Document:

QuickLinks
 -- Click here to rapidly navigate through this document

Exhibit 10.9  

 
 

FORM OF
  DISCOVERY HOLDING COMPANY
  TRANSITIONAL STOCK ADJUSTMENT PLAN    
    

ARTICLE I

Purpose Of Plan  

        The purpose of the Plan is to provide for the supplemental grant of both stock options to purchase the common stock of Discovery Holding Company (the "Company")
and of restricted shares of the Company's common stock to holders of certain outstanding options, stock appreciation rights and restricted shares issued under certain stock-based plans administered by
Liberty Media Corporation ("LMC") in connection with adjustments made to outstanding LMC stock incentive awards and restricted shares of LMC common stock as a result of the spin off of the Company
from LMC. 

ARTICLE II

Definitions  

        2.1   Definitions. For purposes of the Plan, the following terms shall have the meanings below stated. 

        "Approved Transaction" means any transaction in which the Board (or, if approval of the Board is not required as a matter of law, the
stockholders of the Company) shall approve (i) any consolidation or merger of the Company, or binding share exchange, pursuant to which shares of Common Stock of the Company would be changed or
converted into or exchanged for cash, securities, or other property, other than any such transaction in which the common stockholders of the Company immediately prior
to such transaction have the same proportionate ownership of the Common Stock of, and voting power with respect to, the surviving corporation immediately after such transaction, (ii) any
merger, consolidation or binding share exchange to which the Company is a party as a result of which the Persons who are common stockholders of the Company immediately prior thereto have less than a
majority of the combined voting power of the outstanding capital stock of the Company ordinarily (and apart from the rights accruing under special circumstances) having the right to vote in the
election of directors immediately following such merger, consolidation or binding share exchange, (iii) the adoption of any plan or proposal for the liquidation or dissolution of the Company,
or (iv) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company. 

        "Board" means the Board of Directors of the Company. 

        "Board Change" means, during any period of two consecutive years, individuals who at the beginning of such period constituted the entire
Board cease for any reason to constitute a majority thereof unless the election, or the nomination for election, of each new director was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of the period. 

        "Code" means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute or statutes thereto. Reference to
any specific Code section shall include any successor section. 

        "Committee" means the committee of the Board appointed to administer this Plan pursuant to Article VII. 

        "Common Stock" each or any (as the context may require) series of the Company's common stock.

 

        "Company" means Discovery Holding Company, a Delaware corporation, and any successor thereto. 

        "Control Purchase" means any transaction (or series of related transactions) in which (1) any person (as such term is defined in
Sections 13(d)(3) and 14(d)(2) of the Exchange Act), corporation or other entity (other than the Company, any Subsidiary of the Company or any employee benefit plan sponsored by
the Company or any Subsidiary of the Company) shall purchase any Common Stock of the Company (or securities convertible into Common Stock of the Company) for cash, securities or any other
consideration pursuant to a tender offer or exchange offer, without the prior consent of the Board, or (2) any person (as such term is so defined), corporation or other entity (other than the
Company, any Subsidiary of the Company, any employee benefit plan sponsored by the Company or any Subsidiary of the Company or any Exempt Person (as defined below)) shall become the  "beneficial
owner" (as such term is defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the then outstanding securities of the Company ordinarily (and apart from the rights
accruing under special circumstances) having the right to vote in the election of directors (calculated as provided in Rule 13d-3(d) under the Exchange Act in the case of
rights to acquire the Company's securities), other than in a transaction (or series of related transactions) approved by the Board. For purposes of this definition,  "Exempt Person" means each of (a) the Chairman of the Board, the President and each of the
directors of the Company as of the Distribution Date, and (b) the respective family members, estates and heirs of each of the persons referred to in clause (a) above and any trust
or other investment vehicle for the primary benefit of any of such persons or their respective family members or heirs. As used with respect to any person, the term  "family member" means the spouse, siblings and lineal descendants of such person. 

        "Distribution" means the distribution by LMC to the holders of LMC Common Stock of all of the issued and outstanding shares of Common
Stock. 

        "Distribution Date" means the date on which the Distribution occurs. 

        "Exchange Act" means the Securities Exchange Act of 1934, as amended. 

        "Fair Market Value" of a share of any series of Common Stock on any day means the last sale price (or, if no last sale price is reported,
the average of the high bid and low asked prices) for a share of such series of Common Stock on such day (or, if such day is not a trading day, on the next preceding trading day) as reported on the
consolidated transaction reporting system for the principal national securities exchange on which shares of such series of Common Stock are listed on such day or if such shares are not then listed on
a national securities exchange, then as reported on Nasdaq. If for any day the Fair Market Value of a share of the applicable series of Common Stock is not determinable by any of the foregoing means,
then the Fair Market Value for such day shall be determined in good faith by the Committee on the basis of such quotations and other considerations as the Committee deems appropriate. 

        "Incentive Plan" means the Liberty Media Corporation 2000 Incentive Plan (As Amended and Restated Effective April 19, 2004) and any
other stock option or incentive plan assumed by LMC pursuant to which any Participant holds an outstanding LMC Award as of the Record Date. Depending on the context, "Incentive Plan" shall mean all of
such plans or a particular one of such plans. 

        "LMC" means Liberty Media Corporation, a Delaware corporation. 

        "LMC Award" means (1) an unexercised and unexpired option to purchase LMC Common Stock, (2) an LMC SAR or (3) an
unvested award of restricted shares of LMC Common Stock.

 

        "LMC Committee" means the Incentive Plan Committee of the Board of Directors of LMC. 

        "LMC Common Stock" means each or any (as the context may require) series of LMC's common stock. 

        "LMC Corporate Holder" means an individual who, as of Record Date, is (1) an LMC employee, (2) a member of the Board of
Directors of LMC or (3) a holder of unvested restricted shares of LMC Common Stock. The Committee may, in its discretion, determine that (i) an individual who does not meet any of the
foregoing criteria should be classified as an LMC Corporate Holder or (ii) an individual who otherwise would qualify as an LMC Corporate Holder, should not be classified as such. 

        "LMC SAR" means a stock appreciation right with respect to any series of LMC Common Stock. 

        "Nasdaq" means The NASDAQ Stock Market. 

        "Option" means an option to purchase Common Stock, granted by the Company to a Participant pursuant to Section 6.1 of the Plan. 

        "Participant" means a person who is an LMC Corporate Holder and who, as of the Record Date, holds an outstanding LMC Award. 

        "Person" means an individual, corporation, limited liability company, partnership, trust, incorporated or unincorporated association,
joint venture or other entity of any kind. 

        "Plan" means the Discovery Holding Company Transitional Stock Adjustment Plan, as set forth herein and as from time to time amended. 

        "Record Date" means 5:00 p.m., New York City time, on [                        ], 2005.

        "Restricted Stock Award" means an award of restricted shares of Common Stock, granted by the Company to a Participant pursuant to
Section 5.1. 

        "Stock Incentives" refers collectively to Restricted Stock Awards and Options. 

        "Subsidiary" of a Person means any present or future subsidiary (as defined in Section 424(f) of the Code) of such Person or
any business entity in which such Person owns, directly or indirectly, 50% or more of the voting, capital or profits interests. An entity shall be deemed a subsidiary of a Person for purposes of this
definition only for such periods as the requisite ownership or control relationship is maintained. 

ARTICLE III

Reservation of Shares  

        The aggregate number of shares of Common Stock which may be issued under this Plan shall not exceed
[                ] shares,
subject to adjustment as hereinafter provided. Any part of such [                ] shares may be issued pursuant to Restricted Stock Awards. The shares of Common
Stock
which may be granted pursuant to Stock Incentives will consist of either authorized but unissued shares of Common Stock or shares of Common Stock which have been issued and reacquired by the Company,
including shares purchased in the open market. The total number of shares authorized under this Plan shall be subject to increase or decrease in order to give effect to the adjustment provision of
Section 9.3 and to give effect to any amendment adopted as provided in Section 8.1.

 

ARTICLE IV

Participation in Plan  

        4.1   Eligibility to Receive Stock Incentives. Stock Incentives under this Plan may be granted only to persons who are
Participants. 

        4.2   Participation Not Guarantee of Employment. Nothing in this Plan or in the instrument evidencing the grant of a Stock
Incentive shall in any manner be construed to limit in any way the right of the Company, LMC or any of their respective Subsidiaries to terminate a Participant's employment at any time, without regard
to the effect of such termination on any rights such Participant would otherwise have under the Plan or any Incentive Plan, or give any right to such a Participant to remain employed by the Company,
LMC or any of their respective Subsidiaries in any particular position or at any particular rate of compensation. 

ARTICLE V

Stock Awards  

        5.1   Grant of Restricted Stock Awards. 

        (a)   Grant. Restricted Stock Award(s) shall be granted to each Participant who, as of the Record Date, holds an outstanding
LMC Award(s) consisting of unvested restricted shares of LMC Common Stock. 

        (b)   Award of Shares. Each Restricted Stock Award shall be for the same series of Common Stock as the corresponding award of
restricted shares of LMC Common Stock to which such Restricted Stock Award relates. The number of shares of Common Stock covered by a Restricted Stock Award shall be 0.10 shares of Common Stock for
each share of LMC Common Stock under the corresponding award of restricted shares of LMC Common Stock which such Restricted Stock Award replaces;  provided, however, no fractional shares of Common Stock shall be awarded under a Restricted Stock Award,
and, if the foregoing adjustment results in any fractional shares, LMC will deliver cash in lieu of such fractional share interest to the applicable Participant in the same manner as cash in lieu of
fractional share interests is paid to record holders of LMC Common Stock in the Distribution. Each Restricted Stock Award and the restricted shares of Common Stock issued thereunder shall continue to
be subject to all the terms and conditions of the applicable Incentive Plan and associated instrument under which the corresponding award of restricted shares of LMC Common Stock was made and any such
terms, conditions and restrictions as may be determined to be appropriate by the Committee. 

        (c)   Lapse of Restrictions. The restrictions on each Restricted Stock Award shall lapse in accordance with the terms and
conditions of the applicable Incentive Plan and associated instrument under which the corresponding award of restricted shares of LMC Common Stock was made; provided, however, that a Participant's
employment or service with the Company, LMC or any of their respective Subsidiaries shall be deemed to be employment or service with the Company and LMC for all purposes under a Restricted Stock
Award. 

        (d)   Award Documentation. Restricted Stock Awards shall be evidenced in such form as the Committee shall approve and contain
such terms and conditions as shall be contained therein or incorporated by way of reference to the Incentive Plan or any associated instrument governing the corresponding award of restricted shares of
LMC Common Stock, which need not be the same for all Restricted Stock Awards. 

        (e)   Rights with Respect to Shares. No Participant who is granted a Restricted Stock Award shall have any rights as a
stockholder by virtue of such grant until shares are actually issued or delivered to the Participant.

 

ARTICLE VI

Options  

        6.1   Grant of Options. 

        (a)   Grant. Option(s) shall be granted to each Participant who, as of the Record Date, holds an outstanding LMC Award(s)
consisting of an option to purchase shares of LMC Common Stock or an LMC SAR. Except as otherwise provided in this Plan, each Option shall continue to be subject to all the terms and conditions of the
applicable Incentive Plan and associated instrument under which the corresponding option to purchase LMC Common Stock or LMC SAR (to the extent such terms and conditions would be applicable to the
grant of an Option) was made and any such terms, conditions and restrictions as may be determined to be appropriate by the Committee. 

        (b)   Option Shares. Each Option shall be for the same series of Common Stock as the corresponding option for LMC Common Stock
or LMC SAR to which such Option relates. The number of shares of Common Stock exercisable under an Option shall be the number of shares of Common Stock that a
Participant would have received in the Distribution if the applicable option for LMC Common Stock had been exercised immediately prior to the Record Date or, in the case of an LMC SAR, the same number
of shares of Common Stock that would have been received in the Distribution if the LMC SAR has been an option exercised immediately prior to the Record Date for the number of shares of LMC Common
Stock, subject to the LMC SAR; provided, however, no fractional shares of Common Stock shall be awarded
under an Option, and, if the conversion of an option to purchase shares of LMC Common Stock or an LMC SAR into an Option results in any fractional shares, the number of shares of Common Stock to be
exercisable under an Option shall be rounded up to the nearest whole number of shares. 

        (c)   Option Price. The purchase price per share of Common Stock under each Option shall be established by the Committee. The
Option price shall be subject to adjustment in accordance with the provisions of Section 9.3 hereof. 

        (d)   Option Documentation. Options shall be evidenced in such form as the Committee shall approve and contain such terms and
conditions as shall be contained therein or incorporated by way of reference to the Incentive Plan or any associated instrument governing the corresponding option to purchase LMC Common Stock or LMC
SAR (to the extent such terms and conditions would be applicable to the grant of an Option), which need not be the same for all Options. 

        6.2   Exercise and/or Termination of Options. 

        (a)   Terms of Option. Options granted under this Plan may be exercised at the same time and in the same manner as the
corresponding option to purchase LMC Common Stock or LMC SAR (to the extent applicable to the grant of an Option). Options granted under this Plan shall expire at the same time and in the same manner
as the corresponding option to purchase LMC Common Stock or LMC SAR (to the extent applicable to the grant of an Option), as provided in the applicable Incentive Plan and any associated instrument
governing such option to purchase LMC Common Stock or LMC SAR; provided, however, that a Participant's employment or service with the Company, LMC or any of their respective Subsidiaries shall be
deemed to be employment or service with the Company and LMC for all purposes under an Option. 

        (b)   Payment on Exercise. No shares of Common Stock shall be issued on the exercise of an Option unless paid for in full at
the time of purchase. Payment for shares of Common Stock purchased upon the exercise of an Option and any amounts required under Section 9.4 shall be determined by the Committee and may consist
of (i) cash, (ii) check, (iii) promissory note (subject to applicable law), (iv) whole shares of any series of Common Stock, (v) the withholding of shares of the
applicable series of Common Stock issuable upon such exercise of the Option, (vi) the

 
delivery, together with a properly executed exercise notice, of irrevocable instructions to a broker to deliver promptly to the Company the amount of sale or loan proceeds required to pay the purchase
price, or (vii) any combination of the foregoing methods of payment, or such other consideration and method of payment as may be permitted for the issuance of shares under the Delaware General
Corporation Law. The permitted method or methods of payment of the amounts payable upon exercise of an Option, if other than in cash, shall be set forth in the applicable Option agreement and may be
subject to such conditions as the Committee deems appropriate. 

        (c)   Value of Shares. Unless otherwise determined by the Committee and provided in the applicable Option agreement, shares of
any series of Common Stock delivered in payment of all or any part of the amounts payable in connection with the exercise of an Option, and shares of any series of Common Stock withheld for such
payment, shall be valued for such purpose at their Fair Market Value as of the exercise date. 

        (d)   Issuance of Shares. The Company shall effect the transfer of the shares of Common Stock purchased under the Option as
soon as practicable after the exercise thereof and payment in full of the purchase price therefor and of any amounts required by Section 9.4, and within a reasonable time thereafter, such
transfer shall be evidenced on the books of the Company. Unless otherwise determined by the Committee and provided in the applicable Option agreement, (i) no Participant or other person
exercising an Option shall have any of the rights of a stockholder of the Company with respect to shares of Common Stock subject to an Option granted under the Plan until due exercise and full payment
has been made, and (ii) no adjustment shall be made for cash dividends or other rights for which the record date is prior to the date of such due exercise and full payment. 

ARTICLE VII

Administration of Plan  

        7.1   The Committee. This Plan shall be administered solely by the Compensation Committee of the Board or such other committee
of the Board as the Board shall designate to administer the Plan. A majority of the Committee shall constitute a quorum thereof and the actions of a majority of the Committee at a meeting at which a
quorum is present, or actions unanimously approved in writing by all members of the Committee, shall be the actions of the Committee. Vacancies occurring on the Committee shall be filled by the Board.
The Committee shall have full and final authority to interpret this Plan and any instruments evidencing Stock Incentives granted hereunder, to prescribe, amend and rescind rules and regulations, if
any, relating to this Plan and to make all determinations necessary or advisable for the administration of this Plan. The Committee's determination in all matters referred to herein shall be
conclusive and binding for all purposes and upon all persons including, but without limitation, the Company, LMC, the shareholders of the Company, the shareholders of LMC, the Committee and each of
the members thereof, and the Participants, and their respective successors in interest. The Committee may delegate any of its rights, powers and duties to any one or more of its members, or to any
other person, by written action as provided herein, acknowledged in writing by the delegate or delegates, except that the Committee may not delegate to any person the authority to grant Stock
Incentives to, or take other action with respect to, Participants who are subject to Section 16 of the Exchange Act. Such delegation may include, without limitation, the power to execute any
documents on behalf of the Committee. 

        7.2   Liability of Committee. No member of the Committee shall be liable for any action or determination made or taken by him
or the Committee in good faith with respect to the Plan. The Committee shall have the power to engage outside consultants, auditors or other professionals to assist in the fulfillment of the
Committee's duties under this Plan at the Company's expense.

 

        7.3   Determinations of the Committee. The Committee may, in its sole discretion, waive any provisions of any Stock Incentive,
provided such waiver is not inconsistent with the terms of the applicable Incentive Plan, any associated instrument or this Plan as then in effect. 

ARTICLE VIII

Amendment and Termination of Plan  

        8.1   Amendment, Modification, Suspension or Termination. The Board may from time to time amend, modify, suspend or terminate
the Plan for the purpose of meeting or addressing any changes in legal requirements or for any other purpose permitted by law except that (i) subject to Section 9.6, no amendment or
alteration that would impair the rights of any Participant under any Stock Incentive awarded to such Participant shall be made without such Participant's consent and (ii) no amendment or
alteration shall be effective prior to approval by the Company's shareholders to the extent such approval is then required pursuant to applicable legal requirements or the applicable requirements of
the securities exchange on which the Company's Common Stock is listed. With the consent of the Participant, or as otherwise permitted under Section 9.6, and subject to the terms and conditions
of the Plan, the Committee may amend outstanding Stock Incentive agreements with any Participant, including any amendment which would (i) accelerate the time or times at which the Stock
Incentive may be exercised and/or (ii) extend the scheduled expiration date of the Stock Incentive. 

        8.2   Termination. The Board may at any time terminate this Plan as of any date specified in a resolution adopted by the Board.
If not earlier terminated, this Plan shall terminate on the last date that any Option granted hereunder may be exercised or any restriction applicable to a Restricted Stock Award granted hereunder has
lapsed, whichever occurs later. 

ARTICLE IX

Miscellaneous Provisions  

        9.1   Exclusion from Pension and Profit-Sharing Computation. By acceptance of a Stock Incentive, unless otherwise provided in
the applicable Stock Incentive agreement, each Participant shall be deemed to have agreed that such Stock Incentive is special incentive compensation that will not be taken into account, in any
manner, as salary, compensation or bonus in determining the amount of any payment under any pension, retirement or other employee benefit plan, program or policy of the Company or any Subsidiary of
the Company. In addition, each beneficiary of a deceased Participant shall be deemed to have agreed that such Stock Incentive will not affect the amount of any life insurance coverage, if any,
provided by the Company on the life of the Participant which is payable to such beneficiary under any life insurance plan covering employees of the Company or any Subsidiary of the Company. 

        9.2   Government and Other Regulations. The obligation of the Company with respect to Stock Incentives shall be subject to all
applicable laws, rules and regulations and such approvals by any governmental agencies as may be required, including the effectiveness of any registration statement required under the Securities Act
of 1933, and the rules and regulations of any securities exchange or association on which the Common Stock may be listed or quoted. For so long as any series of Common Stock is registered under the
Exchange Act, the Company shall use its reasonable efforts to comply with any legal requirements (i) to maintain a registration statement in effect under the Securities Act of 1933 with respect
to all shares of the applicable series of Common Stock that may be issued to Participants under the Plan and (ii) to file in a timely manner all reports required to be filed by it under the
Exchange Act. 

        9.3   Adjustments. 

        (a)   If
the Company subdivides its outstanding shares of any series of Common Stock into a greater number of shares of such series of Common Stock (by stock dividend, stock
split,

 
reclassification, or otherwise) or combines its outstanding shares of any series of Common Stock into a smaller number of shares of such series of Common Stock (by reverse stock split,
reclassification, or otherwise) or if the Committee determines that any stock dividend, extraordinary cash dividend, reclassification, recapitalization, reorganization, split-up,
spin-off, combination, exchange of shares, warrants or rights offering to purchase such series of Common Stock or other similar corporate event (including mergers or consolidations other
than those which constitute Approved Transactions, adjustments with respect to which shall be governed by Section 9.3(b)) affects any series of Common Stock so that an adjustment is required to
preserve the benefits or potential benefits intended to be made available under the Plan, then the Committee, in its sole discretion and in such manner as the Committee may deem equitable and
appropriate, may make such adjustments to any or all of (i) the number and kind of shares of stock subject to outstanding Stock Incentives, and (ii) the purchase or exercise price with
respect to any of the foregoing, provided, however, that the number of shares subject to any Stock Incentive shall always be a whole number.
Notwithstanding the foregoing, if all shares of any series of Common Stock are redeemed, then each outstanding Stock Incentive shall be adjusted to substitute for the shares of such series of Common
Stock subject thereto the kind and amount of cash, securities or other assets issued or paid in the redemption of the equivalent number of shares of such series of Common Stock and otherwise the terms
of such Stock Incentive, including, in the case of Options or similar rights, the aggregate exercise price, shall remain constant before and after the substitution (unless otherwise determined by the
Committee and provided in the applicable Stock Incentive agreement). The Committee may, if deemed appropriate, provide for a cash payment of a Stock Incentive to a Participant in connection with any
adjustment made pursuant to this Section 9.3(a). 

        (b)   Approved Transactions; Board Change; Control Purchase. In the event of any Approved Transaction, Board Change or Control
Purchase, notwithstanding any contrary waiting period, installment period, vesting schedule or restriction period in any Stock Incentive agreement or in the Plan, unless the applicable Stock Incentive
agreement provides otherwise: (i) in the case of an Option, each such outstanding Option granted under the Plan shall become exercisable in full in respect of the aggregate number of shares
covered thereby; and (ii) in the case of Common Stock awarded under a Restricted Stock Award, any restriction period applicable to each such Common Stock shall be deemed to have expired and all
such Common Stock shall become vested. Notwithstanding the foregoing, unless otherwise provided in the applicable Stock Incentive agreement, the Committee may, in its discretion, determine that any or
all outstanding Stock Incentives of any or all types granted pursuant to the Plan will not vest or become exercisable on an accelerated basis in connection with an Approved Transaction if effective
provision has been made for the taking of such action which, in the opinion of the Committee, is equitable and appropriate to substitute a new Stock Incentive or to assume such Stock Incentive and to
make such new or assumed Stock Incentive, as nearly as may be practicable, equivalent to the old Stock Incentive (before giving effect to any acceleration of the vesting or exercisability thereof),
taking into account, to the extent applicable, the kind and amount of securities,
cash or other assets into or for which the applicable series of Common Stock may be changed, converted or exchanged in connection with the Approved Transaction. 

        9.4   Withholding of Taxes. The Company's obligation to deliver shares of Common Stock or pay cash in respect of any Stock
Incentives under the Plan shall be subject to applicable federal, state and local tax withholding requirements. Federal, state and local withholding tax due upon the exercise of any Option or upon the
vesting of, or expiration of restrictions with respect to Common Stock granted under Restricted Stock Awards, may, in the discretion of the Committee, be paid in shares of the applicable series of
Common Stock already owned by the Participant or through the withholding of shares otherwise issuable to such Participant, upon such terms and conditions (including the conditions referenced in
Section 6.2) as the Committee shall determine. If the Participant shall fail to pay, or

 
make arrangements satisfactory to the Committee for the payment of, all such federal, state and local taxes required to be withheld with respect to a Stock Incentive, then the Company shall, to the
extent permitted by law, have the right to deduct from any payment of any kind otherwise due to such Participant an amount equal to any federal, state or local taxes of any kind required to be
withheld with respect to such Stock Incentive. 

        9.5   Restrictions on Benefit. Notwithstanding any provision of this Plan to the contrary, the provisions of any Incentive Plan
concerning restrictions on benefits (in order to avoid excise taxes on the Participant under Section 4999 of the Code or the disallowance of a deduction to the Company pursuant to
Section 280G of the Code) are specifically incorporated by this reference. 

        9.6   Section 409A. Notwithstanding any provision in this Plan or the Incentive Plan to the contrary, if any Plan or
Incentive Plan provision or any Stock Incentive thereunder would result in the imposition of an additional tax under Code Section 409A and related regulations and United States Department of
the Treasury pronouncements ("Section 409A"), that Plan or Incentive Plan provision and/or that Stock Incentive will be reformed to avoid imposition of the applicable tax and no action taken to
comply with Section 409A shall be deemed to adversely affect the Participant's right to a Stock Incentive or require the consent of the Participant. 

 

        IN
WITNESS WHEREOF, this document has been executed effective as of the Record Date. 

	

 	
 	

DISCOVERY HOLDING COMPANY
	

 	
 	

By:	
 	

	 	 	Name:	 	 
	 	 	Title:	 	 

QuickLinks

FORM OF DISCOVERY HOLDING COMPANY TRANSITIONAL STOCK ADJUSTMENT PLANQuickLinks
 -- Click here to rapidly navigate through this document

Exhibit 10.10  

 
 

AGREEMENT    
    

        This AGREEMENT (this "Agreement") is made and entered into as of
[                        ], 2005,
by and between Discovery Holding Company, a Delaware corporation (the "Company") and John C. Malone
("Stockholder"). 

RECITALS  

        A.    Liberty
Media Corporation ("Liberty"), the ultimate parent corporation of the Company prior to the distribution of all of
the capital stock of the Company to the stockholders of Liberty (the "Distribution"). 

        B.    In
connection with the Distribution, holders of common stock of Liberty will receive shares of Series A Common Stock, par value $.01, of the Company
("Company Series A Common Stock"), and shares of Series B common stock, par value $.01, of the Company (the
"Company Series B Common Stock"; together with the Company Series A Common Stock and the Company Series C Common Stock (as defined
below), if and when issued, the "Common Stock"). 

        C.    In
the Distribution, it is anticipated that the Stockholder will receive approximately 10.37 million shares of Company Series B Common Stock. 

        D.    It
is also anticipated that the Stockholder will receive or otherwise be granted non-transferable options to purchase shares of Company Series B Common
Stock (the "Company Series B Options," which term will include any options pursuant to which the holder may elect to acquire shares of Company
Series B Common Stock or Company Series A Common Stock). 

        E.    The
Board of Directors of the Company ("Company Board") has requested that Stockholder enter into this Agreement, and
Stockholder is willing to enter into this Agreement. 

AGREEMENTS  

        In consideration of the foregoing and the mutual agreements and covenants set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, hereby agree as follows: 

        1.     Definitions. As used herein, capitalized terms shall have the meanings set forth below or elsewhere in this Agreement
(terms defined in the singular shall have the same meanings when used in the plural and vice versa): 

        "Affiliate" means, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries Controls,
is Controlled by, or is under common Control with such first Person. 

        A
"Change of Control of the Company" will be deemed to have occurred upon any Person (other than Stockholder, a Stockholder Affiliate or a
Permitted Stockholder Transferee) becoming the beneficial owner of equity securities of the Company representing 50% or more of the voting power of the outstanding capital stock of the Company. 

        "Common Stock" has the meaning set forth in the recitals to this Agreement. 

        "Company" has the meaning set forth in the preamble to this Agreement. 

        "Company Board" has the meaning set forth in the recitals to this Agreement. 

        "Company Control Transaction" means any transaction (including, without limitation, a merger, tender offer or other business combination)
that, if consummated, would result in a Change in Control of the Company. 

        "Company Series A Common Stock" has the meaning set forth in the recitals to this Agreement.

 

        "Company Series B Common Stock" has the meaning set forth in the recitals to this Agreement. 

        "Company Series B Options" has the meaning set forth in the recitals to this Agreement. 

        "Company Series C Common Stock" means the Series C common stock, par value $.01 per share, of the Company. 

        "Control" means the direct or indirect power to direct, or cause the direction of, the management and policies of any Person, whether
through the ownership of voting securities, by contract, by membership or involvement in the board of directors, management committee or other management structure of such Person or otherwise. 

        "Controlled Affiliate" means, with respect to any Person, any Affiliate of such Person which such Person possesses the affirmative power
to Control. 

        "Distribution" has the meaning set forth in the recitals to this Agreement. 

        "Distribution Date" means the date on which the Distribution occurs. 

        "Hedge" means any swap, hedge or similar arrangement or transaction that Transfers, in whole or in part, any of the economic consequences
of ownership of a security. 

        "Immediate Family" means, with respect to any natural Person, the spouse, the siblings (by birth or adoption), and any lineal ascendants
and descendants thereof and of the spouse and siblings (by birth or adoption) thereof, and the estate or heirs of any of the foregoing. 

        "Liberty" has the meaning set forth in the recitals to this Agreement. 

        "Permitted Stockholder Transferee" means any entity (i) the equity securities of which are listed or traded on a national
securities exchange or market, (ii) Stockholder and the Stockholder Affiliates collectively own or, immediately after giving effect to the proposed Transfer, would own, and have the right to
vote securities of such entity representing 20% or more of the outstanding voting power of such entity (based upon votes entitled to be cast in the election of directors) and (iii) no other
Person owns and has the right to vote securities of such entity representing a percentage of the outstanding voting power of such entity greater than the voting power of the securities owned by
Stockholder and the Stockholder Affiliates collectively. 

        "Person" means any human being, corporation, partnership (general or limited), limited liability company, association, joint venture,
trust, estate, governmental authority or other entity or organization. 

        "Stockholder" has the meaning set forth in the preamble to this Agreement. 

        "Stockholder Affiliate" means any of Affiliate of Stockholder, any member of Stockholder's Immediate Family or any Affiliate thereof, or
any trust Controlled by Stockholder and established primarily for the benefit of Stockholder or any member of his Immediate Family; provided,  however, that
the Company will be deemed not to be a Stockholder Affiliate. 

        "Stockholder Shares" means all of the shares of Company Series B Common Stock owned by Stockholder or any Stockholder Affiliate as
of any date of determination, whether acquired in connection with the Distribution, upon exercise of Company Series B Options or otherwise. 

        "Transfer" means any sale, assignment, transfer, pledge, hypothecation, grant of security interest, or other disposition, direct or
indirect (including by merger or sale of stock of a holding company or otherwise), and whether voluntary or by operation of law; provided, that
(x) the conversion of any shares of Company Series B Common Stock into shares of Company Series A Common Stock or any exchange of shares of Company Series B Common Stock
for shares of Company Series A Common Stock in a transaction with the Company or any Controlled Affiliate of the Company, will not

 
constitute a Transfer of shares of Company Series B Common Stock and (y) the election by Stockholder or any Stockholder Affiliate in accordance with the terms of an instrument evidencing
any Company Series B Options to receive shares of Company Series A Common Stock upon exercise of any Company Series B Option will not constitute a Transfer of the shares of
Company Series B Common Stock that could have been received upon such exercise. 

        2.     Restrictions on Transfers of Stockholder Shares; Permitted Transfers. 

        (a)   Stockholder
will not, and will not permit any Stockholder Affiliate to, Transfer any Stockholder Shares, or enter into any agreement with any Person to Transfer
Stockholder Shares, except for the following Transfers, which shall be permitted subject to compliance with the provisions of this Agreement: 

        (i)    any
Transfer to a Stockholder Affiliate; 

        (ii)   any
Transfer to (x) trusts, foundations, limited and general partnerships, limited liability companies and other entities in connection with good faith estate
planning and similar wealth management programs and arrangements, or (y) foundations, charitable organizations and similar entities in connection with charitable giving; 

        (iii)  any
Transfer of Stockholder Shares to the Company in connection with the exercise by Stockholder of Company Series B Options or in connection with any
"cash-less" type exercise; 

        (iv)  any
Transfer to a Permitted Stockholder Transferee so long as neither Stockholder nor any Stockholder Affiliate is, at the time of such Transfer of Stockholder Shares,
a party to any agreement, arrangement or understanding with any Person (other than Stockholder or a Stockholder Affiliate) pursuant to which Stockholder or such Stockholder Affiliate is to Transfer a
number of shares of such Permitted Stockholder Transferee such that, after giving effect to such Transfer, Stockholder and the Stockholder Affiliates collectively would cease to own and have the power
to vote shares of such Permitted Stockholder Transferee representing 20% or more of the outstanding voting power of such Permitted Stockholder Transferee; 

        (v)   any
Transfer constituting a pledge of or grant of a security interest in Stockholder Shares in connection with a bona fide financing or Hedge with a commercial bank or
other financial institution in which Stockholder or a Stockholder Affiliate is the borrower or counter-party, so long as (x) Stockholder or any Stockholder Affiliate retains the right to vote
such Stockholder Shares at all times prior to a default or, in the case of a Hedge, delivery of the underlying shares, and (y) any pledgee, secured party or counter-party in such transaction
agrees, for the benefit of the Company. that, in the event of a default, foreclosure or other acquisition of Stockholder Shares by such pledgee, secured party or counter-party, such pledgee, secured
party or counter-party will convert all Stockholder Shares into shares of Company Series A Common Stock in connection with any subsequent Transfer by such pledgee, secured party or
counter-party to any Person other than Stockholder or a Stockholder Affiliate; 

        (vi)  any
Transfer pursuant to a divorce proceeding or settlement or the terms of a pre-nuptial agreement to which Stockholder is a party, to a Person who is a
party to such proceeding, settlement or agreement; and 

        (vii) any
Transfer in connection with the consummation of a Company Control Transaction (x) that has been approved by the Company Board or (y) in connection
with which the Company Board, or any court of competent jurisdiction, has taken actions that would terminate, neutralize or otherwise render ineffective or inapplicable any shareholder rights plan of
the Company or redeem any purchase rights issued thereunder.

 

        (b)   Any
Transfer of Stockholder Shares permitted under this Section 2 (other than any Transfer pursuant to Sections 2(a)(iii) (provided that the shares
issuable upon such exercise are subject to this Agreement), (v) (provided that the pledgee, secured party or counter-party has entered into the agreement contemplated thereby) or (vii)) shall
be subject to the condition that the proposed transferee of such Stockholder Shares shall, prior to such transferee's acquisition of Stockholder Shares, execute and deliver a written agreement,
reasonably acceptable to the Company, pursuant to which such transferee will agree to be bound by the restrictions set forth in this Agreement. 

        3.     Representations and Warranties. Each party hereto hereby represents and warrants to the other party as follows (with such
representations and warranties surviving the execution, delivery and performance of this Agreement): 

        (a)   Such
party has the legal right and all requisite power and authority to make and enter into this Agreement and to perform his or its obligations hereunder and comply
with the provisions hereof. If such party is the Company, the execution, delivery and performance of this Agreement by the Company
has been duly authorized by all necessary action on its part. This Agreement has been duly executed and delivered by such party and constitutes the valid and binding obligation of such party
enforceable against him or it in accordance with its terms except as enforcement may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting the rights of creditors generally
and except that the availability of equitable remedies, including specific performance, is subject to the discretion of the court before which any proceeding therefor may be brought; 

        (b)   The
execution, delivery and performance of this Agreement by such party, and the compliance by such party with the provisions hereof, do not and will not (with or
without notice or lapse of time, or both) conflict with, or result in any violation of, or default under, or give rise to any right of termination, cancellation or acceleration of any obligation or to
loss of a material benefit under, any loan or credit agreement, note, bond, mortgage, indenture, lease or other agreement, instrument, permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to such party or any of his or its properties or assets, other than any such conflicts, violations, defaults, or other effects which individually
or in the aggregate do not and will not prevent, restrict or impede such party's performance of his or its obligations under and compliance with the provisions of this Agreement. If such party is the
Company, the execution, delivery and performance of and compliance with this Agreement by it do not and will not contravene its charter, by-laws or other organizational document; and 

        (c)   No
consent, approval, order or authorization of, or registration, declaration or filing with, any governmental or regulatory authority or any other person is required by
such party in connection with the execution, delivery or performance of this Agreement by such party, other than as may be required under applicable Federal and state securities laws. 

        4.     Effective Date; Termination. 

        (a)   This
Agreement may not be revoked by any party prior to its effectiveness and shall become effective automatically without any further action by the parties as of the
Distribution Date and shall continue in full force and effect until the earliest of (i) the termination of this Agreement pursuant to a writing signed by the parties hereto;
(ii) 5 p.m. Mountain Standard Time on the eighteen month anniversary of the date hereof; (iii) the death of Stockholder; and (iv) upon the consummation of a Company Control
Transaction. 

        (b)   Notwithstanding
the foregoing, in the event the Distribution Date has not occurred prior to the [    ] day following the date hereof,
this Agreement will automatically terminate and be deemed void ab initio and will not be of any further force or effect. Upon the termination or

 
expiration of this Agreement as provided herein, all of the covenants and agreements set forth in this Agreement applicable to any party shall terminate and be of no further force and effect. 

        5.     Miscellaneous. 

        (a)   Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware,
without giving effect to its principles or rules of conflicts of laws to the extent that such principles or rules would require or permit the application of the law of another jurisdiction. 

        (b)   Jurisdiction. Each of the parties hereto irrevocably and unconditionally agrees that any suit, action or proceeding
seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement will be brought exclusively in the Delaware Chancery Courts, or, if the Delaware
Chancery Courts do not have subject matter jurisdiction, in the state courts of the State of Delaware located in Wilmington, Delaware or, in the federal courts located in the State of Delaware. Each
of the parties hereto consents to personal jurisdiction in any such action, suit or proceeding brought in any such court (and of the appropriate appellate courts therefrom) and irrevocably waives, to
the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such
suit, action or proceeding brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether
within or without the jurisdiction of any such court. Without limiting the foregoing, each party agrees that service of process on such party at the address specified in
Section 5(h) shall be deemed effective service of process on such party. 

        (c)   WAIVER OF JURY TRIAL. EACH OF THE PARTIES AGREES AND ACKNOWLEDGES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS
AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE BREACH, TERMINATION OR VALIDITY OF THIS AGREEMENT. 

        (d)   Specific Performance. Stockholder acknowledges and agrees that (i) the obligations and agreements of Stockholder
contained in this Agreement relate to special, unique and extraordinary matters, (ii) the Company is and will be relying on such covenants and agreements, and (iii) a violation of any of
the
obligations or agreements of Stockholder in this Agreement will cause the Company irreparable injury for which adequate remedies are not available at law. Therefore, Stockholder agrees that the
Company shall be entitled to an injunction, restraining order or such other equitable relief (without the requirement to post bond) as a court of competent jurisdiction may deem necessary or
appropriate to restrain Stockholder from committing any violation of its covenants, obligations or agreements set forth herein. These injunctive remedies are cumulative and in addition to any other
rights and remedies the Company may have. 

        (e)   Amendment, Waivers, etc. Neither this Agreement nor any term hereof may be amended or otherwise modified other than by an
instrument in writing signed by the parties hereto. No provision of this Agreement may be waived, discharged or terminated other than by an instrument in writing signed by the party against whom the
enforcement of such waiver, discharge or termination is sought. 

        (f)    Assignment; No Third Party Beneficiaries. This Agreement shall not be assignable or otherwise transferable by a party
without the prior consent of the other party, and any attempt to so assign or otherwise transfer this Agreement without such consent shall be void and of no effect.

 
This Agreement shall be binding upon the parties and their respective successors and permitted assigns. Nothing in this Agreement shall be construed as giving any person, other than the parties hereto
and their respective successors, legal representatives and permitted assigns, any right, remedy or claim under or in respect of this Agreement or any provision hereof. 

        (g)   Expenses. Except as otherwise provided herein, all costs and expenses incurred in connection with the transactions
contemplated by this Agreement shall be paid by the party incurring such costs and expenses. 

        (h)   Notices. All notices, consents, requests, instructions, approvals and other communications provided for in this Agreement
shall be in writing and shall be deemed validly given upon personal delivery or one day after being sent by overnight courier service or by telecopy (so long as for notices or other communications
sent by telecopy, the transmitting telecopy machine records electronic confirmation of the due transmission of the notice), at the following address or telecopy number, or at such other address or
telecopy number as a party may designate to the other parties: 

        (i)    if
to DHC to: 

Discovery
Holding Company

12300 Liberty Boulevard

Englewood, CO 80112

Attn: Charles Y. Tanabe, Esq.

Fax: (720) 875-5382 

with
copies to: 

Frederick
H. McGrath

Baker Botts L.L.P.

30 Rockefeller Plaza

New York, New York 10112

Fax: (212) 259-2530 

        (ii)   if
to Stockholder to: 

John
C. Malone

12300 Liberty Boulevard

Englewood, CO 80112

Fax: (720) 875-5394 

        (i)    Remedies. No failure or delay by any party in exercising any right, power or privilege under this Agreement shall operate
as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies
provided herein shall be cumulative and not exclusive of any rights or remedies provided by law. 

        (j)    Severability. If any term or provision of this Agreement is held to be invalid, illegal, incapable of being enforced by
any rule of law, or public policy, or unenforceable for any reason, it shall be adjusted rather than voided, if possible, in order to achieve the intent of the parties hereto to the maximum extent
possible. In any event, the invalidity or unenforceability of any provision of this Agreement in any jurisdiction shall not affect the validity or enforceability of the remainder of this Agreement in
that jurisdiction or the validity or enforceability of this Agreement, including that provision, in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal
or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a

 
mutually acceptable manner in order that the terms of this Agreement remain as originally contemplated to the fullest extent possible. 

        (k)   Integration. This Agreement constitutes the full and entire understanding and agreement of the parties with respect to
the subject matter hereof and supersedes any and all prior understandings or agreements relating to the subject matter hereof. 

        (l)    Section Headings. The article and section headings of this Agreement are for convenience of reference only
and are not to be considered in construing this Agreement. 

        (m)  Further Assurances. From time to time at the request of the Company, and without further consideration, Stockholder shall
execute and deliver or cause to be executed and delivered such additional documents and instruments and shall take all such further action as may be reasonably necessary or desirable to effect the
matters contemplated by this Agreement. 

        (n)   Counterparts; Effectiveness. This Agreement may be executed in two or more counterparts, all of which shall be considered
the same agreement. Signature pages from separate identical counterparts may be combined with the same effect as if the parties signing such signature page had signed the same
counterpart. This Agreement shall become effective when each party hereto shall have received counterparts hereof signed by all of the other parties hereto. 

[Remainder of page intentionally left blank.]

 

        IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first set forth above. 

	

 	
 	

DISCOVERY HOLDING COMPANY
	

 	
 	

By:	
 	

 Name:

Title:
	

 	
 	

 JOHN C. MALONE

QuickLinks

AGREEMENT

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00086-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00086-of-00352.parquet"}]]