Exhibit 10.12
EMPLOYMENT AGREEMENT
BETWEEN
XM SATELLITE RADIO HOLDINGS INC.,
XM SATELLITE RADIO, INC.
AND
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THIS AGREEMENT is entered into as of July 16, 1999 (the "Effective Date"),
by and between XM Satellite Radio Holdings Inc., a Delaware corporation, and its
subsidiary XM Satellite Radio Inc., a Delaware corporation, both having a place
of business at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
(hereinafter collectively referred to as "XM") and ▇▇▇▇ ▇▇▇▇▇▇▇ ("EMPLOYEE") a
resident of the State of Maryland.
WHEREAS, XM is engaged in the development, implementation and operation of
a digital audio satellite service to portable receivers (the "XM System"); and
WHEREAS, XM is interested in employing EMPLOYEE as its Chairman of the
Board of Directors and EMPLOYEE is interested in being employed in that position
subject to the terms and conditions set forth herein;
NOW THEREFORE, in consideration of the foregoing premises and the mutual
covenants and agreements of the parties contained herein, the parties hereby
agree as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the terms defined in this Article I shall
have the respective meanings set forth below:
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1.1 "Affiliate" shall mean any corporation, partnership or other entity
controlling, controlled by, or under common control with XM, by virtue of direct
or indirect beneficial ownership of voting securities of or voting interest in
the controlled entity (or ownership of over 10% of the then outstanding voting
shares of XM)
1.2 "Confidential Information" shall mean all information known to XM or
learned by EMPLOYEE, during the term of employment and not generally known,
including any and all general and specific knowledge, experience, information
and data, technical or non-technical, and whether or not patentable, including,
without limitation processes, skills, information, knowhow, trade secrets, data,
designs, formulae, algorithms, specifications, samples, methods, techniques,
compilations, computer programs, devices, concepts, inventions, developments,
discoveries, improvements, and commercial or financial information, in any form,
including without limitation, oral, written, graphic, demonstrative, machine
recognizable, specimen or sample form.
1.3 "Conflicting Product or Service" shall mean any product or service of
any person or organization other than XM, in existence or under development,
which resembles or competes with a product or service of XM.
1.4 "Conflicting Organization" shall mean any person or organization
engaged in, or about to become engaged in, research on or development,
production, marketing, or selling of a "Conflicting Product or Service."
1.5 "Inventions" shall mean inventions, designs, discoveries,
developments, creations, and improvements created, discovered, developed,
conceived or reduced to practice.
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1.6 "Works of Authorship" shall mean all computer software programs or
other writings, including, without limitation, verbal works, designs, models,
drawings, or audio, visual or audiovisual recordings.
ARTICLE 2
TERM OF AGREEMENT; EMPLOYMENT
2.1 Term. Subject to the provisions of Article 4 hereof, this
Agreement shall be in effect as of the Effective Date, and EMPLOYEE shall serve
at the pleasure of the Board of Directors with no specified term of service.
For the term of this Agreement, each twelve (12) month period beginning on the
Effective Date or an anniversary thereof shall be considered a "Contract Year",
although such term shall not imply a right to employment for such period.
2.2 Employment. XM agrees to employ EMPLOYEE as Chairman of the
Board of Directors and EMPLOYEE agrees to accept such employment by XM, on the
terms and conditions set forth herein. EMPLOYEE represents and warrants that
neither the execution and delivery nor performance by him of this Agreement will
violate any agreement, order, judgment or decree to which he is a party or by
which he is bound.
2.3 Duties. As Chairman of the Board of XM, EMPLOYEE shall have the
duties and responsibilities related to building the organization and business,
including but not limited to, raising funding required to pursue the business,
corporate and Board governance, shareholder and strategic investor relations,
and management oversight, and shall report to the Board of Directors. While
acting as Chairman of the Board of Directors, EMPLOYEE shall also serve as a
director of XM.
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(a) EMPLOYEE's employment with XM shall be one-half-time. During the
term of employment, EMPLOYEE shall devote one-half of EMPLOYEE's time,
attention, skill and ability to the faithful and diligent fulfillment of
EMPLOYEE's duties hereunder. EMPLOYEE acknowledges and agrees that EMPLOYEE may
be required, without additional compensation, to perform services for any
Affiliates, and to accept such office or position with any Affiliate as the
Board may require, including, but not limited to, service as an officer or
director of XM or any Affiliate. EMPLOYEE shall comply with all applicable
policies of XM and Affiliates. It is understood that EMPLOYEE currently serves
as Chairman of the Board of Directors of American Mobile Satellite Corporation.
(b) During the term of this Agreement, XM shall provide EMPLOYEE with
directors and officers insurance and indemnification for any and all claims
arising out of or related to his activities as an officer or director of XM or
any of its Affiliates on the same basis as that provided to other officers and
directors of XM and its Affiliates.
ARTICLE 3
COMPENSATION
3.1 Base Salary. For services rendered by EMPLOYEE pursuant to this
Agreement, XM agrees to pay EMPLOYEE a base salary ("Base Salary") commencing as
of the Effective Date at the rate of .275 shares of Class A Common Stock of XM
Satellite Radio Holdings, Inc. Such shares will be issued to you as soon as
practicable after the Effective Date and will be subject to repurchase on a
proportionate basis by XM at a valuation of $509,711 per share should EMPLOYEE's
service with XM terminate prior to the first anniversary of the Effective Date
in accordance with Article 4 hereof. Such Base Salary shall be subject to
review and increase at least annually by the Compensation Committee of the Board
as may be agreed by the Compensation Committee of the Board and
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EMPLOYEE. In determining any such increase, the Compensation Committee of the
Board shall consider any increases in the cost of living and may provide for any
performance or merit increases, on the same basis as may apply from time to time
to other XM executive employees generally. The term "Base Salary" as used herein
shall include any adjustments thereto made from time to time as permitted by
this Section 3.1.
3.2 [Intentionally Omitted]
3.3 Participation in Benefit Plans. Subject to applicable eligibility
requirements, during the term of this Agreement, EMPLOYEE shall be eligible to
participate in any stock option, employee stock ownership, pension, thrift,
profit sharing, group life or disability insurance, medical or dental coverage,
education, or other retirement or employee benefit plan or program that XM has
adopted or may adopt for the benefit of its employees, on the same basis as
other executive employees. Such participation shall be subject to the terms and
conditions of such plans or programs, including, but not limited to, such
generally applicable eligibility provisions as may be in effect from time to
time.
3.4 Expenses. XM shall reimburse EMPLOYEE in connection with
performance of the services and duties hereunder for all reasonable, ordinary
and necessary business expenses actually incurred by EMPLOYEE in connection with
such performance, including ordinary and necessary expenses incurred by EMPLOYEE
in connection with travel on XM business, provided all such expenses have been
approved in advance by XM in accordance with and subject to the terms and
conditions of XM's then-prevailing expense policy, As a condition precedent to
obtaining such reimbursement, EMPLOYEE shall provide to XM any and all
statements, bills, or receipts evidencing the expenses for which EMPLOYEE seeks
reimbursement, and such other related information or materials as XM may from
time to time reasonably require. EMPLOYEE shall account to XM for any expenses
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that are eligible for reimbursement under this Section 3.4 in accordance with XM
policy.
3.5 Employment and Supplies. XM shall provide EMPLOYEE with
administrative support relating to the performance of EMPLOYEE's duties of the
same type and extent as is provided to other executive employees. XM shall
acquire and/or provide to EMPLOYEE for his business use: multimedia portable
computer and subscriptions to various trade publications and various trade
books. Such items shall remain the exclusive property of XM, are to be used
solely for XM's benefit, and shall be returned promptly to XM upon the
termination of EMPLOYEE's employment for whatever reason.
3.6 Withholding. Anything in this Agreement to the contrary
notwithstanding, all payments required to be made by XM hereunder to EMPLOYEE or
EMPLOYEE's estate or beneficiaries in connection with EMPLOYEE's employment
hereunder shall be subject to the withholding of such amounts relating to taxes
as XM may reasonably determine it should withhold pursuant to any applicable law
or regulation.
3.7 Stock Option Grant. EMPLOYEE shall receive a stock option grant
on the following terms:
(a) The Option will be non-qualified, ten year stock option with
respect to five (5) shares of XM common stock, with an exercise price and based
on a valuation of $509,711 per share, and with a date of grant as of the
Effective Date.
(b) Vesting of the five (shares) shall be as follows: Two (2) shares
shall be exercisable on the first anniversary of the date of grant. The three
(3) remaining shares shall be exercisable in three (3) equal annual
installments, with the first installment beginning on the first anniversary of
the date of grant, provided that
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additional performance objectives are met, as shall be mutually agreed upon
between the EMPLOYEE and the Compensation Committee of the Board of Directors.
(c) Post-termination Exercise. Vested stock options will be
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exercisable following termination of employment for the following periods: 0
months in the case of termination for Cause (as defined in Article 4); 3 months
following a voluntary termination; 6 months following an involuntary
termination; or 1 year following death, disability, retirement, or termination
(voluntary or involuntary) within one year following a change of control.
(d) If and when Form S-8 is available, XM will register EMPLOYEE's
stock.
(e) Exercising/Vesting. In the event of death, or involuntary
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termination (which shall include termination by employee following default by
XM) within one year of a change of control, vesting of all options would occur.
In all other cases, non-vested options would be unexercisable and forfeited upon
termination of employment. A "change of control" will occur where (1) any person
or group becomes beneficial owner of securities of XM representing more than 40%
of the then voting power of XM; (2) board members (together with new members
appointed by at least 2/3 of those members) at the beginning of a two-year
period no longer constitute 2/3 of the Board during such two-year period; (3) a
merger/consolidation of XM occurs wherein the XM voting securities immediately
prior thereto do not constitute at least 60% of the combined voting securities
after the merger/consolidation; or (4) the stockholder approve a plan of
complete liquidation or winding-up or an agreement for sale/disposition of all
or substantially all of company's assets, provided that no change of control
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will be deemed to occur as a result of the following (a) an initial public
offering of XM; (b) any change necessitated by the conversion of Class B
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Common Stock to Class A Common Stock by American Mobile Satellite Corporation,
and/or (c) a private placement by XM of up to $150,000,000 of XM securities.
(f) Cashless exercise/tax withholding provisions would also be
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included, as well as other standard stock option plan/agreement provisions.
ARTICLE 4
TERMINATION
4.1 General. EMPLOYEE's service hereunder shall terminate upon
EMPLOYEE's death or "Disability" and may be terminated by XM with or without
"Cause" (each term as defined in this Article 4) effective as of the date
written notice of termination is given to EMPLOYEE by or on behalf of the Board,
or may be terminated by EMPLOYEE on the giving of notice of not less than 30
days.
4.2 Termination for "Cause" or without "Cause" or Voluntarily by
Employee. In the event EMPLOYEE's employment is terminated by XM for Cause (as
defined in this Article 4) or without Cause or in the event EMPLOYEE voluntarily
terminates employment, XM shall thereafter pay to EMPLOYEE (or EMPLOYEE's legal
representatives, estate, beneficiaries or heirs), in accordance with XM's then-
prevailing executive payroll practices, all compensation benefits and other
payments to which EMPLOYEE was entitled hereunder only through the effective
date of termination of employment, and XM shall thereafter have no further
obligation to EMPLOYEE (or EMPLOYEE's legal representatives, estate,
beneficiaries or heirs) for any compensation benefits, or other payments
hereunder.
4.3 Death or Disability
(a) In the event of EMPLOYEE's death, XM shall continue to pay
EMPLOYEE's then current Base Salary to EMPLOYEE's legal representatives,
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estate, beneficiaries or heirs, in accordance with XM's then-prevailing
executive payroll practices, through the end of the calendar month following
EMPLOYEE's death but shall have no further obligation to EMPLOYEE or EMPLOYEE's
legal representatives, estate, beneficiaries or heirs for any compensation,
benefits or other payments hereunder.
(b) Upon EMPLOYEE's "Disability", the payment of benefits under XM's
short-term and long-term disability insurance programs, if any, shall offset
XM's obligations under the foregoing Article 3.1 to the extent such benefits are
received. For purposes of this Agreement, EMPLOYEE shall be deemed to be under a
Disability if EMPLOYEE shall be unable, by virtue of illness or physical or
mental incapacity or disability (from any cause or causes whatsoever), to
perform EMPLOYEE's essential job functions hereunder, whether with or without
reasonable accommodation, in substantially the manner and to the extent required
hereunder prior to the commencement of such disability, for a period exceeding
90 consecutive days. Subject to any applicable legal requirements, in the event
EMPLOYEE shall remain under a Disability for a period exceeding 120 days in any
12 month period, XM shall have the right to terminate EMPLOYEE's employment
hereunder at the end of any calendar month during the continuance of such
disability upon at least thirty (30) days prior written notice to EMPLOYEE.
(e) Definition of "Cause". For purposes of this Agreement, Cause shall mean: (i)
EMPLOYEE's willful or gross misconduct or willful or gross negligence in the
performance of his duties for XM (ii) EMPLOYEE's intentional or habitual neglect
of his duties for XM, or (iii) EMPLOYEE's theft or misappropriation of funds of
XM or commission of a felony.
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ARTICLE 5
RESTRICTIVE COVENANTS
5.1 Confidentiality. Except as authorized or directed by XM,
EMPLOYEE shall not, at any time during or subsequent to the term of this
Agreement, directly or indirectly publish or disclose any Confidential
Information of XM or any of its Affiliates, or Confidential Information of
others that has come into the possession of XM or any of its Affiliates, or into
the EMPLOYEE's possession in the course of his employment with XM or of his
services and duties hereunder, to any other person or entity, and EMPLOYEE shall
not use any such Confidential Information for EMPLOYEE's own personal use or
advantage or make it available to others for use. All Confidential Information,
whether oral or written, regarding the business or affairs of XM or any of its
Affiliates, including, without limitation, information as to their products,
services, systems, designs, inventions, software, finances (including prices,
costs and revenues), marketing plans, programs, methods of operation,
prospective and existing contracts, customers and other business arrangements or
business plans, procedures, and strategies, shall all be deemed Confidential
Information, except to the extent the same, shall have been lawfully and without
breach of the EMPLOYEE's confidential obligation made available to the general
public without restriction, or that EMPLOYEE can prove, by documentary evidence,
was previously known to EMPLOYEE prior to the term of EMPLOYEE's employment. The
Company shall be under no obligation to identify specifically any information as
to which the protection of this Section 5.1 extends by any notice or other
action. Upon expiration or termination of this Agreement for any reason,
EMPLOYEE shall promptly return to XM all Confidential Information, including all
copies thereof in EMPLOYEE's possession, whether prepared by him or others.
5.2 Unfair Competition. During the tam of this agreement and for a
period of one (1) year after the termination thereof, provided EMPLOYEE has
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served at least one year, EMPLOYEE shall not, within the United States, directly
or indirectly, and whether or not for compensation, as a stockholder owning
beneficially or of record more than five percent (5%) of the outstanding shares
of any class of stock of an issuer, or as an officer, director, employee,
consultant, partner, joint venturer, proprietor, or otherwise, engage in or
become interested in any Conflicting Organization in connection with research,
development, consulting, manufacturing, purchasing, accounting, engineering,
marketing, merchandising or selling of any Conflicting Product or Service,
directly or indirectly, in competition with XM (or its successor) as conducted
from time to time during such period. During the period in which EMPLOYEE is
receiving any payments under this Agreement and for a period of one (1) year
thereafter, EMPLOYEE shall not, without the prior written consent of XM, solicit
or hire or induce the termination of employment of any employees or other
personnel providing services to XM, for any business activity, other than a
business activity owned or controlled, directly or indirectly, by XM.
5.3 Injunctive Relief.
(a) EMPLOYEE acknowledges and warrants that he will be fully able to
earn an adequate livelihood for himself and his dependents if Section. 5.2
should be specifically enforced against him, and that Section 5.2 merely
prevents unfair competition against XM for a limited period of time. EMPLOYEE
agrees and acknowledges that, by virtue of EMPLOYEE's employment with XM,
EMPLOYEE shall have access to and maintain an intimate knowledge of XM's
activities and affairs, including trade secrets, Confidential Information, and
other confidential matters. As a result of such access and knowledge, and
because of the special, unique, and extraordinary services that EMPLOYEE is
capable of performing for XM or one of its competitors, EMPLOYEE acknowledges
that the services to be rendered by EMPLOYEE pursuant to this Agreement are of a
character giving them a peculiar value, the loss of which cannot adequately or
reasonably be
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compensated by money damages. Consequently, EMPLOYEE agrees that any breach or
threatened breach by EMPLOYEE of EMPLOYEE's obligations under this Article 5
would cause irreparable injury to XM, and that XM shall be entitled to (i)
preliminary and permanent injunctions enjoining EMPLOYEE from violating such
provisions, and (ii) actual money damages suffered by XM as a result of such
breach, in the amount of any fees, compensation, benefits, profits, or other
remuneration earned by EMPLOYEE or any competitor or XM as a result of such
breach, together with interest, and costs and attorneys' fees expended to
collect such damages or secure such injunctions. Nothing in this Agreement,
however, shall be construed to prohibit XM from pursuing any other remedy, XM
and EMPLOYEE having agreed that all such remedies shall be cumulative.
(b) The restrictions set forth in this Article 5 and the following
Article 6 shall be construed as independent covenants, and shall survive the
termination or expiration of this Agreement, and the existence of any claim or
cause of action against XM, whether predicated upon this Agreement or otherwise,
shall not constitute a defense to the enforcement by XM of the restrictions
contained in this Article 5 or the following Article 6. EMPLOYEE hereby consents
and waives any objection to the jurisdiction over his person or the venue of any
courts within the District of Columbia with respect to any proceedings in law or
in equity arising out of this Article 5 or the following Article 6. If any court
of competent jurisdiction shall hold that any of the restrictions contained in
Section 5.2 are unreasonable as to time, geographical area, or otherwise, said
restrictions shall be deemed to be reduced to the extent necessary in the
opinion of such court to make their application reasonable.
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ARTICLE 6
INVENTIONS, WORKS OF AUTHORSHIP,
PATENTS AND COPYRIGHTS
6.1 Ownership of Inventions and Works of Authorship. EMPLOYEE agrees
that all Inventions made, conceived, discovered, developed or reduced to
practice by EMPLOYEE and all software and other works of authorship created by
EMPLOYEE, either alone or with others, at any time, within or without normal
working hours, during the term of this Agreement, arising out of such employment
or based upon Confidential Information, or pertinent to any field of business or
research in which, during such employment, XM is engaged or (if such is known or
ascertainable by EMPLOYEE) is considering engaging, whether or not patented or
patentable, shall be and remain the sole property of XM with respect to all
rights of EMPLOYEE arising from any discovery, conception, development,
reduction to practice, or creation by EMPLOYEE. XM shall have the full right to
assign, license, or transfer all rights thereto.
6.2 Disclosure of Inventions and Works of Authorship. EMPLOYEE shall
promptly make full disclosure to XM or to an authorized representative thereof
of all information relating to the making, conception, discovery, development,
creation or reduction to practice of Inventions, or of software and other works
of authorship owned by XM pursuant to Section 6.1 above.
6.3 Patent and Copyright Applications. At the request of XM and at
XM's expense, EMPLOYEE shall execute such documents and perform such acts as XM
deems necessary to obtain patents or the like, on such Inventions or copyright
registrations for such software and other works of authorship in any
jurisdiction or jurisdictions. Such obligation shall continue beyond the term
of this Agreement. In the event that XM is unable because of EMPLOYEE's mental
or physical capacity or for any other reason to secure EMPLOYEE's signature to
apply for or to pursue
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any applications for patent or copyright covering Inventions, software and other
works of authorship owned by XM pursuant to Section 6.1, then EMPLOYEE hereby
irrevocably designates and appoints XM as EMPLOYEE's agent and attorney in fact,
upon prior notice, to act for and in his behalf and stead to execute and file
any such applications and to do all other lawfully permitted acts to further the
prosecution and issuance of patents and copyright registrations thereon with the
same legal force and effect as if executed by EMPLOYEE. EMPLOYEE further agrees
not to file any patent applications relating to or describing or otherwise
disclosing any Confidential Information or any such Inventions, or to claim any
copyright or file and applications to register any copyright in such software or
other works of authorship, except with the prior written consent of XM.
6.4 Assignment of Inventions and Works of Authorship. EMPLOYEE agrees
to assign to XM or its Affiliates all of EMPLOYEE's right, title and interest in
and to any and all such Inventions and the patent applications and patents
relating thereto and to the copyright in any and all such software and other
works of authorship and any copyright applications and registrations relating
thereto conceived, reduced to practice, discovered, created or otherwise
developed by EMPLOYEE and owned by XM pursuant to Section 6.1 above.
ARTICLE 7
MISCELLANEOUS
7.1 Assignment. The rights and obligations of XM under this
Agreement shall be binding upon its successors and assigns and may be assigned
by XM to the successors in interest of XM. The rights and obligations of
EMPLOYEE under this Agreement shall be binding upon EMPLOYEE's heirs, legatees,
personal representatives, executors or administrators. This Agreement may not be
assigned by EMPLOYEE, but any amount owed EMPLOYEE upon EMPLOYEE's death shall
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inure to the benefit of EMPLOYEE's heirs, legatees, personal representatives,
executors, or administrators.
7.2 Notice. For purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when hand delivered, sent by overnight courier,
or mailed by first-class, registered, or certified mail, return receipt
requested, postage prepaid, or transmitted by telegram, telecopy, or telex,
addressed as follows:
If to EMPLOYEE: (Copy to XM Executive Office)
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Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
If to XM:
XM Satellite Radio Holdings Inc.
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▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
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Attn: General Counsel
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
7.3 Entire Agreement. From and after the Effective Date, this
Agreement constitutes the entire agreement between the parties hereto, and
expressly supersedes all prior oral or written agreements, commitments or
understandings with respect to the matters provided for herein,
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7.4 Headings. Article and Section headings contained in this
Agreement are inserted for convenience of reference only, shall not be deemed to
be a part of this Agreement for any purpose, and shall not in any way define or
affect the meaning, construction or scope of any of the provisions hereof.
7.5 Severability. In the event any provision of this Agreement, or
any portion thereof, is determined by any arbitrator or court of competent
jurisdiction to be unenforceable as written, such provision or portion thereof
shall be interpreted so as to be enforceable. In the event any provision of this
Agreement, or any portion thereof is determined by any arbitrator or court of
competent jurisdiction to be void, the remaining portions of this Agreement
shall nevertheless be binding upon XM and EMPLOYEE with the same effect as
though the void provision or portion thereof had been severed and deleted.
7.6 Governing Law. This Agreement, the rights and obligations of the
parties hereto, and any claims or disputes relating thereto, shall be governed
by and construed in accordance with the substantive laws of the State of New
York (excluding the choice of law rules thereof).
7.7 Amendment; Modification; Waiver. No amendment, modification or
waiver of the terms of this Agreement shall be valid unless made in writing and
duly executed by EMPLOYEE and XM. No delay or failure at any time on the part of
XM in exercising any right, power or privilege under this Agreement, or in
enforcing any provision of this Agreement, shall impair any such right, power,
or privilege, or be construed as a waiver of any default or as any acquiescence
therein, or shall affect the right of XM thereafter to enforce, each and every
provision of this Agreement in accordance with its terms.
7.8 Additional Obligations. Both during and after the term of
employment, EMPLOYEE shall, upon reasonable notice, furnish XM with such
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information as may be in EMPLOYEE's possession or control, and cooperate with
XM, as may reasonably be requested by XM (and, after the term of employment,
with due consideration for EMPLOYEE's obligations with respect to any new
employment or business activity) m connection with any litigation or other
adversarial proceeding in which XM or any Affiliate is or may become a party. XM
shall reimburse EMPLOYEE for all reasonable expenses incurred by EMPLOYEE in
fulfilling EMPLOYEE's obligations under this Article 7.8.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the Effective Date.
XM Satellite Radio Holdings Inc. ▇▇▇▇ ▇▇▇▇▇▇▇
XM Satellite Radio Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title: Senior Vice President, General Title: Chairman of the Board
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Counsel and Secretary
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PERFORMANCE CRITERIA - STOCK OPTION VESTING
Performance criteria required for the Chairman of the Board of XM Satellite
Radio Inc. shall be established and/or modified from time to time by the
Compensation Committee of the Board of Directors. Absent specific additional or
substitute performance criteria, successful completion of the following
objectives must be achieved, or the requirement waived, by the Compensation
Committee of the Board, prior to the vesting of any stock options which carry
performance requirements as a vesting criteria:
Year One Performance Objective:
. XM Satellite Radio Inc. shall have successfully completed a public offering
of its shares and be listed on a recognized public market exchange (NASDAQ).
. XM Satellite Radio Inc. shall have secured sufficient additional capital
resources to fund its operation during the year.
Year Two Performance Objective:
. XM Satellite Radio Inc. shall have secured sufficient funding, whether
through debt or equity offerings, at least equaling its projected cash needs
through its commercial service launch.
. XM Satellite Radio Inc. shall not be in default on any of its financing
instruments or major contracts.
Year Three Performance Objective:
. XM Satellite Radio Inc. shall have commercially launched its service
offerings as evidenced by significant numbers of revenue-producing
subscribers, and widespread availability of XM Radio's service throughout the
United States.
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