Sample Business Contracts

Employment and Noncompetition Agreement - CD Radio Inc. and Joseph S. Capobianco

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                  This EMPLOYMENT AND NONCOMPETITION AGREEMENT is dated as of
April 16, 1997 (the "Agreement"), by and between CD RADIO INC., a Delaware
corporation, (the "Company"), and JOSEPH S. CAPOBIANCO (the "Executive"). In
consideration of the mutual covenants and conditions set forth herein, the
Company and the Executive agree as follows:

                  1.       EMPLOYMENT.  The Company hereby employs the
Executive and the Executive hereby accepts employment with the
Company subject to the covenants and conditions of this

                  2.       DUTIES AND REPORTING RELATIONSHIP.

                  (a)      Duties. The Executive shall be employed in the
capacity of a Vice President of the Company responsible for content and
programming. During the term of this Agreement the Executive shall, on a
full-time basis, use his skills and render services to the best of his ability
in supervising the programming affairs of the Company and shall, in addition,
perform such other activities and duties as the Chairman and Chief Executive
Officer of the Company shall, from time to time, specify and direct.

                  (b)      Reporting Relationship.  The Executive shall
report to the Chairman and Chief Executive Officer of the

                  3.       TERM.  The term of this Agreement shall be deemed
to have commenced and be effective on and from April 16, 1997,
and end on April 16, 2000, unless terminated earlier pursuant to
the provisions of Paragraph 6 below.

                  4.       COMPENSATION.

                           (a)      Annual Salary. During the term of this
Agreement, the Executive shall be paid a salary of U.S. $200,000 per year,
subject to any increases that the Board of Directors or the compensation
committee thereof shall approve.

                           (b)      Stock Options. The Company hereby grants to
the Executive the option to purchase 50,000 shares of the Company's common
stock, par value $0.001 per share (the "Common Stock") at U.S.$13.00 per share,
on such terms and subject to such conditions as are set forth in the option
agreement attached hereto as Exhibit A.


<PAGE>   2

                           (c)  Other. All compensation paid to the Executive
hereunder shall be subject to any and all such payroll and withholding
deductions as are required by the law of any applicable jurisdiction, state or
federal, with taxing authority with respect to such compensation.


                           (a)      Expenses.  The Company shall promptly
reimburse the Executive for all reasonable and necessary business expenses
incurred and advanced by his in carrying out his duties under this Agreement.
The Executive shall present to the Company from time to time an itemized
account of such expenses in such form as may be required by the Company.

                           (b)      Benefits.  During the term of employment
hereunder, the Executive shall be entitled to participate fully in any benefit
plans, programs, policies and any fringe benefits which may be made available
to the corporate officers of the Company generally including but not limited to
medical, dental and life insurance; provided, however, that the Executive shall
participate in any bonus, stock option or stock purchase or compensation plan
currently in effect or subsequently established by the Company to the extent,
and only to the extent authorized by the plan document or the Board of
Directors or the compensation committee thereof.

                  6.       TERMINATION.

                           (a)      Termination for Cause.  The Company has the
right and may elect to terminate this Agreement for Cause. For purposes of this
Agreement, "Cause" shall be limited to (i) action by the Executive involving
willful malfeasance having a material adverse effect on the Company or (ii) the
Executive being convicted of a felony; provided that any action by the
Executive shall not constitute "Cause" if, in good faith, the Executive
believed such action to be in or not opposed to the best interests of the
Company, or if the Executive shall be entitled, under applicable law or the
Certificate of Incorporation or Bylaws of the Company, to be indemnified with
respect to such action. Termination or the Executive for Cause pursuant to this
Subparagraph 6(a) shall be communicated by a Notice of Termination. For
purposes of this Agreement a "Notice of Termination" shall mean delivery to the
Executive of a copy of a resolution duly adopted by the affirmative vote of not
less than a majority of the directors present and voting at a meeting of the
Company's Board or Directors called and held for that purpose after reasonable
notice to the Executive and reasonable opportunity for the Executive, together
with the Executive's counsel, to be heard before the Board prior to such vote,
finding that in the good faith opinion of the Board the Executive was


<PAGE>   3

guilty of conduct set forth in the first sentence of this Subparagraph 6(a) and
specifying the particulars thereof in detail (the date of such termination by
the Board is referred hereinafter as the "Termination Date"). For purposes of
this Agreement, no such purported termination of the Executive's employment
shall be effective without such Notice of Termination.

                           (b)      Voluntary Resignation.  Should the Executive
wish to resign from his position with the Company during the term of his
employment, the Executive shall give thirty (30) days written notice to the
Company, setting forth the reasons and specifying the date as of which his
resignation is to become effective. The date specified in such written notice
shall be referenced herein as the "Termination Date." Failure to provide such
notice shall entitle the Company only to fix the Termination Date as of the
last business day on which the Executive reported for work at his principal
place of employment with the Company and shall have no other effect.

                           (c)      Without Cause.  The Company shall have the
absolute right to terminate the Executive's employment without cause at any
time. If the Company elects to terminate the Executive without cause, the
Company shall give thirty (30) days written notice to the Executive. Thirty
(30) days after such notice is given to the Executive shall be referenced
herein as the "Termination Date."

                           (d)      Compensation and Benefits Upon Termination.
If the employment of the Executive is terminated for any reason except (i) by
the Company for Cause or (ii) by the Executive voluntarily, the Executive shall
be entitled to receive, and the Company shall pay without setoff, counterclaim
or other withholding except as set forth in Paragraph 4(c) the following amount
(in addition to any salary, benefits or other sums due the Executive through
the Termination Date):

                           (i) nothing ($0.00) if the written notice advising
                  of the Executive's termination is given on or before,
                  July 16, 1997;

                           (ii) an amount equal to one-third (1/3) of his
                  annual salary then in effect, if the written notice advising
                  of the Executive's termination is given after July 16, 1997
                  but on or before October 16, 1997; or

                           (iii) an amount equal to one-half (1/2) of his
                  annual salary then in effect, if the written notice advising
                  of the Executive's termination is given after October 16,

Any amount becoming payable under this Paragraph 6(d) shall be paid on the
Termination Date.


<PAGE>   4

condition of his employment hereunder, the Executive has executed and delivered
to the Company an agreement addressing the nondisclosure of confidential
information (the "Nondisclosure Agreement") in the form attached hereto as
Exhibit B and incorporated herein by reference as if set forth in full herein.

                  8.       COVENANT NOT TO COMPETE. For a period beginning on
the date of this Agreement and ending one (1) years after the Termination Date,
the Executive will not, directly or indirectly, enter into the employment of,
render services to or acquire any interest whatsoever in (whether for his own
account as an individual proprietor, or as a partner, associate, shareholder,
officer, director, consultant, trustee or otherwise), or otherwise assist, any
person or entity engaged in any operations in North America involving any
satellite digital audio radio service or any subscription-based digital audio
radio service delivered to cars or other mobile vehicles; provided, however,
that nothing herein shall prevent the purchase or ownership by the Executive by
way of investment of up to four percent (4%) of the shares or equity interest
of any corporation or other entity. Without limiting the generality of the
foregoing, the Executive agrees that during the one (1) year period set forth
above the Executive will not call on or otherwise solicit business or assist
others to solicit business from any of the customers or potential customers of
the Company as to any product or service that competes with any product or
service provided or marketed by or actually under development by the Company at
the time of the Executive's termination. The Executive furthermore agrees that
he will not solicit or assist others to solicit the employment of or hire any
employee of the Company throughout the term of this Covenant Not To Compete
without the prior written consent of the Company. Notwithstanding the
foregoing, this Covenant Not To Compete will not become effective and will be
null and void, and of no force and effect, in the event the notice of
termination of the Executive's employment hereunder is given for any reason
prior to July 16, 1997.

                  9.       REMEDIES. The Executive agrees that damages for
breach of any of his covenants under Paragraphs 7 and 8 above will be difficult
to determine and inadequate to remedy the harm which may be caused thereby, and
therefore consents that these covenants may be enforced by temporary or
permanent injunction without the necessity of bond. Such injunctive relief
shall be in addition to and not in place of any other remedies available at law
or equity. The Executive believes, as of the date of this Agreement, that the
provisions of this Agreement are reasonable and that the Executive is capable
of gainful employment without breaching this Agreement. However, should any
court or tribunal decline to enforce any provision of Paragraph 7 or 8 of this
Agreement, this Agreement shall, to the extent applicable in the


<PAGE>   5

circumstances before such court or tribunal, be deemed to be modified to
restrict the Executive's competition with the Company to the maximum extent of
time, scope and geography which the court or tribunal shall find enforceable,
and such provisions shall be so enforced. The losing party shall reimburse the
prevailing party for any costs and attorneys fees incurred in connection with
any action to enforce the covenants under Paragraph 8 above. The Company and
the Executive shall have available to them all remedies at law and in equity
for the enforcement of this Agreement, which remedies (including but not
limited to termination of this Agreement as provided herein) shall be
cumulative and not elective.

                  10.      INDEMNIFICATION.  The Company shall indemnify the
Executive to the full extent provided in the Company's Certificate of
Incorporation and Bylaws and the law of the State of Delaware in connection
with his activities as an officer and director of the Company.

                  11.      GOLDEN PARACHUTE PAYMENTS. If as a result of a
change  in control, the Executive is required to pay an excise tax on "excess
parachute payments" (as defined in Section 280G(b) of the Code) under Section
4999 of the Code, the Company shall reimburse the Executive for the amount of
such taxes paid. In addition, the Company shall pay the Executive such
additional amounts as are necessary to place the Executive in the same
financial position that she would have been in if she had not incurred any tax
liability under Section 4999 of the Code as a result of such change in control;
provided, however, that the Company shall in no event pay the Executive any
amounts with respect to any penalties or interest due under any provision of
the Code. The determination of the amount, if any, of any "excess parachute
payments" and any tax liability under Section 4999 of the Code shall be made by
a nationally-recognized independent accounting firm agreed to by the Company
and the Executive. The fees and expenses of such accounting firm shall be paid
by the Company. The determination of such accounting firm shall be final and
binding on the parties. The Company agrees to pay to the Executive any amounts
to be paid or reimbursed under this Paragraph 11 within thirty (30) days after
receipt by the Company of written notice from the accounting firm which sets
forth such accounting firm's determination.

                  12.      ENTIRE AGREEMENT. The provisions contained herein
and the exhibits hereto constitute the entire agreement between the parties with
respect to the subject matter hereof and supersede any and all prior
agreements, understandings and communications between the parties, oral or
written, with respect to such subject matter.

                  13.      MODIFICATION.  Any waiver, alteration, amendment
or modification of any provisions of this Agreement and the


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exhibits hereto shall not be valid unless in writing, approved by a majority of
the directors of the Company who are not full-time employees of the Company,
and signed by both the Executive and the Company.

                  14.      SEVERABILITY.  If any provision of this Agreement
shall be declared to be invalid or unenforceable, in whole or in
part, such invalidity or unenforceability shall not affect the
remaining provisions hereof, which shall remain in full force and

                  15.      ASSIGNMENT.  The Executive may not assign any of
his rights or delegate any of his duties hereunder without the
written consent of the Company.  The Company may not assign any
of its rights or delegate any of its obligations hereunder.

                  16.      BINDING EFFECT.  Subject to the limitations set
forth in Paragraph 13 above, this Agreement shall be binding upon
and inure to the benefit of the successors in interest of the
Executive and the Company.

                  17.      NOTICE.  All notices and other communications
required or permitted hereunder shall be made in writing and
shall be deemed effective when initially transmitted by courier
or facsimile transmission and five (5) days after mailing by
registered or certified mail:

                           (i)      if to the Company:

                                    CD Radio Inc.
                                    Sixth Floor
                                    1001 22nd Street, N.W.
                                    Washington, D.C. 20037
                                    Telecopier No.: (202)296-6265

                           (ii)     if to the Executive:

                                    Joseph S. Capobianco
                                    14 Evergreen Court
                                    Suffern, New York 10901
                                    Telecopier No.: (914)368-1720

or to such other person or address as either of the parties shall furnish in
writing to the other party from time to time.

                  17.      CHOICE OF LAW.  This Agreement shall be governed
by and construed in accordance with the laws of the State of New
York applicable to contracts made and to be performed entirely
within said state jurisdiction.


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                 18.     ATTORNEYS' FEES.  In the event of litigation arising
out of or in connection with this Agreement, the prevailing party shall be
entitled to recover from the other party all of its attorneys' fees and other
expenses incurred in connection with such litigation.

                 19.     NON-MITIGATION.  After the termination of his
employment hereunder, the Executive shall not be required to mitigate damages or
the amount of any benefit or payment provided under this Agreement by seeking
other employment, or otherwise; nor shall the amount of any benefit or payment
provided for under this Agreement be reduced by any compensation earned by the
Executive as the result of employment by another employer.

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

                                        CD RADIO INC.

                                     By:/s/ David Margolese
                                        Name:  David Margolese
                                        Title: Chairman and Chief
                                        Executive Officer


                                       /s/ Joseph S. Capobianco
                                        Joseph S. Capobianco