EXHIBIT 99.1
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made as of December 28, 2005
(the "Effective Date") by and between Liberty Media Corporation, a Delaware
corporation (the "Company"), and Xxxxxx X. Xxxxxxx (the "Executive").
RECITALS
The Executive currently is an officer, director and employee of the
Company. On August 2, 2005, the Executive resigned his position as Chief
Executive Officer of the Company and anticipates that he will resign his
position as President of the Company within the next several months. The board
of directors of the Company (the "Board") has determined that it is in the best
interests of the Company to continue the Executive's employment with the
Company, and the Executive desires to continue as an employee of the Company.
The Company and the Executive desire to memorialize the terms of the Executive's
employment with the Company.
AGREEMENT
In consideration of the mutual covenants set forth in this Agreement and
other good and valuable consideration, the receipt and sufficiency of which are
acknowledged, the parties, intending to be legally bound, agree as follows:
1. TERM. The Company will employ the Executive, and the Executive will
serve the Company, on the terms and conditions set forth in this Agreement, for
the period beginning on the Effective Date and ending on the earlier of August
31, 2014 or the date on which the Executive's employment with the Company is
terminated in accordance with Section 4 below (the "Term"). The Term will
consist of the following: (i) the Current Employment Period, which will begin on
the Effective Date and conclude on the earlier of March 31, 2006 or the
expiration of the Term, (ii) if the Term does not expire on or prior to April 1,
2006, the Second Employment Period, which will begin on April 1, 2006 and
conclude on the earlier of March 31, 2008 or the expiration of the Term, and
(iii) if the Term does not expire on or prior to April 1, 2008, the Third
Employment Period, which will begin on April 1, 2008 and conclude on the earlier
of August 31, 2014 or the expiration of the Term (each, an "Employment Period").
2. POSITION AND DUTIES.
(a) DESCRIPTION. The Executive will continue to serve as President of
the Company until the earlier of (i) his resignation from such office or (ii)
his removal from such office and/or the appointment of a successor by the Board
in accordance with the bylaws of the Company, in any case on or before the end
of the Current Employment Period. During the Second Employment Period and the
Third Employment Period, the Executive will provide assistance with special
projects as reasonably determined by the Company, taking into account, among
other things, the expertise of Executive. All such projects shall be consistent
with the duties of the Executive's past positions and responsibilities with the
Company.
(b) LOCATION. The Executive's services will be performed primarily at
the principal office of the Company (or otherwise within 35 miles of such
office), subject to any travel requirements necessary to perform his duties
hereunder; provided that Executive may, if reasonably possible, perform services
on a telecommuting basis.
(c) REPORTING. During the Term, the Executive shall report to the
Chairman of the Board or such other individual as the Board designates by notice
to the Executive.
(d) OTHER ACTIVITIES. It will not be considered a violation of this
Agreement for the Executive to (i) serve on corporate, civic or charitable
boards or committees, (ii) deliver lectures, fulfill speaking engagements or
teach at educational institutions, (iii) manage personal investments and (iv)
engage in employment with one or more other entities, so long as such activities
do not significantly interfere with the performance of the Executive's
responsibilities as an employee of the Company in accordance with this
Agreement.
3. COMPENSATION; BENEFITS; TIME DEVOTED TO EMPLOYMENT.
(a) CURRENT EMPLOYMENT PERIOD. During the Current Employment Period,
the Executive will devote reasonable attention and time during normal business
hours to the business and affairs of the Company as necessary to carry out the
responsibilities of Executive's current position with the Company. Through the
conclusion of the Current Employment Period, the Executive will continue to
receive an annual base salary of $1,000,000, payable pursuant to the Company's
normal payroll practices. The Executive will also be entitled to receive a
performance bonus in the amount of $750,000 (the "Performance Bonus").
(b) SECOND EMPLOYMENT PERIOD. During the Second Employment Period,
upon request by the Company, the Executive shall devote up to 450 hours per
annum during normal business hours to the performance of services reasonably
requested by the Company as described in Section 2(a) above. During the Second
Employment Period, the Executive will be entitled to receive an annual base
salary of $500,000, payable pursuant to the Company's normal payroll practices.
(c) THIRD EMPLOYMENT PERIOD. During the Third Employment Period, if
requested by the Company, the Executive shall devote to the performance of
services described in Section 2(a) above during normal business hours such
number of hours as the Executive and the Company shall agree. During the Third
Employment Period, the Executive will be entitled to receive (i) an annual base
salary of $3,000, payable pursuant to the Company's normal payroll practices,
and (ii) an additional amount of cash compensation based upon an hourly rate to
be agreed between the Company and the Executive, payable pursuant to the
Company's normal payroll practices.
(d) BENEFITS. During the Term, the Executive will be entitled to
continue participating in savings and welfare benefit plans, practices, policies
and programs ("plans") as the Company may make available generally to senior
executives of the Company to the extent such participation is permitted under
the terms of such plans, subject to the terms and conditions of such plans and
subject to the continued maintenance of such plans by the Company.
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(e) EXPENSES. During the Term, the Executive will be entitled to
receive prompt reimbursement for all reasonable business expenses incurred by
the Executive in accordance with the Company's policies, practices and
procedures in performing services pursuant to this Agreement.
(f) VACATION, PERSONAL AND SICK LEAVE. The Executive acknowledges and
agrees that (i) prior to the commencement of the Second Employment Period, the
Executive will have taken all vacation, personal and sick leave to which the
Executive will have become entitled as of Xxxxx 00, 0000, (xx) the Executive
will not accrue vacation, personal or sick leave during any portion of the Term
following commencement of the Second Employment Period, and (iii) the Executive
will not be entitled to any payment for accrued but unused vacation, personal or
sick leave at any time, including upon termination of the Executive's employment
with the Company.
(g) OFFICE SUPPORT; USE OF CORPORATE APARTMENT. From the Effective
Date through the conclusion of the Second Employment Period, (i) the Company
will provide office space and administrative support to the Executive at the
principal office of the Company for the performance of the Executive's duties
hereunder, and (ii) the Executive shall have access to the Company's apartment
in New York City in accordance with the policies and practices of the Company
with respect to use of such apartment by its senior executives.
(h) DEFERRED COMPENSATION ARRANGEMENTS. The Company and the Executive
acknowledge that, as of the Effective Date, the Executive is entitled to the
benefits described in each of the deferred compensation agreements identified in
Exhibit A (the "Deferred Compensation Agreements"). The Executive acknowledges
that, except for deferred compensation governed by the Deferred Compensation
Agreements, Executive will not be entitled to receive any form or amount of
deferred compensation on account of his past or future employment with the
Company.
(i) STOCK OPTIONS AND STOCK APPRECIATION RIGHTS. The Company and the
Executive acknowledge that, as of the Effective Date, the Executive holds the
options and stock appreciation rights described in Exhibit B (the "Existing
Awards") pursuant to the agreements identified in Exhibit B (the "Existing Award
Agreements"). The Company further acknowledges and agrees that, notwithstanding
any provision to the contrary in any Existing Award Agreement, all of the
Existing Awards shall be fully exercisable as of the Effective Date. In all
other respects, each Existing Award shall remain subject to the terms and
conditions of the applicable Existing Award Agreement. For so long as the
Executive is employed by the Company pursuant to this Agreement, he shall be
considered by the Company to be employed for all purposes relating to the
Existing Awards. In consideration of the benefits provided to the Executive
under this Section 3(i), and notwithstanding any provision of this Agreement or
any communication, documentation or other evidence to the contrary, the
Executive acknowledges and agrees that he will not be entitled to receive any
additional stock options, stock appreciation rights, restricted stock, stock
units or other equity-based award (collectively, "Awards") during the Term,
regardless of whether the Company grants any such Award to any other officer,
director or employee of the Company during the Term.
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(j) USE OF COMPANY AIRCRAFT. The Company and the Executive agree
that, during the period beginning on August 2, 2005, and ending on April 30,
2006, the Executive shall be entitled to 60 hours of personal flight time on
aircraft in which the Company has an ownership or leasehold interest ("Company
Aircraft"), subject, in the case of any particular aircraft, to the availability
of such aircraft during such period. The fair market value of such personal
flight time will be calculated based on the Standard Industry Fair Level (or
SIFL) formula pursuant to 26 C.F.R. ss. 1.61-21(g) or any successor provision
for purposes of determining the amount of compensation to the Executive
represented by such personal flight time. This provision shall supersede any
agreement(s), oral or written, between the Company regarding the Executive's
personal use of Company Aircraft.
(k) INDEMNIFICATION. The Company and Executive acknowledge and agree
that they are parties to an Indemnification Agreement dated August 10, 2001 (the
"Indemnification Agreement") pursuant to which the Company has agreed to
indemnify the Executive with respect to Claims relating to Indemnifiable Events
(as such terms are defined in the Indemnification Agreement). The Company and
the Executive further acknowledge and agree that the Indemnification Agreement
shall remain in full force and effect according to its terms, notwithstanding
that Executive has resigned his position as Chief Executive Officer of the
Company and will cease to hold the office of President of the Company on or
before March 31, 2006.
4. TERMINATION OF EMPLOYMENT.
(a) DEATH OR DISABILITY. The Executive's employment will terminate
automatically upon the Executive's death during the Term. The Company will be
entitled to terminate the Executive's employment because of the Executive's
Disability during the Employment Period. "Disability" means that the Executive
is unable to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period of not less
than 12 months, as certified by a physician selected by the Company or its
insurers and reasonably acceptable to the Executive or the Executive's legal
representative. A termination of the Executive's employment by the Company for
Disability will be communicated to the Executive or the Executive's legal
representative by written notice, and will be effective on the 10th day after
receipt of such notice by the Executive or the Executive's legal representative
(the "Disability Effective Date").
(b) BY THE COMPANY. The Company may terminate the Executive's
employment during the Employment Period for Cause. "Cause" will mean illegal
conduct or gross misconduct by the Executive, in either case that is willful and
results in material and demonstrable damage to the business or reputation of the
Company or any of its affiliates. A termination of employment by the Company for
Cause will be effectuated by giving the Executive written notice ("Notice of
Termination for Cause") of the termination, setting forth in reasonable detail
the specific conduct of the Executive that constitutes Cause. A termination of
employment by the Company for Cause will be effective (unless disputed by the
Executive) on the fifth business day following the date when the Notice of
Termination for Cause is received by the Executive, unless the notice sets forth
a later date (which date set forth in the notice will in no event be later than
30 days after the notice is received by the Executive).
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(c) BY THE EXECUTIVE. The Executive may terminate his employment with
the Company at any time for any reason.
(d) DATE OF TERMINATION. The "Date of Termination" means the date of
the Executive's death, the Disability Effective Date, the date on which the
termination of the Executive's employment by the Company or by the Executive is
effective, or August 31, 2014, as the case may be.
5. OBLIGATIONS OF THE COMPANY UPON TERMINATION. Following the Executive's
Date of Termination, the Company will have the obligations to the Executive set
forth in this Section 5, and will have no further obligations under this
Agreement, other than, if applicable, any obligations to reimburse expenses due
to the Executive under Section 3(e) and as otherwise expressly set forth herein.
(a) DEATH OR DISABILITY. If the Executive's employment is terminated
because of death or the Company terminates the Executive's employment on account
of Disability, the Company will pay the Executive or his legal representative,
within 10 days following the Date of Termination: (i) if such termination occurs
during the First Employment Period or the Second Employment Period, the portion
of the Executive's annual base salary for the period from the most recent
preceding payroll date through the end of the Second Employment Period, less all
applicable federal, state and local withholdings, or (ii) if such termination
occurs during the Third Employment Period, the portion of the Executive's annual
base salary for the period from the most recent preceding payroll date through
the end of the Term, less all applicable federal, state and local withholdings.
The payments and benefits provided pursuant to this Section 5(a) are intended as
liquidated damages for a termination of the Executive's employment with the
Company as a result of death or Disability, and will be the sole and exclusive
remedy therefor.
(b) CAUSE; VOLUNTARY TERMINATION BY EXECUTIVE. If, during the Term,
the Executive's employment is terminated by the Company for Cause or the
Executive voluntarily terminates employment with the Company, the Company will
pay the Executive, within 10 days following the Date of Termination, the portion
of the Executive's annual base salary for the period from the most recent
preceding payroll date through the Date of Termination, less all applicable
federal, state and local withholdings.
6. FULL SETTLEMENT. The Company's obligation to make the payments
provided for in, and otherwise to perform its obligations under, this Agreement
will not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action that the Company may have against the Executive or
others. In no event will the Executive be obligated to seek other employment or
take any other action by way of mitigation of the amounts payable to the
Executive under any of the provisions of this Agreement, and such amounts will
not be reduced, regardless of whether the Executive obtains other employment.
7. CONFIDENTIAL INFORMATION. The Executive will hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company and its respective businesses that the
Executive has obtained or obtains during the Executive's employment by the
Company (before and after the Effective Date) and that is not public knowledge
(other than as a result of the Executive's violation of this Section 7)
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("Confidential Information"). The Executive will not communicate, divulge or
disseminate Confidential Information at any time during or after the Executive's
employment with the Company, except with the prior written consent of the
Company or as otherwise required by law or legal process. Notwithstanding
anything herein to the contrary, the Executive may disclose the terms of this
Agreement to (a) attorneys or accountants for Executive for the rendition of
legal or tax advice (in which case Executive will be responsible for his
attorney's or accountant's compliance with the restrictions stated in this
Section 7), (b) Executive's spouse (in which case Executive will be responsible
for his spouse's compliance with the restrictions stated in this Section 7), or
(c) as required by law.
8. DISPUTE RESOLUTION. At the option of the Executive or the Company, any
dispute, controversy, or question arising under, out of or relating to this
Agreement or the breach thereof, other than that for injunctive relief to this
Agreement or the breach thereof, will be referred for decision by arbitration in
the Denver metropolitan area of the State of Colorado by a neutral arbitrator
selected by the parties hereto. The proceeding will be governed by the Rules of
the American Arbitration Association then in effect or such rules last in effect
(in the event such Association is no longer in existence). If the parties are
unable to agree upon such a neutral arbitrator within 30 days after either party
has given the other written notice of the desire to submit the dispute,
controversy or question for decision as aforesaid, then either party may apply
to the American Arbitration Association for an appointment of a neutral
arbitrator, or if such Association is not then in existence or does not act in
the matter within 30 days of application, either party may apply to the
Presiding Judge of the District Court of any county in Colorado for an
appointment of a neutral arbitrator to hear the parties and settle the dispute,
controversy or question, and such Judge is hereby authorized to make such
appointment. In the event that either party exercises the right to submit a
dispute arising hereunder to arbitration, the decision of the neutral arbitrator
will be final, conclusive and binding on all interested persons and no action at
law or equity will be instituted or, if instituted, further prosecuted by either
party other than to enforce the award of the neutral arbitrator. The award of
the neutral arbitrator may be entered in any court that has jurisdiction. In the
event that the Executive is successful in pursuing any claim(s) or dispute(s)
arising out of this Agreement, the Company will pay the Executive's attorneys'
fees and costs and expenses of any Arbitrator in connection with such claims or
disputes. In any other case, the Executive and the Company will each bear all
their own costs and attorneys' fees, except the Company will in all events pay
the costs of any arbitrator appointed hereunder.
9. ASSIGNMENT; ENFORCEABILITY.
(a) This Agreement is personal to the Executive and, without the
prior written consent of the Company, will not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
will inure to the benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement will inure to the benefit of and be enforeceable
by the Company and its successors and assigns.
10. MISCELLANEOUS.
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(a) This Agreement will be governed by, and construed in accordance
with, the laws of the State of Colorado, without reference to principles of
conflict of laws. The captions of this Agreement are not part of the provisions
hereof and will have no force or effect. This Agreement may not be amended or
modified except by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
(b) All notices and other communications under this Agreement will be
in writing and will be given by hand delivery or telecopy to the other party or
by registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Executive: Xx. Xxxxxx X. Xxxxxxx
XXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXX
Facsimile: XXXXXXXXXXXX
If to the Company: Liberty Media Corporation
00000 Xxxxxxx Xxxxxxxxx
Xxxxxxxxx, XX 00000
Attn: General Counsel
Telecopy: 720-875-5382
or to such other address or telecopy as either party furnishes to the other in
writing in accordance with this Section 10(b). Notices and communications will
be effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement will not affect the validity or enforceability of any other provision
of this Agreement. If any provision of this Agreement will be held invalid or
unenforceable in part, the remaining portion of such provision, together with
all other provisions of this Agreement, will remain valid and enforceable and
continue in full force and effect to the fullest extent consistent with law.
(d) Notwithstanding any other provision of this Agreement, the
Company may withhold from amounts payable under this Agreement all federal,
state, local and foreign taxes that are required to be withheld by applicable
laws or regulations.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision of, or to assert any right under, this Agreement
will not be deemed to be a waiver of such provision or right or of any other
provision of or right under this Agreement.
(f) Except as to (i) the Deferred Compensation Agreements referenced
in Section 3(h) above, (ii) the Existing Award Agreements referenced in Section
3(i) above and the Indemnification Agreement referenced in Section 3(k) above,
the Executive and the Company acknowledge that this Agreement supersedes any
other agreement between them or between the Executive and any predecessor or
affiliate of the Company (collectively with the Company, the "Employing
Entities"), or any plan or practice of any of the Employing Entities concerning
the subject matter hereof, including the Company's Severance Pay Plan or any
other severance plan
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or policy of any of the Employing Entities or any of their respective affiliates
(collectively, the "Severance Plans"). The Executive hereby irrevocably waives
any rights to severance benefits under the Severance Plans or to acceleration of
equity awards under the Severance Plans or any equity award plan of any of the
Employing Entities except as may be provided in this Agreement.
(g) This Agreement may be executed in several counterparts, each of
which will be deemed an original, and said counterparts will constitute but one
and the same instrument.
(h) Each party will bear any costs, including attorneys' fees,
incurred by such party in connection with negotiating and entering into this
Agreement.
(i) In the event of breach or alleged breach of this Agreement by the
Executive, termination of the Executive's employment by the Company shall be the
Company's sole and exclusive remedy.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and
the Company has caused this Agreement to be executed in its name on its behalf,
all as of the day and year first above written.
/s/ Xxxxxx X. Xxxxxxx
----------------------------------------
Xxxxxx X. Xxxxxxx
LIBERTY MEDIA CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxx, Senior Vice President
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EXHIBIT A
TO
EMPLOYMENT AGREEMENT DATED DECEMBER 28, 2005 BETWEEN
LIBERTY MEDIA CORPORATION AND XXXXXX X. XXXXXXX
DEFERRED COMPENSATION AGREEMENTS
1. Deferred Compensation Agreement dated as of July 1, 2005 between Liberty
Media Corporation and Xxxxxx X. Xxxxxxx (2005 Lump Sum Payment)
2. Amended and Restated Deferred Compensation Agreement dated as of December
28, 2005 between Liberty Media Corporation and Xxxxxx X. Xxxxxxx (2004 Lump
Sum Payment)
3. Amended and Restated Deferred Compensation Agreement dated as of December
28, 2005 between Liberty Media Corporation and Xxxxxx X. Xxxxxxx
(Installment Payments)
EXHIBIT B
TO
EMPLOYMENT AGREEMENT DATED DECEMBER 28, 2005 BETWEEN
LIBERTY MEDIA CORPORATION AND XXXXXX X. XXXXXXX
EXISTING AWARD AGREEMENTS
OPTIONS/SARS
OUTSTANDING AND BASE PRICE
AGREEMENT EXERCISABLE AS OF
AS OF EFFECTIVE DATE EFFECTIVE DATE
Non-Qualified Stock Option Agreement and Stock Appreciation Rights 25,640 LMC Series A $19.40
Agreement dated July 11, 1997 between TCI Music, Inc. and Xxxxxx X. Options with Tandem
Xxxxxxx Stock Appreciation
Rights
Non-Qualified Stock Option Agreement dated as of August 10, 2001 16,679,853 LMC Series B $11.03 (Series B)
between Liberty Media Corporation and Xxxxxx X. Xxxxxxx (issued Options (or, at
pursuant to the Liberty Media Corporation 2000 Incentive Plan (As Executive's election, $10.77 (Series A)
Amended and Restated Effective August 10, 2001)) Series A Options)
Stock Appreciation Rights Agreement dated as of July 31, 2003 1,000,000 LMC Series A $7.98
between Liberty Media Corporation and Xxxxxx X. Xxxxxxx (issued Free-Standing Stock
pursuant to the Liberty Media Corporation 2000 Incentive Plan (As Appreciation Rights
Amended and Restated Effective September 11, 2002))
Stock Appreciation Rights Agreement dated as of August 6, 2004 1,000,000 LMC Series A $7.27
between Liberty Media Corporation and Xxxxxx X. Xxxxxxx (issued Free-Standing Stock
pursuant to the Liberty Media Corporation 2000 Incentive Plan (As Appreciation Rights
Amended and Restated Effective April 19, 2004))
