AMENDED
AND RESTATED EMPLOYMENT AGREEMENT made December 19, 2008
effective as of December 1, 2008 (the “Effective
Date”), between TIME WARNER INC., a Delaware corporation (the
“Company”), and JOHN MARTIN
(“You”).
You
are currently employed with the Company pursuant to an Employment
Agreement (the “Original Agreement”) made
December 20, 2007, effective as of January 1, 2008 (the
“Initial Effective Date”). This Agreement amends and
supersedes the Original Agreement in all respects effective the
Effective Date, and you and the Company desire to set forth the
terms and conditions of your employment by the Company and 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 Initial Effective Date and ending on
December 31, 2010 (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 Executive Vice President and Chief Financial 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.
3.1
Base Salary . The Company shall pay you a base salary at the
rate of not less than $1,000,000 per annum during the term of
employment (“Base Salary”). The Company may increase,
but not decrease, 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, you may be entitled to
receive during the term of employment an annual cash bonus
(“Bonus”) subject to and pursuant to the
Company’s Annual Bonus Plan for Executive Officers (such
plan, together with any successor plan of Company intended to
comply with Section 162(m) of the Internal Revenue Code of 1986, as
amended (the “Code”), being hereinafter referred to as
the “Annual Bonus Plan”). Although your Bonus is fully
discretionary, your target annual Bonus is $2,000,000, but the
parties acknowledge that your actual Bonus will vary depending on
the actual performance of you and the Company from a minimum of $0
and up to a maximum Bonus of $3,000,000 as determined by the
Compensation and Human Development Committee of the Board of
Directors of the Company (the “Compensation
Committee”). 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. Although as a general matter the Company expects to pay
bonuses at the target level in cases of satisfactory individual
performance, it does not commit to do so, and your Bonus may be
negatively affected by the exercise of the Compensation
Committee’s discretion or by overall Company performance.
Payments of any bonus compensation under this Section 3.2
shall 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
$3,000,000 (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 Committee of the
Company’s Board of Directors from time to time in its sole
discretion.
2
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 contained on the date
hereof in the Restated Certificate of Incorporation and By-laws of
the Company (not including any amendments or additions after the
date hereof that limit or narrow, but including any that add to or
broaden, the protection afforded to you by those
provisions).
3.5
Signing Equity Grant . In accordance with Section 3.5
of the Original Agreement, on January 2, 2008, you were
awarded options to purchase 81,300 shares of Time Warner common
stock and 65,810 restricted stock units (the “Make-Whole
RSUs” and, together with the stock options, the
“Make-Whole Awards”). The Make-Whole Awards are
intended to have a combined valuation of approximately $1,550,000
based on calculations as of October 31, 2007, and were granted
to replace equity awards granted by Time Warner Cable Inc. and
amounts you expected to receive pursuant to a cash long-term
incentive plan maintained by Time Warner Cable Inc. You have
irrevocably agreed to cancel all outstanding stock options,
restricted stock units or other awards based on any class of common
stock of Time Warner Cable Inc. granted to you by Time Warner Cable
Inc. effective January 1, 2008. The Make-Whole Awards are reflected
in award agreements entered into between you and the Company, with
the standard form of restricted stock units agreement modified to
provide that the Make-Whole RSUs will have accelerated vesting on a
pro-rated based on the Severance Term Date in the event of a
termination of employment pursuant to Section 4.2.
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
3
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.
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 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
lines, duties, or place of employment or (ii) the Company
failing to cause any successor to all or
4
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 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 five calendar years for which the annual
bonus received by you from the Company was the greatest; provided,
however, if the Company has previously paid you no annual Bonus,
then your Average Annual Bonus shall equal your target Bonus and if
the Company has previously paid you one annual Bonus, then your
Average Annual Bonus shall equal the average of such Bonus and your
target Bonus. 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 the later of (i) the Term Date and (ii) the
date which is twenty-four months after the Effective Termination
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 as an employee during such
period, you shall cease to be treated as an employee of
the
5
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 effective date of such termination as
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 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.
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, as such form may be
updated in the discretion of the Company. If you shall fail to
execute and
6
deliver
such release, or if you revoke such release as provided therein,
then in lieu of 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.
4.5
Mitigation . In the event of a termination without cause
under this Agreement, you shall not be required to take actions in
order to mitigate your damages hereunder, unless Section 280G
of 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 that part or all of the consideration, compensation or
benefits to be paid to you under this Agreement would 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
7
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, 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 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.
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
8
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 Chief Executive
Officer or other more 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
9
Section 5
an amount equal to all disability payments received by you during
the Disability Period from Worker’s Compensation, Social
Security and disa
|
