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 Exhibit 10.26  

 
 

  CALL AGREEMENT    
    

        AGREEMENT, dated as of February 9, 1998, between Tele-Communications, Inc., a Delaware corporation ("TCI"),
John C. Malone ("Malone") and Leslie Malone ("Leslie"). 

        WHEREAS,
TCI desires to have the right to acquire all of the shares of its Common Stock, $1.00 par value per share, of any series that has voting rights greater than one vote per share,
that are beneficially owned by the other parties to this Agreement; and 

        WHEREAS,
each such other party, for himself and his successors (including his estate upon his death), desires to grant such right to TCI; 

        NOW,
THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as
follows: 

        1.     DEFINITIONS 

        1.1   CERTAIN
DEFINITIONS 

        "Affiliate"
means, when used with reference to a specified Person, any Person that directly or indirectly through one or more intermediaries Controls, is Controlled by or is under common
Control with, such specified Person. 

        "Agreement"
means this Call Agreement, as the same may be amended or supplemented from time to time. 

        "beneficially
own" has the meaning ascribed thereto in Rule 13d-3 under the Exchange Act, as interpreted by the Securities and Exchange Commission, provided that a
Person shall be deemed to have beneficial ownership of all securities that such Person has a right to acquire without regard to the 60 day limitation in such Rule, and except that a Person
shall not be deemed a beneficial owner of, or to own beneficially, any securities as to which such Person does not, directly or indirectly, have or share investment power within the meaning of said
Rule. The terms beneficially owned, own beneficially and beneficial owner shall have correlative meanings. For purposes of this Agreement, neither Malone nor Leslie will be deemed to beneficially own
any High Vote Stock or other security beneficially owned by the other. 

        "Board
of Directors" means the Board of Directors of the Company, or any authorized committee thereof. 

        "Bona
Fide Offer" has the meaning set forth in Section 2.3(b)(i) hereof. 

        "Call
Period" has the meaning set forth in Section 2.2(b) hereof. 

        "Call
Right" has the meaning set forth in Section 2.2(a) hereof. 

        A
"Change of Control" shall have occurred with respect to the Company if: 

        (i)    a
merger or consolidation occurs between the Company and any other Person in which the voting power of all voting securities of the Company outstanding immediately prior
thereto represent (either by remaining outstanding or being converted into voting securities of the surviving entity) less than 50% of the voting power of the Company or the surviving entity
outstanding immediately after such merger or consolidation (or if the Company or the surviving entity after giving effect to such
transaction is a subsidiary of the issuer of securities in such transaction, then the voting power of all voting securities of the Company outstanding immediately prior to such transaction represent
(by being converted into voting securities of such issuer) less than 50% of the voting power of the issuer outstanding immediately after such merger or consolidation); or 

 

        (ii)   in
any share exchange, extraordinary dividend, acquisition, disposition or recapitalization (or series of related transactions of such nature) (other than a merger or
consolidation) the holders of voting securities of the Company immediately prior thereto continue to own beneficially voting securities representing less than 50% of the voting power of the Company
(or any successor entity) immediately thereafter. 

        "Charitable
Transferee" means, with respect to either Group, any private charitable foundation or donor advised fund established by one or more members of such Group that, in either
case, (i) is controlled directly or indirectly solely by one or more members of such Group, and (ii) meets the requirements under the Code for such member(s) or Related Parties to deduct
donations to such foundation or donor advised fund. 

        "Close
of Business" means 5:00 p.m. local time in Denver, Colorado. 

        "Closing"
has the meaning set forth in Section 4.1(a) hereof. 

        "Closing
Date" has the meaning set forth in Section 4.1(a) hereof. 

        "Closing
Date Amount" has the meaning set forth in Section 2.2(d) hereof. 

        "Code"
means the Internal Revenue Code of 1986, as amended, and the rules and regulations from time to time promulgated thereunder. 

        "Combined
Offered Shares" has the meaning set forth in Section 2.3(b)(ii) hereof. 

        "Commencement
Date" has the meaning set forth in Section 2.3(c)(i) hereof. 

        "Common
Stock" means the Common Stock, $1.00 par value per share, of the Company, as constituted on the date of this Agreement, and any capital stock into which such Common Stock may
thereafter be changed (whether as a result of a recapitalization, reorganization, merger consolidation, share exchange, stock dividend or other transaction or event). The Common Stock currently is
issuable in series. 

        "Company"
means Tele-Communications, Inc., a Delaware corporation, and any successor (by merger, consolidation, sale, transfer, exchange, or otherwise) to all or
substantially all of its business and assets. 

        "Company
Notice" has the meaning set forth in Section 2.2(b) hereof. 

        "Company
Price" has the meaning set forth in Section 2.3(b)(ii). 

        "Control",
as to any Person, means the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by
contract or otherwise. "Controlled" and "Controlling" shall have corresponding meanings. 

        "Current
Market Price" of any security on any day means (i) the last reported sale price (or, if no sale is reported, the average of the high and low bid prices) on The Nasdaq
Stock Market on such day, or (ii) if the primary trading market for such security is not The Nasdaq Stock Market, then the closing sale price regular way on such day (or, in case no such sale
takes place on such day, the reported closing bid price regular way on such day) in each case on the New York Stock Exchange, or, if such security is not listed or admitted to trading on such
exchange, then on the principal exchange on which such security is traded, or (iii) if the Current Market Price of such security on such day is not available pursuant to one of the methods
specified above, then the average of the bid and asked prices for such security on such day as furnished by any New York Stock Exchange member firm selected from time to time by the Board of Directors
for that purpose. 

        "Difference"
has the meaning set forth in Section 3.2(b) hereof. 

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        "Disposition"
means any sale, assignment, alienation, gift, exchange, conveyance, transfer, hypothecation or other disposition whatsoever, whether voluntary or involuntary and whether
direct or indirect. The term "dispose" (whether or not capitalized) shall mean to make a Disposition. Neither the grant and exercise of voting rights under the Stockholders Agreement nor the grant of
rights by Malone to the Magness Group under Article III of the Stockholders Agreement shall be a "Disposition". 

        "Election
Notice" has the meaning set forth in Section 2.3(b)(iii). 

        "Estate"
means, upon the death of Malone, the estate of Malone, through its personal representative(s). 

        "Excepted
Shares" means, subject to the last two sentences of this definition, that number of Member Shares which, in the aggregate for all Members, is equal to five percent (5%) of the
largest total number (calculated without duplication) of Member Shares beneficially owned by all Members at any time during the period from and after the date of this Agreement until this Agreement
shall no longer be in effect. For purposes of determining the total number of Member Shares beneficially owned by the Member at any time of determination during such period, the Members shall be
deemed to own all Member Shares actually beneficially owned by them at such time and also to continue to beneficially own all Member Shares, if any, sold or otherwise disposed of without violation of
this Agreement at any time prior to such time of determination, so that such number of Member Shares as of any time of determination shall be calculated as though the Members at all times continued to
beneficially own all Member Shares that they beneficially owned at any time during such period, without deduction of any Member Shares that were disposed of at any time during that period and in each
case without duplication. In the event that the Company (i) pays a dividend or distribution on the outstanding High Vote Stock in shares of High Vote Stock, (ii) subdivides the
outstanding High Vote Stock into a greater number of shares of High Vote Stock, (iii) combines the outstanding shares of High Vote Stock into a smaller number of shares of High Vote Stock or
(iv) issues by reclassification of or other change in the High Vote Stock (whether pursuant to a merger or consolidation or otherwise) any other shares of High Vote Stock, then (A) any
such shares of High Vote Stock received by any Member in exchange for or replacement of the Excepted Shares shall themselves be Excepted Shares and (B) calculations of the number of Excepted
Shares as of any time pursuant to the first sentence of this definition shall take appropriate account of such event. 

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

        "Exempt
Transfer" means, with respect to any Member Shares of any Member, any Disposition: 

        (i)    pursuant
to Section 2.2 hereof; 

        (ii)   to
another Member; 

        (iii)  to
a member of the Magness Group; 

        (iv)  that
is an exchange or conversion of such Member Shares that occurs by operation of law in connection with a merger or consolidation of the Company with or into another
corporation or a reclassification or similar event, that has been duly authorized and approved by the required vote of the Board of Directors and the stockholders of the Company pursuant to its
Restated Certificate of Incorporation and Delaware law; provided, however, that any shares of capital stock issued in exchange for or in reclassification of such Member Shares or into which such
Member Shares are converted in any such transaction shall continue to be Member Shares for purposes of this Agreement unless such transaction resulted in a Change of Control of the Company; 

3

 

        (v)   to
a Prospective Purchaser in compliance with subsections (a) through (e), inclusive, of Section 2.3 hereof; 

        (vi)  pursuant
to Section 2.3(f) hereof; 

        (vii) that
is a gift or assignment for no consideration by such Member (if a natural person) during his life to any one or more of his Related Parties; 

        (viii)  that
is a transfer to the legal representatives of such Member (if a natural person) upon his death or adjudication of incompetency or by any such legal
representatives to any Person to whom the transferor could have transferred such security pursuant to any clause of this definition; or 

        (ix)  subject
to subsections (a) through (e), inclusive, of Section 2.3 hereof, pursuant to Article IV of the Stockholders Agreement; 

        provided,
however, that no Disposition pursuant to clause (ii), (vii) or (viii) shall be an Exempt Transfer unless each Person to whom any such Disposition is made
(unless already such a party and so bound) simultaneously therewith becomes a party to this Agreement and the Stockholders Agreement and agrees to be bound hereby and thereby with respect to such
Member Shares to the same extent as such Member. 

        "Exercise
Date" has the meaning set forth in Section 2.2(b) hereof. 

        "Free
to Sell Date" has the meaning set forth in Section 2.3(v) hereof. 

        "Gross
Purchase Price" has the meaning set forth in Section 2.2(c) hereof. 

        "Gross
Stock Value" has the meaning set forth in Section 2.2(d) hereof. 

        "Group"
means either the Malone Group or the Magness Group, as the context requires. 

        "High
Vote Stock" means Common Stock of any series that has voting rights greater than one vote per share. The High Vote Stock is currently comprised of the Series B TCI Group
Common Stock, Series B LMG Common Stock and Series B Ventures Group Common Stock. 

        "Holder"
has the meaning set forth in Section 2.2(b) hereof. 

        "Holder
Election Notice" has the meaning set forth in Section 2.2(d) hereof. 

        "Independent
Committee" means a committee of the Board of Directors consisting of directors other than a Member, any Permitted Transferee, or any Related Party of any Member or any such
Permitted Transferee. 

        "Leslie"
has the meaning assigned for such term in the introductory paragraph of this Agreement. 

        "Low
Vote Stock" means Common Stock of any series that has voting rights no greater than one vote per share. The Low Vote Stock is currently comprised of Series A TCI Group Common
Stock, Series A LMG Common Stock and Series A Ventures Group Common Stock. 

        "Magness
Call Agreement" means the Call Agreement, dated as of the date hereof, by and among the Company, Malone, Leslie, Gary Magness, Kim Magness, the Estate of Bob Magness, the Estate
of Betsy Magness and certain other holders of securities of the Company, as it may be amended from time to time. 

        "Magness
Group" has the meaning assigned to it in the Magness Call Agreement. 

        "Malone"
means John C. Malone, a resident of Colorado. 

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        "Malone
Group" shall mean (i) each of Malone and Leslie, (ii) each other Person who is required to become or becomes a party to this Agreement and a member of the Malone
Group pursuant to any provision of this Agreement, (iii) each other Person who at any time acquires any High Vote Stock in a transaction or a chain of transactions initiated by another member
of the Malone Group, other than Exempt Transfers (except those described in clauses (ii), (vii) or (viii) of the definition of "Exempt Transfer" in Section 1.1 hereof) and
(iv) each spouse or other Related Party of any member of the Malone Group, in each case so long as such Person is or is required to be a party to this Agreement or such Person or any of its
Related Parties is the direct or indirect Beneficial Owner of any High Vote Stock. Unless Malone (or his estate), the Company and the Magness Group Representative otherwise agree in writing, no member
of the Magness Group shall be a Member of the Malone Group or a Related Party of any Member. 

        "Member"
means any member of the Malone Group. 

        "Member
Shares" means, with respect to any Member, any and all shares of High Vote Stock beneficially owned by such Member on the date hereof or of which beneficial ownership is
hereafter acquired by such Member or by any Permitted Transferee from such Member or from another Permitted Transferee. 

        "Net
Proceeds" has the meaning set forth in Section 3.2(a) hereof. 

        "Offered
Shares" has the meaning set forth in Section 2.3(b)(i) hereof. 

        "Offering
Period" has the meaning set forth in Section 3.2(a) hereof. 

        "Offer
Notice" has the meaning set forth in Section 2.3(b)(ii) hereof. 

        "Permitted
Transferee" means, with respect to any Member, a Related Party of such Member or another Person to whom any of such Member's Member Shares are transferred, directly or
indirectly, in an Exempt Transfer, in each case if such Person is or is required to become a party to this Agreement or is or is required to be bound by its terms and for so long as such Person is the
beneficial owner of any Member Shares. 

        "Per
Share Value", as to any series of High Vote Stock on any relevant day, means the average of the Current Market Prices of the Low Vote Stock into which the shares of such series of
High Vote Stock are convertible at the option of the holder for the period of 30 consecutive trading days ending on (i) in the case of any calculation pursuant to Section 2.2 hereof, the
last trading day prior to the date of Malone's death, (ii) in the case of any calculation of the Gross Purchase Price for purposes of Section 2.3(b), the last trading day prior to the
date the Offer Notice is given, and (iii) in the case of any determination pursuant to Section 6.1, the last trading day prior to the date on which a letter of intent or other
documentation for the proposed transaction is executed, in each case appropriately adjusted to take into account any stock dividends on the Low Vote Stock, or any stock splits, reclassifications or
combinations of the Low Vote Stock, during the period following the first of such 30 trading days and ending on the last full trading day immediately preceding the Closing Date. 

        "Person"
means any natural person, corporation, partnership, joint venture, limited liability company, trust, unincorporated organization, association or other entity. 

        "Prohibited
Premium" has the meaning set forth in Section 6.1(a) hereof. 

        "Prospective
Purchaser" has the meaning set forth in Section 2.3(b)(i) hereof. 

        "Public
Sale Dollar Amount" has the meaning set forth in Section 3.1(a) hereof. 

        "Public
Sale Notice" has the meaning set forth in Section 3.1(a) hereof. 

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        "Qualified
Appraiser" means a Person who is nationally recognized as being qualified and experienced in the appraisal of assets comparable to the noncash consideration proposed to be
given pursuant to the Bona Fide Offer and shall not be an Affiliate of any party to this Agreement. 

        "Qualified
Trust" means, with respect to any member of either Group, any trust that is directly or indirectly controlled solely by one or more members of such Group and the beneficiaries
of which are one or more Related Parties or Charitable Transferees of one or more of such members, including, without limitation, any such trust that is so controlled and (i) qualifies under
the Code as a so called "charitable remainder trust," provided that the income beneficiaries consist solely of one or more Related Parties of such member(s) and the remainder interest reverts to one
or more Charitable Transferees or (ii) qualifies under the Code as a so-called "charitable lead trust," provided that the income beneficiaries consist solely of one or more
Charitable Transferees and the remainder interest reverts to either such member(s) or one or more Related Parties of such member(s). 

        "Registration
Rights Agreement" has the meaning set forth in Section 2.2(e) hereof. 

        "Registration
Statement" has the meaning set forth in Section 3.2(a) hereof. 

        "Related
Party" means, with respect to any Member or Permitted Transferee: 

        (i)    the
spouse, siblings and lineal descendants (which shall include a Person adopted before the age of 18) of such Person or any spouse of any such sibling or lineal
descendant; 

        (ii)   any
Qualified Trust; 

        (iii)  a
custodian under the Uniform Gifts to Minors Act or similar fiduciary for the exclusive benefit of such Person's children during their lives or a Charitable
Transferee; or 

        (iv)  a
corporation, limited liability company, private foundation or other entity organized under the laws of any state in the United States which is Controlled by, and all
equity, participation, beneficial or similar interests (and rights to acquire any thereof, contingently or otherwise) of which are beneficially owned solely by, such Person or such Person and one or
more Related Parties of such Person referred to in clause (i), (ii) or (iii) of this definition, provided that in any case under clause (i), (ii), (iii) or
(iv) the requisite relationship with such Member or Permitted Transferee described in such clause is maintained and if, as the result of any completed or proposed act, transaction or event, any
Person who previously was a Related Party of a Member or a Permitted Transferee ceases to qualify as a Related Party of such Person or if any shares of High Vote Stock beneficially owned by any such
Related Party are to be distributed or otherwise Disposed of to any Person not already a party to this Agreement and bound by this Agreement as a Member of the Malone Group, then simultaneously
therewith such Person must become a party to this agreement and the Stockholders Agreement and agree to be bound hereby and thereby with respect to such shares as a Member of the Malone Group. 

        "Resale
Stock" has the meaning set forth in Section 3.1(a) hereof. 

        "Sale
of the Company" means any transaction which results in a Change in Control of the Company, specifically excluding, however, any sale of any of the Member Shares pursuant to the
terms of this Agreement. 

        "Sales"
has the meaning set forth in Section 3.2(a) hereof. 

        "Securities
Act" means the Securities Act of 1933, as amended. 

        "Seller"
has the meaning set forth in Section 3.1(a) hereof. 

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        "Series A
Common Stock" means, collectively, the Series A TCI Group Common Stock, Series A LMG Common Stock, and Series A Ventures Group Common Stock, into
which the Series B Common Stock of the corresponding series is convertible. 

        "Series A
LMG Common Stock" means the Tele-Communications, Inc. Series A Liberty Media Group Common Stock. 

        "Series A
TCI Group Common Stock" means the Tele-Communications, Inc. Series A TCI Group Common Stock. 

        "Series A
Ventures Group Common Stock" means the Tele-Communications, Inc. Series A TCI Ventures Group Common Stock. 

        "Series B
Common Stock" means, collectively, the Series B TCI Group Common Stock, Series B LMG Common Stock and Series B Ventures Group Common Stock set forth
in the recitals hereto. 

        "Series B
TCI Group Common Stock" means the Tele-Communications, Inc. Series B TCI Group Common Stock. 

        "Series B
LMG Common Stock" means the Tele-Communications, Inc. Series B Liberty Media Group Common Stock. 

        "Series B
Ventures Group Common Stock" means the Tele-Communications, Inc. Series B TCI Ventures Group Common Stock. 

        "Series
Purchase Price" has the meaning set forth in Section 2.2(c) hereof. 

        "Series
Stock Value" has the meaning set forth in Section 2.2(d) hereof. 

        "Settlement
Agreement" has the meaning set forth in Section 7.3(b) hereof. 

        "Stockholders
Agreement" means the Stockholders' Agreement, dated as of the date hereof, by and among the Company, Malone, Leslie, Gary Magness, Kim Magness, the Estate of Bob Magness
and the Estate of Betsy Magness, as it may be amended from time to time. 

        "Stock
Proceeds Amount" has the meaning set forth in Section 3.1(b) hereof. 

        "Subject
Shares" has the meaning set forth in Section 2.2(a) hereof. 

        "Subsidiary",
when used with respect to the Company, means any corporation, partnership or other business entity of which an aggregate of 50% or more of the outstanding capital stock or
other securities have ordinary voting power to elect a majority of the board of directors, managers, trustees or other controlling persons, or an equivalent controlling interest therein, of such
Person (irrespective of whether, at the time, capital stock or other securities of any other class or classes of such entity shall have or might have voting power by reason of the happening of any
contingency) is, or of which an aggregate of 50% or more of the interests in which are, at the time, directly or indirectly, owned by the Company and/or one or more Subsidiaries of the Company
(irrespective of whether any other Person, by reason of a pledge of capital stock or other securities or otherwise, shall or might have ownership thereof or voting power with respect thereto by reason
of the happening of any contingency). 

        "Tag-Along
Shares" has the meaning set forth in Section 2.3(b)(ii) hereof. 

        "Third
Appraiser" has the meaning set forth in Section 2.3(c)(iv) hereof. 

        "Transferor"
has the meaning set forth in Section 2.3(b)(i) hereof. 

        "Underwriters"
has the meaning set forth in Section 3.2(a) hereof. 

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        1.2   TERMS
DEFINED IN THE STOCKHOLDERS AGREEMENT. Capitalized terms used but not defined in this Agreement are intended to have the definitions assigned to them in the
Stockholders Agreement, and such definitions are hereby incorporated by reference. 

        1.3   DEFINITIONS
INCLUDE THE SINGULAR AND THE PLURAL. Terms defined in the singular include the plural and vice versa. 

        2.     GRANT
OF CALL RIGHT. 

        2.1   GRANT.
Subject to and on the terms and conditions set forth in this Agreement, each Member, on behalf of himself, his Permitted Transferees and his estate, heirs,
administrators, executors, other legal representatives, successors and assigns, hereby grants to the Company the call right, as provided in Section 2.2 and Section 2.3 of this Agreement,
and makes the covenants for the benefit of the Company set forth herein. In consideration of the grant to it of the call right and the making of such covenants, the Company shall pay to the Malone
Group, collectively, the aggregate sum of One Hundred Fifty Million Dollars ($150,000,000), of which One Hundred Million Dollars ($100,000,000) shall be for the grant of such call right,
Twenty-Five Million Dollars ($25,000,000) shall be for the grant of the acceleration feature of such call right and Twenty-Five Million Dollars ($25,000,000) shall be for the
making of such covenants. Such payment shall be made on or prior to February 9, 1998 in cash by wire transfer of next day funds to an account designated by Malone. Such payment shall be
allocated among the Members in any manner in which they agree among themselves. The Company shall be entitled to rely exclusively and conclusively on information provided by the Malone or the Estate
as to any such allocation or other matters in connection with the exercise of the rights of the Malone Group and each of its Members under this Agreement and shall not, in any event, have any
liability to any Member as a result of such reliance. 

        2.2   CALL
RIGHT. (a) Subject to the last sentence upon Malone's death, the Company shall have the right (the "Call Right"), exercisable by action of the Independent
Committee, to purchase all but not less than all of the shares of High Vote Stock beneficially owned by each Member at the time of Malone's death and all but not less than all of the shares of High
Vote Stock that are then beneficially owned by any Permitted Transferee of any Member and which shares were acquired directly or indirectly from a Member or another Permitted Transferee of Member
Shares in any Exempt Transfer or other transaction except a sale to a prospective Purchaser in accordance with Section 2.3(b) hereof (collectively for all Members and Permitted Transferees, the
"Subject Shares"). The Company may not exercise its Call Right under this Section 2.2 unless it concurrently exercises its corresponding call right under the corresponding provisions of the
Magness Call Agreement. 

        (b)   The
Company may exercise the Call Right, by giving written notice of such exercise (the "Company Notice") to each Member and each such Permitted Transferee, if any
(collectively, the "Holder"), at any time during the period commencing on and including the date of Malone's death and ending at the Close of Business on the 50th day after the date, following
Malone's death, on which any legal action that may be required to confirm the appointment of the personal representative(s) for the Estate or for the Estate to act through its personal
representative(s) has been completed (such period, the "Call Period"). The date the Company Notice is given to the Holder is referred to as the "Exercise Date." 

        (c)   The
total consideration payable to the members of the Malone Group collectively for all of the Subject Shares (the "Gross Purchase Price") will be an amount equal to the
sum of the amounts determined in accordance with the following formula for each series of High Vote Stock included in the Subject Shares: 110% of the product of the Per Share Value for such series as
of the date of Malone's death, multiplied by the number of shares of such series included in the Subject Shares (such amount, as to each series, the "Series Purchase Price"). 

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In
calculating any Series Purchase Price or the Gross Purchase Price, the number of Subject Shares and the number of shares of any series included in the Subject Shares shall be calculated without
duplication for any shares that may, by virtue of the definition of "beneficially owned," be deemed to be beneficially owned by more than one Member. 

        (d)   The
Gross Purchase Price will be payable in cash or, as to any series of High Vote Stock included in the Subject Shares, in fully paid and nonassessable shares of Low
Vote Stock of the corresponding series, or any combination of the foregoing, as the Holder may elect, subject to the rights of the Company pursuant to Section 3.1, by written notice given to
the Company at least 60 days prior to the Closing Date (the "Holder Election Notice"). The Holder Election Notice shall specify as to each series of High Vote Stock included in the Subject
Shares, the portion of the Series Purchase Price to be paid in Low Vote Stock of the corresponding series (such portion, as to each series of High Vote Stock, being the "Series Stock Value" and as to
all series for which payment in Low Vote Stock has been elected being, in the aggregate, the "Gross Stock Value"). The Gross Purchase Price less the Gross Stock Value is herein referred to as the
"Closing Date Amount". Subject to the Company's right to elect to require a public sale in accordance with Section 3, the Closing Date Amount shall be delivered to the Estate, on behalf of all
Members and Permitted Transferees who held any of the Subject Shares purchased in cash on the Closing Date. 

        (e)   If
the Holder has timely elected in accordance with Section 2.2(d) to receive any portion of the Gross Purchase Price in shares of Low Vote Stock, the number of
shares of any series of Low Vote Stock to be delivered to the Holder on the Closing Date shall be equal to the quotient obtained by dividing (i) the Series Stock Value for the corresponding
series of High Vote Stock by (ii) the Per Share Value of such corresponding series of High Vote Stock. The shares to be so delivered on the Closing Date will not have been registered for sale
under the Securities Act and may not be sold except pursuant to an effective registration statement or an exemption from the registration requirements of the Securities Act. The Company will be under
no obligation to register such shares for resale except as otherwise provided in a Registration Rights Agreement to be entered into by the Company and the Holder on or prior to the Closing Date
pursuant to which the Company shall grant to the Holder registration rights with respect to such Shares not less favorable to the Holder than any registration rights heretofore or hereafter granted by
the Company to any Person and otherwise on terms customary for similar agreements (the "Registration Rights Agreement"). The certificates for the shares of Low Vote Stock to be delivered to the Holder
on the Closing Date shall bear a customary legend to the foregoing effect, but shall be free of any rights of the Company hereunder. 

        (f)    Amounts
payable pursuant to this Agreement in cash shall, unless otherwise agreed by the Company and the Holder, be paid by wire transfer of next day funds on or prior
to the Closing Date to an account designated in writing by the Holder at least two (2) Business Days before the Closing Date. 

        (g)   In
the event that there are multiple Holders at the commencement of the Call Period, then the provisions of this Section 2.2 and of Section 3 shall be
applied to each Holder separately, with the applicable shares of High Vote Stock beneficially owned by a Holder being the Subject Shares with respect to such Holder and each Holder being entitled to
make an election pursuant to Section 2.2(d), and to have an election made by the Company with respect to it pursuant to Section 3.1, without regard to the elections made pursuant to said
Sections by or with respect to the other Holders. 

        2.3   ACCELERATION
OF CALL RIGHT. (a) During the term of this Agreement, neither any Member nor any Permitted Transferee shall dispose of any Member Shares, except in
an 

9

 

Exempt
Transfer. If any Related Party of any Member to whom such Member transfers any Member Shares in an Exempt Transfer ceases to be a Related Party of its transferor and is not then a Related Party
of any other Permitted Transferee, then unless such Person shall either transfer the Member Shares held by it to a Member, a Permitted Transferee or a Related Party of either or otherwise agrees to be
bound by this Agreement with respect to such Member Shares such occurrence shall be deemed to be a Disposition of the Member Shares then held by such Person giving rise to the Company's purchase right
unless the requirements of the proviso in the definition of "Related Party" in Section 1.1 hereof are satisfied. 

        (b)   (i)
If any Member or any Permitted Transferee (as applicable, the "Transferor") receives a bona fide written offer (a "Bona Fide Offer") from a Person who is not an
Affiliate of any Member or any Permitted Transferor (a "Prospective Purchaser") to purchase all or any of the Member Shares beneficially owned by the Transferor and the Transferor desires to accept
the Bona Fide Offer, then prior to the acceptance of the Bona Fide Offer by the Transferor, the Call Right shall accelerate as to the Member Shares that are the subject of the Bona Fide Offer (the
"Offered Shares") and the Company may exercise the Call Right in the manner and to the extent set forth in this Section 2.3(b). 

        (ii)   The
Transferor shall give written notice (the "Offer Notice") to the Company of its receipt of the Bona Fide Offer and desire to accept the same, which notice shall
(A) state the identity of the Prospective Purchaser and, if the Prospective Purchaser is not its own ultimate parent within the meaning of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, the identity of its ultimate parent(s) and (B) set forth all material terms of the Bona Fide Offer (including the purchase price and the method of payment
thereof). If one or more members of the Magness Group exercise their right pursuant to the Stockholders Agreement to tag-along on the Bona Fide Offer, the Transferor shall set forth in the
Offer Notice or in a separate written notice given at any time prior to the Closing Date the names of such exercising member(s) and the number of shares of High Vote Stock beneficially owned by each
such member that such member has elected to
include in the sale to the Prospective Purchaser pursuant to the Stockholders Agreement (such member's "Tag-Along Shares"). The Company shall then have the option to exercise the Call
Right as to all but not less than all of the Offered Shares and the Tag-Along Shares (collectively, the "Combined Offered Shares") at the applicable price determined in accordance with the
following sentence and, subject to the remaining provisions of this Section 2.3, on the terms of the Bona Fide Offer (as disclosed in the Offer Notice). The price at which the Combined Offered
Shares may be purchased by the Company shall be the lesser of (x) the price offered in the Bona Fide Offer and (y) an amount equal to the Gross Purchase Price, as determined in
accordance with Section 2.2, that would be payable if the Combined Offered Shares were the Subject Shares (such lesser amount being, the "Company Price"). The Transferor shall enclose with the
Offer Notice a true and complete copy of the Bona Fide Offer and all documents related thereto. In determining the Company Price, (i) if any portion of the price offered in the Bona Fide Offer
consisted of consideration other than cash, the fair market value of such non-cash consideration shall be deemed to be equal to the amount determined by agreement of the Transferor and the
Company or, failing such agreement, as determined in accordance with the procedures as set forth in Section 2.3(c); and the number of Subject Shares and the number of shares of any series
included in the Subject Shares shall be calculated without duplication for any shares that may, by virtue of the definition of "beneficially owned," be deemed to be beneficially owned by more than one
Member. 

10

 

        (iii)  The
Company shall have the right, exercisable (if so determined by the Independent Committee) by the written notice (an "Election Notice") given to the Transferor on
or before the Close of Business on the tenth (10th) Business Day after receipt of the Offer Notice, to exercise the Call Right as to the Combined Offered Shares and to purchase all but not less than
all of the Combined Offered Shares. If the Company duly delivers an Election Notice for the Combined Offered Shares in accordance with the foregoing procedure, it shall (subject to the Company's right
to elect to pay a portion of the Company Price in debt securities in accordance with Section 2.3(b)(iv) and subject to the Company's right to elect to require a public sale in accordance with
Section 3.1), purchase the Combined Offered Shares for cash, paid by wire transfer of next day funds on or prior to the Closing Date to an account designated by the Transferor in writing at
least two (2) Business Days before such date. Notwithstanding the date fixed as the Closing Date in Section 4.1, the Closing Date for the purchase and sale of the Combined Offered Shares
pursuant to this Section 2.3 shall be subject to extension in accordance with Section 2.3(c). 

        (iv)  In
the event that the Company Price is the price offered in the Bona Fide Offer and any part of the price specified in the Bona Fide Offer is proposed to be paid in
debt securities, the Company may, in its discretion, elect to pay the equivalent portion of the Company Price through the issuance of debt securities with substantially similar terms in an amount the
fair market value of which is equal to the fair market value of the equivalent portion of the debt securities specified in the Offer Notice, in each case as agreed by the Company and the Transferor
or, failing such agreement, as determined in accordance with the procedures specified in Section 2.3(c), taking into consideration relevant credit factors relating to the Prospective Purchaser
and the Company and the marketability and liquidity of such debt securities. 

        (v)   In
the event that (A) no Election Notice has been given by the tenth (10th) Business Day after receipt of the Offer Notice, or (B) if an Election Notice is
given, the Closing has not occurred by the 61st day after the Election Notice is given (or such later date as the parties may have scheduled for the Closing or to which the Closing may have
been extended pursuant to Section 2.3(c), for any reason other than a breach by the Transferor or another Member or Permitted Transferee of its obligations hereunder (the first to occur of such
events being the "Free to Sell Date"), then each Person included within the Transferor shall have the right to sell all but not less than all of the Combined Offered Shares of such Person to the
Prospective Purchaser at the price (or a greater price) and upon the terms (or terms no more favorable to the Prospective Purchaser) specified in the Offer Notice and, in connection with any such sale
such Person shall not be required to convert any of such Offered Shares into shares of Low Vote Stock prior to the sale to such Prospective Purchaser. The right to sell Combined Offered Shares to the
Prospective Purchaser pursuant to this Section 2.3(b)(v) shall expire and the provisions of this Section 2.3(b) shall be reinstated in the event that the Prospective Purchaser has not
purchased such Combined Offered Shares within ten (10) Business Days after the Free to Sell Date. 

        (c)   (i)
If a Bona Fide Offer proposes to pay a portion of the price for the Offered Shares in consideration other than cash and the Company and the Transferor have not
agreed upon the value thereof (or, in the case of debt securities, if the Company has elected to pay a portion of the Company Price in equivalent securities and the Company and the Transferor have not
agreed upon the value of the debt securities the Company proposes to issue) by the Close of Business on the fifth (5th) Business Day prior to the date otherwise fixed for the Closing (the
"Commencement Date") then the procedures set forth in this Section 2.3(c) shall 

11

 

be
commenced and the Closing Date shall be extended to the fifth (5th) Business Day following the date on which the fair market value of the noncash consideration (or Company issued debt securities)
has been finally determined pursuant to this Section 2.3(c). 

        (ii)   The
Company and the Transferor shall each retain a Qualified Appraiser and notify the other party of its selection within five (5) Business Days of the
Commencement Date to render the determination required by this Section 2.3(c). If either party fails to timely select its Qualified Appraiser then the Qualified Appraiser selected by the other
party shall render such determination. The Company and the Transferor shall each be responsible for the fees and expenses of the Qualified Appraiser selected by it, unless only one Qualified Appraiser
is selected in which case the Company and the Transferor shall each bear 50% of such fees and expenses. If a Third Appraiser is selected pursuant to this Section 2.3(c) the fees and expenses of
the Third Appraiser will be shared equally by the Company and the Transferor. 

        (iii)  The
Qualified Appraisers selected by the parties shall submit their respective independent determinations of the fair market value of the noncash consideration (and,
if applicable, Company issued debt securities), within 15 Business Days after the Commencement Date. If the respective determinations of such Qualified Appraisers vary by less than ten percent (10%),
the fair market value
of the noncash consideration (and, if applicable, Company issued debt securities) shall be the average of the two determinations. 

        (iv)  If
such respective determinations vary by ten percent (10%) or more, the two Appraisers shall promptly designate a third Qualified Appraiser (the "Third Appraiser"). No
party to this Agreement or any Affiliate of any party to this Agreement or Qualified Appraiser shall, provide any information to the Third Appraiser as to the determinations of the initial Qualified
Appraisers or otherwise influence the Third Appraiser's determination in any way. The Third Appraiser shall submit its determination of the fair market value of the noncash consideration (and, if
applicable, Company issued debt securities), within ten (10) Business Days after the date on which the Third Appraiser is retained. If a Third Appraiser is retained, the fair market value of
the noncash consideration (and, if applicable, Company issued debt securities) shall equal the average of the two closest of the three determinations, except that, if the difference between the
highest and middle determinations is no more than 105% and no less than 95% of the difference between the middle and lowest determinations, then the fair market value shall equal the middle
determination. 

        (v)   In
determining the fair market value of the noncash consideration (and, if applicable, the Company issued debt securities), each Qualified Appraiser retained pursuant to
this Section 2.3(c) shall: (i) assume that the fair market value of the applicable asset is the price at which the asset would change hands between a willing buyer and a willing seller,
neither being under any compulsion to buy or sell and each having reasonable knowledge of all relevant facts; (ii) assume that the applicable asset would be sold for cash; and (iii) use
valuation techniques then prevailing in the relevant industry. 

        (d)   No
voluntary transfers of Member Shares may be made by any Holder during the Call Period and if the Call Right is exercised, thereafter, except to the Company pursuant
to the Call Right. Accordingly, without limiting the generality of the foregoing, no voluntary transfer may be made during such period pursuant to a Bona Fide Offer, notwithstanding the Transferor's
compliance with this Section 2.3 prior to Malone's death. 

12

 

        (e)   If
there shall be more than one Transferor in any transaction or series of related transactions covered by an Offer Notice, and if, to the extent permitted by this
Agreement, the Company pays the Company Price with more than one form of consideration, then unless otherwise agreed in writing by the Transferors, each Transferor shall receive on a per share basis
substantially the same combination of consideration. 

        (f)    Notwithstanding
anything in this Agreement to the contrary, one or more Members may, at any time and from time to time, sell a number of Member Shares that in the
aggregate for all transfers made
pursuant to this subsection by any or all of the Members is equal to or less than the number of Excepted Shares. Prior to the consummation of a disposition of any Member Shares in accordance with this
Section 2.3(f), such Member Shares must be converted into shares of Low Vote Stock of the corresponding series. The number of any Member Shares disposed of pursuant to this
Section 2.3(f) shall be subtracted from the number of Excepted Shares. Upon the consummation of a disposition of Member Shares pursuant to this Section 2.3(f), the Member disposing of
such Member Shares shall deliver to the Company a written notice stating the number of Member Shares so disposed of by such Member and the aggregate number of Excepted Shares which such Member
continues to beneficially own. 

        3.     PUBLIC
SALE ELECTION. 

        3.1   COMPANY
ELECTION. (a) Notwithstanding anything in Section 2.2(d) or Section 2.3(b)(iii) to the contrary, but subject to Section 2.3(e), the
Company shall have the right to pay all or any portion of the Closing Date Amount or Company Price, as applicable, in shares of Low Vote Stock in accordance with the following procedures. At least
five (5) Business Days prior to the Closing Date, the Company shall notify (the "Public Sale Notice") the Holder or each Transferor, as the case may be, as to the portion of the Closing Date
Amount or Company Price, as applicable, to be paid in shares of Low Vote Stock (the "Public Sale Dollar Amount"). The number of shares of Low Vote Stock (the "Resale Stock") deliverable to the
Underwriters pursuant to Section 3.2 shall be that number of shares which when sold in accordance with Section 3.2 will reasonably be expected to yield aggregate net proceeds
collectively to all the Member(s), Permitted Transferee(s), Members of the Magness Group and other Persons, if any, participating in the sale (collectively, the "Seller") (after deduction of
underwriting discounts and commissions and assuming the payment by the Company of all other expenses of registration and sale of the Resale Stock) of an aggregate amount equal to the Stock Proceeds
Amount. 

        (b)   The
term "Stock Proceeds Amount" shall mean the sum of (i) Public Sale Dollar Amount, plus (ii) interest on the Public Sale Dollar Amount, accruing from
and including the Closing Date to the date of payment pursuant to Section 3.2, at a rate equal to the weighted average interest rate applicable as of the Closing Date to that portion of the
consolidated indebtedness of the Company that bears interest at a floating interest rate. 

        (c)   Subject
to the foregoing, the decision as to which series of Low Vote Stock and the number of shares of each such series that will comprise the Resale Stock shall be
made by the Company at its discretion. Such shares shall be held by the Company on behalf of the Seller pending the Sales, and the Company shall be authorized to deliver such shares to the
Underwriters on such Seller's behalf prior to the closing of the Sales. 

        3.2   PUBLIC
SALE. (a) On the Closing Date, the Company shall provide an effective registration statement (the "Registration Statement") registering under the
Securities Act resales of the Resale Stock deliverable pursuant to Section 3.1 having a maximum aggregate offering price (net of underwriting fee and commissions) equal to the Stock Proceeds
Amount. Such Resale Stock shall be sold (at the Company's discretion but in the form of one or more secondary offerings on behalf of each Seller) under the Registration Statement during the period of
not more 

13

 

than
45 days following the Closing Date as specified by the Company (the "Offering Period"). The Company may by notice to each Seller at any time shorten the Offering Period, and in such event,
the Offering Period as referred to herein shall mean such shorter period. All sales (the "Sales") of the Resale Stock shall be made on behalf of each Seller by underwriters selected by the Company
(the "Underwriters") pursuant to one or more block trades, underwritten offerings or otherwise, in each case as determined by the Company. The actual net proceeds from the Sales (after deduction of
underwriting discounts and commissions) are referred to as the "Net Proceeds". The Company shall pay all expenses of registration and sale of the Resale Stock. 

        (b)   On
the fifth Business Day following the termination of the Offering Period, the Company shall deliver to each Seller such Seller's pro rata portion of the Net Proceeds
and if the Net Proceeds are less than the Stock Proceeds Amount, the difference (the "Difference") shall be paid by the Company in cash on such date to Sellers on a pro rata basis. The Company may
elect to pay some or all of the Difference prior to such date and in such event the interest component of the portion of the Difference so paid early shall be calculated with respect to such earlier
payment date. If the Net Proceeds exceed the Stock Proceeds Amount, the Company may retain the excess. 

        (c)   The
Company shall indemnify each Seller and the Underwriters in respect of the Sales to the same extent as the Company would indemnify the Holder and the Underwriters as
provided in the Registration Rights Agreement, but the Sales shall not be deemed to have been made pursuant to the Registration Rights Agreement. 

        (d)   Each
Seller shall be required to cooperate with the Company in connection with the Registration Statement and the Sales (including, without limitation, by executing and
delivering underwriting and other documents and instruments, taking actions and providing information) as shall be reasonably requested by the Company in connection therewith. 

        4.     CLOSING
MATTERS. 

        4.1   CLOSING
DATE. The consummation of the purchase and sale of (i) the Subject Shares following the exercise of the Call Right pursuant to Section 2.2 or
(ii) the Combined Offered Shares following the exercise of the Call Right pursuant to Section 2.3 (in each case, a "Closing") shall be held at 10:00 a.m. local time on,
respectively, (x) the 155th day following the Exercise Date, or (y) the 60th day following the
date the Election Notice is given or (z) such other date and at such other time as the Holder or the Transferor and the Company may agree (the date on which any such Closing occurs is referred
to herein as the "Closing Date"). The Closing shall take place at the principal offices of the Company or at such other place as the Malone or the Estate (as the case may be) and the Company may
agree. 

        4.2   CLOSING
DELIVERIES. At the Closing, the Company shall pay to the Member(s) and Permitted Transferee(s), if any, comprising the Seller (i) any portion of the
Closing Date Amount or Company Price, as applicable, that was required to be paid in cash in the manner provided in Section 2.2(f) or Section 2.3(b)(iii), as and if applicable,
(ii) deliver certificate(s) registered in the name of each Seller for the number of shares of Low Vote Stock required to be delivered in payment of the Gross Stock Value portion of the Gross
Purchase Price, and (iii) if the Company has elected to pay any or all of the Closing Date Amount or Company Price, as applicable, in shares of Low Vote Stock pursuant to Section 3.1,
deliver the Registration Statement conforming to the requirements of Section 3.2. At the Closing, each of the Member(s) and Permitted Transferee(s), if any, participating in the sale shall be
required, as a condition to receiving payment, to deliver to the Company (i) a stock certificate or certificates, duly endorsed for transfer or in blank, representing such Person's Subject
Shares or Combined Offered Shares, as applicable, (ii) if applicable, copies of Letters Testamentary or other documentation evidencing the authority of such Person to transfer any of the
Subject Shares that are evidenced by certificates registered in 

14

 

the
name of a Person other than such Seller, (iii) a certificate, executed by or on behalf of such Person, in which such Person represents and warrants to the Company that such Person has good
title to the Subject Shares or Combined Offered Shares, as applicable, being sold by him, free and clear of any liens, claims, charges or encumbrances and has the legal authority to consummate such
sale and (iv) such other certificates and documents as the Company may reasonably request. 

        5.     CERTAIN
REPRESENTATIONS, WARRANTIES AND COVENANTS. 

        5.1   REPRESENTATIONS
AND WARRANTIES. Each party hereto hereby represents and warrants to the other parties 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, except, with respect to the exercise of certain rights granted hereunder, in connection with
Federal and state securities laws. 

        5.2   GENERAL
COVENANTS. (a) In the event that any sale of shares pursuant to this Agreement would violate any rules or regulations of any governmental or regulatory
agency having jurisdiction or any other material law, rule, regulation, order, judgment or decree applicable to the parties hereto (including, with respect to the Company, its subsidiaries or any of
the Company's or such subsidiary's respective properties and assets), then each party hereto hereby agrees (i) to cooperate with and assist the other in filing such applications and giving such
notices, (ii) to use reasonable efforts to obtain, and to assist the other in obtaining, such consents, approvals and waivers, and (iii) to take such other actions, including supplying
all information necessary for any filing, as any affected party may reasonably request, all as and to the extent necessary or advisable so that the consummation of such sale will not constitute or
result in such a violation. 

15

 

        (b)   Each
party hereto hereby further agrees that he or it shall not take any action or enter into any agreement or arrangement restricting or limiting his or its ability
timely and fully to perform all his or its obligations under this Agreement. 

        6.     STOCKHOLDER'S
COVENANT RELATING TO A SALE OF COMPANY. 

        6.1   LIMITATION
ON SIZE OF PREMIUM. (a) In connection with any proposed Sale of the Company, each Member agrees not to negotiate for or require as a term of such
transaction or as a condition to his agreement to vote therefor that either (i) the holders of High Vote Stock receive for such High Vote Stock or (ii) any Member or any Related Party or
Affiliate of any Member receives for the shares of High Vote Stock or Common Stock beneficially owned by any of them, consideration the value of which on a per share basis exceeds the value per share
payable to (x) holders of shares of Low Vote Stock into which such High Vote Stock is convertible or (y) holders of Common Stock other than any Member or any Related Party or Affiliate
of any Member, in either case by more than ten percent (10%) (a "Prohibited Premium"). For the purposes of computing the existence of a Prohibited Premium, if any noncash consideration to be received
by any holders of Common Stock in any proposed Sale of the Company is the same for both (A) (i) the holders of High Vote Stock or (ii) any Member or any Related Party or Affiliate of any
Member, as applicable, and (B) (x) holders of shares of Low Vote Stock into which such High Vote Stock is convertible or (y) holders of Common Stock other than any Member or any Related
Party or Affiliate of any Member, as applicable, a Prohibited Premium shall be deemed to exist if the ratio of such noncash consideration given to the Persons listed in (A) above exceeds the
amount of such noncash consideration given to the Persons listed in (B) above by more than ten percent (10%). If different forms of noncash consideration are to be given to the Persons listed
in (A) above than to the Persons listed in (B) above, and there is any disagreement between the Independent Committee and any such Person as to the value of any such consideration for
the purposes of determining if there is a Prohibited Premium, then the noncash consideration shall be valued by using the appraisal procedures set forth in Section 2.3(c). 

        (b)   If
a proposed Sale of the Company containing a Prohibited Premium is submitted to the stockholders of the Company for a vote, each Member agrees that he will vote all of
his Member Shares, and any other shares of voting stock entitled to vote on such proposal beneficially owned by him, against such proposal. 

        7.     MISCELLANEOUS.

        7.1   TERM.
This Agreement shall continue in full force and effect until the first to occur of the following: (i) all of the Member Shares have been purchased by the
Company, (ii) all of the Member Shares have been sold to one or more Prospective Purchasers in compliance with Section 2.3(b) and (ii) the Call Right under Section 2.2 has
expired unexercised. 

        7.2   BINDING
EFFECT; ASSIGNABILITY; ENTIRE AGREEMENT; LEGENDS. (a) Except as expressly provided herein, no party hereto may assign its rights or delegate its
obligations hereunder without the prior written consent of the other parties hereto, except that the Company may assign its rights and delegate its obligations without such consent to any successor
corporation by operation of law. Any assignment or delegation in contravention of this Agreement shall be void and shall not relieve the assigning or delegating party of any obligation hereunder. This
Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. 

        (b)   This
Agreement sets forth the entire agreement and understanding between the parties as to the subject matter hereof and merges and supersedes all prior discussions,
agreements and understandings of any and every nature among them with respect to such subject matter. For the sake of certainty, the parties specifically acknowledge that this 

16

 

Agreement
is not intended to merge, supersede or alter the provisions of (i) the Stockholders Agreement or (ii) any provision of the Agreement, effective as of January 5, 1998 and
titled "AGREEMENT RE: SETTLEMENT OF MAGNESS ESTATE LITIGATION" among certain parties to such Stockholders' Agreement and certain other Persons, as it may be amended from time to time (the "Settlement
Agreement"), other than numbered paragraph 10 thereof, or (iii) any separate agreement, release or instrument granted, entered into or delivered pursuant to such Settlement Agreement. 

        (c)   Except
as expressly set forth herein, none of the provisions of this Agreement shall inure to the benefit of or be enforceable by any Person not a party hereto. 

        (d)   The
provisions of Section 6.4 of the Stockholders Agreement are hereby incorporated by reference, with the same force and effect as if set forth at this place. 

        7.3   AMENDMENTS
AND WAIVERS. Subject to Section 7.12 hereof, the provisions of this Agreement, including the provisions of this sentence, may not be amended, modified
or supplemented, and waivers of or consents to departures from the provisions hereof may not be given unless approved in writing by the Company and Malone or the Estate. 

        7.4   GOVERNING
LAW. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware, regardless of the laws that might be
applicable under principles of conflicts of law. 

        7.5   INTERPRETATION.
The headings of the sections contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the parties and shall
not affect the meaning or interpretation of this Agreement. 

        7.6   NOTICES.
All notices, requests, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered
personally or mailed, certified or registered mail with postage prepaid, sent by facsimile transmission (with acknowledgment received), or by reliable overnight courier service, with acknowledgment of
receipt requested to the intended recipient at: (i) in the case of Malone or any other member of the Malone Group, to Malone or such member at such address as he may from time to time specify
by written notice to the Company and the
Magness Group Representative, (ii) in the case of the Magness Group Representative or any member of the Magness Group, to the Magness Group Representative at such address as he may from time to
time specify by written notice to the Company and Malone (or his estate, heirs or personal representative) and (iii) in the case of the Company, to it at its principal executive offices or at
such changed address as it may from time to time specify in writing to the Magness Group Representative, the Company and Malone (or his estate, heirs or personal representative). All notices and other
communications given to a party in accordance with the provisions of this Agreement shall be deemed to have been given (i) three Business Days after the same are sent by certified or registered
mail, postage prepaid, return receipt requested, (ii) on the date when delivered by hand, (iii) on the date sent by facsimile transmission (with acknowledgment received) unless such day
is not a Business Day in which case, the next Business Day following such day or (iv) one Business Day after the same are sent by a reliable overnight courier service, with acknowledgment of
receipt requested. Notwithstanding the preceding sentence, notice of change of address shall be effective only upon actual receipt thereof. 

        7.7   NO
IMPLIED WAIVERS. No action taken pursuant to this Agreement, including, without limitation, any investigation by or on behalf of any party, shall be deemed to
constitute a waiver by the party taking such action of compliance with any representations, warranties, covenants or agreements contained herein or made pursuant hereto. The waiver by any party hereto
of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any preceding or succeeding breach and no failure by any party to exercise any right or 

17

 

privilege
hereunder shall be deemed a waiver of such party's rights or privileges hereunder or shall be deemed a waiver of such party's rights to exercise the same at any subsequent time or times
hereunder. 

        7.8   COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to
constitute one and the same agreement. 

        7.9   FURTHER
ASSURANCES. Each party shall cooperate and take such actions as may be reasonably requested by another party in order to carry out the provisions and purposes of
this Agreement and the transactions contemplated hereby. If, as a result of any recapitalization, reorganization, merger, consolidation, share exchange or other transaction or event shares of any
substitute, different or new class or series of High Vote Stock is issued or is issuable (upon exercise of warrants, options, convertible securities or otherwise) to any Member, then if and to the
extent requested in writing by the Company, such shares shall be subject to terms as nearly as equivalent as practicable to the provisions of this Agreement and the Stockholders' Agreement applicable
to such Member. 

        7.10 REMEDIES.
In the event of a breach or a threatened breach by one party to this Agreement of its obligations under this Agreement, each other party, in addition to being
entitled to exercise all rights granted by law, including recovery of damages, shall be deemed to have suffered or be about to suffer irreparable harm and will be entitled to specific performance of
its rights under this Agreement. The parties agree that the provisions of this Agreement shall be specifically enforceable, it being agreed by
the parties that the remedy at law, including monetary damages, for breach of such provision will be inadequate compensation for any loss and that any defense in any action for specific performance
that a remedy at law would be adequate is waived. 

        7.11 USE
OF CERTAIN WORDS. The use of the words "hereof", "herein", "hereunder", and words of similar import shall refer to this entire Agreement, and not to any particular
article, section, subsection, clause, or paragraph of this Agreement, unless the context clearly indicates otherwise. The use in this Agreement of the masculine, feminine or neither shall be deemed to
include a reference to the others. 

        7.12 SEVERABILITY.
If any provision of this Agreement or the application thereof to any Person or circumstance is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remaining provisions hereof, or the application of such provision to Persons or circumstances other than those as to which it has been held invalid or unenforceable, shall
remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, provided, that if any provision hereof or the application thereof shall be so held to be invalid, void
or unenforceable by a court of competent jurisdiction, then such court may substitute therefor a suitable and equitable provision in order to carry out, so far as may be valid and enforceable, the
intent and purpose of the invalid, void or unenforceable provision and, if such court shall fail or decline to do so, the parties shall negotiate in good faith in an effort to agree upon such a
suitable and equitable provision. 

        7.13 CONSENT
TO JURISDICTION; SERVICE OF PROCESS; WAIVER OF JURY TRIAL. 

        (a)   TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY (I) SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE
NONEXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT SITTING IN WILMINGTON, DELAWARE (AND OF ANY APPELLATE COURT TO WHICH AN APPEAL OF ANY JUDGMENT, ORDER, DECREE OR DECISION OF ANY SUCH COURT MAY
BE TAKEN) IN ANY 

18

 

SUIT,
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR EITHER CALL AGREEMENT OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT RENDERED IN ANY SUCH SUIT, ACTION OR PROCEEDING,
(II) WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY SUCH COURT, INCLUDING ANY CLAIM THAT ANY SUCH SUIT, ACTION OR
PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM, (III) WAIVES ALL RIGHTS TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION OR PROCEEDING AND (IV) WAIVES PERSONAL SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER PROCESS BY ANY MEANS, MANNER OR METHOD OTHER THAN IN THE MANNER PROVIDED FOR THE GIVING OF NOTICES TO SUCH PARTY IN SECTION 7.6, AND AGREES THAT ANY PROCESS SERVED UPON SUCH
PARTY IN SUCH MANNER SHALL HAVE THE SAME VALIDITY AND LEGAL FORCE AND EFFECT AS IF SERVED UPON SUCH PARTY PERSONALLY WITHIN WILMINGTON, DELAWARE. 

        (b)   Nothing
in this Section shall affect the right of any party to serve legal process in any other manner permitted by law or affect the right of any party to bring any
action or proceeding against any other party or its property in the courts of any other jurisdiction. The consents to jurisdiction set forth in this Section shall not constitute general consents to
service of process in the State of Delaware, shall have no effect for any purpose except as provided in this Section and shall not be deemed to confer rights on any Person other than the parties to
this Agreement. 

        7.14 FACSIMILE
SIGNATURES. This Agreement and any other instrument executed and delivered by any party pursuant to this Agreement may be executed by facsimile signatures. 

        7.15 ATTORNEYS'
FEES. In any action or proceeding brought to enforce any provision of this Agreement, and in any action or proceeding otherwise arising under or with respect
to this Agreement, the prevailing party shall be entitled to recover reasonable attorneys' fees in addition to any other available remedy. 

        7.16 EXPENSES.
Except as otherwise expressly provided in this Agreement, each party will pay its own costs and expenses in connection with the negotiation, preparation,
execution, delivery and performance of this Agreement, any amendment or supplement to or modification of this Agreement and any and all other agreements, instruments, certificates and other documents
furnished pursuant hereto or in connection herewith. 

[rest
of page intentionally left blank] 

19

 

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

					
	

 	
 	
TELE-COMMUNICATIONS, INC.
	

 	
 	
By:	
 	
 

  Name:

Title: 
	

 	
 	
  
 

  JOHN C. MALONE
	

 	
 	
  

  LESLIE MALONE

20

QuickLinks

CALL AGREEMENTEXHIBIT
10.24

 

RIGEL
PHARMACEUTICALS, INC.

 

AMENDED
AND RESTATED EMPLOYMENT AGREEMENT

 

THIS
AMENDED AND RESTATED EMPLOYMENT AGREEMENT (“Agreement”) is
entered by and between Dr. Donald G. Payan (“Executive”) and RIGEL
PHARMACEUTICALS, INC. (the “Company”), a Delaware corporation on November 13,
2008 (the “Effective Date”).  This Agreement shall replace and supersede
that certain Employment Agreement between Executive and the Company entered
into effective as of December 17, 2007 (the “Prior
Agreement”).

 

WHEREAS,
The Company and Employee previously entered into the Prior
Employment Agreement and desire to amend and restate the Prior Agreement in its
entirety as set forth herein, effective as of the Effective Date, in order to
clarify the application of Section 409A of the Internal Revenue Code of
1986, as amended (the “Code”) to
the benefits provided to Executive under the Prior Agreement.

 

NOW,
THEREFORE, in consideration of the mutual promises and
covenants contained herein, it is hereby agreed by and between the parties
hereto as follows, effective as of the Effective Date:

 

1.             EMPLOYMENT
BY THE COMPANY.

 

1.1          Title and
Responsibilities.  Subject to the
terms set forth herein, Executive will continue to be employed by the Company
as the person responsible for all of the Company’s scientific research;
currently, the Executive holds the title of Executive Vice President, Chief
Scientific Officer.  Executive will
report to the Company’s Chief Executive Officer and the Company’s Board of
Directors (the “Board”).
During his employment with the Company, Executive will devote his best efforts
and substantially all of his business time and attention (except for vacation
periods and reasonable periods of illness or other incapacity permitted by the
Company’s general employment policies) to the business of the Company.

 

1.2          At-Will Employment. 
Executive’s relationship with the Company is at-will.  The Company will have the right to terminate
this Agreement and Executive’s employment with the Company at any time with or without
Cause (as defined below), and with or without advance notice.  In addition, the Company retains the
discretion to modify the terms of Executive’s employment, including but not
limited to position, duties, reporting relationship, office location, compensation,
and benefits, at any time.  Executive’s
at-will employment relationship may only be changed in a written agreement
approved by the Board and signed by Executive and a duly authorized officer of
the Company.

 

 

1.3          Company Employment
Policies.  The employment
relationship between the parties will continue to be governed by the general
employment policies and procedures of the Company, including those relating to
the protection of confidential information and assignment of inventions.

 

2.             COMPENSATION.

 

2.1          Salary.  Executive will earn a base salary in 2008 at
an annualized rate of $483,000, payable on the Company’s standard payroll
dates.  Executive will be considered for
annual increases in base salary in accordance with Company policy.

 

2.2          Target Bonus.  Subject to annual review by the Board or a
duly authorized committee thereof (either, the “Committee”),
Executive will be eligible to earn a target annual bonus of up to fifty percent
(50%) of Executive’s base salary (the “Target  Bonus”).  Whether Executive earns a Target Bonus, and
if so, in what amount, will be determined solely by the Committee in its
discretion.  Executive must remain an
active employee through the time the Committee determines bonus amounts for
executives of the Company in order to earn any bonus.

 

2.3          Equity Awards.  Executive’s
current compensatory equity awards are not affected by this Agreement and will
remain in effect in accordance with the terms of the applicable award
agreements and stock plan(s).

 

2.4          Standard Company
Benefits.  Executive will be entitled
to participate in the Company’s employee benefits and compensation plans which
may be in effect from time to time and provided by the Company to its
executives, under the terms and conditions of such benefit and compensation
plans.

 

3.             CONFIDENTIAL
INFORMATION.

 

3.1          Intellectual Property.         As a condition of his
continued employment, Executive must continue to comply with the Employee
Proprietary Information and Inventions Agreement (the “Proprietary Agreement”)
he has executed previously.  Nothing in
this Agreement is intended to modify in any respect the Proprietary Agreement,
and the Proprietary Agreement will remain in full force and effect.

 

3.2          Solicitation.          As a condition of
receiving the Severance Benefits (as defined below), Executive agrees that for
one (1) year following the termination of employment with the Company,
Executive will not personally initiate or participate in the solicitation of
any employee of the Company or any of its affiliates to terminate his or her
relationship with the Company or any of its affiliates in order to become an
employee for any other person or business entity.

 

4.             TERMINATION
OF EMPLOYMENT; CHANGE OF CONTROL

 

4.1          Termination Without
Cause or Resignation for Good Reason — No Change of Control.  If the Company terminates Executive’s
employment at any time 

 

2

 

without Cause (and other
than as a result of death or disability), or if Executive resigns from all
positions he then holds with the Company for Good Reason, and such termination
is not a “Qualifying Termination” (as defined below), and provided further that
such termination is a “separation from service” (as defined under Treasury
Regulation Section 1.409A-1(h)), Executive will be eligible for the
following severance benefits (the “Severance Benefits”):  (i) the Company will make a lump sum
severance payment to Executive in an amount equal to two (2) years of
Executive’s then-current base salary plus 200% of the Eligible Bonus, where the
Eligible Bonus is an average of the percent earned of the Target Bonus for
performance for the last two year multiplied by the current Target Bonus,
subject to withholdings and deductions, (ii) if Executive timely elects
continued health insurance coverage pursuant to the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (together with any applicable state law
of similar effect, “COBRA”), the Company will pay the full amount of Executive’s COBRA
premiums for Executive’s continued coverage under the Company’s group health
plans, including coverage for Executives’s eligible dependents for
eighteen (18) months following the date his employment terminates or until such
earlier date as he becomes eligible for health insurance coverage from another
source (provided that Executive must promptly inform the Company, in writing,
if he becomes eligible for health insurance coverage from another source within
eighteen (18) months after the termination) or otherwise ceases to be eligible
for COBRA, (iii) acceleration of all then-outstanding compensatory equity
awards, and (iv) a modification of the post-termination exercise period of
such equity awards until the earlier of (a) the original end of the term
of each such award (generally 10 years from the date of grant) or (b) the
one (1) year anniversary of the date of the termination of
employment.  Executive will not be
entitled to the Severance Benefits unless and until the requirements set forth
in Section 5 of this Agreement are satisfied.

 

(a)           Definition of Cause.  For purposes of this Agreement, “Cause” will mean: (1) an
intentional action or intentional failure to act by Executive that was
performed in bad faith and to the material detriment of the business of the
Company; (2) Executive’s intentional refusal or intentional failure to act
in accordance with any lawful and proper direction or order of his or her
superiors that has not been cured within ten (10) days after written
notice from the Company, or that has caused irreparable damage incapable of
cure; (3) Executive’s habitual or gross neglect of the duties of
employment that has not been cured within ten (10) days after written
notice from the Company, or that has caused irreparable damage incapable of
cure; (4) Executive’s indictment, charge, or conviction of a felony or any
crime involving moral turpitude, or participation in any act of theft or
dishonesty, in each case, that has had or could reasonably be expected to have
a material detrimental effect on the business of the Company; or (5) Executive’s
violation of any material provision of the Proprietary Agreement or violation
of any material provision of any other written Company policy or procedure.

 

(b)           Definition of Change of
Control.  For purposes of this
Agreement, a “Change of Control” has the
meaning set forth in the Severance Plan (as defined below).

 

3

 

(c)           Definition of
Resignation for Good Reason.  For
purposes of this Agreement, a “Resignation for Good
Reason” means Executive has resigned from all positions he
then-holds with the Company (or any successor thereto) if (1):  (i)     there is a material diminution of Executive’s
authority, including but not limited to decision-making authority,
duties, or responsibilities; (ii)     there
is a material reduction in the Executive’s annual base compensation (including
the base salary and target bonus opportunity), where material is considered greater than 5%; (iii)   the Executive is required
to relocate his primary work location to a facility or location that would
increase the Executive’s one way commute distance by more than twenty (20)
miles from the Executive’s primary work location as
of immediately prior to such change; (iv) a material
diminution in the authority, duties, or responsibilities of the supervisor to whom
the Executive is required to report,
including a requirement that the Executive report to a corporate officer
or employee instead of reporting directly to the board of directors of a
corporation (or similar governing body with respect to an entity other than a
corporation); (v)  a material diminution in the budget over
which the Executive retains authority; (vi)  the Executive is required, as a condition to continued
service, to enter into any agreement with the Company or a successor thereto
regarding confidentiality, non-competition, non-solicitation or other similar
restrictive covenant that is materially more restrictive than under the
Proprietary Agreement; (vii)  the
Company materially breaches its obligations under this Plan or any
then-effective written employment agreement with the Executive; or (viii) any
acquirer, successor or assign of the Company fails to assume and perform, in
all material respects, the obligations of the Company hereunder; and (2) the
Executive provides written notice to the Company’s General Counsel within the
60-day period immediately following such action; and (3) such action is
not remedied by the Company within thirty (30) days following the Company’s
receipt of such written notice; and (4) the Executive’s resignation is
effective not later than sixty (60) days after the expiration of such thirty
(30) day cure period.

 

4.2          Qualifying Termination
Upon Change of Control.  Executive
will be an “Eligible Employee” under the Company’s Change of Control Severance
Plan (the “Severance Plan”).  Upon a “Qualifying Termination” (as defined
in the Severance Plan), Executive will not receive any part of the Severance
Benefits and instead Executive’s rights to receive any severance pay or post-termination
benefit continuation will be only as set forth in the Severance Plan and as
otherwise required by applicable law.

 

4.3          Other Terminations.
If, at any time, the Company terminates Executive’s employment at any time for
Cause or as a result of death or disability, or if Executive resigns other than
for Good Reason, Executive’s salary will cease on the date of termination, and
Executive will not be entitled to any Severance Benefits, severance pay, pay in
lieu of notice or any other such compensation, or any accelerated vesting of
any equity awards, other than payment of accrued salary and such other accrued
benefits as expressly required in such event by applicable law or the terms of
any applicable Company benefit plans or new agreements made at that time.

 

(a)           Certain Offsets.  The Company will reduce Executive’s Severance
Benefits, in whole or in part, by any other severance benefits, pay in lieu of 

 

4

 

notice, or other similar
benefits payable to Executive by the Company that become payable in connection
with Executive’s termination of employment, including but not limited to any
payments that are owed pursuant to (i) any other severance plan, policy or
practice, or any individually negotiated employment contract or agreement with
the Company relating to severance benefits, in each case, as is in effect on
Executive’s termination date, (ii) any applicable legal requirement,
including, without limitation, the Worker Adjustment and Retraining Notification
Act (the “WARN Act”), or (iii) any
Company policy or practice providing for Executive to remain on the payroll
without being in active service for a limited period of time after being given
notice of the termination of Executive’s employment.  The termination payments and benefits
provided under this Agreement are intended to satisfy, to the greatest extent
possible, any and all statutory obligations that may arise out of Executive’s
termination of employment.  In the
Company’s sole discretion, such reductions may be applied on a retroactive
basis, with severance benefits previously paid being recharacterized as
payments pursuant to the Company’s statutory obligation.  If Executive is indebted to the Company at
his or her termination date, the Company reserves the right to offset any
severance payments to Executive by the amount of such indebtedness.

 

4.4          Code Section 409A. 
If the Company (or, if applicable, the successor entity thereto)
determines that the severance payments and benefits provided under this
Agreement or the Severance Plan (any such payments, the “Plan Payments”)
constitute “deferred compensation” under Code Section 409A (together, with
any state law of similar effect, “Section 409A”) and if Executive is a “specified
employee” of the Company or any successor entity thereto, as such term is
defined in Section 409A(a)(2)(B)(i) (a “Specified Employee”), then, solely to
the extent necessary to avoid the incurrence of the adverse personal tax
consequences under Section 409A, the timing of the Plan Payments will be
delayed as follows:  on the earliest to
occur of (1) the date that is six months and one day after the “separation
from service” (as such term is defined in Section 1.409A-1(h) of the
Treasury Regulations), and (2) the date of Executive’s death (such
earliest date, the “Delayed
Initial Payment Date”), the Company (or the successor entity
thereto, as applicable) will (i) pay to Executive a lump sum amount equal
to the sum of the Plan Payments that Executive would otherwise have received through
the Delayed Initial Payment Date if the commencement of the payment of the Plan
Payments had not been delayed pursuant to this Section 4.4 and (ii) commence
paying the balance of the Plan Payments in accordance with the applicable
payment schedules set forth in this Agreement or the Severance Plan, as
applicable.  Prior to the imposition of
any delay on the Plan Payments as set forth above, it is intended that (A) each
installment of the Plan Payments be regarded as a separate “payment” for
purposes of Treasury Regulations Section 1.409A-2(b)(2)(i), (B) all
Plan Payments satisfy, to the greatest extent possible, the exemptions from the
application of Section 409A provided under Treasury Regulations Sections
1.409A-1(b)(4) and 1.409A-1(b)(9)(iii), and (C) the Plan Payments
consisting of COBRA premiums also satisfy, to the greatest extent possible, the
exemption from the application of Section 409A provided under Treasury
Regulations Section 1.409A-1(b)(9)(v).

 

5.             RELEASE.  As a condition of receiving the Severance
Benefits, Executive will execute and return to the Company, a release
substantially in the form attached hereto 

 

5

 

as EXHIBIT A within
the time frame set forth therein (the “Release”)
and such release must become effective in accordance with its terms, but not
later than the 60th day following the termination of employment (with the
Company having the authority, in its discretion, to modify the form of the
release to comply with applicable law) and Executive will continue to comply
with his obligations under the Proprietary Agreement.  Notwithstanding the payment schedules set
forth herein, no Severance Benefits will be paid prior to the effective date of
the Release (the “Release Date”), but rather on
the first regular payroll pay day following the Release Date, the Company will
pay Executive the Severance Benefits Executive would otherwise have received on
or prior to such date but for the delay in Severance Benefits related to the
effectiveness of the Release, with the balance of the Severance Benefits being
paid as originally scheduled.  In no
event will the commencement of the payment of the Severance Benefits occur
later than March 15 of the year following the year in which the “separation
from service” (as such term is defined in Section 1.409A-1(h) of the
Treasury Regulations) occurs.

 

6.             GENERAL
PROVISIONS.

 

6.1          Notices.  Any notices provided hereunder must be in
writing and will be deemed effective upon the earlier of personal delivery (including,
personal delivery by facsimile transmission), delivery by express delivery
service (e.g. Federal Express), or the third day after mailing by first class
mail, to the Company at its primary office location and to Executive at his
address as listed on the Company payroll (which address may be changed by
either party by written notice).

 

6.2          Severability.  Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in
any jurisdiction, such invalidity, illegality or unenforceability will not
affect any other provision or any other jurisdiction, and such invalid, illegal
or unenforceable provision will be reformed, construed and enforced in such
jurisdiction so as to render it valid, legal, and enforceable consistent with
the intent of the parties insofar as possible.

 

6.3          Waiver.  If either party should waive any breach of
any provisions of this Agreement, he or it will not thereby be deemed to have
waived any preceding or succeeding breach of the same or any other provision of
this Agreement.

 

6.4          Entire Agreement.  This Agreement, including its exhibits,
constitutes the entire agreement between Executive and the Company regarding
the subject matter hereof.  As of the
Effective Date, this Agreement supersedes and replaces any and all other
agreements, promises, or representations, written or otherwise, between
Executive and the Company with regard to this subject matter, including the
Existing Agreement.  This Agreement is
entered into without reliance on any agreement, promise, or representation,
other than those expressly contained or incorporated herein, and, except for
those changes expressly reserved to the Company’s or Board’s discretion in this
Agreement, the terms of this Agreement cannot be modified or amended except in
a 

 

6

 

writing signed by
Executive and a duly authorized officer of the Company which is approved by the
Board.

 

6.5          Counterparts.  This Agreement may be executed in separate
counterparts, any one of which need not contain signatures of more than one
party, but all of which taken together will constitute one and the same
Agreement.  Signatures transmitted via
facsimile will be deemed the equivalent of originals.

 

6.6          Headings and
Construction.  The headings of the
sections hereof are inserted for convenience only and will not be deemed to
constitute a part hereof or to affect the meaning thereof.  For purposes of construction of this
Agreement, any ambiguities will not be construed against either party as the
drafter.

 

6.7          Successors and Assigns.  This Agreement is intended to bind and inure
to the benefit of and be enforceable by Executive, the Company, and their
respective successors, assigns, heirs, executors and administrators, except
that Executive may not assign any of his duties hereunder and he may not assign
any of his rights hereunder without the written consent of the Company.

 

6.8          Arbitration.  To provide a mechanism for rapid and
economical dispute resolution, Executive and the Company agree that any and all
disputes, claims, or causes of action, in law or equity, arising from or
relating to this Agreement (including the Release) or its enforcement,
performance, breach, or interpretation, or arising from or relating to
Executive’s employment with the Company or the termination of Executive’s
employment with the Company, will be resolved, to the fullest extent permitted
by law, by final, binding, and confidential arbitration held in San Francisco,
California, and conducted by JAMS, Inc. (“JAMS”), under its then-applicable Rules and
Procedures.  By agreeing to this arbitration procedure, both Executive and the Company
waive the right to resolve any such dispute through a trial by jury or judge or
by administrative proceeding. 
Executive will have the right to be
represented by legal counsel at any arbitration proceeding at his expense.  The arbitrator will:  (a) have the authority to compel
adequate discovery for the resolution of the dispute and to award such relief
as would otherwise be available under applicable law in a court proceeding; and
(b) issue a written statement signed by the arbitrator regarding the
disposition of each claim and the relief, if any, awarded as to each claim, the
reasons for the award, and the arbitrator’s essential findings and conclusions
on which the award is based.  The Company
will bear all fees for the arbitration, except for any attorneys’ fees or costs
associated with Executive’s personal representation.  The arbitrator, and not a court, will also be
authorized to determine whether the provisions of this paragraph apply to a
dispute, controversy or claim sought to be resolved in accordance with these
arbitration procedures.  Notwithstanding
the provisions of this paragraph, the parties are not prohibited from seeking
injunctive relief in a court of appropriate jurisdiction to prevent irreparable
harm on any basis, pending the outcome of arbitration.  Any awards or orders in such
arbitrations may be entered and enforced as judgments in the federal and the
state courts of any competent jurisdiction.

 

7

 

6.9          Governing Law.  All questions concerning the construction,
validity and interpretation of this Agreement will be governed by the law of
the State of California without regard to conflicts of laws principles.

 

6.10        Term.     This Agreement will automatically terminate on December 31,
2010; provided that no such termination shall affect the right to any unpaid
benefit due the Executive under this Agreement.

 

6.11        Exhibits.

 

Exhibit A — Release Agreement

 

8

 

IN WITNESS WHEREOF,
the parties have executed this AMENDED AND RESTATED EMPLOYMENT AGREEMENT effective as
of the Effective Date written above.

 

	
  RIGEL PHARMACEUTICALS, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Dolly Vance

  	
   

  
	
   

  	
  Dolly
  Vance

  	
   

  
	
   

  	
  Senior VP, General Counsel, Corporate Secretary

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  DR. DONALD G. PAYAN

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Donald G. Payan

  	
   

  
				

 

 

EXHIBIT A

 

RELEASE
AGREEMENT

 

I
understand and agree completely to the terms set forth in the Rigel
Pharmaceuticals, Inc. Employment Agreement (the “Agreement”).

 

I understand that this
Release, together with the Agreement, constitutes the complete, final and
exclusive embodiment of the entire agreement between the Company, affiliates of
the Company and me with regard to the subject matter hereof.  I am not relying on any promise or
representation by the Company or the Employers that is not expressly stated
therein.  Certain capitalized terms used
in this Release are defined in the Agreement.

 

I hereby confirm my
obligations under my Proprietary Agreement with the Company and/or the
Employer.

 

Except as otherwise set
forth in this Release, I hereby generally and completely release the Company,
the Employers, and their current and former directors, officers, employees,
stockholders, shareholders, partners, agents, attorneys, predecessors,
successors, parent and subsidiary entities, insurers, affiliates, and assigns
(collectively, the “Released Parties”) from any
and all claims, liabilities and obligations, both known and unknown, that arise
out of or are in any way related to events, acts, conduct, or omissions
occurring prior to my signing this Agreement (collectively, the “Released Claims”).  The Released Claims include, but are not
limited to:  (1) all claims arising
out of or in any way related to my employment with the Company, the Employers
or their affiliates, or the termination of that employment; (2) all claims
related to my compensation or benefits, including salary, bonuses, commissions,
vacation pay, expense reimbursements, severance pay, fringe benefits, stock,
stock options, or any other ownership interests in the Company, the Employers,
or their affiliates; (3) all claims for breach of contract, wrongful
termination, and breach of the implied covenant of good faith and fair dealing;
(4) all tort claims, including claims for fraud, defamation, emotional
distress, and discharge in violation of public policy; and (5) all
federal, state, and local statutory claims, including claims for
discrimination, harassment, retaliation, attorneys’ fees, or other claims
arising under the federal Civil Rights Act of 1964 (as amended), the federal
Americans with Disabilities Act of 1990, the federal Age Discrimination in
Employment Act of 1967 (as amended) (“ADEA”), the
federal Employee Retirement Income Security Act of 1974 (as amended), and the
California Fair Employment and Housing Act (as amended).  Notwithstanding the foregoing, the following
are not included in the Released Claims (the “Excluded
Claims”): (1) any rights or claims for indemnification I
may have pursuant to any written indemnification agreement with the Company to
which I am a party, the charter, bylaws, or operating agreements of the
Company, or under applicable law;  or (2) any
rights which are not waivable as a matter of law.  In addition, nothing in this Release prevents
me from filing, cooperating with, or participating in any proceeding before the
Equal Employment Opportunity Commission, the Department of Labor, or the
California Department of Fair Employment and Housing, except that I hereby
waive my 

 

 

right to any monetary benefits in connection with any such claim,
charge or proceeding.  I hereby represent
and warrant that, other than the Excluded Claims, I am not aware of any claims
I have or might have against any of the Released Parties that are not included
in the Released Claims.

 

I acknowledge that I am
knowingly and voluntarily waiving and releasing any rights I may have under the
ADEA.  I also acknowledge that the
consideration given for the Released Claims is in addition to anything of value
to which I was already entitled.  I
further acknowledge that I have been advised by this writing, as required by
the ADEA, that: (a) the Released Claims do not apply to any rights or
claims that arise after the date I sign this Release; (b) I should consult
with an attorney prior to signing this Release (although I may choose
voluntarily not to do so); (c) I have twenty-one (21) days to consider
this Release (although I may choose to voluntarily to sign it sooner); (d) I
have seven (7) days following the date I sign this Release to revoke the
Release by providing written notice to an officer of the Company; and (e) the
Release will not be effective until the date upon which the revocation period
has expired unexercised, which will be the eighth day after I sign this Release
(“Effective Date”).

 

I acknowledge that I have
read and understand Section 1542 of the California Civil Code which reads
as follows: “A general release does not extend to claims
which the creditor does not know or suspect to exist in his or her favor at the
time of executing the release, which if known by him or her must have materially
affected his or her settlement with the debtor.”  I hereby expressly waive and relinquish all
rights and benefits under that section and any law of any jurisdiction of
similar effect with respect to my release of any claims hereunder.

 

I hereby represent that I
have been paid all compensation owed and for all hours worked, I have received
all the leave and leave benefits and protections for which I am eligible, and I
have not suffered any on-the-job injury for which I have not already filed a
workers’ compensation claim.

 

I acknowledge that to
become effective, I must sign and return this Release to the Company so that it
is received not later than twenty-one (21) days following the date it is
provided to me, and I must not revoke it thereafter.

 

	
   

  	
  EMPLOYEE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  

 

2

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