Document:

exv10w34

Exhibit 10.34

AMENDED AND RESTATED PLEDGE AGREEMENT

THIS AMENDED AND RESTATED PLEDGE AGREEMENT (this “Agreement”) is made and entered into as of this
7th day of May, 2008 by and among MITCHELL J. KELLY, an individual (the “Borrower”) and NOVAVAX, INC., a Delaware
corporation (the “Company”).

RECITALS

     A. WHEREAS, in 2002, the Company had a pre-existing plan whereby Novavax corporate officers
and directors who had received Novavax stock options were eligible to exercise such options with
payment in the form of a non-recourse interest-bearing promissory note.

     B. WHEREAS, in 2002, the Borrower exercised his right to pay the exercise price of 95,000
options received by Borrower through the delivery of a full recourse, interest-bearing promissory
note (the “Original Note”) in the amount of $447,600, which accrued interest monthly at the rate of
5.07%.

     C. WHEREAS, such Original Note was secured by 95,000 shares of common stock of the Company
(the “Collateral”) pursuant to a pledge agreement between the Borrower and the Company, dated as of
March 21, 2002 (the “Original Pledge Agreement”).

     D. WHEREAS, the Original Note was initially payable upon the earlier to occur of the
following: (a) payable in full upon the date on which the Borrower ceased for any reason to be a
director of the Company, (b) payable in part to the extent of net proceeds, upon the date on which
the Borrower sold all or any portion of the Collateral, or (c) payable in full on March 21, 2007.

     E. WHEREAS, in May 2006, the Borrower resigned as a director of the Company. Concurrent with
Borrower’s resignation, the Company extended the maturity of the Original Note, to be payable upon
the earlier to occur of the following: (a) payable in part to the extent of net proceeds upon, the
date on which the Borrower sold all or any portion of the Collateral, or (b) payable in full on
December, 31, 2007.

     F. WHEREAS, in December 2007, the Borrower and the Company entered into discussions concerning
possible further amendments to the Original Note. On December 31, 2007 Borrower did not repay the
amount due under the extended maturity date of the Original Note, which constituted a default of
the Note (a “Designated Default”).

     G. WHEREAS, Borrower has requested, and the Company has agreed, to amend and restate the
Original Note to provide, among other things, that the entire amount outstanding as of December 31,
2007, including accrued interest, be treated as principal, to increase the interest rate to 8.0%
per annum, and to permit the Company to sell the Collateral in accordance with the terms of this
Agreement.

     H. WHEREAS, the Borrower had delivered the Amended and Restated Promissory Note (the “Note”)
of even date hereof, which provides for $578,848.22 as outstanding principal (together with accrued
interest at a rate of 8.0% per annum, the “Obligations”).

     I. WHEREAS, the Borrower desires to affirm his pledge of the Collateral and permit the Company
to cause the Collateral to be sold in accordance with the terms of this Agreement.

 

 

AGREEMENT

     In consideration of the Recitals and the mutual promises and covenants contained herein and
intending to be legally bound hereby, the Company and the Borrower agree as follows:

     1. Pledge. The Borrower hereby assigns, transfers, sets over and pledges to the
Company as collateral to secure the payment and performance of any and all Obligations of the
Borrower to the Company arising under the Note, 95,000 shares of common stock of Novavax, Inc. (the
“Collateral”), and herewith delivers to the Company the certificates evidencing the same, endorsed
in blank or with duly executed stock powers attached.

     2. Sale of Collateral.

          (a) Borrower and the Company hereby appoint Oppenheimer as their broker (the “Agent”) to
perform any of the Sales described in this Agreement.

          (b) At any time during the relevant periods set forth on Exhibit A that the trading
price of the Company’s common stock, as reported on NASDAQ Global Market, is at or exceeds the
corresponding Sale Price set forth on Exhibit A, and the program for the Sale of Collateral
by the Agent is not otherwise suspended as per the terms of Section 2. (d) below, the Agent shall
sell all of the Collateral (a “Sale”). The Agent shall apply all proceeds from the Sale(s) first to
the outstanding amount due under the Note and then return the excess amount, if any, to Borrower.
Each time Agent places a trade to effect a Sale, the trade shall be a limit order at no less than
the Sale Price set forth on Exhibit A.

          (c) Borrower may direct Agent to place limit trades to effect a Sale of the Collateral,
provided that such Sales are at no less than the Break Even Price set forth on Exhibit B.

          (d) Borrower may direct Agent to effect a Sale of the Collateral at any price, and Agent’s
ability to sell the Collateral at the prices set forth on Exhibit A shall be suspended, at any time
after (i) the Company issues a press release or makes a filing with the Securities and Exchange
Commission (“SEC”) announcing a transaction with a third party, approved by the Company’s Board of
Directors, that will result in the Change in Control of the Company (a “Change in Control
Agreement”), (ii) the Company or a third party issues a press release or makes a filing with the
SEC announcing that the Company and the third party have entered into discussions that could lead
to the Change in Control of the Company, (iii) a third party files a Schedule TO with the SEC for
the purpose of acquiring at least a majority of the outstanding shares of the Company’s common
stock through a tender offer (a “Tender Offer”), or (iv) a third party issues a press release or
makes a filing with the SEC announcing that it may seek to effect the Change in Control of the
Company. A Change in Control means (1) a sale, lease, license or other disposition of all or
substantially all of the assets of the Company, (2) a consolidation or merger of the Company with
or into any other corporation or other entity or person, or any other corporate reorganization, in
which the shareholders of the Company immediately prior to such consolidation, merger or
reorganization, own less that fifty percent (50%) of the outstanding voting power of the surviving
entity and its parent following the consolidation, merger or reorganization, or (3) any transaction
or series of related transactions involving a person or entity, or a group of affiliated persons or
entities (but excluding any employee benefit plan or related trust sponsored or maintained by the
Company or an affiliate) in which such persons or entities that were not shareholders of the
Company immediately prior to their acquisition of Company securities as part of such transaction
become the owners, directly or indirectly, of securities of the Company representing more than
fifty percent (50%) of the combined voting power of the Company’s then outstanding securities other
than by virtue of a merger, consolidation or similar transaction and other than as part of a
private financing transaction by the Company. Borrower’s right to direct Agent to effect a Sale
under this subsection (d) shall be suspended,

 

 

and Agent’s ability to sell the Collateral at the prices set forth on Exhibit A shall be
reinstated, if (i) the Company issues a press release announcing the termination of the Change in
Control Agreement, (ii) the Tender Offer is withdrawn, (iii) the Company or a third party issues a
press release or makes a filing with the SEC announcing that discussions about a possible Change in
Control of the Company have terminated, or (iv) a third party issues a press release or makes a
filing with the SEC announcing that it is no longer interested in seeking to effect the Change in
Control of the Company.

          (e) The proceeds of any Sale, regardless of whether such Sale was initiated by Agent or
directed by Borrower, shall not be used to offset or otherwise reduce a Quarterly Payment (as
defined in the Note), except to the extent that the proceeds of the Sale (share sufficient to pay
the Note in full and satisfy the Obligations.

          (f) In the event that the proceeds of any Sale(s) is insufficient to satisfy the Obligations,
the terms set forth in this Agreement shall apply to the Obligations still outstanding.

          (g) In executing the Sale(s), the Company and the Agent shall comply with the Securities Act
of 1933, as amended, and all rules and regulations thereunder.

     3. Representations and Warranties of Borrower.

          (a) Recitals. To the best of Borrower’s knowledge, the Recitals in this Agreement are
true and correct in all material respects.

          (b) Enforceability. This Agreement is the legal, valid and binding obligation of
Borrower, enforceable against Borrower in accordance with its terms.

          (c) No Violation. Borrower’s execution, delivery and performance of this Agreement do
not and will not (i) violate any law, rule, regulation or court order to which Borrower is subject;
(ii) conflict with or result in a breach of any agreement or instrument to which Borrower is party
or by which it or its properties are bound, or (iii) result in the creation or imposition of any
lien, security interest or encumbrance on any property of Borrower, whether now owned or hereafter
acquired, other than liens in favor of the Company.

          (d) Title to Collateral. Borrower has good and marketable title to all of the
Collateral, free and clear of any mortgage, pledge, lien, encumbrance or charge of any nature
whatsoever, except the pledge created by this Agreement in favor of the Company.

          (e) Indebtedness. There is no material breach or default of the terms of any other
agreement or instrument evidencing indebtedness of the Borrower, except for the Designated Default.

          (f) Obligations Absolute. The obligation of the Borrower to repay the Obligations,
including all interest accrued thereon, is absolute and unconditional, and there exists no right of
set off or recoupment, counterclaim or defense of any nature whatsoever to payment of the
Obligations.

     4. Representations and Warranties of Company

          (a) Recitals. To the best of the Company’s knowledge, the Recitals in this Agreement
are true and correct in all material respects.

          (b) Enforceability. This Agreement is the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms.

 

 

          (c) No Violation. The Company’s execution, delivery and performance of this Agreement
do not and will not (i) violate any law, rule, regulation or court order to which the Company is
subject or (ii) conflict with or result in a breach of any agreement or instrument to which the
Company is party or by which it or its properties are bound.

          (d) Material Nonpublic Information. The Company confirms that it is entering into this
Agreement in good faith and in compliance with the requirements of Rule l0b5-l at a time when it is
not in possession of non-public material information, (b) it will not disclose to any persons at
Agent effecting Sales under the Agreement any information regarding the Company that might
influence the execution of Sales under the Agreement and (c) it will inform Agent as soon as
possible of any subsequent legal or contractual restrictions affecting the execution of Sales under
the Agreement by Agent.

     5. Collateral.

          (a) The Borrower hereby renounces and waives all rights that are waivable under Article 9 of
the Uniform Commercial Code (the “UCC”) as in effect from time to time in any jurisdiction in which
any Collateral may now or hereafter be located. Without limiting the generality of the foregoing,
the Borrower hereby (i) renounces any right to receive notice of any disposition by the Company or
the Agent of the Collateral pursuant to the UCC, whether such disposition is by public or private
sale under the UCC or otherwise, and (ii) waives any rights relating to compulsory disposition of
the Collateral pursuant to the UCC.

          (b) The Company shall exercise reasonable care in the custody and preservation of the
Collateral in its possession. Beyond the exercise of reasonable care to assure the safe custody of
the Collateral while held hereunder, the Company shall not have any duty or liability to preserve
rights pertaining thereto and shall be relieved of all responsibility for the Collateral upon
surrendering it to the Borrower or tendering surrender of it to the Borrower, it being understood
that the Company shall not have any responsibility for (a) ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders, or other matters relative to any
Collateral, whether or not the Company has or is deemed to have knowledge of such matters, or (b)
taking any necessary steps to preserve rights against any parties with respect to any Collateral.

     6. Rights Prior to Declaration of Default.

          (a) Unless a Default (as hereafter defined) shall have occurred and be continuing, the
Collateral shall continue to be registered in the name of the Borrower and the Borrower shall have
the right to vote the same at all stockholders meetings at which the same or any part thereof may
be voted and to receive any cash dividends (other than liquidating or similar dividends) allocable
thereto. Stock dividends and any other distribution with respect to the Collateral shall be pledged
as additional collateral and held by the Borrower subject to the terms and conditions hereof.

          (b) If the stock of any corporation whose shares are pledged hereunder shall be changed into
or exchanged for a different number of kind of shares of stock or other securities of such
corporation or of another corporation, whether through merger, consolidation, reorganization,
recapitalization, stock split, or combination of shares, there shall be substituted for Collateral
held by the Company under this Agreement the number of shares of stock or other securities into
which each outstanding share of such capital stock shall be so changed or for which each share
shall be exchanged. The Borrower hereby agrees that any securities so substituted for the
Collateral pursuant to the terms of such change or exchange shall be delivered directly to the
Company, to be held and disposed of by the Company in accordance with the

 

 

terms and provisions of this Agreement. The Borrower authorizes the Company to surrender the
Collateral or take whatever other action is required to be taken with respect to the Collateral
under the terms of such change or exchange and further agrees to execute and deliver to the Company
such stock powers as may be necessary to carry out the purposes of this Agreement in view of such
substitution.

     7. Default. Each of the following shall constitute a “Default” hereunder:

          (a) The Borrower shall fail to keep or perform any of the covenants or agreements contained
herein;

          (b) an event of default under the Note; or

          (c) any representation or warranty of Borrower herein shall be false, misleading or incorrect
in any material respect.

          Upon the occurrence of a Default, and without demand for performance or other notice of any
kind to Borrower:

          (i) the Company may exercise, in addition to all other rights and remedies granted to it in
this Agreement and in any other instrument or agreement securing, evidencing or relating to the
Obligations, all rights and remedies of a secured party under the DCC. Without limiting the
generality of the foregoing, the Company, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice required by law
referred to below or otherwise specifically required hereunder) to or upon the Borrower, may in
such circumstances forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, assign or give option or options to purchase or otherwise
dispose of and deliver the Collateral or any part thereof (or contract to do any of the foregoing),
in one or more parcels at public or private sale or sales, in the over-the-counter market, at any
exchange, broker’s board or office of the Company or elsewhere upon such terms and conditions as it
may deem advisable and at such prices as it may deem best (without reference to Exhibit A), for
cash or on credit or for future delivery without assumption of any credit risk. The Company shall
have the right upon any such public sale or sales, and, to the extent permitted by law, upon any
such private sale or sales, to purchase the whole or any part of the Collateral so sold, free of
any right or equity of redemption in the Borrower, which right or equity is hereby waived or
released. The Company shall apply any proceeds from time to time held by it and the net proceeds of
any such collection, recovery, receipt, appropriation, realization or sale, after deducting all
reasonable costs and expenses of every kind incurred in respect thereof or incidental to the care
or safekeeping of any of the Collateral or in any way relating to the Collateral or the rights of
the Company hereunder, including, without limitation, reasonable attorneys’ fees and disbursements
of counsel to the Company, to the payment in whole or in part of the Obligations, in such order as
the Company may elect, and only after such application and after the payment by the Company of any
other amount required by any provision of law, including, without limitation, Section 9-615(f) of
the DCC, need the Company account for the surplus, if any, to the Borrower. To the extent permitted
by applicable law, the Borrower waives all claims, damages and demands it may acquire against the
Company arising out of the lawful exercise by it of any rights hereunder. If any notice of a
proposed sale or other disposition of Collateral shall be required by law, such notice shall be
deemed reasonable and proper if given at least 7 days before such sale or other disposition. The
Borrower shall remain liable for any deficiency if the proceeds of any sale or other disposition of
Collateral are insufficient to pay the Obligations and the fees and disbursements of any attorneys
employed by the Company to collect such deficiency; and

 

 

          (ii) the Company shall be free to exercise any and all rights and remedies it may have
hereunder or under applicable law. The Company and Borrower hereby acknowledge and agree that as of
the date hereof, neither is aware of any event of default other than the Designated Defaults.

     8. Release and Indemnity.

          (a) The Borrower hereby remises, releases and forever discharges the Company and any of its
present and former directors, officers, shareholders, other equity holders, agents, employees,
attorneys, representatives, predecessors and successors, and their respective heirs, executors,
administrators, transferees, successors and assigns (collectively, the “Releasees”) and each of
them, of and from any and all manner of actions or causes of action, suits, debts, dues, accounts,
bonds, covenants, contracts, controversies, promises, agreements, judgments, costs, expenses, fees,
liabilities, claims and demands whatsoever in law or in equity, or otherwise, of whatsoever kind or
nature, whether foreseen or unforeseen, matured or unmatured, known or unknown, accrued or not
accrued, direct or indirect, which the Borrower had, has or can, shall or may hereafter have, for
or by reason of any cause, matter or thing whatsoever from the beginning of the world through the
date of this Agreement, in connection with, arising from or in any way attributable to the
Borrower’s relationship with the Releasees; provided, however, that this Section 8(a) shall
not be deemed to be a release by the Borrower of the Releasees with respect to any claims which may
be asserted by the Borrower which arise from or relate to the fraud or willful misconduct of any of
the Releasees.

          (b) The Borrower further hereby agrees to indemnify and hold the Company and its officers,
attorneys, agents and employees harmless from any loss, damage, judgment, liability or expense
(including counsel fees) suffered by or rendered against the Company or on account of anything
arising out of this Agreement, the Note, or any other document delivered pursuant hereto or thereto
up to and including the date hereof; provided that, the Borrower shall not have any obligation
hereunder to the Company with respect to indemnified liabilities arising from the gross negligence
or willful misconduct of the Company.

     9. Waiver of Jury Trial; Consent to Jurisdiction.

          (a) Each of the parties hereto hereby knowingly, voluntarily, and intentionally waives any
right to trial by jury such party may have in any action or proceeding, in law or in equity, in
connection with this Agreement, the Note, or the transactions contemplated by any thereof. The
Borrower represents and warrants that no representative or agent of the Company has represented,
expressly or otherwise, that the Company will not, in the event of litigation, seek to enforce this
right to jury trial waiver. The Borrower acknowledges that the Company has been induced to enter
into this Agreement by, among other things, the provisions of this Section 9(a).

          (b) The Borrower hereby irrevocably consents to the nonexclusive jurisdiction of the Circuit
Court of Montgomery County in Maryland and the United States District Court for the District of
Maryland, and waives personal service of any and all process upon the Borrower and consents that
all such service of process be made by certified or registered mail directed to the Borrower at the
address for the Borrower provided in Section 10(g), and service so made shall be deemed to be
completed upon actual receipt thereof. The Borrower waives any objection to jurisdiction and venue
of an action instituted against the Borrower as provided herein and agrees not to assert any
defense based on lack of jurisdiction or venue.

 

 

          10. Miscellaneous.

          (a) Amendment and Restatement. This Agreement amends and restates, and is in
substitution for, the Original Pledge Agreement. However, without duplication, this Agreement shall
in no way extinguish, cancel or satisfy Borrower’s unconditional obligations evidenced by the
Original Pledge Agreement or constitute a novation of the Original Pledge Agreement. Nothing herein
is intended to extinguish, cancel or impair the lien priority or effect of any security agreement,
pledge agreement or mortgage with respect to Borrower’s obligations hereunder and under any other
document relating hereto.

          (b) Further Assurance. The Borrower agrees to execute, and cause such other and
further documents and instruments as the Company may request to implement the provisions of this
Agreement and to perfect and protect the liens and security interests created hereby.

          (c) Benefit of Agreement. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto, their respective successors and assigns. No
other person or entity shall be entitled to claim any right or benefit hereunder, including,
without limitation, the status of a third party beneficiary of this Agreement.

          (d) Integration. This Agreement, together with the Note, constitutes the entire
agreement and understanding among the parties relating to the subject matter hereof, and supersedes
all prior proposals, negotiations, agreements and understandings relating to such subject matter.
In entering into this Agreement, the Borrower acknowledges that it is relying on no statement,
representation, warranty, covenant or agreement of any kind made by the Company or any employee or
agent of the Company, except for the agreements of the Company set forth herein.

          (e) Severability. The provisions of this Agreement are intended to be severable. If
any provisions of this Agreement shall be held invalid or unenforceable in whole or in part in any
jurisdiction, such provision shall, as to such jurisdiction, be ineffective to the extent of such
invalidity or enforceability without in any manner affecting the validity or enforceability of such
provision in any other jurisdiction or the remaining provisions of this Agreement in any
jurisdiction.

          (f) Governing Law. This Agreement shall be governed by and construed in accordance
with the internal substantive laws of the State of Maryland, without regard to the choice of law
principles of such state.

          (g) Counterparts; Telecopied Signatures. This Agreement may be executed in any number
of counterparts and by different parties to this Agreement on separate counterparts, each of which,
when so executed, shall be deemed an original, but all such counterparts shall constitute one and
the same agreement. Any signature delivered by a party by facsimile transmission shall be deemed to
be an original signature hereto.

          (h) Notices. Any notice required or permitted under this Agreement shall be deemed
given on the earliest of (a) physical delivery to a party or (b) three (3) days after dispatch by
established carrier service to the intended recipient as follows:

 

 

	 	 	 
	To the Company:
	 	Novavax, Inc.
	 
	 	9920 Belward Campus Drive
	 
	 	Rockville, Maryland 20850
	 
	 	Attn: Chief Financial Officer
	 
	 	 
	with a copy to:
	 	Ballard Spahr Andrews & Ingersoll, LLP
	 
	 	1735 Market Street
	 
	 	51 st Floor
	 
	 	Philadelphia, Pennsylvania 19103
	 
	 	Attention: Jennifer L. Miller
	 
	 	 
	To the Borrower:
	 	Mitchell 1. Kelly

          (i) Amendment. No amendment, modification, rescission, waiver or
release of any provision of this Agreement shall be effective unless the same shall be in writing
and signed by the parties hereto.

 

 

          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.

	 	 	 	 	 
	 	COMPANY

NOVAVAX, INC.

 	 
	 	By:  	/s/ Len Stigliano
 	 
	 	 	Name:  	Len Stigliano 	 
	 	 	Title:  	V.P., C.F.O. 	 
	 
	 	BORROWER

 	 
	 	/s/ Mitchell J. Kelly
 	 
	 	Mitchell J. Kelly 	 
	 	 	 

 

 

	 	 	 	 	 

Exhibit A

Quarterly Payments

	 	 	 	 	 
	Period	 	Sale Price Per Share
	 
	 	 	 	 
	4/1/2008 to 6/30/2008

	 	$	6.63	 
	7/1/2008 to 9/30/2008

	 	$	6.22	 
	10/1/2008 to 12/31/2008

	 	$	6.08	 
	1/1/2009 to 3/31/2009

	 	$	5.93	 
	4/1/2009 to 6/30/2009

	 	$	5.77	 

 

 

Exhibit B

	 	 	 	 	 
	 	 	Break Even
	Period	 	Price Per Share
	 
	 	 	 	 
	4/1/2008 to 6/30/2008

	 	$	6.22	 
	7/1/2008 to 9/30/2008

	 	$	5.81	 
	10/1/2008 to 12/31/2008

	 	$	5.67	 
	1/1/2009 to 3/31/2009

	 	$	5.52	 
	4/1/2009 to 6/30/2009

	 	$	5.36exv4w5

Exhibit 4.5

DISCOVERY HOLDING COMPANY

TRANSITIONAL STOCK ADJUSTMENT PLAN

(As Assumed by Discovery Communications, Inc.)

ARTICLE I

Purpose and Amendment of Plan

     1.1 Purpose. 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 (“DHC”) and of restricted
shares of DHC’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 2005 spin off of DHC from LMC.
Discovery Communications, Inc. (the “Company”) is assuming the Plan as a result of the transaction
completed by the Company and DHC on September 17, 2008 (the “Closing Date”), in which the Company
became the new publicly traded parent of DHC.

     1.2 Amendment and Restatement of Plan. The Plan is amended and restated as of September
17, 2008 to reflect the assumption by the Company of the Plan as described above.

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 common stock
of DHC for all periods prior to the Closing Date and of the Company for all periods following the
Closing Date.

          “Company” means Discovery Communications, Inc., a Delaware corporation, and any
successor thereto.

-1-

 

          “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 DHC 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 of DHC in its spin-off from LMC.

          “Distribution Date” means the date on which the Distribution occurred.

          “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 held 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.

-2-

 

          “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
Assumed by Discovery Communications, Inc.) as set forth herein and as from time to time amended.

          “Record Date” means 5:00 p.m., New York City time, on July 15, 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 5,600,000 shares, subject to adjustment as hereinafter provided. Any part of such
5,600,000 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.

-3-

 

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.

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     (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.

-5-

 

     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.

-6-

 

     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 such manner as the Committee, in its sole discretion, deems
equitable and appropriate, shall 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.

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     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.

-8-

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