Employment Agreement - Sirius Satellite Radio Inc. and Michael S. Ledford
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT, dated as of August 29, 2001 (this
"Agreement"), between SIRIUS SATELLITE RADIO INC., a Delaware
corporation (the "Company"), and MICHAEL S. LEDFORD (the "Executive").
In consideration of the mutual covenants and conditions set forth
herein, the Company and the Executive agree as follows:
1. Employment. Subject to the terms and conditions of this Agreement,
the Company hereby employs the Executive, and the Executive hereby accepts
employment with the Company.
2. Duties and Reporting Relationship. (a) The Executive shall be
employed in the capacity of Senior Vice President, Engineering, of the Company.
In such capacity, the Executive's duties shall include, without limitation,
management of the Company's engineering department and all of its activities,
the maintenance of the Company's broadcast systems, the maintenance and
development of the Company's system architecture, the development and planning
of future products, from a technical and engineering standpoint, and the
development and management of technical business relationships. During the Term
(as defined below), the Executive shall, on a full-time basis and consistent
with the needs of the Company to achieve the goals of the Company, use his
skills and render services to the best of his ability in supervising the
engineering operations of the Company described above and shall, in addition,
perform such other activities and duties consistent with his position as the
Chief Executive Officer or Chief Operating Officer of the Company shall, from
time to time, reasonably specify and direct. The Executive shall not be required
by this Agreement to perform duties for any entity other than the Company and
its subsidiaries.
(b) The Executive shall generally perform his duties and conduct his
business initially at the principal offices of the Company in New York, New
York. As part of the Executive's duties, the Executive shall undertake a study
of the optimum location of the Company's engineering department, and following
selection of a new location for the Company's engineering department by the
Company, the Executive's duties shall generally be performed at such new
location. The timing and scope of such relocation shall be within the discretion
of the Company.
(c) The Executive shall report to the Chief Executive Officer of the
Company. In the event the company hires a President and/or Chief Operating
Officer, then, at the option of the Company, the Executive shall report to the
President and/or Chief Operating Officer.
3. Term. The term of this Agreement shall commence on September 17,
2001 and end on September 16, 2004, unless terminated earlier pursuant to the
provisions of Section 6 (the "Term").
4. Compensation. (a) Base Salary. During the Term, the Executive shall
be paid an annual base salary of $340,000, subject to any increases that the
Chief Executive Officer of the Company shall approve. All amounts paid to the
Executive under this Agreement shall be in U.S. dollars. The Executive's base
salary shall be paid at least monthly and, at the option of the
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Company, may be paid more frequently. In the event the Executive's employment is
terminated during the Term, the Executive's base salary shall be prorated
through the date of termination.
(b) Stock Options. On the first day of the Term, the Company shall
grant to the Executive an option to purchase 300,000 shares of the Company's
common stock, par value $.001 per share (the "Common Stock"), at an exercise
price equal to the closing price of the Common Stock on the Nasdaq National
Market on September 17, 2001. Such options shall be subject to the terms and
conditions set forth in the Option Agreement attached to this Agreement as
Exhibit A.
(c) Restricted Stock. On the first day of the Term, the Company shall
grant to the Executive 50,000 restricted shares of Common Stock. Such restricted
shares of Common Stock shall be subject to the terms and conditions set forth in
the Restricted Stock Agreement attached to this Agreement as Exhibit B.
(d) All compensation paid to the Executive hereunder shall be subject
to any payroll and withholding deductions required by any applicable law.
5. Additional Compensation; Expenses and Benefits. (a) During the Term,
the Company shall reimburse the Executive for all reasonable and necessary
business expenses incurred and advanced by him in carrying out his duties under
this Agreement. In addition, the Company shall reimburse the Executive for
reasonable hotel accommodations or, if the Company elects, a temporary apartment
in the New York metropolitan area prior to the relocation of a portion of the
Company's engineering department. Consistent with the Company's policies (e.g.
coach fare on domestic flights), the Company shall also reimburse the Executive
for the reasonable costs of two round trips per month from the Executive's home
in California to the Company's executive offices in New York City prior to the
relocation of a portion of the Company's engineering department. The Executive
shall present to the Company from time to time an itemized account of all
expenses in such form as may be required by the Company from time to time.
(b) In the event that the Executive is required to relocate his family
in connection with the relocation of the Company's engineering department, the
Company shall pay the reasonable expenses of moving his family, furniture, cars
and other personal effects to the new location. To the extent such moving
expenses are not tax deductible, such payments will be grossed-up, to the extent
necessary, to cover all applicable federal and state income taxes applicable to
such payment. In the event that the Executive is required by the Company to
relocate his family in connection with the relocation of the Company's
engineering department, the Company shall also reimburse the Executive for the
reasonable cost of one broker's commission, but not in excess of $100,000,
incurred in connection with the sale of the Executive's principal residence. In
the event the Executive's employment is voluntarily terminated by the Executive
prior to the first anniversary of the Term, the Executive shall be obligated to
repay a pro rata portion of all amounts paid by the Company in connection with
such relocation, including all amounts paid or reimbursed pursuant to this
Section 5(b). The pro rata portion shall be determined by dividing all amounts
paid or reimbursed by the Company to the Executive in connection with such
relocation by a fraction, the numerator of which shall be the number of the days
from the beginning of the Term to the date of the Executive's termination and
the denominator shall be 365.
(c) During the Term, the Executive shall be entitled to participate
fully in any bonus grants, benefit plans, programs, policies and fringe benefits
which may be made available to the
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senior officers of the Company generally, including, without limitation,
medical, dental and life insurance; provided that the Executive shall
participate in any 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 and by the Board of Directors of the
Company (the "Board") or the compensation committee thereof. In the event an
annual bonus is awarded to the Executive for the year ending December 31, 2001,
the Executive shall be entitled to a bonus in an amount that assumes he became
an employee as of January 1, 2001.
(d) Following the relocation of a portion of the company's engineering
department, the Company shall pay the Executive a monthly allowance of $1,500 to
pay the costs of leasing and maintaining an automobile for use in connection
with the business of the Company.
6. Termination. The date upon which this Agreement is deemed to be
terminated in accordance with any of the provisions of this Section 6 is
referred to herein as the "Termination Date."
(a) Termination for Cause. The Company has the right and may elect to
terminate this Agreement for Cause at any time. For purposes of this Agreement,
"Cause" means the occurrence or existence of any of the following:
(i) a material breach by the Executive of the terms of his
employment or of his duty not to engage in any transaction that
represents, directly or indirectly, self-dealing with the Company or
any of its affiliates (which, for purposes hereof, shall mean any
individual, corporation, partnership, association, limited liability
company, trust, estate, or other entity or organization directly or
indirectly controlling, controlled by, or under direct or indirect
common control with the Company) which has not been approved by a
majority of the disinterested directors of the Board, if in any such
case such material breach remains uncured after thirty days have
elapsed following the date on which the Company gives the Executive
written notice of such breach;
(ii) a material breach by the Executive of any duty referred
to in clause (i) above with respect to which at least one prior notice
was given under clause (i);
(iii) any act of dishonesty, misappropriation, embezzlement,
intentional fraud, or similar conduct by the Executive involving the
Company or any of its affiliates;
(iv) the conviction or the plea of nolo contendre or the
equivalent in respect of a felony;
(v) any damage of a material nature to any property of the
Company or any of its affiliates caused by the Executive's willful or
grossly negligent conduct;
(vi) the repeated nonprescription use of any controlled
substance or the repeated use of alcohol or any other non-controlled
substance that renders the Executive unfit to serve as an officer of
the Company or its affiliates;
(vii) the Executive's failure to comply with the Board's
reasonable written instructions after thirty days written notice; or
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(viii) conduct by the Executive that in the good faith written
determination of the Board demonstrates unfitness to serve as an
officer of the Company or its affiliates, including, without
limitation, a finding by the Board or any regulatory authority that the
Executive committed acts of unlawful harassment or violated any other
state, federal or local law or ordinance prohibiting discrimination in
employment.
Termination of the Executive for Cause pursuant to this Section 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 or resolutions duly adopted by the affirmative vote of not less than
a majority of the directors present and voting at a meeting of the Board 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 guilty of conduct set forth in clauses
(i) through (viii) of this Section 6(a) and specifying the particulars thereof
in detail. For purposes of this Section 6(a), this Agreement shall terminate on
the date specified by the Board in the Notice of Termination.
(b) Death or Disability. (i) This Agreement and the Executive's
employment shall terminate upon the death of the Executive. For purposes of this
Section 6(b)(i), this Agreement shall terminate on the date of the Executive's
death.
(ii) If the Executive is unable to perform the essential duties and
functions of his position because of a disability, even with a reasonable
accommodation, for one hundred eighty days within any three hundred sixty-five
day period, and the Company, in its reasonable judgment, determines that the
exigencies created by the Executive's disability are such that termination is
warranted, the Company shall have the right and may elect to terminate the
services of the Executive by a Notice of Disability Termination. For purposes of
this Agreement, a "Notice of Disability Termination" shall mean a written notice
that sets forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under this Section
6(b)(ii). For purposes of this Agreement, no such purported termination by the
Company shall be effective without such Notice of Disability Termination. This
Agreement shall terminate on the day such Notice of Disability Termination is
received by the Executive.
(c) Voluntary Resignation. Should the Executive wish to resign from his
position with the Company during the Term, for other than Good Reason (as
defined below), the Executive shall give fourteen days prior written notice to
the Company. Failure to provide such notice shall entitle the Company to
terminate this Agreement effective on the last business day on which the
Executive reported for work at his principal place of employment with the
Company. This Agreement shall terminate on the effective date of the resignation
defined above, however, the Company may, at its sole discretion, request that
the Executive perform no job responsibilities and cease his active employment
immediately upon receipt of the notice from the Executive.
(d) 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 seven
days written notice to the Executive. This Agreement shall terminate seven days
following receipt of such notice by the Executive, however, the Company may, at
its sole discretion, request that the Executive cease active employment and
perform no more job duties immediately upon provision of such notice to the
Executive.
(e) For Good Reason. Should the Executive wish to resign from his
position with the
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Company for Good Reason during the Term, the Executive shall give seven days
prior written notice to the Company. Failure to provide such notice shall
entitle the Company 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. This Agreement shall terminate on the date specified in such
notice, however, the Company may, at its sole discretion, request the Executive
cease active employment and perform no more job duties immediately upon receipt
of such notice from the Executive.
For purposes of this Agreement, "Good Reason" shall mean the
continuance of any of the following events (without the Executive's express
prior written consent) for a period of seven days (or thirty days in the case of
items (i), (iii) and (iv) below) after delivery to the Company by the Executive
of a notice of the occurrence of such event:
(i) the assignment to the Executive by the Company of duties
not reasonably consistent with the Executive's positions, duties,
responsibilities, titles or offices at the commencement of the Term or
any unreasonable reduction in his duties or responsibilities or any
removal of the Executive from or any failure to re-elect the Executive
to any of such positions (except in connection with the termination of
the Executive's employment for Cause, disability or as a result of the
Executive's death or by the Executive other than for Good Reason); or
(ii) any reduction in the Executive's annual base salary from
the previous year; or
(iii) following completion of the location study contemplated
by Section 2(b) of this Agreement, the failure of the Company to
reasonably agree on a new location for at least a portion of the
Company's engineering department; or
(iv) any material breach by the Company of this Agreement.
(f) Compensation and Benefits Upon Termination. (i) If the employment
of the Executive is terminated without Cause or the Executive terminates his
employment for Good Reason, then the Executive shall be entitled to receive, and
the Company shall pay to the Executive without setoff, counterclaim or other
withholding, except as set forth in Section 4(d), an amount (in addition to any
salary, benefits or other sums due the Executive through the Termination Date)
equal to one year of the Executive's annualized base salary then in effect. Any
amount becoming payable under this Section 6(f)(i) shall be paid in immediately
available funds within ten business days following the Termination Date.
(ii) If this Agreement is terminated by the Executive or the Company
for any reason other than those specified in Sections 6(f)(i), including
resignation by the Executive without Good Reason or termination by the Company
with Cause, the Executive shall be entitled to no compensation or other benefits
under this Agreement other than those which are due the Executive through the
Termination Date.
7. Nondisclosure of Confidential Information. (a) The Executive
acknowledges that in the course of his employment he will occupy a position of
trust and confidence. The Executive shall not, except as may be required to
perform his duties or as required by applicable law, disclose to others or use,
directly or indirectly, any Confidential Information.
(b) "Confidential Information" shall mean information about the
Company's business and
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operations that is not disclosed by the Company for financial reporting purposes
and that was learned by the Executive in the course of his employment by the
Company, including, without limitation, any business plans, product plans,
strategy, budget information, proprietary knowledge, patents, trade secrets,
data, formulae, sketches, notebooks, blueprints, information and client and
customer lists and all papers and records (including computer records) of the
documents containing such Confidential Information, other than information that
is publicly disclosed by the Company in writing. The Executive acknowledges that
such Confidential Information is specialized, unique in nature and of great
value to the Company, and that such information gives the Company a competitive
advantage. The Executive agrees to deliver or return to the Company, at the
Company's request at any time or upon termination or expiration of his
employment or as soon as possible thereafter, all documents, computer tapes and
disks, records, lists, data, drawings, prints, notes and written information
(and all copies thereof) furnished by the Company or prepared by the Executive
in the course of his employment by the Company.
(c) The provisions of this Section 7 shall survive any termination of
this Agreement.
8. Covenant Not to Compete. For three years following the end of the
Term (the "Restricted Period"), the Executive shall 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, stockholder, officer, director, consultant, trustee or
otherwise), or otherwise assist, any person or entity engaged (a) in any
operations in North America involving the transmission of radio entertainment
programming in competition with the Company, (b) in the business of
manufacturing, marketing or distributing radios, antennas or other parts for use
in devices which receive broadcasts of XM Satellite Radio Inc. or any successor
to XM Satellite Radio Inc., or (c) that competes, or is likely to compete, with
any other aspect of the business of the Company as conducted at the end of the
Term; provided that nothing in this Agreement shall prevent the purchase or
ownership by the Executive by way of investment of up to five percent 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 Restricted
Period, the Executive shall 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 under development by the Company at the end
of the Term. The Executive agrees that during the Restricted Period he will not
solicit or assist others to solicit the employment of or hire any employee of
the Company without the prior written consent of the Company.
9. Inventions. The Executive shall promptly disclose in writing to the
Company all inventions, discoveries, developments, improvements, and innovations
("Inventions") whether or not patentable, conceived or made by the Executive,
either solely or in concert with others during the period of his employment with
the Company, including, but not limited to any period prior to the date of this
Agreement, whether or not made or conceived during work hours that: (a) relate
in any manner to the existing or contemplated business or research activities of
the Company; or (b) are suggested by or result from the Executive's employment
with the Company; or (c) result from the use of the Company's time, materials,
or facilities. All Inventions shall be the exclusive property of the Company.
(b) The Executive assigns to the Company his entire right, title, and
interest to all such Inventions that are the property of the Company under the
provisions of this Agreement and all unpatented Inventions that Executive now
owns, except those specifically described in a statement which has been
separately executed by a duly authorized officer of the Company and
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the Executive and which is attached hereto as Exhibit C. The Executive shall, at
the Company's request and expense, execute specific assignments to any such
Invention and execute, acknowledge, and deliver such other documents and take
such further action as may be considered necessary by the Company at any time
during or subsequent to the period of his employment with the Company to obtain
and define letters patent in any and all countries and to vest title in such
Inventions in the Company or its assigns.
(c) Any Invention disclosed by the Executive to a third person or
described in a patent application filed by the Executive or on the Executive's
behalf within one year following the period of the Executive's employment with
the Company, shall be presumed to have been conceived or made by the Executive
during the period of his employment with the Company unless proved to have been
conceived and made by the Executive following the termination of employment with
the Company.
(d) The provisions of this Section 9 shall survive any termination of
this Agreement.
10. Gross-Up Provisions. (a) If the Executive is, in the opinion of a
nationally recognized accounting firm jointly selected by the Executive and the
Company, expected to pay an excise tax on "excess parachute payments" (as
defined in Section 280G(b) of the Internal Revenue Code of 1986, as amended (the
"Code")) under Section 4999 of the Code as a result of an acceleration of the
vesting of options or for any other reason, the Company shall have an absolute
and unconditional obligation to pay the Executive in accordance with the terms
of this Section 10 the expected amount of such taxes. In addition, the Company
shall have an absolute and unconditional obligation to pay the Executive such
additional amounts as are necessary to place the Executive in the exact same
financial position that he would have been in if he had not incurred any
expected tax liability under Section 4999 of the Code; provided 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 exact
amount, if any, of any expected "excess parachute payments" and any expected tax
liability under Section 4999 of the Code shall be made by the
nationally-recognized independent accounting firm selected by the Executive and
the Company. The fees and expenses of such accounting firm shall be paid by the
Company in advance. The determination of such accounting firm shall be final and
binding on the parties. The Company irrevocably agrees to pay to the Executive,
in immediately available funds to an account designated in writing by the
Executive, any amounts to be paid under this Section 10 within two days after
receipt by the Company of written notice from the accounting firm which sets
forth such accounting firm's determination. In addition, in the event that such
payments are not sufficient to pay all excise taxes on "excess parachute
payments" under Section 4999 of the Code as a result of an acceleration of the
vesting of options or for any other reason and to place the Executive in the
exact same financial position that he would have been in if he had not incurred
any expected tax liability under Section 4999 of the Code as a result of a
change in control, then the Company shall have an absolute and unconditional
obligation to pay the Executive such additional amounts as may be necessary to
pay such excise taxes and place the Executive in the exact same financial
position that he would have been had he not incurred any tax liability as a
result of a change in control under the Code. Notwithstanding the foregoing, in
the event that a written ruling (whether public or private) of the Internal
Revenue Service ("IRS") is obtained by or on behalf of the Company or the
Executive, which ruling expressly provides that the Executive is not required to
pay, or is entitled to a refund with respect to, all or any portion of such
excise taxes or additional amounts, the Executive shall promptly reimburse the
Company in an amount equal to all amounts paid to the Executive pursuant to this
Section 10 less any excise taxes or additional amounts which remain payable by,
or are not refunded to, the Executive after giving effect to such IRS ruling.
Each of
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the Company and the Executive agrees to promptly notify the other party if it
receives any such IRS ruling.
(b) The provisions of this Section 10 shall survive any termination of
this Agreement.
11. Remedies. The Executive and Company agree that damages for breach
of any of the covenants under Sections 7 and 8 above will be difficult to
determine and inadequate to remedy the harm which may be caused thereby, and
therefore consent that these covenants may be enforced by temporary or permanent
injunction without the necessity of bond. 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 arbitrator decline to enforce any provision of
Section 7 or 8 of this Agreement, this Agreement shall, to the extent applicable
in the circumstances before such court or arbitrator, 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 arbitrator shall find
enforceable, and such provisions shall be so enforced.
12. Indemnification. The Company shall indemnify the Executive to the
full extent provided in the Company's Amended and Restated Articles of
Incorporation and Amended and Restated Bylaws and the law of the State of
Delaware in connection with his activities as an officer of the Company.
13. Entire Agreement. The provisions contained herein 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.
14. Modification. Any waiver, alteration, amendment or modification of
any provisions of this Agreement shall not be valid unless in writing and signed
by both the Executive and the Company.
15. 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 effect.
16. Assignment. The Executive may not assign any of his rights or
delegate any of his duties hereunder without the prior written consent of the
Company. The Company may not assign any of its rights or delegate any of its
obligations hereunder without the prior written consent of the Executive.
17. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the successors in interest of the Executive and the Company.
18. Notices. 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 days after mailing by
registered or certified mail:
if to the Company:
Sirius Satellite Radio Inc.
1221 Avenue of the Americas
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9
36th Floor
New York, New York 10020
Attention: General Counsel
Telecopier: (212) 584-5353
if to the Executive:
Michael S. Ledford
Address on file at the offices
of the Company
or to such other person or address as either of the parties shall furnish in
writing to the other party from time to time.
19. Governing 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 the State of New York.
20. Non-Mitigation. The Executive shall not be required to mitigate
damages or seek other employment in order to receive compensation or benefits
under Section 6 of this Agreement; nor shall the amount of any benefit or
payment provided for under Section 6 of this Agreement be reduced by any
compensation earned by the Executive as the result of employment by another
employer.
21. Arbitration. (a) The Executive and the Company agree that if a
dispute arises concerning or relating to the Executive's employment with the
Company, or the termination of the Executive's employment, such dispute shall be
submitted to binding arbitration under the rules of the American Arbitration
Association regarding resolution of employment disputes in effect at the time
such dispute arises. The arbitration shall take place in New York, New York, and
both the Executive and the Company agrees to submit to the jurisdiction of the
arbitrator selected in accordance with the American Arbitration Association
rules and procedures. Except as provided below, the Executive and the Company
agree that this arbitration procedure will be the exclusive means of redress for
any disputes relating to or arising from the Executive's employment with the
Company or his termination, including disputes over rights provided by federal,
state, or local statutes, regulations, ordinances, and common law, including all
laws that prohibit discrimination based on any protected classification. The
parties expressly waive the right to a jury trial, and agree that the
arbitrator's award shall be final and binding on both parties, and shall not be
appealable. The arbitrator shall have discretion to award monetary and other
damages, and any other relief that the arbitrator deems appropriate and is
allowed by law. The arbitrator shall have the discretion to award the prevailing
party reasonable costs and attorneys' fees incurred in bringing or defending an
action, and shall award such costs and fees to the Executive in the event the
Executive prevails on the merits of any action brought hereunder.
(b) The Company and the Executive agree that the sole dispute that is
excepted from Section 21(a) is an action seeking injunctive relief from a court
of competent jurisdiction regarding enforcement and application of Sections 7, 8
or 9 of this Agreement, which action may be brought in addition to, or in place
of, an arbitration proceeding in accordance with Section 21(a).
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22. Counterparts. This Agreement may be executed in counterparts, all
of which shall be considered one and the same agreement, and shall become
effective when one or more counterparts have been signed by each of the parties
and delivered to the other party.
23. Executive's Representations. The Executive hereby represents and
warrants to Company that he (a) is not now under any contractual or other
obligation that is inconsistent with or in conflict with this Agreement or that
would prevent, limit, or impair the Executive's performance of his obligations
under this Agreement; (b) has been provided the opportunity to be, or has been,
represented by legal counsel in preparing, negotiating, executing and delivering
this Agreement; and (c) fully understands the terms and provisions of this
Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
SIRIUS SATELLITE RADIO INC.
By: /s/ Patrick L. Donnelly
-----------------------
Patrick L. Donnelly
Senior Vice President and
General Counsel
/s/ Michael S. Ledford
---------------------------------------
Michael S. Ledford
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EXHIBIT A
THIS OPTION HAS NOT BEEN REGISTERED UNDER STATE OR FEDERAL SECURITIES
LAWS. THIS OPTION MAY NOT BE TRANSFERRED EXCEPT BY WILL OR UNDER THE LAWS OF
DESCENT AND DISTRIBUTION.
SIRIUS SATELLITE RADIO 1999 LONG-TERM STOCK INCENTIVE PLAN
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement"), dated as of September
17, 2001 ("Date of Grant"), between SIRIUS SATELLITE RADIO INC., a Delaware
corporation (the "Company"), and Mr. Michael S. Ledford (the "Optionee").
1. Grant of Option. Subject to the terms and conditions of this
Agreement and the Sirius Satellite Radio 1999 Long-Term Stock Incentive Plan (as
amended, supplemented or otherwise modified from time to time, the "Plan"), the
Company hereby grants to the Optionee the right and option (this "Option") to
purchase up to three hundred thousand (300,000) shares (the "Shares") of common
stock, par value $0.001 per share, of the Company at a price per share of $____
(the "Exercise Price"). This Option is not intended to qualify as an Incentive
Stock Option for purposes of Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code"). In the case of any stock split, stock dividend or like
change in the Shares occurring after the date hereof, the number of Shares and
the Exercise Price shall be adjusted as set forth in Section 4(b) of the Plan.
This Option shall vest and be exercisable as follows:
(a) The right and option to purchase up to one hundred
thousand (100,000) Shares shall vest and become
exercisable on September 17, 2002 if the Optionee
continues to be employed by the Company until and on
such date;
(b) The right and option to purchase up to one hundred
thousand (100,000) Shares shall vest and become
exercisable on September 17, 2003 if the Optionee
continues to be employed by the Company until and on
such date; and
(c) The right and option to purchase up to one hundred
thousand (100,000) Shares shall vest and become
exercisable on September 17, 2004 if the Optionee
continues to be employed by the Company until and on
such date.
The vesting of this Option is also subject to acceleration in accordance with
the provisions of Section 13 of the Plan; provided that in no event shall the
ownership by (i) Apollo Investment Fund IV, L.P. and Apollo Overseas Partners
IV, L.P. of shares of the Company's 9.2% Series A Junior Cumulative Convertible
Preferred Stock and shares of the Company's 9.2% Series B Junior Cumulative
Convertible Preferred Stock or (ii) affiliates of The Blackstone Group L.P. of
shares of the Company's 9.2% Series D Junior Cumulative Convertible Preferred
Stock be
<PAGE>
13
deemed to constitute a Change of Control (as defined in the Plan) for the
purposes of the Plan.
2. Termination of Option. This Option shall terminate, to the extent
not previously exercised, ten (10) years from the Date of Grant or earlier upon
the expiration of (a) ninety (90) days from the date of termination of the
Optionee's employment with the Company for any reason whatsoever other than
death or Disability (as defined below) or (b) the expiration of one (1) year
from (i) the date of death of the Optionee or (ii) cessation of the Optionee's
employment by reason of Disability (as defined below). Subject to the terms of
the Plan, if the Optionee's employment is terminated by death, this Option shall
be exercisable only by the person or persons to whom the Optionee's rights under
such Option shall pass by the Optionee's will or by the laws of descent and
distribution of the state or county of the Optionee's domicile at the time of
death. "Disability" shall mean any physical, mental or other health condition
which substantially impairs the Optionee's ability to perform his assigned
duties for one hundred twenty (120) days or more in any two hundred forty (240)
day period or that can be expected to result in death. The Company shall
determine whether the Optionee has incurred a Disability on the basis of medical
evidence reasonably acceptable to the Company. Upon making a determination of
Disability, the Company shall determine the date of the Optionee's termination
of employment.
For purposes of this Agreement, transfer of employment between or among
the Company and/or any Related Company shall not be deemed to constitute a
termination of employment with the Company or the Related Company. "Related
Company", when referring to a subsidiary corporation, shall mean any corporation
(other than the Company) in an unbroken chain of corporations beginning with the
Company if, on the date of this Agreement, each of the corporations other than
the last corporation in the unbroken chain owns stock possessing fifty percent
(50%) or more of the total combined voting power of all classes of stock of one
of the other corporations in such chain. When referring to a parent corporation,
the term "Related Company" shall mean any corporation (other than the Company)
in an unbroken chain of corporations ending with the Company if, on the date of
this Agreement, each of the corporations, other than the Company, owns stock
possessing fifty percent (50%) or more of the total combined voting power of all
classes of stock of one of the other corporations in such chain.
3. Non-transferable. This Option may not be transferred, assigned,
pledged or hypothecated in any manner (whether by operation of law or otherwise)
other than by will or by the applicable laws of descent and distribution, and
shall not be subject to execution, attachment or similar process. Upon any
attempt to transfer, assign, pledge, hypothecate or otherwise dispose of this
Option or of any right or privilege conferred hereby, contrary to the provisions
hereof, or upon the sale or levy or any attachment or similar process upon the
rights and privileges conferred hereby, this Option shall terminate and become
null and void.
4. Exercise. Subject to Sections 1 and 2 of this Agreement and the
terms of the Plan, this Option may be exercised, in whole or in part, by means
of a written notice of exercise signed and delivered by the Optionee (or, in the
case of exercise after death of the Optionee by the executor, administrator,
heir or legatee of the Optionee, as the case may be) to the Company at the
address set forth herein for notices to the Company. Such notice shall (a) state
the number of Shares to be purchased and the date of exercise, and (b) be
accompanied by payment of the Exercise Price in cash, by certified or cashier's
check or by delivery of such other consideration as the administrator of the
Plan may approve.
5. Withholding. Prior to delivery of the Shares purchased upon exercise
of this Option,
<PAGE>
14
the Company shall determine the amount of any United States federal, state and
local income tax, if any, which is required to be withheld under applicable law
and shall, as a condition of exercise of this Option and delivery of
certificates representing the Shares purchased upon exercise of this Option,
collect from the Optionee the amount of any such tax to the extent not
previously withheld.
6. Rights of the Optionee. Neither this Option, the execution of this
Agreement nor the exercise of any portion of this Option shall confer upon the
Optionee any right to, or guarantee of, continued employment by the Company, or
in any way limit the right of the Company to terminate employment of the
Optionee at any time, subject to the terms of any written employment agreement
between the Company and the Optionee.
7. Professional Advice. The acceptance and exercise of this Option may
have consequences under federal and state tax and securities laws which may vary
depending upon the individual circumstances of the Optionee. Accordingly, the
Optionee acknowledges that the Optionee has been advised to consult his or her
personal legal and tax advisor in connection with this Agreement and this
Option.
8. Agreement Subject to the Plan. The Option and this Agreement are
subject to the terms and conditions set forth in the Plan and in any amendments
to the Plan existing now or in the future, which terms and conditions are
incorporated herein by reference. A copy of the Plan previously has been
delivered to the Optionee. Should any conflict exist between the provisions of
the Plan and those of this Agreement, the provisions of the Plan shall govern
and control. This Agreement and the Plan constitute the entire understanding
between the Company and the Optionee with respect to this Option.
9. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York without regard to its
conflict of laws principles, and shall bind and inure to the benefit of the
heirs, executors, personal representatives, successors and assigns of the
parties hereto.
10. Notices. Any notice required or permitted to be made or given
hereunder shall be mailed via certified or registered mail or delivered
personally to the addresses set forth below, or as changed from time to time by
written notice to the other:
Company: Sirius Satellite Radio Inc.
1221 Avenue of the Americas, 36th Floor
New York, New York 10020
Attention: Chief Financial Officer
Optionee: Mr. Michael S. Ledford
Address on file at
the office of the Company
Notices and other communications shall be deemed received and effective
upon the earliest of (i) hand delivery to the recipient, (ii) one business day
after deposit with a nationally recognized overnight courier (with next day
delivery specified) and (iii) five (5) days after being mailed by certified or
registered mail, postage prepaid, return receipt.
<PAGE>
15
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
SIRIUS SATELLITE RADIO INC. Optionee:
By:________________________ __________________________
Patrick Donnelly Mr. Michael S. Ledford
Senior Vice President and
General Counsel
<PAGE>
16
EXHIBIT B
SIRIUS SATELLITE RADIO 1999 LONG-TERM STOCK INCENTIVE PLAN
RESTRICTED STOCK AGREEMENT
THIS RESTRICTED STOCK AGREEMENT (this "Agreement"), dated as of
September 17, 2001 ("Date of Grant"), between SIRIUS SATELLITE RADIO INC., a
Delaware corporation (the "Company"), and Mr. Michael S. Ledford (the
"Executive").
WHEREAS, the Company maintains the Sirius Satellite Radio 1999
Long-Term Incentive Plan (the "Plan"), which is incorporated into and forms a
part of this Agreement, and the Executive has been selected by the committee
administering the Plan (the "Committee") to receive an award of Restricted Stock
under Section 8(a) of the Plan (and thus become a "Participant" as defined in
the Plan).
NOW, THEREFORE, IT IS AGREED, by and between the Company and the
Executive, as follows:
1. Definitions. Terms used in this Agreement that are not defined in
this Agreement are defined in the Plan.
2. Shares Subject to Agreement. The Executive is hereby awarded 50,000
shares of Restricted Stock.
3. Rights as Stockholder. The Executive shall be entitled to receive
any dividends paid with respect to his shares of Restricted Stock; provided,
that no dividends shall be payable to or for the benefit of the Executive with
respect to record dates occurring either (i) before the Date of Grant or (ii) on
or after the date, if any, on which the Executive has forfeited the Restricted
Stock. The Executive shall be entitled to vote his shares of Restricted Stock
that have not been forfeited to the same extent as would have been applicable to
the Executive if he was then vested in the shares; provided that the Executive
shall not be entitled to vote the shares with respect to record dates for such
voting rights arising either (i) before the Date of Grant or (ii) on or after
the date, if any, on which the Executive has forfeited the Restricted Stock.
4. Transfer and Forfeiture of Shares. On the Executive's Termination
Date, the Executive shall forfeit all of his shares of Restricted Stock that are
not then vested. For purposes of this Agreement, the Executive's "Termination
Date" means his Termination Date as defined in Section 6 of the Employment
Agreement dated as of August 29, 2001 between the Company and the Executive (as
amended, supplemented or otherwise modified, the "Employment Agreement").
Subject to earlier vesting pursuant to Section 5, the Executive shall become
vested in 12,500 shares of Restricted Stock, and thus become owner of the shares
free of all restrictions otherwise imposed by this Agreement, on September 17,
2002, September 17, 2003, September 17, 2004 and September 17, 2005.
<PAGE>
17
A share of the Executive's Restricted Stock may not be sold, assigned,
transferred pledged or otherwise encumbered until the Executive becomes vested
in such share.
5. Death or Disability. Notwithstanding Section 4, the Executive shall
become vested in his shares of Restricted Stock as of his Termination Date
before the date his Restricted Stock would otherwise vest under Section 4, if
such Termination Date occurs by reason of the Participant's death or Disability.
For purposes of this Agreement, "Disability" means any physical, mental or other
health condition which substantially impairs the Executive's ability to perform
his assigned duties for one hundred twenty (120) days or more in any two hundred
forty (240) day period or that can be expected to result in death. The Company
shall determine whether the Executive has incurred a Disability on the basis of
medical evidence reasonably acceptable to the Company. Upon making a
determination of Disability, the Company shall determine the date of the
Executive's termination of employment.
6. Other Termination. Notwithstanding Section 4, the Executive shall
become vested in his shares of Restricted Stock as of his Termination Date
before the date his Restricted Stock would otherwise vest under Section 4, if
such Termination Date occurs by any reason that would cause an amount to become
payable to the Executive under Section 6(f) of the Employment Agreement.
7. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York without regard to its
conflict of laws principles, and shall bind and inure to the benefit of the
heirs, executors, personal representatives, successors and assigns of the
parties hereto.
8. Plan Governs. Notwithstanding anything in this Agreement to the
contrary, the terms of this Agreement shall be subject to the terms of the Plan,
a copy of which may be obtained by the Executive from the office of the
Secretary of the Company.
9. Amendment. This Agreement may be amended by written agreement of the
Executive and the Company, without the consent of any other person.
10. Section 83(b) Election. The Executive understands and acknowledges
that (i) he should consult with his tax advisor regarding the advisability of
filing with the Internal Revenue Service an election under 'SS'83(b) of the
Internal Revenue Code, (ii) that an election under 'SS'83(b) must be filed
within 30 days after the Date of Grant, and (iii) that the Company is under no
obligation to assist the Executive with determining the appropriateness of
filing the election or making the filing itself.
<PAGE>
18
IN WITNESS WHEREOF, the Executive and the Company have executed this
Agreement as of the Date of Grant.
SIRIUS SATELLITE RADIO INC.
By:________________________ __________________________
Patrick L. Donnelly Michael S. Ledford
Senior Vice President and
General Counsel
<PAGE>
19
EXHIBIT C
List of Prior Inventions
and Original Works of Authorship
<TABLE>
<CAPTION>
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Title Date Identifying Number or Brief Description
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<S> <C> <C>
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</TABLE>
____ No inventions or improvements
____ Additional Sheets Attached
-----------------------------
Michael S. Ledford
____________ ___, 2001