XM Radio 2011 Annual Report Download - page 46

In connection with the execution of the employment agreement, we granted Mr. Greenstein an option to
purchase 27,768,136 shares of our common stock at an exercise price of $0.43 per share (the closing price of our
common stock on the date of the employment agreement). These options vest in four equal installments on each
of July 26, 2010, July 26, 2011, July 26, 2012 and July 26, 2013, with potential accelerated vesting upon the
termination of Mr. Greenstein’s employment by us without cause, by him for good reason, and upon his death or
disability. These options will generally expire no later than July 27, 2019, subject to earlier termination following
Mr. Greenstein’s termination of employment.
In the event Mr. Greenstein’s employment is terminated by us 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 payment equal to his then annual salary and the cash value of the bonus last paid or payable to him in
respect of the fiscal year preceding the fiscal year in which the termination occurs 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. Greenstein would require him to pay
an excise tax under Section 280G of the Internal Revenue Code, we have agreed to pay Mr. Greenstein 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.
James E. Meyer
In October 2009, we entered into a new employment agreement with James E. Meyer to continue to serve as
our President, Operations and Sales, through May 1, 2013. The employment agreement provides for an initial
base salary of $950,000 with specified increases to $1,100,000 in January 2010, $1,200,000 in May 2011, and
$1,300,000 in June 2012. In 2010, Mr. Meyer waived the increases in his base salary that were scheduled to take
effect in May 2011 and June 2012 under his employment agreement. In February 2011, we entered into an
amendment to our employment agreement with Mr. Meyer. The amendment changed the date that Mr. Meyer
may elect to retire from April 2011 to May 2012, delayed a previously scheduled increase in Mr. Meyer’s base
salary from May 1, 2012 to June 1, 2012 and eliminated our obligation to offer Mr. Meyer a one-year consulting
agreement upon expiration of his employment agreement or upon his retirement. In March 2012, we entered into
another amendment to our employment agreement with Mr. Meyer that changed the date that he may elect to
retire from May 2012 to May 2013.
In connection with the execution of the 2009 employment agreement, we granted Mr. Meyer an option to
purchase 25,184,984 shares of our common stock at an exercise price of $0.5752 per share (the closing price of
our common stock on date of the employment agreement). The options generally vest in four equal annual
installments on each of October 14, 2010, October 14, 2011, October 14, 2012 and October 14, 2013, and expire
on October 14, 2019, with potential accelerated vesting upon the termination of Mr. Meyer’s employment
agreement by us without cause or by him for good reason. If Mr. Meyer’s employment is terminated due to his
death or by us as a result of his disability, the vesting of the portion of his option award that otherwise would
have become vested within 12 months following the date of such termination will accelerate.
If Mr. Meyer’s employment is terminated without cause or he terminates his employment for good reason,
subject to his execution of a release of claims and his compliance with certain restrictive covenants, we are
obligated to continue his health benefits for 18 months and his life insurance benefits for one year and pay him a
lump sum payment within 60 days, equal to Mr. Meyer’s annual base salary plus the greater of (x) a bonus equal
to 60% of his then annual base salary or (y) the prior year’s bonus actually paid to him (the “Designated
Amount”). In the event Mr. Meyer elects to retire in May 2013, subject to his execution of a release of claims and
his compliance with certain restrictive covenants and generally in lieu of any other payments under his
employment agreement, we are obligated to continue his health benefits for two years and pay him a lump sum
within 60 days equal to two times the Designated Amount.
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