XM Radio 2009 Annual Report Download - page 47

part of the stockholders, to select one of the approved reverse stock split ratios and effect the approved reverse
stock split by filing the Reverse Stock Split Amendment with the Secretary of State of the State of Delaware
at any time after the approval of the Reverse Stock Split Amendment. If the Reverse Stock Split Amendment
has not been filed with the Secretary of State of the State of Delaware by the close of business on June 30,
2011, the board of directors will have no authority to effectuate the Reverse Stock Split Amendment. If the
reverse stock split is implemented, the Reverse Stock Split Amendment also would reduce the number of
authorized shares of our common stock as set forth below but would not change the par value of a share of
our common stock. Except for any changes as a result of the treatment of fractional shares, each stockholder
will hold the same percentage of common stock outstanding immediately prior to the reverse stock split as
such stockholder held immediately prior to the reverse stock split.
Our board of directors believes that stockholder approval of an exchange ratio range (rather than an exact
exchange ratio) provides the board with maximum flexibility to achieve the purposes of the reverse stock split.
If the stockholders approve this Item 3, the reverse stock split will be effected, if at all, only upon a
determination by the board of directors that the reverse stock split is in the company’s and the stockholders’
best interests at that time. In connection with any determination to effect the reverse stock split, the board of
directors will set the time for such a split and select a specific ratio within the range. These determinations
will be made by the board of directors with the intention to create the greatest marketability for our common
stock based upon prevailing market conditions at that time.
The board of directors reserves its right to elect to abandon the reverse stock split if it determines, in its
sole discretion, that this proposal is no longer in the best interests of the company and its stockholders.
Purpose of the Reverse Stock Split Amendment
Our common stock currently trades on The NASDAQ Global Select Market under the symbol “SIRI”.
The NASDAQ Global Select Market has several continued listing criteria that companies must satisfy in order
to remain listed on the exchange. One of these criteria is that a company’s common stock have a trading price
that is greater than or equal to $1.00 per share. On September 15, 2009, we received notice from the NASDAQ
Stock Market that our common stock had closed below $1.00 per share for 30 consecutive business days and
was therefore not in compliance with the NASDAQ Marketplace Rules. On March 16, 2010, we received a
letter from the NASDAQ staff stating that we had not regained compliance with the $1.00 minimum closing
bid price requirement for continued listing under NASDAQ Listing Rule 5450(a)(1). We have been granted a
hearing before a NASDAQ Hearings Panel to appeal the staff’s determination. This request automatically
stayed any action to delist our common stock from The NASDAQ Global Select Market until the hearing
procedures have concluded. Currently, we meet all of The NASDAQ Global Select Market’s continued listing
criteria, other than the minimum bid price requirement.
The purpose of the reverse stock split is to increase the per share trading value of our common stock. Our
board of directors intends to effect the proposed reverse stock split only if it believes that a decrease in the
number of shares outstanding is likely to improve the trading price for our common stock, and only if the
implementation of a reverse stock split is determined by the board of directors to be in the best interests of the
company and its stockholders. Our board of directors may exercise its discretion not to implement a reverse
stock split.
Impact of the Reverse Stock Split Amendment if Implemented
If approved and effected, the reverse stock split will be realized simultaneously and in the same ratio for
all of our common stock. The reverse stock split will affect all holders of our common stock uniformly and
will not affect any stockholder’s percentage ownership interest in the company. As described below, holders of
common stock otherwise entitled to a fractional share as a result of the reverse stock split will receive a cash
payment in lieu of such fractional share. These cash payments will reduce the number of post-reverse stock
split holders of our common stock to the extent there are concurrently stockholders who would otherwise
receive less than one share of common stock after the reverse stock split. In addition, the reverse stock split
will not affect any stockholder’s proportionate voting power (subject to the treatment of fractional shares).
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