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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement"), dated as of September 9, 1999,
between LIBERTY DIGITAL, INC., a Delaware corporation (the "Company"), and XXXX
XXXX, also known as Xxx Xxxxxxx ("Executive").
WHEREAS, Executive is a party to an Employment Agreement with Liberty
Media Corporation ("Liberty") dated September 28, 1998 (the "Liberty Employment
Agreement"), pursuant to which he is employed as President and Chief Executive
Officer of Liberty Digital LLC (the "LLC");
WHEREAS, concurrently with the execution and delivery of this
Agreement, Liberty, Executive and Company are entering into a Deferred
Compensation and Stock Appreciation Rights Agreement in the form attached as
Exhibit A (the "Compensation Agreement");
WHEREAS, Liberty, the LLC and the Company are parties to a Contribution
Agreement dated April 23, 1999, pursuant to which substantially all of the
assets of the LLC have been contributed to the Company;
WHEREAS, the Executive Committee of the Board of Directors of Liberty
has adopted a policy pursuant to the Compensation Agreement that the Company
shall be the primary (but not exclusive) vehicle for the pursuit of Interactive
Programming Opportunities (as defined in the Contribution Agreement) that are
provided or otherwise made available to Liberty (the "Liberty Policy");
WHEREAS, Executive is President and Chief Executive Officer of the
Company;
WHEREAS, Executive, Liberty and the Company desire to terminate the
Liberty Employment Agreement and enter into this Agreement on substantially the
same terms;
WHEREAS, this Agreement sets forth the terms and conditions of the
employment by the Company of Executive;
WHEREAS, in consideration of the mutual covenants set forth in this
Agreement and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties, intending to be
legally bound, agree as follows:
1. Termination of Liberty Employment Agreement; Term and Termination.
(a) Termination of Liberty Employment Agreement. Upon execution
and delivery of this Agreement the Liberty Employment Agreement is terminated.
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(b) Term. Subject to the terms and conditions of this Agreement,
the Company will employ Executive, and Executive will serve the Company, from
the date of this Agreement until December 15, 2003 (the "Employment Term").
(c) Termination by the Company. Executive's employment may be
terminated by the Company only as follows:
(i) Upon the death of Executive;
(ii) Upon 180 days prior notice from the Company to Executive
(the "Notice Period"), in the event of an illness or other disability
which has incapacitated Executive from performing his duties hereunder,
as defined in a long-term liability insurance policy to be purchased by
Executive, a copy of which will be provided to the Company or, if such
policy is not purchased or a copy thereof is not delivered to the
Company, as determined in good faith by the Board of Directors of the
Company (the "Board"), for at least 180 consecutive days during the
twelve calendar months preceding the month in which such notice is
given; provided, however, that in the event that, prior to the end of
the Notice Period, Executive recovers from such illness or other
disability to an extent permitting him to perform his duties hereunder,
the notice of termination pursuant to this clause (ii) will be of no
further force and effect;
(iii) At any time upon notice of termination of Executive
pursuant to this Section 1(c)(iii) and by paying to Executive in a lump
sum on the effective date of such termination compensation for the
remaining term of this Agreement pursuant to Section 4(a), calculated
at the annual rate then in effect;
(iv) At any time for "cause" (a "Termination for Cause"),
which for purposes of this Agreement will be deemed to have occurred
only on the happening of any of the following:
(A) the plea of guilty to, or conviction for, the
commission of a felony offense by Executive, provided, however,
that after indictment the Company may suspend Executive from the
rendition of services but without limiting or modifying in any
other way the Company's obligations under this Agreement;
(B) a material breach by Executive of a material fiduciary
duty owed to the Company;
(C) a material breach by Executive of any of the covenants
made by him in Sections 8 and 9; or
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(D) the willful and gross neglect by Executive of the
material duties specifically and expressly required by this
Agreement;
provided, however, that any claim that "cause," within the meaning of
clause (B), (C) or (D) above, exists for the termination of Executive's
employment may be asserted on behalf of the Company only by a duly
adopted resolution of the Board and only after 30 days' prior notice to
Executive during which period he may cure the breach or neglect that is
the basis of any such claim, if curable; provided, further, that no
state of facts that, with or without notice to Executive or the passage
of time or both, would give rise to the right of the Company to
terminate Executive's employment pursuant to clause (ii) of this
Section 1(c) may, directly or indirectly, in whole or in part, be the
basis for a claim that "cause," within the meaning of clause (D) above,
exists for the termination of Executive's employment.
(d) Termination by Executive. Executive may terminate his
employment by the Company at any time by giving notice thereof to the Company.
For purposes of this Agreement, any termination by Executive will be deemed to
be a "Voluntary Termination" unless it is a "Termination for Good Reason," which
will be deemed to have occurred if Employee terminates his employment because of
(i) a material diminution of Executive's duties as President and Chief Executive
Officer of the Company, including, without limitation, the appointment by the
Company of a Co-President or Co-Chief Executive Officer, (ii) the imposition by
the Board of a requirement that Executive report to a person other than such
Board, (iii) Executive ceasing to serve as a director of the Company, other than
due to Executive's resignation, refusal to stand for reelection or death, (iv)
the failure of Liberty (as defined in the Compensation Agreement), on or after
January 1, 2002, to follow the Liberty Policy if, and only if, the Per Share
Fair Market Value as of the Valuation Date corresponding to Executive's
termination pursuant to this clause (iv) is greater than the Target Per Share
Value as of such date (with Per Share Fair Market Value, Valuation Date and
Target Per Share Value having the meanings given them in, and being determined
pursuant to, the Compensation Agreement)), (v) an arbitrator's determination
pursuant to Section 11 of the Compensation Agreement that a valuation made by
the Board pursuant to clause (i) of the last paragraph of Section 10.b. of the
Compensation Agreement in connection with the issuance of Common Stock or a
Derivative Security to Liberty or an Affiliate of Liberty (with Common Stock,
Derivative Security, Liberty and Affiliate having the meanings given them in the
Compensation Agreement) was not made in good faith or (vi) the breach by the
Company in any material respect of any of its material obligations under this
Agreement, and, in any such case (but only if correction or cure is possible),
the failure by the Company to correct or cure the circumstance or breach on
which such termination is based within 30 days after receiving notice from
Executive describing such circumstance or breach in reasonable detail.
(e) Effect of Termination. If Executive's employment by the
Company is terminated by Executive or by the Company pursuant to Section 1(c),
all compensation under Section 4 of this Agreement that has accrued in favor of
Executive as of the date of such termination, to the extent unpaid or
undelivered, will be paid or delivered to Executive on the date of termination.
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If Executive's termination of his employment is a Termination for Good Reason,
Executive will be entitled to a lump sum payment in the same amount as would be
payable to Executive if such termination were by the Company pursuant to clause
(iii) of Section 1(c). Upon termination of Executive's employment and payment of
such amount (and, if applicable, the full amount payable pursuant to clause
(iii) of Section 1(c) or the preceding sentence), the Company's obligations
under this Agreement will terminate, except as provided in the fifth, sixth and
seventh sentences of this Section 1(e) (if and to the extent applicable),
Section 5 (as it relates to expenses incurred prior to such termination) and
Section 7 of this Agreement. Executive acknowledges that his obligations under
Sections 8, 9, 10 and 11 will survive any such termination. If Executive dies
while employed by the Company or during the period that he is receiving payments
pursuant to the immediately succeeding sentence, the Company will, as promptly
as practicable following Executive's death, pay to Executive's designated
beneficiary or beneficiaries in a lump sum an amount equal to one year's
compensation under Section 4(a) of this Agreement, calculated at the annual rate
in effect at the time of Executive's death. If Executive's employment is
terminated pursuant to Section 1(c)(ii) of this Agreement, the Company will
continue to pay to Executive his annual salary (at the rate in effect at the
time of termination of his employment) as and when the same would otherwise be
due in accordance with Section 4 of this Agreement for one year from such date
of termination. The phrase "designated beneficiary or beneficiaries" means the
person or persons named from time to time by Executive in a signed instrument
filed with the Company; provided, however, that if a designation made in any
such instrument is for any reason ineffective, or if no such designation has
been made, the phrase "designated beneficiary or beneficiaries" will mean the
Executive's estate.
(f) At least 180 days prior to the end of the initial term of this
Agreement, the Company and Executive will notify the other if such party does
not intend to renew this Agreement beyond such initial term.
2. Services to be Rendered by Executive. Executive will serve as a
director and as President and Chief Executive Officer of the Company. In such
capacities, Executive will perform all reasonable acts customarily associated
with such positions, or necessary or desirable to protect and advance the best
interests of the Company and its subsidiaries. Without limiting the generality
of the foregoing, Executive will be responsible for directing the development
and integration of the Company's business and for developing, in coordination
with Liberty, new media or cable programming businesses that take advantage of
the competencies of the Company, in each case with the goal of maximizing the
value of the Company's stock. If Executive is currently serving as or is elected
a director of Liberty or a director or an officer of any of Liberty's
subsidiaries or affiliates in addition to the Company, Executive will serve in
any such capacities without further compensation except as may be decided by the
Company at the Company's sole election. Executive will perform such acts and
carry out such duties, and will in all other respects serve the Company,
faithfully and to the best of his ability. Executive will, during the Employment
Term, be based in Los Angeles, California, with the understanding that Executive
will travel as reasonably required in the performance of his duties under this
Agreement.
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3. Time to Be Devoted by Executive. Executive will devote substantially
all of his business time, attention, efforts and abilities to the business of
the Company and will use his best efforts to promote the interests of the
Company and not to commit acts detrimental to the Company's interest. Executive
confirms that he has no business interests of any kind which will require a
significant portion of his business time other than his employment by the
Company. Notwithstanding anything to the contrary stated above, but subject to
Section 8, Executive will be permitted to make and manage business investments
and to engage in noncompetitive activities of any nature whatsoever so long as
those activities do not interfere in any material respect with the performance
by Executive of the duties contemplated by this Agreement.
4. Compensation Payable to Executive.
(a) Subject to Section 12, during the Employment Term, the Company
will pay to Executive salary at the rate of $750,000 per annum, such rate to be
increased annually on each January 1, beginning January 1, 2000, by the greater
of (a) the percentage increase, if any, in the Consumer Price Index, All Urban
Consumers (CPI-U), U.S. City Average, All Items, as published by the U.S.
Department of Labor, Bureau of Labor Statistics (or any similar successor index)
from December 31, 1998, in the case of the year beginning January 1, 2000, and
from each December 31 thereafter for each succeeding year or (b) 5%. All
payments under this Agreement will be subject to applicable withholding and
similar taxes. The Board of Directors will review Executive's compensation
annually to determine, in its sole discretion, whether any additional increase
in the Executive's salary is appropriate.
(b) Executive's annual compensation will be paid to Executive in
accordance with the Company's regular policy but not less frequently than once a
month.
5. Expenses. The Company will reimburse Executive for the reasonable
amount of dining, hotel, travel, entertainment and other expenses (consistent
with the Company's reimbursement standards for its most senior officers)
necessarily incurred by Executive in the discharge of his duties hereunder.
6. Executive Benefit Plans and Vacations. Executive will be entitled to
participate in all formal incentive compensation, incentive stock option,
retirement, insurance, hospitalization and disability plans that are in
existence or may be adopted by the Company or in which employees of the Company
are eligible to participate, provided that Executive is eligible by the terms
thereof to participate therein. Executive will be entitled to paid vacation for
a number of weeks per year which Executive reasonably deems appropriate in light
of his duties under this Agreement.
7. Indemnification. The Company will indemnify and hold harmless
Executive, to the fullest extent permitted by applicable law, in respect of any
liability, damage, cost or expense (including reasonable counsel fees) incurred
in connection with the defense of any claim, action, suit or proceeding to which
he is a party, or any threat thereof, by reason of his being or having been an
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officer or director of the Company or any subsidiary of the Company, or his
serving or having served at the request of the Company or Liberty as a director,
officer, employee or agent of another corporation or of a partnership, joint
venture, trust, business organization, enterprise or other entity, including
service with respect to employee benefit plans. Without limiting the generality
of the foregoing, the Company will pay the expenses (including reasonable
counsel fees) of defending any such claim, action, suit or proceeding in advance
of its final disposition, upon receipt of an undertaking by Executive to repay
all amounts advanced if it should ultimately be adjudicated by a court of
competent jurisdiction that Executive is not entitled to be indemnified under
this Section.
8. Noncompetition. So long as Executive is employed by the Company and
for the Applicable Period (as defined below) following the termination of his
employment, Executive will not, directly or indirectly, as principal or agent,
or in any other capacity, own, manage, operate, participate in or be employed by
or otherwise be interested in, or connected in any manner with, any person,
firm, corporation or other enterprise which competes in the United States or
elsewhere in the world in any material respect with any business conducted by
the Company or any of its subsidiaries as such business is conducted while
Executive is employed by the Company. Nothing herein contained will be construed
as denying Executive the right to own securities of any such corporation which
is listed on a national securities exchange or quoted in the NASDAQ system to
the extent of an aggregate of 5% of the amount of such securities outstanding.
For purposes hereof, the term "Applicable Period" will apply only in the case of
a Voluntary Termination or a Termination for Cause and means the period
beginning on the effective date of the termination of Executive's employment
with the Company (the "Effective Date") and ending on the earlier of (i) the
second anniversary of the Effective Date or (ii) December 31, 2003.
9. Confidentiality. Other than in the performance of his duties
hereunder, Executive will not, so long as he is employed by the Company or
thereafter, directly or indirectly make use of, or divulge to any person, firm,
corporation, entity or business organization, and he will use his best efforts
to prevent the publication or disclosure of, any confidential or proprietary
information concerning, the business, accounts or finances of, or any of the
methods of doing business used by the Company or of the dealings, transactions
or affairs of the Company or any of its customers which have or which may have
come to his knowledge during his employment with the Company; but this Section 9
will not prevent Executive from responding to any subpoena, court order or
threat of other legal duress, provided Executive notifies the Company hereof
with reasonable promptness so that the Company may seek a protective order or
other appropriate relief.
10. Delivery of Materials. Upon termination of Executive's employment,
Executive will deliver to the Company all documents, papers, materials and other
property of the Company and of any of its subsidiaries or affiliates relating to
their respective affairs, which may then be in his possession or under his
control.
11. Noninterference. Executive will not, while in the employ of the
Company and for the two-year period following the effective date of the
termination of his employment, solicit the employment of any employee of the
Company or any of its subsidiaries or affiliates on behalf of any
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other person, firm, corporation, entity or business organization or otherwise
interfere with the employment relationship between any employee or officer of
the Company or any of its subsidiaries or affiliates and the Company or any of
its subsidiaries or affiliates.
12. Remedies. In the event of a material breach by Executive of this
Agreement, or termination of his employment by the Company pursuant to Section
1(c)(iv), he will be deemed to have relinquished all rights to any amounts
payable under Section 4 and all other benefits hereunder at and after the time
of such breach or termination, but will be required to comply with the
provisions of Sections 8, 9, 10 and 11 of this Agreement. Upon any such breach
or termination, the Company will be entitled, if it so elects and in addition to
any other lawful remedies that may be available to it, to institute and
prosecute proceedings at law or in equity to obtain damages with respect to such
breach or to enforce the specific performance of this Agreement by Executive or
to enjoin Executive from engaging in any activity in violation thereof.
Executive acknowledges and agrees that any breach or threatened breach by
Executive of any of Sections 8, 9, 10 and 11 hereof will cause immediate,
irreparable injury to the Company and that money damages will not provide an
adequate remedy for any such breach or threatened breach. Accordingly, upon any
such breach or threatened breach by Executive of such Sections the Company will
be entitled, in addition to any other lawful remedies that may be available to
it, to injunctive relief, and no bond or other security will be required.
13. Notices. All notices to be given hereunder will be in writing and
will be deemed duly given when delivered personally or mailed, certified mail,
return receipt requested, postage prepaid and addressed as follows:
(a) If to be given to the Company:
Liberty Media Corporation
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: President
(b) If to be given to Executive:
Xxx Xxxxxxx
c/o Xxxx Xxxx
00000 Xxxxxx Xxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
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with a copy to:
Xxxxxxx Xxxxx, Esq.
Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
or to such other address as a party may furnish to the other in writing in
accordance with this Section 13.
14. Severability. The provisions of this Agreement are severable and if
any such provision or the application thereof to any person or circumstance is
held by a court or governmental authority of competent jurisdiction to be
invalid, void or unenforceable, the remaining provisions hereof, or the
application of such provision to persons or circumstances other than those as to
which it has been held invalid or unenforceable, will remain in full force and
effect and will in no way be affected, impaired or invalidated thereby. Without
limiting the generality of the foregoing, should any court or governmental
authority of competent jurisdiction determine that the provisions of Section 8
are unenforceable in respect of scope, duration, geographic area or any other
matter, such court or governmental authority will be empowered to substitute, to
the extent enforceable, similar provisions or other provisions so as to provide,
to the fullest extent permitted by applicable law, the benefits intended by
Section 8.
15. Waiver. The failure of a party to insist upon strict adherence to
any term of this Agreement on any occasion will not be considered a waiver of
any other breach of that or any other provision hereof.
16. Withholding. The Company will be entitled to withhold from amounts
or other consideration payable or issuable to Executive hereunder such amounts
as may be required by law.
17. Miscellaneous. This Agreement may not be changed nor can any
provision hereof be waived except by an instrument in writing duly signed by the
party to be charged, and constitutes the entire agreement between the Company
and Executive with respect to the subject matter hereof. Notwithstanding that
the Compensation Agreement provides that it will be constructed and enforced in
accordance with the internal laws of the State of California without regard to
choice of law principles as provided in Section 13.f. thereof, this Agreement
will be interpreted, governed and controlled by the internal laws of the State
of Colorado, without reference to principles of conflict of laws.
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IN WITNESS WHEREOF, this Agreement has been executed as of the day and
year first above written.
/s/ Xxxx Xxxx
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Xxxx Xxxx, a/k/a Xxx Xxxxxxx
LIBERTY DIGITAL, INC.
By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
Vice President
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