Document:

exv10w67

 

    Exhibit 10.67

 

    [Freddie
    Mac letterhead]

 

    September 1,
    2005
    

 

    The Honorable Stephen A. Blumenthal

    Acting Director

    Office of Federal Housing Enterprise Oversight

    1700 G Street, NW

    Washington DC 20552

 

    Dear Acting Director Blumenthal:

 

    On October 19, 2000, Fannie Mae and Freddie Mac (the
    corporations) announced their voluntary adoption of a series of
    financial risk management and disclosure commitments designed to
    enhance market discipline, liquidity and capital. In
    consultation with OFHEO, Fannie Mae and Freddie Mac have
    reviewed these commitments, are updating them to ensure their
    continuing effectiveness, and are setting forth the process by
    which the commitments are being
    implemented.1

 

		
	
    1.  
    
	
    Issuance
    of Subordinated Debt

 

    Fannie Mae and Freddie Mac will issue subordinated debt for
    public secondary market trading and rated by no less than two
    nationally recognized statistical rating organizations:

 

			
	 	    • 
	
    The purpose of the subordinated debt is to provide market
    information on the perceived risks of each corporation and, in
    addition to capital, to provide protection to senior debt
    holders.

	 
	 	    • 
	
    Subordinated debt will be issued in a quantity such that the sum
    of total capital (core capital plus general allowance for
    losses) plus the outstanding balance of qualifying subordinated
    debt will equal or exceed the sum of outstanding net MBS
    times 0.45 percent and total on-balance sheet assets times
    4 percent.2

 

    1 The
    interim risk-based capital stress test, an initiative undertaken
    by the corporations in 2000, was superseded by the
    implementation by OFHEO of the risk based capital stress test in
    2002.

 

    2 Qualifying
    subordinated debt is defined as subordinated debt that contains
    the interest deferral feature described below.

		
	    • 	
    The interest deferral requires the deferral of interest payments
    for up to 5 years if:

			
	 	    Ø 
	
    The corporation’s core capital falls below 125% of critical
    capital or

	 	    Ø 
	
    The corporation’s core capital falls below minimum capital
    AND, pursuant to the corporation’s request, the Secretary
    of the Treasury exercises discretionary authority to purchase
    the company’s obligations under Section 306(c) of the
    Freddie Mac Charter Act and Section 304(c) of the Fannie
    Mae Charter Act.

 

    Honorable Stephen A. Blumenthal

    September 1, 2005 — Page 2
    

 

			
	 	    • 
	
    The corporations shall take reasonable steps to maintain
    outstanding subordinated debt of sufficient size to promote
    liquidity and reliable market quotes on market values.

	 
	 	    • 
	
    Every 6 months, commencing January 1, 2006, each
    corporation will submit to its OFHEO
    Examiner-in-Charge
    a subordinated debt management plan that includes any issuance
    plans for the upcoming six months. The plan also will include:

			
	 	    Ø 
	
    An assessment of the liquidity of current outstanding issuances
    including, where available, bid-offer spreads and dealer price
    quotes

	 	    Ø 
	
    An assessment of the prevailing market conditions for new
    issuances

	 	    Ø 
	
    The capital needs of the corporation

	 	    Ø 
	
    Where available, information on the investor base of outstanding
    subordinated debt

	 	    Ø 
	
    Other relevant factors, including, but not limited to, excessive
    cost.

 

    The plan may be updated, as appropriate, to reflect changes in
    circumstances and market conditions.

 

			
	 	    • 
	
    OFHEO will evaluate each plan submitted and provide the
    corporation with its
    views.3

    • If OFHEO does not object to a plan submitted to it
    by a corporation, then the corporation may proceed to implement
    the plan.

    • Each quarter the corporation shall submit to OFHEO
    calculations of its quantity of subordinated debt and total
    capital as part of its quarterly capital report. OFHEO will
    disclose each corporation’s calculation as a separate item
    in its quarterly capital classification of each corporation.

 

		
	
    2.  
    
	
    Liquidity
    Management and Contingency Planning

 

    Each corporation will comply with principles of sound liquidity
    management consistent with industry practice. In addition, each
    corporation will:

			
	 	    • 
	
    Maintain a portfolio of highly liquid
    assets.  The size of this liquid asset portfolio
    will be established by each corporation and assessed by the
    OFHEO Examiner in Charge.

	 	    • 
	
    Maintain a functional contingency plan providing for at least
    three months’ liquidity (using internal forecasts) without
    relying upon issuance of unsecured debt.

 

    Calculations of percentages and remaining life will be as of the
    last day of each month and effective until the last day of the
    following month.

 

    Subordinated debt meeting all the conditions specified above
    will be discounted for the purposes of this calculation as it
    approaches maturity in the following manner: one-fifth of the
    outstanding amount is excluded each year during the
    instrument’s last five years before maturity. When
    remaining maturity is less than one year, the instrument is
    entirely excluded. Remaining life to maturity for subordinated
    debt that is callable before maturity will be calculated by the
    final maturity of the subordinated debt.

 

    3 The
    plan submitted to OFHEO may include information including, but
    not limited to, the amount, timing and feasibility of issuing
    such debt, particularly in situations where current financial
    statements for a corporation are not available.

 

    Honorable Stephen A. Blumenthal

    September 1, 2005 — Page 3
    

 

			
	 	    • 
	
    Periodically test the contingency plan in consultation with its
    OFHEO
    Examiner-in-Charge.

 

    3.  Public
    Disclosures
    

 

    Each corporation will provide periodic public disclosures on its
    risks and risk management practices and will inform its OFHEO
    Examiner-in-Charge
    of the
    disclosures.4
    These disclosures for each corporation will include:

 

    Subordinated Debt Disclosure

 

			
	 	    • 
	
    Compliance of the corporation with the commitment regarding
    subordinated debt, including a comparison of the quantity of
    subordinated debt and total capital to the levels set forth
    above.

 

    Liquidity Management Disclosure

 

			
	 	    • 
	
    Compliance of the corporation with the plan for maintaining
    three months’ liquidity and meeting the commitment for
    periodic testing.

 

    Interest Rate Risk Disclosures

 

			
	 	    • 
	
    Monthly averages of its duration gap.  Each
    corporation will work with OFHEO to try to align its measures as
    much as practicable.

	 	    • 
	
    Monthly disclosures of the impact on its financial condition of
    both a
    50-basis
    point shift in rates and a
    25-basis
    point change in the slope of the yield curve.

 

    Credit Risk Disclosures

 

			
	 	    • 
	
    Quarterly assessments of the impact on the corporation’s
    expected credit losses from an immediate 5 percent decline
    in single-family home prices for the entire U.S.

	 	    • 
	
    Impact will be reported in present value terms and measure
    losses to the corporation both before and after receipt of
    private mortgage insurance claims and other credit enhancements.

 

    Public Disclosure of Risk Rating

 

			
	 	    • 
	
    Each corporation will seek to obtain a rating that will be
    continuously monitored by at least one nationally recognized
    statistical rating organization.

	 	    • 
	
    The rating will assess, among other things, the independent
    financial strength or “risk to the government” of the
    corporation operating under its authorizing legislation but
    without assuming a cash infusion or extraordinary support of the
    government in the event of a financial crisis.

 

    4 Disclosures
    may be affected by situations where current financial statements
    are not available for a corporation; this should be reported to
    OFHEO.

 

    Honorable Stephen A. Blumenthal

    September 1, 2005 — Page 4
    

 

    4.  Monitoring,
    Review and Amendment
    

 

			
	 	    • 
	
    OFHEO will monitor and report whether each corporation is
    meeting the terms of the above commitments.

	 	    • 
	
    Each corporation will be responsible for reporting to OFHEO
    concerning its implementation of these commitments, changes in
    circumstances and market conditions affecting the
    corporation’s ability to implement the commitments, and
    possible amendments to any of these commitments.

	 	    • 
	
    The OFHEO
    Examiner-in-Charge
    for each corporation, in consultation with the corporation, will
    routinely monitor the effectiveness of these commitments and all
    materials submitted to OFHEO shall be provided to the
    Examiner-in-Charge.
    The OFHEO
    Examiner-in-Charge
    will serve as the primary contact for the corporations.

 

    Fannie Mae and Freddie Mac are pleased to agree with OFHEO
    regarding the process for implementation of the commitments set
    forth above. We believe this step will significantly enhance the
    flexibility and continuing effectiveness of the above
    commitments. We appreciate the opportunity to work with you on
    this subject and we will of course continue to do so as we move
    forward.

 

    Sincerely,

 

    /s/  Richard F.
    Syron

 

    Richard F. Syron

 

    [OFHEO
    LETTERHEAD]

 

    September 1, 2005

 

    Mr. Richard F. Syron

    Chairman and Chief Executive Officer

    Freddie Mac

    8200 Jones Branch Drive

    McLean, VA
    22102-3110

 

    Dear Mr. Syron:
    

 

    I am in receipt of your letter of September 1, 2005
    proposing an agreement under which Freddie Mac would issue
    subordinated debt pursuant to a bi-annual plan reviewed by OFHEO
    and subject to the continuing oversight of the agency. The
    agreement also encompasses Freddie Mac making public disclosures
    related to risk and represents the transformation of the
    “voluntary initiative” announced by your company on
    October 19, 2000, into an enforceable agreement with your
    federal regulator.

 

    OFHEO agrees to your proposal. This exchange of letters
    constitutes a written agreement for the purposes of subtitle C
    of the Federal Housing Enterprises Financial Safety and
    Soundness Act of 1992.

 

    The evolution of the voluntary nature of the initiatives into a
    formal regulatory process enhances the strength of the
    commitments of the enterprise to public disclosure and furthers
    the goal of ensuring the safe and sound operation of the company
    in an environment which includes discipline imposed by the
    financial markets. OFHEO will address any additional
    implementation matters that may be required as they arise.

 

    We look forward to working with you on this matter.

 

    Sincerely,

 

    /s/  Stephen
    A. Blumenthal

    Stephen A. Blumenthal

    Acting Directorexv10w9

Exhibit 10.9

Execution Copy

EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT is made as of this 28th day of November, 2006, (this
“Agreement”) by and between Discovery Communications, Inc, a Delaware corporation with its
principal place of business at One Discovery Place, Silver Spring, Maryland 20910 (the
“Company”) and David Zaslav, an individual, currently residing in Ryebrook,
New York 10573, (the “Executive”), (collectively, the “Parties”).

WHEREAS, the Company desires to employ the Executive as President and Chief Executive Officer
(“CEO”), and the Parties desire to enter into this Agreement to secure the Executive’s
employment during the term hereof, on the terms and conditions set forth herein.

NOW, THEREFORE, the Parties agree as follows:

	1.	 	Title. The Company hereby employs the Executive, and the Executive agrees to
serve the Company as President and CEO, on the terms and conditions hereinafter set forth,
headquartered principally in the Company’s Silver Spring, Maryland offices (although it is
anticipated that he will, from time to time, consistent with the Company’s business needs,
work from the Company’s New York, New York offices).
	 
	2.	 	Employment Term and Location. The Executive’s employment by the Company pursuant to
this Agreement will commence on a mutually agreeable date no later than April 1, 2007 (the
“Effective Date”), and continue through the fifth anniversary thereof, unless sooner
terminated pursuant to Paragraph 10 hereof (the ‘Term of Employment”). The Term of Employment
automatically will be extended for subsequent twelve (12) month terms unless either the
Company or the Executive provides written-notice of nonrenewal at
least six (6) months prior
to the expiration of the Term of Employment.
	 
	3.	 	Duties. The Executive shall report directly and solely to the Shareholder Group of
the Company (the “Board”) and work closely with the Chairman of the Board. The Executive
shall have all of the power, authority and responsibilities customarily attendant to the position of President and CEO, including the supervision and responsibility for
all operations and management of the Company and its subsidiaries (the “Company Entities”).
The Executive shall be the most senior executive having management responsibilities for the
assets and day-to-day operations of the Company. The Executive shall work under the direction
and control of the Board. The Executive agrees to render his services under this Agreement
loyally and faithfully, to the best of his abilities and in substantial conformance with all
laws, rules and Company policies. The Executive shall be subject to all of the Company’s
policies, including conflicts of interest.
	 
	4.	 	Compensation.

	 	(a)	 	Base Salary. The Company shall pay the Executive a base salary (the
“Base Salary”), to be paid on the same payroll cycle as other executive officers of
the Company (which shall be not less than bi-monthly), at an annual rate of Two
Million Dollars ($2,000,000).

 

 

	 	(b)	 	Signing Bonus. The Company shall pay the Executive a signing bonus in the aggregate
amount of Two Million Five Hundred Thousand Dollars ($2,500,000), payable in two
installments. The first installment shall be in the amount of One Million Five Hundred
Thousand Dollars ($1,500,000) and shall be paid within ten (10) days following the Effective
Date and the second installment shall be in the amount of One Million Dollars ($1,000,000)
and shall be paid on or about the first anniversary of the Effective Date, provided the
Executive is still employed by the Company as of such first anniversary or has been
terminated other than for Cause or for Good Reason, pursuant to subparagraph 10(c) below.
	 
	 	(c)	 	Annual Bonus. For each full twelve (12) month period for which the Executive
is employed by the Company (or as otherwise specifically provided in Paragraph 10 following
termination of employment), beginning with the Effective Date and each anniversary thereof, the
Executive will be eligible to earn an “Annual Bonus,” provided the Executive remains employed
under this Agreement from the start of such twelve (12) month period through the anniversary of
such date (or as otherwise specifically provided in Paragraph 10 following
termination of employment). The “Target” Annual Bonus for each year shall be an amount equal to
(i) 150% of the Base Salary during the first two twelve (12) month periods, (ii) 175% of the Base
Salary during the third twelve (12) month period, (iii) 200% of the Base Salary during the fourth
twelve (12) month period, and (iv) 225% of the Base Salary during the fifth twelve (12) month
period; provided that for the first twelve (12) month period, the Annual Bonus shall be no less
than Three Million Dollars ($3,000,000); for the second twelve (12) month period, the Annual
Bonus shall be no less Two Million Dollars ($2,000,000); for the third twelve (12) month period,
the Annual Bonus shall be no less than One Million Five Hundred
Thousand Dollars  ($1,500,000);
and for the fourth and fifth twelve (12) month periods, the Annual Bonus shall be no less than
One Million Dollars ($ 1,000,000). In the event the Term of Employment extends beyond the fifth
twelve (12) month period, there shall not be any additional guaranteed Annual Bonus.
	 
	 	 	 	The Company generally pays annual incentive compensation on a calendar year basis, after
delivery of the audited financial reports for such calendar year. In determining the amount
of the bonus the Executive will receive for any calendar year, the Target Annual Bonus and
the guaranteed Annual Bonus numbers above will be prorated to reflect the portion of the
twelve (12) month anniversary periods in such calendar year. For an example of the
foregoing, see Schedule A which sets forth how the foregoing proration would apply
if the Effective Date is April 1, 2007.
	 
	 	 	 	The amount of the Annual Bonus will depend upon the achievement of quantitative and
qualitative objectives with one-half the Target Annual Bonus subject to achievement of
quantitative objectives and one-half of the Annual Bonus subject to the achievement of
qualitative objectives. The quantitative and qualitative objectives will be established each
year by the Compensation Committee in consultation with the Executive during the first
ninety (90) days of each calendar year (provided that, for the first calendar year of the
Term of

 - 2 - 

 

	 	 	 	Employment, the Compensation Committee shall not establish the objectives until on or
after the Effective Date). The review of performance relative to the quantitative
objectives for each year shall be completed within thirty (30) days of the delivery of
the audited financial statements of the Company for such year. The review of performance
relative to qualitative objectives shall be completed by the end of March following such
year, and achievement of the qualitative objectives will be determined by a majority
vote of the Board.
	 
	 	 	 	With respect to the quantitative objectives, the Compensation Committee of the Company’s Board
(the “Compensation Committee”) shall determine the type of objectives (e.g., annual revenue,
operating income and cash flow objectives), the relative weight to be given to each type of
objective (e.g., 33% each), and the numerical performance targets for each objective. The full
Target Annual Bonus attributable to the quantitative objectives (i.e., 50% of the Target Annual
Bonus) shall be earned only upon full (100%) achievement of each quantitative component;
if the Executive’s performance relative to the quantitative performance targets is
less than 80% of such targets, then no quantitative portion of the Target Annual Bonus will be
earned; and if the Executive’s performance relative to the quantitative performance targets is between 80% and
100% of such targets, then the amount of the Target Annual Bonus earned with respect to that quantitative component shall be
pro-rated from 0% to 100%. By way of example, in second twelve (12) month period, the Target
Annual Bonus is $3,000,000, and one-half of such Target Annual Bonus ($1,500,000) is contingent
upon meeting quantitative objectives; if there are two quantitative performance objectives and the
Company achieves 95% of such objectives, then the Executive will have earned 75% of the
quantitative portion of the Target Annual Bonus, or $ 1,125,000. In the event the Company restates
its financial statements for any year after having paid an Annual Bonus for such year, then the
Compensation Committee shall recalculate the quantitative portion of the Executive’s Annual Bonus
for such year,
based upon the restated financial statements, and (x) if the Company previously underpaid the
quantitative portion of the Annual Bonus for such year, the Company shall promptly pay to the
Executive (without interest) any additional Annual Bonus he was due for such year, and (y) if
the Company previously overpaid the Annual Bonus for such year, the Executive shall promptly repay
to the Company (without interest) the amount of the excess quantitative portion of Annual Bonus
previously paid for such year; provided that, in the event the Party required to make a payment
under this sentence is entitled to receive future
payments from the Party entitled to receive payment under this sentence, then the Party required
to make the payment under this sentence may reduce the payment due under this sentence by the
present value of the future payments to be received from the other Party.
	 
	 	(d)	 	Unit Appreciation Award. As of the Effective Date, the Executive shall be awarded
under the terms of the Company’s Discovery Appreciation Plan (the “DAP”) Four Million
(4,000,000) “Appreciation Units” (as defined in the DAP), which is roughly equivalent to an
interest of 0.794% in the appreciation in the value of the Company. The Executive’s rights
with respect to the Appreciation

 - 3 - 

 

	 	 	 	Units are set forth in the DAP (including vesting at 25% per year, pursuant to
section 4.1 of DAP), except that, notwithstanding the terms of the DAP: (i) upon
payment of the Executive’s Appreciation Units in connection with a “Regular
Maturity Date” (as defined in the DAP) the Company shall award the Executive an
additional grant of Appreciation Units to replenish the number of Appreciation
Units canceled in connection with such payment (pursuant to section 3.2(a) of
DAP), provided the Executive remains an eligible “Full-Time Employee” (as
defined in the DAP) as of such date (for the avoidance of doubt, in the event the
Executive’s employment with the Company has terminated for any reason, the
replenishment grants will cease immediately prior to the Executive’s termination
of employment); and (ii) upon the Executive’s termination of employment without
Cause or for Good Reason, pursuant to subparagraph 10(c) below, (x) all of the
Executive’s outstanding Appreciation Units shall become fully vested, and (y) if
such termination occurs prior to the fifth anniversary of the Effective Date, then
one-half of the vested Appreciation Units from each “Grant Effective Date” (as
defined in the DAP) shall be valued as of the date of termination and paid within
sixty (60) days following the Executive’s termination of employment and one-half
of the vested Appreciation Units from each “Grant Effective Date” (as defined in
the DAP) shall be valued as of the earlier of their Regular Maturity Date or the
fifth anniversary of the Effective Date and paid within sixty (60) days
thereafter.
	 
	 	(e)	 	Withholding. The Company will have the right to withhold from
payments  otherwise due and owing to the Executive, an amount sufficient to satisfy
any federal, state, and/or local income and payroll taxes, any amount required to be
deducted under any employee benefit plan in which Executive participates or as required
to satisfy any valid lien or court order.

	5.	 	Employee Benefits.

	 	(a)	 	Group Benefits. During the Term of Employment, the Executive shall be
eligible to participate in all employee benefit plans and arrangements sponsored or
maintained by the Company for the benefit of its senior executive group, including,
without limitation, all group insurance plans (term life, medical and  disability)
and retirement plans, as long as any such plan or arrangement remains generally
applicable to its senior executive group. The Executive shall be entitled to four (4)
weeks of vacation for each 
twelve (12) month period of employment; the Executive may
take vacation in accordance with Company policy, consistent with the best interests of
the Company; and annual leave not taken during a calendar year shall be carried
forward and/or forfeited in accordance with Company policy.
	 
	 	(b)	 	Office. The Company will provide the Executive with office space and such
other facilities, support staff (Executive Assistant) and services suitable to his
position, adequate for the performance of his duties and reasonably acceptable to
Executive.
	 
	 	(c)	 	Equipment. The Company will provide and pay all such reasonable expenses
related to Executive’s use of mobile technology during the Term of Employment,

 - 4 - 

 

	 	 	 	including monthly fees for business use of a cellular telephone, a wireless
email device (e.g., a “Blackberry”), a personal digital assistant (PDA), and a
laptop computer, in each case as approved by the Company, to allow Executive to
perform his job duties outside of the Company’s offices.

	6.	 	Business Expenses. The Executive shall be reimbursed for all reasonable
expenses incurred by him in the discharge of his duties, including, but not limited to,
expenses for entertainment and travel, provided the Executive shall account for and
substantiate all such expenses in accordance with the Company’s written policies for its
senior executive group. Executive shall be entitled to travel via Company aircraft,
pursuant to Company policy, or first class air transportation. The Executive or his
designee shall manage and approve the business use of Company aircraft generally
consistent with past practices and consistent with Company policy as may be in effect
from time to time.
	 
	7.	 	Car Allowance. During the Term of Employment, the Company shall lease for
the Executive’s sole use a car, chosen by the Executive, with a value not to exceed
$90,000, provided such lease shall have a term of at least five years; the Company’s
lease payments shall include coverage of “gap” or “guaranteed auto/asset protection”
insurance on the leased car. By notice delivered to the Company no
later than 
ten (10)
days prior to the Effective Date, in lieu of having the Company lease a car for the
Executive’s benefit, the Executive may elect to receive an economically equivalent car
allowance, provided that in no event shall the allowance exceed the amount of $ 1,400 per
calendar month.
	 
	8.	 	Relocation Expenses. The Executive shall purchase a residence within twenty (20)
miles of the Company’s principal offices by the later of July 31, 2007 or one hundred
eighty (180) days after the Effective Date (the “Relocation Date”), and for the
period commencing on the Effective Date and ending on the Relocation Date, the Company
shall provide the Executive with a suitable, furnished apartment within twenty (20) miles of
the Company’s principal offices and shall pay for the rent and utilities for such apartment.
If and when Executive and his family relocate their principal residence from
Westchester County, New York to a location within twenty (20) miles of the Company’s
principal offices, and if they do so no later than September 30, 2008, then the Company
shall reimburse the Executive for the following out-of-pocket expenses that he incurs:
(i) ordinary and reasonable realtor fees and closing costs incurred in connection with the
sale of the Executive’s current primary residence, (ii) ordinary and reasonable closing
costs incurred in connection with the purchase of the Executive’s new primary residence,
(iii) ordinary and reasonable costs incurred to pack, insure, transport and unpack
the household furnishings and effects of his primary residence, and (iv) ordinary
and reasonable costs for up to thirty (30) days of temporary housing for Executive and
his family while his household furnishings are in transit.  In no event shall the
Company reimburse
relocation expenses, pursuant to the immediately preceding sentence in
an amount, in the aggregate, in excess of $250,000. From the Effective Date through
the earlier of the date the Executive and his family relocate their principal residence to
within twenty (20) miles of the Company’s principal offices or the Relocation Date,
the  Company shall make private aircraft available to the Executive up to twice per
calendar week for the purpose of traveling to or from his current residence and the
Company’s principal offices. Thereafter, until the earlier of the date the Executive’s
family relocates 

 - 5 - 

 

	 	 	to within twenty (20) miles of the Company’s principal offices or one (1) year after the
Relocation Date (the “Transition Period”), the Company shall make private aircraft
available to the Executive up to twice per calendar week for the purpose of traveling to or
from his family’s residence and the Company’s principal offices, provided that to the extent
any expense associated with the Executive’s use of the aircraft is not deductible by  the
Company, the Executive shall reimburse the Company for the loss of any tax benefit or, at
the Executive’s election, pay for the use of such airplane in a manner such that no portion
of the expense is nondeductible. All expenses related to the Executive’s personal commuting
incurred after the Transition Period will be at the sole cost of the Executive.
	 
	9.	 	Freedom to Contract. The Executive represents and warrants that, while he currently
 is under contract to another employer, he has (or within the next thirty (30) days will
have) a right to terminate such contract with advance notice of not more than ninety (90)
days, that he has the right to enter into this Agreement without breaching such contract,
that as of the Effective Date he will be eligible for employment by the Company, and that no
  other written or verbal agreements exist which would be in conflict with or prevent
performance of any portion of this Agreement. The Executive further agrees to hold the
Company harmless from any and all liability arising out of any prior contractual obligations
entered into by the Executive. The Executive represents and warrants that he has not made
and, during the Term of Employment, will not make any contractual or other commitments that
would conflict with or prevent his performance of any portion of this Agreement or conflict
with the full enjoyment by the Company of the rights herein granted.
	 
	10.	 	Termination. Notwithstanding the provisions of Paragraph 2 of this Agreement, the
Executive’s employment under this Agreement and the Term of Employment hereunder shall
terminate on the earliest of the following dates:

	 	(a)	 	Death. Upon the date of the Executive’s death. In such event, the
Company shall pay to the Executive’s legal representatives or named beneficiaries
(as the Executive may designate from time to time in a writing delivered to
the Company): (i) the Executive’s accrued but unpaid Base Salary through the date
of termination, plus.(ii) any Annual Bonus for a completed year which was
earned (including any guaranteed Annual Bonus) but not paid as of the date
of termination; plus (iii) any accrued but unused vacation leave pay as of the date
of termination; plus (iv) any accrued vested benefits under the Company’s
employee welfare and retirement plans, in accordance with the terms of those plans;
plus (v) reimbursement of any business expenses in accordance with Paragraph 6
hereof ((i), (ii), (iii), (iv) and (v) hereinafter, the “Accrued Benefits”). In
addition, the Company shall pay (x) an amount equal to a fraction of the Annual
Bonus the Executive would have received for the calendar year of the Executive’s
death (including any guaranteed Annual Bonus), where the numerator of the fraction
is the number of calendar days the Executive was actively employed during
the calendar year and the denominator of the fraction is 365, which amount shall
be  payable at the time the Company normally pays the Annual Bonus; plus (y)
the “COBRA” premiums for the continuation of Company group health
insurance benefits previously provided to the Executive’s family pursuant to
Paragraph 5 

 - 6 - 

 

	 	 	 	(provided his family timely elects such COBRA coverage) for so long as the family members
remain eligible to receive such COBRA benefits; plus (z) the vested DAP benefits pursuant
to section 7.2 of the DAP.
	 
	 	(b)	 	Cause. Upon the date specified in a written notice from the Board terminating the
Executive’s employment for “Cause.” In such event, the Company shall pay to the Executive
the Accrued Benefits.
	 
	 	 	 	The Company shall have “Cause” as a result of the Executive’s:
	 
	 	 	 	(i) Willful malfeasance by the Executive in connection with his employment, including
embezzlement,’ misappropriation of funds, property or corporate opportunity or material
breach of this Agreement, as determined by the Board after investigation, notice to
Executive of the charge and provision to the Executive of an opportunity to respond;
	 
	 	 	 	(ii) If the Executive commits any act or becomes involved in any situation or occurrence
involving moral turpitude, which is materially damaging to the business or reputation of
the Company; or
	 
	 	 	 	(iii) If the Executive is convicted of, or pleads guilty or nolo contendre to, fails to
defend against, or is indicted for a felony or a crime involving moral turpitude.
	 
	 	 	 	The Executive’s employment shall not be terminated for Cause under this subparagraph (b)
unless the Company notifies the Executive in writing of its intention to terminate his
employment for Cause, describes with reasonably specificity the circumstances giving rise
thereto, and (provided the Board believes such circumstances are susceptible of being
cured by the Executive) provides the Executive a period of at least ten (10) business days
to cure, and the Executive has failed to effect such a cure within such period. The Board,
in its reasonable discretion, exercised in good faith, shall determine whether the
Executive has cured the circumstances giving rise to Cause.
	 
	 	(c)	 	Other Than for Cause or for Good Reason. Upon the date specified in a written notice
(i) from the Board of Directors terminating the Executive’s employment for any reason other
than for Cause, the Executive’s death, the Executive’s “Disability,” or the expiration of the
Term of Employment (and in the event no date is specified in the notice, the termination
shall be effective upon the date on which the notice is delivered to the Executive); or (ii)
from the Executive terminating his employment for “Good Reason.” In such event, the Company
shall pay to the Executive: (u) the Accrued Benefits; plus (v) an amount equal to a fraction
of the Annual Bonus the Executive would have received for the calendar year of the
termination (including any guaranteed Annual Bonus), where the numerator of the fraction is
the number of calendar days the Executive was employed during the calendar year and the
denominator of the fraction is 365, which amount shall be payable at the time the Company
normally pays the Annual Bonus; (w) an amount equal to one-twelfth (1/12) of the Executive’s
then current

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	 	 	 	annualized Base Salary multiplied by the applicable number of months in the Severance Period, which
amount shall be paid in substantially equal payments over the course of the Severance Period in
accordance with the Company’s normal payroll practices during such period; plus (x) an amount equal
to one-twelfth (1/12) of the Executive’s then current Target Annual Bonus multiplied by the number
of months in the Severance Period, which amount shall be paid in substantially equal payments
over the course of the Severance Period in accordance with the Company’s normal payroll
practices during such period; plus (y) accelerated vesting and payment of Executive’s Appreciation
Units under the DAP in accordance with Paragraph 4(d) hereof; plus (z) payment of the “COBRA”
premiums for the continuation of Company group health insurance benefits provided to Executive and
his family pursuant to Paragraph 5 (provided Executive timely elects such COBRA coverage) for the
Severance Period (provided, that the Company shall cease to pay such COBRA premiums at such time
that Executive obtains new employment and is eligible for health insurance benefits from the new
employer or COBRA rights otherwise expire) ((u), (v), (w), (x) (y) and (z) hereinafter, the
“Severance Benefits”). For the purposes of this Agreement, the “Severance Period” shall be: (A)
a period of thirty-six (36) months if such termination occurs prior to the first anniversary of the
Effective Date, (B) a period of thirty (30) months if such termination occurs on or after the first
anniversary but before the second anniversary of the Effective Date, (C) a period of twenty-four
(24) months if such termination occurs on or after the second anniversary but before the third
anniversary of the Effective Date, (D) a period of eighteen (18) months if such termination occurs
on or after the third anniversary but before the fourth anniversary of the Effective Date, or (E) a
period of twelve (12) months if such termination occurs on or after the fourth anniversary.
	 
	 	 	 	The Executive shall have “Good Reason” as a result of the Company’s:

(1) reduction of Executive’s Base Salary;

(2) material reduction in the amount of the Annual Bonus which Executive is eligible to
earn;

(3) relocation of Executive’s primary office at the Company to a facility or location
that is more than forty (40) miles away from Executive’s primary office location
immediately prior to such relocation and is further away from Executive’s residence,
provided that a relocation to midtown Manhattan, New York shall not constitute Good
Reason;

(4) material reduction of Executive’s duties; or

(5) material breach of this Agreement.

	 	 	 	The Executive’s employment shall not be terminated for Good Reason under this subparagraph (c)
unless the Executive notifies the Board in writing of his intention to terminate his employment
for Good Reason, describes with reasonably

 - 8 - 

 

	 	 	 	specificity the circumstances giving rise thereto, and (provided such
circumstances are susceptible of being cured by the Company) provides the Company
a period of at least ten (10) business days to cure, and the Company has failed
to effect such a cure within such period.
	 
	 	(d)	 	Disability. Upon the date specified in a written notice from the
Board of Directors terminating the Executive’s employment for “Disability.” In
the event of the Executive’s Disability, the Company shall pay to the
Executive (i) the Accrued Benefits; plus (ii) an amount equal to a fraction of
the Annual Bonus the Executive would have received for the calendar year of
the Executive’s Disability (including any guaranteed Annual Bonus), where the
numerator of the fraction is the number of calendar days the Executive was
actively employed during the calendar year and the denominator of the fraction
is 365, which amount shall be payable at the time the Company normally pays
the Annual Bonus; plus (iii) payment of the “COBRA” premiums for the
continuation of Company group health insurance benefits provided to Executive
and his family pursuant to Paragraph 5 (provided Executive timely elects such
COBRA coverage) for so long as the Executive remains eligible to receive such
COBRA benefits (provided, that the Company shall cease to pay such COBRA
premiums at such time that Executive obtains new employment and is eligible
for health insurance benefits from the new employer); plus (iv) the vested DAP
benefits pursuant to section 7.2 of the DAP.
	 
	 	 	 	For purposes of this Agreement, the Executive shall be deemed to have a “Disability” if the
Executive is unable to perform substantially all of his duties under this Agreement in the
normal and regular manner due to mental or physical illness or injury, and has been unable
so to perform for one hundred fifty (150) days or more during the twelve (12) consecutive
months then ending. The determination of Executive’s Disability shall be made by the Board.
The Executive
shall cooperate fully with any physician or health care professional
(the “Doctor”) chosen by the Board, in its sole discretion, to review
Executive’s medical condition. The Executive shall cooperate with the Doctor by,
among other things, executing any necessary releases to grant the Doctor full access
to any and all of the Executive’s medical records, authorizing or requiring physicians
and other healthcare professionals who have treated or dealt with the Executive to
consult with the Doctor and submitting to such physical examinations or testing as
may be requested by the Doctor. The Executive shall be deemed to have a Disability
if he is receiving disability benefits under the long term disability plan
sponsored by the Company.
	 
	 	(e)	 	Quit. Upon the date the Executive retires, resigns or otherwise
terminates his employment with the Company other than with Good Reason or on account of
Executive’s death. In the event of the Executive’s quit, the Company shall pay to the
Executive the Accrued Benefits.
	 
	 	(f)	 	Term. Upon the expiration of the Term of Employment. In the event of
the termination of the Executive’s employment upon the expiration of the Term of

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	 	 	 	Employment (including any extension thereof pursuant to Paragraph 2), the Company
shall pay to the Executive (x) the Accrued Benefits; plus (y) the vested DAP
benefits pursuant to section 7.2 of the DAP.
	 
	 	(g)	 	Change in Control. In the event the Executive’s employment is
terminated other than for Cause or for Good Reason (pursuant to subparagraph 10(c))
within twelve (12) months following a Change in Control, the Severance Period (under
subparagraph 10(c)) shall be the lesser of: (i) thirty-six (36) months; or (ii) the
number of full calendar months remaining until the fifth anniversary of the Effective
Date; provided that in no event shall the Severance Period be less than the Severance
Period determined under subparagraph 10(c) without regard to this subparagraph 10(g).
	 
	 	 	 	For the purposes of this Agreement, “Change in Control” shall mean (A) the merger,
consolidation or reorganization of the Company with any other company (or the
issuance by the Company of its voting securities as consideration in a merger,
consolidation or reorganization of a subsidiary with any other company) other than
such a merger, consolidation or reorganization which would result in the voting
securities of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted
into voting securities of the other entity) at least 50% of the combined voting power of
the voting securities of the Company or such other entity outstanding immediately after
such merger, consolidation or reorganization, provided that Discovery Holding Company
(“DHC”), Cox Communications, Inc. or Advance Newhouse Communications. Inc. (and their
respective affiliates) shall hold, in the aggregate, at least 50% of the voting power of
the voting securities of the Company; (B) the consummation by the Company of a plan of
complete liquidation of the Company or an agreement for the sale or disposition by
the Company of all or substantially all of the Company’s assets, other than any
such sale or disposition to an entity at least 50% of the combined voting power of
the voting securities of which is owned immediately after the sale or disposition
by DHC,
Cox Communications, Inc. or Advance Newhouse Communications Inc. (and their
respective affiliates); or (C) any sale, transfer or issuance of voting securities of the
Company (including any series of related transactions) as a result of which DHC,
Cox Communications, Inc. or Advance Newhouse Communications Inc. (and
their respective affiliates) shall cease to hold, in the aggregate, directly or
indirectly, at least 50% of the voting power of the voting securities of the Company.

	 	 	Following the termination of the Term of Employment and the Executive’s employment under
this Agreement, the Company will have no further liability to the Executive hereunder and
no further payments will be made to him, except as provided in subparagraphs (a) through
(g) above. Upon the date of the termination of the Executive’s employment pursuant to
subparagraph (c), (d) or (g) above, in consideration of the payments to be made to the
Executive pursuant to such subparagraph and as a condition to the payment thereof, the
Executive agrees to execute a release of any claims against the Company, its employees,
officers, directors, members, shareholders, affiliates and

 - 10 - 

 

	 	 	subsidiaries arising out of, in connection with or relating to the Executive’s employment
with or termination of employment from the Company including any claims under the terms of
this Agreement and including a release of claims under the Age Discrimination in Employment
Act, in a form to be provided by the Company. The Company agrees that such release will
provide that: (1) the Term of Employment has ended and the Company will no longer require
the Executive to perform any additional duties under this Agreement on behalf of the
Company, except those post-employment duties contemplated by the release (if any) and
Paragraphs 11, 12 and 13 below; (2) other than as set forth or otherwise addressed in the
release, the Board has no actual knowledge of any claim, charge or complaint against the
Executive; and (3) the release shall not be construed to prohibit the Executive from
presenting any defense against any claim, charge or complaint the Company subsequently may
bring against him.
	 
	 	 	In the event that the Term of Employment has expired, no successor agreement has been
executed by the Executive and the Company, and the Executive continues to provide his
services to the Company at the Company’s request, such employment shall be at will on such
terms and conditions as may be established by the Company and may be terminated for any
reason or no reason at any time by either Party with or without notice.
	 
	11.	 	Restrictive Covenants.

	 	(a)	 	Exclusive Services. The Executive shall during the Term of Employment,
except during vacation periods, periods of illness and the like, devote his full and
undivided business time and attention to his duties and responsibilities for the
Company. During the Executive’s employment with the Company, the Executive shall not
engage in any other business activity that would interfere with his responsibilities or
the performance of his duties under this Agreement, provided that the Executive may sit
on the boards of directors of other entities, with the prior written approval of the
Board. The Executive will not during the Term of Employment solicit offers for the
Executive’s services, negotiate with potential employers, enter into any oral or
written agreement for the Executive’s services, give or accept any option for the
Executive’s services, enter into the employment of, perform services for, or grant or
receive future rights of any kind relating to the Executive’s services to or from any
person or entity whatsoever other than the Company; provided that this sentence shall
not apply during the last six (6) months of the Term of Employment, with respect to the
Executive’s provision of services after the expiration of the Term of Employment, if
either Party shall have given notice of nonrenewal pursuant to Paragraph 2 hereof.

	 	(b)	 	Non-Solicitation, Non-Interference and Non-Competition. As a means to
protect the Company’s legitimate business interests including protection of the
Confidential Information of the Company (Executive hereby agreeing and acknowledging
that the activities prohibited by this Paragraph 11 would necessarily involve the use
of Confidential Information), during the Restricted
Period (as defined below), the Executive shall not, directly, indirectly or as an
agent on behalf of any person, firm, partnership, corporation or other entity:

 - 11 - 

 

	 	 	 	(i) solicit for employment, consulting or any other provision of services or hire
any person who is a full-time or part-time employee of (or in the preceding six (6)
months was employed by) the Company (or a Company Entity) or an individual
performing, on average, twenty or more hours per week of personal services as an
independent contractor to the Company (or a Company Entity), provided the
prohibition in this clause (i) shall not apply to the Executive’s Executive
Assistant. This includes, but is not limited to, inducing or attempting to induce,
or influencing or attempting to influence, any such person to terminate his or her
employment or performance of services with or for the Company (or a Company Entity);
or
	 
	 	 	 	(ii) (x) solicit or encourage any person or entity who is or, within the prior six (6)
months, was a customer, producer, advertiser, distributor or supplier of the Company
(or a Company Entity) during the Term of Employment to discontinue such person’s or
entity’s business relationship with the Company (or a Company Entity); or (y)
discourage any prospective customer, producer, advertiser, distributor or supplier of
the Company (or a Company Entity) from becoming a customer, producer, advertiser,
distributor or supplier of the Company (or a Company Entity), including, without
limitation, making any negative statements or communications about the Company (or a
Company Entity) or their respective shareholders, directors, officers, employees or
agents; provided that the restrictions of this clause (ii) shall apply only to
customers, producers, advertisers, distributors or suppliers of the Company with which
Executive had personal contact, or for whom Executive had some responsibility in the
performance of Executive’s duties for the Company, during the Term of Employment; or
	 
	 	 	 	(iii) hold any interest in (whether as owner, investor, shareholder, lender or otherwise)
or perform any services for (whether as employee, consultant, advisor,  director or
otherwise), including the service of providing advice for, a Competitive Business. For the
purposes of this clause (iii), a “Competitive Business” shall be any business that directly
competes with the Company for viewers, advertisers, distributors, producers, actors or the
like in (x) the production, post-production assembly, or distribution/delivery by
electronic means (including, but not limited to, broadcast, cable, satellite, or the
internet) of video entertainment, or (y) the exploitation of video entertainment through
retail sales establishments, theatres or the internet. For the avoidance of doubt, the
foregoing is not intended to prohibit the Executive from working for or engaging in
activities on behalf of a business primarily engaged in the production, distribution and
exploitation of video entertainment in the form of motion pictures intended primarily for
theatrical release or computer-based gaming, such as Lions Gate Entertainment, Paramount
Pictures and Electronic Arts (as those businesses are currently constituted and operated).
	 
	 	 	 	(iv) provided that if the Executive’s employment with the Company has been terminated
by the Company for reasons of Disability or without Cause, or if the Executive has
terminated his employment for Good Reason, or if in the fifth year of the Term of
Employment either Party has given the requisite notice it or he does

 - 12 - 

 

	 	 	 	not want to renew the Term of Employment beyond the fifth anniversary date of the Effective
Date, then the definition of “Competitive Business” shall be as follows: any business that
directly competes with the Company for viewers, advertisers, distributors, producers, actors or
the like in the post-production, assembly and/or distribution/delivery by electronic means
(including, but not limited to, broadcast, cable, satellite and internet) of branded,
non-fiction video entertainment. For the purpose of clarification, such a Competitive Business
would (x) include, but would not be limited to, National Geographic Channel International, Arts
& Entertainment Television Networks, BBC and the Scripps Networks (as those businesses are
currently constituted and operated), and (y) exclude, but would not be limited to, Sci-Fi, the
USA Network and Lifetime Entertainment Services (as those businesses are currently constituted
and operated). For the avoidance of doubt, the Executive shall not be prohibited from working
for or engaging in activities on behalf of a business entity that does not constitute a
Competitive Business under this clause (iv) merely by virtue of the fact that such business
entity is affiliated with a business entity that does constitute a Competitive Business,
provided that the Executive is not working for or engaging in any activity on behalf of such
Competitive Business and, unless the Competitive Business is less than five percent (5%) of the
business entity’s overall
business (measured in terms of gross revenue, operating income and cash flow), the Executive
does not have responsibility for such Competitive Business. Furthermore, this clause (iv) shall
not restrict the Executive from providing services to any television broadcast service, the
video and audio portions of which
are intelligibly receivable without charge by means of standard roof-top or television set
built-in antennae, even if such service is also carried via cable, satellite or internet, provided
that less than fifty percent (50%) of the broadcaster’s programming for such service is
non-fiction content similar to that distributed by the Company.
	 
	 	 	 	(v) The “Restricted Period” shall begin on the Effective Date and shall expire on the later
of: (x) one (1) year after the Executive’s termination of employment with the Company; or (y) if
the Executive has terminated employment and is receiving  Severance Benefits, pursuant to
subparagraphs 10(c) or 10(g), the end of the applicable Severance Period, provided that the
Executive may elect to forego all Severance Benefits which would be paid more than one (1) year
after the Executive’s termination of employment with the Company and to receive payment
of all vested DAP benefits within sixty (60) days of the expiration of such one (1) year period,
in which event the Restricted Period shall be limited to one (1) year
after the Executive’s termination of employment with the Company; or (z) if the Executive’s
employment with the Company was terminated in a manner such that clause (iv) is not applicable
(i.e., it was not terminated on account of Disability or without Cause or for Good Reason, or at
the end of the fifth anniversary of the
Effective Date by reason of either Party having given the requisite notice of non-renewal) and the
Executive’s employment was terminated prior to the fifth anniversary of the Effective Date, two
(2) years after the Executive’s termination of employment with the Company, provided that if the
Restricted Period in this subclause (z) would extend beyond the fifth anniversary of the Effective
Date,

 - 13 - 

 

	 	 	 	then upon such anniversary, the applicable definition of Competitive Business shall
be changed to that in clause (iv) and provided further that in no event shall the
Restricted Period in this subclause (z) extend beyond the 6th anniversary of the
Effective Date. For purposes of clarity, in no event will the Restricted Period
expire earlier than one (1) year after the Executive’s termination of employment
with the Company.
	 
	 	 	 	(vi) Notwithstanding clauses (iii) and (iv) above, the Executive may own, directly
or indirectly, of an aggregate of not more than 2% of the outstanding publicly
traded stock or other publicly traded equity interest in any entity that engages in
a Competitive Business, so long as such ownership therein is solely as a passive
investor and does not include the performance of any services (as director,
employee, consultant, advisor or otherwise) to such entity.

	 	(c)	 	Confidential Information.

	 	 	 	(i) No Disclosure. Executive shall not, at any time (whether during or after the
Term of Employment) (x) retain or use for the benefit, purposes or account of
himself or any other person or entity, or (y) disclose, divulge, reveal,
communicate, share, transfer or provide access to any person or entity outside the
Company (other than its shareholders, directors, officers, managers, employees,
agents, counsel, investment advisers or representatives in the normal course of the
performance of their duties), any non-public, proprietary or confidential
information (including trade secrets, know-how, research and development,
software, databases, inventions, processes, formulae, technology, designs and
other intellectual property, information concerning finances, investments, profits,
pricing, costs, products, services, vendors, customers, clients, partners, investors,
personnel, compensation, recruiting, training, advertising, sales, marketing,
promotions, government and regulatory activities and approval) concerning the
past, current or future business, activities and operations of the Company, any
Company Entities and/or any third party that has disclosed or provided any of
same to the Company on a confidential basis. (“Confidential Information”) without
the prior authorization of the Board. Confidential Information shall not include
any information that is (A) generally known to the industry or the public other
than as a result of the Executive’s breach of this Agreement; (B) is or was
available to the Executive on a non-confidential basis prior to its disclosure to
such Executive by the Company (or a Company Entity), or (C) made available to
Executive by a third party who, to the best of such Executive’s knowledge, is or
was not bound by a confidentiality agreement with (or other confidentiality
obligation to) the Company (or a Company Entity) or another person or entity.
The Executive acknowledges that the Company’s shareholder, DHC, has publicly
traded common stock and that the Company’s business, activities and operations
materially affect the public’s perception of DHC; therefore, the Executive shall
handle Confidential Information related to DHC in accordance with the federal
securities laws applicable to companies with publicly traded securities.

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	 	 	 	(ii) Permitted Disclosures. Notwithstanding the provisions of the
immediately preceding clause (i), nothing in this Agreement shall preclude the
Executive from (x) using any Confidential Information in any manner reasonably
connected to the conduct of the Company’s business; or (y) disclosing the
Confidential Information to the extent required by applicable law, rule or
regulation (including complying with any oral or-written questions,
interrogatories, requests for information or documents, subpoena, civil
investigative demand or similar process to which Executive is subject), provided
that the Executive gives the Company prompt notice of such request(s), to the
extent practicable, so that the Company may seek an appropriate protective order
or similar relief (and the Executive shall cooperate with such efforts by the Company, and shall in any event make only the minimum
disclosure required by such law, rule or regulation). Nothing contained herein
shall prevent the use in any formal dispute resolution proceeding (subject, to
the extent possible, to a protective order) of Confidential Information in
connection with the assertion or defense of any claim, charge or other dispute by or
against the Company or the Executive.
	 
	 	 	 	(iii) Non-Disclosure of Terms. Except as may be required by law, the
Executive shall not disclose the financial terms of this Agreement, except to:
(x) the Executive’s attorneys, accountants, financial or tax advisors, and (y)
members of the Executive’s immediate family, provided each such individual
agrees not to reveal the terms of the Agreement further.
	 
	 	 	 	(iv) Return All Materials. Upon termination of the Executive’s employment for
any reason, the Executive shall (x) cease and not thereafter commence use of any
Confidential Information or intellectual property (including any patent, invention,
copyright, trade secret, trademark, trade name, logo, domain name or other source
indicator) owned or used by the Company (or a Company Entity), (y) immediately
destroy, delete, or return to the Company (at the Company’s option) all originals
and copies in any form or medium (including memoranda, books, papers, plans,
computer files, letters and other data) in the Executive’s possession or control
(including any of the foregoing stored or located in the Executive’s office,
home, laptop or other computer, whether or not such computer is Company
property) that contain Confidential Information or otherwise relate to the
business of the Company, except that Executive may retain only those portions of
any personal notes, notebooks and diaries that do not contain any Confidential
Information; and (z) notify and folly cooperate with the Company regarding the
delivery or destruction of any other Confidential Information of which Executive
is or becomes aware,
	 
	 	(d)	 	Reasonableness of Covenants. The Executive acknowledges and
agrees that the services to be provided by him under this Agreement are of a
special, unique and extraordinary nature. The Executive further acknowledges and
agrees that the restrictions contained in this Paragraph 11 are necessary to prevent
the use and disclosure of Confidential Information and to protect other legitimate
business interests of the Company. The Executive acknowledges that all of the
restrictions in this Paragraph 11 are reasonable in all respects, including
duration, territory and

 - 15 - 

 

	 	 	 	scope of activity. The Executive agrees that the restrictions contained in this
Paragraph 11 shall be construed as separate agreements independent of any other
provision of this Agreement or any other agreement between the Executive and the
Company. The Executive agrees that the existence of any claim or cause of action by
the Executive against the Company, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by the Company of the
covenants and restrictions in this Paragraph 11. The Executive agrees that the
restrictive covenants contained in this Paragraph 11 are a material part of the
Executive’s obligations under this Agreement for which the Company has agreed to
compensate Executive as provided in this Agreement. The Restricted Period
referenced above shall be tolled on a day-for-day basis for each day during which
the Executive violates the provisions of the subparagraphs above in any respect, so
that the Executive is restricted from engaging in the activities prohibited by the
subparagraphs for the full period.

	12.	 	Intangible Property. The Executive will not at any time during or after the Term
of Employment have or claim any right, title or interest in any trade name, trademark, or
copyright belonging to or used by the Company or Company Entities and shall not have
or claim any right, title or interest in any material or matter of any sort prepared for or
used in connection with the programming, advertising, broadcasting or promotion of the
Company or Company Entities, whatever the Executives’ involvement with such matters
may have been, and whether procured, produced, prepared, published or broadcast in
whole or in part by the Executive, it being the intention of the Parties that the Executive
shall, and hereby does, recognize that the Company or Company Entities now has and
shall hereafter have and retain the sole and exclusive rights in any and all such trade
names, trademarks, copyrights (all the Executive’s work in this regard being a work for
hire for the Company under the copyright laws of the United States), character names,
material and matter as described above. The Executive shall cooperate fully with the
Company during his employment and thereafter in the securing of trade name, patent,
trademark or copyright protection or other similar rights in the United States and in
foreign countries and shall give evidence and testimony and execute and deliver to the
Company all papers reasonably requested by it in connection therewith, provided however
that the Company shall reimburse the Executive for reasonable expenses related thereto.
	 
	13.	 	Arbitration.

	 	(a)	 	The Parties shall retain all rights and remedies available to them under law, in
equity, or otherwise with respect to any dispute, claim or controversy arising out
of, relating to, concerning, involving, or requiring the interpretation of the
provisions of Paragraphs 11-12 of this Agreement, and any such dispute, claim or
controversy shall not be subject to arbitration under this Paragraph 13 or otherwise.
The Parties consent to the exclusive jurisdiction of the state and federal courts
located in the State of Maryland.
	 
	 	(b)	 	All other disputes, claims or controversies arising out of or relating to this
Agreement or Executive’s employment with the Company shall be settled by arbitration
initiated within the applicable statute of limitations period and

 - 16 - 

 

	 	 	 	administered by the American Arbitration Association under its National Rules for
the Resolution of Employment Disputes in the form obtaining when the arbitration is
initiated. The determination of the arbitrator shall be final and binding on the
Parties and judgment upon the award rendered by the arbitrator may be entered in
any court having jurisdiction thereof. The place of arbitration shall be the
Washington, DC metropolitan area.
	 
	 	(c)	 	The arbitrator shall be selected by mutual agreement of the Parties.
If the Parties are not able to agree upon an available arbitrator within seven days
of the initiation of the arbitration, the Parties shall obtain from the National
Academy of Arbitrators a panel of seven available arbitrators and the arbitrator shall be
selected by each Party striking the name of one arbitrator in turn, until only one
name of an available arbitrator remains. The Party initiating the arbitration shall
make the first strike within 48 hours of receiving the panel list and each
successive strike shall be made within 48 hours of the previous strike.
	 
	 	(d)	 	Consistent with the expedited nature of arbitration, each Party will,
upon written request of the other Party, promptly provide the other with copies of
documents on which the producing Party may rely in support of or in opposition to any
claim or defense. Any dispute regarding discovery, or the scope thereof, shall be
determined by the arbitrator, which determination shall be conclusive. All discovery
shall be completed within 30 days following the appointment of the
arbitrator.
	 
	 	(e)	 	The arbitrator may grant any remedy or relief that would be available in a
court of law provided, however, that the arbitrator will have no authority to award punitive
or other damages not measured by the prevailing Party’s actual damages, except
as may be required by statute. The Parties hereby expressly waive any right to a
jury trial and this waiver of a jury trail is absolute under this agreement to
arbitrate.
	 
	 	(f)	 	Except as may be required by law, neither Party nor an arbitrator may disclose
the existence, content, any documents received in discovery, or
results of any arbitration hereunder without the prior written consent of both Parties.
	 
	 	(g)	 	Unless otherwise determined by the arbitrator, each Party
shall be responsible for its own fees and expenses (including all
attorneys’ fees and witness fees) incurred by the Party in the arbitration.

	14.	 	Miscellaneous.

	 	(a)	 	Waiver or Modification. Any waiver by either Party of a breach of any
provision of this Agreement shall not operate as, or to be, construed to be a waiver
of any other breach of such provision of this Agreement. The failure of a Party to
insist upon strict adherence to any term of this Agreement on one or more occasions
shall not be considered a waiver or deprive that Party of the right thereafter to
insist upon strict adherence to that term or any other term of this Agreement.

 - 17 - 

 

	 	 	 	Neither this Agreement nor any part of it may be waived, changed or terminated
orally, and any waiver, amendment or modification must be in writing and signed
by each of the Parties. Any waiver of any right of the Company hereunder or any
amendment hereof shall require the approval of the Chairman of the Board or the
Chairman of the Compensation Committee. Until such approval or waiver has
been obtained, no such waiver or amendment shall be effective. 
	 
	 	(b)	 	Successors and Assigns. The rights and obligations of the Company under
this Agreement shall be binding on and inure to the benefit of the Company, its
successors and permitted assigns. The rights and obligations of the Executive under
this Agreement shall be binding on and inure to the benefit of the heirs and legal
representatives of the Executive. The Company may assign this Agreement to a
successor in interest, including the purchaser of all or substantially all of the
assets of the Company, provided that the Company shall remain liable hereunder
unless the assignee purchased all or substantially all of the assets of the Company.
The Executive may not assign any of his duties under this Agreement.
	 
	 	(c)	 	Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall, when executed, be deemed to be an
original and all of which shall be deemed to be one and the same instrument.
	 
	 	(d)	 	Governing Law. This Agreement will be governed and construed and enforced
in accordance with the laws of the State of Maryland, without regard
to its conflicts of law rules.
	 
	 	(e)	 	Entire Agreement. This Agreement contains the entire understanding of
the Parties relating to the subject matter of this Agreement and supersedes all other
prior written or oral agreements, understandings or arrangements. The Executive
and the Company each acknowledges that, in entering into this Agreement, he/it
does not rely on any statements or representations not contained in this
Agreement.
	 
	 	(f)	 	Severability. Any term or provision of this Agreement which is determined to
be invalid or unenforceable by any court of competent jurisdiction in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of any
of the terms or provisions of this Agreement in any other jurisdiction and such
invalid or unenforceable provision shall be modified by such court so that it is
enforceable to the extent permitted by applicable law.
	 
	 	(g)	 	Notices. Except as otherwise specifically provided in this Agreement, all
notices and other communications required or permitted to be given under this Agreement
shall be in writing and delivery thereof shall be deemed to have been made (i)
three business days following the date when such notice shall have been deposited
in first class mail, postage prepaid, return receipt requested, to any comparable or
superior postal or air courier service then in effect, or (ii) on the date
transmitted

 - 18 - 

 

	 	 	 	by hand delivery to, or (iii) on the date transmitted by telegram, telex,
telecopier, facsimile or email transmission (with receipt confirmed by telephone), to the
Party entitled to receive the same, at the address indicated below or at such
other address as such Party shall have specified by written notice to the
other Party hereto given in accordance herewith:

	 	 	 	 	 
	 

	 	if to the Company:
	 	Chairman, Board of Shareholders
	 

	 	 	 	Discovery Communications, Inc.
	 

	 	 	 	One Discovery Place
	 

	 	 	 	Silver Spring, Maryland 20910
	 

	 	 	 	(tel) (240) 662-5200
	 

	 	 	 	(fax) (240) 662-5252
	 
	 	 	 	 
	 

	 	with a copy to:
	 	General Counsel
	 

	 	 	 	Discovery Communications, Inc.
	 

	 	 	 	One Discovery Place
	 

	 	 	 	Silver Spring, Maryland 20910
	 

	 	 	 	(tel) (240) 662-5495
	 

	 	 	 	(fax) (240) 662-1489
	 
	 	 	 	 
	 

	 	if to the Executive:
	 	David Zaslav
	 
	 

	 	 	 	Ryebrook, New York 10573
	 
	 	 	 	 
	 

	 	with a copy to:
	 	David Nochimson
	 

	 	 	 	Ziffren, Brittenham, Branca, Fischer, Gilbert-Lurie,
	 

	 	 	 	Stiffelman, Cook, Johnson, Lande& Wolf LLP
	 

	 	 	 	1801 Century Park West
	 

	 	 	 	Los Angeles, California 90067-6406
	 

	 	 	 	(tel) (310) 552-3388
	 

	 	 	 	(fax) (310) 553-7068

	 	(h)	 	Titles. The titles and headings of any paragraphs in this
Agreement are for reference only and shall not be used in construing the terms
of this Agreement.
	 
	 	(i)	 	No Third Party Beneficiaries. This Agreement does not create,
and shall not be construed as creating, any rights enforceable by any person
not a party to this Agreement.
	 
	 	(j)	 	Survival. The covenants, agreements, representations and
warranties contained in this Agreement shall survive the termination of the
Term of Employment and the Executive’s termination of employment with the
Company for any reason.

 - 19 - 

 

     IN WITNESS WHEREOF, this Agreement has been executed and delivered by the Parties as of the
first date written above.

	 	 	 	 	 	 	 	 	 
	David Zaslav	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	/s/ David Zaslav	 	 	 	November 28, 2006
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	DISCOVERY COMMUNICATIONS INC.	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:	 	/s/ John Hendricks	 	 	 	November 28, 2006
	 	 	 	 	 	 	 
	 

	 	Its:
	 	Chairman	 	 	 	 
	 

	 	 	 	 	 	 	 	 

 - 20 - 

 

Schedule A

Target Bonus and Guarantee

Assuming a 1-1-07 Effective Date

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Year	 	Base Salary	 	 	% Target	 	  $ Target	 	          $ Guarantee
	 
	2007
	 	$2:0MM	 	 	150	%	 	$	3,000,000	 	 	$	3,000,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2008
	 	$2.0MM	 	 	150	%	 	$	3,000,000	 	 	$	2,000,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2009
	 	$2.0MM	 	 	175	%	 	$	3,500,000	 	 	$	1,500,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2010
	 	$2.0MM	 	 	200	%	 	$	4,000,000	 	 	$	1,000,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2011
	 	$2.0MM	 	 	225	%	 	$	4,500,000	 	 	$	1,000,000	 

Pro-Ration of Target Bonus and Guarantee 
Assuming
4-1-07 Effective Date

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Year	 	Base Salary	 	% Target	 	$ Target	 	    $ Total Guarantee
	 
	2007
	 	$	1.5MM	 	 	150	%	 	$	2,250,000	 	 	$	2,250,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2008
	 	$	2.0MM	 	 	150	%	 	$	3,000,000	 	 	$	2,250,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2009
	 	$	2.0MM	 	 	168.75	%	 	$	3,375,000	 	 	$	1,625,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2010
	 	$	2.0MM	 	 	193.75	%	 	$	3,875,000	 	 	$	1,125,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2011
	 	$	2.0MM	 	 	218.75	%	 	$	4,375,000	 	 	$	1,000,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2012
	 	$	500,000	 	 	 	225	%	 	$	1,125,000	 	 	$	250,000	 

 - 21 - 

 

Agreement
and Acknowledgement

     I, David Zaslav, have entered into that certain Employment Agreement dated November 28, 2007
with Discovery Communications, Inc. (the “Employment Agreement”). Pursuant to Section 4(d) of
such Employment Agreement, Discovery Communications, Inc. (the “Company”) agreed to issue me
Appreciation Units effective as of my first day of employment with the Company in accordance with
the terms of the Company’s Discovery Appreciation Plan (the “Plan”).

     I hereby acknowledge and agree that:

(i) THE
GRANT EFFECTIVE DATE OF MY INITIAL APPRECIATION UNIT AWARD IS JANUARY 1, 2007;

(II) THE COMPANY AMENDED THE PLAN EFFECTIVE AS OF JANUARY
1, 2007, TO PERMIT THE BEGINNING UNIT VALUE OF AN
APPRECIATION UNIT AWARD TO BE BASED UPON THE CLOSING
PRICE OF A SINGLE CLASS A SHARE OF DHC (TRADING ON THE
NASDAQ NATIONAL MARKET UNDER THE SYMBOL “DISCA”) ON THE
DATE COINCIDENT WITH OR IMMEDIATELY PRECEDING THE GRANT
EFFECTIVE DATE, AND

(III) THE BEGINNING UNIT VALUE OF THE APPRECIATION UNIT AWARD ISSUED TO ME AS OF
JANUARY 1, 2007 SHALL BE $17.699 – WHICH IS EQUAL TO THE CLOSING PRICE OF A SINGLE CLASS
A SHARE OF DHC (TRADING ON THE NASDAQ NATIONAL MARKET UNDER THE SYMBOL “DISCA”) ON
DECEMBER 29, 2006 (THE DATE
COINCIDENT WITH OR IMMEDIATELY PRECEDING THE JANUARY 1, 2007 GRANT EFFECTIVE
DATE OF MY APPRECIATION UNIT AWARD ON WHICH THE NASDAQ WAS NOT CLOSED), WHICH ACCORDING
TO THE WALL STREET JOURNAL WAS $16.09, MULTIPLIED BY (B) ONE HUNDRED TEN PERCENT
(110%).

	 	 	 
	/s/
David Zaslav
 

	 	JANUARY 19, 2007 
	DAVID
ZASLAV
	 	 

 - 22 -

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