XM Radio 2014 Annual Report Download - page 56

similar effect, upon terms and conditions as may be determined by the Committee from time to
time, if a participant, during his or her employment or other service with us or a subsidiary engages
in activity detrimental to our business. In addition, any award agreement may also provide for the
cancellation or forfeiture of an award or the forfeiture and repayment to us of any gain related to an
award, or other provisions intended to have a similar effect, upon such terms and conditions as
may be required by the Committee or under Section 10D of the Securities Exchange Act of 1934,
as amended, or any applicable rules or regulations of the SEC or any national securities exchange
or national securities association on which our common stock may be traded.
Term of the 2015 Plan
No grant will be made under the 2015 Plan more than 10 years after the date on which the
2015 Plan is first approved by our board of directors, but all grants made on or prior to such date
will continue in effect thereafter subject to the terms thereof and of the 2015 Plan.
Certain Federal Income Tax Consequences Relating to Awards
The following is a brief summary of some of the federal income tax consequences of certain
transactions under the 2015 Plan based on federal income tax laws in effect on the date hereof.
This summary, which is presented for the information of stockholders considering how to vote on
this proposal and not for Plan participants, is not intended to be complete and does not describe
federal taxes other than income taxes (such as Medicare and Social Security taxes), or state, local
or foreign tax consequences.
Tax Consequences to Participants
Non-qualified Stock Options. In general, (i) no income will be recognized by an optionee at the
time a non-qualified stock option is granted; (ii) at the time of exercise of a non-qualified stock
option, ordinary income will be recognized by the optionee in an amount equal to the difference
between the exercise price paid for the shares and the fair market value of the shares on the date
of exercise; and (iii) at the time of sale of shares acquired pursuant to the exercise of a non-
qualified stock option, appreciation (or depreciation) in value of the shares after the date of exercise
will be treated as either short-term or long-term capital gain (or loss) depending on how long the
shares have been held.
Incentive Stock Options. No income generally will be recognized by an optionee upon the grant
or exercise of an ISO. The exercise of an ISO, however, may result in alternative minimum tax
liability. If shares of our common stock are issued to the optionee pursuant to the exercise of an
ISO, and if no disqualifying disposition of such shares is made by such optionee within two years
after the date of grant or within one year after the transfer of such shares to the optionee, then
upon sale of such shares, any amount realized in excess of the exercise price will be taxed to the
optionee as a long-term capital gain and any loss sustained will be a long-term capital loss.
If shares of our common stock acquired upon the exercise of an ISO are disposed of prior to
the expiration of either holding period described above, the optionee generally will recognize
ordinary income in the year of disposition in an amount equal to the excess (if any) of the fair
market value of such shares at the time of exercise (or, if less, the amount realized on the
disposition of such shares if a sale or exchange) over the exercise price paid for such shares. Any
further gain (or loss) realized by the participant generally will be taxed as short-term or long-term
capital gain (or loss) depending on the holding period.
SARs. No income will be recognized by a participant in connection with the grant of a tandem
SAR or a free-standing SAR. When the SAR is exercised, the participant normally will be required
to include as taxable ordinary income in the year of exercise an amount equal to the amount of
cash received and the fair market value of any shares of our common stock received on the
exercise.
Restricted Stock. The recipient of restricted stock generally will be subject to tax at ordinary
income rates on the fair market value of the restricted stock (reduced by any amount paid by the
49