XM Radio 2010 Annual Report Download - page 120

In January 2004, SIRIUS signed a seven-year agreement with a sports programming provider. Upon execution
of this agreement, SIRIUS delivered 15,173,070 shares of common stock valued at $40,967 to that programming
provider. These shares of common stock are subject to transfer restrictions which lapse over time. We recognized
share-based payment expense associated with these shares of $5,852 in the years ended December 31, 2010, 2009
and 2008. As of December 31, 2010, there was a $1,568 remaining balance of common stock value included in other
current assets. As of December 31, 2009, there was a $7,420 remaining balance of common stock value included in
other current assets and other long-term assets in the amount of $5,852 and $1,568, respectively.
Preferred Stock, par value $0.001 per share
We were authorized to issue up to 50,000,000 shares of undesignated preferred stock as of December 31, 2010
and 2009.
There were zero and 24,808,959 shares of Series A Convertible Preferred Stock (“Series A Preferred Stock”)
issued and outstanding as of December 31, 2010 and 2009, respectively. In September 2010, the holder of the
Series A Preferred Stock converted the 24,808,959 outstanding shares into an equal number of shares of our
common stock.
There were 12,500,000 shares of Convertible Perpetual Preferred Stock, Series B (the “Series B Preferred
Stock”), issued and outstanding as of December 31, 2010 and 2009. The Series B Preferred Stock is convertible into
shares of our common stock at the rate of 206.9581409 shares of common stock for each share of Series B Preferred
Stock, representing approximately 40% of our outstanding shares of common stock (after giving effect to such
conversion). As the holder of the Series B Preferred Stock, Liberty Radio LLC is entitled to a number of votes equal
to the number of shares of our common stock into which each such Series B Preferred Stock share is convertible.
Liberty Radio LLC will also receive dividends and distributions ratably with our common stock, on an as-converted
basis. With respect to dividend rights, the Series B Preferred Stock ranks evenly with our common stock and each
other class or series of our equity securities not expressly provided as ranking senior to the Series B Preferred Stock.
With respect to liquidation rights, the Series B Preferred Stock ranks evenly with each other class or series of our
equity securities not expressly provided as ranking senior to the Series B Preferred Stock, and will rank senior to our
common stock. In 2009, we accounted for the issuance of Series B Preferred Stock by recording a $227,716 increase
to additional paid-in capital for the amount of allocated proceeds received and an additional $186,188 increase to
paid-in capital for the beneficial conversion feature, which was recognized as a charge to retained earnings.
There were no shares of Preferred Stock, Series C Junior (the “Series C Junior Preferred Stock”), issued and
outstanding as of December 31, 2010 and 2009. In 2009, our board of directors created and reserved for issuance in
accordance with the Rights Plan (as described below) 9,000 shares of the Series C Junior Preferred Stock. The
shares of Series C Junior Preferred Stock are not redeemable and rank, with respect to the payment of dividends and
the distribution of assets, junior to all other series of our preferred stock, unless the terms of such series shall so
provide.
Warrants
We have issued warrants to purchase shares of common stock in connection with distribution and program-
ming agreements, satellite purchase agreements and certain debt issuances. As of December 31, 2010, approx-
imately 42,421,000 warrants to acquire an equal number of shares of common stock with an average exercise price
of $2.66 per share were outstanding and fully vested. Warrants vest over time or upon the achievement of milestones
and expire at various times through 2015. We incurred warrant related expense of $0, $2,522 and $1,865 for the
years ended December 31, 2010, 2009 and 2008, respectively.
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SIRIUS XM RADIO INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)