XM Radio 2008 Annual Report Download - page 178

or to grant both types of Options. In the case of Incentive Stock Options, the terms and conditions of such
grants shall be subject to and comply with such rules as may be prescribed by Section 422 of the Code, as
from time to time amended, and any regulations implementing such statute. All Options when granted under
the Plan are intended to be Non-Qualified Stock Options, unless the applicable Award Agreement expressly
states that the Option is intended to be an Incentive Stock Option. If an Option is intended to be an Incentive
Stock Option, and if for any reason such Option (or any portion thereof) shall not qualify as an Incentive
Stock Option, then, to the extent of such nonqualification, such Option (or portion thereof) shall be regarded
as a Non-Qualified Stock Option appropriately granted under the Plan; provided that such Option (or portion
thereof) otherwise complies with the Plan’s requirements relating to Non-Qualified Stock Options. No Option
shall be exercisable more than ten years from the date of grant.
(b) Exercise Price. The Committee shall establish the exercise price at the time each Option is granted,
which exercise price shall be set forth in the applicable Award Agreement and which shall not be less than the
Fair Market Value per Share on the date of grant.
(c) Exercise. Each Option shall be exercisable at such times and subject to such terms and conditions as
the Committee may, in its sole discretion, specify in the applicable Award Agreement. The Committee may
impose such conditions with respect to the exercise of Options, including without limitation, any relating to
the application of federal or state securities laws, as it may deem necessary or advisable.
(d) Payment. (i) No Shares shall be delivered pursuant to any exercise of an Option until payment in
full of the aggregate exercise price therefore is received by the Company. Such payment may be made in cash,
or its equivalent, or (x) by exchanging Shares owned by the optionee (which are not the subject of any pledge
or other security interest and which have been owned by such optionee for at least six months), or (y) subject
to such rules as may be established by the Committee, through delivery of irrevocable instructions to a broker
to sell the Shares otherwise deliverable upon the exercise of the Option and to deliver promptly to the
Company an amount equal to the aggregate exercise price or by a combination of the foregoing, provided that
the combined value of all cash and cash equivalents and the Fair Market Value of any such Shares so tendered
to the Company as of the date of such tender is at least equal to such aggregate exercise price.
(ii) Wherever in this Plan or any Award Agreement a Participant is permitted to pay the exercise price of
an Option or taxes relating to the exercise of an Option by delivering Shares, the Participant may, subject to
procedures satisfactory to the Committee, satisfy such delivery requirement by presenting proof of beneficial
ownership of such Shares, in which case the Company shall treat the Option as exercised without further
payment and shall withhold such number of Shares from the Shares acquired by the exercise of the Option.
SECTION 7. Stock Appreciation Rights.
(a) Grant. Subject to the provisions of the Plan, the Committee shall have sole authority to determine
the Participants to whom Stock Appreciation Rights shall be granted, the number of Shares to be covered by
each Stock Appreciation Right Award, the grant price thereof and the conditions and limitations applicable to
the exercise thereof. Stock Appreciation Rights with a grant price equal to or greater than the Fair Market
Value per Share as of the date of grant are intended to qualify as “performance-based compensation” under
Section 162(m) of the Code. In the sole discretion of the Committee, Stock Appreciation Rights may, but need
not, be intended to qualify as performance-based compensation in accordance with Section 11 hereof. Stock
Appreciation Rights may be granted in tandem with another Award, in addition to another Award, or
freestanding and unrelated to another Award. Stock Appreciation Rights granted in tandem with or in addition
to an Award may be granted either before, at the same time as the Award or at a later time. No Stock
Appreciation Right shall be exercisable more than ten years from the date of grant.
(b) Exercise and Payment. A Stock Appreciation Right shall entitle the Participant to receive an amount
equal to the excess of the Fair Market Value of a Share on the date of exercise of the Stock Appreciation
Right over the grant price thereof (which shall not be less than the Fair Market Value on the date of grant).
The Committee shall determine in its sole discretion whether a Stock Appreciation Right shall be settled in
cash, Shares or a combination of cash and Shares.
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