This excerpt taken from the DTV 10-K filed Mar 1, 2005.
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS NON-QUALIFIED STOCK OPTION AGREEMENT (Agreement), dated as of March 16, 2004, is entered into between The DIRECTV Group, Inc. a Delaware corporation (DIRECTV) and Chase Carey (Executive).
WHEREAS, at its meeting on March 15, 2004, the Compensation Committee of DIRECTVs Board of Directors (the Committee) approved The DIRECTV Group, Inc. 2004 Stock Plan (as it may be amended from time to time, the Plan) and the grant to Executive of nonqualified stock options to purchase an aggregate of 1,883,764 shares of DIRECTVs common stock, $.01 par value per share (the Common Stock), upon the terms and conditions set forth herein and subject to the approval of the Plan by DIRECTVs Board of Directors and further subject to the approval of the Plan by DIRECTVs stockholders at their 2004 annual meeting; and
WHEREAS, at its meeting on March 16, 2004, the Board of Directors of DIRECTV ratified the grant to Executive of the non-qualified stock options referred to above, upon the terms and conditions set forth herein and subject to the approval of the Plan by DIRECTVs stockholders at their 2004 annual meeting; and
WHEREAS, the Committee and the Companys Board of Directors each has also approved the terms and conditions of an employment agreement with Executive effective as of January 1, 2004 (such agreement, as it may be amended from time to time, is referred to herein as the Employment Agreement).
NOW, THEREFORE, in consideration of the services rendered and to be rendered by Executive and the mutual promises made herein and the mutual benefits to be derived there from, DIRECTV and Executive agree as follows:
1. Defined Terms. Any capitalized term used herein and not otherwise defined shall have the meaning assigned to such term in the Plan.
2. Grant of Options. This Agreement evidences DIRECTVs grant to Executive of the right and option to purchase, on the terms and conditions set forth herein and in Exhibit A hereto (incorporated herein by this reference), to the extent exercisable, all or any part of an aggregate of 1,883,764 shares of Common Stock at the prices set forth in Exhibit A hereto (the Options), subject to the provisions of this Agreement. The grant of the Options is subject to the approval of the Plan by DIRECTVs stockholders at their 2004 annual meeting, so that no Options shall be vested or exercisable unless the stockholders so approve the Plan. If the Companys stockholders do not approve the Plan, all the Options granted hereunder shall be void.
3. Exercisability of Option. The Options shall vest and become exercisable as to the number of shares of Common Stock specified in Exhibit A (subject to adjustment as provided in Section 8) on the applicable dates specified in Exhibit A, subject to the applicable provisions of
the Plan and this Agreement. Each Option may be exercised only to the extent such Option is vested and exercisable, and, during Executives lifetime, only by Executive. In no event may the Executive exercise any Option after the applicable Expiration Date (the Expiration Date) for such Option as specified in Exhibit A.
(a) Cumulative Exercisability. To the extent Executive does not at the time of a particular exercise purchase all the shares of Common Stock that Executive may then exercise for any particular Option or Options, Executive has the right cumulatively thereafter to purchase any of such shares of Common Stock not so purchased until the applicable Option terminates or expires.
(b) No Fractional Shares; Minimum Exercise. Fractional share interests shall be disregarded, but may be cumulated. No fewer than 100 shares of Common Stock may be purchased at any one time, unless the number purchased is the total number at the time exercisable under the applicable Option.
4. Exercise of Option. To the extent vested and exercisable, each Option may be exercised by the delivery to DIRECTV of a written exercise notice stating the number of shares of Common Stock to be purchased pursuant to the Option accompanied by payment of the aggregate Grant Price of the shares of Common Stock to be purchased and the payment or provision for any applicable employment or other taxes or withholding for taxes thereon. Subject to Section 7 below, such Option shall be deemed to be exercised upon receipt and approval by DIRECTV of such written exercise notice accompanied by the aggregate Grant Price and any other payments so required, as permitted pursuant to Section 5.
5. Method of Payment of Option. Payment of the aggregate Grant Price shall be by any of the following, or a combination thereof, at the election of Executive:
(a) in cash or by electronic funds transfer, or by check payable to the order of DIRECTV, in the full amount of the purchase price of the shares of Common Stock and the amount (if any) required to satisfy any applicable withholding taxes;
(b) by delivery of shares of Common Stock that have been held by Executive for at least six months, in accordance with Section 7(e) of the Plan, subject to compliance with applicable law; or
(c) in a combination of payments under clauses (a) and (b).
Other payment methods may be permitted only if expressly authorized by the Committee with respect to each Option or all Options under and consistent with the terms of the Plan.
6. Continuance of Employment Required. The vesting schedule requires continued service through each applicable vesting date as a condition to the vesting of the applicable Option and rights and benefits under this Agreement. Partial service, even if substantial, during any vesting period will not entitle Executive to any proportionate vesting or avoid or mitigate a termination of rights and benefits upon or following a termination of employment or service as provided in Section 7 or 9 below or under the Plan.
7. Effect of Termination of Employment on Exercise Period. If Executives employment by DIRECTV terminates, the Options and all other rights and benefits under this Agreement shall terminate, except that Executive shall be entitled to such additional vesting and additional time to exercise the Options after the date of such termination (the Severance Date), to the extent provided below, except that in no event may any Option be exercised after its Expiration Date as specified in Exhibit A:
(a) If Executive voluntarily terminates his employment, Executive shall have three months after the Severance Date to exercise each Option to the extent such Option was exercisable on the Severance Date, unless otherwise approved by the Committee.
(b) If DIRECTV terminates Executives employment without Cause (as defined in the Employment Agreement), or if Executives employment terminates as a result of disability (as determined in accordance with the Employment Agreement) or death, all unvested Options shall vest as of the Severance Date and Executive (or Executives Personal Representative or Beneficiary, as the case may be) shall have 12 months after the Severance Date to exercise any or all of the Options.
(c) If DIRECTV terminates Executives employment for Cause, all the Options shall terminate as of the Severance Date.
8. Adjustments Upon Specified Events. As provided in Section 14 of the Plan, upon the occurrence of certain events relating to or affecting the Common Stock as contemplated by Section 14 of the Plan, the Committee shall, in such manner, to such extent (if any) and at such times as it deems appropriate and equitable in the circumstances, make adjustments in the number, amount and type of shares of Common Stock (or other securities or property) subject to the Options, the Grant Prices and the securities deliverable upon exercise of the Options (or any combination thereof) or provide for a cash payment or the assumption, substitution or exchange of the Option or the shares or other securities subject to the Options, based upon the distribution or consideration payable to holders of Common Stock generally. All rights of Executive hereunder are subject to such adjustments and other provisions of the Plan.
9. Possible Early Termination of Award. As permitted by Section 14 of the Plan, and without limiting the authority of the Committee under any of the provisions of Section 14 of the Plan, the Committee retains the right to terminate any or all of the Options, to the extent each such Option has not vested, upon a dissolution of DIRECTV or a reorganization event or transaction in which DIRECTV does not survive (or does not survive as a public company in respect of its outstanding Common Stock). This Section 9 is not intended to prevent future vesting (including provision for future vesting) if each Option (or a substituted Award) remains outstanding following a transaction described in Section 14 of the Plan.
10. Leaves of Absence. Absence from work caused by military service, authorized sick leave or other leave approved in writing by DIRECTV or the Committee shall not be considered a termination of employment by DIRECTV for purposes of Section 7 only if reemployment upon the expiration of such leave is required by contract or law, or such leave is for a period of not more than 90 days.