XM Radio 2009 Annual Report Download - page 45

The following description of the Rights Plan is qualified in its entirety by reference to the text of the
Rights Plan, which is attached to this proxy statement as Appendix A. We urge you to read carefully the
Rights Plan in its entirety as the discussion below is only a summary.
The Rights. As part of the Rights Plan, our board of directors 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, each right initially represents 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 a stockholder
approximately the same dividend, voting and liquidation rights as does one share of our common stock. Prior
to exercise, a right does not give its holder any rights as a stockholder.
Exercisability. The rights will not be exercisable until the close of business on the tenth business day
after a public announcement by us that a person or group has become an Acquiring Person. We refer to the
date that the rights become exercisable as the “Distribution Date.” Until the Distribution Date, our common
stock certificates will evidence the rights. Any transfer of shares of our common stock prior to the Distribution
Date will constitute a transfer of the associated rights. After the Distribution Date, the rights may be
transferred on the books and records of the Rights Agent as provided in the Rights Plan.
Subject to the exchange feature described below, after the Distribution Date, each holder of a right, other
than rights beneficially owned by the Acquiring Person (which will be void), will have the right to receive
upon exercise and payment of the Purchase Price, that number of shares of our common stock having a market
value of two times the Purchase Price.
Exchange. On or after the Distribution Date, we (1) will, if on such date the voting rights set forth in
Section 12 of the Certificate of Designations for our Convertible Perpetual Preferred Stock, Series B-1, are
still in effect, and (2) at any time thereafter, may, at the option of our board of directors, exchange the rights
(other than rights owned by such person or group which will have become void) for our common stock, in
whole or in part, at an exchange ratio of one share of our common stock per right (subject to adjustment).
Expiration. The rights and the Rights Plan will expire on the earliest of (1) August 1, 2011, (2) the time
at which the rights are redeemed pursuant to the Rights Plan, (3) the time at which the rights are exchanged
pursuant to the Rights Plan, (4) the repeal of Section 382 of the Code, or any successor statute, if our board of
directors determines that the Rights Plan is no longer necessary for the preservation of tax benefits, (5) the
beginning of a taxable year to which our board of directors determines that no tax benefits may be carried
forward and (6) June 30, 2010 if our stockholders have not approved the Rights Plan.
Redemption. At any time prior to the Distribution Date, our board of directors may redeem the rights in
whole, but not in part, at a price of $0.00001 per right, subject to adjustment to reflect any stock split, stock
dividend or similar transaction (the “Redemption Price”). The redemption of the rights may be made effective
at such time, on such basis and with such conditions as our board of directors in its sole discretion may
establish. Immediately upon any redemption, the right to exercise the rights will terminate and the only right
of the holders of rights will be to receive the Redemption Price.
Anti-Dilution Provisions. Our board of directors may make certain adjustments to prevent dilution that
may occur as a result of certain events, including among others, a stock dividend, a stock split or a
reclassification of the preferred shares or our common stock. Such adjustments may include adjustments to the
purchase price of the preferred shares under the rights, the number of preferred shares issuable pursuant to
each right and the number of outstanding rights, in each case as provided for in the Rights Plan. Generally, no
adjustments to the purchase price of less than 1% will be made.
Amendments. Before the Distribution Date, our board of directors may amend or supplement the Rights
Plan without the consent of the holders of the rights. After the Distribution Date, our board of directors may
amend or supplement the Rights Plan only to cure an ambiguity, to alter time period provisions, to correct
inconsistent provisions or to make any additional changes to the Rights Plan, but only to the extent that those
changes do not impair or adversely affect any rights holder and do not result in the rights again becoming
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