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As filed with the Securities and Exchange Commission on February 14, 2000
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
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ALLIED RISER COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
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DELAWARE 75-2789492
(State of incorporation) (I.R.S. employer identification number)
1700 PACIFIC AVENUE
DALLAS, TEXAS 75201
(Address of principal executive offices, including zip code)
ALLIED RISER COMMUNICATIONS CORPORATION
1999 AMENDED AND RESTATED STOCK OPTION AND EQUITY
INCENTIVE PLAN
(FULL TITLE OF THE PLAN)
MICHAEL R. CARPER
SENIOR VICE PRESIDENT AND GENERAL COUNSEL
ALLIED RISER COMMUNICATIONS
1700 PACIFIC AVENUE, SUITE 400
DALLAS, TEXAS 75201
(214) 210-3000
(NAME, ADDRESS AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
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WITH COPIES TO:
PHYLLIS G. KORFF, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
FOUR TIME SQUARE
NEW YORK, NEW YORK 10036
(212) 735-3000
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CALCULATION OF REGISTRATION FEE
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Proposed Maximum Proposed Maximum Amount of
Title of Securities Amount to be Offering Price Aggregate Offering Registration
to be Registered Registered(1) per Share(2) Price Fee
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Common stock, par value $0.0001 per share 10,755,000 $24.201 $260,281,829.80 $68,714.40
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(1) The aggregate number of shares of common stock shown in the table above
consists of (a) 5,000,000 shares which represent the maximum number of
shares of common stock which may be granted pursuant to the Allied Riser
Communications Corporation 1999 Amended and Restated Stock Option and
Equity Incentive Plan (the "Plan") or which may be sold upon the exercise
of options or pursuant to purchase rights which have been or hereafter may
be granted under the plan, as of the date hereof; and (b) 5,755,000 shares
offered for resale which have been issued to our employees under our prior
benefit plans. The aggregate number of shares is subject to adjustment by
reason of stock splits, stock dividends and other events affecting all
common shares in accordance with the Plan. Accordingly, pursuant to Rule
416 under the Securities Act of 1933, as amended (the "Securities Act"),
this registration statement covers, in addition to the number of shares of
common stock shown in the table above, an indeterminate number of shares of
common stock which may be subject to grant or otherwise issuable after the
operation of the provisions of the Plan governing such adjustments.
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(2) The Proposed Maximum Offering Price Per Share was estimated in part
pursuant to Rule 457(h) under the Securities Act and, in part, pursuant to
Rule 457(c) under the Securities Act. With respect to the 1,659,888 shares
subject to outstanding options to purchase common stock under the Plan, the
Proposed Maximum Offering Price Per Share was estimated pursuant to Rule
457(h), under which the per share price of options to purchase stock under
an employee stock option plan may be estimated by reference to the exercise
price of such options. The weighted average exercise price of the 1,659,888
shares subject to outstanding options under the Plan is $13.83. With
respect to the (i) 2,992,670 shares of common stock available for future
grant under the Plan and (ii) 6,102,442 shares of common stock previously
issued under the Plan and prior benefit plans (but not previously
registered on Form S-8) and included in the prospectus filed herewith, the
estimated Proposed Maximum Offering Price Per Share was estimated pursuant
to Rule 457(c) whereby the per share price was determined by reference to
the average between the high and low price reported on the National Market
System of the National Association of Securities Dealers Automated
Quotation System (NASDAQ) on February 9, 2000, which average was $26.09375
The number referenced in the table above under "Proposed Maximum Offering
Price Per Share" represents a weighted average of the foregoing estimates
calculated in accordance with Rules 457(h) and 457(c).
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EXPLANATORY NOTE
Allied Riser Communications Corporation has prepared this registration
statement in accordance with the requirements of Form S-8 under the Securities
Act, to register shares of common stock issued or issuable pursuant to Allied
Riser's 1999 Amended and Restated Stock Option and Equity Incentive Plan and
issued to our employees under our prior benefit plans.
This registration statement on Form S-8 also includes a prospectus
prepared in accordance with Instruction C of Form S-8, in accordance with the
requirements of Part I of Form S-3, and may be used for reofferings and resales
on a continuous or delayed basis in the future of up to an aggregate 6,673,277
shares that constitute either "control securities" and/or "restricted
securities" which have been issued prior to the filing of this registration
statement.
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Allied Riser will send or give the documents containing the information
specified in Part I of Form S-8 to employees as specified by the Securities and
Exchange Commission Rule 428(b)(1) under the Securities Act. Allied Riser does
not need to file these documents with the Commission either as part of this
registration statement or as prospectuses or prospectus supplements under Rule
424 of the Securities Act.
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PROSPECTUS
6,673,277 SHARES OF COMMON STOCK
OF ALLIED RISER COMMUNICATIONS CORPORATION
The shares of common stock, $0.0001 par value per share, of Allied
Riser Communications Corporation offered hereby will be sold from time to time
by certain stockholders of Allied Riser described under the caption "Registered
Stockholders" in this prospectus. The registered stockholders are current or
former employees of our company or independent contractors providing services to
our company who acquired the shares of common stock as compensation for services
performed for Allied Riser.
The sales may occur in transactions in the over-the-counter market
(quoted on the Nasdaq National Market) at prevailing market prices or in
negotiated transactions. We will not receive proceeds from any of these sales.
We are paying the expenses incurred in registering the shares, but all selling
and other expenses incurred by each of the registered stockholders will be borne
by that registered stockholder.
The shares of common stock are "control securities" and/or "restricted
securities" under the Securities Act of 1933, as amended (the "Securities Act"),
before their sale under this prospectus. This prospectus has been prepared for
the purpose of registering the shares under the Securities Act to allow for
future sales by the registered stockholders, on a continuous or delayed basis,
to the public without restriction. Each registered stockholder may be deemed to
be an "underwriter" within the meaning of the Securities Act. Any commissions
received by a broker or dealer in connection with resales of the shares may be
deemed to be underwriting commissions or discounts under the Securities Act.
Our common stock is traded on the Nasdaq National Market under the
symbol "ARCC." On February 9, 2000, the last reported sale price of the common
stock, as reported on the Nasdaq National Market, was $25 5/8 per share.
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Investing in the common stock involves a high degree risk. For more
information, please see "Risk Factors" beginning on page 6.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED WHETHER
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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February 14, 2000
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TABLE OF CONTENTS
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PAGE
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AVAILABLE INFORMATION............................................................................3
INCORPORATED DOCUMENTS...........................................................................4
THE COMPANY......................................................................................5
RISK FACTORS.....................................................................................6
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS...............................................13
REGISTERED STOCKHOLDERS.........................................................................14
PLAN OF DISTRIBUTION............................................................................16
LEGAL MATTERS...................................................................................16
EXPERTS.........................................................................................16
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AVAILABLE INFORMATION
Allied Riser is subject to the informational reporting requirements of
the Securities Exchange Act of 1934 and files reports, proxy statements and
other information with the Securities and Exchange Commission. These reports,
proxy statements and other information can be inspected and copied at the Public
Reference Room of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549
and at the Commission's regional offices at 500 West Madison Street, Suite 1400,
Chicago, IL 60661-2511 and 7 World Trade Center, 13th Floor, New York, NY 10048,
at prescribed rates. The Commission maintains a website that contains reports,
proxy and information statements and other information regarding registrants,
including Allied Riser, that file electronically with the Commission. The
address of this website is "http://www.sec.gov." In addition, you may obtain
information from the Public Reference Room by calling the Commission at
1-800-SEC-0330. In addition, our common stock is quoted on the Nasdaq National
Market System. Reports, proxy statements, informational statements and other
information concerning Allied Riser can be inspected at the offices of the
National Association of Securities Dealers, Inc. at 1735 K Street, N.W.,
Washington, D.C. 20006.
Allied Riser intends to furnish its stockholders with annual reports
containing additional financial statements and a report thereon by independent
certified public accountants.
A copy of any document incorporated by reference in this registration
statement of which this prospectus forms a part but which is not delivered with
this prospectus will be provided by us without charge to any person to whom this
prospectus has been delivered upon the oral or written request of that person.
Requests should be directed to the attention of the Corporate Secretary, Allied
Riser Communications Corporation, 1700 Pacific Avenue, Dallas, Texas 75201. Our
telephone number at that location is (214) 210-3000.
You should only rely on the information incorporated by reference or
provided in this prospectus or any supplement. We have not authorized anyone
else to provide you with different information. The common stock is not being
offered in any state where the offer is not permitted. You should not assume
that the information in this prospectus or any supplement is accurate as of any
date other than the date on the front of this prospectus.
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INCORPORATED DOCUMENTS
The Commission allows us to "incorporate by reference" information into
this prospectus, which means that we can disclose important information to you
by referring you to another document filed separately with the Commission. The
information incorporated by reference is deemed to be part of this prospectus,
except for any information superseded by information in this prospectus.
Allied Riser's prospectus dated October 28, 1999, filed on October 29,
1999 pursuant to Rule 424(b) of the Securities Act, Allied Riser's registration
statement on Form 8-A filed with the Commission on October 25, 1999, as amended
on Form 8-A/A filed with the Commission on October 27, 1999 under Section 12 of
the Exchange Act, and Allied Riser's quarterly report on Form 10-Q for the
fiscal quarter ended September 30, 1999, as filed with the Commission on
December 13, 1999 are incorporated herein by reference. In addition, all
documents subsequently filed by Allied Riser pursuant to Sections 13(a), 13(c),
14 and 15(d) of the Exchange Act, prior to the filing of a post-effective
amendment which indicates that all securities offered have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference herein and to be a part hereof from the date of filing
of such documents. Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is
incorporated or deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
prospectus.
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THE COMPANY
We are a facilities-based provider of broadband data, video and voice
communications services to small-and medium-sized businesses located primarily
in major metropolitan areas in the United States. We typically deliver our
services over fiber-optic networks that we design, construct, own and operate
inside large- and medium- sized office buildings. Today, over this
infrastructure, we offer ultra high-speed Internet access, business-oriented
television for display on computer desktops, enhanced conference calling
services and other broadband data services.
Our Internet access services provide a direct connection to the
Internet at speeds up to 175 times faster than standard dial-up service and are
always-on. Our business-oriented television is the first of many additional
connectivity services and broadband-enabled applications and content that we
intend to offer using our in-building broadband infrastructure.
We use our in-building fiber-optic networks to transmit data to and
from each of our customers at speeds of ten million bits of data per second.
Using commercially available equipment, we can increase this transmission speed
to one billion bits of data per second. We connect each of our in-building
networks to a central facility in each metropolitan area, usually over
fiber-optic lines we lease from other carriers. At this metropolitan hub, we
aggregate and disseminate network traffic for Internet connectivity and our
other broadband services.
On October 29, 1999, we completed an initial public offering of
16,970,550 shares of common stock for which we received net proceeds of
approximately $284,891,706.
Our executive offices are located at 1700 Pacific Avenue, Dallas, Texas
75201; our telephone number is (214) 210-3000 and our facsimile number is (214)
210-3001. Our web site is www.alliedriser.com. The information contained on our
web site is not incorporated by reference into this prospectus.
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RISK FACTORS
This offering involves a high degree of risk. You should carefully
consider the risks described below and the other information in this prospectus
before deciding to invest in the shares of common stock.
WE HAVE EXPERIENCED INCREASING NEGATIVE EBITDA, OPERATING LOSSES AND NET LOSSES,
WHICH WILL CONTINUE
We may not achieve or sustain positive EBITDA, operating income or net
income in the future. Since our formation we have generated increasing negative
EBITDA, and larger operating losses and net losses each quarter. We have not
achieved profitability and expect to continue to incur increasing negative
EBITDA, operating losses and net losses for the foreseeable future.
In addition, we expect to continue to incur significant development
costs and, as a result, we will need to generate significant revenue to achieve
profitability, which may not occur.
WE HAVE AN UNPROVEN BUSINESS MODEL WHICH COULD FAIL
We are not aware of any company that has achieved positive EBITDA,
operating income or net income by executing a business plan like ours. We will
make substantial capital expenditures in deploying our networks before we know
whether our business plan can be successfully executed. As a result, there is a
risk that our business will fail.
WE ARE A START-UP COMPANY AND IF WE DO NOT GROW VERY RAPIDLY WE WILL NOT SUCCEED
We began operating our first fiber-optic network in January 1998 and we
must grow very rapidly to succeed. Because the communications industry is
capital intensive, rapidly evolving and prone to significant economies of scale,
as a relatively small organization we are at a competitive disadvantage. The
growth we must achieve to reduce that disadvantage will put a significant strain
on all our resources. In particular, we will require substantial additional
capital to finance our operations in the future according to our current
business plan. If we fail to grow rapidly or obtain additional capital our
ability to compete with larger more well established companies will be
substantially reduced.
OUR BUSINESS WILL BE HARMED IF OUR BILLING, CUSTOMER SERVICE AND INFORMATION
SUPPORT SYSTEMS ARE NOT REPLACED OR FURTHER DEVELOPED
Sophisticated information processing systems are vital to our growth
and our ability to achieve operating efficiencies. A failure of these systems
could substantially impair our ability to provide services, send invoices and
monitor our operations. Systems we have identified as being presently inadequate
to meet the increased demands of our anticipated growth include billing and
collections, work-flow and customer priority management, financial and
accounting, human resources, sales and customer support and fixed asset
management.
While we have begun implementing certain upgrades to these systems, the
development and implementation of these systems rely, for the most part, on
acquiring products and services offered by third-party vendors and integrating
those products and services. We may be unable to implement these systems on a
timely basis or at all, and these systems may not perform as expected. We may
also be unable to fully maintain and upgrade our operational support systems as
necessary.
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We are also dependent on the systems of our network capacity providers,
and, in some cases, on the interface between our systems and those of our
providers. Therefore, any systems failures experienced by our suppliers could
also have similar adverse effects on our systems.
THE SECTOR IN WHICH WE OPERATE IS HIGHLY COMPETITIVE, AND WE MAY NOT BE ABLE TO
COMPETE EFFECTIVELY
We face competition from many entities with significantly greater
financial resources, well-established brand names and larger customer bases. The
numerous companies that may seek to enter our niche may expose us to severe
price competition for our services or for building access rights. We expect
competition to intensify in the future. We expect significant competition from
traditional and new telecommunications companies, including local, long
distance, cable modem, Internet, digital subscriber line, microwave, mobile and
satellite data service providers. If these potential competitors successfully
focus on our niche, there may be intense price competition which could impede
our ability to become profitable.
IN-BUILDING COMPETITORS. Some competitors, such as Cypress
Communications, OnSite Access, Broadband Office, Intermedia Communications,
SiteLine, RCN Telecom Services, NextLink, Winstar, Teligent and Advanced Radio
Telecom, are attempting to gain access to office buildings in our target
markets. Some of these competitors have sought to develop exclusive
relationships with building owners. To the extent these competitors are
successful, we may face difficulties in building our networks and marketing our
services within some of our target buildings. Our agreements to use utility
shaft space within buildings are not exclusive. An owner of any of the buildings
in which we have rights to install a network could also give similar rights to
one of our competitors. Certain competitors already have rights to install
networks in some of the buildings in which we have rights. It will take a
substantial amount of time for us to build networks in all the buildings where
we obtain rights to do so. Each building in which we have not built a network is
particularly vulnerable to competitors. It is not clear whether it will be
profitable for two or more different companies to operate broadband networks
within the same building. Therefore, it is critical that we build our networks
in additional buildings quickly. Once we have done so, if a competitor installs
a network in the same building, it is likely that there will be substantial
price competition.
LOCAL TELEPHONE COMPANIES. Incumbent local telephone companies,
including GTE and the Bell Operating Companies, have several competitive
strengths which may place us at a competitive disadvantage. These competitive
strengths include:
o an established brand name and reputation;
o significant capital to deploy fiber-optic equipment rapidly;
o ability to offer higher-speed data services through digital subscriber
line technology;
o their own inter-building connections; and
o ability to bundle digital data services with their voice services to
achieve economies of scale in servicing customers.
Competitive local telephone companies often have broadband
inter-building connections, market their services to tenants of large- and
medium-sized buildings and selectively build in-building facilities.
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LONG DISTANCE COMPANIES. We will face strong competition from long
distance companies Many of the leading long distance carriers, including AT&T,
MCI WorldCom, and Sprint, are expanding their capabilities to support
high-speed, end-to-end data networking services, and could begin to build their
own in-building networks. The newer national long distance carriers, such as
Qwest, Level 3, Williams Communications and Broadwing, are building and managing
high-speed fiber-based national data networks, partnering with Internet service
providers, and may extend their networks by installing in-building fiber-optic
cables.
FIXED WIRELESS SERVICE PROVIDERS. We may lose potential customers to
fixed wireless service providers. Fixed wireless service providers can provide
high speed inter-building communications services using microwave or other
facilities or satellite earth stations on building rooftops. Some of these
providers have targeted small- and medium-sized-business customers and have a
business strategy that is similar to ours. These providers include Winstar,
Teligent, Advanced Radio Telecom, Sprint and MCI WorldCom.
INTERNET, DIGITAL SUBSCRIBER LINE, AND CABLE MODEM SERVICE PROVIDERS.
The services provided by Internet service providers and cable modem service
providers can be used by our potential customers instead of our services.
Internet service providers, such as GTE Internetworking, UUNET, a subsidiary of
MCI WorldCom, Sprint, Concentric Networks, MindSpring, Prodigy, EarthLink, Verio
and PSINet, provide Internet access to residential and business customers,
generally using the existing communications infrastructure. Digital subscriber
line companies and/or their Internet service provider customers, such as Covad,
Rhythms NetConnections, NorthPoint and Network Access Solutions, typically
provide broadband Internet access. Cable modem service providers, such as
Excite@Home and its @Work subsidiary, Road Runner, RCN Telecom Services and High
Speed Access, also provide broadband Internet access. On-line service providers,
such as America Online, Compuserve, Microsoft Network, and WebTV, provide
Internet connectivity, ease-of-use and a stable environment for modem
connections.
WE MUST OBTAIN ADDITIONAL AGREEMENTS WITH BUILDING OWNERS OR OUR GROWTH WILL BE
CONSTRAINED
Our business depends upon our ability to install in-building networks.
The failure of building owners to grant or renew access rights on acceptable
terms could substantially reduce our potential customer base. Current federal
laws and regulations, and laws and regulations in a large majority of states, do
not require building owners to make space available to us, or to do so on terms
that are reasonable or nondiscriminatory. Building owners may decide not to
permit us to install our networks in their buildings. In addition, building
owners may elect not to renew our access agreements, which typically have terms
of ten years. Non-renewal of these agreements would cause losses resulting from
the removal or sale of our infrastructure in these buildings and would reduce
our revenues.
WE MUST INSTALL NETWORKS IN ADDITIONAL BUILDINGS BEFORE OUR COMPETITORS DO OR WE
MAY FACE A COMPETITIVE DISADVANTAGE
Our success will depend upon our ability to quickly install our
in-building networks in many more buildings. This is crucial in order to
establish a first-mover advantage. We may not be able to accomplish this. Each
building in which we have not built a network is particularly vulnerable to
competitors. Future expansions and adaptations of our network infrastructure may
be necessary to respond to growth in the number of customers served, increased
capacity demands and changes to our services. The expansion and adaptation of
our in-building networks will require substantial financial, operational and
managerial resources.
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Our failure to rapidly deploy, expand and adapt our networks to changing
conditions could make it difficult to increase and retain our customer base,
which would reduce our revenues and impede our growth.
THERE MIGHT NOT BE SUFFICIENT DEMAND FOR OUR SERVICES
Demand for broadband services has grown rapidly, and this market is
characterized by rapidly changing technology, evolving industry standards and
frequent new service introductions.
If the commercial market for Internet access and other broadband
services develops more slowly than expected or if the Internet services that we
offer are not broadly accepted, our revenues will not grow as quickly as
necessary to achieve or sustain profitability.
Demand and market acceptance for recently introduced services in this
industry are subject to a high level of uncertainty.
In addition, critical issues concerning the commercial use of services
requiring broadband capabilities remain unresolved and may impact the growth of
these services. Historically, some businesses have been reluctant to purchase
broadband services, such as high-speed Internet access, for a number of reasons,
including:
o resistance to the use of the Internet in business applications;
o inconsistent quality of service;
o lack of available cost-effective, high-speed options;
o the need to deal with multiple and frequently incompatible vendors;
o inadequate security for stored or transmitted data;
o lack of networking tools to simplify Internet access and use; and
o lack of high-speed application requirements.
Capacity constraints caused by heavy use of the Internet may impede
further development to the extent that users experience delays, transmission
errors and other difficulties. Further, enterprises that have already invested
substantial resources in other methods may be particularly reluctant or slow to
adopt a new strategy.
ALTERNATIVE TECHNOLOGIES POSE COMPETITIVE THREATS
In addition to fiber-optic technology, there are other technologies
that provide more capacity and speed than traditional copper wire transmission
technology and can be used instead of our services. Furthermore, these
technologies may be improved and other new technologies may develop that provide
more capacity and speed than the fiber-optic technology we employ. Existing
alternative technologies include:
o DIGITAL SUBSCRIBER LINE TECHNOLOGY. Digital subscriber line technology
was developed to produce higher data transfer rates over the existing
copper-based telephone network. The data transfer rates for digital
subscriber lines are reported to range between 144 thousand bits of
data per second and six million bits of data per second. Digital
subscriber line technology has been substantially improved in recent
years.
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o CABLE MODEMS. Cable modems can allow users to send and receive data
using cable television distribution systems. According to industry
sources, cable modem users typically experience download speeds of 1.5
million bits of data per second.
o WIRELESS TECHNOLOGIES. Wireless technologies, such as satellite and
microwave communications systems, can provide high-speed data
communications. Satellite systems, such as DirecPC, can offer high
download speeds that are advertised at 400 thousand bits of data per
second.
o INTEGRATED SERVICES DIGITAL NETWORKS. Integrated services digital
networks have been offered by the incumbent local telephone companies
over the existing copper-based telephone network for some time. These
services offer data transfer speeds of 128 thousand bits of data per
second.
The development of new technologies or the significant penetration of
alternative technologies into our target market may reduce the demand for our
services and consequently could have a material adverse effect on our revenues
and net income (loss).
WE MUST PURCHASE CAPACITY FROM THIRD PARTIES WHO MAY BE UNABLE OR UNWILLING TO
MEET OUR REQUIREMENTS
We construct in-building networks and generally rely on other
communications carriers to provide transmission capacity outside the buildings.
Our failure to obtain adequate connections from other carriers on a timely basis
could delay or impede our ability to provide services and generate revenue.
We have experienced, and expect to continue to experience, delays in
obtaining transmission capacity. In addition, in some of our target markets
there is only one established carrier available to provide the necessary
connection. This increases our cost and makes it extremely difficult, if not
impossible, to obtain redundant connections. Sufficient capacity or redundant
capacity may not be readily available from third parties at commercially
reasonable rates, if at all. Our failure to obtain sufficient redundant
connectivity could result in an inability to provide service in certain
buildings and service interruptions, which could in time lead to loss of
customers and damage to our reputation.
As of September 30,1999, we have committed to pay for approximately
$1,888,000 of services from other carriers and we expect to sign additional
similar contracts. We will have to pay those carriers even if we do not use
their services.
WE MUST MAKE SIGNIFICANT CAPITAL EXPENDITURES BEFORE GENERATING REVENUE, WHICH
MAY PROVE INSUFFICIENT TO JUSTIFY THOSE EXPENDITURES
When we install an in-building network, we incur significant initial
expenditures. If we fail to attract enough customers within each office
building, our capital expenditures in that building will be wasted. These
expenditures vary depending on the size of the building and whether we encounter
any construction-related difficulties. In addition, we typically install an
in-building network before we have any customers in that building. Since we
generally do not solicit customers within a building until our network is in
place, and since our costs can vary, we may not be able to recoup our
expenditures within any building.
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OUR NETWORKS MAY BE VULNERABLE TO UNAUTHORIZED ACCESS WHICH COULD INTERFERE WITH
THE PROVISION OF OUR SERVICES
Our networks may be vulnerable to unauthorized access, computer viruses
and other disruptive problems. Remediating the effects of computer viruses and
alleviating other security problems may require interruptions, incurrence of
costs and delays or cessation of service to our customers. Other companies have
experienced interruptions in service as a result of the accidental or
intentional actions of Internet users, current and former employees or others.
Unauthorized access could jeopardize the security of confidential information
stored in our computer systems or those of our customers. Although we intend to
continue to implement industry-standard and other security measures, such
measures at other companies have been circumvented in the past and may be
circumvented on our systems in the future. These risks could have a material
adverse effect on our ability to provide services.
WE MUST ATTRACT AND RETAIN KEY PERSONNEL IN A TIGHT LABOR MARKET OR WE WILL BE
UNABLE TO MANAGE OUR GROWTH
There currently is intense competition for personnel with the
qualifications we require. The loss of the services of key personnel or the
failure to attract additional personnel as required could have a material
adverse effect on our ability to grow and on the price of our common stock. We
are highly dependent upon the efforts of our existing senior management team.
Although we have entered into employment agreements with members of our senior
management team, these agreements do not obligate the employees to remain with
us for any length of time. We believe that our future success will depend in
large part on our ability to attract and retain qualified technical and sales
personnel.
LEGISLATION AND GOVERNMENT REGULATION COULD ADVERSELY AFFECT US
Changes in the regulatory environment could affect our operating
results by increasing competition, decreasing revenue, increasing costs or
impairing our ability to offer services. The provision of basic
telecommunications services is subject to significant regulation at the federal
and state level. The Federal Communications Commission, or FCC, regulates
telecommunications carriers providing interstate and international common
carrier services. State public utilities commissions exercise jurisdiction over
intrastate basic telecommunications services but do not regulate most enhanced
services, which involve more than the pure transmission of customer provided
information. Many of our competitors and vendors, especially incumbent local
telephone companies, are subject to federal and state regulations. These
regulations change from time to time in ways that are difficult for us to
predict. Although we believe the services we provide today are not subject to
substantial regulation by the FCC or the state public utilities commissions,
changes in regulation or new legislation may increase the regulation of our
current services. In addition, a regulatory body may seek to apply
telecommunications regulations to our enhanced services.
IF WE DECIDE TO PROVIDE VOICE AND OTHER BASIC TELECOMMUNICATIONS
SERVICES WE MAY BE UNABLE TO SUCCESSFULLY RESPOND TO REGULATORY CHANGES. We will
become subject to regulation by the FCC and state agencies in the event we
decide to offer non-enhanced voice and other basic telecommunications services.
Complying with these regulatory requirements may be costly. Through
subsidiaries, we are in the process of applying for, and in some states have
received, authority from state regulatory commissions and the FCC to provide
basic telecommunications services, such as voice telephony service. These
subsidiaries will be subject to direct federal and state regulation upon
approval of their respective applications. The regulations that apply to basic
telecommunications services change from time to time and such changes may have
adverse effects on our business.
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<PAGE> 15
REGULATION OF ACCESS TO OFFICE BUILDINGS COULD NEGATIVELY AFFECT OUR
BUSINESS. There have been proposals to require that commercial office buildings
and the providers of networks in them give access to competitive providers of
telecommunications services. If these proposals are adopted and regulatory or
legal requirements change access rights to our target buildings or our networks,
these requirements will facilitate our competitors' entry into buildings where
we have access rights, which in turn will diminish the value of our access
rights and adversely affect our competitive position. Recently, the FCC
initiated a regulatory proceeding relating to access to utility shaft and other
space, facilities and equipment in multiple tenant buildings, and bills were
introduced in Congress regarding the same topic. Some of the issues being
considered in these developments include requiring building owners to provide
utility shaft access to telecommunications carriers, and requiring some
telecommunications providers to provide access to other telecommunications
providers. We do not know whether, when or in what form these proposals will be
adopted.
AS AN INTERNET ACCESS PROVIDER, WE MAY INCUR LIABILITY FOR INFORMATION
DISSEMINATED THROUGH OUR NETWORK. The law relating to the liability of Internet
access providers and on-line services companies for information carried on or
disseminated through their networks is unsettled. Although we have not been sued
for information carried on our network, it is possible that we could be. Federal
and state statutes have been directed at imposing liability on Internet service
providers for aspects of content carried on their networks. There may be new
legislation and court decisions that may affect our services and expose us to
potential liability.
As the law in this area develops, the potential imposition of liability
upon us for information carried on and disseminated through our network could
require us to implement measures to reduce our exposure to such liability, which
may require the expenditure of substantial resources or the discontinuation of
certain products or service offerings. Any costs that are incurred as a result
of such measures or the imposition of liability could have a material adverse
effect on our operating expenses and our liquidity.
MEMBERS OF OUR BOARD SERVE ON THE BOARDS OF OUR POTENTIAL COMPETITORS, WHICH MAY
CREATE CONFLICTS OF INTEREST
Members of our board of directors also serve as officers or directors
of other telecommunications or Internet services companies. To the extent that
any of these companies presently offer, or at some future point begin to offer,
services having characteristics similar to those offered by us, there may be
conflicts of interest between the fiduciary duties owed by these individuals to
us and the duties owed to these other companies. We have not adopted specific
policy guidelines to address these potential conflicts of interest and if these
conflicts of interest arise, they may be resolved on terms that are not in the
best interests of all of our stockholders.
ANTI-TAKEOVER PROVISIONS COULD PREVENT OR DELAY A CHANGE OF CONTROL
Provisions of our amended and restated certificate of incorporation and
amended and restated by-laws and Delaware law could make it more difficult for a
third party to acquire us, even if doing so would be beneficial to our
stockholders. These provisions include:
o the ability of our board of directors to issue preferred stock without
any further approval being required from our stockholders;
-12-
<PAGE> 16
o the "staggered" nature of our board of directors which results in
directors being elected for terms of three years; and
o the requirement that stockholders provide us with advance notice of
proposed actions.
These provisions may have the effect of delaying, deferring or
preventing a change in our control, impeding a merger, consolidation, takeover
or other business combination, which in turn could preclude our stockholders
from recognizing a premium over the prevailing market price of the common stock.
IMPAIRMENT OF OUR INTELLECTUAL PROPERTY RIGHTS COULD HARM OUR BUSINESS
While we are seeking federal registration of ARC and certain other
trademarks, we have not been awarded any trademark registrations, and are
relying upon our common law rights. It is possible that other entities may
challenge our registration and use of these trademarks based on a claim of
superior rights, dilution or otherwise. Such challenges, if successful, could
preclude us from registering and even using our trademarks, in which case the
expense of developing new trademarks and resulting loss of product
identification and goodwill could have a material adverse effect on our net
income (loss) and our brand awareness.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements within the meaning
of Section 27A of the Securities Act and Section 21E of the Exchange Act.
Forward-looking statements include, but are not limited to, statements about our
plans, objectives, expectations, intentions and assumptions and other statements
that are not historical facts. When used in this prospectus, the words "expect,"
"anticipate," "intend," "plan," "believe," "seek," "estimate" and similar
expressions are generally intended to identify forward-looking statements.
Because these forward-looking statements involve risks and uncertainties, actual
results may differ materially from those expressed or implied by these
forward-looking statements. We do not intend to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
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<PAGE> 17
REGISTERED STOCKHOLDERS
The 6,673,277 shares of common stock of Allied Riser to which this
prospectus relates are being registered for reoffers and resales by our present
and former employees, officers and directors, who acquired the shares of common
stock pursuant to our "employee benefit plans" as that term is defined in Rule
405 of Regulation C under the Securities Act. The registered stockholders may
resell all, a portion or none of such shares of common stock from time to time.
In addition, this prospectus covers and may be used by unnamed non-affiliate
registered stockholders who hold shares of common stock issued under the
"employee benefit plans." The shares being registered include 2,872,834 shares
owned by certain of our directors and officers listed below.
<TABLE>
<CAPTION>
No. of Shares
No. of Shares No. of Shares Not Included
Name Title Owned(1) Registered(1) in Offering
---- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Michael R. Carper Senior vice presi- 266,667 266,667 --*
dent and general
counsel
David H. Crawford Chief executive 823,737 823,737 --*
officer and director
John M. Todd Chief operating 605,501 600,001 5,500*
officer, president
and director
John H. Davis Chief technology 334,334 333,334 1,000*
officer and director
Todd C. Doshier Senior vice presi- 683,761 683,761 --*
dent and chief
financial officer
Stephen W. Schovee Director 6,250 6,250 --*
William J. Elsner Director 6,250 6,250 --*
Rod F. Dammeyer Director 6,250 6,250 --*
William T. White Director 6,250 6,250 --*
R. David Spreng Director 16,250 6,250 10,000*
Blair P. Whitaker Director 6,250 6,250 --*
Jeffrey Weitzen Director 70,667 66,667 4,000*
Mary A. Wilderotter Director 67,667 66,667 1,000*
</TABLE>
* Represents ownership of less than one percent.
-14-
<PAGE> 18
(1) Includes shares of our common stock issued or issuable to the
Registered Stockholders under the Allied Riser 1999 Amended and
Restated Stock Option and Equity Incentive Plan and issued under our
prior benefit plans, whether or not exercisable as of, or within sixty
days of, the date of this Prospectus.
-15-
<PAGE> 19
PLAN OF DISTRIBUTION
Each registered stockholder may sell his or her shares of common stock
for value from time to time under this prospectus in one or more transactions on
Nasdaq, in negotiated transactions or in a combination of such methods of sale,
at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at prices otherwise negotiated. The registered
stockholders may effect such transactions by selling the shares of common stock
to or through broker-dealers, and such broker-dealers may receive compensation
in the form of underwriting discounts, concessions or commissions from the
registered stockholders and/or the purchasers of the shares of common stock for
whom such broker-dealers may act as agent (which compensation may be less than
or in excess of customary commissions).
Each registered stockholder and any broker-dealer that participates in
the distribution of the shares of common stock may be deemed to be an
"underwriter" within the meaning of Section 2(11) of the Securities Act, and any
commissions received by them and any profit on the resale of the shares sold by
them may be deemed to be underwriting discounts and commissions under the
Securities Act. All registered and other expenses incurred by the registered
stockholders will be borne by the registered stockholders. We will pay all other
expenses in connection with this offering and will not receive any proceeds from
sales of any shares of common stock by the registered stockholders.
In addition to any shares of common stock sold hereunder, the
registered stockholders may sell shares of common stock in compliance with all
of the requirements of Rule 144. Notwithstanding the foregoing, the amount of
securities to be reoffered or resold by means of this prospectus, by each
person, may not exceed, during any three-month period, the amount specified in
Rule 144(e). There is no assurance that the registered stockholders will sell
all or any portion of the shares of common stock offered hereby.
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be
passed upon for Allied Riser by Skadden, Arps, Slate, Meagher & Flom LLP.
EXPERTS
The consolidated financial statements of Allied Riser
Communications Corporation as of December 31, 1997 and 1998 and for the period
from inception (December 19, 1996) through December 31, 1997 and for the year
ended December 31, 1998 incorporated by reference into this prospectus have been
audited by Arthur Andersen LLP, independent public accountants, as indicated in
their report with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving such reports.
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<PAGE> 20
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.
The following documents filed with the Securities and Exchange
Commission (the "Commission") by the registrant, Allied Riser Communications
Corporation, a Delaware corporation ("Allied Riser"), pursuant to the Exchange
Act, are incorporated by reference in this registration statement:
(1) Allied Riser's registration statement (Registration No. 333-85597)
on Form S-1 filed with the Commission on August 19, 1999, as amended and Allied
Riser's U.S. prospectus filed with the Commission under Rule 424(b) under the
Securities Act, filed with the Commission on October 29, 1999.
(2) The description of Allied Riser's outstanding common stock
contained in Allied Riser's registration statement on Form 8-A filed with the
Commission on October 25, 1999, as amended on Form 8-A/A filed with the
Commission on October 27, 1999, under Section 12 of the Exchange Act.
(3) Allied Riser's quarterly report on Form 10-Q for the fiscal quarter
ended September 30, 1999, as filed with the Commission on December 13, 1999.
All documents subsequently filed by Allied Riser pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment which indicates that all securities offered have been
sold or which deregisters all securities then remaining unsold, shall be deemed
to be incorporated by reference herein and to be a part hereof from the date of
filing of such documents. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this registration statement to the extent that a
statement contained herein or in any other subsequently filed document which
also is incorporated or deemed to be incorporated by reference herein modifies
or supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
registration statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of Delaware Law authorizes a court to award or a
corporation's board of directors to grant indemnity to directors and officers in
terms sufficiently broad to permit such indemnification under some circumstances
for liabilities arising under the Securities Act and to provide for the
reimbursement of expenses incurred.
-17-
<PAGE> 21
As permitted by the Delaware Law, Article VIII of our Amended and
Restated Bylaws provides that (1) we are required to indemnify our directors and
officers to the fullest extent permitted by the Delaware Law, subject to very
limited exceptions; (2) we are permitted to indemnify our other employees to the
extent that we indemnify our officers and directors, unless otherwise required
by law, our Amended and Restated Certificate, our Amended and Restated Bylaws or
agreements; (3) we are required to advance expenses, as incurred, to our
directors and officers in connection with a legal proceeding to the fullest
extent permitted by the Delaware Law, subject to very limited exceptions; and
(4) the rights conferred in the Amended and Restated Bylaws are not exclusive.
As permitted by the Delaware Law, our Amended and Restated Certificate includes
a provision that eliminates the personal liability of our directors for monetary
damages for breach of fiduciary duty as a director, except for liability (1) for
any breach of the director's duty of loyalty to us or our stockholders; (2) for
acts of omissions not in good faith or that involve intentional misconduct or a
knowing violation of law; (3) under Section 174 of the Delaware Law (regarding
payments of dividends; stock purchases or redemptions which are unlawful) or (4)
for any transaction from which the director derived an improper personal
benefit. This provision in the Amended and Restated Certificate does not
eliminate the directors' fiduciary duty, and in appropriate circumstances
equitable remedies such as injunctive or other forms of non-monetary relief will
remain available under Delaware Law. In addition, each director will continue to
be subject to liability for breach of the director's duty of loyalty to us for
acts or omissions not in good faith or involving intentional misconduct, for
knowing violations of law, for actions leading to improper personal benefit to
the director and for payment of dividends or approval of stock repurchases or
redemptions that are unlawful under Delaware Law. The provision also does not
affect a director's responsibilities under any other law, such as the federal
securities laws or state or federal environmental laws.
Under Article VIII of our Amended and Restated Bylaws, we are
authorized to, and have purchased, insurance covering our directors and officers
against liability asserted against them in their capacity as officers or
directors. In addition, we have entered into indemnification agreements with our
directors, pursuant to which, under certain circumstances, we are required to
indemnify and advance expenses to such director.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
The securities that are to be reoffered or resold pursuant to this
registration statement were issued to employees of Allied Riser pursuant to
employee benefit plans maintained by Allied Riser in transactions that were
exempt from the registration requirements of the Securities Act pursuant to
Section 4(2) thereto and/or Rule 701 thereunder.
ITEM 8. EXHIBITS.
A list of exhibits is set forth on the Exhibit Index which immediately
precedes the exhibits and which is incorporated by reference herein.
ITEM 9. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
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<PAGE> 22
(1) To include any prospectus required by Section 10(a)(3)
of the Securities Act;
(2) 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; and
(3) To include any material information with respect to
the plan of distribu tion not previously disclosed in the registration statement
or any material change to such information in the registration statement;
provided, however, that paragraphs (a)(1) and (a)(2) 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 Allied Riser pursuant to Section 13 or 15(d) of the Exchange Act
that are incorporated by reference in the registration statement.
(b) That, for the purpose of determining any liability under
the Securities Act, 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.
(c) 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.
(d) That, for purposes of determining any liability under the
Securities Act, each filing of the registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to Section 15(d) of
the Exchange Act) that is incorporated by reference in the registration
statement 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.
(e) Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities 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 Securities Act and will be governed by the final
adjudication of such issue.
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<PAGE> 23
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities Act of
1933, the registrant certifies that is has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
registration statement has been signed on its behalf by the undersigned,
thereunto duly authorized in the City of Dallas, State of Texas, on this 14th
day of February, 2000.
ALLIED RISER COMMUNICATIONS
CORPORATION
(Registrant)
By: /s/ DAVID H. CRAWFORD
-----------------------------------------
David H. Crawford
Chief executive officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints David H. Crawford and Todd C. Doshier,
and each of them, his true and lawful attorney-in-fact and agents 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 to this
registration statement, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof. This power of attorney may be executed in counterparts.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on this 14th day of February, 2000.
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<S> <C> <C>
/s/ DAVID H. CRAWFORD Chief executive officer February 14, 2000
- ------------------------------ and director
David H. Crawford (Principal executive officer)
/s/ TODD C. DOSHIER Chief financial officer and February 14, 2000
- ------------------------------ Senior vice president
Todd C. Doshier (Principal financial officer and
accounting officer)
/s/ JOHN M. TODD Chief operating officer, president February 14, 2000
- ------------------------------ and director
John M. Todd
</TABLE>
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<PAGE> 24
<TABLE>
<S> <C> <C>
/s/ JOHN H. DAVIS Chief technology officer and February 14, 2000
- ------------------------------ director
John H. Davis
/s/ STEPHEN S. SCHOVEE Director and chairman of the February 14, 2000
- ------------------------------ board
Stephen S. Schovee
/s/ ROD F. DAMMEYER Director February 14, 2000
- ------------------------------
Rod F. Dammeyer
/s/ WILLIAM J. ELSNER Director February 14, 2000
- ------------------------------
William J. Elsner
/s/ R. DAVID SPRENG Director February 14, 2000
- ------------------------------
R. David Spreng
/s/ JEFFREY WEITZEN Director February 14, 2000
- ------------------------------
Jeffrey Weitzen
/s/ BLAIR P. WHITAKER Director February 14, 2000
- ------------------------------
Blair P. Whitaker
/s/ MARY A. WILDEROTTER Director February 14, 2000
- ------------------------------
Mary A. Wilderotter
/s/ WILLIAM T. WHITE Director February 14, 2000
- ------------------------------
William T. White
</TABLE>
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<PAGE> 25
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
4.1 Form of certificate representing shares of common stock
(incorporated by reference to the Company's Registration
Statement on Form S-1 (Registration No. 333-85597)).
5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP.
10.1 Subscription Agreement, dated as of November 13, 1998, by and
among Allied Riser and the investors listed on the signature
pages thereof. (incorporated by reference to the Company's
Registration Statement on Form S-1 (Registration No. 333-85597))
10.2 Amendment No. 1 to Subscription Agreement, dated as of November,
1998 (incorporated by reference to the Company's Registration
Statement on Form S-1 (Registration No. 333-85597))
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in
Exhibit 5.1).
24.1 Power of Attorney (included on the signature page hereto).
99.1 Allied Riser Communications Corporation 1999 Amended and Restated
Stock Option and Equity Incentive Plan (incorporated by reference
to the Company's Registration Statement on Form S-1 (Registration
No. 333-85597)).
</TABLE>
<PAGE> 1
EXHIBIT 5.1
[Letterhead of Skadden, Arps, Slate, Meagher & Flom LLP]
February 14, 2000
Allied Riser Communications Corporation
1700 Pacific Avenue
Dallas, Texas 75201
Re: Registration Statement on Form S-8 of
Allied Riser Communications Corporation
Ladies and Gentlemen:
We have acted as special counsel to Allied Riser Communications
Corporation, a Delaware corporation (the "Company"), in connection with the
proposed issuance by the Company of up to 5,000,000 shares (the "Shares") of
Common Stock, par value $0.0001 per share (the "Common Stock"), pursuant to the
Allied Riser Communications Corporation 1999 Stock Option and Equity Incentive
Plan (the "Stock Option Plan").
This opinion is delivered in accordance with the requirements of Item
601(b)(5) of Regulation S-K under the Securities Act of 1933, as amended (the
"Securities Act").
In connection with this opinion, we have examined and are familiar with
originals or copies, certified or otherwise identified to our satisfaction, of
(i) the Company's Registration Statement on Form S-8, relating to the Shares,
filed with the Securities and Exchange Commission (the "Commission") under the
Securities Act on February 14, 2000 (together with all exhibits thereto, the
"Registration Statement"), (ii) the Amended and Restated Certificate of
Incorporation of the Company, as currently in effect, (iii) the By-Laws of the
Company, as currently in effect, (iv) specimen certificates representing the
Common Stock, (v) resolutions of the Board of Directors of the Company relating
to the Stock Option Plan and the filing of the Registration Statement; (vi) the
Stock Option Plan; and (vii) the form of option agreement between the Company
and the employees, directors and officers receiving options (the "Option
Agreement"). We have also examined originals or copies, certified or otherwise
identified to our satisfaction, of such records of the Company and such
agreements, certificates of public officials, certificates of officers or other
<PAGE> 2
Allied Riser Communications
Corporation
February 14, 2000
Page 2
representatives of the Company and others, and such other documents,
certificates and records as we have deemed necessary or appropriate as a basis
for the opinions set forth herein.
In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such latter documents. In making our
examination of documents executed or to be executed by parties other than the
Company, we have assumed that such parties had the power, corporate or other, to
enter into and perform all obligations thereunder and have also assumed the due
authorization by all requisite action, corporate or other, and execution and
delivery by such parties of such documents and the validity and binding effect
thereof. We have further assumed that each of the Option Agreements to be
entered into between the Company and the employees, directors and officers
receiving options under the Stock Option Plan will conform to the form of
agreement examined by us. As to any facts material to the opinions expressed
herein which we have not independently established or verified, we have relied
upon oral or written statements and representations of officers and other
representatives of the Company and others.
Members of our firm are admitted to the Bar in the State of New York,
and we do not express any opinion as to the laws of any other jurisdiction other
the General Corporation Law of the State of Delaware.
Based upon and subject to the foregoing, we are of the opinion that the
Shares have been duly authorized and when the Shares have been issued, delivered
and paid for upon exercise of options duly granted pursuant to the terms of the
Stock Option Plan and the Option Agreements, and certificates representing the
Shares in the form of the specimen certificates examined by us have been
manually signed by an authorized officer of the transfer agent and registrar for
the Common
<PAGE> 3
Allied Riser Communications
Corporation
February 14, 2000
Page 3
Stock and registered by such transfer agent and registrar, such Shares will be
validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion with the Commission as
Exhibit 5.1 to the Registration Statement. In giving such consent, we do not
thereby admit that we are included in the category of persons whose consent is
required under Section 7 of the Securities Act.
Very truly yours,
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated January 11, 1999 (except with respect to Note 12 as to which the dates
are April 29, 1999 for the matters discussed in the first two paragraphs,
September 18, 1999 for the matter discussed in the third paragraph, and October
25, 1999 for the matter discussed in fourth paragraph), on the consolidated
financial statements of Allied Riser Communications Corporation as of December
31, 1997 and 1998 and for the period from inception (December 19, 1996) through
December 31, 1997 and for the year ended December 31, 1998 (and to all
references to our Firm), incorporated by reference in the Registration
Statement on Form S-8.
/s/ ARTHUR ANDERSEN LLP
Dallas, Texas,
February 8, 2000
