EXHIBIT 10.8
As Amended through
November 18, 1993
TIME WARNER INC.
1988 Restricted Stock Plan For
Non-Employee Directors
1. PURPOSE. The purpose of the Plan is to supplement the compensation
paid to Outside Directors and to increase their proprietary interest in the
Company and their identification with the interests of the Company's
stockholders, by grants of annual awards of Common Stock.
2. CERTAIN DEFINITIONS.
(a) "Average Market Price" shall mean the average (rounded to the nearest
cent) of the means between the high and low sales prices of a share of Common
Stock as reported on the New York Stock Exchange Composite Tape for the ten
consecutive trading days ending on the date of the annual meeting of
stockholders of the Company for the year with respect to which an annual grant
of Restricted Shares is automatically made pursuant to paragraph 5 of the Plan.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Commission" shall mean the Securities and Exchange Commission.
(d) "Common Stock" shall mean the Common Stock, par value $1 per share, of
the Company.
(e) "Company" shall mean Time Warner Inc., a Delaware corporation.
(f) "Grant Date" shall have the meaning set forth in paragraph 5 of the
Plan.
(g) "Outside Director" shall mean a member of the Board of Directors of
the Company who, as of the close of business on the date of the annual meeting
of stockholders of the Company, is not an employee of the Company or any
subsidiary of the Company. For the purposes hereof, a "subsidiary" of the
Company shall mean any corporation,
partnership or other entity in which the Company owns, directly or indirectly,
an equity interest of 50% or more.
(h) "Plan" shall mean this 1988 Restricted Stock Plan for Non-Employee
Directors of the Company.
(i) "Retained Distributions" shall mean distributions which are retained
by the Company pursuant to paragraph 6(b) of the Plan.
(j) "Restricted Shares" shall mean shares of Common Stock automatically
granted to an Outside Director pursuant to paragraph 5 of the Plan.
(k) "Restriction Period" shall mean the period of time specified in
paragraph 6(a) hereof applicable to all Restricted Shares granted under the
Plan.
3. SHARES SUBJECT TO THE PLAN. Subject to the provisions of paragraph 9
hereof, the maximum aggregate number of Restricted Shares which may be issued
under the Plan shall be 145,692; provided, however, that any Restricted Shares
-------- -------
issued under the Plan which are forfeited by the terms of the Plan shall be
deemed not to have been issued for the purpose of this paragraph 3 and shall
again become available for grant while the Plan is in effect. No fractional
shares of Common Stock shall be granted or issued under the Plan.
The Restricted Shares may be, in whole or in part, authorized but unissued
shares of Common Stock or shares of Common Stock previously issued and
outstanding and reacquired by the Company.
4. ELIGIBILITY. Subject to the last sentence of paragraph 5 hereof, the
only persons eligible to participate in the Plan shall be Outside Directors.
5. ANNUAL GRANTS. Each Outside Director shall automatically be granted
under the Plan, as of the conclusion of each annual meeting of stockholders of
the Company (the "Grant Date"), commencing with the annual meeting to be held in
1990, that number of Restricted Shares equal to $30,000 divided by the Average
Market Price of the Common Stock on the Grant Date, and, except as hereinafter
provided, the Company
-2-
shall promptly thereafter issue such shares, in each case without any further
action required to be taken by the Board or any committee thereof. The Company
shall not be required to issue fractions of Restricted Shares and in lieu
thereof any fractional Restricted Share shall be rounded to the next whole
number. Notwithstanding the foregoing, in the case of an Outside Director who,
as of any Grant Date, has not continuously served as a member of the Board for a
period of at least six consecutive months (a "new Outside Director"), the
Restricted Shares granted to such new Outside Director on such Grant Date shall
not be issued in such new Outside Director's name until six months after such
new Outside Director shall have first become a new Outside Director. An
individual who shall become an Outside Director subsequent to the date of the
annual meeting of stockholders of the Company for any year shall first become
eligible to participate in the Plan commencing on the date of the next annual
meeting of stockholders of the Company.
6. RESTRICTION PERIOD; RESTRICTIONS APPLICABLE TO RESTRICTED SHARES;
CERTIFICATES REPRESENTING RESTRICTED SHARES.
(a) All Restricted Shares granted to an Outside Director pursuant to the
Plan shall be subject to the possibility of forfeiture and the restrictions set
forth in paragraph 6(b) below for a period (the "Restriction Period") commencing
on the date such Restricted Shares shall have been automatically granted to such
Outside Director pursuant to paragraph 5 of the Plan and ending on the earliest
of the following events:
(i) the date such Outside Director ceases to be a director of
the Company by reason of mandatory retirement pursuant to any policy or
plan of the Company applicable to Outside Directors;
(ii) the date such Outside Director, having been nominated for
reelection, is not reelected by the stockholders of the Company to serve as
a member of the Board;
(iii) the date of death of such Outside Director;
(iv) the date such Outside Director terminates
-3-
service on the Board on account of medical or health reasons which render
such Outside Director unable to continue to serve as a member of the Board;
or
(v) the occurrence of a Change in Control of the Company (as
defined in paragraph 6(c) below).
;provided, however, that, in the discretion of the Board on a case by case
-------- -------
basis, the Restriction Period applicable to all Restricted Shares granted to an
Outside Director shall end and be deemed completed for all purposes of the Plan
in the event an Outside Director (a "withdrawing Outside Director") terminates
his or her service as a member of the Board (A) for reasons of personal or
financial hardship; (B) to serve in any governmental, diplomatic or any other
public service position or capacity; (C) to avoid or protect against a conflict
of interest of any kind; (D) on the advice of legal counsel; or (E) for any
other extraordinary circumstance that the Board determines to be comparable to
the foregoing. The withdrawing Outside Director shall abstain from
participating in any determination made by the Board with respect to any matter
relating to the foregoing.
(b) Restricted Shares, when issued, will be represented by a stock
certificate or certificates registered in the name of the Outside Director to
whom such Restricted Shares shall have been granted. Each such certificate
shall bear a legend in substantially the following form:
"The shares represented by this certificate are subject to the terms
and conditions (including forfeiture and restrictions against
transfer) contained in the Time Warner Inc. 1988 Restricted Stock Plan
for Non-Employee Directors. A copy of such Plan is on file in the
Office of the Secretary of Time Warner Inc."
Such certificates shall be deposited by such Outside Director with the
Company, together with stock powers or other instruments of assignment, each
endorsed in blank, which will permit transfer to the Company of all or any
portion of the Restricted Shares and any securities constituting Retained
Distributions that shall be forfeited or that shall not become vested in
accordance with the Plan. Restricted Shares shall constitute issued and
outstanding shares of Common Stock for all corporate purposes. The Outside
Director will have the
-4-
right to vote such Restricted Shares, to receive and retain all regular cash
dividends paid on such Restricted Shares and to exercise all other rights,
powers and privileges of a holder of Common stock with respect to such
Restricted Shares, with the exception that (i) the Outside Director will not be
entitled to delivery of the stock certificate or certificates representing such
Restricted Shares until the Restriction Period shall have expired and unless all
other vesting requirements with respect thereto shall have been fulfilled; (ii)
the Company will retain custody of the stock certificate or certificates
representing the Restricted Shares during the Restriction Period; (iii) other
than regular cash dividends the Company will retain custody of all distributions
("Retained Distributions") made or declared with respect to the Restricted
Shares (and such Retained Distributions will be subject to the same
restrictions, terms and conditions as are applicable to the Restricted Shares)
until such time, if ever, as the Restricted Shares with respect to which such
Retained Distributions shall have been made, paid or declared shall have become
vested, and such Retained Distributions shall not bear interest or be segregated
in separate accounts; (iv) an Outside Director may not sell, assign, transfer,
pledge, exchange, encumber or dispose of any Restricted Shares or any Retained
Distributions during the Restriction Period; and (v) a breach of any
restrictions, terms or conditions provided in the Plan or established by the
Board with respect to any Restricted Shares or Retained Distributions will cause
a forfeiture of such Restricted Shares and any Retained Distributions with
respect thereto.
(c) A "Change in Control" of the Company shall be deemed to have
occurred on the date upon which (i) the Board (or, if approval of the Board is
not required as a matter of law, the stockholders of the Company) shall approve
(a) 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 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 (b) 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 (c) the adoption of any
plan or proposal for the liquidation or dissolution of the Company, or (ii) any
person (as such term is defined in Section 13(d)(3) and 14(d)(2) of the
-5-
Securities Exchange Act of 1934, as amended (the "Exchange Act")), corporation,
or other entity shall purchase any Common Stock of the Company (or securities
convertible into the 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 any such person, corporation or other entity (other
than the Company or any benefit plan sponsored by the Company or any subsidiary)
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 percent or more of the combined voting power of the then
outstanding securities of the Company ordinarily (and apart from rights accruing
under special circumstances) having the right to vote in the election of
directors (calculated as provided in paragraph (d) of such Rule 13d-3 in the
case of rights to acquire the Company's securities), or (iii) during any period
of two consecutive years, individuals who at the beginning of such period
constitute the entire Board shall cease 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.
7. COMPLETION OF RESTRICTION PERIOD; FORFEITURE. Upon the completion of
the Restriction Period with respect to an Outside Director's Restricted Shares,
and the satisfaction of any other applicable restrictions, terms and conditions,
all Restricted Shares issued to such Outside Director and any Retained
Distributions with respect to such Restricted Shares shall become vested. The
Company shall promptly thereafter issue and deliver to the Outside Director new
stock certificates or instruments representing the Restricted Shares and other
distributions registered in the name of the Outside Director or, if deceased,
his or her legatee, personal representative or distributee, which do not contain
the legend set forth in paragraph 6(b) hereof.
If an Outside Director ceases to be a member of the Board for any reason
other than as set forth in clauses (i) through (v) of paragraph 6(a) hereof or
as the Board may otherwise approve in accordance with paragraph 6(a), then all
Restricted Shares issued to such Outside Director and all Retained Distributions
with respect thereto shall be forfeited to the Company and the Outside Director
shall not thereafter have any
-6-
rights (including dividend and voting rights) with respect to such Restricted
Shares and Retained Distributions.
8. STATEMENT OF ACCOUNT. Each Outside Director shall receive an annual
statement, on or about June 1st, showing the number of Restricted Shares granted
to such Outside Director for that year and the aggregate number of Restricted
Shares that have been granted to such Outside Director under the Plan.
9. ADJUSTMENT IN EVENT OF CHANGES IN COMMON STOCK. In the event of a
recapitalization, stock split, stock dividend, combination or exchange of
shares, merger, consolidation or liquidation or the like, the aggregate number
and class of Restricted Shares available for grant under the Plan shall be
appropriately adjusted by the Board, whose determination shall be conclusive.
10. NO RIGHT TO NOMINATION. Nothing contained in the Plan shall confer
upon any Outside Director the right to be nominated for reelection to the Board.
11. NONALIENATION OF BENEFITS. No right or benefit under the Plan shall
be subject to anticipation, alienation, sale, assignment, hypothecation, pledge,
exchange, transfer, encumbrance or charge, and any attempt to anticipate,
alienate, sell, assign, hypothecate, pledge, exchange, transfer, encumber or
charge the same shall be void. No right or benefit hereunder shall in any
manner be liable for or subject to the debts, contracts, liabilities or torts of
the person entitled to such benefit. If any Outside Director or beneficiary
hereunder should become bankrupt or attempt to anticipate, alienate, sell,
assign, hypothecate, pledge, exchange, transfer, encumber or charge any right or
benefit hereunder, then such right or benefit shall, in the discretion of the
Board, cease and terminate, and in such event, the Board in its discretion may
hold or apply the same or any part thereof for the benefit of the Outside
Director, his or her beneficiary, spouse, children or other dependents, or any
of them, in such manner and in such proportion as the Board may deem proper.
-7-
12. APPOINTMENT OF ATTORNEY-IN-FACT. Upon the issuance of any Restricted
Shares hereunder and the delivery by an Outside Director of the stock power
referred to in paragraph 6(b) hereof, such Outside Director shall be deemed to
have appointed the Company, its successors and assigns, the attorney-in-fact of
the Outside Director, with full power of substitution, for the purpose of
carrying out the provisions of this Plan and taking any action and executing any
instruments which such attorney-in-fact may deem necessary or advisable to
accomplish the purposes hereof, which appointment as attorney-in-fact shall be
irrevocable and coupled with an interest. The Company as attorney-in-fact for
the Outside Director may in the name and stead of the Outside Director make and
execute all conveyances, assignments and transfers of the Restricted Shares and
Retained Distributions deposited with the Company pursuant to paragraph 6(b) of
the Plan and the Outside Director hereby ratifies and confirms all that the
Company, as said attorney-in-fact, shall do by virtue thereof.
Nevertheless, the Outside Director shall, if so requested by the Company,
execute and deliver to the Company all such instruments as may, in the judgment
of the Company, be advisable for the purpose.
13. SECTION 4999 RULES. Notwithstanding any provisions to the contrary
contained in the Plan, if the Payment (as hereinafter defined) due to the
Outside Director hereunder upon the occurrence of a Change in Control of the
Company would be subject to the excise tax imposed by Section 4999 (or any
successor thereto) of the Internal Revenue Code of 1986 (the "Code"), then any
such Payment hereunder payable to the Outside Director shall be reduced to the
largest amount that will result in no portion of the aggregate of the Payments
from the Company being subject to such excise tax. The term "Payment" shall
mean any transfer of property within the meaning of Section 280G (or any
successor thereto) of the Code.
The determination of any reduction in Payments under the Plan shall be made
by the Outside Director in good faith, and such determination shall be
conclusive and binding on the Company. The Outside Director shall have the
right to determine the extent to which the aggregate amount of any such
reduction shall be applied against any cash or any shares of stock of the
Company or any other securities or property to which the Outside Director would
otherwise have been entitled
-8-
under the Plan, the extent to which the Payments hereunder and any other
payments due to the Outside Director from the Company shall be reduced, and
whether to waive the right to the acceleration of any portion of the Payment due
hereunder or otherwise due to the Outside Director from the Company, and any
such determination shall be conclusive and binding on the Company. To the
extent that Payments hereunder are not paid as a consequence of the limitation
contained in this paragraph 13, then the Restricted Shares and Retained
Distributions not so accelerated shall be deemed to remain outstanding and shall
be subject to the provisions of the Plan as if no acceleration had occurred.
If (a) the Company shall make any Payments pursuant to the Plan to the
Outside Director, (b) an excise tax under Section 4999 (or any successor
thereto) of the Code is in fact paid by the Outside Director (or is claimed by
the Internal Revenue Service to be due) as a result of any such Payment, either
alone or together with any other Payments received or to be received by the
Outside Director from the Company, and (c) if nationally recognized counsel to
the Outside Director or the Company shall have given an opinion of counsel that
repayment of all or a portion of such Payments would result in such excise tax
being refunded to the Outside Director (or, if not paid, in such excise tax not
being imposed), then the Outside Director shall repay to the Company all or such
portion of such Payments so that such excise tax will be refunded (or will not
apply).
The Company shall pay all legal fees and expenses which the Outside
Director may incur in any contest of the Outside Director's interpretation of,
or determinations under, the provisions of this paragraph 13.
14. WITHHOLDING TAXES.
(a) At the time any Restricted Shares or Retained Distributions
become vested or payable, each Outside Director shall pay to the Company the
amount of any Federal, state or local taxes of any kind required by law to be
withheld with respect thereto.
(b) If an Outside Director properly elects (which, apart from any
other notice required by law, shall require that the Outside Director notify the
Company of such election at the time it is made) within 30 days after the
Company
-9-
issues the certificate or certificates representing the Restricted Shares to the
Outside Director to include in gross income for Federal income tax purposes an
amount equal to the fair market value of such Restricted Shares at the time of
such issuance, he or she shall pay to the Company in the year of award of such
Restricted Shares the amount of any Federal, state or local taxes required to be
withheld with respect to such Restricted Shares.
(c) If an Outside Director shall fail to make the payments required
hereunder, the Company shall, to the extent permitted by law, have the right to
deduct from any payment of any kind otherwise due to such Outside Director any
Federal, state or local taxes of any kind required by law to be withheld with
respect to such Restricted Shares.
15. AMENDMENT AND TERMINATION OF PLAN. The Board may at any time
terminate the Plan or make such amendments to the Plan as it shall deem
advisable; provided, however, that the Board may not, without approval by the
-------- -------
holders of a majority of the voting securities of the Company present, or
represented, and entitled to vote at a meeting, (i) increase the maximum number
of Restricted Shares which may be granted hereunder in the aggregate (except for
adjustments by the Board as hereinabove provided in paragraph 9), (ii) increase
the dollar value of Restricted Share grants provided in paragraph 5 hereof, or
(iii) modify the provisions of paragraph 4 hereof as to eligibility for
participation in the Plan. No termination or amendment of the Plan shall
adversely affect the rights of any Outside Director (without his or her consent)
under any grant previously made.
16. GOVERNMENT AND OTHER REGULATIONS. Notwithstanding any other
provisions of the Plan, the obligations of the Company with respect to
Restricted Shares shall be subject to all applicable laws, rules and
regulations, and such approvals by any governmental agencies as may be required
or deemed appropriate by the Company. The Company reserves the right to delay
or restrict, in whole or in part, the issuance or delivery of Common Stock
pursuant to any grants of Restricted Shares under the Plan until such time as:
(a) any legal requirements or regulations shall have been met
relating to the issuance of such Restricted Shares or to their registration,
qualification or exemption
-10-
from registration or qualification under the Securities Act of 1933 or any
applicable state securities laws; and
(b) satisfactory assurances shall have been received that such
Restricted Shares when delivered will be duly listed on the New York Stock
Exchange and the Pacific Stock Exchange.
17. NONEXCLUSIVITY OF PLAN. Neither the adoption of the Plan by the Board
nor the submission of the Plan to the stockholders of the Company for approval
shall be construed as creating any limitations on the power of the Board to
adopt such other incentive arrangements as it may deem desirable, including
without limitation, the awarding of stock otherwise than under the Plan, and
such arrangements may be either generally applicable or applicable only in
specific cases.
18. GOVERNING LAW. The Plan shall be governed by, and construed in
accordance with, the laws of the State of New York.
19. EFFECTIVE DATE OF THE PLAN. The Plan shall become effective on a date
which is the latter of (i) the date the Plan is approved by the stockholders of
the Company entitled to vote at the annual meeting of stockholders of the
Company to be held in 1988, or any adjournment thereof; and (ii) the date on
which the Company receives a favorable interpretative letter from the Commission
to the effect that (x) the grant of Restricted Shares under the Plan is exempt
from the operation of Section 16(b) of the Exchange Act and (y) Outside
Directors who receive Restricted Shares under the Plan will continue to be
"disinterested persons" within the meaning of Rule 16b-3 under the Exchange Act
with respect to administration of the Company's other stock related plans in
which only employees of the Company (including officers, whether or not they are
directors) and its subsidiaries may participate.
20. BENEFICIARIES. Each Outside Director may designate any person(s) or
legal entity(ies), including his or her estate, as his or her beneficiary under
the Plan. Such designation shall be made in writing on a form filed with the
Secretary of the Corporation or his or her designee and may be revoked or
changed by an Outside Director at any time by
-11-
filing written notice of such revocation or change with the Secretary of the
Corporation or his or her designee. If no person shall be designated by an
Outside Director as his or her beneficiary or if no person designated by such
Outside Director as his or her beneficiary survives such Outside Director, the
Outside Director's beneficiary shall be his or her estate.
-12-