company and to secure
your services on a full-time basis for the period to and including December 31,
2013 on and subject to the terms and conditions set forth in this Agreement, and
you are willing to provide such services on and subject to the terms and
conditions set forth in this Agreement. You and the Company therefore agree as
follows: 1. Term of Employment. Your “term of employment” as this phrase
is used throughout this Agreement shall be for the period beginning on the
Effective Date and ending on December 31, 2013 (the “Term Date”), subject,
however, to earlier termination as set forth in this Agreement. 2.
Employment. During the term of employment, you shall serve as Chief
Financial and Administrative Officer of the Company or in such other senior
position as the Company may determine and you shall have the authority,
functions, duties, powers and responsibilities normally associated with such
position and such additional authority, functions, duties, powers and
responsibilities as may be assigned to you from time to time by the Company
consistent with your senior position with the Company. During the term of
employment, (i) your services shall be rendered on a substantially full-time,
exclusive basis and you will apply on a full-time basis all of your skill and
experience to the performance of your duties, (ii) you shall have no other
employment and, without the prior written consent of your manager or other more
senior officer of the Company in your reporting line, no outside business
activities which require the devotion of substantial amounts of your time, (iii)
you shall report to the Chief Executive Officer of the Company, and (iv) the
place for the performance of your services shall be the principal executive
offices of the Company in the New York City metropolitan area, subject to such
reasonable travel as may be required in the performance of your duties. The
foregoing shall be subject
to the Company’s written policies, as in effect from time to time, regarding
vacations, holidays, illness and the like. 3. Compensation. 3.1 Base
Salary. The Company shall pay you a base salary at the rate of not less than
$1,600,000 per annum during the term of employment (“Base Salary”). The Company
shall make a payment promptly following the execution of this Agreement of the
difference between the former salary and the increased salary for the period
from the Effective Date to the date of execution. The Company may increase, but
not decrease without your consent, your Base Salary during the term of
employment. Base Salary shall be paid in accordance with the Company’s customary
payroll practices. 3.2 Bonus. In addition to Base Salary, the Company
typically pays its executives an annual cash bonus (“Bonus”). Although your
Bonus is fully discretionary your target annual Bonus as a percentage of Base
Salary is 300%. The Company may increase, but not decrease without your consent,
your target annual Bonus during the term of employment. Each year, your personal
performance will be considered in the context of your executive duties and any
individual goals set for you, and your actual Bonus will be determined based on
your personal performance and the Company’s performance. Your Bonus amount, if
any, will be paid to you between January 1 and March 15 of the calendar year
immediately following the performance year in respect of which such Bonus is
earned. 3.3 Long Term Incentive Compensation. So long as the term of
employment has not terminated the Company annually shall provide you with long
term incentive compensation with a target value of $4,300,000 (based on the
valuation method used by the Company for its senior executives) through a
combination of stock option grants, restricted stock units, performance shares
or other equity-based awards, cash-based long-term plans or other components as
may be determined by the Compensation and Human Development Committee of the
Company’s Board of Directors from time to time in its sole discretion. 3.4
Indemnification. You shall be entitled throughout the term of employment
(and after the end of the term of employment, to the extent relating to service
during the term of employment) to the benefit of the indemnification provisions
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contained on the Effective Date in the Restated Certificate of Incorporation
and By-laws of the Company (not including any amendments or additions after the
Effective Date that limit or narrow, but including any that add to or broaden,
the protection afforded to you by those provisions). 3.5. Make-Whole
RSUs. In accordance with Section 3.5 of the Prior Agreements, on January 2,
2008, you were awarded 31,682 restricted stock units (the “Make Whole RSUs,”
reflecting the adjustments made to outstanding RSUs in connection with the
separations of Time Warner Cable Inc. and AOL Inc. in 2009 and the 1 for 3
reverse stock split that that became effective March 27, 2009. The Make Whole
RSUs are reflected in a restricted stock units agreement that provides that the
Make Whole RSUs will have accelerated vesting on a pro rated basis on the
Severance Term Date in the event of a termination of employment pursuant to
Section 4.2. 4. Termination. 4.1 Termination for Cause. The
Company may terminate the term of employment and all of the Company’s
obligations under this Agreement, other than its obligations set forth below in
this Section 4.1, for “cause”. Termination by the Company for “cause” shall mean
termination because of your (a) conviction (treating a nolo contendere plea as a
conviction) of a felony (whether or not any right to appeal has been or may be
exercised), (b) willful failure or refusal without proper cause to perform your
duties with the Company, including your obligations under this Agreement (other
than any such failure resulting from your incapacity due to physical or mental
impairment), (c) misappropriation, embezzlement or reckless or willful
destruction of Company property, (d) breach of any statutory or common law duty
of loyalty to the Company, (e) intentional and improper conduct materially
prejudicial to the business of the Company or any of its affiliates, or (f)
breach of any of the covenants provided for in Section 8 hereof. Such
termination shall be effected by written notice thereof delivered by the Company
to you and shall be effective as of the date of such notice; provided, however,
that if (i) such termination is because of your willful failure or refusal
without proper cause to perform any one or more of your obligations under this
Agreement, (ii) such notice is the first such notice of termination for any
reason delivered by the Company to you under this Section 4.1, and (iii) within
15 days following the date of such notice you shall cease your refusal and shall
use your best efforts to perform such obligations, the termination shall not be
effective.
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In the event of termination by the Company for cause, without prejudice to
any other rights or remedies that the Company may have at law or in equity, the
Company shall have no further obligation to you other than (i) to pay Base
Salary through the effective date of the termination of employment (the
“Effective Termination Date”), (ii) to pay any Bonus for any year prior to the
year in which such termination occurs that has been determined but not yet paid
as of the Effective Termination Date, and (iii) with respect to any rights you
have pursuant to any insurance or other benefit plans or arrangements of the
Company. You hereby disclaim any right to receive a pro rata portion of any
Bonus with respect to the year in which such termination occurs. 4.2
Termination by You for Material Breach by the Company and Termination by the
Company Without Cause. Unless previously terminated pursuant to any other
provision of this Agreement and unless a Disability Period shall be in effect,
you shall have the right, exercisable by written notice to the Company, to
terminate the term of employment under this Agreement with an Effective
Termination Date 30 days after the giving of such notice, if, at the time of the
giving of such notice, the Company is in material breach of its obligations
under this Agreement; provided, however, that, with the exception of clause (i)
below, this Agreement shall not so terminate if such notice is the first such
notice of termination delivered by you pursuant to this Section 4.2 and within
such 30-day period the Company shall have cured all such material breaches; and
provided further, that such notice is provided to the Company within 90 days
after the occurrence of such material breach. A material breach by the Company
shall include, but not be limited to, (i) the Company violating Section 2 with
respect to authority, reporting, duties, or place of employment or (ii) the
Company failing to cause any successor to all or substantially all of the
business and assets of the Company expressly to assume the obligations of the
Company under this Agreement. The Company shall have the right, exercisable by
written notice to you delivered before the date which is 60 days prior to the
Term Date, to terminate your employment under this Agreement without cause,
which notice shall specify the Effective Termination Date. If such notice is
delivered on or after the date which is 60 days prior to the Term Date, the
provisions of Section 4.3 shall apply. 4.2.1 In the event of a termination of
employment pursuant to this Section 4.2 (a “termination without cause”), you
shall receive Base Salary and a pro
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rata portion of your Average Annual Bonus (as defined below) through the
Effective Termination Date. Your Average Annual Bonus shall be equal to the
average of the regular annual bonus amounts (excluding the amount of any special
or spot bonuses) in respect of the two calendar years during the most recent
three calendar years for which the annual bonus received by you from the Company
was the greatest. Your pro rata Average Annual Bonus pursuant to this Section
4.2.1 shall be paid to you at the times set forth in Section 4.6. 4.2.2 After
the Effective Termination Date, you shall continue to be treated as an employee
of the Company for a period ending on the date which is twenty-four months after
the Effective Termination Date if the Effective Termination Date occurs prior to
the Term Date and twelve months after the Effective Termination Date if the
Effective Termination Date occurs on or after the Term Date (such date, the
“Severance Term Date”), and during such period you shall be entitled to receive,
whether or not you become disabled during such period but subject to Section 6,
(a) Base Salary (on the Company’s normal payroll payment dates as in effect
immediately prior to the Effective Termination Date) at an annual rate equal to
your Base Salary in effect immediately prior to the notice of termination, and
(b) an annual Bonus in respect of each calendar year or portion thereof (in
which case a pro rata portion of such Bonus will be payable) during such period
equal to your Average Annual Bonus. Except as provided in the next sentence, if
you accept other full-time employment during such period or notify the Company
in writing of your intention to terminate your status of being treated as an
employee during such period, you shall cease to be treated as an employee of the
Company for purposes of your rights to receive certain post-termination benefits
under Section 7.2 effective upon the commencement of such other employment or
the date specified by you in such notice, whichever is applicable (the “Equity
Cessation Date”), and you shall receive the remaining payments of Base Salary
and Bonus pursuant to this Section 4.2.2 at the times specified in Section 4.6
of the Agreement. Notwithstanding the foregoing, if you accept employment with
any not-for-profit entity or governmental entity, then you may continue to be
treated as an employee of the Company for purposes of your rights to receive
certain post-termination benefits pursuant to Section 7.2 and you will continue
to receive the payments as provided in the first sentence of this Section 4.2.2;
and if you accept full-time employment with any affiliate of the Company, then
the payments provided for in this Section 4.2.2 shall immediately cease and you
shall not be entitled to any further payments. For purposes of this Agreement,
the term “affiliate” shall mean any entity which, directly or indirectly,
controls, is controlled by, or is under common control
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with, the Company. 4.3 After the Term Date. If at the Term Date, the
term of employment shall not have been previously terminated pursuant to the
provisions of this Agreement, no Disability Period is then in effect and the
parties shall not have agreed to an extension or renewal of this Agreement or on
the terms of a new employment agreement, then the term of employment shall
continue on a month-to-month basis and you shall continue to be employed by the
Company pursuant to the terms of this Agreement, subject to termination by
either party hereto on 60 days written notice delivered to the other party
(which notice may be delivered by either party at any time on or after the date
which is 60 days prior to the Term Date). If the Company shall terminate the
term of employment on or after the Term Date for any reason (other than for
cause as defined in Section 4.1, in which case Section 4.1 shall apply), which
the Company shall have the right to do so long as no Disability Date (as defined
in Section 5) has occurred prior to the delivery by the Company of written
notice of termination, then such termination shall be deemed for all purposes of
this Agreement to be a “termination without cause” under Section 4.2; and the
provisions of Sections 4.2.1 and 4.2.2 shall apply, except that the period for
which you shall continue to be treated as an employee following the Effective
Termination Date will be twelve months. 4.4 Release. A condition
precedent to the Company’s obligation to make or continue the payments
associated with a termination without cause shall be your execution and delivery
of a release in the form attached hereto as Annex A, or as such form may be
updated by the Company as required by law, within 60 days following your
Effective Termination Date. If you shall fail to timely execute and deliver such
release, or if you revoke such release as provided therein, then in lieu of
continuing to receive the payments provided for herein, you shall receive a
severance payment determined in accordance with the Company’s policies relating
to notice and severance reduced by the aggregate amount of severance payments
paid pursuant to this Agreement, if any, prior to the date of your refusal to
deliver, or revocation of, such release. Any such severance payments shall be
paid in the form of Base Salary continuation payments at the annual rate equal
to your Base Salary in effect immediately prior to your notice of termination,
with such amounts paid until your severance benefit has been exhausted. 4.5
Mitigation. In the event of a termination without cause under
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this Agreement, you shall not be required to take actions in order to
mitigate your damages hereunder, unless Section 280G of the Internal Revenue
Code of 1986, as amended (the “Code”),would apply to any payments to you by the
Company and your failure to mitigate would result in the Company losing tax
deductions to which it would otherwise have been entitled. In such an event,
Section 4.7.1 shall govern. With respect to the preceding sentences, any
payments or rights to which you are entitled by reason of the termination of
employment without cause shall be considered as damages hereunder. Any
obligation to mitigate your damages pursuant to this Section 4.5 shall not be a
defense or offset to the Company’s obligation to pay you in full the amounts
provided in this Agreement upon the occurrence of a termination without cause,
at the time provided herein, or the timely and full performance of any of the
Company’s other obligations under this Agreement. 4.6 Payments. Payments
of Base Salary and Bonus required to be made to you after any termination shall
be made at the same times as such payments otherwise would have been paid to you
pursuant to Sections 3.1 and 3.2 if you had not been terminated, subject to
Section 11.17. 4.7 Limitation on Certain Payments. Notwithstanding any
other provision of this Agreement: 4.7.1. In the event the Company (or its
successor) determines, based on the advice of an independent nationally
recognized public accounting firm engaged by the Company, that part or all of
the consideration, compensation or benefits to be paid to you under this
Agreement constitute “parachute payments” under Section 280G(b)(2) of the Code,
then, if the aggregate present value of such parachute payments, singularly or
together with the aggregate present value of any consideration, compensation or
benefits to be paid to you under any other plan, arrangement or agreement which
constitute “parachute payments” (collectively, the “Parachute Amount”) exceeds
2.99 times your “base amount”, as defined in Section 280G(b)(3) of the Code (the
“Base Amount”), the amounts constituting “parachute payments” which would
otherwise be payable to you or for your benefit shall be reduced to the extent
necessary so that the Parachute Amount is equal to 2.99 times the Base Amount
(the “Reduced Amount”); provided that such amounts shall not be so reduced if
the Company determines, based on the advice of such public accounting firm, that
without such reduction you would be entitled to receive and retain, on a net
after tax basis (including, without limitation, any excise taxes payable under
Section 4999 of the Code), an amount which is greater than the
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amount, on a net after tax basis, that you would be entitled to retain upon
receipt of the Reduced Amount. 4.7.2. If the determination made pursuant to
Section 4.7.1 results in a reduction of the payments that would otherwise be
paid to you except for the application of Section 4.7.1, such reduction in
payments shall be first applied to reduce any cash severance payments that you
would otherwise be entitled to receive hereunder and shall thereafter be applied
to reduce other payments and benefits in a manner that would not result in
subjecting you to additional taxation under Section 409A of the Code, unless you
elect to have the reduction in payments applied in a different order. Within ten
days following such determination, the Company shall pay or distribute to you or
for your benefit such amounts as are then due to you under this Agreement and
shall promptly pay or distribute to you or for your benefit in the future such
amounts as become due to you under this Agreement. 4.7.3. As a result of the
uncertainty in the application of Sections 280G and 4999 of the Code at the time
of a determination hereunder, it is possible that payments will be made by the
Company that should not have been made under Section 4.7.1 (an “Overpayment”).
In the event that there is a final determination by the Internal Revenue
Service, or a final determination by a court of competent jurisdiction, that an
Overpayment has been made, the Company shall have no further liability or
obligation to you for any excise taxes, interest or penalty that you are
required to pay as a result of such final determination. 4.8 Retirement.
Notwithstanding the provisions of this Agreement relating to a termination
without cause and Disability, on the date you first become eligible for normal
retirement as defined in any applicable retirement plan (i.e., age 65) of the
Company or any subsidiary of the Company (the “Retirement Date”), then this
Agreement shall terminate automatically on such date and your employment with
the Company shall thereafter be governed by the policies generally applicable to
employees of the Company, and you shall not thereafter be entitled to the
payments provided in this Agreement to the extent not received by you on or
prior to the Retirement Date. In addition, no benefits or payments provided in
this Agreement relating to termination without cause and Disability shall
include any period after the Retirement Date and if the provision of benefits or
calculation of payments provided in this Agreement with respect thereto would
include any period subsequent to the Retirement Date, such provision of benefits
shall end on the
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Retirement Date and the calculation of payments shall cover only the period
ending on the Retirement Date. 5. Disability. 5.1 Disability
Payments. If during the term of employment and prior to the delivery of any
notice of termination without cause, you become physically or mentally disabled,
whether totally or partially, so that you are prevented from performing your
usual duties for a period of six consecutive months, or for shorter periods
aggregating six months in any twelve-month period, the Company shall,
nevertheless, continue to pay your full compensation through the last day of the
sixth consecutive month of disability or the date on which the shorter periods
of disability shall have equaled a total of six months in any twelve-month
period (such last day or date being referred to herein as the “Disability
Date”), subject to Section 11.17. If you have not resumed your usual duties on
or prior to the Disability Date, the Company shall pay you a pro rata Bonus
(based on your Average Annual Bonus) for the year in which the Disability Date
occurs and thereafter shall pay you disability benefits for the period ending on
the later of (i) the Term Date or (ii) the date which is twelve months after the
Disability Date (in the case of either (i) or (ii), the “Disability Period”), in
an annual amount equal to 75% of (a) your Base Salary at the time you become
disabled and (b) the Average Annual Bonus, in each case, subject to Section
11.17. 5.2 Recovery from Disability. If during the Disability Period you
shall fully recover from your disability, the Company shall have the right
(exercisable within 60 days after notice from you of such recovery), but not the
obligation, to restore you to full-time service at full compensation. If the
Company elects to restore you to full-time service, then this Agreement shall
continue in full force and effect in all respects and the Term Date shall not be
extended by virtue of the occurrence of the Disability Period. If the Company
elects not to restore you to full-time service, you shall be entitled to obtain
other employment, subject, however, to the following: (i) you shall perform
advisory services during any balance of the Disability Period; and (ii) you
shall comply with the provisions of Sections 8 and 9 during the Disability
Period. The advisory services referred to in clause (i) of the immediately
preceding sentence shall consist of rendering advice concerning the business,
affairs and management of the Company as requested by the
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Chief Executive Officer or other senior officer of the Company but you shall
not be required to devote more than five days (up to eight hours per day) each
month to such services, which shall be performed at a time and place mutually
convenient to both parties. Any income from such other employment shall not be
applied to reduce the Company’s obligations under this Agreement. 5.3 Other
Disability Provisions. The Company shall be entitled to deduct from all
payments to be made to you during the Disability Period pursuant to this Section
5 an amount equal to all disability payments received by you during the
Disability Period from Worker’s Compensation, Social Security and disability
insurance policies maintained by the Company; provided, however, that for so
long as, and to the extent that, proceeds paid to you from such disability
insurance policies are not includible in your income for federal income tax
purposes, the Company’s deduction with respect to such payments shall be equal
to the product of (i) such payments and (ii) a fraction, the numerator of which
is one and the denominator of which is one less the maximum marginal rate of
federal income taxes applicable to individuals at the time of receipt of such
payments. All payments made under this Section 5 after the Disability Date are
intended to be disability payments, regardless of the manner in which they are
computed. Except as otherwise provided in this Section 5, the term of employment
shall continue during the Disability Period and you shall be entitled to all of
the rights and benefits provided for in this Agreement, except that Sections 4.2
and 4.3 shall not apply during the Disability Period, and unless the Company has
restored you to full-time service at full compensation prior to the end of the
Disability Period, the term of employment shall end and you shall cease to be an
employee of the Company at the end of the Disability Period and shall not be
entitled to notice and severance or to receive or be paid for any accrued
vacation time or unused sabbatical. 6. Death. If you die during the term
of employment, this Agreement and all obligations of the Company to make any
payments hereunder shall terminate except that your estate (or a designated
beneficiary) shall be entitled to receive Base Salary to the last day of the
month in which your death occurs and Bonus compensation (at the time bonuses are
normally paid) based on the Average Annual Bonus, but prorated according to the
number of whole or partial months you were employed by the Company in such
calendar year. 7. Other Benefits.
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7.1 General Availability. To the extent that (a) you are eligible
under the general provisions thereof (including without limitation, any plan
provision providing for participation to be limited to persons who were
employees of the Company or certain of its subsidiaries prior to a specific
point in time) and (b) the Company maintains such plan or program for the
benefit of its executives, during the term of your employment with the Company,
you shall be eligible to participate in any savings plan, or similar plan or
program and in any group life insurance, hospitalization, medical, dental,
accident, disability or similar plan or program of the Company now existing or
established hereafter. 7.2 Benefits After a Termination or Disability.
After the Effective Termination Date of employment pursuant to Section 4.2 and
prior to the Severance Term Date or during the Disability Period, you shall
continue to be treated as an employee of the Company for purposes of eligibility
to participate in the Company’s health and welfare benefit plans other than
disability programs and to receive the health and welfare benefits (other than
disability programs) required to be provided to you under this Agreement to the
extent such health and welfare benefits are maintained in effect by the Company
for its executives. After the Effective Termination Date of a termination of
employment pursuant to Section 4 or during a Disability Period, you shall not be
entitled to any additional awards or grants under any stock option, restricted
stock or other stock-based incentive plan and you shall not be entitled to
continue elective deferrals in or accrue additional benefits under any qualified
or nonqualified retirement programs maintained by the Company. At the Severance
Term Date your rights to benefits and payments under any health and welfare
benefit plans or any insurance or other death benefit plans or arrangements of
the Company shall be determined in accordance with the terms and provisions of
such plans. At the Severance Term Date or, if earlier, the Equity Cessation
Date, your rights to benefits and payments under any stock option, restricted
stock, stock appreciation right, bonus unit, management incentive or other
long-term incentive plan of the Company shall be determined in accordance with
the terms and provisions of such plans and any agreements under which such stock
options, restricted stock or other awards were granted. However, consistent with
the terms of the employment agreement dated as of February 13, 2002 between the
Company and you (which terms were carried forward to the employment agreement
between you and Time Warner Entertainment Company, L.P. and to the Prior
Agreements), notwithstanding the foregoing or any more restrictive provisions of
any such plan or agreement, if your employment with the Company is
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terminated as a result of a termination pursuant to Section 4.2, then, (i)
all stock options to purchase shares of Time Warner Common Stock shall continue
to vest, and any such vested stock options shall remain exercisable (but not
beyond the term of such options), through the earlier of the Severance Term Date
or the Equity Cessation Date; (ii) except if you shall then qualify for
retirement under the terms of the applicable stock option agreement and would
receive more favorable treatment under the terms of the stock option agreement,
(x) all stock options to purchase shares of Time Warner Common Stock granted to
you on or after February 1, 2002 (the “Term Options”) that would have vested on
or before the Severance Term Date (or the comparable date under any employment
agreement that amends, replaces or supersedes this Agreement) shall vest and
become immediately exercisable upon the earlier of the Severance Term Date or
the Equity Cessation Date, and (y) all your vested Term Options shall remain
exercisable for a period of three years after the earlier of the Severance Term
Date or the Equity Cessation Date (but not beyond the term of such stock
options); and (iii) the Company shall not be permitted to determine that your
employment was terminated for “unsatisfactory performance” within the meaning of
any stock option agreement between you and the Company. With respect to awards
of restricted stock units for Time Warner Common Stock (“RSUs”) held at the
Effective Termination Date of a termination of employment pursuant to Section
4.2, subject to potential further delay in payment pursuant to Section 11.17,
(i) if you are eligible for retirement treatment at the Effective Termination
Date, then for all awards of RSUs that contain special accelerated vesting upon
retirement, the vesting of the RSUs will accelerate upon, and the shares of Time
Warner Common Stock will be paid to you promptly following, the Effective
Termination Date; and (ii) if you are not eligible for retirement treatment at
the Effective Termination Date, then the treatment of the RSUs (other than the
Make-Whole RSU grant made pursuant to Section 3.5) will be determined at the
earlier of the Severance Term Date or the Equity Cessation Date in accordance
with the terms of the applicable award agreement(s), but the shares of Time
Warner Common Stock underlying any vested RSUs will not be paid to you until
promptly following the next regular vesting date(s) for such award(s) of RSUs.
With respect to the Make-Whole RSUs, if there is a termination of employment
pursuant to Section 4.2 prior to their vesting, then, subject to potential
further delay in payment pursuant to Section 11.17, a pro-rated portion of the
Make-Whole RSU, representing the number of RSUs that would vest through the
Severance Term Date, shall vest and be paid to you promptly following the
Effective Termination Date.
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7.3 Payments in Lieu of Other Benefits. In the event the term of
employment and your employment with the Company is terminated pursuant to any
section of this Agreement, you shall not be entitled to notice and severance
under the Company’s general employee policies or to be paid for any accrued
vacation time or unused sabbatical, the payments provided for in such sections
being in lieu thereof. 7.4 Life Insurance. During your employment with
the Company, the Company shall (i) provide you with $50,000 of group life
insurance and (ii) pay you annually an amount equal to two times the premium you
would have to pay to obtain life insurance under a standard group universal life
insurance program in an amount equal to $3,000,000. The Company shall pay you
such amount no later than March 15 of the calendar year following any calendar
year in which you are entitled to this amount. You shall be under no obligation
to use the payments made by the Company pursuant to the preceding sentence to
purchase any additional life insurance. The payments made to you hereunder shall
not be considered as “salary” or “compensation” or “bonus” in determining the
amount of any payment under any retirement, profit-sharing or other benefit plan
of the Company or any subsidiary of the Company. 8. Protection of
Confidential Information; Non-Compete. 8.1 Confidentiality Covenant.
You acknowledge that your employment by the Company (which, for purposes of this
Section 8 shall mean Time Warner Inc. and its affiliates) will, throughout your
employment, bring you into close contact with many confidential affairs of the
Company, including information about costs, profits, markets, sales, products,
key personnel, pricing policies, operational methods, technical processes, trade
secrets, plans for future development, strategic plans of the most valuable
nature and other business affairs and methods and other information not readily
available to the public. You further acknowledge that the services to be
performed under this Agreement are of a special, unique, unusual, extraordinary
and intellectual character. You further acknowledge that the business of the
Company is global in scope, that its products and services are marketed
throughout the world, that the Company competes in nearly all of its business
activities with other entities that are or could be located in nearly any part
of the world and that the nature of your services, position and expertise are
such
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that you are capable of competing with the Company from nearly any location
in the world. In recognition of the foregoing, you covenant and agree: 8.1.1 You
shall keep secret all confidential matters of the Company and shall not disclose
such matters to anyone outside of the Company, or to anyone inside the Company
who does not have a need to know or use such information, and shall not use such
information for personal benefit or the benefit of a third party, either during
or after the term of employment, except with the Company’s written consent,
provided that (i) you shall have no such obligation to the extent such matters
are or become publicly known other than as a result of your breach of your
obligations hereunder and (ii) you may, after giving prior notice to the Company
to the extent practicable under the circumstances, disclose such matters to the
extent required by applicable laws or governmental regulations or judicial or
regulatory process; 8.1.2 You shall deliver promptly to the Company on
termination of your employment, or at any other time the Company may so request,
all memoranda, notes, records, reports and other documents (and all copies
thereof) relating to the Company’s business, which you obtained while employed
by, or otherwise serving or acting on behalf of, the Company and which you may
then possess or have under your control; and 8.1.3 For a period of one year
after the effective date of your retirement or other termination by you of your
employment with the Company or the Effective Date of a termination of employment
pursuant to Section 4, without the prior written consent of the Company, you
shall not employ, and shall not cause any entity of which you are an affiliate
to employ, any person who was a full-time employee of the Company at the date of
such termination of employment or within six months prior thereto but such
prohibition shall not apply to your secretary or executive assistant or to any
other employee eligible to receive overtime pay. 8.2. Non-Compete
Covenant. 8.2.1 During the term of employment and for the twelve-month
period after (i) the effective date of your retirement or other termination by
you of your employment or (ii) the Effective Termination Date of a termination
of employment pursuant to Section 4, you shall not, directly or indirectly,
without the prior written consent of the Chief Executive Officer of the Company:
(x) render any services to, manage,
14
operate, control, or act in any capacity (whether as a principal, partner,
director, officer, member, agent, employee, consultant, owner, independent
contractor or otherwise and whether or not for compensation) for, any person or
entity that is a Competitive Entity, or (y) acquire any interest of any type in
any Competitive Entity, including without limitation as an owner, holder or
beneficiary of any stock, stock options or other equity interest (except as
permitted by the next sentence). Nothing herein shall prohibit you from
acquiring solely as an investment and through market purchases (i) securities of
any Competitive Entity that are registered under Section 12(b) or 12(g) of the
Securities Exchange Act of 1934 (the “Exchange Act”) and that are publicly
traded, so long as you or any entity under your control are not part of any
control group of such Competitive Entity and such securities, including
converted or convertible securities, do not constitute more than one percent
(1%) of the outstanding voting power of that entity and (ii) securities of any
Competitive Entity that are not registered under Section 12(b) or 12(g) of the
Exchange Act and are not publicly traded, so long as you or any entity under
your control is not part of any control group of such Competitive Entity and
such securities, including converted securities, do not constitute more than
three percent (3%) of the outstanding voting power of that entity, provided that
in each case you have no active participation in the business of such entity.
8.2.2 “Competitive Entity” shall be defined as a business (whether conducted
through an entity or by individuals including employee in self-employment) that
is engaged in any business that competes, directly or indirectly through any
parent, subsidiary, affiliate, joint venture, partnership or otherwise, with (x)
any of the business activities carried on by the Company in any geographic
location where the Company conducts business (including without limitation a
Competitive Activity as defined below), (y) any business activities being
planned by the Company or in the process of development at the time of your
termination of employment (as evidenced by written proposals, market research,
RFPs and similar materials) or (z) any business activity that the Company has
covenanted, in writing, not to compete with in connection with the disposition
of such a business. 8.2.3 “Competitive Activity” refers to business activities
within the lines of business of the Company, including without limitation, the
following:
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(a) |
The operation of domestic and international networks and premium pay |
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programming to cable system operators, satellite distribution services, |
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(b) |
The sale, licensing and/or distribution of content on DVD and Blu-ray discs, |
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(c) |
The production, distribution and licensing of motion pictures and other |
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(d) |
The publication and distribution of print and digital editions of magazines |
8.3. Injunctive Relief. Executive acknowledges that Executive’s
services are of a special, unique and extraordinary value to the Company and
that Executive develops goodwill on behalf of the Company. Because Executive’s
services are unique and because Executive has access to confidential information
and strategic plans of the Company of the most valuable nature and will help the
Company develop goodwill, the parties agree that the covenants contained in this
Section 8 are necessary to protect the value of the business of the Company and
that a breach of any such non-competition covenant would result in irreparable
and continuing damage for which there would be no adequate remedy at law. The
parties agree therefore that in the event of a breach or threatened breach of
this Section 8, the Company may, in addition to other rights and remedies
existing in its favor, apply to any court of competent jurisdiction for specific
performance and/or injunctive or other relief in order to enforce, or prevent
any violations of, the provisions hereof. The parties further agree that in the
event the Company is granted any such injunctive or other relief, the Company
shall not be required to post any
16
bond or security that may otherwise normally be associated with such relief.
9. Ownership of Work Product. You acknowledge that during the term of
employment, you may conceive of, discover, invent or create inventions,
improvements, new contributions, literary property, material, ideas and
discoveries, whether patentable or copyrightable or not (all of the foregoing
being collectively referred to herein as “Work Product”), and that various
business opportunities shall be presented to you by reason of your employment by
the Company. You acknowledge that all of the foregoing shall be owned by and
belong exclusively to the Company and that you shall have no personal interest
therein, provided that they are either related in any manner to the business
(commercial or experimental) of the Company, or are, in the case of Work
Product, conceived or made on the Company’s time or with the use of the
Company’s facilities or materials, or, in the case of business opportunities,
are presented to you for the possible interest or participation of the Company.
You shall (i) promptly disclose any such Work Product and business opportunities
to the Company; (ii) assign to the Company, upon request and without additional
compensation, the entire rights to such Work Product and business opportunities;
(iii) sign all papers necessary to carry out the foregoing; and (iv) give
testimony in support of your inventorship or creation in any appropriate case.
You agree that you will not assert any rights to any Work Product or business
opportunity as having been made or acquired by you prior to the date of this
Agreement except for Work Product or business opportunities, if any, disclosed
to and acknowledged by the Company in writing prior to the date hereof. 10.
Notices. All notices, requests, consents and other communications
required or permitted to be given under this Agreement shall be effective only
if given in writing and shall be deemed to have been duly given if delivered
personally or sent by a nationally recognized overnight delivery service, or
mailed first-class, postage prepaid, by registered or certified mail, as follows
(or to such other or additional address as either party shall designate by
notice in writing to the other in accordance herewith):
17
10.1 If to the Company: Time Warner Inc.
One Time Warner Center
New York, New York 10019
Attention: Senior Vice President : Global
Compensation and Benefits (with a copy, similarly addressed
but Attention: General Counsel) 10.2 If to you, to your residence address set
forth on the records of the Company. 11. General. 11.1 Governing
Law. This Agreement shall be governed by and construed and enforced in
accordance with the substantive laws of the State of New York applicable to
agreements made and to be performed entirely in New York. 11.2 Captions.
The section headings contained herein are for reference purposes only and shall
not in any way affect the meaning or interpretation of this Agreement. 11.3
Entire Agreement. This Agreement, including Annexes A and B, set forth
the entire agreement and understanding of the parties relating to the subject
matter of this Agreement and supersedes all prior agreements, arrangements and
understandings, written or oral, between the parties. 11.4 No Other
Representations. No representation, promise or inducement has been made by
either party that is not embodied in this Agreement, and neither party shall be
bound by or be liable for any alleged representation, promise or inducement not
so set forth. 11.5 Assignability. This Agreement and your rights and
obligations hereunder may not be assigned by you and except as specifically
contemplated in this Agreement, neither you, your legal representative nor any
beneficiary designated by you shall have any right, without the prior written
consent of the Company, to assign,
18
transfer, pledge, hypothecate, anticipate or commute to any person or entity
any payment due in the future pursuant to any provision of this Agreement, and
any attempt to do so shall be void and shall not be recognized by the Company.
The Company shall assign its rights together with its obligations hereunder in
connection with any sale, transfer or other disposition of all or substantially
all of the Company’s business and assets, whether by merger, purchase of stock
or assets or otherwise, as the case may be. Upon any such assignment, the
Company shall cause any such successor expressly to assume such obligations, and
such rights and obligations shall inure to and be binding upon any such
successor. 11.6 Amendments; Waivers. This Agreement may be amended,
modified, superseded, cancelled, renewed or extended and the terms or covenants
hereof may be waived only by written instrument executed by both of the parties
hereto, or in the case of a waiver, by the party waiving compliance. The failure
of either party at any time or times to require performance of any provision
hereof shall in no manner affect such party’s right at a later time to enforce
the same. No waiver by either party of the breach of any term or covenant
contained in this Agreement, in any one or more instances, shall be deemed to
be, or construed as, a further or continuing waiver of any such breach, or a
waiver of the breach of any other term or covenant contained in this Agreement.
11.7 Specific Remedy. In addition to such other rights and remedies as
the Company may have at equity or in law with respect to any breach of this
Agreement, if you commit a material breach of any of the provisions of Sections
8.1, 8.2, or 9, the Company shall have the right and remedy to have such
provisions specifically enforced by any court having equity jurisdiction, it
being acknowledged and agreed that any such breach or threatened breach will
cause irreparable injury to the Company. 11.8 Resolution of Disputes.
Except as provided in the preceding Section 11.7, any dispute or controversy
arising with respect to this Agreement and your employment hereunder (whether
based on contract or tort or upon any federal, state or local statute, including
but not limited to claims asserted under the Age Discrimination in Employment
Act, Title VII of the Civil Rights Act of 1964, as amended, any state Fair
Employment Practices Act and/or the Americans with Disability Act) shall, at the
election of either you or the Company, be submitted to JAMS for resolution in
arbitration in accordance with the rules and procedures of JAMS. Either party
shall make such election by delivering written notice thereof to the other party
at any time (but not later than 45
19
days after such party receives notice of the commencement of any
administrative or regulatory proceeding or the filing of any lawsuit relating to
any such dispute or controversy) and thereupon any such dispute or controversy
shall be resolved only in accordance with the provisions of this Section 11.8.
Any such proceedings shall take place in New York City before a single
arbitrator (rather than a panel of arbitrators), pursuant to any streamlined or
expedited (rather than a comprehensive) arbitration process, before a
non-judicial (rather than a judicial) arbitrator, and in accordance with an
arbitration process which, in the judgment of such arbitrator, shall have the
effect of reasonably limiting or reducing the cost of such arbitration. The
resolution of any such dispute or controversy by the arbitrator appointed in
accordance with the procedures of JAMS shall be final and binding. Judgment upon
the award rendered by such arbitrator may be entered in any court having
jurisdiction thereof, and the parties consent to the jurisdiction of the New
York courts for this purpose. The prevailing party shall be entitled to recover
the costs of arbitration (including reasonable attorneys fees and the fees of
experts) from the losing party. If at the time any dispute or controversy arises
with respect to this Agreement, JAMS is not in business or is no longer
providing arbitration services, then the American Arbitration Association shall
be substituted for JAMS for the purposes of the foregoing provisions of this
Section 11.8. If you shall be the prevailing party in such arbitration, the
Company shall promptly pay, upon your demand, all legal fees, court costs and
other costs and expenses incurred by you in any legal action seeking to enforce
the award in any court. 11.9 Beneficiaries. Whenever this Agreement
provides for any payment to your estate, such payment may be made instead to
such beneficiary or beneficiaries as you may designate by written notice to the
Company. You shall have the right to revoke any such designation and to
redesignate a beneficiary or beneficiaries by written notice to the Company (and
to any applicable insurance company) to such effect. 11.10 No Conflict.
You represent and warrant to the Company that this Agreement is legal, valid and
binding upon you and the execution of this Agreement and the performance of your
obligations hereunder does not and will not constitute a breach of, or conflict
with the terms or provisions of, any agreement or understanding to which you are
a party (including, without limitation, any other employment agreement). The
Company represents and warrants to you that this Agreement is legal, valid and
binding upon the Company and the execution of this Agreement and the performance
of the Company’s obligations hereunder does not and will
20
not constitute a breach of, or conflict with the terms or provisions of, any
agreement or understanding to which the Company is a party. 11.11 Conflict of
Interest. Attached as Annex B and made part of this Agreement is the Time
Warner Corporate Standards of Business Conduct. You confirm that you have read,
understand and will comply with the terms thereof and any reasonable amendments
thereto. In addition, as a condition of your employment under this Agreement,
you understand that you may be required periodically to confirm that you have
read, understand and will comply with the Standards of Business Conduct as the
same may be revised from time to time. 11.12 Withholding Taxes. Payments
made to you pursuant to this Agreement shall be subject to withholding and
social security taxes and other ordinary and customary payroll deductions. 11.13
No Offset. Neither you nor the Company shall have any right to offset any
amounts owed by one party hereunder against amounts owed or claimed to be owed
to such party, whether pursuant to this Agreement or otherwise, and you and the
Company shall make all the payments provided for in this Agreement in a timely
manner. 11.14 Severability. If any provision of this Agreement shall be
held invalid, the remainder of this Agreement shall not be affected thereby;
provided, however, that the parties shall negotiate in good faith with respect
to equitable modification of the provision or application thereof held to be
invalid. To the extent that it may effectively do so under applicable law, each
party hereby waives any provision of law which renders any provision of this
Agreement invalid, illegal or unenforceable in any respect. 11.15
Survival. Sections 3.4, 7.3 and 8 through 11 shall survive any
termination of the term of employment by the Company for cause pursuant to
Section 4.1. Sections 3.4, 4.4, 4.5, 4.6, 4.7 and 7 through 11 shall survive any
termination of the term of employment pursuant to Sections 4.2, 5 or 6. Sections
3.4, 4.6 and Sections 8 through 11 shall survive any termination of employment
due to resignation.
21
11.16 Definitions. The following terms are defined in this Agreement
in the places indicated: affiliate : Section 4.2.2
Average Annual Bonus : Section 4.2.1
Base Amount : Section 4.7.1
Base Salary : Section 3.1
Bonus : Section 3.2
cause : Section 4.1
Code : Section 4.5
Company : the first paragraph on page 1 and Section 8.1
Competitive Entity : Section 8.2
Disability Date : Section 5
Disability Period : Section 5
Effective Date : the first paragraph on page 1
Effective Termination Date : Section 4.1
Equity Cessation Date : Section 4.2.2
Make Whole RSUs : Section 3.5
Overpayment : Section 4.7.3
Parachute Amount : Section 4.7.1
Prior Agreements : the second paragraph on page 1
Reduced Amount : Section 4.7.1
Severance Term Date : Section 4.2.2
Term Date : Section 1
term of employment : Section 1
termination without cause : Section 4.2.1
Work Product : Section 9 11.17 Compliance with IRC Section 409A. This
Agreement is intended to comply with Section 409A of the Internal Revenue Code
of 1986, as amended (the “Code”) and will be interpreted in a manner intended to
comply with Section 409A of the Code. Notwithstanding anything herein to the
contrary, (i) if at the time of your termination of employment with the Company
you are a “specified employee” as defined in Section 409A of the Code (and any
related regulations or other pronouncements thereunder) and the deferral of the
commencement of any payments or benefits otherwise payable hereunder as a result
of such termination of employment is necessary in order to prevent any
accelerated or additional tax under Section 409A of the Code, then the Company
will defer the commencement of the payment of any such payments or benefits
hereunder (without any reduction in such payments or benefits ultimately paid or
provided to you) until the date that is six months following your termination of
employment with the Company (or the
22
earliest date as is permitted under Section 409A of the Code) and (ii) if any
other payments of money or other benefits due to you hereunder could cause the
application of an accelerated or additional tax under Section 409A of the Code,
such payments or other benefits shall be deferred if deferral will make such
payment or other benefits compliant under Section 409A of the Code, or otherwise
such payment or other benefits shall be restructured, to the extent possible, in
a manner, determined by the Company, that does not cause such an accelerated or
additional tax. To the extent any reimbursements or in-kind benefits due to you
under this Agreement constitutes “deferred compensation” under Section 409A of
the Code, any such reimbursements or in-kind benefits shall be paid to you in a
manner consistent with Treas. Reg. Section 1.409A-3(i)(1)(iv). Each payment made
under this Agreement shall be designated as a “separate payment” within the
meaning of Section 409A of the Code. References in this Agreement to your
termination of active employment or your Effective Termination Date shall be
deemed to refer to the date upon which you have a “separation from service” with
the Company and its affiliates within the meaning of Section 409A of the Code.
The Company shall consult with you in good faith regarding the implementation of
the provisions of this Section 11.17; provided that neither the Company nor any
of its employees or representatives shall have any liability to you with respect
to thereto. IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
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TIME WARNER INC. |
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By |
/s/ James Cummings |
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Title: James Cummings |
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SVP Compensation & Benefits |
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/s/ John Martin |
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John Martin |
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23
ANNEX A RELEASE This Release is made by and among (“You” or
“Your”) and TIME WARNER INC. (the “Company”), One Time Warner Center, New York,
New York 10019 as of the date set forth below in connection with the Employment
Agreement dated , and effective as of , and the letter agreement
(the “Letter Agreement” between You and the Company dated as of (as so
amended, the “Employment Agreement”), and in association with the termination of
your employment with the Company. In consideration of payments made to You and
other benefits to be received by You by the Company and other benefits to be
received by You pursuant to the Employment Agreement, as further reflected in
the Letter Agreement, You, being of lawful age, do hereby release and forever
discharge the Company, its successors, related companies, Affiliates, officers,
directors, shareholders, subsidiaries, agents, employees, heirs, executors,
administrators, assigns, benefit plans (including but not limited to the Time
Warner Inc. Severance Pay Plan For Regular Employees), benefit plan sponsors and
benefit plan administrators of and from any and all actions, causes of action,
claims, or demands for general, special or punitive damages, attorney’s fees,
expenses, or other compensation or damages (collectively, “Claims”), whether
known or unknown, which in any way relate to or arise out of your employment
with the Company or the termination of Your employment, which You may now have
under any federal, state or local law, regulation or order, including without
limitation, Claims related to any stock options held by You or granted to You by
the Company that are scheduled to vest subsequent to Your termination of
employment and Claims under the Age Discrimination in Employment Act (with the
exception of Claims that may arise after the date You sign this Release, Title
VII of the Civil Rights Act of 1964, the Americans with Disabilities Act of
1990, as amended, the Family and Medical Leave Act and the Employee Retirement
Income Security Act of 1974, as amended, through and including the date of this
Release; provided, however, that the execution of this Release shall not prevent
You from bringing a lawsuit against the Company to enforce its obligations under
the Employment Agreement and this Release. Notwithstanding anything to the
contrary, nothing in this Release shall prohibit or restrict You from (i) making
any disclosure of information required by law; (ii) filing a charge with,
providing information to, or testifying or otherwise assisting in any
investigation or proceeding brought by, any federal regulatory or law
enforcement agency or legislative body, any self-regulatory organization, or the
Company’s legal, compliance or human resources officers; (iii) filing,
testifying or participating in or otherwise assisting in a proceeding relating
to an alleged violation of any federal, state or municipal law relating to fraud
or any rule or regulation of the Securities and Exchange Commission or any
self-regulatory organization; or (iv) challenging the validity of my release of
claims under the Age Discrimination in Employment Act. Provided, however, You
acknowledge that You cannot recover any monetary damages or equitable relief in
connection with a charge brought by You or through any action brought by a third
party with respect to the Claims
released and waived in the Agreement. Further, notwithstanding the above, You
are not waiving or releasing: (i) any claims arising after the Effective Date of
this Agreement; (iii) any claims for enforcement of this Agreement; (iii) any
rights or claims You may have to workers compensation or unemployment benefits;
(iv) claims for accrued, vested benefits under any employee benefit plan of the
Company in accordance with the terms of such plans and applicable law; and/or
(v) any claims or rights which cannot be waived by law. You further state that
You have reviewed this Release, that You know and understand its contents, and
that You have executed it voluntarily. You acknowledge that You have been given
days to review this Release and to sign it. You also acknowledge that
by signing this Release You may be giving up valuable legal rights and that You
have been advised to consult with an attorney. You understand that You have the
right to revoke Your consent to the Release for seven days following Your
signing of the Release. You further understand that You will cease to receive
any payments or benefits under this Agreement (except as set forth in Section
4.4 of the Agreement) if You do not sign this Release or if You revoke Your
consent to the Release within seven days after signing the Release. The Release
shall not become effective or enforceable with respect to claims under the Age
Discrimination Act until the expiration of the seven-day period following Your
signing of this Release. To revoke, You send a written statement of revocation
by certified mail, return receipt requested, or by hand delivery. If You do not
revoke, the Release shall become effective on the eighth day after You sign it.
Accepted and Agreed to: __________________________ Dated:
_____________________
ANNEX B TIME WARNER CORPORATE
STANDARDS OF BUSINESS CONDUCT
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