P.O. Box 7078
Laguna Niguel, CA 92607
November 5, 2008
Chairman of the Board
c/o Board of Directors
Sirius Satellite Radio, Inc.
1221 Avenue of the Americas
New York, NY 10020
Sub: Formal Letter of Demand
I am a shareholder and a member of the recently formed shareholders’ group, Save Sirius. Save Sirius and its members, in this Formal Letter of Demand, call on the Sirius XM Board of Directors to:
Postpone the vote that is asking shareholders to consider the further dilution and increase of shares from 4.5 billion to 8 billion in the fully diluted float
Postpone the proposed reverse split ranging from 1 for 10 to 1 for 50.
In light of the abysmal stock performance and dire financial situation, we demand that all stock and other bonuses be suspended immediately until the return to these compensation plans would be commensurate with the concept of “performance based compensation”
Given the NASDAQ’s reprieve of delisting securities below a dollar, there is time for this board to convene an emergency meeting to consider other options, such as but not limited to, self-funding by shareholders. This will give the Corporation time and means to obtain the additional funding from a position of strength and not from a position of desperation.
We are calling on the board to indefinitely postpone the shareholder vote giving time for management and its shareholders to address any and all viable options to prevent the massive amounts of dilution being proposed by this board as well as the proposed reverse stock split. We demand the board grant a meeting with all interested parties to address alternatives that would be more in line with shareholders’ interests.
If the board continues with the scheduled vote, not meeting our demands, we will hold them in violation of their fiduciary duties and seek injunctive relief.
As the board is aware, there are (RICO) charges pending before a Federal Court in California that accuse this board and its executives of racketeering, breach of fiduciary duty as well as Sherman Act Violations.
The conspiracy to withhold and commercially introduce interoperable radios, to obtain control of all of the SDARS spectrum and to consummate the merger between XM and Sirius at any and all cost, without consideration of the impact on the corporation and its shareholders, gives us cause to deem this board not fit to make proper decisions on behalf of the shareholders.
c/o Board of Directors
November 5, 2008
It is inconceivable that this board would lock their shareholders into the longest merger delay in history without having already obtained the proper financing. This board and CEO Mel Karmazin, publicly stated on multiple occasions that if this merger was not in the shareholders’ best interest and “did not make sense”, they would walk away. The fact that the promises made to the shareholders were breached and that this merger was consummated under what Mr. Karmazin called “toxic terms” has resulted in catastrophic losses (over 90%) in shareholder value. It should be noted that the “toxic terms”( included the issuance of 300 million shares of the Corporation stock to be given to the financiers of XM’s debt for the sole purpose of being sold short on the open market). It is clear that this board is self dealing and it has not fulfilled its fiduciary duty to shareholders.
This has been a well-orchestrated multi-year conspiracy to consolidate the SDARS spectrum which included willful violation of their licensing mandate as well as willful violation of their Joint Development Agreement. The final chapter in the conspiracy will be to privatize the combined entities thereby stealing it from its rightful owners, the shareholders.
Mr. Karmazin was brought out of retirement by Mr. Leon Black of Apollo, a member of the board. In a September 15th 2008 Wall Street Journal article written by Sarah McBride, she states,
"Given Sirius XM's low stock price, Mr. Karmazin said he would love to take the company private. But given the state of the credit markets, 'How do you find [the money] today?' If the company were generating positive cash flow, which he expects it to do for the full year in 2009, privatization would become much more feasible, he says."
Given Mr. Karmazin’s connection with Mr. Leon Black (founder of one of the largest private equity firms in the country), as well as comments made in his Wall Street Journal interview, it is obvious there are severe conflicts of interest between Mr. Karmazin, the board, and their shareholders. It is their goal to privatize this company that is completely adverse to their fiduciary responsibility to enhance shareholder value. To suggest privatization at these levels speaks for itself and the board should call for Mr. Karmazin’s resignation. We are asking those board members who have been complicit in this conspiracy, to step up and perform their fiduciary duty to we the shareholders, by seeking an orderly replacement of our CEO. We would like to take this opportunity to remind the board and executives of SiriusXM that they work for us. It is we, the shareholders, that own this company.
As stated above, if the board continues with the scheduled vote, not meeting our demands, we will hold them in violation of their fiduciary duties and seek injunctive relief. As time is of the essence, we expect a written response within five days from receipt of this letter. Your failure to respond accordingly will result in drafting of the required documents to seek a preliminary injunction.
Respectfully submitted on behalf of Save Sirius:
[email protected] SaveSirius.org
Signed By: ___________________________________ _________________
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