XM Radio 2010 Annual Report Download - page 47
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amount of such tax and any additional amount as may be necessary to place him in the exact same financial
position that he would have been in if the excise tax was not imposed.
David J. Frear
In June 2003, we entered into an employment agreement with David A. Frear to serve as our Executive
Vice President and Chief Financial Officer. The employment agreement was amended in August 2005 and
February 2008, and is effective through July 31, 2011. The employment agreement, as amended, provides for
an annual base salary of $750,000, subject to approved increases.
If Mr. Frear’s employment is terminated without cause or he terminates his employment for good reason,
subject to his execution of a release of claims, we are obligated to pay him a lump sum equal to his annual
salary as of the date of the termination and the last annual bonus actually paid to him and to continue his
health and life insurance benefits for one year.
In the event that any payment we make, or benefit we provide, to Mr. Frear would require him to pay an
excise tax under Section 280G of the Internal Revenue Code, we have agreed to pay Mr. Frear the amount of
such tax and such additional amount as may be necessary to place him in the exact same financial position
that he would have been in if the excise tax was not imposed.
2003 Long-Term Stock Incentive Plan
Messrs. Greenstein, Meyer, Donnelley and Frear also have outstanding options or restricted stock units as
of December 31, 2010 that were granted under the 2003 Long-Term Stock Incentive Plan. Under the 2003
Long-Term Stock Incentive Plan, the outstanding equity awards granted to these named executive officers are
subject to potential accelerated vesting upon a change of control. In addition, Mr. Frear’s award agreements
relating to options and restricted stock units granted to him in February 2008 under the 2003 plan provide that
such equity awards are subject to potential accelerated vesting upon his death and disability. All of the
outstanding options granted under the 2003 plan held by the named executive officers were “out-of the money”
as of December 31, 2010, and, therefore, are not included in the table of potential payments and benefits
below.
2009 Long-Term Stock Incentive Plan
All of our named executive officers have outstanding equity awards as of December 31, 2010 that were
granted under the 2009 Long-Term Stock Incentive Plan. Under the terms of the 2009 plan, the outstanding
equity awards granted to the named executive officers are subject to potential accelerated vesting upon
termination without cause by the company or termination by the executive for good reason during a two year
period following a change of control, to the extent outstanding awards granted under the plan are either
assumed, converted or replaced by the resulting entity in the event of a change of control.
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