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EXHIBIT 10.10
EMPLOYMENT AND NONCOMPETITION AGREEMENT
This EMPLOYMENT AND NONCOMPETITION AGREEMENT is dated as of
July 10, 1997 (the "Agreement"), by and between CD RADIO INC., a Delaware
corporation, (the "Company"), and XXXXXX X. XXXXXXXXXX (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 Agreement.
2. DUTIES AND REPORTING RELATIONSHIP.
(a) Duties. The Executive shall be employed in the
capacity of an Executive Vice President and the Chief Financial Officer of the
Company. 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 financial 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 Company.
3. TERM. The term of this Agreement shall be deemed to
have commenced and be effective on and from August 25, 1997, and end on August
25, 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 computed on an annualized base
of U.S. $250,000.00 per year for the period of his employment hereunder through
December 31, 1997 and thereafter during the balance of the term of this
Agreement at a salary computed on an annualized base of $275,000.00, subject to
any increases that the Board of Directors or the compensation committee thereof
shall approve.
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(b) Stock Options. The Company hereby grants to
the Executive the option to purchase 175,000 shares of the Company's common
stock, par value $0.001 per share (the "Common Stock") at U.S.$15.125 per
share, on such terms and subject to such conditions as are set forth in the
option agreement attached hereto as Exhibit A.
(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.
5. ADDITIONAL COMPENSATION, EXPENSES AND BENEFITS.
(a) Expenses. The Company shall promptly
reimburse the Executive for all reasonable and necessary business expenses
incurred and advanced by him 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 bonus
grants, 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 by the Board of Directors or the compensation committee thereof in their
absolute discretion.
(c) Moving Expenses. The Executive presently
resides in Los Angeles, California. It is expect and understood under this
Agreement that the Executive shall establish his principal residence within the
metropolitan area of the City of New York, New York. With respect to such
move, the Company shall reimburse him, in each case on due proof thereof, as
follows:
(i) The Company shall reimburse the Executive for the
reasonable, direct expenses which he shall incur in
moving his principal residence to New York,
including, but not limited to, the costs of (A)
transporting his family and shipping his furniture,
furnishing and personal effects to New York, (B)
rental of a car in Los Angeles for a maximum of two
(2) months (as a replacement for his prior use of a
company car), (C) two (2) roundtrip airline tickets
for his wife for "househunting" visits to New York,
(D) any brokerage fee paid by
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him in respect of rental of a permanent residence in
New York, (E) storage of his furnishings, furniture
and personal effects in respect his move for up to
two (2) months and (F) insuring his furnishings,
furniture and personal effects during moving and
storage (all up to a maximum aggregate sum of
$27,000.00);
(ii) The Company shall pay directly to the Executive's
broker, at the Executive's request, any brokerage
commission (up to a maximum of six percent (6%) of
the gross sale price thereof) incurred by the
Executive with respect to the sale of his present
residence in Los Angeles, California;
(iii) The Company shall reimburse the Executive for the monthly
rental expenses which the Executive may incur with
respect to any temporary apartment rental he may
undertake prior to his establishing his permanent
residence in New York, up to a maximum of four (4)
months rent and a maximum aggregate rent paid of
$15,000.00;
(iv) As to any reimbursements to be made to the Executive
under subparagraphs (i) and (iii) above, the Company
shall further pay to the Executive an additional sum
equal to forty-five percent (45%) of each such
amount as a "gross-up" for the personal income taxes
which the Executive shall incur with respect to that
reimbursement payment.
(d) Additional Payment. To compensate the
Executive for his loss of an annual incentive bonus expected to be paid to him
in his current employment which the Executive will forego by reason of his
agreement to commence his employment with the Company on August 25, 1997, the
Company shall pay to the Executive the additional sum of $90,000.00 upon his
commencement of employment with the Company on August 25, 1997.
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
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law or the Certificate of Incorporation or Bylaws of the Company, to be
indemnified with respect to such action. Termination of 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 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 to the Executive without
setoff, counterclaim or other withholding except as set forth in Paragraph 4(c)
an amount (in addition to any salary, benefits or other sums due the Executive
through the Termination Date) equal to his annualized salary base then in
effect. Any amount becoming payable under this Paragraph 6(d) shall be paid on
the Termination Date.
7. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. As a
condition of his employment hereunder, the Executive has executed and delivered
to the Company an agreement addressing the nondisclosure of confidential
information (the "Nondisclosure
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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) year 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.
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 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.
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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 he would have been in if he 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 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 effect.
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.
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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
0000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Telecopier No.: (000)000-0000
(ii) if to the Executive:
Xxxxxx X. Xxxxxxxxxx
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopier No.: (000)000-0000
or to such other person or address as either of the parties shall furnish in
writing to the other party from time to time.
18. CHOICE OF LAW. This Agreement shall be governed by
and construed in accordance with the laws of the District of Columbia
applicable to contracts made and to be performed entirely within said
jurisdiction.
19. 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.
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20. 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:
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Name: Xxxxxxxx X. Xxxxxxxx
Title: Secretary
EXECUTIVE
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Xxxxxx X. Xxxxxxxxxx
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