XM Radio 2009 Annual Report Download - page 52

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;
• persons who own more than 5% of our outstanding stock;
• persons that hold our common stock as part of a straddle, hedge, constructive sale or conversion
transaction; and
• U.S. holders who acquired their shares of our common stock through the exercise of an employee stock
option or otherwise as compensation.
If a partnership or other entity taxed as a partnership holds our common stock, the tax treatment of a
partner in the partnership generally will depend upon the status of the partner and the activities of the
partnership. Partnerships and partners in such a partnership should consult their tax advisers about the tax
consequences of the reverse stock split to them.
This discussion does not address the tax consequences of the reverse stock split under state, local or
foreign tax laws. No assurance can be given that the IRS would not assert, or that a court would not sustain, a
position contrary to any of the tax consequences set forth below.
Holders of our common stock are urged to consult with their own tax advisors as to the tax
consequences of the reverse stock split in their particular circumstances, including the applicability and
effect of the alternative minimum tax and any state, local or foreign and other tax laws and of changes
in those laws.
For purposes of this section, the term “U.S. holder” means a beneficial owner of our common stock that
for U.S. federal income tax purposes is:
• a citizen or resident of the United States;
• a corporation, or other entity treated as a corporation for U.S. federal income tax purposes, created or
organized in or under the laws of the United States or any State or the District of Columbia;
• an estate that is subject to U.S. federal income tax on its income regardless of its source; or
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