EMPLOYMENT AGREEMENT made as of January 9, 2000, effective as of July 1,
1999 (the "Effective Date"), between TIME WARNER INC., a Delaware corporation
(the "Company"), and Joan N. Sumner.
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 Effective
Date and ending on December 31, 2003 ("Term Date"), subject, however, to earlier
termination as set forth in this Agreement.
2. Employment. You shall serve as a Senior Vice President of the Company
during the term of employment, and you shall have the authority, functions,
duties, powers and responsibilities normally associated with such position as it
relates to investor relations and such additional authority, functions, duties,
powers and responsibilities as the Board of Directors, the Chief Executive
Officer or the President of the Company may from time to time delegate to you in
addition thereto. 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 report only to the Company's Board of Directors, its
Chief Executive Officer or its President, (iii) you shall have no other
employment and, without the prior written consent of the Chief Executive Officer
or the President of the Company, no outside business activities which require
the devotion of substantial amounts of your time and (iv) the place for the
performance of your services shall be the principal executive offices of the
Company which shall be 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 of not less
than $300,000 per annum during the term of employment (the "Base Salary"). The
Company may increase, but not decrease, the 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, the Company expresses its expectation about bonus payments,
assuming satisfactory personal and Company performance, as a target percentage
of Base Salary, and in your case that target is 100%. 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 Company's
discretion or by overall Company performance.
3.3 Deferred Compensation. In addition to Base Salary and Bonus, you
shall be credited with a defined contribution which shall be determined and paid
out on a deferred basis as provided in this Agreement. During the term of
employment, the Company shall credit to an account maintained for you (the
"Deferred Account"), in the Deferred Compensation Plan established by the
Company on November 18, 1998, as the same may be amended from time to time (as
so amended, the "Deferred Plan"), annually, an amount equal to the following
("Deferred Compensation"): during the period from the Effective Date through
December 31, 2000, 25% of your then current Base Salary; during the period from
January 1, 2001 through December 31, 2001, 35% of your then current Base Salary;
and during the period from January 1, 2002 through the Term Date, 50% of your
then current Base Salary. Such amount shall be credited pro rata during each
year of the term of employment at the same time you receive payments of Base
Salary.
3.4 Indemnification. You shall be entitled throughout the term of
employment to the benefit of the indemnification provisions contained on the
date hereof in the 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).
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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" but only if the
term of employment has not previously been terminated pursuant to any other
provision of this Agreement. Termination by the Company for "cause" shall mean
termination by action of the Company's Board of Directors, or a committee
thereof, because of your 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) or willful refusal without proper cause to perform your obligations
under this Agreement or because of your breach of any of the covenants provided
for in Section 9. 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 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 obligations to you other than (i) to
pay Base Salary and make credits of Deferred Compensation through the effective
date of termination, (ii) to pay any Bonus that has been determined but not yet
paid as of the date of such termination 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 effective 15 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;
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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 15-day
period the Company shall have cured all such material breaches. A material
breach by the Company shall include, but not be limited to, (i) the Company
violating Section 2 with respect to your title, reporting lines, 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, to
terminate your employment under this Agreement without cause, which notice shall
specify the effective date of such termination.
4.2.1 After the effective date of a termination pursuant to this
Section 4.2 (a "termination without cause"), you shall receive Base Salary,
Deferred Compensation and a pro rata portion of your Average Annual Bonus (as
defined below) through the effective date of termination. 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.
4.2.2 After the effective date of a termination without cause,
you shall remain an employee of the Company for the period ending on the later
of (i) the Term Date and (ii) the date which is eighteen months after the
effective date of such termination 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 at an annual rate equal to your Base Salary in effect
immediately prior to the notice of termination, (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 the Average Annual Bonus
and (c) credits of Deferred Compensation. Except as provided in the second
succeeding 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 an employee of the Company
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,
and you shall be entitled to receive, as severance, a lump sum payment within 30
days after such
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commencement or such effective date (provided that if you were named in
the compensation table in the Company's then most recent proxy statement, such
lump sum payment shall be made within 30 days after the end of the calendar year
in which such commencement or effective date occurred), discounted as provided
in the immediately following sentence, equal to the balance of the payments you
would have received pursuant to this Section 4.2.2 had you remained on the
Company's payroll. That lump sum shall be discounted to present value as of the
date of payment from the times at which such amounts would otherwise have become
payable absent such termination at an annual discount rate for the relevant
periods equal to 120% of the "applicable Federal rate" (within the meaning of
Section 1274(d) of the Code), in effect on the date of such termination,
compounded semi-annually. Notwithstanding the foregoing, if you accept
employment with any not-for-profit entity, then you shall be entitled to remain
an employee of the Company and 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 lump sum payment.
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 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 Special Termination by You. You may elect to terminate this
Agreement, effective December 31, 2000, by written notice delivered to the
Company no
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earlier than June 15, 2000 and no later than July 15, 2000. In the event
you make such election, (a) you shall cease to be an employee of the Company on
December 31, 2000, (b) the non-compete provisions of Section 9.2 shall not apply
to you after that date and (c) the Company shall pay you Base Salary and make
credits of Deferred Compensation through December 31, 2000 and shall pay you a
Bonus for the year 2000 which shall not be less than your 1999 Bonus multiplied
by a fraction, the numerator of which is the sum of all regular annual bonuses
(excluding any special or spot bonuses) paid to all Senior Vice Presidents and
Executive Vice Presidents of the Company with respect to the year 2000 and the
denominator of which is the sum of all such bonuses paid to such officers with
respect to the year 1999; provided, however, that the annual bonuses of any such
officer shall be included in the foregoing calculation only if such officer was
a Senior Vice President or Executive Vice President during both 1999 and 2000.
4.5 Office Facilities. In the event of a termination without cause,
then for the period beginning on the effective date of such termination and
ending one year thereafter, the Company shall, without charge to you, make
available to you office space at or near your principal job location immediately
prior to such termination, together with secretarial services, office
facilities, services and furnishings, in each case reasonably appropriate to an
employee of your position and responsibilities prior to such termination but
taking into account your reduced need for such office space, secretarial
services and office facilities, services and furnishings as a result of you no
longer being a full-time employee.
4.6 Release. A condition precedent to the Company's obligation to make
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. If you shall
fail to execute and 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.
4.7 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 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
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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 Retirement Date and the calculation
of payments shall cover only the period ending on the Retirement Date.
4.8 Mitigation. The payments provided for in this Agreement in the
event of a termination without cause are not subject to mitigation unless your
failure to mitigate would result in the Company losing tax deductions to which
it would otherwise have been entitled. In such an event, you will engage in
whatever mitigation is necessary to preserve the Company's tax deductions. In
addition to any obligation under the preceding sentence, and without duplication
of any amounts required to be paid to the Company thereunder, if after a
termination without cause you obtain other employment with any entity other than
a not-for-profit entity, then the total cash salary and bonus received in
connection with such other employment, whether paid to you or deferred for your
benefit, for services through the later of (i) the Term Date or (ii) eighteen
months after the effective date of such termination without cause, up to an
amount equal to (a) the discounted lump sum payment received by you or for your
account with respect to Base Salary, Bonus and Deferred Compensation for such
period, minus (b) the amount of severance you would have received in accordance
with the personnel policies of the Company if you had been job eliminated, shall
reduce, pro tanto, any amount which the Company would otherwise be required to
pay to you as a result of such termination and, to the extent amounts have
theretofore been paid to you as a result of such termination, such cash salary
and bonus shall be paid over to the Company as received with respect to such
period, but the provisions of this sentence shall not apply to any type of
equity interest, bonus unit, phantom or restricted stock, stock option, stock
appreciation right or similar benefit received as a result of such other
employment. 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. With respect to the second preceding
sentence, you shall in no event be required to pay the Company with respect to
any calendar year more than the discounted amount received by you or credited to
the Deferred Plan with respect to Base Salary, Bonus and Deferred Compensation
for such year. Any obligation to mitigate your damages pursuant to this Section
4.8 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
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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.
4.9 Payments. So long as you remain on the payroll of the Company or
any subsidiary of the Company, payments of Base Salary, Deferred Compensation
and Bonus required to be made after a termination without cause shall be made at
the same times as similar payments are made to other senior executives of the
Company.
5. Disability.
5.1 Disability Payments. If during the term of employment and prior to
any 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 and continue to make the
Deferred Compensation credits when otherwise due, 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"). If you have not resumed your usual duties on or prior to the Disability
Date, the Company shall pay you a pro rata Bonus for the year in which the
Disability Date occurs and shall pay you disability benefits for the longer of
(i) the period ending on the Term Date or (ii) eighteen months (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 this reduced amount
shall also be deemed to be the Base Salary for purposes of determining the
amounts to be credited by the Company as Deferred Compensation) and (b) the
Average Annual Bonus.
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
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Disability Period; and (ii) you shall comply with the provisions of
Sections 9 and 10 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 the President 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 and Deferred Compensation 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
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according to the number of whole or partial months you were employed by the
Company in such calendar year.
7. 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 the Group Universal Life ("GUL") insurance program
made available by the Company in an amount equal to $2 million. You shall be
under no obligation to use the payments made by the Company pursuant to the
preceding sentence to purchase GUL insurance or to purchase any other life
insurance. If the Company discontinues its GUL insurance program, the Company
shall nevertheless make the payments required by this Section 7 as if such
program were still in effect. 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 pension, retirement, profit-sharing or other benefit plan
of the Company or any subsidiary of the Company.
8. Other Benefits.
8.1 General Availability. To the extent that (a) you are eligible
under the general provisions thereof and (b) the Company maintains such plan or
program for the benefit of its senior executives, during the term of employment
and so long as you are an employee of the Company, you shall be eligible to
participate in any pension, profit-sharing, stock option or similar plan or
program and in any group life insurance (to the extent set forth in Section 7),
hospitalization, medical, dental, accident, disability or similar plan or
program of the Company now existing or established hereafter. In addition, you
shall be entitled during the term of employment and so long as you are an
employee of the Company, to receive other benefits generally available to all
senior executives of the Company, including, without limitation, to the extent
maintained in effect by the Company for its senior executives, an automobile
allowance and financial services.
8.2 Benefits After a Termination or Disability. During the period you
remain on the payroll of the Company after a termination without cause or during
the Disability Period, you shall continue to be eligible to participate in the
benefit plans and to receive the benefits required to be provided to you under
this Agreement to the extent such benefits are maintained in effect by the
Company for its senior executives; provided, however, you shall not
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be entitled to any additional awards or grants under any stock option,
restricted stock or other stock based incentive plan. You shall continue to be
an employee of the Company for purposes of any stock option and restricted
shares agreements and any other incentive plan awards until such time as you
leave the payroll of the Company. At the time you leave the payroll of the
Company, your rights to benefits and payments under any benefit plans or any
insurance or other death benefit plans or arrangements of the Company or under
any stock option, restricted stock, stock appreciation right, bonus unit,
management incentive or other 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;
provided, however, that notwithstanding the foregoing or any more restrictive
provisions of any such plan or agreement, if you leave the payroll of the
Company as a result of a termination pursuant to Section 4.2, then (i) all stock
options granted to you by the Company after the date of this Agreement shall
vest and become immediately exercisable at the time you leave the payroll of the
Company, (ii) all stock options granted to you by the Company after the date of
this Agreement shall remain exercisable (but not beyond the term thereof) during
the remainder of the term of employment and for a period of three months
thereafter or such longer period as may be specified in any stock option
agreement 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 the you and the Company.
8.3 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 or
to be paid for any accrued vacation time or unused sabbatical, the payments
provided for in such sections being in lieu thereof.
9. Protection of Confidential Information; Non-Compete.
9.1 Confidentiality Covenant. You acknowledge that your employment by
the Company (which, for purposes of this Section 9 shall mean Time Warner Inc.
and its affiliates) will, throughout the term of 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 and other business
affairs and methods and other information not readily available to the public,
and plans for future development. You further acknowledge that the services to
be
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performed under this Agreement are of a special, unique, unusual, extraordinary
and intellectual character. You further acknowledge that the business of the
Company is international in scope, that its products 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 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:
9.1.1 You shall keep secret all confidential matters of the
Company and shall not disclose such matters to anyone outside of the Company,
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;
9.1.2 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
9.1.3 If the term of employment is terminated pursuant to Section
4, for a period of one year after such termination, 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 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.
9.2 Non-Compete. During the term of employment and, subject to Section
4.4, through the later of (i) the Term Date, (ii) the date you leave the payroll
of the Company and (iii) twelve months after the effective date of any
termination of the term of employment pursuant to Section 4, you shall not,
directly or indirectly, without the prior written consent of the Chief Executive
Officer or the President of the Company, render any services to
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any person or entity or acquire any interest of any type in any entity
that might be deemed in competition with the Company; provided, however, that
the foregoing shall not be deemed to prohibit you from acquiring, solely as an
investment and through market purchases, securities of any entity which are
registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934
and which are publicly traded, so long as you are not part of any control group
of such entity and such securities, if converted, do not constitute more than
one percent (1%) of the outstanding voting power of that entity. For purposes of
the foregoing, a person or entity shall be deemed to be in competition with the
Company if such person or entity engages in any line of business that is
substantially the same as either (i) any line of operating business which the
Company engages in, conducts or, to your knowledge, has definitive plans to
engage in or conduct or (ii) any operating business that is engaged in or
conducted by the Company and as to which, to your knowledge, the Company
covenants in writing, in connection with the disposition of such business, not
to compete therewith.
9.3 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
9.1 or 9.2, 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.
10. 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
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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.
11. 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):
11.1 If to the Company:
Time Warner Inc.
75 Rockefeller Plaza
New York, New York 10019
Attention: Chief Executive Officer
(with a copy, similarly addressed
but Attention: General Counsel)
11.2 If to you, to your residence address set forth on the records of
the Company.
12. General.
12.1 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.
12.2 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.
14
12.3 Entire Agreement. This Agreement, including Annex A, sets 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.
12.4 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.
12.5 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, 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 may assign its rights together with its obligations
hereunder, in connection with any sale, transfer or other disposition of all or
substantially all of its business and assets; and such rights and obligations
shall inure to, and be binding upon, any successor to all or substantially all
of the business and assets of the Company, whether by merger, purchase of stock
or assets or otherwise. The Company shall cause you such successor expressly to
assume such obligations.
12.6 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.
12.7 Resolution of Disputes. Any dispute or controversy arising with
respect to this Agreement and your employment hereunder (whether based on
contract or tort or
15
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/ENDISPUTE for resolution in arbitration in
accordance with the rules and procedures of JAMS/ENDISPUTE. Either party shall
make such election by delivering written notice thereof to the other party at
any time (but not later than 45 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 12.7. 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 nonjudicial (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/ENDISPUTE 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/ENDISPUTE is not in
business or is no longer providing arbitration services, then the American
Arbitration Association shall be substituted for JAMS/ENDISPUTE for the purposes
of the foregoing provisions of this Section 12.7. 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.
12.8 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.
12.9 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
16
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 not constitute a breach of, or conflict with the
terms or provisions of, any agreement or understanding to which the Company is a
party.
12.10 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.
12.11 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.
12.12 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.
12.13 Survival. Sections 3.4, 8.2, 8.3 and 9 through 12 shall survive
any termination of the term of employment by the Company for cause and any
termination by you pursuant to Section 4.4. Sections 4.6, 4.8 and 6 through 12
shall survive any termination of the term of employment without cause.
12.14 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 Salary - Section 3.1
Bonus - Section 3.2
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cause - Section 4.1
Code - Section 4.2.2
Company - the first paragraph on page 1 and Section 9.1
Deferred Compensation - Section 3.3
Deferred Plan - Section 3.3
Disability Date - Section 5
Disability Period - Section 5
Effective Date - the first paragraph on page 1
Retirement Date - Section 4.7
Term Date - Section 1
term of employment - Section 1
termination without cause - Section 4.2.1
Work Product - Section 10
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.
TIME WARNER INC.
By /s/ Andrew J. Kaslow
---------------------
Andrew J. Kaslow
Senior Vice President
/s/ Joan N. Sumner
---------------------
Joan N. Sumner
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ANNEX A
RELEASE
Pursuant to the terms of the Employment Agreement made as of _____________,
between TIME WARNER INC., a Delaware corporation (the "Company"), 75 Rockefeller
Plaza, New York, New York 10019 and the undersigned (the "Agreement"), and in
consideration of the payments made to me and other benefits to be received by me
pursuant thereto, I, [Name], being of lawful age, do hereby release and forever
discharge the Company and its officers, shareholders, subsidiaries, agents, and
employees, from any and all actions, causes of action, claims, or demands for
general, special or punitive damages, attorney's fees, expenses, or other
compensation, which in any way relate to or arise out of my employment with the
Company or any of its subsidiaries or the termination of such employment, which
I may now or hereafter have under any federal, state or local law, regulation or
order, including without limitation, under the Age Discrimination in Employment
Act, as amended, through and including the date of this Release; provided,
however, that the execution of this Release shall not prevent the undersigned
from bringing a lawsuit against the Company to enforce its obligations under the
Agreement.
I acknowledge that I have been given at least 21 days from the day I
received a copy of this Release to sign it and that I have been advised to
consult an attorney. I understand that I have the right to revoke my consent to
this Release for seven days following my signing. This Release shall not become
effective or enforceable until the expiration of the seven-day period following
the date it is signed by me.
I ALSO ACKNOWLEDGE THAT BY SIGNING THIS RELEASE I MAY BE GIVING UP VALAUBLE
LEGAL RIGHTS AND THAT I HAVE BEEN ADVISED TO CONSULT A LAWYER BEFORE SIGNING. I
further state that I have read this document and the Agreement referred to
herein, that I know the contents of both and that I have executed the same as my
own free act.
WITNESS my hand this ____ day of ___________, ____.
---------------------------
[Name]