<PAGE>
As filed with the Securities and Exchange Commission on October 6, 2000
Registration No. 333-_____
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
________________________
XM Satellite Radio Holdings Inc.
(Exact name of registrant as specified in its charter)
Delaware 4899 54-1878819
(State of Incorporation) (Primary Standard Industrial (I.R.S. Employer
Classification Code Number) Identification No.)
_______________
1500 Eckington Place, NE
Washington, DC 20002
(202) 380-4000
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
_______________
Joseph M. Titlebaum
Senior Vice President, General Counsel
and Secretary
XM Satellite Radio Holdings Inc.
1500 Eckington Place, NE
Washington, DC 20002
(202) 380-4000
(Name, address, including zip code, and telephone number,
including area code, of registrant's agent for service)
_______________
Copies to:
Steven M. Kaufman, Esq.
Hogan & Hartson L.L.P.
555 Thirteenth Street, N.W.
Washington, D.C. 20004
(202) 637-5600
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [_]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act of 1933, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act of 1933, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box.[_]
<TABLE>
<CAPTION>
====================================================================================================================================
Calculation of Registration Fee
------------------------------------------------------------------------------------------------------------------------------------
Proposed Proposed
Amount to be Maximum Price Maximum Aggregate Amount of
Title of Each Class of Securities to be Registered (1) Registered (2) per Security (2)(3) Offering Price (2)(3) Registration Fee
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Debt Securities (4) (4) (4)
Preferred Stock, par value $0.01 per share (4) (4) (4)
Depositary Shares, representing Preferred Stock (4) (4) (4)
Common Stock, par value $0.01 per share (4) (4) (4)
Warrants (5) (4) (4) (4)
Rights (4) (4) (4)
------------------------------------------------------------------------------------------------------------------------------------
Total $500,000,000 (4) $500,000,000(6) $132,000.00(7)
====================================================================================================================================
</TABLE>
(1) The securities covered by this Registration Statement may be sold or
otherwise distributed separately, together or as units with other securities
covered by this Registration Statement. This Registration Statement covers
offers, sales and other distributions of the securities listed in this table
from time to time at prices to be determined, as well as debt securities and
debt guarantees issuable upon the exercise of debt warrants so offered or sold,
shares of Preferred Stock distributable upon the termination of a deposit
arrangement for depositary shares so offered or sold, and shares of Common Stock
issuable upon the exchange or conversion of debt securities or shares of
Preferred Stock so offered or sold that are exchangeable for or convertible into
shares of Common Stock or upon the exercise of Common Stock warrants or rights
so offered, sold or distributed. This Registration Statement also covers debt
securities, debt guarantees, shares of Preferred Stock, depositary shares,
shares of Common Stock, warrants and rights that may be offered or sold under
delayed delivery contracts pursuant to which the counterparty may be required to
purchase such securities, as well as such contracts themselves. Such contracts
would be issued with the debt securities, debt guarantees, shares of Preferred
Stock, depositary shares, shares of Common Stock, warrants and/or rights.
(2) In U.S. dollars or the equivalent thereof for any security denominated in
one or more, or units of two or more, foreign currencies or composite currencies
based on the exchange rate at the time of sale. Debt securities may be issued
with original issue discount such that the aggregate initial public offering
price will not exceed $500,000,000 together with the other securities issued
hereunder.
(3) Estimated solely for purposes of calculating the registration fee under
Rule 457.
(4) Omitted pursuant to General Instruction II.D of Form S-3 under the
Securities Act of 1933, as amended.
(5) The warrants covered by this Registration Statement may be debt warrants,
Preferred Stock warrants, depositary share warrants or Common Stock warrants.
(6) The aggregate maximum offering price of all securities issued under this
Registration Statement will not exceed $500,000,000. No separate consideration
will be received for debt guarantees or for shares of Preferred Stock or Common
Stock that are issued upon conversion or exchange of debt securities, shares of
Preferred Stock or depositary shares registered hereunder or for shares of
Preferred Stock distributed upon termination of a deposit arrangement for
depositary shares.
(7) Calculated under Rule 457(o) of the rules and regulations under the
Securities Act of 1933, as amended. Under Rule 457(n), no separate registration
fee is payable with respect to the debt guarantees.
The registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION BUT HAS NOT BECOME EFFECTIVE. THESE
SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED BEFORE THE
REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO
SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS UNLAWFUL.
Subject to Completion
Preliminary Prospectus dated __________, 2000
PROSPECTUS
$500,000,000
XM SATELLITE RADIO HOLDINGS INC.
Common Stock
Debt Guarantees
Debt Securities
Depositary Shares
Preferred Stock
Rights
Warrants
Corporate Headquarters:
1500 Eckington Place, N.E.
Washington, D.C. 20002
(202) 380-4000
. We will provide specific terms of the applicable offered securities in
supplements to this prospectus. The terms of the securities will include
the initial offering price, aggregate amount of the offering, listing on
any securities exchange or market, risk factors and the agents, dealers or
underwriters, if any, to be used in connection with the sale of these
securities.
. Our Class A common stock is traded on the Nasdaq National Market under the
symbol "XMSR."
You should read this prospectus and any supplement carefully before you invest.
This prospectus may not be used to consummate sales of the offered securities
unless it is accompanied by a prospectus supplement describing the method and
terms of the offering of those offered securities.
Investing in these securities involves various risks. See "Risk Factors"
beginning on page 7.
Neither the Securities and Exchange Commission nor any other regulatory body has
approved or disapproved of these securities or passed upon the adequacy or
accuracy of this prospectus. Any representation to the contrary is a criminal
offense.
The date of this prospectus is _________, 2000.
<PAGE>
TABLE OF CONTENTS
<TABLE>
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Page
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<S> <C>
Summary................................................................... 4
Risk Factors.............................................................. 7
Use of Proceeds........................................................... 17
Description of Debt Securities............................................ 18
Description of Common Stock............................................... 26
Description of Preferred Stock............................................ 27
Description of Depositary Shares.......................................... 29
Description of Warrants................................................... 33
Description of Rights..................................................... 34
Book-Entry Securities..................................................... 35
Plan of Distribution...................................................... 37
Legal Matters............................................................. 38
Experts................................................................... 38
</TABLE>
<PAGE>
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the SEC
utilizing a "shelf" registration process. Under this process, XM Satellite
Radio Holdings Inc. (which we generally refer to as the "Company" in this
prospectus) may offer and sell any combination of the securities described in
this prospectus in one or more offerings up to a total dollar amount of
$500,000,000.
This prospectus and any accompanying prospectus supplement do not contain all
of the information included in the registration statement. We have omitted
parts of the registration statement as permitted by the rules and regulations of
the SEC. For further information, we refer you to the registration statement on
Form S-3, including its exhibits. Statements contained in this prospectus and
any accompanying prospectus supplement about the provisions or contents of any
agreement or other document are not necessarily complete. If SEC rules and
regulations require that any agreement or document be filed as an exhibit to the
registration statement, you should refer to that agreement or document for a
complete description of these matters. You should not assume that the
information in this prospectus or any prospectus supplement is accurate as of
any date other than the date on the front of each document.
This prospectus provides you with a general description of the securities we
may offer. Each time we offer securities, we will provide a prospectus
supplement and attach it to this prospectus. The prospectus supplement will
contain specific information about the terms of the securities being offered at
that time. The prospectus supplement may also add, update or change information
contained in this prospectus. You should read both this prospectus and any
prospectus supplement, together with any additional information you may need to
make your investment decision.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy materials the Company has filed
with the SEC at the following locations of the SEC:
<TABLE>
<S> <C> <C>
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, New York 10048 Suite 1400
Chicago, Illinois 60661-2511
</TABLE>
Please call the SEC at 1-800-SEC-0330 for further information on the operation
of its public reference room. The Company's SEC filings also are available to
the public on the SEC's Internet site at http://www.sec.gov.
The SEC allows us to "incorporate by reference" in this prospectus certain
information we file with the SEC, which means that we may disclose important
information in this prospectus by referring you to the document that contains
the information. The information incorporated by reference is considered to be
a part of this prospectus, and later information filed with the SEC will update
and supersede this information. We incorporate by reference the documents
listed below and any future filings we make with the SEC under Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934, until the offering of
securities covered by this prospectus is completed:
. Our Annual Report on Form 10-K for our fiscal year ended December 31, 1999,
filed with the SEC on March 16, 2000;
. Our Current Reports on Form 8-K, filed with the SEC on February 28, 2000
and July 14, 2000;
. The description of our Class A common stock set forth in our registration
statement filed under Section 12 of the Securities Exchange Act on Form 8-A
on September 23, 1999, including any amendment or report filed with the SEC
for the purpose of updating such description;
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. Our Proxy Statement, filed with the SEC on April 26, 2000; and
. Our Quarterly Reports on Form 10-Q for the quarterly periods ended March
31, 2000 and June 30, 2000, filed with the SEC on May 12, 2000 and August
11, 2000, respectively.
In the event of conflicting information in these documents, the information in
the latest filed document should be considered correct.
In addition, you may obtain a copy of our SEC filings at no cost by writing or
telephoning the Company at:
XM Satellite Radio Holdings Inc.
1500 Eckington Place, N.E.
Washington, DC 20002
Attn: General Counsel
(202) 380-4000
The Company has filed with the SEC a "shelf" registration statement on Form S-
3 under the Securities Act of 1933, relating to the securities that may be
offered by this prospectus. This prospectus is a part of that registration
statement, but does not contain all of the information in the registration
statement. For more detail concerning the Company and any securities offered by
this prospectus, you may examine the registration statement and the exhibits
filed with it at the locations listed in the first paragraph under this heading.
Readers should rely on the information provided or incorporated by reference in
this prospectus or in the applicable supplement to this prospectus. We have not
authorized anyone to provide you with different or inconsistent information.
Readers should not assume that the information in this prospectus and the
applicable supplement is accurate as of any date other than the date on the
front cover of the document. Our business, financial information, results of
operations and prospects may have changed since those dates.
If it is against the law in any state to make an offer to sell these securities
(or to solicit an offer from someone to buy these securities), then this offer
does not apply to any person in that state, and no offer or solicitation is made
by this prospectus to any such person.
2
<PAGE>
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the information incorporated by reference in it, as well
as any prospectus supplement that accompanies it, include "forward-looking
statements" within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act. We intend the forward-looking statements to be covered
by the safe harbor provisions for forward-looking statements in these sections.
All statements regarding our expected financial position and operating results,
our business strategy and our financing plans are forward-looking statements.
These statements can sometimes be identified by our use of forward-looking words
such as "may," "will," "anticipate," "estimate," "expect" or "intend." These
statements are subject to known and unknown risks, uncertainties and other
factors that could cause the actual results to differ materially from those
contemplated by the statements. The forward-looking information is based on
various factors and was derived using numerous assumptions. Although we believe
that our expectations in such forward-looking statements are reasonable, we
cannot promise that our expectations will turn out to be correct. Our actual
results could be materially different from and worse than our expectations.
Important factors that could cause our actual results to be materially different
from our expectations include those disclosed in this prospectus under the
caption "Risk Factors," beginning on page 7, and elsewhere throughout this
prospectus.
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SUMMARY
This summary does not contain all the information that may be important to
you. You should read this entire prospectus carefully, including the section
entitled "Risk Factors." Unless the context otherwise requires, the terms "we,"
"our," and "us" refer to XM Satellite Radio Holdings Inc. and its subsidiaries
("Holdings"), including XM Satellite Radio Inc. and subsidiary ("XM").
Our Business
We seek to become a premier nationwide provider of audio entertainment and
information programming. We will transmit our service, which we will call ''XM
Radio,'' from our satellites to vehicle, home and portable radios. XM Radio
plans to offer up to 100 channels of music, news, talk, sports and children's
programming developed by us or third parties for a monthly subscription price of
$9.95. We believe XM Radio will appeal to consumers because of our clear sound
quality from digital signal radios, variety of programming and nationwide
coverage. We will build a subscriber base for XM Radio through multiple
distribution channels, including an exclusive distribution arrangement with
General Motors, other automotive manufacturers, car audio dealers and national
electronics retailers. We expect to commence commercial operation of our
service in the second quarter of 2001.
We hold one of only two licenses issued by the Federal Communications
Commission to provide satellite digital audio radio service in the United
States. We will broadcast XM Radio throughout the continental United States from
two of the most powerful commercial satellites available and will have a ground
spare in reserve. A network of terrestrial repeaters, which are ground-based
electronics equipment, will receive and re-transmit the satellite signals to
augment our satellite signal coverage. We have contracts to develop,
manufacture and distribute XM radios with several leading consumer electronics
manufacturers. Our radios will be capable of receiving both XM Radio and
traditional AM/FM stations and will be available at national consumer
electronics retailers under the Sony, Pioneer, Alpine and SHARP brand names.
We will offer our consumers a unique listening experience by providing up to
100 channels of programming, coast-to-coast coverage and clear sound with our
digital signals. We will have original music and talk channels created by XM
Originals, our in-house programming unit, and channels created by well-known
providers of brand name programming, including, for example, CNN, USA Today,
BET, Radio One, Clear Channel, and Hispanic Broadcasting Corporation. We have a
team of programming professionals with a proven record of introducing new radio
formats and building local and national listenership.
In addition to our subscription fee, we expect revenues from sales of limited
advertising time on a number of channels. XM Radio offers a new national radio
platform for advertisers that solves many of the problems associated with buying
radio advertising nationally on a spot or syndicated basis. Through affinity and
niche programming, we will give advertisers an effective way to aggregate
geographically disparate groups of listeners in their targeted demographic
markets.
As of September 15, 2000, we have raised $1.1 billion in debt and equity
proceeds, net of expenses and repayment of debt, from investors and strategic
partners, including $227 million from a Series C preferred stock financing in
August 2000. Our strategic investor companies include General Motors, DIRECTV,
Clear Channel Communications, American Honda, and our parent company, Motient
Corporation.
We are presently a development stage company with no revenue-generating
operations. The funds we have raised as of September 15, 2000 are expected to
be sufficient in the absence of additional financing to cover our funding needs
through commencement of commercial operation of our services in the second
quarter of 2001. However, if we need to significantly alter our system before
commercial operation or our schedule is materially delayed, we may need
additional funding. After we commence commercial service, we will require
significant additional funds before we generate positive cash flow.
We believe that there is a significant market for XM Radio. Market data show
strong demand for radio service. Over 75% of the entire United States population
age 12 and older listens to the radio daily, and over 95% listens to
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the radio weekly. A market study conducted for us projects that as many as 49
million people may subscribe to satellite radio by 2012.
Our strategy includes offering diverse programming designed to appeal to a
large audience, including urban and rural listeners of virtually all ages,
ethnicities, economic groups and specialty interests. We will tailor our
programming and marketing to appeal to specific groups that our research has
shown are most likely to subscribe to our service. We have several planned
distribution channels, including through major car and radio manufacturers.
Our executive offices are at 1500 Eckington Place, NE, Washington, D.C.
20002, and our telephone number is (202) 380-4000. We maintain an Internet site
on the World Wide Web at www.xmradio.com. Information at our web site is not,
and should not be deemed to be, part of this prospectus.
5
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Summary Consolidated Financial Data
<TABLE>
<CAPTION>
December 15,
1992
(Date of
Six Months Ended Inception)
Years Ended December 31, June 30, to June 30,
------------------------------------- ------------------------
1997 1998 1999 1999 2000 2000
---------- ---------- ----------- ---------- ----------- ---------
(In thousands, except share data)
<S> <C> <C> <C> <C> <C> <C>
Consolidated Statements of Operations Data(1):
Revenue........................................... $ -- $ -- $ -- $ -- $ -- $ --
---------- ---------- ----------- ---------- ----------- --------
Operating expenses:
Research and development......................... -- 6,941 4,274 1,378 4,739 15,954
Professional fees................................ 1,090 5,242 9,969 2,560 10,787 27,088
General and administrative....................... 20 4,010 16,448 4,503 15,300 35,777
---------- ---------- ----------- ---------- ----------- --------
Total operating expenses......................... 1,110 16,193 30,691 8,441 30,826 78,819
---------- ---------- ----------- ---------- ----------- --------
Operating loss.................................... (1,110) (16,193) (30,691) (8,441) (30,826) (78,819)
Other income--interest income (expense), net...... (549) 26 (6,205) 76 12,999 6,269
---------- ---------- ----------- ---------- ----------- --------
Net loss.......................................... $ (1,659) $ (16,167) $ (36,896) $ (8,365) $ (17,827) $(72,550)
========== ========== =========== ========== =========== ========
Preferred stock dividend requirement.............. -- -- -- -- (3,643) (3,643)
Net loss attributable to common stockholders...... (1,659) (16,167) (36,896) (8,365) (21,470) $(76,193)
---------- ---------- ----------- ---------- ----------- --------
Net loss per share--basic and diluted............. $ (0.26) $ (2.42) $ (2.40) $ (1.25) $ (0.45)
========== ========== =========== ========== ===========
Weighted average shares used in computing net loss
per share--basic and diluted..................... 6,368,166 6,689,250 15,334,102 6,689,250 48,033,191
Other Data (2):
Ratio of earnings to combined fixed charges and
preferred dividends (3)........................... -- -- -- -- --
---------- ---------- ----------- ---------- -----------
Deficiency of earnings to cover combined fixed
charges and preferred dividends................... $ 3,560 $ 27,991 $ 52,240 $ 16,583 $ 36,970
---------- ---------- ----------- ---------- -----------
</TABLE>
<TABLE>
<CAPTION>
December 31, June 30,
-------------------------------------
1997 1998 1999 2000
---------- ---------- ----------- ----------
(In thousands)
<S> <C> <C> <C> <C>
Consolidated Balance Sheets Data:
Cash, cash equivalents and short-term investments.. $ 1 $ 310 $120,170 $ 267,372
Pledged securities(4).............................. -- -- -- 174,623
System under construction.......................... 91,932 169,029 362,358 579,981
Total assets....................................... 91,933 170,485 515,189 1,086,605
Total debt......................................... 82,504 140,332 212 261,339
Total liabilities.................................. 82,949 177,668 30,172 324,388
Stockholders' equity (deficit)..................... 8,984 (7,183) 485,017 762,217
</TABLE>
(1) Business activity for the period from December 15, 1992, which was our date
of inception, through December 31, 1996 was insignificant.
(2) For purposes of determining the ratio of earnings to combined fixed charges
and preferred dividends and the deficiency of earnings to cover combined
fixed charges and preferred dividends, "earnings" includes pre-tax income
(loss) adjusted for fixed charges and preferred dividends. "Fixed charges"
consist of interest expensed and capitalized, amortization of deferred
financing charges, and that portion of operating lease rental expense
(deemed to be one third of rental expense) representative of interest.
(3) The ratios of combined fixed charges and preferred dividends to earnings
are not present for the years ended 1997, 1998 and 1999 and the six months
ended June 30, 1999 and 2000 because earnings were inadequate to cover
combined fixed charges and preferred dividends.
(4) Consists of a portfolio of U.S. government securities held by the trustee
for the benefit of the holders of the Senior Secured Notes and a money
market fund associated with a contract.
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RISK FACTORS
You should consider carefully these risk factors together with all of the
other information included in this prospectus before making an investment
decision.
Some of the information in this prospectus may contain forward looking
statements. Such statements can be identified by the use of forward looking
terminology such as "may," "will," "expect," "anticipate," "estimate,"
"continue" or other similar words. These statements discuss future
expectations, contain projections of results of operations or of financial
condition or state other "forward looking" information. When considering such
forward looking statements, you should keep in mind the risk factors and other
cautionary statements in this prospectus. The risk factors noted in this section
and other factors noted throughout this prospectus, including certain risks and
uncertainties, could cause our actual results to differ materially from those
contained in any forward looking statement.
You could lose money on your investment because we have not started operations
or generated any revenues.
We are a development stage company and still need to develop the planned XM
Radio service significantly before we can offer it to consumers. We have not yet
generated any revenues and will not do so until we can start commercial
operation of our service. Unless we generate significant revenues, we will not
become profitable, and you could lose money on your investment. Our ability to
generate revenues and ultimately to become profitable will depend upon several
factors, including
. whether we create and implement the XM Radio system in a timely fashion;
. whether consumer electronics manufacturers successfully develop and
manufacture XM radios;
. whether we can attract and retain enough subscribers and advertisers to XM
Radio;
. whether we compete successfully; and
. whether the FCC grants us all additional necessary authorizations in a
timely manner.
Our expenditures and losses have been significant and are expected to grow.
As of June 30, 2000, we had incurred significant costs, aggregating
approximately $580.0 million, in connection with the development of the XM Radio
system. We incurred net aggregate losses approximating $72.6 million from our
inception through June 30, 2000. We expect our net losses and negative cash flow
to grow as we build the XM Radio system, make payments under our various
contracts and begin to incur marketing costs. If we are unable ultimately to
generate sufficient revenues to become profitable and have positive cash flow,
you could lose money on your investment.
We need substantial further financing but such financing might not be available
and the terms of our FCC license may restrict our ability to raise funding.
The funds we have raised as of September 15, 2000 are expected to be
sufficient in the absence of additional financing to cover our funding needs
through commencement of commercial operation of our services in the second
quarter of 2001. However, if we need to significantly alter our system before
commercial operation or our schedule is materially delayed, we may need
additional funding. After we commence commercial service, we will require
significant additional funds before we generate positive cash flow. In addition,
we have substantial payment obligations under a distribution agreement with
General Motors. Our actual funding requirements could vary materially from our
current estimates. We may have to raise more funds than expected to remain in
business and to continue to develop and market the XM Radio system.
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We plan to raise future funds by selling debt or equity securities, or both,
publicly and/or privately and by obtaining loans or other credit lines from
banks or other financial institutions. We may not be able to raise sufficient
funds on favorable terms or at all. If we fail to obtain any necessary financing
on a timely basis, then
. our satellite construction, launch, or other events necessary to our
business could be materially delayed, or their costs could materially
increase;
. we could default on our commitments to our satellite construction or launch
contractors, creditors or others, leading to termination of construction or
inability to launch our satellites;
. we may not be able to launch our satellite radio service as planned and may
have to discontinue operations or seek a purchaser for our business or
assets; and
. XM may not be able to meet its obligations under the senior secured notes.
Motient Corporation is our controlling stockholder and controls us under
applicable FCC rules. Motient has certain rights regarding the election of
persons to serve on our board of directors and as of September 15, 2000 holds
approximately 53.9% of the voting power, or 46.5% giving effect to the
conversion of all of our outstanding common stock equivalents. Motient cannot
relinquish its controlling position, its right to designate a majority of our
directors, or hold less than 40% of the voting stock without obtaining the prior
approval of the FCC. Accordingly, prior to our obtaining FCC approval of the
transfer of control from Motient, we will only be able to issue a limited amount
of voting securities or securities convertible into voting securities unless
certain of our stockholders holding nonvoting convertible securities agree not
to convert them into voting securities or we take other steps to permit voting
securities on a basis consistent with FCC rules. Certain holders of our
nonvoting securities have agreed not to convert their securities if it would
cause Motient not to hold at least 40% of our voting stock, until we obtain
approval by the FCC of a change in control. In return, we have agreed not to
issue new voting securities, other than the units sold in March 2000 and other
than up to 2,000,000 shares of Class A common stock (except upon conversion or
exercise of existing securities or under our employee stock plans), if it would
make these holders unable to convert any of their nonvoting securities. We have
filed an application with the FCC to permit Motient to relinquish control of us.
We may not be able to obtain FCC approval or it may take a long period of time
to obtain such approval and there may be conditions imposed in connection with
such approval that may be unfavorable to us. The inability to raise capital
opportunistically, or at all, could adversely affect our business plan.
Our substantial indebtedness could adversely affect our financial health which
could reduce the value of our securities.
As of June 30, 2000, we had total indebtedness of $261.3 million and
stockholders' equity of $762.2 million.
Our substantial indebtedness could have important consequences to you. For
example, it could:
. increase our vulnerability to general adverse economic and industry
conditions;
. limit our ability to fund future working capital, capital expenditures,
research and development costs and other general corporate requirements;
. require us to dedicate a substantial portion of our cash flow from
operations to payments on XM's indebtedness, thereby reducing the
availability of our cash flow to fund working capital, capital
expenditures, research and development efforts and other general corporate
purposes;
. limit our flexibility in planning for, or reacting to, changes in our
business and the industry in which we operate;
. place us at a competitive disadvantage compared to our competitors that
have less debt; and
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. limit, along with the financial and other restrictive covenants in our
indebtedness, among other things, our ability to borrow additional funds.
And, failing to comply with those covenants could result in an event of
default which, if not cured or waived, could have a material adverse effect
on us.
Our satellites could be damaged or destroyed during launch.
A significant percentage of satellites never become operational because of
launch failure, satellite destruction or damage during launch, and improper
orbital placement. Launch failure rates vary depending on the particular launch
vehicle and contractor. There is a limited track record for the specific launch
vehicle that will be used for the launch of our satellites, and even launch
vehicles with good track records experience some launch failures. Three of the
four satellite launches from the Sea Launch platform, our intended means of
launch, have been successful, including the most recent launch. If one or more
of our launches fail, we will suffer significant delay that will be very
damaging to our business, and we will incur significant additional costs
associated with the delay in revenue generating activities.
Premature failure of our satellites would damage our business.
If one of our satellites were to fail prematurely, it likely would affect the
quality of our service, substantially delay the commencement or interrupt the
continuation of our service and harm our business. This harm to our business
would continue until we either launched our ground spare satellite or had
additional satellites built or launched. A number of factors may decrease the
useful lives of our satellites to less than the expected approximately 15 years,
including
. defects in construction;
. faster than expected degradation of solar panels;
. loss of fuel on board;
. random failure of satellite components that are not protected by back-up
units;
. electrostatic storms; and
. collisions with other objects in space.
In addition, our network of terrestrial repeaters will communicate principally
with one satellite. If the satellite communicating with the repeater network
fails, we would have to repoint all of the repeaters to communicate with the
other satellite. This would result in an interruption of service that could last
from a few hours to several days and could harm our business.
Damage to our satellites will not be fully covered by insurance.
We intend to purchase standard launch and in-orbit insurance policies from
global space insurance underwriters. Any adverse change in insurance market
conditions may substantially increase the premiums we would have to pay for such
insurance. If the launch of either satellite is a total or partial failure, our
insurance may not fully cover our losses. We do not expect to buy insurance to
cover and would not have protection against business interruption, loss of
business or similar losses. Also, any insurance we obtain will likely contain
certain customary exclusions and material change conditions which would limit
our coverage.
Our system depends on development and integration of complex technologies in a
novel configuration that might not work.
Our system will involve new applications of existing technology and the
complex integration of different technologies, which may not work as planned. In
addition, we may not be able to successfully develop the new technologies
required for our planned XM Radio system.
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The use of terrestrial repeaters with a satellite system is untested and may
not provide the expected transmission quality. Our system will rely on a
network of terrestrial repeaters to retransmit satellite signals in areas where
blockages occur from high concentrations of tall buildings and other
obstructions. Satellites and terrestrial repeater networks have not been
integrated and used together on the scale we contemplate. We cannot be certain
that what we plan will work. Failure to integrate these technologies may result
in areas with impediments to satellite line of sight experiencing dead zones
where our signals cannot be received clearly or are of low quality.
Our business plan relies on the timely development of XM radios. Our service
is to be received by specially designed receivers that have not yet been
developed. They will require a unique integration of existing technologies,
which may take longer than expected.
Integration of components of our system may encounter technical difficulties.
We will have to integrate a number of sophisticated satellite and other wireless
technologies never integrated in the past before we can begin offering our
service. If the technological integration of the XM Radio system is not
completed in a timely and effective manner, our business will be harmed. We
cannot ultimately confirm the ability of the system to function until we have
actually deployed and tested a substantial portion of the system. Hardware or
software errors in space or on the ground may limit or delay the XM Radio
service and therefore reduce anticipated revenues.
Performance failures by our satellite and launch contractors would damage our
business, and we may not have adequate remedies.
We will rely on Hughes Space and Communications International, Inc., our
satellite manufacturer, to build and deliver our satellites in a timely manner.
If Hughes Space and Communications fails to deliver functioning satellites in a
timely manner, the introduction of our service would likely be delayed. If
Hughes Space and Communications were to deliver a satellite late or otherwise
default, the remedies we have will not adequately compensate us for any damage
caused to our business. Hughes Space and Communications will not be liable for
indirect or consequential damages, or lost revenues or profits, from late
delivery or other defaults. Also, our satellite contract entitles Hughes Space
and Communications to certain excusable delays for which we have no remedy. If
Hughes Space and Communications breaches its performance warranty, our only
remedy is not to pay Hughes in-orbit performance incentive payments of up to a
total of $12.5 million for each satellite. This remedy likely will not
adequately compensate us for the damage such breach would cause to our business.
We are depending on our satellite launch services provider to build our launch
vehicles and to launch the satellites. If the satellite launch services provider
fails to launch the satellites in a timely manner, we may be unable to meet our
business plan timetable. Neither Hughes Space and Communications nor the
satellite launch services provider will be liable to us for any delay in
delivery of the satellites up to 180 days caused by our scheduled launch
services provider. A delay of more than six months beyond the launch period for
either satellite may allow us to select an alternative launch system. This
remedy, however, likely would not adequately compensate us for the damage such
delay would cause to our business. Although we may be able to use another
satellite launch services provider, switching to another provider could involve
significant delay and a significant increase in cost.
Failure of third party vendors to supply radios to customers in a timely manner
would delay our revenues.
We will rely on third party manufacturers and their distributors to
manufacture and distribute XM radios. If one or more manufacturers fails to
develop XM radios for timely commercial sale, at an affordable price and with
mass market nationwide distribution, the launch of our service could be delayed,
our revenues could be less than expected and our business may suffer. We will
rely on Delphi-Delco, Sony, Motorola, Pioneer, Alpine, Mitsubishi, Audiovox and
Clarion to develop, manufacture and market XM radios for use in the car, and on
Sony and SHARP to develop, manufacture and market XM radios for home and
portable use. XM radios are not yet available, and our agreements with third
party vendors may not result in the timely production of enough affordable XM
radios to permit the widespread introduction of our service.
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Competition from Sirius Satellite Radio and traditional and emerging audio
entertainment providers could adversely affect our revenues.
In seeking market acceptance, we will encounter competition for both listeners
and advertising revenues from many sources, including
. Sirius Satellite Radio, the other satellite radio licensee;
. traditional and, when available, digital AM/FM radio;
. Internet based audio providers;
. direct broadcast satellite television audio service; and
. cable systems that carry audio service.
Sirius Satellite Radio (formerly named CD Radio) has announced that it has
arrangements for the construction, implementation and distribution of its
service and that it expects to begin receiving revenue from commercial
operations in the first quarter of 2001, which is slightly ahead of our
timetable. If Sirius Satellite Radio begins commercial operations significantly
before we do, it may gain a competitive advantage over us.
Unlike XM Radio, traditional AM/FM radio already has a well established market
for its services and generally offers free broadcast reception supported by
commercial advertising rather than by a subscription fee. Also, many radio
stations offer information programming of a local nature, such as traffic and
weather reports, which XM Radio is not expected to offer as effectively as local
radio, or at all. To the extent that consumers place a high value on these
features of traditional AM/FM radio, we will be at a competitive disadvantage.
Demand for our service may be insufficient for us to become profitable.
There is currently no mobile satellite digital audio radio service in
commercial operation in the United States. As a result, we cannot estimate with
any certainty the potential consumer demand for such a service or the degree to
which we will meet that demand. Among other things, consumer acceptance of XM
Radio will depend upon
. whether we obtain, produce and market high quality programming consistent
with consumers' tastes;
. the willingness of consumers to pay subscription fees to obtain satellite
radio service;
. the cost and availability of XM radios; and
. XM Radio's and our competitors' marketing and pricing strategy.
If demand for our service does not develop as expected, we may not be able to
generate enough revenues to become profitable. Although we have commissioned
market studies which attempt to measure market demand, these studies are based
upon statistical sampling methods and reflect responses to hypothetical
questions. Consequently, the data may not be accurate. We caution you not to
place undue reliance on this data.
Because we expect to derive a significant part of our revenues from
advertisers as well as subscription revenues, advertiser acceptance also will be
critical to the success of our business. Our ability to generate revenues from
advertisers will depend on several factors, including the level and type of
market penetration of our service, competition for advertising dollars from
other media, and changes in the advertising industry. FCC regulations limit our
ability to offer our radio service other than to subscribers on a pay-for-
service basis. These factors may reduce our potential revenue from advertising.
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Large payment obligations under our distribution agreement with General Motors
may prevent us from becoming profitable.
We have significant payment obligations under our long-term agreement with
General Motors for the installation of XM radios in General Motors vehicles and
the distribution of our service to the exclusion of other satellite radio
services. These payment obligations, which could total several hundred million
dollars over the life of the contract, may prevent us from becoming profitable.
A significant portion of these payments are fixed in amount, and we must pay
these amounts even if General Motors does not meet performance targets in the
contract. Although this agreement is subject to renegotiation if General Motors
does not achieve and maintain specified installation levels we cannot predict
the outcome of any such renegotiation.
Joint development agreement funding requirements could be significant.
Under our agreement with Sirius Radio, each party is obligated to fund one
half of the development cost of the technologies used to develop a unified
standard for satellite radios. Each party will be entitled to license fees or a
credit towards its one half of the cost based upon the validity, value, use,
importance and available alternatives of the technology it contributes. The
applicability or validity of Sirius Radio's claims in their former patent suit
against us could affect the determination of the amount of license fees or
credits relating to contributed or licensed technology under the agreement. The
amounts of these fees or credits will be determined over time by agreement of
the parties or by arbitration. We cannot predict at this time the amount of
license fees or contribution payable by XM or Sirius Radio or the size of the
credits to XM and Sirius Radio from the use of their technology. This may
require significant additional capital.
If we default under our joint development agreement, Sirius Satellite Radio's
patent infringement lawsuit against us could be refiled.
Under our agreement with Sirius Radio for the development of a unified
standard for satellite radios, the lawsuit Sirius Radio brought against us in
January 1999 alleging our infringement of three Sirius Radio patents was
withdrawn. We and Sirius Radio have agreed to cross-license our respective
intellectual property. However, if this agreement is terminated before the value
of the licenses has been determined due to our failure to perform a material
covenant or obligation, then this suit could be refiled.
Our business may be impaired by third party intellectual property rights.
Development of the XM Radio system will depend largely upon the intellectual
property that we will develop and license from third parties. If the
intellectual property that we may develop or use is not adequately protected,
others will be permitted to and may duplicate the XM Radio system or service
without liability. In addition, others may challenge, invalidate or circumvent
our intellectual property rights, patents or existing sublicenses. Some of the
know-how and technology we have developed and plan to develop will not be
covered by United States patents. Trade secret protection and contractual
agreements may not provide adequate protection if there is any unauthorized use
or disclosure. The loss of necessary technologies could require us to obtain
substitute technology of lower quality performance standards, at greater cost or
on a delayed basis, which could harm our business.
Other parties may have patents or pending patent applications which will later
mature into patents or inventions which may block our ability to operate our
system or license our technology. We may have to resort to litigation to enforce
our rights under license agreements or to determine the scope and validity of
other parties' proprietary rights in the subject matter of those licenses. This
may be expensive. Also, we may not succeed in any such litigation.
Third parties may bring suit against us for patent or other infringement of
intellectual property rights. Any such litigation could result in substantial
cost to, and diversion of effort by, our company, and adverse findings in any
proceeding could
. subject us to significant liabilities to third parties;
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. require us to seek licenses from third parties;
. block our ability to operate the XM Radio system or license its technology;
or
. otherwise adversely affect our ability to successfully develop and market
the XM Radio system.
Failure to comply with FCC requirements could damage our business.
As an owner of one of two FCC licenses to operate a commercial satellite radio
service in the United States, we are subject to FCC rules and regulations, and
the terms of our license, which require us to meet certain conditions such as
. milestone dates, including the requirement that we begin full operation of
our system by October 2003;
. interoperability of our system with the other licensed satellite radio
system;
. coordination of our satellite radio service with radio systems operating in
the same range of frequencies in neighboring countries; and
. coordination of our communications links to our satellites with other
systems that operate in the same frequency band.
Non-compliance by us with these conditions could result in fines, additional
license conditions, license revocation or other detrimental FCC actions. We may
also be subject to interference from adjacent radio frequency users if the FCC
does not adequately protect us against such interference in its rulemaking
process. In addition, the FCC has not yet issued rules permitting us to deploy
terrestrial repeaters to fill gaps in satellite coverage. Our plans to deploy
terrestrial repeaters may be impacted by the FCC's rules, when issued.
Some of our vendors are subject to United States export regulations and will
need approval from the State Department under technology export statutes and
regulations for the launch of our satellites. Failure to receive such approval
or any change in applicable law or policy may delay our satellite launch.
If the challenge to our FCC license is successful, our business could be harmed.
The award of our FCC license was challenged by one of the losing bidders in
the initial FCC licensing procedure. The challenge was denied by the FCC, but
the losing bidder filed with the FCC for reconsideration of the license award.
If this challenge is successful, the FCC could take a range of actions, any of
which could harm our ability to proceed with our planned satellite radio
service.
Our service network or other ground facilities could be damaged by natural
catastrophes.
Since our ground-based network will be attached to buildings, towers, and
other structures around the country, an earthquake, tornado, flood or other
catastrophic event anywhere in the United States could damage our network,
interrupt our service and harm our business in the affected area. We will not
have replacement or redundant facilities that can be used to assume the
functions of our repeater network or of our planned central production and
broadcast facility in the event of a catastrophic event. Any damage to our
repeater network would likely result in degradation of our service for some
subscribers and could result in complete loss of service in affected areas.
Damage to our central production and broadcast facility would restrict our
production of programming and require us to obtain programming from third
parties to continue our service.
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Consumers could steal our service.
Like all radio transmissions, the XM Radio signal will be subject to
interception. Pirates may be able to obtain or rebroadcast XM Radio without
paying the subscription fee. Although we plan to use encryption technology to
mitigate the risk of signal theft, such technology may not be adequate to
prevent theft of the XM Radio signal. If widespread, signal theft could harm our
business.
We need to obtain rights to programming, which could be more costly than
anticipated.
We must negotiate and enter into music programming royalty arrangements with
performing rights societies such as the American Society of Composers, Authors
and Publishers, Broadcast Music, Inc. and SESAC, Inc. Radio broadcasters
currently pay a combined total of approximately 4% of their revenues to these
performing rights societies. We expect to negotiate or establish license fees
through a rate court proceeding in the U.S. District Court for the Southern
District of New York, but such royalty arrangements may be more costly than
anticipated. We must also enter into royalty arrangements with the owners of the
sound recordings. Cable audio services currently pay a royalty rate of 6.5% of
gross subscriber revenue set by the Librarian of Congress. Although we believe
we can distinguish XM Radio sufficiently from the cable audio services in order
to negotiate a lower statutory rate, we may not be able to do so.
Rapid technological and industry changes could make our service obsolete.
The satellite industry and the audio entertainment industry are both
characterized by rapid technological change, frequent new product innovations,
changes in customer requirements and expectations, and evolving industry
standards. If we are unable to keep pace with these changes, our business may be
unsuccessful. Products using new technologies, or emerging industry standards,
could make our technologies obsolete. In addition, we may face unforeseen
problems when developing the XM Radio system which could harm our business.
Because we will depend on third parties to develop technologies used in key
elements of the XM Radio system, more advanced technologies which we may wish to
use may not be available to us on reasonable terms or in a timely manner.
Further, our competitors may have access to technologies not available to us,
which may enable them to produce entertainment products of greater interest to
consumers, or at a more competitive cost.
The market price of our stock could be hurt by substantial price and volume
fluctuations.
Historically, stock prices and trading volumes for emerging companies
fluctuate widely for a number of reasons, including some reasons which may be
unrelated to their businesses or results of operations. This market volatility
could depress the price of our common stock without regard to our operating
performance. In addition, our operating results may be below the expectations of
public market analysts and investors. If this were to occur, the market price of
our common stock would likely significantly decrease.
Our major stockholders own approximately 70.5% of our stock on a fully diluted
basis and effectively control us. Their interests may conflict with our
interests and yours.
As of September 15, 2000, our principal stockholders own approximately 70.5%
of our common stock on a fully diluted basis with total voting power of
approximately 81.4%. We have entered into material contracts and transactions
with our principal stockholders and their affiliates, and we may enter into
additional contracts in the future. The composition of our board of directors is
governed by a shareholders' agreement among our principal stockholders, which
grants them effective management control over us. These stockholders could use
their position as principal stockholders and their management control to cause
us to take actions that might not be in our interests or yours.
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The holders of our Series C preferred stock have certain veto rights.
Under the terms of our Series C preferred stock, the consent of holders of at
least 60% of the Series C preferred stock is required before we can take certain
actions, including issuances of additional securities above specified levels and
the incurrence of indebtedness under which we must meet financial covenants to
avoid default. These requirements could hamper our ability to raise additional
funds. The consent of holders of at least 60% of the Series C preferred stock
is also required for transactions with affiliates, other than on an arms'-length
basis, and for any merger or sale of assets of the Company. The approval for a
merger could make it difficult for a third party to acquire us and thus could
depress our stock price.
We need people with special skills to develop, launch and maintain our new
service. If we cannot find and keep these people, our business and stock price
could suffer.
We depend on the continued efforts of our executive officers and key employees
who have specialized technical knowledge regarding our satellite and radio
systems and business knowledge regarding the radio industry and subscription
services. If we lose the services of one or more of these employees, or fail to
attract qualified replacement personnel, it could harm our business and our
future prospects.
It may be hard for a third party to acquire us, and this could depress our stock
price.
We are a Delaware company with unissued preferred stock, the terms of which
can be set by our board of directors. Antitakeover provisions in Delaware law
and our ability to adopt a shareholder rights plan using our preferred stock
could make it difficult for a third party to acquire us, even if doing so would
benefit our stockholders. This could depress our stock price.
Future sales of our Class A common stock in the public market could lower its
stock price and impair our ability to raise funds in new stock offerings.
As of September 15, 2000, we had 34,026,909 shares of Class A common stock
outstanding, or 71,322,710 shares assuming conversion of all 16,557,262 shares
of our Class B common stock, 10,786,504 shares of our Series A convertible
preferred stock, 867,289 shares of our Series B convertible redeemable preferred
stock and 235,000 shares of our Series C convertible redeemable preferred stock
outstanding. Sales of a large number of shares could adversely affect the market
price of our Class A common stock, which could impair our ability to raise funds
in additional stock offerings.
Motient, which owns 200,000 shares of our Class A common stock and all
16,557,262 shares of our Class B common stock, is prohibited from selling any of
these shares, other than to affiliates, until October 8, 2000 or when we
commence commercial operations, whichever comes first. At that time, these
shares will be freely tradable, subject to the provisions of Rule 144 or Rule
701 under the Securities Act. Motient has experienced substantial appreciation
in the value of its shares relative to the price paid for them. In the event
Motient elects to sell its shares, the price of our stock could materially
decline, irrespective of our performance.
On July 28, 2000, we filed an amended registration statement under the
Securities Act covering all 5,300,000 shares of our Class A common stock subject
to outstanding stock options or reserved for issuance under our stock plans. The
registration statement became effective upon filing. Accordingly, shares
registered under the registration statement are, subject to vesting provisions
and Rule 144 volume limitations applicable to our affiliates, available for sale
in the open market, and in the case of our officers, directors and stockholders
who have entered into lock-up agreements, available for sale after lock-up
agreements expire. As of September 15, 2000, options to purchase 2,888,108
shares of our Class A common stock were outstanding.
The holders of approximately 16 million shares of our Class A common stock,
all of our Series A convertible preferred stock, all of our Class B common stock
and all of our Series C convertible redeemable preferred stock have the right to
request registration of their shares in future public offerings of our equity
securities. Sony Electronics owns a warrant that may in the future be
exercisable for up to 2% of our Class A common stock on a fully-diluted basis
depending on Sony's success in achieving certain sales targets. Sony will have
the right to request registration of these shares in future public offerings.
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Our forward-looking statements are speculative and may prove to be wrong.
Much of the information in this prospectus consists of forward-looking
statements based on our current expectations. These statements are inherently
predictive and speculative, and you must not assume that they will prove to be
correct. You can often identify these statements by forward-looking words such
as
. "may;"
. "will," "intend," "plan to;"
. "expect," "anticipate," "project, "believe," "estimate;"
. "continue" or similar words.
You should read such statements very carefully because they
. discuss our future plans or expectations;
. contain projections of our future financial condition or results of
operations; or
. state other forward-looking information.
When you consider such forward-looking statements, you should keep in mind the
risk factors above and the other cautionary statements in this prospectus
because they provide examples of risks, uncertainties and events that may cause
our actual results to differ materially from the expectations we describe in our
forward-looking statements.
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USE OF PROCEEDS
Unless otherwise described in a supplement to this prospectus used to offer
specific securities, the Company intends to use the net proceeds from the sale
of securities under this prospectus along with funds available from prior
offerings and from other financing sources for operational, promotional,
subscriber acquisition, joint development and manufacturing costs and expenses
and for working capital and general corporate purposes.
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DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the debt securities summarizes some
general terms that will apply to the debt securities. The particular terms of
the debt securities offered by any prospectus supplement and the extent, if any,
to which such general provisions may apply to the debt securities so offered
will be described in the prospectus supplement relating to such debt securities.
Accordingly, for a description of the terms of a particular issue of debt
securities, reference must be made to both the prospectus supplement relating
thereto and to the following description. The description is not complete, and
we refer you to the indenture that we filed with the SEC as an exhibit to the
registration statement of which this prospectus is a part.
General
The debt securities will be either our senior debt securities or our
subordinated debt securities. We will issue our debt securities under an
indenture between us and one or more commercial banks to be selected as trustees
(collectively, the "trustee"). The indenture may be supplemented by one or more
supplemental indentures. We refer to the indenture, together with any
supplemental indenture, as the "indenture" throughout the remainder of this
prospectus.
The indenture does not limit the amount of debt securities that we may issue.
The indenture provides that debt securities may be issued up to the principal
amount that we authorize from time to time. The senior debt securities will be
unsecured and will have the same rank as all of our other unsecured and
unsubordinated debt. The subordinated debt securities will be unsecured and
will be subordinated and junior to all senior indebtedness. The terms of the
indenture do not contain any covenants or other provisions designed to give
holders of any debt securities protection against changes in our operations,
financial condition or transactions involving us, but those provisions may be
included in the documents that include the specific terms of the debt
securities.
We may issue the debt securities in one or more separate series of senior
debt securities and subordinated debt securities. The prospectus supplement
relating to the particular series of debt securities being offered will specify
the particular amounts, prices and terms of those debt securities. These terms
may include:
. the title of the debt securities;
. any limit upon the aggregate principal amount of the debt securities;
. if other than United States dollars, the currency or currencies, including
the euro and other composite currencies, in which payments on the debt
securities will be payable and whether the holder may elect payment to be
made in a different currency;
. the date or dates when payments on the principal must be made or the method
of determining that date or dates;
. interest rates, and the dates from which interest, if any, will accrue, and
the dates when interest is payable and the maturity;
. the right, if any, to extend the interest payment periods and the duration
of the extensions;
. the places where payments may be made and the manner of payments;
. any mandatory or optional redemption provisions;
. subordination provisions;
. the denominations in which debt securities will be issued;
. the terms applicable to any debt securities issued at a discount from their
stated principal amount;
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. the currency or currencies of payment of principal or interest; and the
period, if any, during which a holder may elect to pay in a currency other
than the currency in which the debt securities are denominated;
. if the amount of payments of principal or interest is to be determined by
reference to an index or formula, or based on a coin or currency other than
that in which the debt securities are stated to be payable, the manner in
which these amounts are determined and the calculation agent, if any;
. whether the debt securities will be issued in fully registered form without
coupons or in bearer form, with or without coupons, or any combination of
these, and whether they will be issued in the form of one or more global
securities in temporary or definitive form;
. whether and on what terms we will pay additional amounts to holders of the
debt securities that are not United States persons in respect of any tax,
assessment or governmental charge withheld or deducted and, if so, whether
and on what terms we will have the option to redeem the debt securities
rather than pay the additional amounts;
. the certificates or forms required for the issuance of debt securities in
definitive form;
. the trustees, depositaries, authenticating or paying agents, transfer
agents or registrars of the debt securities;
. any deletions of, or changes or additions to, the events of default or
covenants;
. the terms, if any, of any guarantee of the payment of principal, premium,
and interest with respect to debt securities of the series and any
corresponding changes to the indenture as then in effect;
. conversion or exchange provisions, if any, including conversion or exchange
prices or rates and adjustments to those prices and rates; and
. any other specific terms of the debt securities.
If any debt securities are sold for any foreign currency or currency unit or
if any payments on the debt securities are payable in any foreign currency or
currency unit, the prospectus supplement will contain any restrictions,
elections, tax consequences, specific terms and other information with respect
to the debt securities and the foreign currency or currency unit.
Some of the debt securities may be issued as original issue discount debt
securities. Original issue discount securities may bear no interest or bear
interest at below-market rates and will be sold at a discount below their stated
principal amount and may bear no or below market interest. The prospectus
supplement will also contain any special tax, accounting or other information
relating to original issue discount securities or other kinds of debt securities
that may be offered, including debt securities linked to an index or payable in
currencies other than United States dollars.
Registrar and Paying Agent
The debt securities may be presented for registration of transfer or for
exchange at the corporate trust office of the security registrar or at any other
office or agency that we maintain for those purposes. In addition, the debt
securities may be presented for payment of principal, interest and any premium
at the office of the paying agent or at any office or agency that we maintain
for those purposes.
Global Securities
We may issue the debt securities of a series in whole or in part in the form
of one or more global certificates that will be deposited with a depositary we
will identify in a prospectus supplement. We may issue global debt
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securities in either registered or unregistered form and in either temporary or
definitive form. We will describe the specific terms of the depositary
arrangement with respect to any series of debt securities in the prospectus
supplement.
Conversion or Exchange Rights
Debt securities may be convertible into or exchangeable for shares of our
equity securities or equity securities of our subsidiaries or affiliates. The
terms and conditions of conversion or exchange will be stated in the applicable
prospectus supplement. The terms will include, among others, the following:
. the conversion or exchange price;
. the conversion or exchange period;
. provisions regarding the convertibility or exchangeability of the debt
securities, including who may convert or exchange;
. events requiring adjustment to the conversion or exchange price;
. provisions affecting conversion or exchange in the event of our redemption
of the debt securities; and
. any anti-dilution provisions, if applicable.
Registered Global Securities
Unless and until it is exchanged in whole or in part for debt securities in
definitive registered form, a registered global security may not be transferred
except as a whole:
. by the depositary for that registered global security to its nominee;
. by a nominee of the depositary to the depositary or another nominee of the
depositary; or
. by the depositary or its nominee to a successor of the depositary or a
nominee of the successor.
The prospectus supplement relating to a series of debt securities will
describe the specific terms of the depositary arrangement involving any portion
of the series represented by a registered global security.
We anticipate that the following provisions will apply to all depositary
arrangements for debt securities:
. ownership of beneficial interests in a registered global security will be
limited to persons that have accounts with the depositary for that
registered global security, these persons being referred to as
"participants", or persons that may hold interests through participants;
. upon the issuance of a registered global security, the depositary for the
registered global security will credit, on its book-entry registration and
transfer system, the participants' accounts with the respective principal
amounts of the debt securities represented by the registered global
security beneficially owned by the participants;
. any dealers, underwriters or agents participating in the distribution of
the debt securities will designate the accounts to be credited; and
. ownership of a beneficial interest in that registered global security will
be shown on, and the transfer of that
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ownership interest will be effected only through, records maintained by the
depositary for that registered global security for interests of
participants and on the records of participants for interests of persons
holding through participants.
The laws of some states may require that specified purchasers of securities
take physical delivery of the securities in definitive form. These laws may
limit the ability of those persons to own, transfer or pledge beneficial
interests in registered global securities.
So long as the depositary for a registered global security, or its nominee,
is the registered owner of that registered global security, the depositary or
that nominee will be considered the sole owner or holder of the debt securities
represented by the registered global security for all purposes under the
indenture. Except as stated below, owners of beneficial interests in a
registered global security:
. will not be entitled to have the debt securities represented by a
registered global security registered in their names;
. will not receive or be entitled to receive physical delivery of the debt
securities in definitive form; and
. will not be considered the owners or holders of the debt securities under
the indenture.
Accordingly, each person owning a beneficial interest in a registered global
security must rely on the procedures of the depositary for the registered global
security and, if the person is not a participant, on the procedures of a
participant through which the person owns its interest, to exercise any rights
of a holder under the indenture.
We understand that under existing industry practices, if we request any
action of holders or if an owner of a beneficial interest in a registered global
security desires to give or take any action that a holder is entitled to give or
take under the indenture, the depositary for the registered global security
would authorize the participants holding the relevant beneficial interests to
give or take the action, and the participants would authorize beneficial owners
owning through the participants to give or take the action or would otherwise
act upon the instructions of beneficial owners holding through them.
We will make payments of principal and premium, if any, and interest, if any,
on debt securities represented by a registered global security registered in the
name of a depositary or its nominee to the depositary or its nominee as the
registered owners of the registered global security. None of us, the trustee or
any other of our agents or agents of the trustee will be responsible or liable
for any aspect of the records relating to, or payments made on account of,
beneficial ownership interests in the registered global security or for
maintaining, supervising or reviewing any records relating to the beneficial
ownership interests.
We expect that the depositary for any debt securities represented by a
registered global security, upon receipt of any payments of principal and
premium, if any, and interest, if any, in respect of the registered global
security, will immediately credit participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the registered
global security as shown on the records of the depositary. We also expect that
standing customer instructions and customary practices will govern payments by
participants to owners of beneficial interests in the registered global security
held through the participants, as is now the case with the securities held for
the accounts of customers in bearer form or registered in "street name." We
also expect that any of these payments will be the responsibility of the
participants.
If the depositary for any debt securities represented by a registered global
security is at any time unwilling or unable to continue as depositary or stops
being a clearing agency registered under the Exchange Act, we will appoint an
eligible successor depositary. If we fail to appoint an eligible successor
depositary within 90 days, we will issue the debt securities in definitive form
in exchange for the registered global security. In addition, we may at any time
and in our sole discretion decide not to have any of the debt securities of a
series represented by one or more registered global securities. In that event,
we will issue debt securities of the series in a definitive form in exchange for
all of the registered global securities representing the debt securities. The
trustee will register any debt securities
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issued in definitive form in exchange for a registered global security in the
name or names as the depositary, based upon instructions from its participants,
will instruct the trustee.
We may also issue bearer debt securities of a series in the form of one or
more global securities, referred to as "bearer global securities." We will
deposit these securities with a common depositary for Euroclear System and
Clearstream Banking, or with a nominee for the depositary identified in the
prospectus supplement relating to the series. The prospectus supplement
relating to a series of debt securities represented by a bearer global security
will describe the applicable terms and procedures. These will include the
specific terms of the depositary arrangement and any specific procedures for the
issuance of debt securities in definitive form in exchange for a bearer global
security, in proportion to the series represented by a bearer global security.
Events of Default
Unless otherwise provided for in the prospectus supplement, the term "event
of default," when used in the indenture means any of the following:
. failure to pay interest for 30 days after the date payment is due and
payable; however, if we extend an interest payment period under the terms
of the debt securities, the extension will not be a failure to pay
interest;
. failure to pay principal or premium, if any, on any debt security when due,
either at maturity, upon any redemption, by declaration or otherwise;
. failure to make sinking fund payments, if any, when due;
. failure to perform other covenants for 60 days after notice that
performance was required;
. events in bankruptcy, insolvency or reorganization of our company; or
. any other event of default provided in the applicable resolution of our
board of directors or the supplemental indenture under which we issue a
series of debt securities.
An event of default for a particular series of debt securities does not
necessarily constitute an event of default for any other series of debt
securities issued under the indenture. If an event of default relating to the
payment of interest, principal or any sinking fund installment involving any
series of debt securities has occurred and is continuing, the trustee or the
holders of not less than 25% in aggregate principal amount of the debt
securities of each affected series may declare the entire principal of all the
debt securities of that series to be due and payable immediately.
If an event of default relating to the performance of other covenants occurs
and is continuing for a period of 60 days after notice of that event of default,
or if any other event of default occurs and is continuing involving all of the
series of senior debt securities, then the trustee or the holders of not less
than 25% in aggregate principal amount of all of the series of senior debt
securities may declare the entire principal amount of all of the series of
senior debt securities due and payable immediately.
Similarly, if an event of default relating to the performance of other
covenants occurs and is continuing for a period of 60 days after notice, or if
any other event of default occurs and is continuing involving all of the series
of subordinated debt securities, then the trustee or the holders of not less
than 25% in aggregate principal amount of all of the series of subordinated debt
securities may declare the entire principal amount of all of the series of
subordinated debt securities due and payable immediately.
If, however, the event of default relating to the performance of other
covenants or any other event of default that has occurred and is continuing is
for less than all of the series of senior debt securities or subordinated debt
securities, then, the trustee or the holders of not less than 25% in aggregate
principal amount of each affected series
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of the senior debt securities or the subordinated debt securities, as the case
may be, may declare the entire principal amount of all debt securities of that
affected series due and payable immediately. The holders of not less than a
majority, or any applicable supermajority, in aggregate principal amount of the
debt securities of a series may, after satisfying conditions, rescind and annul
any of the above-described declarations and consequences involving the series.
If an event of default relating to events in bankruptcy, insolvency or
reorganization occurs and is continuing, then the principal amount of all of the
debt securities outstanding, and any accrued interest, will automatically become
due and payable immediately, without any declaration or other act by the trustee
or any holder.
The indenture imposes limitations on suits brought by holders of debt
securities against us. Except for actions for payment of overdue principal or
interest, no holder of debt securities of any series may institute any action
against us under the indenture unless:
. the holder has previously given to the trustee written notice of default
and continuance of that default;
. the holders of at least 25% in principal amount of the outstanding debt
securities of the affected series have requested that the trustee institute
the action;
. the requesting holders have offered the trustee reasonable indemnity for
expenses and liabilities that may be incurred by bringing the action;
. the trustee has not instituted the action within 60 days of the request;
and
. the trustee has not received inconsistent direction by the holders of a
majority in principal amount of the outstanding debt securities of the
series.
We will be required to file annually with the trustee a certificate, signed
by an officer of our company, stating whether or not the officer knows of any
default by us in the performance, observance or fulfillment of any condition or
covenant of the indenture.
Discharge, Defeasance and Covenant Defeasance
We can discharge or defease our obligations under the indenture as stated
below or as provided in the prospectus supplement.
Unless otherwise provided in the applicable prospectus supplement, we may
discharge obligations to holders of any series of debt securities that have not
already been delivered to the trustee for cancellation and that have either
become due and payable or are by their terms to become due and payable, or are
scheduled for redemption, within one year. We may effect a discharge by
irrevocably depositing with the trustee cash or United States government
obligations, as trust funds, in an amount certified to be enough to pay when
due, whether at maturity, upon redemption or otherwise, the principal of,
premium, if any, and interest on the debt securities and any mandatory sinking
fund payments.
Unless otherwise provided in the applicable prospectus supplement, we may
also discharge any and all of our obligations to holders of any series of debt
securities at any time, which we refer to as "defeasance." We may also be
released from the obligations imposed by any covenants of any outstanding series
of debt securities and provisions of the indenture, and we may omit to comply
with those covenants without creating an event of default under the trust
declaration, which we refer to as "covenant defeasance." We may effect
defeasance and covenant defeasance only if, among other things:
. we irrevocably deposit with the trustee cash or United States government
obligations, as trust funds, in an amount certified to be enough to pay at
maturity, or upon redemption, the principal, premium, if any, and interest
on all outstanding debt securities of the series;
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. we deliver to the trustee an opinion of counsel from a nationally
recognized law firm to the effect that (a) in the case of covenant
defeasance, the holders of the series of debt securities will not recognize
income, gain or loss for United States federal income tax purposes as a
result of the defeasance, and will be subject to tax in the same manner and
at the same times as if no covenant defeasance had occurred and (b) in the
case of defeasance, either we have received from, or there has been
published by, the Internal Revenue Service a ruling or there has been a
change in applicable United States federal income tax law, and based on
that ruling or change, the holders of the series of debt securities will
not recognize income, gain or loss for United States federal income tax
purposes as a result of the defeasance and will be subject to tax in the
same manner as if no defeasance had occurred; and
. in the case of subordinated debt securities, no event or condition will
exist that, based on the subordination provisions applicable to the series,
would prevent us from making payments of principal of, premium, if any, and
interest on any of the applicable subordinated debt securities at the date
of the irrevocable deposit referred to above or at any time during the
period ending on the 91st day after the deposit date.
Although we may discharge or decrease our obligations under the indenture as
described in the two preceding paragraphs, we may not avoid, among other things,
our duty to register the transfer or exchange of any series of debt securities,
to replace any temporary, mutilated, destroyed, lost or stolen series of debt
securities or to maintain an office or agency in respect of any series of debt
securities.
Modification of the Indenture
Except as provided in the prospectus supplement, the indenture provides that
we and the trustee may enter into supplemental indentures without the consent of
the holders of debt securities to:
. secure any debt securities;
. evidence the assumption by a successor corporation of our obligations and
the conversion of any debt securities into the capital stock of that
successor corporation, if the terms of those debt securities so provide;
. add covenants for the protection of the holders of debt securities;
. cure any ambiguity or correct any inconsistency in the indenture;
. establish the forms or terms of debt securities of any series; and
. evidence and provide for the acceptance of appointment by a successor
trustee.
The indenture also provides that we and the trustee may, with the consent of
the holders of not less than a majority in aggregate principal amount of debt
securities of all series of senior debt securities or of subordinated debt
securities then outstanding and affected, voting as one class, add any
provisions to, or change in any manner, eliminate or modify in any way the
provisions of, the indenture or modify in any manner the rights of the holders
of the debt securities. We and the trustee may not, however, without the
consent of the holder of each outstanding debt security affected:
. extend the final maturity of any debt security;
. reduce the principal amount or premium, if any;
. reduce the rate or extend the time of payment of interest;
. reduce any amount payable on redemption;
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. change the currency in which the principal, unless otherwise provided for a
series, premium, if any, or interest is payable;
. reduce the amount of the principal of any debt security issued with an
original issue discount that is payable upon acceleration or provable in
bankruptcy;
. impair the right to institute suit for the enforcement of any payment on
any debt security when due; or
. reduce the percentage of holders of debt securities of any series whose
consent is required for any modification of the indenture.
Concerning the Trustee
The indenture provides that there may be more than one trustee under the
indenture, each for one or more series of debt securities. If there are
different trustees for different series of debt securities, each trustee will be
a trustee of a trust under the indenture separate and apart from the trust
administered by any other trustee under the indenture. Except as otherwise
indicated in this prospectus or any prospectus supplement, any action permitted
to be taken by a trustee may be taken by that trustee only on the one or more
series of debt securities for which it is the trustee under the indenture. Any
trustee under the indenture may resign or be removed from one or more series of
debt securities. All payments of principal of, premium, if any, and interest
on, and all registration, transfer, exchange, authentication and delivery of,
the debt securities of a series will be effected by the trustee for that series
at an office designated by the trustee of that series in New York, New York.
If the trustee becomes a creditor of our company, the indenture places
limitations on the right of the trustee to obtain payment of claims or to
realize on property received in respect of any such claim as security or
otherwise. The trustee may engage in other transactions. If it acquires any
conflicting interest relating to any duties concerning the debt securities,
however, it must eliminate the conflict or resign as trustee.
The holders of a majority in aggregate principal amount of any series of
debt securities then outstanding will have the right to direct the time, method
and place of conducting any proceeding for exercising any remedy available to
the trustee concerning the applicable series of debt securities, so long as the
direction:
. would not conflict with any rule of law or with the indenture;
. would not be unduly prejudicial to the rights of another holder of the debt
securities; and
. would not involve any trustee in personal liability.
The indenture provides that if an event of default occurs, is not cured and
is known to any trustee, the trustee must use the same degree of care as a
prudent person would use in the conduct of his or her own affairs in the
exercise of the trust's power. The trustee will be under no obligation to
exercise any of its rights or powers under the indenture at the request of any
of the holders of the debt securities, unless they have offered to the trustee
security and indemnity satisfactory to the trustee.
No Individual Liability of Incorporators, Shareholders, Officers or Directors
The indenture provides that no incorporator and no past, present or future
shareholder, officer or director of our company or any successor corporation in
those capacities will have any individual liability for any of our obligations,
covenants or agreements under the debt securities or the indenture.
Governing Law
The indenture and the debt securities will be governed by, and construed in
accordance with, the laws of the State of New York.
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DESCRIPTION OF COMMON STOCK
Our authorized capital stock consists of 180,000,000 shares of Class A common
stock, $.01 par value per share, 30,000,000 shares of Class B common stock, $.01
par value per share, 30,000,000 shares of Class C common stock, $.01 par value
per share, 15,000,000 shares of Series A convertible preferred stock, $.01 par
value per share, 3,000,000 shares of 8.25% Series B convertible redeemable
preferred stock, $.01 par value per share and 250,000 shares of 8.25% Series C
convertible redeemable preferred stock, $.01 par value per share. The following
summary description of our capital stock is subject to our Restated Certificate
of Incorporation and Restated Bylaws and the Delaware General Corporation Law.
Common Stock
As of September 15, 2000, there were 34,026,909 shares of Class A common stock
outstanding and 16,557,262 shares of Class B common stock outstanding.
Class A Common Stock
Holders of our Class A common stock are entitled
. to one vote for each share held on any matter submitted for stockholder
approval;
. to receive on a pro rata basis, dividends and distributions, if any, as the
board of directors may declare out of legally available funds; and
. upon the liquidation, dissolution, winding up or insolvency of the company,
to share ratably in the net assets of our company available after we pay
our liabilities and any preferential amounts to which holders of the Series
A convertible preferred stock may be entitled.
Holders of our Class A common stock have no preemptive, redemption or sinking
fund rights.
Class B Common Stock
Our Class B common stock has the same rights as our Class A common stock
except that our Class B common stock is entitled to three votes for each share.
Shares of our Class B common stock are convertible into shares of Class A common
stock on a one-for-one basis, subject to antidilution protection if we effect a
recapitalization.
Class C Common Stock
Holders of our Class C common stock are entitled to the same rights as holders
of Class A common stock except that the holders of our Class C common stock are
not entitled to vote on any matter submitted for stockholder approval.
Transfer Agent and Registrar
The transfer agent and registrar for the Class A common stock is BankBoston,
N.A.
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DESCRIPTION OF PREFERRED STOCK
The Company is authorized to issue 60,000,000 shares of Preferred Stock,
par value $.01 per share (the "Preferred Stock"). As of September 15, 2000,
11,888,793 shares of Preferred Stock were issued and outstanding, consisting of
10,786,504 shares of Series A convertible preferred stock, 867,289 shares of
8.25% Series B convertible redeemable preferred stock, and 235,000 shares of
8.25% Series C convertible redeemable preferred stock.
Under the Company's certificate of incorporation, shares of Preferred Stock
may be issued from time to time, in one or more series as authorized by the
Board of Directors. Prior to issuance of shares of each series, the Board of
Directors may file a certificate of designations with Secretary of State of the
State of Delaware, fixing for each such series the designations, powers,
preferences and rights of the shares of such series and the qualifications,
limitations or restrictions thereon, including, but not limited to, dividend
rights, dividend rate or rates, conversion rights, voting rights, rights and
terms of redemption (including sinking fund provisions), the redemption price or
prices, and the liquidation preferences. The Board of Directors could authorize
the issuance of shares of Preferred Stock with terms and conditions which could
have the effect of discouraging a takeover or other transaction which holders of
some, or a majority, of such shares might believe to be in their best interests
or in which holders of some, or a majority, of such shares might receive a
premium for their shares over the then market price of such shares.
The following description of the Preferred Stock sets forth certain general
terms and provisions of the Preferred Stock to which any supplement to this
prospectus may relate. The statements below describing the Preferred Stock are
in all respects subject to and qualified in their entirety by reference to the
applicable provisions of the Company's certificate of incorporation and bylaws
and the Delaware General Corporation Law.
General
Subject to limitations prescribed by Delaware law and the Company's
certificate of incorporation and bylaws, the Board of Directors is authorized to
fix the number of shares constituting each series of Preferred Stock and the
designations and powers, preferences and relative, participating, optional or
other special rights and qualifications, limitations or restrictions thereof,
including such provisions as may be desired concerning voting, redemption,
dividends, dissolution or the distribution of assets, conversion or exchange,
and such other subjects or matters as may be fixed by resolution of the Board of
Directors or duly authorized committee thereof. The Preferred Stock will, when
issued, be fully paid and nonassessable and will not have, or be subject to, any
preemptive or similar rights.
The prospectus supplement relating to the series of Preferred Stock offered
thereby will describe the specific terms of such securities, including:
(1) the title and stated value of such Preferred Stock;
(2) the number of shares of such Preferred Stock offered, the liquidation
preference per share and the offering price of such Preferred Stock;
(3) the dividend rate(s), period(s) and/or payment date(s) or method(s) of
calculation thereof applicable to such Preferred Stock;
(4) whether dividends shall be cumulative or non-cumulative and, if
cumulative, the date from which dividends on such Preferred Stock shall
accumulate;
(5) the procedures for any auction and remarketing, if any, for such
Preferred Stock;
(6) the provisions for a sinking fund, if any, for such Preferred Stock;
(7) the provisions for redemption, if applicable, of such Preferred Stock;
(8) any listing of such Preferred Stock on any securities exchange;
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(9) the terms and conditions, if applicable, upon which such Preferred Stock
will be convertible into Common Stock of the Company, including the
conversion price (or manner of calculation thereof) and conversion
period;
(10) a discussion of federal income tax considerations applicable to such
Preferred Stock;
(11) the rank of such Preferred Stock with respect to dividend rights and
rights upon liquidation, dissolution or winding up of the affairs of the
Company;
(12) the voting rights, if any, of holders of such Preferred Stock;
(13) any limitations on issuance of any series of Preferred Stock ranking
senior to or on a parity with such series of Preferred Stock as to
dividend rights and rights upon liquidation, dissolution or winding up of
the affairs of the Company; and
(14) any other specific terms, preferences, rights, limitations or
restrictions of such Preferred Stock.
Transfer Agent
The registrar and transfer agent for a particular series of Preferred Stock
will be set forth in the applicable prospectus supplement.
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DESCRIPTION OF DEPOSITARY SHARES
General
The Company may issue receipts for depositary shares, each of which
depositary receipts will represent a fractional interest of a share of a
particular series of Preferred Stock, as specified in the applicable prospectus
supplement. Shares of Preferred Stock of each series represented by depositary
shares will be deposited under a separate Deposit Agreement among the Company,
the depositary named therein and the holders from time to time of the depositary
receipts. Subject to the terms of the Deposit Agreement, each owner of a
depositary receipt will be entitled, in proportion to the fractional interest of
a share of a particular series of Preferred Stock represented by the depositary
shares evidenced by such depositary receipt, to all the rights and preferences
of the Preferred Stock represented by such depositary shares (including
dividend, voting, conversion, redemption and liquidation rights).
The depositary shares will be evidenced by depositary receipts issued
pursuant to the applicable Deposit Agreement. Immediately following the issuance
and delivery of the Preferred Stock by the Company to the preferred stock
depositary, the Company will cause the preferred stock depositary to issue, on
behalf of the Company, the depositary receipts. Copies of the applicable form of
Deposit Agreement and depositary receipt may be obtained from the Company upon
request, and the statements made hereunder relating to the Deposit Agreement and
the depositary receipts to be issued thereunder are summaries of certain
provisions thereof and do not purport to be complete and are subject to, and
qualified in their entirety by reference to, all of the provisions of the
applicable Deposit Agreement and related depositary receipts.
Dividends and Other Distributions
The preferred stock depositary will distribute all cash dividends or other
cash distributions received in respect of the Preferred Stock to the record
holders of depositary receipts evidencing the related depositary shares in
proportion to the number of such depositary receipts owned by such holders,
subject to certain obligations of holders to file proofs, certificates and other
information and to pay certain charges and expenses to the preferred stock
depositary.
In the event of a distribution other than in cash, the preferred stock
depositary will distribute property received by it to the record holders of
depositary receipts entitled thereto, subject to certain obligations of holders
to file proofs, certificates and other information and to pay certain charges
and expenses to the preferred stock depositary, unless the preferred stock
depositary determines that it is not feasible to make such distribution, in
which case the preferred stock depositary may, with the approval of the Company,
sell such property and distribute the net proceeds from such sale to such
holders.
No distribution will be made in respect of any depositary share to the
extent that it represents any Preferred Stock converted into other securities.
Withdrawal of Stock
Upon surrender of the depositary receipts at the corporate trust office of
the preferred stock depositary (unless the related depositary shares have
previously been called for redemption or converted into other securities), the
holders thereof will be entitled to delivery at such office, to or upon such
holder's order, of the number of whole or fractional shares of the Preferred
Stock and any money or other property represented by the depositary shares
evidenced by such depositary receipts. Holders of depositary receipts will be
entitled to receive whole or fractional shares of the related Preferred Stock on
the basis of the proportion of Preferred Stock represented by each depositary
share as specified in the applicable prospectus supplement, but holders of such
shares of Preferred Stock will not thereafter be entitled to receive depositary
shares therefor. If the depositary receipts delivered by the holder evidence a
number of depositary shares in excess of the number of depositary shares
representing the number of shares of Preferred Stock to be withdrawn, the
preferred stock depositary will deliver to such holder at the same time a new
depositary receipt evidencing such excess number of depositary shares.
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Redemption of Depositary Shares
Whenever the Company redeems shares of Preferred Stock held by the
preferred stock depositary, the preferred stock depositary will redeem as of the
same redemption date the number of depositary shares representing shares of the
Preferred Stock so redeemed, provided the Company shall have paid in full to the
preferred stock depositary the redemption price of the Preferred Stock to be
redeemed plus an amount equal to any accrued and unpaid dividends thereon to the
date fixed for redemption. The redemption price per depositary share will be
equal to the corresponding proportion of the redemption price and any other
amounts per share payable with respect to the Preferred Stock. If fewer than all
the depositary shares are to be redeemed, the depositary shares to be redeemed
will be selected pro rata (as nearly as may be practicable without creating
fractional depositary shares) or by any other equitable method determined by the
Company.
From and after the date fixed for redemption, all dividends in respect of
the shares of Preferred Stock so called for redemption will cease to accrue, the
depositary shares so called for redemption will no longer be deemed to be
outstanding and all rights of the holders of the depositary receipts evidencing
the depositary shares so called for redemption will cease, except the right to
receive any moneys payable upon such redemption and any money or other property
to which the holders of such depositary receipts were entitled upon such
redemption and surrender thereof to the preferred stock depositary.
Voting of the Preferred Stock
Upon receipt of notice of any meeting at which the holders of the Preferred
Stock are entitled to vote, the preferred stock depositary will mail the
information contained in such notice of meeting to the record holders of the
depositary receipts evidencing the depositary shares which represent such
Preferred Stock. Each record holder of depositary receipts evidencing
depositary shares on the record date (which will be the same date as the record
date for the Preferred Stock) will be entitled to instruct the preferred stock
depositary as to the exercise of the voting rights pertaining to the amount of
Preferred Stock represented by such holder's depositary shares. The preferred
stock depositary will vote the amount of Preferred Stock represented by such
depositary shares in accordance with such instructions, and the Company will
agree to take all reasonable action which may be deemed necessary by the
preferred stock depositary in order to enable the preferred stock depositary to
do so. The preferred stock depositary will abstain from voting the amount of
Preferred Stock represented by such depositary shares to the extent it does not
receive specific instructions from the holders of depositary receipts evidencing
such depositary shares. The preferred stock depositary shall not be responsible
for any failure to carry out any instruction to vote, or for the manner or
effect of any such vote made, as long as any such action or non-action is in
good faith and does not result from negligence or willful misconduct of the
preferred stock depositary.
Liquidation Preference
In the event of the liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary, the holders of each depositary receipt will be
entitled to the fraction of the liquidation preference accorded each share of
Preferred Stock represented by the depositary shares evidenced by such
depositary receipt, as set forth in the applicable prospectus supplement.
Conversion of Preferred Stock
The depositary shares, as such, are not convertible into Common Stock or
any other securities or property of the Company. Nevertheless, if so specified
in the applicable prospectus supplement relating to an offering of depositary
shares, the depositary receipts may be surrendered by holders thereof to the
preferred stock depositary with written instructions to the preferred stock
depositary to instruct the Company to cause conversion of the Preferred Stock
represented by the depositary shares evidenced by such depositary receipts into
whole shares of Common Stock, other shares of Preferred Stock of the Company or
other shares of stock, and the Company has agreed that upon receipt of such
instructions and any amounts payable in respect thereof, it will cause the
conversion thereof utilizing the same procedures as those provided for delivery
of Preferred Stock to effect such conversion. If the depositary shares evidenced
by a depositary receipt are to be converted in part only, a new depositary
receipt or receipts will be issued for any depositary shares not to be
converted. No fractional shares of Common Stock will be issued upon conversion,
and if such conversion would result in a fractional share being issued, an
amount will be
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paid in cash by the Company equal to the value of the fractional interest based
upon the closing price of the Common Stock on the last business day prior to the
conversion.
Amendment and Termination of Deposit Agreement
The form of depositary receipt evidencing the depositary shares which
represent the Preferred Stock and any provision of the Deposit Agreement may at
any time be amended by agreement between the Company and the preferred stock
depositary. However, any amendment that materially and adversely alters the
rights of the holders of depositary receipts or that would be materially and
adversely inconsistent with the rights granted to the holders of the related
Preferred Stock will not be effective unless such amendment has been approved by
the existing holders of at least 66 2/3% of the depositary shares evidenced by
the depositary receipts then outstanding. No amendment shall impair the right,
subject to certain exceptions in the Depositary Agreement, of any holder of
depositary receipts to surrender any depositary receipt with instructions to
deliver to the holder the related Preferred Stock and all money and other
property, if any, represented thereby, except in order to comply with law.
Every holder of an outstanding depositary receipt at the time any such amendment
becomes effective shall be deemed, by continuing to hold such receipt, to
consent and agree to such amendment and to be bound by the Deposit Agreement as
amended thereby.
The Deposit Agreement may be terminated by the Company upon not less than
30 days' prior written notice to the preferred stock depositary if a majority of
each series of Preferred Stock affected by such termination consents to such
termination, whereupon the preferred stock depositary shall deliver or make
available to each holder of depositary receipts, upon surrender of the
depositary receipts held by such holder, such number of whole or fractional
shares of Preferred Stock as are represented by the depositary shares evidenced
by such depositary receipts together with any other property held by the
preferred stock depositary with respect to such depositary receipts. In
addition, the Deposit Agreement will automatically terminate if (i) all
outstanding depositary shares shall have been redeemed, (ii) there shall have
been a final distribution in respect of the related Preferred Stock in
connection with any liquidation, dissolution or winding up of the Company and
such distribution shall have been distributed to the holders of depositary
receipts evidencing the depositary shares representing such Preferred Stock or
(iii) each share of the related Preferred Stock shall have been converted into
securities of the Company not so represented by depositary shares.
Charges of Preferred Stock Depositary
The Company will pay all transfer and other taxes and governmental charges
arising solely from the existence of the Deposit Agreement. In addition, the
Company will pay the fees and expenses of the preferred stock depositary in
connection with the performance of its duties under the Deposit Agreement.
However, holders of depositary receipts will pay the fees and expenses of the
preferred stock depositary for any duties requested by such holders to be
performed which are outside of those expressly provided for in the Deposit
Agreement.
Resignation and Removal of Depositary
The preferred stock depositary may resign at any time by delivering to the
Company notice of its election to do so, and the Company may at any time remove
the preferred stock depositary, any such resignation or removal to take effect
upon the appointment of a successor preferred stock depositary. A successor
preferred stock depositary must be appointed within 60 days after delivery of
the notice of resignation or removal and must be a bank or trust company having
its principal office in the United States and having a combined capital and
surplus of at least $50,000,000.
Miscellaneous
The preferred stock depositary will forward to holders of depositary
receipts any reports and communications from the Company which are received by
the preferred stock depositary with respect to the related Preferred Stock.
Neither the preferred stock depositary nor the Company will be liable if it
is prevented from or delayed in, by law or any circumstances beyond its control,
performing its obligations under the Deposit Agreement. The
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<PAGE>
obligations of the Company and the preferred stock depositary under the Deposit
Agreement will be limited to performing their duties thereunder in good faith
and without negligence (in the case of any action or inaction in the voting of
Preferred Stock represented by the depositary shares), gross negligence or
willful misconduct, and the Company and the preferred stock depositary will not
be obligated to prosecute or defend any legal proceeding in respect of any
depositary receipts, depositary shares or shares of Preferred Stock represented
thereby unless satisfactory indemnity is furnished. The Company and the
preferred stock depositary may rely on written advice of counsel or accountants,
or information provided by persons presenting shares of Preferred Stock
represented thereby for deposit, holders of depositary receipts or other persons
believed in good faith to be competent to give such information, and on
documents believed in good faith to be genuine and signed by a proper party.
In the event the preferred stock depositary shall receive conflicting
claims, requests or instructions from any holders of depositary receipts, on the
one hand, and the Company, on the other hand, the preferred stock depositary
shall be entitled to act on such claims, requests or instructions received from
the Company.
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<PAGE>
DESCRIPTION OF WARRANTS
The Company may offer by means of this prospectus warrants for the purchase
of its debt securities, Preferred Stock, depositary shares or Common Stock. The
Company may issue warrants separately or together with any other securities
offered by means of this prospectus, and the warrants may be attached to or
separate from such securities. Each series of warrants will be issued under a
separate warrant agreement (each, a "Warrant Agreement") to be entered into
between the Company and a warrant agent specified therein. The warrant agent
will act solely as an agent of the Company in connection with the warrants of
such series and will not assume any obligation or relationship of agency or
trust for or with any holders or beneficial owners of warrants.
The applicable prospectus supplement will describe the following terms,
where applicable, of the warrants in respect of which this prospectus is being
delivered: (1) the title and issuer of such warrants; (2) the aggregate number
of such warrants; (3) the price or prices at which such warrants will be issued;
(4) the currencies in which the price or prices of such warrants may be payable;
(5) the designation, amount and terms of the securities purchasable upon
exercise of such warrants; (6) the designation and terms of the other securities
with which such warrants are issued and the number of such warrants issued with
each such security; (7) if applicable, the date on and after which such warrants
and the securities purchasable upon exercise of such warrants will be separately
transferable; (8) the price or prices at which and currency or currencies in
which the securities purchasable upon exercise of such warrants may be
purchased; (9) the date on which the right to exercise such warrants shall
commence and the date on which such right shall expire; (10) the minimum or
maximum amount of such warrants which may be exercised at any one time; (11)
information with respect to book-entry procedures, if any; (12) a discussion of
certain federal income tax considerations; and (13) any other material terms of
such warrants, including terms, procedures and limitations relating to the
exchange and exercise of such warrants.
33
<PAGE>
DESCRIPTION OF RIGHTS
The Company may issue rights to its shareholders for the purchase of shares
of Common Stock. Each series of rights will be issued under a separate rights
agreement (a "Rights Agreement") to be entered into between the Company and a
bank or trust company, as rights agent, all as set forth in the prospectus
supplement relating to the particular issue of rights. The rights agent will act
solely as an agent of the Company in connection with the certificates relating
to the rights of such series and will not assume any obligation or relationship
of agency or trust for or with any holders of rights certificates or beneficial
owners of rights. The Rights Agreement and the rights certificates relating to
each series of rights will be filed with the SEC and incorporated by reference
as an exhibit to the Registration Statement of which this prospectus is a part.
The applicable prospectus supplement will describe the terms of the rights
to be issued, including the following, where applicable: (1) the date for
determining the shareholders entitled to the rights distribution; (2) the
aggregate number of shares of Common Stock purchasable upon exercise of such
rights and the exercise price; (3) the aggregate number of rights being issued;
(4) the date, if any, on and after which such rights may be transferable
separately; (5) the date on which the right to exercise such rights shall
commence and the date on which such right shall expire; (6) any special United
States federal income tax consequences; and (7) any other terms of such rights,
including terms, procedures and limitations relating to the distribution,
exchange and exercise of such rights.
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<PAGE>
BOOK-ENTRY SECURITIES
The securities offered by means of this prospectus may be issued in whole
or in part in book-entry form, meaning that beneficial owners of the securities
will not receive certificates representing their ownership interests in the
securities, except in the event the book-entry system for the securities is
discontinued. Securities issued in book entry form will be evidenced by one or
more global securities that will be deposited with, or on behalf of, a
depositary identified in the applicable prospectus supplement relating to the
securities. The Depository Trust Company is expected to serve as depositary.
Unless and until it is exchanged in whole or in part for the individual
securities represented thereby, a global security may not be transferred except
as a whole by the depositary for the global security to a nominee of such
depositary or by a nominee of such depositary to such depositary or another
nominee of such depositary or by the depositary or any nominee of such
depositary to a successor depositary or a nominee of such successor. Global
securities may be issued in either registered or bearer form and in either
temporary or permanent form. The specific terms of the depositary arrangement
with respect to a class or series of securities that differ from the terms
described here will be described in the applicable prospectus supplement.
Unless otherwise indicated in the applicable prospectus supplement, the
Company anticipates that the following provisions will apply to depositary
arrangements.
Upon the issuance of a global security, the depositary for the global
security or its nominee will credit on its book-entry registration and transfer
system the respective principal amounts of the individual securities represented
by such global security to the accounts of persons that have accounts with such
depositary, who are called "participants." Such accounts shall be designated by
the underwriters, dealers or agents with respect to the securities or by the
Company if the securities are offered and sold directly by the Company.
Ownership of beneficial interests in a global security will be limited to the
depositary's participants or persons that may hold interests through such
participants. Ownership of beneficial interests in the global security will be
shown on, and the transfer of that ownership will be effected only through,
records maintained by the applicable depositary or its nominee (with respect to
beneficial interests of participants) and records of the participants (with
respect to beneficial interests of persons who hold through participants). The
laws of some states require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such limits and laws may impair
the ability to own, pledge or transfer beneficial interest in a global security.
So long as the depositary for a global security or its nominee is the
registered owner of such global security, such depositary or nominee, as the
case may be, will be considered the sole owner or holder of the securities
represented by such global security for all purposes under the applicable
indenture or other instrument defining the rights of a holder of the securities.
Except as provided below or in the applicable prospectus supplement, owners of
beneficial interest in a global security will not be entitled to have any of the
individual securities of the series represented by such global security
registered in their names, will not receive or be entitled to receive physical
delivery of any such securities in definitive form and will not be considered
the owners or holders thereof under the applicable Indenture or other instrument
defining the rights of the holders of the securities.
Payments of amounts payable with respect to individual securities
represented by a global security registered in the name of a depositary or its
nominee will be made to the depositary or its nominee, as the case may be, as
the registered owner of the global security representing such securities. None
of the Company, its officers and directors or any trustee, paying agent or
security registrar for an individual series of securities will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the global
security for such securities or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
The Company expects that the depositary for a series of securities offered
by means of this prospectus or its nominee, upon receipt of any payment of
principal, premium, interest, dividend or other amount in respect of a permanent
global security representing any of such securities, will immediately credit its
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of such global security
for such securities as shown on the records of such depositary or its nominee.
The Company also expects that payments by participants to owners of beneficial
interests in such global security held through such participants will be
governed by standing instructions and customary practices, as is the case with
securities held for the account
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<PAGE>
of customers in bearer form or registered in "street name." Such payments will
be the responsibility of such participants.
If a depositary for a series of securities is at any time unwilling, unable
or ineligible to continue as depositary and a successor depositary is not
appointed by the Company within 90 days, the Company will issue individual
securities of such series in exchange for the global security representing such
series of securities. In addition, the Company may, at any time and in its sole
discretion, subject to any limitations described in the applicable prospectus
supplement relating to such securities, determine not to have any securities of
such series represented by one or more global securities and, in such event,
will issue individual securities of such series in exchange for the global
security or securities representing such series of securities.
36
<PAGE>
PLAN OF DISTRIBUTION
The Company may sell securities offered by means of this prospectus to one
or more underwriters for public offering and sale by them or may sell such
securities to investors directly or through agents. Any such underwriter or
agent involved in the offer and sale of such securities will be named in the
prospectus supplement relating to the securities.
Underwriters may offer and sell securities offered by means of this
prospectus at a fixed price or prices, which may be changed, at prices related
to the prevailing market prices at the time of sale or at negotiated prices. The
Company also may, from time to time, authorize underwriters acting as the
Company's agents to offer and sell securities by means of this prospectus upon
the terms and conditions as are set forth in the prospectus supplement relating
to such securities. In connection with a sale of securities offered by means of
this prospectus, underwriters may be deemed to have received compensation from
the Company in the form of underwriting discounts or commissions and may also
receive commissions from purchasers of securities for whom they may act as
agent. Underwriters may sell securities offered by means of this prospectus to
or through dealers, and such dealers may receive compensation in the form of
discounts, concessions or commissions from the underwriters and/or commissions
from the purchasers for whom they may act as agent.
Any underwriting compensation paid by the Company to underwriters or agents
in connection with the offering of securities offered by means of this
prospectus, and any discounts, concessions or commissions allowed by
underwriters to participating dealers, will be set forth in the applicable
prospectus supplement. Underwriters, dealers and agents participating in the
distribution of the offered securities may be deemed to be underwriters, and any
discounts or commissions received by them and any profit realized by them upon
the resale of the offered securities may be deemed to be underwriting discounts
and commissions, under the Securities Act. Underwriters, dealers and agents may
be entitled, under agreements entered into with the Company, to indemnification
against and contribution toward certain civil liabilities, including liabilities
under the Securities Act.
If so indicated in a prospectus supplement, the Company will authorize
agents, underwriters or dealers to solicit offers by certain institutional
investors to purchase securities of the series to which such prospectus
supplement relates providing for payment and delivery on a future date specified
in such prospectus supplement. There may be limitations on the minimum amount
which may be purchased by any such institutional investor or on the portion of
the aggregate principal amount of the particular offered securities which may be
sold pursuant to such arrangements. Institutional investors to which such offers
may be made, when authorized, include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions and such other institutions as may be approved by the Company. The
obligations of any such purchasers pursuant to such delayed delivery and payment
arrangements will not be subject to any conditions except that (i) the purchase
by an institution of the particular securities offered shall not at the time of
delivery be prohibited under the laws of any jurisdiction in the United States
to which such institution is subject, and (ii) if the particular securities are
being sold to underwriters, the Company shall have sold to such underwriters the
total principal amount of such securities or number of warrants less the
principal amount or number thereof, as the case may be, covered by such
arrangements. Underwriters will not have any responsibility in respect of the
validity of such arrangements or the performance of the Company or such
institutional investors thereunder.
The Company may agree to sell securities to an underwriter for a delayed
public offering and may further agree to adjustments before the public offering
to the underwriters' purchase price for the securities based on changes in the
market value of the securities. The prospectus supplement relating to any such
public offering will contain information on the number of securities to be sold,
the manner of sale or other distribution, and other material facts relating to
the public offering.
Certain of the underwriters and their affiliates may be customers of,
engage in transactions with and perform services for the Company and its
subsidiaries in the ordinary course of business.
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<PAGE>
LEGAL MATTERS
Certain legal matters with respect to the securities offered by this
prospectus will be passed upon for us by Hogan & Hartson L.L.P., Washington,
D.C.
EXPERTS
Our consolidated financial statements as of December 31, 1998 and 1999 and
for each of the years in the three-year period ended December 31, 1999 and for
the period from December 15, 1992 (date of inception) through December 31, 1999,
have been incorporated by reference herein and in the registration statement, in
reliance upon the report of KPMG LLP, independent certified public accountants,
appearing elsewhere herein, and upon the authority of said firm as experts in
accounting and auditing. The report of KPMG LLP contains an explanatory
paragraph that states that we have not commenced operations and are dependent
upon additional debt or equity financings, which raises substantial doubt about
our ability to continue as a going concern. Our consolidated financial
statements do not include any adjustments that might result from the outcome of
that uncertainty.
38
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following are the estimated expenses to be incurred in connection with
the issuance and distribution of the securities being registered.
<TABLE>
<S> <C>
SEC registration fee................... $132,000
Printing and engraving expenses........ 1,700
Legal fees and expenses................ 25,000
NASD filing fees....................... 17,500
Accounting fees and expenses........... 30,000
Total............................. $206,200
</TABLE>
Item 15. Indemnification of Directors and Officers.
Section 145 of Delaware General Corporation Law permits indemnification of
officers and directors of our company under certain conditions and subject to
certain limitations. Section 145 of the Delaware General Corporation Law also
provides that a corporation has the power to purchase and maintain insurance on
behalf of its officers and directors against any liability asserted against such
person and incurred by him or her in such capacity, or arising out of his or her
status as such, whether or not the corporation would have the power to indemnify
him or her against such liability under the provisions of Section 145 of the
Delaware General Corporation law.
Article Ninth of our Restated Certificate of Incorporation and Article VI,
Section 1 of our Bylaws provide that we shall indemnify our directors and
officers and any such directors and officers serving at our request as a
director, officer, employee or agent of another entity to the fullest extent not
prohibited by the Delaware General Corporation Law. The Bylaws also provide that
we may, but shall not be obligated to, maintain insurance, at our expense, for
the benefit of our company and of any person to be indemnified. In addition, we
have entered or will enter into indemnification agreements with our directors
and officers that provide for indemnification in addition to the indemnification
provided in our Bylaws. The indemnification agreements contain provisions that
may require our company, among other things, to indemnify our directors and
executive officers against certain liabilities (other than liabilities arising
from intentional or knowing and culpable violations of law) that may arise by
reason of their status or service as directors or executive officers of our
company or other entities to which they provide service at the request of our
company and to advance expenses they may incur as a result of any proceeding
against them as to which they could be indemnified. We believe that these
provisions and agreements are necessary to attract and retain qualified
directors and officers. We have obtained an insurance policy covering directors
and officers for claims that such directors and officers may otherwise be
required to pay or for which we are required to indemnify them, subject to
certain exclusions.
As permitted by Section 102(b)(7) of the Delaware General Corporation Law,
Article Eighth of our Restated Certificate of Incorporation provides that a
director shall not be personally liable for monetary damages or breach of
fiduciary duty as a director, except for liability
. for any breach of the director's duty of loyalty to our company or our
stockholders;
. for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
II-1
<PAGE>
. under Section 174 of the Delaware General Corporation Law; or
. for any transaction from which the director derived any improper
personal benefit.
Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits.
Incorporated by reference to the Exhibit Index beginning on page II-5
hereto.
(b) Financial Statement Schedules included separately in the Registration
Statement.
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price represent
no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table
in the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that subparagraphs (i) and (ii) do not apply if the
information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or
furnished to the Commission by the registrant pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for the purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-2
<PAGE>
The undersigned registrant hereby undertakes to supplement the
prospectus, after the expiration of the subscription period, to set forth the
results of the subscription offer, the transactions by the underwriters during
the subscription period, the amount of unsubscribed securities to be purchased
by the underwriters, and the terms of any subsequent reoffering thereof. If any
public offering by the underwriters is to be made on terms differing from those
set forth on the cover page of the prospectus, a post-effective amendment will
be filed to set forth the terms of such offering.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as
part of this registration statement in reliance under Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall
be deemed to be part of this registration statement as of the time it
was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the provisions described under Item 15 above or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer, or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the District of Columbia, on October 6, 2000.
XM SATELLITE RADIO HOLDINGS INC.
By: /s/ Hugh Panero
-----------------------------
Hugh Panero
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Hugh Panero, Heinz Stubblefield and Joseph
M. Titlebaum his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place, and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this registration statement and any additional registration
statement filed pursuant to Rule 462(b) under the Securities Act of 1933 in
respect of an offering contemplated by this registration statement, and to file
the same, with exhibits thereto, and other documents in connection therewith
with the Securities and Exchange Commission, granting unto said attorney-in-fact
and agent full power and authority to do and perform each and every act and
thing requisite and necessary to be done, as fully to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or either of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Hugh Panero President, Chief Executive Officer and October 6, 2000
------------------------------- Director (Principal Executive Officer)
Hugh Panero
/s/ Heinz Stubblefield Senior Vice President, Chief Financial
------------------------------- Officer (Principal Financial and October 6, 2000
Heinz Stubblefield Accounting Officer)
/s/ Gary M. Parsons
------------------------------- Chairman of the Board of Directors October 6, 2000
Gary M. Parsons
/s/ Nathaniel A. Davis
------------------------------- Director October 6, 2000
Nathaniel A. Davis
/s/ Thomas J. Donohue
------------------------------- Director October 6, 2000
Thomas J. Donohue
</TABLE>
II-4
<PAGE>
<TABLE>
<S> <C> <C>
/s/ Randall T. Mays
_______________________________ Director October 6, 2000
Randall T. Mays
_______________________________ Director
Randy S. Segal
_______________________________ Director
Jack Shaw
/s/ Dr. Rajendra Singh
_______________________________ Director October 6, 2000
Dr. Rajendra Singh
_______________________________ Director
Ronald L. Zarrella
_______________________________ Director
Pierce J. Roberts, Jr.
_______________________________ Director
Walter V. Purnell, Jr.
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
Exhibit
-------
No. Description
--- ---------------------------------------------------------------------
3.1 Restated Certificate of Incorporation of XM Satellite Radio Holdings
Inc. (incorporated by reference to the Registrant's Registration
Statement on Form S-1, File No. 333-83619).
3.2 Restated Bylaws of XM Satellite Radio Holdings Inc. (incorporated by
reference to the Registrant's Registration Statement on Form S-1,
File No. 333-83619).
4.1 Form of Certificate for our Class A common stock (incorporated by
reference to Exhibit 3 to the Registrant's Registration Statement on
Form 8-A, filed with the SEC on September 23, 1999).
4.2 Form of Certificate for our 8.25% Series B Convertible Redeemable
Preferred Stock (incorporated by reference to the Registrant's
Registration Statement on Form S-1, File No. 333-93529).
4.3 Certificate of Designation Establishing the Voting Powers,
Designations, Preferences, Limitations, Restrictions and Relative
Rights of 8.25% Series B Convertible Redeemable Preferred Stock due
2012 (incorporated by reference to the Registrant's Annual Report on
Form 10-K, filed with the SEC on March 16, 2000).
4.4 Warrant to purchase shares of XM Satellite Radio Holdings Inc.'s
Class A common stock, dated February 9, 2000, issued to Sony
Electronics, Inc. (incorporated by reference to the Registrant's
Quarterly Report on Form 10-Q, filed with the SEC on May 12, 2000).
4.5 Warrant Agreement, dated March 15, 2000, between XM Satellite Radio
Holdings Inc. as Issuer and United States Trust Company of New York
as Warrant Agent (incorporated by reference to the Registrant's
Registration Statement on Form S-1, File No. 333-39176).
4.6 Warrant Registration Rights Agreement, dated March 15, 2000, between
XM Satellite Radio Holdings Inc. and Bear, Stearns & Co. Inc.,
Donaldson, Lufkin and Jenrette Securities Corporation, Salomon Smith
Barney Inc. and Lehman Brothers Inc. (incorporated by reference to
the Registrant's Registration Statement on Form S-1, File No. 333-
39176).
4.7 Form of Warrant (incorporated by reference to the Registrant's
Registration Statement on Form S-1, File No. 333-39176).
4.8 Certificate of Designation Establishing the Powers, Preferences,
Rights, Qualifications, Limitations and Restrictions of the 8.25%
Series C Convertible Redeemable Preferred Stock due 2012
(incorporated by reference to the Registrant's Registration Statement
on Form S-1, File No. 333-39176).
4.9 Form of Certificate for our 8.25% Series C Convertible Redeemable
Preferred Stock (incorporated by reference to the Registrant's
Registration Statement on Form S-1, File No. 333-39176).
4.10 Form of Indenture (to be filed by amendment).
4.11 Indenture, dated as of March 15, 2000, between XM Satellite Radio
Inc. and United States Trust Company of New York (incorporated by
reference to the Registrant's Registration Statement on Form S-4,
filed with the SEC on September 1, 2000).
5.1 Opinion of Hogan & Hartson L.L.P. concerning the legality of the
securities offered hereunder (to be filed by amendment).
12.1 Statement of Computation of Earnings to Fixed Charges and Preferred
Stock Dividends.
21.1 Subsidiaries of XM Satellite Radio Holdings Inc. (incorporated by
reference to the Registrant's Registration Statement on Form S-1,
File No. 333-39176).
II-6
<PAGE>
23.1 Consent of KPMG LLP.
23.2 Consent of Hogan & Hartson L.L.P. (included in Exhibit 5.1)
27.1 Financial Data Schedule.
II-7
