XM Radio 2008 Annual Report Download - page 153

Certificates”) to the transfer agent in exchange for certificates representing the appropriate number of whole
shares of post-reverse stock split common stock (“New Certificates”). No New Certificates will be issued to a
stockholder until such stockholder has surrendered all Old Certificates, together with a properly completed and
executed letter of transmittal, to the transfer agent. No stockholder will be required to pay a transfer or other
fee to exchange his, her or its Old Certificates.
Stockholders will then receive a New Certificate(s) representing the number of whole shares of common
stock which they are entitled as a result of the reverse stock split. Until surrendered, we will deem outstanding
Old Certificates held by stockholders to be cancelled and only to represent the number of whole shares of
post-reverse stock split common stock to which these stockholders are entitled.
Any Old Certificates submitted for exchange, whether because of a sale, transfer or other disposition of
stock, will automatically be exchanged for new certificates. If an Old Certificate has a restrictive legend on the
back of the Old Certificate(s), the New Certificate will be issued with the same restrictive legends that are on
the back of the Old Certificate(s).
If a stockholder is entitled to a payment in lieu of any fractional share interest, such payment will be
made as described above under “Fractional Shares”.
Stockholders should not destroy any stock certificate(s) and should not submit any stock certificate(s)
until requested to do so.
Accounting Matters
The reverse stock split will not affect the par value of a share of our common stock. As a result, as of the
Effective Time of the reverse stock split, the stated capital attributable to common stock on our balance sheet
will be reduced proportionately based on the reverse stock split ratio (including a retroactive adjustment of
prior periods), and the additional paid-in capital account will be credited with the amount by which the stated
capital is reduced. Reported per share net income or loss will be higher because there will be fewer shares of
common stock outstanding.
No Appraisal Rights
Under the Delaware General Corporation Law, stockholders are not entitled to appraisal rights with
respect to the reverse stock split, and we will not independently provide stockholders with any such right.
Certain United States Federal Income Tax Considerations
The following is a summary of certain U.S. federal income tax consequences of the reverse stock split to
holders of our common stock. This discussion is based upon the Code, Treasury regulations, judicial
authorities, published positions of the Internal Revenue Service (the “IRS”) and other applicable authorities,
all as currently in effect and all of which are subject to change or differing interpretations (possibly with
retroactive effect). This discussion is limited to U.S. holders (as defined below) that hold their shares of our
common stock as capital assets for U.S. federal income tax purposes (generally, assets held for investment).
This discussion does not address all of the tax consequences that may be relevant to a particular stockholder
or to stockholders that are subject to special treatment under U.S. federal income tax laws, such as:
• stockholders that are not U.S. holders;
• financial institutions;
• insurance companies;
• tax-exempt organizations;
• dealers in securities or currencies;
• persons whose functional currency is not the U.S. dollar;
• traders in securities that elect to use a mark to market method of accounting;
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