DISCOVERY PERFORMANCE EQUITY PROGRAM NONQUALIFIED STOCK OPTION GRANT AGREEMENT FOR EMPLOYEES

EX-10.4 5 rrd302872_34270.htm NON-QUALIFIED STOCK OPTION GRANT AGREEMENT DC10198.pdf -- Converted by SEC Publisher 4.2, created by BCL Technologies Inc., for SEC Filing

DISCOVERY PERFORMANCE EQUITY PROGRAM

NONQUALIFIED STOCK OPTION GRANT AGREEMENT FOR EMPLOYEES

     Discovery Communications, Inc. (the “Company”) has granted you an option (the “Option”) under the Discovery Communications, Inc. 2005 Incentive Plan (As Amended and Restated) (the “Plan”). The Company’s general program to offer equity and equity-type awards to eligible employees is referred to as the “Performance Equity Program” (or “PEP”). The Option lets you purchase a specified number (the “Option Shares”) of shares of the Company’s Series A common stock, at a specified price per share (the “Grant Price”).

     The individualized communication you received (the “Cover Letter”) provides the details for your Option. It specifies the number of Option Shares, the Grant Price, the Date of Grant, the schedule for exercisability, and the latest date the Option will expire (the “Term Expiration Date”).

The Option is subject in all respects to the applicable provisions of the Plan. This Grant

Agreement does not cover all of the rules that apply to the Option under the Plan; please refer to the Plan document. Capitalized terms are defined either further below in this grant agreement (the “Grant Agreement”) or in the Plan. If you are located in a country other than the United States, you are also receiving an International Addendum to this Grant Agreement (the “International Addendum”). You are required to sign a copy of the International Addendum in addition to accepting this Grant Agreement electronically. The International Addendum is incorporated into the Grant Agreement by reference and supplements the terms of this Grant Agreement and future grants to you under the Plan.

The Plan document is available on the Fidelity website. The Prospectus for the Plan, the Company’s S-8, Annual Report on Form 10-K, and other filings the Company makes with the Securities and Exchange Commission are available for your review on the Company’s web site. You may also obtain paper copies of these documents upon request to the Company’s HR department.

Neither the Company nor anyone else is making any representations or promises regarding the duration of your service, exercisability of the Option, the value of the Company's stock or of this Option, or the Company's prospects. The Company is not providing any advice regarding tax consequences to you or regarding your decisions regarding the Option; you agree to rely only upon your own personal advisors.

NO ONE MAY SELL, TRANSFER, OR DISTRIBUTE THE OPTION OR THE SECURITIES THAT MAY BE PURCHASED UPON EXERCISING THE OPTION WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATING THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO DISCOVERY COMMUNICATIONS, INC. OR OTHER INFORMATION AND

REPRESENTATIONS SATISFACTORY TO IT THAT SUCH REGISTRATION IS NOT REQUIRED.

In addition to the Plan’s terms and restrictions, the following terms and restrictions apply:

Option    While your Option remains in effect under the Option Expiration section, you 
Exercisability    may exercise any exercisable portions of the Option (and buy the Option Shares) 
    under the timing rules of this section. 
 
    The Option will become exercisable on the schedule provided in the Cover Letter 
    to this Grant Agreement, assuming you remain employed (or serve as a member 
    of the Company’s board of directors) through each Exercisability Date. Any 
    fractional shares will be carried forward to the following Exercisability Date, 
    unless the Committee selects a different treatment. For purposes of this Grant 
    Agreement, employment with the Company will include employment with any 
    Subsidiary whose employees are then eligible to receive Awards under the Plan 
    (provided that a later transfer of employment to an ineligible Subsidiary will not 
    terminate employment unless the Committee determines otherwise). 
 
    Exercisability will accelerate fully on your Retirement, or, while employed, your 
    Disability or death. If the Company terminates your employment without Cause 
    during a calendar year before the Option is fully exercisable, the Option shall 
    remain or become exercisable as though you remained working through any 
    Exercisability Dates occurring during the 90 days after the date of termination. 
    (“Cause” has the meaning provided in Section 11.2(b) of the Plan. “Retirement” 
    means your employment ends for any reason other than Cause at a point at 
    which you are at least age 60 and have been employed by the Company, any of 
    its subsidiaries, or Discovery Communications, LLC for at least five years, where 
    your period of service is determined using the Company’s Prior Employment 
    Service Policy or a successor policy chosen by the Committee. Acceleration 
    upon Retirement does not apply in countries subject to the EU Directive on 
    Discrimination.) 
 
                   Change in                       Notwithstanding the Plan’s provisions, if an Approved Transaction, 
                   Control                       Control Purchase, or Board Change (each a “Change in Control”) 
                       occurs while you remain employed by the Company, the Option will only 
                       have accelerated exercisability as a result of the Change in Control if 
                       (i) within 12 months after the Change in Control, (x) your employment is 
                       terminated without Cause or (y) you resign for Good Reason and (ii) with 
                       respect to any Approved Transaction, the transaction actually closes and 
                       the qualifying separation from employment occurs within 12 months after 
                       the closing date. 
 
                       “Good Reason” has the meaning provided in your employment 
                       agreement with the Company or, if no such agreement is in effect after a 
                       Change in Control, any of the following events without your consent and 
                       as measured against the status in effect at the Change in Control (unless 
                       you have subsequently consented to a different status): (a) a required 
                       relocation of your principal place of employment that results in an 
                       increase in commuting distance of at least 50 miles, (b) a job level 
                       reduction of at least two levels, or (c) a reduction in base salary, provided 
                       however, that you must provide the Company with written notice of the 
                       existence of the event constituting Good Reason within 45 days of your 
                       knowledge of any such event having occurred and allow the Company 
                       30 days to cure the same. If the Company so cures the change, you will 
                       not have a basis for terminating your employment for Good Reason with 

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                       respect to such cured change. If such event is not cured within such 
                       30 day period, you may make your resignation effective at the end of 
                       such 30 day period. Unless the Committee determines otherwise, Good 
                       Reason provides an acceleration only for resignations during the 
                       12 month period following a Change in Control. 
 
                       The Committee reserves its ability under Section 11.1(b) of the Plan to 
                       vary this treatment if the Committee determines there is an equitable 
                       substitution or replacement award in connection with a Change in 
                       Control. 
 
Option Expiration    The Option will expire no later than the close of business on the Term Expiration 
    Date. Unexercisable portions of the Option expire immediately when you cease 
    to be employed (unless you are concurrently remaining or becoming a member 
    of the Board). If the Company terminates your employment for Cause, the 
    Option will immediately expire without regard to whether it is then exercisable. 
 
    Exercisable portions of the Option remain exercisable until the first to occur of the 
    following (the “Final Exercise Date”), each as defined further in the Plan or the 
    Grant Agreement: 

·      The 30 th day after your employment (or directorship) ends if you resign other than on Retirement (except as extended below on death)
 
·      The 90 th day after your employment (or directorship) ends if the Company terminates your employment without Cause (even if then eligible for Retirement, except as the Committee otherwise provides, and except as extended below on death)
 
·      For death, Disability, or Retirement, the first anniversary of the date employment ends
 
·      The Term Expiration Date
 
    If you die during the 30 or 90 day period after your employment ends (on a 
    termination without Cause or a resignation), the period for exercise will be 
    extended until the first anniversary of the date your employment ended, subject 
    to the Term Expiration Date, and the extended date will be the Final Exercise 
    Date. 
 
    The Committee can override the expiration provisions of this Grant Agreement. 
 
Automatic Exercise    At close of business on the Final Exercise Date, if the Exercise Spread Test is 
    met, the Option will be automatically exercised using the “net exercise” method 
    described below, without regard to the notice requirement and with additional 
    shares retained for purposes of satisfying the minimum applicable tax 
    withholdings (the “Automatic Exercise”). The Option satisfies the “Exercise 
    Spread Test” if the per share spread between the closing price of the Company’s 
    Series A common stock and the Grant Price (the “Exercise Spread”) on the 
    Final Exercise Date is at least one dollar. If the Exercise Spread Test is not 
    satisfied, the unexercised portions of the Option will expire as of close of 
    business on the Final Exercise Date. 
 
    For avoidance of doubt, you may exercise any exercisable portion of the Option 
    prior to the time of an Automatic Exercise and no portion of the Option may or will 
    be exercised at or after your termination for Cause. 

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    The Automatic Exercise procedure is provided as a convenience and as a 
    protection against inadvertent expiration of an Option. Because any exercise of 
    an Option is normally your responsibility, you hereby waive any claims against 
    the Company or any of its employees or agents if an Automatic Exercise does 
    not occur for any reason and the Option expires. 
 
Method of    Subject to this Grant Agreement and the Plan, and other than for portions of the 
Exercise and    Option that are automatically exercised as described in the Automatic Exercise 
Payment for    section, you may exercise the Option only by providing a written notice (or notice 
Shares    through another previously approved method, which could include a web-based 
    or voice- or e-mail system) to the Secretary of the Company or to whomever the 
    Committee designates, received on or before the date the Option expires. Each 
    such notice must satisfy whatever then-current procedures apply to that Option 
    and must contain such representations (statements from you about your 
    situation) as the Company requires. You must, at the same time, pay the Grant 
    Price using one or more of the following methods: 
 
                   Cash/Check                       cash or check in the amount of the Grant Price payable to the order of 
                       the Company; 
 
                   Cashless                       an approved cashless exercise method, including directing the Company 
                   Exercise                       to send the stock certificates (or other acceptable evidence of ownership) 
                       to be issued under the Option to a licensed broker acceptable to the 
                       Company as your agent in exchange for the broker’s tendering to the 
                       Company cash (or acceptable cash equivalents) equal to the Grant Price 
                       and, if you so elect, any required tax withholdings; or 
 
                   Net Exercise                       by delivery of a notice of “net exercise” to or as directed by the 
                       Company, as a result of which you will receive (i) the number of shares 
                       underlying the portion of the Option being exercised less (ii) such 
                       number of shares as is equal to (A) the aggregate Grant Price for the 
                       portion of the Option being exercised divided by (B) the Fair Market 
                       Value on the date of exercise. 
 
                       The Committee can approve additional payment methods, including use 
                       of a fully or partially recourse promissory note, subject to any prohibitions 
                       of applicable law. 
 
Clawback    If the Company’s Board of Directors or its Compensation Committee (the 
    “Committee”) determines, in its sole discretion, that you engaged in fraud or 
    misconduct as a result of which or in connection with which the Company is 
    required to or decides to restate its financials, the Committee may, in its sole 
    discretion, impose any or all of the following: 
 
                       Immediate expiration of the Option , whether vested or not, if granted 
                       within the first 12 months after issuance or filing of any financial 
                       statement that is being restated (the “Recovery Measurement Period”) 
 
                       As to any exercised portion of the Option (to the extent, during the 
                       Recovery Measurement Period, the Option is granted, vests, is 
                       exercised, or the purchased shares are sold), prompt payment to the 
                       Company of any Option Gain. For purposes of this Agreement, the 
                       “Option Gain” per share you received on exercise of options is 

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                                           for stock you have sold or transferred without sale, the greater of 
                                           (i) the Exercise Spread and (ii) the spread between the price at 
                                           which you sold (or the fair market value on the date of other 
                                           disposition of) the stock and the Grant Price paid, and 
 
                                           for stock you have retained, the greater of (i) Exercise Spread 
                                           and (ii) the spread between the closing price on the date of the 
                                           Committee’s request for repayment and the Grant Price paid. 
 
 
                       This remedy is in addition to any other remedies that the Company may 
                       have available in law or equity. 
 
                       Payment is due in cash or cash equivalents within 10 days after the 
                       Committee provides notice to you that it is enforcing this clawback. 
                       Payment will be calculated on a gross basis, without reduction for taxes 
                       or commissions. The Company may, but is not required to, accept 
                       retransfer of shares in lieu of cash payments. 
 
                       By accepting this Option, you agree that the Clawback section, as it may 
                       be amended from time to time without your further consent, applies to 
                       any nonqualified stock options or other equity compensation grants (with 
                       applicable modifications for the type of grant) you receive or received on 
                       or after March 15, 2010. 
 
Withholding    Issuing the Option Shares is contingent on satisfaction of all obligations with 
    respect to required tax or other required withholdings (for example, in the U.S., 
    Federal, state, and local taxes). Except as provided in the Automatic Exercise 
    section, the Company may take any action permitted under Section 11.9 of the 
    Plan to satisfy such obligation, including, if the Committee so determines, 
    satisfying the tax obligations by (i) reducing the number of Option Shares to be 
    issued to you in connection with any exercise of the Option by that number of 
    Option Shares (valued at their Fair Market Value on the date of exercise) that 
    would equal all taxes required to be withheld (at their minimum withholding 
    levels), (ii) accepting payment of the withholdings from a broker in connection 
    with a Cashless Exercise of the Option or directly from you, or (iii) taking any 
    other action under Section 11.9. If a fractional share remains after deduction for 
    required withholding, the Company will pay you the value of the fraction in cash. 
 
Compliance    You may not exercise the Option if the Company’s issuing stock upon such 
with Law    exercise would violate any applicable Federal or state securities laws or other 
    laws or regulations. You may not sell or otherwise dispose of the Option Shares 
    in violation of applicable law. As part of this prohibition, you may not use the 
    Cashless Exercise methods if the Company’s insider trading policy then prohibits 
    you from selling to the market. 
 
Additional    The Company may postpone issuing and delivering any Option Shares for so 
Conditions    long as the Company determines to be advisable to satisfy the following: 
to Exercise     
 
                       its completing or amending any securities registration or qualification of 
                       the Option Shares or its or your satisfying any exemption from 
                       registration under any Federal or state law, rule, or regulation; 

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                       its receiving proof it considers satisfactory that a person seeking to 
                       exercise the Option after your death is entitled to do so; 
 
                       your complying with any requests for representations under the Plan; 
                       and 
 
                       your complying with any Federal, state, or local tax withholding 
                       obligations. 
 
Additional    If you exercise the Option at a time when the Company does not have a current 
Representations    registration statement (generally on Form S-8) under the Securities Act of 1933 
from You    (the “Act”) that covers issuances of shares to you, you must comply with the 
    following before the Company will issue the Option Shares to you. You must — 
 
                       represent to the Company, in a manner satisfactory to the Company’s 
                       counsel, that you are acquiring the Option Shares for your own account 
                       and not with a view to reselling or distributing the Option Shares; and 
 
                       agree that you will not sell, transfer, or otherwise dispose of the Option 
                       Shares unless: 
 
                                           a registration statement under the Act is effective at the time of 
                                           disposition with respect to the Option Shares you propose to sell, 
                                           transfer, or otherwise dispose of; or 
 
                                           the Company has received an opinion of counsel or other 
                                           information and representations it considers satisfactory to the 
                                           effect that, because of Rule 144 under the Act or otherwise, no 
                                           registration under the Act is required. 
 
No Effect on    Nothing in this Grant Agreement restricts the Company’s rights or those of any of 
Employment    its affiliates to terminate your employment or other relationship at any time and 
or Other    for any or no reason. The termination of employment or other relationship, 
Relationship    whether by the Company or any of its affiliates or otherwise, and regardless of 
    the reason for such termination, has the consequences provided for under the 
    Plan and any applicable employment or severance agreement or plan. 
 
Not a Stockholder    You understand and agree that the Company will not consider you a stockholder 
    for any purpose with respect to any of the Option Shares until you have 
    exercised the Option, paid for the shares, and received evidence of ownership. 
 
No Effect on    You understand and agree that the existence of the Option will not affect in any 
Running Business    way the right or power of the Company or its stockholders to make or authorize 
    any adjustments, recapitalizations, reorganizations, or other changes in the 
    Company’s capital structure or its business, or any merger or consolidation of the 
    Company, or any issuance of bonds, debentures, preferred or other stock, with 
    preference ahead of or convertible into, or otherwise affecting the Company’s 
    common stock or the rights thereof, or the dissolution or liquidation of the 
    Company, or any sale or transfer of all or any part of its assets or business, or 
    any other corporate act or proceeding, whether or not of a similar character to 
    those described above. 
 
Governing Law    The laws of the State of Delaware will govern all matters relating to the Option, 
    without regard to the principles of conflict of laws. 

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Notices    Any notice you give to the Company must follow the procedures then in effect. If 
    no other procedures apply, you must send your notice in writing by hand or by 
    mail to the office of the Company’s Secretary (or to the Chair of the Committee if 
    you are then serving as the sole Secretary). If mailed, you should address it to 
    the Company’s Secretary (or the Chair of the Committee) at the Company’s then 
    corporate headquarters, unless the Company directs optionees to send notices 
    to another corporate department or to a third party administrator or specifies 
    another method of transmitting notice. The Company and the Committee will 
    address any notices to you using its standard electronic communications 
    methods or at your office or home address as reflected on the Company’s 
    personnel or other business records. You and the Company may change the 
    address for notice by like notice to the other, and the Company can also change 
    the address for notice by general announcements to optionees. 
 
Amendment    Subject to any required action by the Board or the stockholders of the Company, 
    the Company may cancel the Option and provide a new Award in its place, 
    provided that the Award so replaced will satisfy all of the requirements of the 
    Plan as of the date such new Award is made and no such action will adversely 
    affect the Option to the extent then exercisable. 
 
Plan Governs    Wherever a conflict may arise between the terms of this Grant Agreement and 
    the terms of the Plan, the terms of the Plan will control. The Committee may 
    adjust the number of Option Shares and the Grant Price and other terms of the 
    Option from time to time as the Plan provides. 

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