EXHIBIT 10.19
OPTION NO.
OPTIONEE:
DATE OF GRANT:
OPTION PRICE:
COVERED SHARES: ______ shares of the common stock of XM
_____________________________________________________________________
XM SATELLITE RADIO HOLDINGS INC.
1998 SHARE AWARD PLAN
NON-QUALIFIED STOCK OPTION AGREEMENT
1. Definitions. Terms defined in the Plan and not otherwise defined in this
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Agreement are used in this Agreement as defined in the Plan. In this Agreement,
except where the context otherwise indicates, the following definitions apply:
A. "A
greement" means this Non-Qualified Stock Option Agreement.
B. "XM" means XM Satellite Radio Holdings Inc., a Delaware corporation.
C. "Committee" means the committee appointed by the XM Board of Directors
to administer the Plan.
D. "Covered Shares" means the Shares subject to the Option.
E. "Date of Exercise" means the date on which XM receives notice of the
exercise, in whole or in part, of the option pursuant to Section 5.A. of this
Agreement.
F. "Date of Expiration" means, subject to the provisions of Section 3.C
and D of this Agreement, ten (10) years after the Date of Grant.
G. "Date of Grant" means the date set forth as the "Date of Grant" on page
1 of this Agreement.
H. "In-Orbit Acceptance of XM's Second Satellite" shall mean that the
second satellite determined by XM to be a "Satisfactorily Operating Satellite"
as defined in Section 1.1(sss) of the "Satellite Purchase Contract for In-Orbit
Delivery by and between American Mobile Radio Corporation [XM Sat
ellite Radio
Inc.] and Xxxxxx Space and Communication International, Inc." dated as of March
20, 1998, as may be amended from time to time.
I. "Option" means the non-qualified stock option granted to the Optionee
in Section 2 of this Agreement.
J. "Option Period" means the period beginning on the Date of Grant and
terminating on the Date of Expiration.
K. "Option Price" means the dollar amount per Share set forth as the
Option Price on page 1 of this Agreement.
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L. "Optionee" means the person identified as the "Optionee" on page 1 of
this Agreement.
M. "Plan" means the XM 1998 Shares Award Plan, as the same may be amended
from time to time.
N. "Public Offering" has the meaning set forth in Section 6.B of this
Agreement.
O. "Securities Act" means the Securities Act of 1933, as amended.
P. "Shares" means shares of common stock of XM.
2. Grant of Option. Pursuant to the Plan and subject to the terms of this
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Agreement, XM grants to the Optionee the Option to purchase from XM that number
of Shares identified as the "Covered Shares" on page 1 of this Agreement,
exercisable at the Option Price, effective on the Date of Grant.
3. Terms of the Option.
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A. Type of Option. The Option is intended to be a non-qualified stock
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option and is not an incentive stock option within the meaning of Section 422 of
the Code.
B. Vesting and Exercise. The Option may be exercised during the Option
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Period, subject to the limitation that the Option shall vest in three (3) equal
annual installments such that:
(a) no portion of the Covered Shares may be exercised during the
first year following the Date of Xxxxx;
(b) during the second year following the Date of Xxxxx, the Option
may be exercised to a maximum of 33 1/3 % of the Covered Shares;
(c) during the third year following the Date of Xxxxx, the Option
may be exercised to a cumulative maximum of 66 2/3% of the Covered
Shares;
(d) thereafter the Option with respect to the Covered Shares may be
exercised in full.
C. Termination of employment: If the Optionee's employment terminates
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during the Option Period, the Option may be exercised for the following periods
after such termination: zero (0) months in the case of a termination for Good
Cause; three (3) months in the case of a voluntary termination; six (6) months
following an involuntary termination, or twelve (12) months in the case of
death, disability, retirement or voluntary or involuntary termination after a
Change of Control. Upon the Optionee's termination of employment, the Option
shall be exercisable only to the extent that it was vested and exercisable as of
the date of the Optionee's termination, except that in the case of the
Optionee's death or involuntary termination within one year of a Change of
Control, the Option shall vest immediately in full and shall be fully
exercisable by the Optionee or the Optionee's authorized representative or by
his or her properly appointed attorney-in-fact, guardian, trustee, or
conservator, as the case may be.
D. Nontransferability. The Option is not transferable by the Optionee
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other than (i) by will or by the laws of descent and distribution, or (ii)
pursuant to a qualified domestic relations order as defined in Section 414(p) of
the Code or Title I of the Employee Retirement Income Security Act or the rules
thereunder, and is exercisable, during the Optionee's lifetime, only by the
Optionee or, in the case of the Optionee's legal disability, by the Optionee's
legal representative except as provided in paragraph C of this Section 3.
4. Capital Adjustments. The number of Covered Shares and the Option Price
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shall be subject to such adjustment, if any, in accordance with Section 11(a) of
the Plan.
5. Method of Exercise.
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A. Notice. The Option shall be exercised, in whole or in part, by the
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delivery to XM of written notice of such exercise, in such form as the Committee
may from time to time prescribe, accompanied by:
(a) full payment in cash or readily available funds or in Shares in
the amount of the Option Price with respect to that portion of the
Option being exercised or pursuant to a cashless exercise program to
be established by the Committee in accordance with Section 4(b) of the
Plan; and
(b) any amount that must be withheld by XM for Federal, State,
and/or local tax purposes, payable either in cash or in Shares,
including through withholding of Shares upon exercise; and
(c) such representations and documents as the corporation, in its
absolute discretion, deems necessary or advisable to effect compliance
with all applicable provisions of the Securities Act and any other
Federal or State securities laws or regulations. XM may, in its
absolute discretion, also take whatever additional actions it deems
appropriate to effect such compliance, including, without limitation
placing legends on share certificates and issuing stop-transfer orders
to transfer agents and registrars; and
(d) if the Option or portion thereof shall be exercised pursuant
to this provisions of Section 3.C of this Agreement by any person or
persons other than the Optionee, appropriate proof of the right of such
person or persons to exercise the Option or portion thereof.
Until the Committee notifies the Optionee to the contrary, the form attached to
this Agreement as Exhibit A shall be used to exercise the Option.
B. Effect. The exercise, in whole or in part, of the Option shall cause a
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reduction in the number of Covered Shares equal to the number of Shares with
respect to which the Option is exercised.
6. Restriction on Exercise and Upon Disposition of Shares of Common Stock
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Issued Upon Exercise.
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A. Limitation on Exercise: Notwithstanding any other provision of this
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Agreement, the Optionee agrees, for himself or herself and his or her
successors, that XM shall not be required to honor the exercise of the Option if
XM does not have in effect a registration statement under the Securities Act
relating to the offer of Shares to the Optionee under the Plan, if XM reasonably
determines that the exercise of such Option would violate the Securities Act.
The Optionee further agrees, for himself or herself and his or her successors,
that upon the issuance of any Shares upon the exercise of the Option, he or she
will, upon the request of the XM, agree in writing that he or she is acquiring
the Shares for investment only and not with a view to resale, and that he or she
will not sell, pledge or otherwise dispose of such shares so issued, unless and
until (a) XM is furnished with an opinion of counsel satisfactory to XM to the
effect that registration of such shares pursuant to the Securities Act is not
required by that Act and the rules and regulations thereunder; (b) the staff of
the Securities and Exchange Commission has issued a "no-action" letter with
respect to such disposition; or (c) such registration or notification as is, in
the opinion of counsel for the corporation, required for the lawful disposition
of such shares has been filed by XM and has become effective; provided, however,
that XM is not obligated hereby to file any such registration or notification.
B. Limitation on Sale: If XM has not completed an offering to the public
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(a "Public Offering") of its shares of common stock (or such class of shares
into which such common stock has been converted), the Optionee agrees not to
sell, pledge, or dispose of any Shares issued upon exercise of the Option,
except to XM as provided in paragraph C of this Section 6. If at any time XM
does complete a Public Offering, it will cause the shares issuable upon the
exercise of the Option to be registered under the Securities Act if required to
permit the public sale of such Shares by the Optionee.
C. Repurchase by XM: In the event that XM has not completed a Public
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Offering by the date the first anniversary of the In-Orbit Acceptance of XM's
Second Satellite occurs, but in no event later than December 31, 2001, XM will
determine and report to Optionee the fair market value as of recent date of a
single share of XM's Common Stock as if XM were sold in its entirety in an arm's
length transaction involving a willing buyer and a willing seller (the "Value").
Such determination will be made by the Board of Directors in good faith (and may
be based, in the Board's discretion, upon a valuation by an appropriate
appraiser selected by the Board). XM will cause a new valuation to be made
annually thereafter unless prior to such time it has completed a Public
Offering,
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and it may, in its sole discretion, undertake to have such valuations made more
frequently than yearly intervals. From and after the date that any valuation is
made and until it is superseded by a subsequent valuation, XM shall purchase for
cash, from the holder of Common Stock issued upon exercise of the Option such
number of shares as may be requested by such holder from time to time at a price
per share equal to the then-current value, provided, that XM shall not be
obligated to so purchase such shares if by the date of such request XM has
completed a Public Offering.
D. Legends: The Optionee further agrees that XM may place a legend
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embodying the foregoing restrictions on the certificates evidencing such shares.
7. Representations and Warranties. Upon exercise of the Option in whole or in
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part, the Optionee shall represent, warrant and acknowledge the following:
A. The Optionee has made such investigations as the Optionee deems
necessary and appropriate of the business and/or financial prospects of XM.
B. The Option is being exercised and the Covered Shares are being acquired
for investment for the Optionee's own account and not with the view to, or for
resale in connection with, any distribution or public offering thereof within
the meaning of the Securities Act, and the certificate for such stock may be
legended to that effect, that such stock is not registered under federal or
state securities laws and that the registration exemptions being relied on are
the federal and state private or limited offering exemptions and the Optionee
has no reason to believe that such exemptions are not applicable to the
Optionee.
C. The Optionee acknowledges that XM has made available to the Optionee
the opportunity to obtain information to evaluate the merits and risks
associated with this Agreement and the transactions contemplated thereby. The
Optionee acknowledges that the investment contemplated by the Option involves a
high degree of risk, including risks associated with XM's business operations
and prospects including competition and the dependence on XM's technology and
events beyond XM's control, the limits on transferability of the Option and
Covered Shares, and the absence of a public market for the Covered Shares.
8. Rights as Stockholder. The Optionee shall have no rights as a stockholder
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with respect to any Covered Shares subject to the Option until and unless a
certificate or certificates representing such shares are issued to the Optionee
pursuant to this Agreement. Except as provided in Section 4 of this Agreement,
no adjustment shall be made for dividends or other rights for which the record
date is prior to the issuance of such certificate or certificates.
9. Employment. Neither the granting of the Option evidenced by this Agreement
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nor any term or provision of this Agreement shall constitute or be evidence of
any understanding, express or implied, on the part of XM to employ or continue
the employment of the Optionee for any period. Whenever reference is made in
this Agreement to the employment of the Optionee, it means employment by XM or
its Affiliate.
10. Subject to the Plan. The Option evidenced by this Agreement and the
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exercise of the Option are subject to the terms and conditions of the Plan,
which are incorporated herein by reference and made a part hereof, but the terms
of the Plan shall not be considered an enlargement of any benefits under this
Agreement. In addition, the Option is subject to any rules and regulations
promulgated by the Committee.
11. Fractional Shares. Notwithstanding anything contained herein to the
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contrary, following a Public Offering, Award exercises and issuances involving
the issuance of Shares may only be effected in whole (and not fractional)
shares.
12. Applicable Law. This Agreement shall be subject to the laws of the State
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of Delaware, without giving effect to the principles of conflict of laws
thereof.
13. Entire Agreement. This Agreement is in lieu of and supersedes all prior
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agreements, representations, negotiations, or other understandings of the
parties with respect to the subject matter hereof. It may not be amended or
altered except in a writing signed by the Optionee and the authorized
representatives of XM.
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14. Waiver and Severability. A. The waiver by either party of a breach of any
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provision of this Agreement shall not operate or be construed as a waiver of the
same or any other breach by either of the parties to this Agreement, whether
prior or subsequent.
B. If any term or provision of this Agreement is determined by a court of
competent jurisdiction to be illegal, invalid, or unenforceable, the legality,
validity, or enforceability of the remainder of this Agreement shall not thereby
be affected, and this Agreement shall be deemed to be amended to the extent
necessary to delete such provision.
15. Headings: The Section, paragraph, and subparagraph headings contained in
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this Agreement are for reference purposes only, and shall not in any way affect
the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Non-Qualified Stock Option
Agreement to be signed effective as of the Date of Grant.
ATTEST: XM SATELLITE RADIO HOLDINGS INC.
_____________________ By: ________________________________________
Accepted and agreed to as of the Date of Xxxxx:
________________________
Optionee
________________________
Name
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"EXHIBIT A"
EXERCISE OF OPTION
Chairman, Board of Directors
XM Satellite Radio Holdings Inc.
00000 Xxxxxxxxx Xxxxxxxxx
Xxxxxx, Xxxxxxxx 00000-0000
To the Board:
The undersigned, the Optionee under the Non-Qualified Stock Option
Agreement identified as Option No. __________, granted pursuant to the XM
Satellite Radio Holdings Inc. 1998 Share Award Plan, hereby irrevocably elects
to exercise the Option granted in the Agreement to purchase _______ shares of
common stock of XM Satellite Radio Holdings Inc. ("XM"), par value $0.10 per
share ("Shares"), and herewith makes payment of $__________ in the form of
[cash, Common Stock, cash plus Common Stock, through the exercise of the
cashless exercise program] for the shares purchased and $_________ in the form
of _________________ [cash, Common Stock, cash plus Common Stock, through the
exercise of the cashless exercise program] to cover the Corporation's
withholding tax liability in respect of the purchase. (Please complete, and
complete separate cashless exercise form as appropriate.)
The Optionee hereby represents, warrants and acknowledges the following:
A. The Optionee has made such investigations as the Optionee feels
necessary and appropriate of the business and/or financial prospects of XM.
B. The Shares are being acquired for investment for the Optionee's own
account and not with the view to, or for resale in connection with, any
distribution or public offering thereof within the meaning of the Securities Act
of 1933, as amended, and the certificate for such stock may be legended to that
effect, that such stock is not registered under federal or state securities laws
and that the registration exemptions being relied on are the federal and state
private or limited offering exemptions and the Optionee has no reason to believe
that such exemptions are not applicable to the Optionee.
C. The Optionee acknowledges that XM has made available to the Optionee
the opportunity to obtain information to evaluate the merits and risks
associated with this Agreement and the transactions contemplated thereby. The
Optionee acknowledges that the investment contemplated by the Option involves a
high degree of risk, including risks associated with XM's business operations
and prospects including competition and the dependence on XM's technology and
events beyond XM's control, the limits on transferability of the Shares, and the
absence of a public market for the Shares.
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[Note: Shares of Common Stock being delivered in payment of all or any part of
the exercise price must be represented by certificates registered in the name of
the Optionee and duly endorsed by the Optionee and by each and every other co-
owner in whose name the shares may also be registered.]
Dated: ________________ ____________________________________
(Signature of Optionee)
Date Received by
XM Satellite Radio Holdings Inc.:____________________________
Received by:______________________________
______________________________
Name
______________________________
Title
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