Stock Option Grants EMPLOYEE shall receive options to purchase Class A common stock of XM Satellite Radio Holdings Inc. (“XM Stock”) on the following terms.
(a) On the Effective Date of the Amendment, XM will grant EMPLOYEE an option to purchase Three Hundred Fifty Thousand (350,000) shares of XM Stock. Additional stock options shall be awarded at the discretion of the Compensation Committee and the Board of Directors.
(b) The options granted pursuant to Article 3.7(a) hereof will be non-qualified. The exercise price for such options shall be, with respect to each grant, the closing price of XM Stock on the date of grant.
(c) Subject to the provisions of Article 4 hereof, the options granted pursuant to Article 3.7(a) hereof will vest and become exercisable on the following schedule: with respect to each grant, one third of the shares covered by the option shall become exercisable on the first anniversary of the grant, one third of the shares covered by the option shall become exercisable on the second anniversary of the grant, and one third of the shares covered by the option shall become exercisable on the third anniversary of the grant. In addition to the annual vesting requirement, the initial options granted upon the amendment of the contract shall also require that EMPLOYEE will not sell, pledge or otherwise dispose of shares issued upon the exercise of such initial options until the first to occur of the following: (i) the average closing price of XM Stock on the Nasdaq National Market system, or principal stock exchange on which shares of XM Stock are then listed, over any 20 consecutive trading days following the date of grant equals or exceeds $10, or (ii) seven years have elapsed since the date of grant. In the event that EMPLOYEE holds non-vested options at the time his employment by XM terminates, such non-vested options shall vest or shall be forfeited, as the case may be, in accordance with the provisions of Article 4 hereof.
(d) Vested options may be exercised within ten (10) years of the date on which they were granted. In the event that EMPLOYEE holds unexercised vested options at the time his employment by XM terminates, such vested options may be exercised within the time periods set forth in Article 4 hereof.
(e) XM agrees that the XM Stock to be issued to EMPLOYEE upon his exercise of the options granted pursuant to Article 3.7(a) hereof will be registered for sale to the public on XM’s Form S-8 Registration Statement.
Stock Option Grant Subject to the provisions set forth herein and the terms and conditions of the Plan, and in consideration of the agreements of the Participant herein provided, the Company hereby grants to the Participant an Option to purchase from the Company the number of shares of Common Stock, at the exercise price per share, and on the schedule, set forth above.
Stock Options (i) As of the close of business on October 19, 2007: (i) 3,359,430 shares of Company Common Stock were subject to issuance pursuant to outstanding options to purchase Company Common Stock under the Company Stock Plans (the “Company Options”) and (ii) 920,296 shares of Company Common Stock were reserved for future issuance pursuant to Company Options or other equity-based awards available for grant under the Company Stock Plans. Since the close of business on October 19, 2007 through the execution of this Agreement, no Company Options have been granted and no shares of Company Common Stock have been reserved for future issuance pursuant to Company Options or other equity-based awards available for grant under the Company Stock Plans. There are no outstanding or authorized stock appreciation, phantom stock or other similar rights (whether payable in stock, cash or other property) with respect to the Company.
(ii) Section 2.2(a) of the Company Disclosure Letter sets forth a list of each outstanding Company Option issued and (a) the particular Company Stock Plan (if any) pursuant to which such Company Option was granted, (b) the name and last known state of domicile of the holder of such Company Option (provided, however, that the Company may redact names of employees (other than with respect to officers of the Company) from such list), (c) the number of shares of Company Common Stock subject to such Company Option, (d) the exercise price of such Company Option (and whether such option is subject to Section 409A of the Code), (e) the date on which such Company Option was granted, (e) the applicable vesting schedule (including any acceleration provisions with respect thereto), and the extent to which such Company Option is vested and exercisable as of the date hereof, (f) the date on which such Company Option expires, and (g) whether such Company Option is intended to qualify as an incentive stock option as defined in Section 422 of the Code. All shares of Company Common Stock subject to issuance under the Company Stock Plans, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, would be duly authorized, validly issued, fully paid and nonassessable. True and complete copies of the forms of all agreements relating to Company Options issued under the Company Stock Plans have been provided to Parent, such forms of agreements are not materially different from the agreements evidencing such Company Options (other than with respect to the name of the holder, the per share exercise price, the number of shares subject to such Company Options and the applicable vesting schedule), and such agreements and instruments have not been amended, modified or supplemented, and the Company has no obligations under any Contract to amend, modify or supplement such agreements in any case from the forms provided to Parent (or the actual agreements evidencing such Company Options).
Treatment of Stock Options At the Effective Time, with respect to each outstanding option to purchase Shares (a “Company Option”) under the Company Stock Plans, whether vested or unvested, (x) if the exercise price of such Company Option is equal to or greater than the Cash Election Consideration, such Company Option shall terminate and be cancelled as of immediately prior to the Effective Time, without any consideration being payable in respect thereof, and have no further force or effect, and (y) if the exercise price of such Company Option is less than the Cash Election Consideration, thirty percent (30%) of such Company Options held by each holder thereof (rounded to the nearest whole share), other than any Company Option that is not held by a Company Employee and any Company Option held by a non-employee Director, shall be deemed to be “Rollover Options” and the remaining Company Options (other than Company Options cancelled pursuant to clause (x) above) shall be deemed to be “Cash-Out Options”. At the Effective Time, automatically and without any required action on the part of the holder thereof:
(i) each such Cash-Out Option shall terminate and be cancelled as of immediately prior to the Effective Time in exchange for the right to receive, in accordance with this Section 4.6(a), a lump sum cash payment in the amount equal to (i) the number of Shares subject to the Company Option immediately prior to the Effective Time, multiplied by (ii) the excess, if any, of the dollar value of the Cash Election Consideration (the “Cash Award Consideration”), over the applicable exercise price (the “Option Payment”). The Option Payment (if any) payable under this Section 4.6(a) to each former holder of a Company Option that was outstanding immediately prior to the Effective Time shall be paid through the Surviving Company’s payroll to such former holder as soon as practicable following the Effective Time (but in any event not later than ten (10) Business Days thereafter), net of any Taxes withheld pursuant to Section 4.2(h); and
(ii) each Rollover Option shall be assumed and converted automatically into a fully-vested option (an “Adjusted Stock Option”) to purchase, on substantially the same terms and conditions (other than vesting) as were applicable under such Rollover Option immediately prior to the Effective Time, the number of shares of Series C Common Stock (rounded down to the nearest whole number of shares) equal to the product of (A) the number of Shares subject to such Rollover Option immediately prior to the Effective Time, multiplied by (B) the Option Exchange Ratio, which Adjusted Stock Option shall have an exercise price per share of Series C Common Stock equal to the quotient (rounded up to the nearest whole cent) obtained by dividing (x) the exercise price per Share subject to such Rollover Option immediately prior to the Effective Time, by (y) the Option Exchange Ratio. The “Option Exchange Ratio” shall equal the quotient (rounded to four decimal places) obtained by dividing (i) the weighted average price of the Class A Shares on the NASDAQ on the Trading Day immediately prior to the date of the Effective Time by (ii) the Average Parent Stock Price.
Grant of Stock Options This non-qualified Stock Option is granted under and pursuant to the Plan and is subject to each and all of the provisions thereof.
Stock Option Award In the event of Employee’s involuntary Termination of Employment without Cause or Termination of Employment due to a resignation by Employee for Good Reason that, in either case, occurs on or before the second anniversary of a Change in Control, the Stock Option Award shall become exercisable immediately (whether or not previously exercisable) and shall remain exercisable for the three year period following such Termination of Employment. For this purpose, “Good Reason” has the same meaning determined by Employee’s written employment agreement in effect on the Grant Date. In the event there is no such agreement or definition, then Good Reason means the initial existence of one or more of the following conditions, arising without the consent of the Employee: (1) a material diminution in Employee’s base compensation; (2) a material diminution in Employee’s authority, duties, or responsibilities, so as to effectively cause Employee to no longer be performing the duties of his position; (3) a material diminution in the authority, duties, or responsibilities of the supervisor to whom Employee is required to report.
Incentive Stock Options If the Shares are held for more than twelve (12) months after the date of the transfer of the Shares pursuant to the exercise of an ISO and are disposed of more than two (2) years after the Date of Grant, any gain realized on disposition of the Shares will be treated as long term capital gain for federal and California income tax purposes. If Shares purchased under an ISO are disposed of within the applicable one (1) year or two (2) year period, any gain realized on such disposition will be treated as compensation income (taxable at ordinary income rates) to the extent of the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price.
Vesting of Stock Options All unvested stock options held by Executive, if any, shall vest immediately upon a Change of Control Termination as defined in Section 6.1.
Stock Option Plans Each stock option granted by the Company under the Company’s stock option plan was granted (i) in accordance with the terms of the Company’s stock option plan and (ii) with an exercise price at least equal to the fair market value of the Common Stock on the date such stock option would be considered granted under GAAP and applicable law. No stock option granted under the Company’s stock option plan has been backdated. The Company has not knowingly granted, and there is no and has been no Company policy or practice to knowingly grant, stock options prior to, or otherwise knowingly coordinate the grant of stock options with, the release or other public announcement of material information regarding the Company or its Subsidiaries or their financial results or prospects.
Stock Options; Restricted Stock The foregoing benefits are intended to be in addition to the value of any options to acquire Common Stock of the Company, the exercisability of which is accelerated pursuant to the terms of any stock option agreement, any restricted stock the vesting of which is accelerated pursuant to the terms of the restricted stock agreement, and any other incentive or similar plan heretofore or hereafter adopted by the Company.
