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SIRI » Topics » Impact of the Reverse Stock Split Amendment if Implemented

This excerpt taken from the SIRI DEF 14A filed Apr 30, 2009.
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).
 
The principal effects of the Reverse Stock Split Amendment will be that:
 
  •  depending on the ratio for the reverse stock split selected by our board of directors, each ten or fifty shares of common stock owned by a stockholder, or any whole number of shares of common stock between ten and fifty as determined by the board of directors, will be combined into one new share of common stock;
 
  •  the number of shares of common stock issued and outstanding (including the shares issuable upon conversion of our preferred stock) will be reduced from approximately 6.5 billion shares to a range of approximately 646 million shares to 129 million shares, depending upon the reverse stock split ratio selected by the board of directors;
 
  •  the number of authorized shares of common stock will be reduced from 8 billion (or, if the proposal to increase the number of authorized shares of common stock set forth in Item 2 is approved, 9 billion) to a range of approximately 1.3 billion to 400 million dependent on the reverse stock split ratio chosen by the board of directors. The table below illustrates the number of authorized shares of common stock that will correspond to each range of reverse stock split ratios:
 
         
    Total Authorized Shares of Common Stock
 		 
Range of Reverse Stock Split Ratios
  after Reverse Stock Split  
 
One-for-ten to one-for-nineteen
    1,300,000,000  
One-for-twenty to one-for-twenty-nine
    700,000,000  
One-for-thirty to one-for-thirty-nine
    500,000,000  
One-for-forty to one-for-fifty
    400,000,000  
 
  •  because the number of issued and outstanding shares of common stock will decrease as result of the reverse stock split, the number of authorized but unissued shares of common stock may increase on a relative basis. These additional shares of authorized common stock would be available for issuance at the discretion of our board of directors from time to time for corporate purposes such as raising


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  additional capital and settling outstanding obligations, acquisitions of companies or assets and sales of stock or securities convertible into or exercisable for common stock. We believe that the availability of the additional shares would provide us with additional flexibility to meet business and financing needs as they arise;
 
  •  based upon the reverse stock split ratio selected by our board of directors, proportionate adjustments will be made to the per share exercise price and/or the number of shares issuable upon the exercise or conversion of all outstanding options, restricted stock awards, restricted stock units, warrants, convertible or exchangeable securities entitling the holders to purchase, exchange for, or convert into, shares of common stock, which will result in approximately the same aggregate price being required to be paid for such options and restricted stock awards and units upon exercise immediately preceding the reverse stock split; and
 
  •  the number of shares reserved for issuance or pursuant to the securities or plans described in the immediately preceding bullet will be reduced proportionately based upon the reverse stock split ratio selected by our board of directors.
 
The table below illustrates the effect, as of March 31, 2009, of a reverse stock split at certain ratios on (i) the shares of common stock outstanding and reserved for issuance, (ii) the reduced number of total authorized shares of common stock under our certificate of incorporation, and (iii) the resulting number of shares of common stock available for issuance:
 
                         
    Shares of Common
 		             
    Stock Outstanding
 		             
    plus Shares of
 		          Shares of Common
 		 
    Common Stock
 		    Total Authorized
 		    Stock Available for
 		 
    Reserved for
 		    Shares of Common
 		    Issuance (% of
 		 
    Issuance     Stock     total authorized)  
 
One-for-ten stock split is approved
    711,805,722       1,300,000,000       588,194,278(45.25 %)
One-for-twenty stock split is approved
    355,902,861       700,000,000       344,097,139(49.16 %)
One-for-thirty stock split is approved
    237,268,574       500,000,000       262,731,426(52.55 %)
One-for-forty stock split is approved
    177,951,430       400,000,000       222,048,570(55.51 %)
One-for-fifty stock split is approved
    142,361,144       400,000,000       257,638,856(64.14 %)
 
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