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Exhibit 4.1
XM SATELLITE RADIO HOLDINGS INC.
1998 SHARES AWARD PLAN
(AS AMENDED)
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Effective as of June 16, 1998
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XM Satellite Radio Holdings Inc.
1998 Shares Award Plan
(as amended)
INTRODUCTION
XM Satellite Radio Holdings Inc., a Delaware corporation (hereinafter
referred to as the "Corporation"), hereby establishes an incentive compensation
plan to be known as the "XM 1998 Shares Award Plan" (hereinafter referred to as
the "Plan"), as set forth in this document. The Plan permits the grant of
Incentive Stock Options, Non-Qualified Stock Options, Phantom Stock Awards,
Stock Appreciation Rights, Restricted Stock Awards and Other Stock-Based Awards.
Subject to the terms of the Plan, the Plan shall become effective on June 16,
1998.
The purpose of the Plan is to promote the success and enhance the value of
the Corporation by linking the personal interests of Participants to those of
the Corporation's shareholders by providing Participants with an incentive for
outstanding performance. The Plan is further intended to assist the Corporation
in its ability to motivate, and retain the services of, Participants upon whose
judgment, interest and special effort the successful conduct of its operations
is largely dependent.
DEFINITIONS
For purposes of this Plan, the following terms shall be defined as follows
unless the context clearly indicates otherwise:
(a) "Affiliate" shall mean (i) any parent, including American Mobile
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Satellite Corporation and any other entity which owns directly or indirectly at
least 50% of the total combined voting power of all classes of stock of the
Corporation and (ii) any entity in which the Corporation directly or indirectly
owns at least 50% of the total combined voting power of all classes of stock.
(b) "Award" shall mean any award to a participant of an Option, Stock
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Appreciation Right, Phantom Share, Restricted Stock or any other stock-based
award under the Plan.
(c) "Award Agreement" shall mean the written agreement, executed by an
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appropriate officer of the Corporation, pursuant to which an Award is granted.
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(d) "Board of Directors" shall mean the Board of Directors of the
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Corporation.
(e) "Change of Control" shall have the meaning set forth in Section 11(d)
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hereof.
(f) "Code" shall mean the Internal Revenue Code of 1986, as amended, and
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the rules and regulations thereunder.
(g) "Committee" shall mean the Board of Directors of the Corporation or any
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committee of two or more Non-Employee Directors (as defined under Rule 16b
promulgated under the Exchange Act) designated by the Board of Directors to
serve as the Committee.
(h) "Consultant" shall mean an individual or entity who is in a consulting
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relationship with the Corporation or any parent or subsidiary of the
Corporation.
(i) "Corporation" shall mean XM Satellite Radio Holdings Inc., a Delaware
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corporation.
(j) "Employee" shall mean a common-law employee of the Corporation or of
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any Affiliate.
(k) "Equivalent Award" shall mean, in connection with a Change of Control,
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a continuation of the Award by the Corporation to a Participant, an agreement by
the person(s) acquiring the Corporation that to honor or assume the Award
following the Change of Control, or the substitution of a new Award with an
inherent value equivalent to that of the original Award and on terms at least as
beneficial to the Participant as those contained in the Participant's original
Award Agreement.
(l) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
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amended, and the rules and regulations thereunder.
(m) "Fair Market Value" of the Corporation's Common Shares on a Trading Day
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shall mean the last reported sale price for Common Shares or, in case no such
reported sale takes place on such Trading Day, the average of the closing bid
and asked prices for the Common Shares for such Trading Day, in either case on
the principal national securities exchange on which the Common Shares are listed
or admitted to trading, or if the Common Shares are not listed or admitted to
trading on any national securities exchange but are traded in the over-the-
counter market, the closing sale price of the Common Shares or, if no sale is
publicly reported, the average of the closing bid and asked quotations for the
Common Shares, as reported by the
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National Association of Securities Dealers Automated Quotation System ("NASDAQ")
or any comparable system or, if the Common Shares are not listed on NASDAQ or a
comparable system, the average of the bid and asked prices of the Common Shares
or, if no sale is publicly reported, the average of the closing bid and asked
prices, as furnished by two members of the National Association of Securities
Dealers, Inc., who make a market in the Common Shares selected from time to time
by the Corporation for that purpose. In addition, for purposes of this
definition, a "Trading Day" shall mean, if the Common Shares are listed on any
national securities exchange, a business day during which such exchange was open
for trading and at least one trade of Common Shares was effected on such
exchange on such business day, or, if the Common Shares are not listed on any
national securities exchange but are traded in the over-the-counter market, a
business day during which the over-the-counter market was open for trading and
at least one "broker-dealer" quoted both a bid and asked price for the Common
Shares (if a broker-dealer quoted only a bid or only an asked price for such
day, such day will not be a Trading Day). In the event the Corporation's Common
Shares are not publicly traded, the Fair Market Value of such Common Shares
shall be determined by the Committee in good faith and in its sole discretion.
(n) "Good Cause" shall mean, with respect to any Participant, the meaning
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of such term as set forth in the employment agreement between the Corporation
(or any Affiliate) and the Participant or, in the event there is no such
employment agreement (or if any such employment agreement does not contain such
a definition), such term shall mean (i) willful or gross misconduct or willful
or gross negligence in the performance of his or her duties for the Corporation
or any Affiliate, (ii) neglect of his or her duties for the Corporation or any
Affiliate after written notice and opportunity to cure, (iii) dishonesty, fraud,
theft, embezzlement or misappropriation of funds, properties or assets of the
Corporation or of any Affiliate, (iv) conviction of a felony, (v) a direct or
indirect material breach of the terms of any agreement with the Corporation or
any Affiliate or (vi) acting in a manner or making any statements which the
Committee reasonably determines to have a material adverse effect on the
reputation, operations, prospects or business relations of the Company or its
Affiliates.
(o) "Incentive Stock Option" shall mean a right to purchase Shares from the
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Corporation that is granted under Section 5 of the Plan and that is intended to
meet the requirements of Section 422 of the Code or any successor provision
thereto.
(p) "Non-Employee Director" shall mean a member of the Board of Directors
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who is not a full-time employee of the Corporation.
(q) "Non-Qualified Stock Option" shall mean a shares option which does not
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satisfy the requirements for, or which is not intended to be eligible for, tax-
favored treatment under Section 422 of the Code.
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(r) "Option" shall mean an Incentive Stock Option or a Non-Qualified Stock
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Option.
(s) "Optionee" shall mean a Participant who is granted an Option under the
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terms of the Plan.
(t) "Other Stock-Based Award" shall mean any right granted under Section 9
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of the Plan.
(u) "Participant" shall mean any Employee, Consultant or Non-Employee
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Director participating under the Plan.
(v) "Phantom Share" shall mean a hypothetical Share which is cancelled by
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the delivery of an actual Share or, in the discretion of the Corporation, by the
payment of cash (or a combination of cash and Shares) in an amount equal to the
Fair Market Value of a Share on the date of surrender.
(w) "Plan" shall mean this XM 1998 Shares Award Plan as the same shall be
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amended, revised or terminated from time to time.
(x) "Restoration Option" shall mean an Option granted under Section 5(f).
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(y) "Restricted Stock" shall mean any Share granted under Section 7 of the
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Plan.
(z) "Securities Act" shall mean the Securities Act of 1933, as amended, and
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the rules and regulations thereunder.
(aa) "Share" shall mean a share of the Class A common stock, par value $.01
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per share, of the Corporation, or such other securities of the Corporation as
may be designated by the Committee from time to time.
(bb) "Stock Appreciation Right" shall mean any right granted under Section
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6 of the Plan.
SECTION 1
ADMINISTRATION
The Plan shall be administered by the Committee. Subject to the provisions
of the Plan, the Committee may establish from time to time such regulations,
provisions, proceedings and conditions of awards which, in its sole opinion, may
be advisable in
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the administration of the Plan. A majority of the Committee shall constitute a
quorum, and, subject to the provisions of Section 4 of the Plan, the acts of a
majority of the members present at any meeting at which a quorum is present, or
acts approved in writing by a majority of the Committee, shall be the acts of
the Committee as a whole.
SECTION 2
SHARES AVAILABLE
Subject to the adjustments provided in Section 7 of the Plan, the aggregate
number of Shares with respect to which Awards may be granted under the Plan
shall be 5,000,000 shares. The Shares underlying Awards shall be counted
against the limitation set forth in the immediately preceding sentence and may
be reused to the extent that the related Award to any individual is settled in
cash, expires, is terminated unexercised, or is forfeited without the delivery
of Shares. Shares granted to satisfy Awards under the Plan may be authorized
and unissued shares, issued Shares held in the Corporation's treasury or Shares
acquired on the open market. The maximum number of Shares with respect to which
Awards may be granted under the Plan to any individual in any calendar year
shall be equal to 267,570 Shares.
SECTION 3
ELIGIBILITY
All (i) Employees who are regularly employed, (ii) Consultants and (iii)
Non-Employee Directors shall be eligible to participate in the Plan.
SECTION 4
AUTHORITY OF COMMITTEE
The Plan shall be administered by, or under the direction of, the
Committee, which shall administer the Plan so as to comply at all times with
applicable law, and shall otherwise have the sole and exclusive authority to
interpret the Plan and to make all determinations specified in or permitted by
the Plan or deemed necessary or desirable for its administration or for the
conduct of the Committee's business. Subject to the provisions of Section 12
hereof, all interpretations and determinations of the Committee may be made on
an individual or group basis and shall be final, conclusive and binding on all
persons. Subject to the express provisions of the Plan, the Committee shall
have authority, in its discretion, to determine, without limitation, the persons
to whom Awards shall be granted, the times when Awards shall be granted, the
number of Shares subject to any Awards, the terms of Awards, any other
restrictions, including any vesting requirements, and the other provisions
thereof (which need not be identical with respect to each Award). In addition,
the authority of the
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Committee shall include, without limitation, the following with respect to an
Award of an Option:
(a) Financing. The arrangement of temporary financing for a Participant by
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registered broker-dealers, under the rules and regulations of the Federal
Reserve Board, for the purpose of assisting a Participant in the exercise of an
Option, such authority to include the payment by the Corporation of the
commissions of the broker-dealer;
(b) Procedures for Exercise of Option. The establishment of procedures for
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a Participant (i) to exercise an Option by payment of cash or (ii) with the
consent of the Committee, (A) to have withheld from the total number of Shares
to be acquired upon the exercise of an Option that number of shares having a
Fair Market Value, which, together with such cash as will be paid in respect of
fractional shares, shall equal the Option exercise price of the total number of
Shares to be acquired, (B) to exercise all or a portion of an Option by
delivering that number of Shares already owned by him or her having a Fair
Market Value which shall equal the Option exercise price for the portion
exercised and, in cases where an Option is not exercised in its entirety, and
subject to the requirements of the Code, to permit the Participant to deliver
the Shares thus acquired by him or her in payment of Shares to be received
pursuant to the exercise of additional portions of such Option, the effect of
which shall be that a Participant can in sequence utilize such newly acquired
shares of Common Shares in payment of the exercise price of the entire Option,
together with such cash as shall be paid in respect of fractional shares or (C)
to engage in any form of "cashless" exercise.
(c) Withholding. The establishment of a procedure whereby a number of
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Shares may be withheld from the total number of Shares to be issued upon
exercise of an Award or for the tender of Shares owned by any Participant to
meet any obligation of withholding for taxes incurred by the Participant upon
such exercise.
SECTION 5
SHARE OPTIONS
(a) Grant. Subject to the provisions of the Plan, the Committee shall have
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sole and complete discretion and authority to determine the Employees,
Consultants and Non-Employee Directors to whom Options shall be granted, the
number of Shares to be covered by each Option, the option price therefor and the
conditions and limitations applicable to the exercise of the Option. The
Committee shall have the discretion and authority to grant Incentive Stock
Options (but only to Employees who meet the requirements of Section 422(a)(2) of
the Code), Non-Qualified Stock Options, and any combination thereof (provided
that Incentive Stock Options shall be granted only to Employees who meet the
requirements of Section 422(a)(2) of the Code). In the
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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.
(b) Exercise Price. Subject to the requirement set forth in Section 5(a)
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with respect to Incentive Stock Options, the Committee in its sole discretion
shall establish the exercise price at the time each option is granted. The
exercise price shall be subject to adjustment in accordance with the provisions
of Section 11 of the Plan.
(c) Term. Subject to the provisions of the Plan, the term of any Option
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granted hereunder shall be not more than 10 years from the date of grant.
(d) Exercisability. Except as provided in Section 5(e) hereof, each Option
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shall be exercisable in whole or in installments, and at such time(s), and
subject to the fulfillment of any conditions on, and to any limitations on,
exercisability as may be determined by the Committee at the time of the grant of
such Options. The right to purchase Shares shall be cumulative so that when the
right to purchase any Shares has accrued such Shares or any part thereof may be
purchased at any time thereafter until the expiration or termination of the
Option. Notwithstanding the above, no Option shall be exercisable by a
Participant until he or she has fully repaid any and all loans made to him or
her by the Corporation (or by any parent or subsidiary of the Corporation);
provided, however, that a repayment (whether in the form of cash or Shares) made
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contemporaneously with an exercise of an Option granted hereunder (including a
repayment in the form of withholding on Shares to be received upon the exercise
of such Option) shall be considered to have occurred prior to such Option
exercise.
(e) Payment of Exercise Price. The price per share of Shares with respect
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to each Option shall be payable at the time the Option is exercised. Such price
shall be payable in cash or pursuant to any of the methods set forth in Sections
4(a) or (b) hereof, as determined by the Participant and approved by the
Committee. Common Shares delivered to the Corporation in payment of the
exercise price shall be valued at the Fair Market Value of the Common Shares on
the date preceding the date of the exercise of the Option.
(f) Restoration Options. In the event that any Participant delivers Shares
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in payment of the exercise price of any Option granted hereunder, or in the
event that the withholding tax liability arising upon exercise of any such
Option by a Participant is satisfied through the withholding by the Corporation
of Shares otherwise deliverable upon exercise of the Option, the Committee shall
have the authority to grant or provide for the automatic grant of a Restoration
Option to such Participant. The grant of a Restoration Option shall be subject
to the satisfaction of such conditions or criteria as
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the Committee in its sole discretion shall establish from time to time. A
Restoration Option shall entitle the holder thereof to purchase a number of
Shares equal to the number of such Shares so delivered or withheld upon exercise
of the original Option. A Restoration Option shall have a per share exercise
price of not less than 100% of the per Share Fair Market Value as of the date of
grant of such Restoration Option and such other terms and conditions as the
Committee in its sole discretion shall determine.
SECTION 6
STOCK APPRECIATION RIGHTS
(a) Grant. Subject to the provisions of the Plan, the Committee shall have
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sole and complete discretion and authority to determine the eligible persons 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 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 at the same time as the Award or at a later time. Stock
Appreciation Rights shall not be exercisable earlier than six months after grant
and shall have a grant price as determined by the Committee on the date of
grant.
(b) Exercise and Payment. A Stock Appreciation Right shall entitle the
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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, provided that the Committee may for administrative convenience
determine that, with respect to any Stock Appreciation Right that is not related
to an Incentive Stock Option and that can only be exercised for cash during
limited periods of time in order to satisfy the conditions of Rule 16b-3, the
exercise of such Stock Appreciation Right for cash during such limited period
shall be deemed to occur for all purposes hereunder on the day during such
limited period on which the Fair Market Value of the Shares is the highest. Any
such determination by the Committee may be changed by the Committee from time to
time and may govern the exercise of Stock Appreciation Rights granted prior to
such determination as well as Stock Appreciation Rights thereafter granted. The
Committee shall determine whether a Stock Appreciation Right shall be settled in
cash, Shares or a combination of cash and Shares.
(c) Other Terms and Conditions. Subject to the terms of the Plan and any
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applicable Award Agreement, the Committee shall determine, at or after the grant
of a Stock Appreciation Right, the term, methods of exercise, methods and form
of settlement, and any other terms and conditions of any Stock Appreciation
Right. Any such determination by the Committee may be changed by the Committee
from time to time and may govern the exercise of Stock Appreciation Rights
granted or exercised
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prior to such determination as well as Stock Appreciation Rights granted or
exercised thereafter. The Committee may impose such conditions or restrictions
on the exercise of any Stock Appreciation Right as it shall deem appropriate.
SECTION 7
RESTRICTED STOCK
(a) Grant. Subject to the provisions of the Plan, the Committee shall have
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sole and complete discretion and authority to determine the eligible persons to
whom Shares of Restricted Stock shall be granted, the number of Shares of
Restricted Stock to be granted to each Participant, the duration of the period
during which, if any, and the conditions under which, the Restricted Stock may
be forfeited to the Corporation, and the other terms and conditions of such
Awards.
(b) Transfer Restrictions. Shares of Restricted Stock may not be sold,
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assigned, transferred, pledged or otherwise encumbered, except, in the case of
Restricted Stock, as provided in the Plan or the applicable Award Agreements.
Certificates issued in respect of Shares of Restricted Stock shall be registered
in the name of the Participant and deposited by such Participant, together with
a stock power endorsed in blank, with the Corporation. Upon the lapse of the
restrictions applicable to such Shares of Restricted Stock, the Corporation
shall deliver such certificates to the Participant or the Participant's legal
representative.
(c) Dividends and Distributions. Dividends and other distributions paid on
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or in respect of any Shares of Restricted Stock may be paid directly to the
Participant, or may be reinvested in additional Shares of Restricted Stock, as
determined by the Committee in its sole discretion.
SECTION 8
PHANTOM SHARES
(a) Grant. Subject to the provisions of the Plan, the Committee shall have
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sole and complete discretion and authority to determine the eligible persons to
whom Phantom Shares shall be granted, the number of Phantom Shares to be granted
to each Participant, the duration of the period during which, and the conditions
under which, the Phantom Shares may be forfeited to the Corporation and the
other terms and conditions of such Awards.
(b) Surrender. Each Award Agreement with respect to a Phantom Stock Unit
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shall specify the date on which the Phantom Stock Unit shall be surrendered, and
thereby cancelled by delivery of a Share with respect thereto, subject to such
terms and conditions as the Committee may specify, in its sole discretion, in
the applicable Award
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Agreement or thereafter. The date on which the Phantom Shares shall be
surrendered may be accelerated upon the occurrence of certain events, as
determined by the Committee in its sole discretion and as set forth in the
applicable Award Agreement.
(c) Dividends and Distributions. Payments may be made to Participants who
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have been awarded Phantom Shares in an amount equal to dividends and other
distributions paid on or in respect of an equivalent number of Shares. Such
payments may be paid directly to the Participant or may be reinvested in
additional Phantom Shares, as determined by the Committee in its sole
discretion.
SECTION 9
OTHER STOCK-BASED AWARDS
The Committee shall have the discretion and authority to grant to eligible
persons an "Other Stock-Based Award," which shall consist of any right that is
(i) not an Award described in Sections 5 through 8 above and (ii) an Award of
Shares or an Award denominated or payable in, valued in whole or in part by
reference to, or otherwise based on or related to, Shares (including, without
limitation, securities or rights convertible into Shares), as deemed by the
Committee to be consistent with the purposes of the Plan. Subject to the terms
of the Plan and any applicable Award Agreement, the Committee shall determine
the terms and conditions of any such Other Stock-Based Award.
SECTION 10
TERMINATION OF SERVICES
The following provisions shall apply in the event that the Participant
ceases to provide services to the Corporation or any Affiliate, either as an
Employee, a Consultant or a Non-Employee Director, unless the Committee shall
have provided otherwise, either at the time of the grant of the Award or
thereafter.
(a) Non-Qualified Stock Options and Stock Appreciation Rights.
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(i) Upon Termination of Services as Employee or Consultant. The
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Participant's right to exercise any Non-Qualified Stock Option or Stock
Appreciation Right shall terminate, and such Option or Stock Appreciation Right
shall expire, as set forth in the Award Agreement. The exercise periods and
rights to acceleration, if any, in the event of termination of employment,
including for Good Cause, or upon death, total and permanent disability or
retirement, or as a result of a change of control or otherwise shall be as set
forth in the Award Agreement as determined by the Committee in its sole
discretion.
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(ii) For purposes of determining whether a Participant's employment or
consulting relationship has terminated, a Participant who is both an Employee
(or Consultant) and a director of the Corporation or any Affiliate shall be
considered to have terminated his or her employment or consulting relationship
only upon his or her termination of service both as an Employee (or Consultant)
and as a director.
(b) Incentive Stock Options.
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(i) Except as otherwise determined by the Committee at the time of
grant, if the Participant's employment with the Corporation terminates for any
reason, the Participant shall have the right to exercise any Incentive Stock
Option and any related Stock Appreciation Right during the 90 days after such
termination of employment to the extent it was exercisable at the date of such
termination, but in no event later than the date the Option would have expired
had it not been for the termination of such employment. If the Participant does
not exercise such Option or related Stock Appreciation Right to the full extent
permitted by the preceding sentence, the remaining exercisable portion of such
Option automatically will be deemed a Non-Qualified Stock Option (except to the
extent otherwise provided by Section 421 or Section 422 of the Code), and such
Option and any related Stock Appreciation Right will be exercisable during the
period set forth in Section 10(a) of the Plan, provided that in the event that
employment terminates because of death or the Participant dies in such 90-day
period, the option will continue to be an Incentive Stock Option to the extent
provided by Section 421 or Section 422 of the Code, or any successor provisions,
and any regulations promulgated thereunder. Notwithstanding the forgoing, if a
Participant's employment is terminated by the Corporation or by any Affiliate
for Good Cause or as otherwise set forth in the Award Agreement, then the
Participant shall immediately forfeit his or her rights to exercise any and all
of outstanding Options or Stock Appreciation Rights theretofore granted to him
or her.
(ii) For purposes of determining whether a Participant's employment or
consulting relationship has terminated, a Participant who is both an Employee
(or Consultant) and a director of the Corporation or any Affiliate shall be
considered to have terminated his or her employment or consulting relationship
only upon his or her termination of service both as an Employee (or Consultant)
and as a director.
(c) Restricted Stock. Except as otherwise determined by the Committee at
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the time of grant, upon termination of employment for any reason during the
restriction period, all shares of Restricted Stock still subject to restriction
shall be forfeited by the Participant and reacquired by the Corporation at the
price (if any) paid by the Participant for such Restricted Stock, provided that
in the event of a Participant's retirement, permanent and total disability or
death, or in cases of special circumstances, the Committee may, in its sole
discretion, when it finds that a waiver would be in the
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best interests of the Corporation, waive in whole or in part any or all
remaining restrictions with respect to such Participant's shares of Restricted
Stock.
(d) Phantom Shares and Other Stock-Based Awards. Upon termination of a
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Participant's employment or consulting relationship with the Corporation for any
reason, the Participant who has been granted Phantom Shares or Other Stock-Based
Awards under the Plan shall surrender such Awards, and such Awards shall either
be cancelled or shall be paid as determined by the Committee at the time of
grant and as set forth in the relevant Award Agreement.
SECTION 11
ADJUSTMENT OF SHARES; MERGER OR
CONSOLIDATION, ETC. OF THE CORPORATION
(a) Recapitalization, Etc. In the event there is any change in the common
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shares of the Corporation by reason of any stock dividend, stock split, adoption
of stock rights plans, split-ups, split-offs, spin-offs, liquidations,
combination or exchanges of shares, recapitalizations, mergers, consolidations
or reorganizations of or by the corporation or any distribution to common
stockholders other than ordinary cash dividends, there shall be substituted for
or added to each Share theretofore appropriated or thereafter subject, or which
may become subject, to any Award, the number and kind of shares or other
securities into which each outstanding Share shall be so changed or for which
each such Share shall be exchanged, or to which each such Share be entitled, as
the case may be, and the per share price thereof also shall be appropriately
adjusted.
(b) Merger or Consolidation of Corporation. Upon (i) the merger or
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consolidation of the Corporation with or into another corporation (pursuant to
which the shareholders of the Corporation immediately prior to such merger or
consolidation will not, as of the date of such merger or consolidation, own a
beneficial interest in shares of voting securities of the corporation surviving
such merger or consolidation having at least a majority of the combined voting
power of such corporation's then outstanding securities), if the agreement of
merger or consolidation does not provide for (1) the continuance of the Awards
granted hereunder or (2) the substitution of new awards for Awards granted
hereunder, or for the assumption of such Awards by the surviving corporation or
(ii) the dissolution, liquidation, or sale of all or substantially all the
assets of the Corporation, the holder of any such Award theretofore granted and
still outstanding (and not otherwise expired) who satisfies such other
requirements, if any, that may be required by the Committee and set forth in the
related Award Agreement, shall have the right immediately prior to the effective
date of such merger, consolidation, dissolution, liquidation or sale of assets
of the Corporation to exercise such Awards in whole or in part without regard to
any installment provision regarding
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exercisability that may have been made part of the terms and conditions of such
Awards. The Corporation, to the extent practicable, shall give advance notice to
affected Participants of such merger, consolidation, dissolution, liquidation or
sale of assets of the Corporation. All such Awards which are not so exercised
shall be forfeited as of the effective time of such merger, consolidation,
dissolution, liquidation or sale of assets of the Corporation.
(c) Change of Control of the Corporation. Notwithstanding the foregoing,
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if a Change of Control occurs during the period commencing on the date of grant
of an Award and terminating on the date of expiration of the Award, the
Participant shall be entitled to receive an Equivalent Award. If, despite the
best efforts of the Corporation, the Participant cannot receive an Equivalent
Award in connection with such Change in Control, (i) the Participant shall be
entitled to receive immediately prior to such Change in Control, in exchange for
his or her Award, cash in an amount equal to the excess of the highest price
paid for a Share in connection with the Change of Control over the exercise
price per Share under the Award, multiplied by the total number of Shares
subject to the Award, including all Shares with respect to which the Award has
not yet become exercisable under the provisions of the Plan but excluding any
Shares with respect to which the Award has previously been exercised or (ii) if
the Participant is an insider who would be subject to suit under Section 16(b)
of the Exchange Act if the Participant were to receive the cash payment
described above, the Award may be exercised by the Participant in full beginning
on the date two weeks before such Change of Control. If the Participant
receives an Equivalent Award in connection with a Change of Control, and the
Optionee's employment with the Corporation or an Affiliate is terminated within
one year following the Change of Control by reason of involuntary termination,
the Equivalent Award may be exercised in full beginning on the date of such
termination if and for such period as the Committee, in its sole discretion,
shall determine.
(d) Definition of Change of Control of the Corporation. A "Change of
--------------------------------------------------
Control" shall be deemed to have occurred if (i) any person or group of persons
(as defined in Section 13(d) and 14(d) of the Exchange Act) together with its
affiliates, excluding employee benefit plans of the Corporation, is or becomes,
directly or indirectly, the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act) of securities of the Corporation representing 40% or more of
the combined voting power of the Corporation's then outstanding securities; or
(ii) individuals who at the beginning of any two-year period constitute the
Board, plus new directors of the Corporation whose election or nomination for
election by the Corporation's shareholders is approved by a vote of at least
two-thirds of the directors of the Corporation still in office who were
directors of the Corporation at the beginning of such two-year period, cease for
any reason during such two-year period to constitute at least two-thirds of the
members of the Board; or (iii) the shareholders of the Corporation approve a
merger or consolidation
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of the Corporation with any other corporation or entity regardless of which
entity is the survivor, other than a merger or consolidation which would result
in the voting securities of the Corporation outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or being
converted into voting securities of the surviving entity) at least 60% of the
combined voting power of the voting securities of the Corporation or such
surviving entity outstanding immediately after such merger or consolidation; or
(iv) the shareholders of the Corporation approve a plan of complete liquidation
or winding-up of the Corporation or an agreement for the sale or disposition by
the Corporation of all or substantially all of the Corporation's assets.
Notwithstanding anything herein to the contrary, in no event shall (A) an
initial public offering of the Corporation, (B) any change in the percentage
ownership of the Corporation by American Mobile Satellite Corporation or its
affiliates, or (C) a private placement of less than $150,000,000 be deemed to
constitute a Change of Control hereunder.
SECTION 12
MISCELLANEOUS PROVISIONS
(a) Administrative Procedures. The Committee may establish any procedures
-------------------------
determined by it to be appropriate in discharging its responsibilities under the
Plan. All actions and decisions of the Committee shall be final.
(b) Investment Representation. With respect to Shares received pursuant to
-------------------------
the exercise of an Option, the Committee may require, as a condition of
receiving such securities, that the Participant furnish to the Corporation such
written representations and information as the Committee deems appropriate to
permit the Corporation, in light of the existence or nonexistence of an
effective registration statement under the Securities Act, to deliver such
securities in compliance with the provisions of the Securities Act.
(c) Withholding Taxes. The Corporation shall have the right to deduct from
-----------------
all cash payments hereunder any federal, state, local or foreign taxes required
by law to be withheld with respect to such payments. In the case of the
issuance or distribution of Common Shares upon the exercise of an Award, the
Corporation, as a condition of such issuance or distribution, may require the
payment (through withholding from the Participant's salary, reduction of the
number of Shares or other securities to be issued, or otherwise) of any such
taxes. Each Participant may satisfy the withholding obligations by paying to
the Corporation a cash amount equal to the amount required to be withheld or by
tendering to the Corporation a number of Shares having a value equivalent to
such cash amount, or by use of any available procedure as described under
Section 4(c) hereof.
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<PAGE>
(d) Compliance with Applicable Law and Regulations. The adoption of the
----------------------------------------------
Plan and the grant and exercise of the Awards thereunder shall be subject to
receipt of all required regulatory approvals, including without limitation any
required approvals of the Federal Communications Commission. Should any
provision of the Plan that is intended to comply with the provisions of Rule
16b-3 under the Exchange Act at the date of the adoption of the Plan by the
Board not be necessary for such compliance, or become no longer necessary for
such compliance, such provision of the Plan shall have no force or effect under
the Plan as of the date that such provision is not required for the purpose of
satisfying the provisions of Rule 16b-3 under the Exchange Act.
(e) Costs and Expenses. The costs and expenses of administering the Plan
------------------
shall be borne by the Corporation and shall not be charged against any Award or
to any employee receiving an Award.
(f) Funding of Plan. The Plan shall be unfunded. Neither the Participants
---------------
nor any other persons shall have any interest in any fund or in any specific
asset or assets of the Corporation or any other entity by reason of any Award.
The interests of each Participant and former Participant hereunder are unsecured
and shall be subject to the general creditors of the Corporation.
(g) Other Incentive Plans. The adoption of the Plan does not preclude the
---------------------
adoption by appropriate means of any other incentive plan for employees.
(h) Plurals. Where appearing in the Plan, singular terms shall include the
-------
plural, and vice versa, unless the context clearly indicates a different
meaning.
(i) Headings. The headings and sub-headings in the Plan are inserted for
--------
the convenience of reference only and are to be ignored in any construction of
the provisions hereof.
(j) Severability. In case any provision of the Plan shall be held illegal
------------
or void, such illegality or invalidity shall not affect the remaining provisions
of the Plan, but shall be fully severable, and the Plan shall be construed and
enforced as if said illegal or invalid provisions had never been inserted
herein.
(k) Liability and Indemnification. Neither the Corporation nor any
-----------------------------
Affiliate shall be responsible in any way for any action or omission of the
Committee, or any other fiduciaries in the performance of their duties and
obligations as set forth in the Plan. Furthermore, neither the Corporation nor
any Affiliate shall be responsible for any act or omission of any of their
agents, or with respect to reliance upon advice of their counsel provided that
the Corporation and/or the appropriate Affiliate relied in good faith upon the
action of such agent or the advice of such counsel.
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<PAGE>
(ii) Except for their own gross negligence or willful misconduct
regarding the performance of the duties specifically assigned to them under, or
their willful breach of the terms of, the Plan, the Corporation, each Affiliate
and the Committee shall be held harmless by the Participants, former
Participants, beneficiaries and their representatives against liability or
losses occurring by reason of any act or omission. Neither the Corporation, any
Affiliate, the Committee, nor any agents, employees, officers, directors or
shareholders of any of them, nor any other person shall have any liability or
responsibility with respect to the Plan, except as expressly provided herein.
(l) Cooperation of Parties. All parties to the Plan and any person
----------------------
claiming any interest hereunder agree to perform any and all acts and execute
any and all documents and papers which the Committee deems necessary or
desirable for carrying out the Plan or any of its provisions.
(m) Governing Law. All questions pertaining to the validity, construction
-------------
and administration of the Plan shall be determined in accordance with the laws
of the State of Delaware.
(n) Nonguarantee of Employment or Consulting Relationship. Nothing
-----------------------------------------------------
contained in the Plan shall be construed as a contract of employment (or as a
consulting contract) between the Corporation (or any Affiliate) and any Employee
or Participant, as a right of any Employee or Participant to be continued in the
employment of (or in a consulting relationship with) the Corporation (or any
Affiliate), or as a limitation on the right of the Corporation or any Affiliate
to discharge any of its Employees or Consultants, at any time, with or without
cause.
(o) Notices. Each notice relating to the Plan shall be in writing and
-------
delivered in person or by certified mail to the proper address. All notices to
the Corporation or the Committee shall be addressed to it at c/o General
Counsel, 1250 23rd Street, N.W., Suite 57, Washington, D.C. 20037. All notices
to Participants, former Participants, beneficiaries or other persons acting for
or on behalf of such persons shall be addressed to such person at the last
address for such person maintained in the Committee's records.
(p) Written Agreements. Each Award shall be evidenced by a signed Award
------------------
Agreement between the Corporation and the Participant containing the terms and
conditions of the Award.
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<PAGE>
SECTION 13
AMENDMENT OR TERMINATION OF PLAN
The Board of Directors of the Corporation shall have the right to amend,
suspend or terminate the Plan at any time except that no amendment, suspension
or termination of the Plan shall alter or impair any Award previously granted
under the Plan without the consent of the holder thereof. Any provision of the
Plan or any Award Agreement notwithstanding, the Committee may cause any Award
granted hereunder to be cancelled in consideration of a cash payment or
alternative Award made to the holder of such cancelled Award equal to the Fair
Market Value of such cancelled Award.
SECTION 14
TERM OF PLAN
The Plan shall automatically terminate on the day immediately preceding the
tenth anniversary of the date the Plan was adopted by the Board of Directors,
unless sooner terminated by the Board of Directors. No Award may be granted
under the Plan subsequent to the termination of the Plan.
SECTION 15
EFFECTIVE DATE
The Plan shall become effective as of June 16, 1998, the date as of which
it was approved by the Board of Directors.
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* * * * *
The Plan was duly adopted and approved by the Board on June 16, 1998, and
was duly adopted and approved by the stockholders of the Corporation on June 16,
1998. The Board duly adopted certain amendments to the Plan on February 3, 1999
and June 6, 1999. The Board duly adopted certain amendments to the Plan on July
8, 1999, including an amendment to increase the number of authorized Shares
under the Plan; the stockholders of the Company approved the amendment for such
increase in the number of authorized Shares on July 8, 1999. The Board duly
adopted certain amendments to the Plan on March 9, 2000, including an amendment
to increase the number of authorized Shares under the Plan; the stockholders of
the Company approved the amendment for such increase in the number of authorized
Shares on May 31, 2000.
________________________________
Joseph M. Titlebaum
XM Satellite Radio Holdings Inc.
Senior Vice President,
General Counsel and Secretary
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