Exhibit 10.4
As
Amended Through
October 25, 2007
AOL TIME WARNER INC.
1994 STOCK OPTION PLAN
1.
PURPOSE OF THE PLAN
The purpose of the AOL Time Warner
Inc. 1994 Stock Option Plan (hereinafter the “Plan”) is
to provide for the granting of nonqualified stock options and stock
appreciation rights to certain employees of and consultants and
advisors to the Company and its Subsidiaries in recognition of the
valuable services provided, and contemplated to be provided, by
such employees, consultants and advisors. The general purpose of
the Plan is to promote the interests of the Company and its
stockholders and to reward dedicated employees, consultants and
advisors of the Company and its Subsidiaries by providing them
additional incentives to continue and increase their efforts with
respect to, and to remain in the employ of, the Company or its
Subsidiaries.
2.
CERTAIN DEFINITIONS
The following terms (whether used in
the singular or plural) have the meanings indicated when used in
the Plan:
(a) “Agreement” means the
stock option agreement and stock appreciation rights agreement
specified in Section 12, both individually and collectively,
as the context so requires.
(b) “Affiliate” means any
corporation, company or other entity whose financial results are
consolidated with those of the Company in accordance with U.S.
generally accepted accounting principles.
(c) “AOL Time Warner”
means AOL Time Warner Inc., a Delaware corporation, and any
successor thereto.
(d) “Approved
Transaction” means any transaction in which the Board (or, if
approval of the Board is not required as a matter of law, the
stockholders of the Company) shall approve (i) any
consolidation or merger of the Company in which the Company is not
the continuing or surviving corporation or pursuant to which shares
of Common Stock would be converted into cash, securities or other
property, other than
(x) a merger of
Time Warner as contemplated in the Amended and Restated Agreement
and Plan of Merger dated as of September 22, 1995 among Time
Warner , TW Inc., Time Warner Acquisition Corp., TW Acquisition
Corp. and Turner Broadcasting System, Inc., as the same may be
amended from time to time, or (y) a merger of the Company in
which the holders of Common Stock immediately prior to the merger
have the same proportionate ownership of common stock of the
surviving corporation immediately after the merger, or
(ii) any sale, lease, exchange, or other transfer (in one
transaction or a series of related transactions) of all, or
substantially all, of the assets of the Company, or (iii) the
adoption of any plan or proposal for the liquidation or dissolution
of the Company.
(e) “Award” means grants
of Options and/or SARs under this Plan.
(f) “Board” means the
Board of Directors of the Company.
(g) “Board Change” means,
during any period of two consecutive years, individuals who at the
beginning of such period constituted the entire Board ceased for
any reason to constitute a majority thereof unless the election, or
the nomination for election by the Company’s stockholders, of
each new director was approved by a vote of at least two-thirds of
the directors then still in office who were directors at the
beginning of the period.
(h) “Change in Control”
means either a Corporate Change in Control or a Transactional
Change in Control.
(i) “Code” means the
Internal Revenue Code of 1986, as amended from time to time, or any
successor statute or statutes thereto. Reference to any specific
Code section shall include any successor section.
(j) “Committee” means the
Committee appointed pursuant to Section 4.
(k) “Common Stock” means
the common stock, par value $.01 per share, of the Company.
(l) “Company” means
(i) with respect to periods prior to January 11, 2001,
Time Warner and (ii) with respect to periods on and after
January 11, 2001, AOL Time Warner.
(m) “Composite Tape”
means the New York Stock Exchange Composite Tape.
(n) “Control Purchase”
means any transaction in which any person (as such
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term is defined
in Sections 13(d)(3) and 14(d)(2) of the Exchange Act),
corporation or other entity (other than the Company or any employee
benefit plan sponsored by the Company or any of its Subsidiaries)
(i) shall purchase any Common Stock (or securities convertible
into Common Stock) for cash, securities or any other consideration
pursuant to a tender offer or exchange offer, without the prior
consent of the Board, or (ii) shall become the
“beneficial owner” (as such term is defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 20% or more of the combined
voting power of the then outstanding securities of the Company
ordinarily (and apart from the rights accruing under special
circumstances) having the right to vote in the election of
directors (calculated as provided in Rule 13d-3(d) in the case
of rights to acquire the Company’s securities).
(o) “Corporate Change in
Control” means the happening of any of the following
events:
(1) the
acquisition by any individual, entity or group (an
“Entity”), including any “person” within
the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange
Act, of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 30% or more of either
(i) the then outstanding shares of common stock of the Company
(the “Outstanding Company Common Stock”) or
(ii) the combined voting power of the then outstanding
securities of the Company entitled to vote generally in the
election of directors (the “Outstanding Company Voting
Securities”); excluding, however, the following: (A) any
acquisition directly from the Company (excluding any acquisition by
virtue of the exercise of an exercise, conversion or exchange
privilege unless the security being so exercised, converted or
exchanged was itself acquired directly from the Company),
(B) any acquisition by the Company, or (C) any
acquisition by an employee benefit plan (or related trust)
sponsored or maintained by the Company or by any corporation
controlled by the Company; or
(2) a
change in the composition of the Board since January 12, 2001,
such that the individuals who, as of such date, constituted the
Board (the “Incumbent Board”) cease for any reason to
constitute at least a majority of such Board; provided that any
individual who becomes a director of the Company subsequent to
January 12, 2001 whose election, or nomination for election by
the stockholders of the Company, was approved by the vote of at
least a majority of the directors then comprising the Incumbent
Board shall be deemed a member of the Incumbent Board; and provided
further, that any individual who was initially elected as a
director of the Company as a result of an actual or threatened
election contest, as such terms are used in Rule
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14a-11 of
Regulation 14A promulgated under the Exchange Act, or any
other actual or threatened solicitation of proxies or consents by
or on behalf of any person or Entity other than the Board shall not
be deemed a member of the Incumbent Board.
(p) “Effective Date”
means the date the Plan becomes effective pursuant to
Section 15.
(q) “Exchange Act”
means the Securities Exchange Act of 1934, as amended from time to
time, or any successor statute or statutes thereto. Reference to
any specific Exchange Act section shall include any successor
section.
(r) “Fair Market
Value” of a share of Common Stock means the average of the
high and low sales prices of a share of Common Stock on the New
York Stock Exchange on the date in question, except as otherwise
provided in Section 6.5.
(s) “General SARs”
means stock appreciation rights subject to the terms of Section
6.5(b).
(t) “Holder” means
an employee of or a consultant or advisor to the Company or any of
its Subsidiaries who has received an Award under this Plan.
(u) “Involuntary
Employment Action” means any change in the terms and
conditions of the Holder’s employment with the Company or any
successor, without cause (as defined herein), to such extent
that:
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(1) |
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the Holder shall fail to be vested with power, authority and
resources analogous to the Holder’s title and/or office prior
to the Change in Control, or |
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(2) |
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the Holder shall lose any significant duties or
responsibilities attending such office, or |
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(3) |
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there shall occur a reduction in the Holder’s base
compensation or |
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(4) |
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the Holder’s employment with the Company, or its
successor, is terminated without cause (as defined herein). |
(v) “Limited SARs”
means stock appreciation rights subject to the terms of Section
6.5(c).
(w) “Minimum Price Per
Share” means the highest gross price (before brokerage
commissions, soliciting dealers’ fees and similar charges)
paid or to be paid for any share of Common Stock (whether by way of
exchange, conversion, distribution, liquidation or otherwise) in,
or in connection with, any Approved Transaction or Control Purchase
which occurs at any time during the period beginning on the
sixtieth day prior to the date on which Limited SARs are exercised
and ending on the date on which Limited SARs are exercised. If the
consideration paid or to be paid in any such Approved Transaction
or Control Purchase shall consist, in whole or in part, of
consideration other than cash, the Board shall take such action, as
in its judgment it deems appropriate, to establish the cash value
of such consideration, but such valuation shall not be less than
the value, if any, attributed to such consideration by any other
party to such Approved Transaction or Control Purchase.
(x) “Option” means
any nonqualified stock option granted pursuant to this Plan.
(y) “Plan” has the
meaning ascribed thereto in Section 1.
(z) “SARs” means
General SARs and Limited SARs.
(aa) “SEC” means the
Securities and Exchange Commission.
(bb) “Subsidiary” of
a person means any present or future subsidiary of such person as
such term is defined in section 425 of the Code and any present or
future trade or business, whether or not incorporated, controlled
by or under common control with such person. An entity shall be
deemed a Subsidiary of a person only for such periods as the
requisite ownership or control relationship is maintained.
(cc) “Survivors”
means a deceased Holder’s legal representatives and/or any
person or persons who acquired the Holder’s rights to an
Option by will or by the laws of descent and distribution.
(dd) “Time Warner
Inc.” means Time Warner Inc., a Delaware corporation.
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(ee) “Total
Disability” or “Disability” means a permanent and
total disability as defined in section 22(e)(3) of the Code.
(ff) “Transactional Change
in Control” means any of the following transactions to which
the Company is a party:
(1) a reorganization,
recapitalization, merger or consolidation (a “Corporate
Transaction”) of the Company, unless securities representing
60% or more of either the outstanding shares of common stock or the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors of the
Company or the corporation resulting from such Corporate
Transaction (or the parent of such corporation) are held subsequent
to such transaction by the person or persons who were the
beneficial holders of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such
Corporate Transaction, in substantially the same proportions as
their ownership immediately prior to such Corporate Transaction;
or
(2) the sale, transfer or other
disposition of all or substantially all of the assets of the
Company.
3.
STOCK SUBJECT TO THE PLAN
3.1. Number of Shares .
Subject to the provisions of Section 12 and this
Section 3, the maximum number of shares of Common Stock in
respect of which Awards may be granted is (x) 1.5 (one and
one-half) times the sum of (a) 1.5% (one and one-half percent)
of the number of shares of Common Stock outstanding on
December 31, 1993, (b) 1.25% (one and one-quarter
percent) of the number of shares of Common Stock outstanding on
December 31, 1994, (c) 1% (one percent) of the number of
shares of Common Stock outstanding on December 31, 1995,
(d) 1.2% (one and two-tenths percent) of the aggregate number
of shares of Common Stock and Series LMCN-V Common Stock, par
value $.01 per share, outstanding on December 31, 1996,
(e) 1.4% (one and four-tenths percent) of the aggregate number
of shares of Common Stock and Series LMCN-V Common Stock, par
value $.01 per share, outstanding on December 31, 1997,
(f) 1.05% (one and five-hundredths percent) of the aggregate
number of shares of Common Stock and Series LMCN-V Common
Stock, par value $.01 per share, outstanding on December 31,
1998, (g) 1.175% (one and one hundred seventy five thousandths
percent) of the aggregate number of shares of Common Stock and
Series LMCN-V Common Stock, par value $.01 per share,
outstanding on December 31, 1999, and (h) two million;
plus (y) 178,100,000; plus (z) 110,000,000; plus
(aa) 27,816,788. If and to the extent that an Option shall
expire,
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terminate or be canceled for any reason without having been
exercised (or without having been considered to have been exercised
as provided in Section 6.5(a)), the shares of Common Stock
subject to such expired, terminated or canceled portion of the
Option shall again become available for purposes of the Plan.
3.2. Character of Shares .
Shares of Common Stock deliverable under the terms of the Plan may
be, in whole or in part, authorized and unissued shares of Common
Stock or issued shares of Common Stock held in the Company’s
treasury, or both.
3.3. Reservation of Shares .
The Company shall at all times reserve a number of shares of Common
Stock (authorized and unissued Common Stock, issued Common Stock
held in the Company’s treasury, or both) equal to the maximum
number of shares that may be subject to outstanding Awards and
future Awards under the Plan.
4.
ADMINISTRATION
4.1. Powers . The Plan shall
be administered by the Board. Subject to the express provisions of
the Plan, the Board shall have plenary authority, in its
discretion, to grant Awards under the Plan and to determine the
terms and conditions (which need not be identical) of all Awards so
granted, including without limitation, (a) the individuals to
whom, and the time or times at which, Awards shall be granted or
awarded, (b) the number of shares to be subject to each Award,
(c) when an Option or SAR can be exercised and whether in
whole or in installments, and (d) the form, terms and
provisions of any Agreement (which terms may be amended, subject to
Section 14).
4.2. Factors to Consider . In
making determinations hereunder, the Board may take into account
the nature of the services rendered by the respective employees,
consultants or advisors, their dedication and past contributions to
the Company and its Subsidiaries, their present and potential
contributions to the success of the Company and its Subsidiaries
and such other factors as the Board in its discretion shall deem
relevant.
4.3. Interpretation . Subject
to the express provisions of the Plan, the Board shall have plenary
authority to interpret the Plan, to prescribe, amend and rescind
the rules and regulations relating to it and to make all other
determinations deemed necessary or advisable for the administration
of the Plan. The determinations of the Board on the matters
referred to in this Section 4 shall be conclusive. The
Board’s determinations under the Plan need not be uniform and
may be made by it selectively among persons who receive, or are
eligible to receive, Awards under the Plan (whether or not such
persons are similarly situated). Without limiting the generality of
the foregoing, the Board shall be entitled, among other things, to
make non-uniform and selective determinations, and to enter into
non-uniform and selective Agreements
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as to
(a) the persons to receive Awards under the Plan, (b) the
terms and provisions of Awards under the Plan and (c) whether
a termination of service with the Company or any Subsidiary or
Affiliate has occurred.
4.4. Delegation to Committee .
Notwithstanding anything to the contrary contained herein, the
Board may at any time, or from time to time, appoint a Committee
and delegate to such Committee the authority of the Board to
administer the Plan, including to the extent provided by the Board,
the power to further delegate such authority. Upon such appointment
and delegation, any such Committee shall have all the powers,
privileges and duties of the Board in the administration of the
Plan to the extent provided in such delegation, except for the
power to appoint members of the Committee and to terminate, modify
or amend the Plan. The Board may from time to time appoint members
of any such Committee in substitution for or in addition to members
previously appointed, may fill vacancies in such Committee and may
discharge such Committee.
Any such Committee shall select one
of its members as its chairman and shall hold its meetings at such
times and places as it shall deem advisable. A majority of members
shall constitute a quorum and all determinations shall be made by a
majority of such quorum. Any determination reduced to writing and
signed by all of the members shall be fully as effective as if it
had been made by a majority vote at a meeting duly called and
held.
5.
ELIGIBILITY
Prior to January 18, 2001,
Awards may be made only to (a) employees of the Company or any
of its Subsidiaries (including officers and directors of any of the
Company’s Subsidiaries), other than officers or directors of
the Company who are subject to Section 16 of the Exchange Act,
(b) prospective employees of the Company or any of its Subsidiaries
and (c) consultants or advisors to the Company or any of its
Subsidiaries. On or after January 18, 2001, Awards may be made
only to (a) employees of the Company or any of its Affiliates
(including officers and directors of any of the Company’s
Affiliates), other than officers and directors of the Company who
are subject to Section 16 of the Exchange Act,
(b) prospective employees of the Company or any of its
Affiliates and (c) consultants to the Company or any of its
Affiliates. The exercise of Options and SARs granted to a
prospective employee shall be conditioned upon such person becoming
an employee of the Company or any of its Subsidiaries or
Affiliates, as the case may be. For purposes of the Plan, the term
“prospective employee” shall mean any person who holds
an outstanding offer of employment on specific terms from the
Company or any of its Subsidiaries or Affiliates, as the case may
be. Only employees designated by the Board to be eligible to be
granted one or more Options or SARs under the Plan shall be
eligible to receive Awards and “employee” shall not
include any person who is not on the payroll of the Company as a
full-time or part-time employee (regardless of whether a
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government agency, court or other entity subsequently determines
that such person is an employee of the Company or any of its
Subsidiaries or Affiliates for purposes of employment taxes,
benefits or any other purpose). Awards may be made to employees,
consultants and advisors who hold or have held Awards under this
Plan or any similar or other awards under any other plan of the
Company or its Subsidiaries or Affiliates, as the case may
be.
6.
OPTIONS AND SARS
6.1. Option Prices . The
purchase price of the Common Stock under each Option shall be
determined by the Board and set forth in the applicable Agreement,
but shall not be less than 100% of the Fair Market Value of the
Common Stock on the date of grant.
6.2. Term of Options . The
term of each Option shall be for such period as the Board shall
determine, as set forth in the applicable Agreement.
6.3. Exercise of Options . An
Option granted under the Plan shall become (and remain) exercisable
during the term of the Option to the extent provided in the
applicable Agreement and this Plan and, unless the Agreement
otherwise provides, may be exercised to the extent exercisable, in
whole or in part, at any time and from time to time during such
term; provided, however, that subsequent to the grant of an Option,
the Board, at any time before complete termination of such Option,
may accelerate the time or times at which such Option may be
exercised in whole or in part (without reducing the term of such
Option). The Agreement may contain conditions precedent to the
exercisability of Options, including without limitation, the
achievement of minimum performance criteria.
6.4. Manner of Exercise .
Payment of the Option purchase price shall be made in cash or in
whole shares of Common Stock already owned by the person exercising
an Option or, partly in cash and partly in such Common Stock;
provided, however, that such payment may be made in whole or in
part in
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