Employment Agreement - Sirius Satellite Radio Inc. and Michael S. Ledford
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT, dated as of
December 3, 2003 (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) Subject to the terms of
Section 2(b), the Executive shall be employed in the capacity of Executive 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.
(b) On April 1, 2004, the Executive shall surrender his title as
Executive Vice President, Engineering, and such title shall be replaced with the
title, Chief Technical Officer of the Company. In such capacity, the Executive
shall be responsible for such technical and engineering activities of the
Company and the Chief Executive Officer of the Company shall designate in
writing from time to time.
(c) 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 addition, the Executive shall perform such other activities and
duties consistent with his position as the President and Chief Executive 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.
(d) The Executive shall generally perform his duties and conduct his
business at such locations as the Company shall from time to time designate.
(e) The Executive shall report to the President and Chief Executive
Officer of the Company.
3. Term. The term of this Agreement shall commence on the date hereof
and end on April 1, 2005, unless terminated earlier pursuant to the provisions
of Section 6 (the "Term"). At the end of the Term, the Company and the Executive
shall negotiate in good faith an agreement to retain the services of the
Executive on a part time basis as a consultant.
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4. Compensation. (a) During the period commencing on the date hereof and
ending on December 31, 2003, the Executive shall be paid an annual base salary
of $340,000. During the period commencing January 1, 2004 and ending on April 1,
2005, the Executive shall be paid an annual base salary of $255,000. 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
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) On the date hereof, the Company shall grant to the Executive an
option to purchase 2,100,000 shares of the Company's common stock, par value
$.001 per share (the "Common Stock"), at an exercise price equal $1.04 per
share. Such options shall be subject to the terms and conditions set forth in
the Option Agreement attached to this Agreement as Exhibit A.
(c) On the date hereof, the Company shall grant to the Executive 900,000
restricted stock units. Such restricted stock units of Common Stock shall be
subject to the terms and conditions set forth in the Restricted Stock Unit
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. 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) 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 senior vice presidents and executive vice
presidents 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.
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
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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
(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
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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 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) not
contemplated by this Agreement; or
(ii) any reduction in the Executive's base salary not
contemplated by this Agreement;
(iii) any material breach by the Company of this Agreement; or
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(iv) the Company requiring the Executive to perform his duties
and conduct his business at a location that would reasonably require the
Executive to be away from his principal residence on the date hereof, on
an overnight basis, for a period of 100 or more days in any twelve month
period
(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 the sum of (1) the Executive's annualized base salary then in effect,
and (2) the annual cash bonus, if any, paid to the Executive with respect to the
immediately preceding calendar year. 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 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
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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. 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
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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 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.
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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
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
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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).
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/ John H. Schultz
--------------------------------
John H. Schultz
Senior Vice President,
Human Resources
/s/ Michael S. Ledford
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Michael S. Ledford