XM Radio 2010 Annual Report Download - page 46

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.
Dara F. Altman
In September 2008, we entered into a three year employment agreement with Dara F. Altman to serve as
our Executive Vice President and Chief Administrative Officer through September 25, 2011. This employment
agreement provides for an annual base salary of $446,332, subject to approved increases.
If Ms. Altman’s employment is terminated without cause or she terminates her employment for good
reason, subject to her execution of a release of claims, we are obligated to continue her medical, dental and
life insurance benefits for 24 months following her termination and pay her a lump sum severance payment, in
cash equal to two times the sum of (1) her base salary as in effect immediately prior to the termination date
or, if higher, in effect immediately prior to the first occurrence of an event or circumstance constituting good
reason, and (2) the higher of (a) the last annual bonus actually paid to her and (b) 55% of her base salary as
in effect immediately prior to the termination date or, if higher, in effect immediately prior to the first
occurrence of an event or circumstance constituting good reason, and a cash amount equal to the sum of (1) a
pro rata cash bonus award for the uncompleted plan year in which the termination occurs and (2) any unpaid
incentive compensation that is contingent only upon the continued employment of Ms. Altman and that was
allocated or awarded to Ms. Altman for the completed fiscal year or other measuring period preceding the date
of termination. We are also obligated to pay outplacement services for a period up to two years or until
Ms. Altman accepts an offer of employment. In addition, all options to purchase our common stock, restricted
stock units or restricted shares of common stock issued by us to her during the term that are held by her on
the termination date shall immediately vest. Any such vested but unexercised stock options shall expire 90 days
following the termination.
In the event that any payment we make, or benefit we provide, to Ms. Altman would require her to pay
an excise tax under Section 280G of the Internal Revenue Code, we have agreed to pay Ms. Altman the
amount of such tax and any additional amount as may be necessary to place her in the exact same financial
position that she would have been in if the excise tax was not imposed.
Patrick L. Donnelly
In January 2010, we entered into a new employment agreement with Patrick L. Donnelly to continue to
serve as our Executive Vice President, General Counsel and Secretary, through January 13, 2014. The
employment agreement provides for an annual base salary in 2010 of $575,000, subject to specified increases
to no less than $625,000 in January 2011, $675,000 in January 2012, and $725,000 in January 2013. In 2010,
Mr. Donnelly waived the increase in his base salary that he would have been entitled to in 2011 under his
employment agreement.
In connection with the execution of the employment agreement, we granted Mr. Donnelly an option to
purchase 13,163,495 shares of our common stock at an exercise price of $0.6669 per share (the last sale price
of our common stock on The NASDAQ Global Select Market prior to the execution of the employment
agreement). The option will generally vest in four equal annual installments on each of January 14, 2011,
January 14, 2012, January 14, 2013 and January 14, 2014, and expires on January 14, 2020, with potential
accelerated vesting upon the termination of Mr. Donnelly’s employment agreement by us without cause, by
him for good reason, due to his death or by us as a result of disability.
If Mr. Donnelly’s employment is terminated without cause or he terminates his employment for good
reason, subject to an execution of a release of claims, we are obligated to pay him a lump sum payment equal
to his then annual salary and the cash value of the bonus last paid or payable to him in respect of the
preceding fiscal year 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. Donnelly would require him to pay
an excise tax under Section 280G of the Internal Revenue Code, we have agreed to pay Mr. Donnelly the
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