XM Radio 2009 Annual Report Download - page 101

Exhibit C
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS
OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS OR BECOMES AN ACQUIRING PERSON
(AS DEFINED IN THE RIGHTS PLAN) AND CERTAIN TRANSFEREES THEREOF WILL BECOME
NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.
SUMMARY OF RIGHTS
On April 28, 2009, the Board of Directors (the “Board”) of Sirius XM Radio Inc., a Delaware
corporation (the “Company”), adopted a rights plan and declared a dividend of one preferred share purchase
right for each outstanding share of common stock. The dividend is payable to our stockholders of record as of
May 11, 2009. The terms of the rights and the rights plan are set forth in a Rights Agreement, by and between
us and The Bank of New York Mellon, as Rights Agent, dated as of April 29, 2009 (the “Rights Plan”).
This summary of rights provides only a general description of the Rights Plan, and thus, should be read
together with the entire Rights Plan, which is incorporated into this summary by reference. All capitalized
terms used herein but not defined herein shall have the meanings ascribed to such terms in the Rights Plan.
Upon written request, the Company will provide a copy of the Rights Plan free of charge to any of its
stockholders.
Our Board adopted the Rights Plan in an effort to protect stockholder value by attempting to protect
against a possible limitation on our ability to use our net operating loss carryforwards and certain other tax
benefits (the “NOLs”) to reduce potential future federal income tax obligations. We have experienced and
continue to experience substantial operating losses, and under the Internal Revenue Code and rules
promulgated by the Internal Revenue Service, we may “carry forward” these losses in certain circumstances to
offset any current and future earnings and thus reduce our federal income tax liability, subject to certain
requirements and restrictions. To the extent that the NOLs do not otherwise become limited, we believe that
we will be able to carry forward a significant amount of NOLs, and therefore these NOLs could be a
substantial asset to us. However, if we experience an “Ownership Change,” as defined in Section 382 of the
Internal Revenue Code, our ability to use the NOLs will be substantially limited, and the timing of the usage
of the NOLs could be substantially delayed, which could therefore significantly impair the value of that asset.
The Rights Plan is intended to act as a deterrent to any person or group (other than the Company, any
Related Person or any Exempt Person) (an “Acquiring Person”) acquiring 4.9% or more of our outstanding
common stock (assuming for purposes of this calculation that all of the Series A Convertible Preferred Stock
and Series B-1 Convertible Preferred Stock are converted into common stock) without the approval of our
Board. Stockholders who own 4.9% or more of our outstanding common stock as of the close of business on
April 29, 2009 will not trigger the Rights Plan so long as they do not (i) acquire any additional shares of
common stock or (ii) fall under 4.9% ownership of common stock and then re-acquire 4.9% or more of the
common stock. The Rights Plan exempts future acquisitions of common stock by any Liberty Party, but does
not in any respect alter the respective rights and obligations of the Company and the Liberty Parties under the
Liberty Investment Agreement. Any rights held by an Acquiring Person are null and void and may not be
exercised. Our Board may, in its sole discretion, exempt any person or group from being deemed an Acquiring
Person for purposes of the Rights Plan.
The Rights. Our Board authorized the issuance of one right per each outstanding share of our common
stock payable to our stockholders of record as of May 11, 2009. Subject to the terms, provisions and
conditions of the Rights Plan, if the rights become exercisable, each right would initially represent the right to
purchase from us one one-millionth of a share of our Series C Junior Preferred Stock for a purchase price of
$2.00 (the “Purchase Price”). If issued, each fractional share of preferred stock would give the stockholder
approximately the same dividend, voting and liquidation rights as does one share of our common stock.
However, prior to exercise, a right does not give its holder any rights as a stockholder of the Company,
including without limitation any dividend, voting or liquidation rights.
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