Filed pursuant to Rule 424 (b)(5)
Registration File No. 333-108387
PROSPECTUS SUPPLEMENT
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(To Prospectus dated November 18, 2003)
73,170,732 SHARES
[SIRIUS SATELLITE LOGO]
COMMON STOCK
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We are offering all 73,170,732 shares of our common stock to be sold in this
offering.
Our common stock is quoted on the Nasdaq National Market under the symbol
'SIRI.' On November 18, 2003, the last reported sale price of our common stock
on the Nasdaq National Market was $2.23 per share.
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. BEFORE BUYING ANY
SHARES, YOU SHOULD CAREFULLY READ THE DISCUSSION OF MATERIAL RISKS OF INVESTING
IN OUR COMMON STOCK IN 'RISK FACTORS' BEGINNING ON PAGE S-6 OF THIS PROSPECTUS
SUPPLEMENT AND ON PAGE 4 OF THE ACCOMPANYING PROSPECTUS.
THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS HAVE NOT
APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS PROSPECTUS
SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PER SHARE TOTAL
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Public offering price $2.10 $153,658,537
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Underwriting discounts and commissions $0.05 $ 3,658,537
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Proceeds, before expenses, to us $2.05 $150,000,000
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We have granted the underwriter the right to purchase up to an additional
10,975,610 shares to cover over-allotments within 30 days from the date of this
prospectus supplement.
The underwriter is offering the shares of our common stock as described in
'Underwriting.' Delivery of the shares will be made on or about November 24,
2003.
UBS INVESTMENT BANK
The date of this prospectus supplement is November 19, 2003.
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You should rely only on the information contained in this prospectus supplement
and the related prospectus to which we have referred you. We have not authorized
anyone to provide you with information that is different. This prospectus
supplement and the related prospectus may only be used where it is legal to sell
these securities. The information in this prospectus supplement and the related
prospectus may only be accurate on the date of this prospectus supplement.
TABLE OF CONTENTS
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PROSPECTUS SUPPLEMENT
Special Note Regarding
Forward-Looking Statements......... ii
Summary.............................. S-1
Selected Consolidated Historical
Financial Data..................... S-4
Risk Factors......................... S-6
Use of Proceeds...................... S-8
Price Range of Common Stock.......... S-8
Dividend Policy...................... S-8
Dilution............................. S-9
Capitalization....................... S-10
Certain United States Tax
Consequences to Non-U.S. Holders... S-11
Underwriting......................... S-13
Legal Matters........................ S-15
PROSPECTUS
Special Note Regarding
Forward-Looking Statements......... 2
About This Prospectus................ 3
About Sirius......................... 3
Risk Factors......................... 4
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock
Dividends.......................... 4
Use of Proceeds...................... 4
Description of Debt Securities....... 5
Description of Capital Stock......... 17
Description of Warrants.............. 21
Plan of Distribution................. 25
Legal Matters........................ 26
Experts.............................. 26
Incorporation by Reference........... 27
Where You May Find Additional
Available Information About Us..... 27
As used in this prospectus supplement and the accompanying prospectus, 'Sirius,'
'company,' 'we,' 'our,' 'ours' and 'us' refer to Sirius Satellite Radio Inc.,
except where the context otherwise requires or as otherwise indicated.
i
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
The following cautionary statements identify important factors that could
cause our actual results to differ materially from those projected in the
forward-looking statements made in this prospectus supplement and the related
prospectus. Any statements about our expectations, beliefs, plans, objectives,
assumptions or future events or performance are not historical facts and may be
forward-looking. These statements are often, but not always, made through the
use of words or phrases such as 'will likely result,' 'are expected to,' 'will
continue,' 'is anticipated,' 'estimated,' 'intends,' 'plans,' 'projection' and
'outlook.' Accordingly, these statements involve estimates, assumptions and
uncertainties which could cause actual results to differ materially from those
expressed in them. Any forward-looking statements are qualified in their
entirety by reference to the factors discussed throughout this prospectus
supplement and the related prospectus. Among the significant factors that have a
direct bearing on our results of operations are:
our competitive position, as XM Satellite Radio, the other satellite radio
service provider in the United States, has substantially more subscribers
than us and may have certain competitive advantages;
our dependence upon third parties to manufacture, distribute, market and
sell SIRIUS radios and components for those radios;
the unproven market for our service; and
the useful life of our satellites, which have experienced circuit failures
on their solar arrays and may not be covered by insurance.
These and other factors are discussed in 'Risk Factors' in the related
prospectus and elsewhere in this prospectus supplement and in the documents
incorporated herein by reference.
Because the risk factors referred to above could cause actual results or
outcomes to differ materially from those expressed in any forward-looking
statements made by us or on our behalf, you should not place undue reliance on
any of these forward-looking statements. Further, any forward-looking statement
speaks only as of the date on which it is made, and we undertake no obligation
to update any forward-looking statement or statements to reflect events or
circumstances after the date on which the statement is made or to reflect the
occurrence of unanticipated events. New factors emerge from time to time, and it
is not possible for us to predict which will arise. In addition, we cannot
assess with any precision the impact of each factor on our business or the
extent to which any factor, or combination of factors, may cause actual results
to differ materially from those contained in any forward-looking statements.
ii
SUMMARY
This summary highlights information contained elsewhere, or incorporated by
reference, in this prospectus supplement and the related prospectus. Because it
is a summary, it may not contain all of the information that is important to
you. To understand this offering fully, you should read this entire prospectus
supplement and the related prospectus carefully, including the financial
statements and the documents incorporated by reference herein.
ABOUT SIRIUS
From our three orbiting satellites, we directly broadcast more than 100
channels, which we call 'streams,' of digital-quality audio throughout the
continental United States for a monthly subscription fee of $12.95. We deliver
60 streams of 100% commercial-free music in virtually every genre, and over 40
streams of news, sports, weather, talk, comedy, public radio and children's
programming. Our broad and deep range of music as well as our news, sports and
entertainment programming is not available on conventional radio in any market
in the United States. We hold one of only two licenses issued by the Federal
Communications Commission to operate a national satellite radio system.
As of September 30, 2003, we had 149,612 subscribers. Our primary source of
revenues is subscription and activation fees. In addition, we derive revenues
from selling advertising on our non-music streams.
We have agreements with Ford Motor Company, DaimlerChrysler Corporation, BMW
of North America, LLC, Nissan North America, Inc. and Volkswagen of America,
Inc. that contemplate the manufacture and sale of vehicles that include SIRIUS
radios. These alliances cover all major brands and affiliates of these
automakers, including Ford, Lincoln, Mercury, Jaguar, Land Rover, Chrysler,
Mercedes, BMW, MINI, Mazda, Dodge, Jeep, Volvo, Nissan, Infiniti, Volkswagen,
Audi and Freightliner and Sterling heavy trucks. Ford, DaimlerChrysler, BMW,
Nissan and Volkswagen are not required to manufacture or sell vehicles that
include SIRIUS radios pursuant to these agreements.
In the autosound aftermarket, SIRIUS radios are available for sale at
various national and regional retailers, such as Best Buy, Circuit City,
Ultimate Electronics, Tweeter Home Entertainment Group, Crutchfield and Good
Guys. On September 30, 2003, SIRIUS radios were available at approximately 5,500
retail locations.
We believe that our ability to attract and retain subscribers will be
dependent in large part on creating and sustaining distribution channels for
SIRIUS radios, both in the retail aftermarket and with automakers, and on the
quality and entertainment value of our programming.
In March 2003, we completed a restructuring of our debt and equity
capitalization. As part of this restructuring, we issued shares of our common
stock in exchange for (i) 91% of our then outstanding debt and (ii) all of our
then outstanding convertible preferred stock. We also raised an additional
$197,112,000 in net proceeds from the sale of our common stock. Additional
information regarding this restructuring is contained in our Annual Report on
Form 10-K for the year ended December 31, 2002. In May 2003, we issued
$201,250,000 in aggregate principal amount of our 3 1/2% Convertible Notes due
2008. In June 2003, we issued 86,250,000 shares of our common stock. We received
approximately $339,771,000 in net proceeds from these offerings.
Our principal executive offices are located at 1221 Avenue of the Americas,
New York, New York 10020. Our telephone number is (212) 584-5100. Our internet
address is sirius.com. Sirius.com is an inactive textual reference only, meaning
that the information contained on the website is not part of this prospectus
supplement and is not incorporated by reference herein.
S-1
RISK FACTORS
Investing in our common stock involves risk, including the risks described
in this prospectus supplement and the documents incorporated by reference
herein. You should carefully consider the risk factors before investing in our
common stock. These risk factors are set forth in our Annual Report on
Form 10-K for the year ended December 31, 2002 and in filings made by us with
the Securities and Exchange Commission after the date of this prospectus
supplement pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934.
S-2
THE OFFERING
Common stock offered......................... 73,170,732 shares
Common stock outstanding after the
offering................................... 1,071,376,375 shares (1)
Over-allotment option........................ 10,975,610 shares
Use of proceeds.............................. We intend to use the net proceeds of this offering
for general corporate purposes, including investments
in programming and retail and automotive
distribution.
We believe we are in advanced stages of negotiations
for certain significant distribution and programming
agreements. These agreements, which we believe would
be beneficial to our business, are likely to require
us to make material cash payments, both initially and
over time, and to award significant equity-based
consideration, which may be dilutive to our common
stockholders. We cannot assure you that we will
successfully conclude any of these negotiations or
that we will derive any long term benefit from the
agreements that may result.
Dividend policy.............................. We have never paid cash dividends on our capital
stock. We currently intend to retain earnings, if
any, for use in our business and do not anticipate
paying cash dividends in the foreseeable future.
Nasdaq National Market symbol................ SIRI
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(1) Based on the number of shares outstanding at September 30, 2003. Excludes
(a) 74,383,138 shares of common stock issuable upon the exercise of
outstanding and unexercised options and restricted stock units as of
September 30, 2003, (b) 8,000,000 shares of common stock issuable upon the
exercise of warrants held by Ford Motor Company and DaimlerChrysler
Corporation, (c) 2,100,000 shares of common stock issuable upon the exercise
of warrants held by Lehman Commercial Paper Inc., (d) 4,233,389 shares of
common stock issuable upon the exercise of other warrants, (e) 61,274 shares
of common stock issuable upon the conversion of our 8 3/4% Convertible
Subordinated Notes due 2009, (f) 145,833,337 shares of common stock issuable
upon the conversion of our 3 1/2% Convertible Notes due 2008 and
(g) 87,577,114 shares of common stock issuable upon exercise of warrants
held by affiliates of Apollo Management, L.P. and The Blackstone Group L.P.
('Blackstone') as of September 30, 2003. On November 5, 2003, Blackstone
exercised 21,027,512 warrants, each with an exercise price of $1.04 per
share, through a cashless exercise. In connection with this exercise,
11,531,805 shares of our common stock were issued to Blackstone.
S-3
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA
The selected consolidated historical financial data shown below as of and
for the years ended December 31, 1998, 1999, 2000, 2001 and 2002 are derived
from our respective audited consolidated financial statements. The selected
consolidated historical financial data shown below as of and for the nine months
ended September 30, 2002 and 2003 are derived from our unaudited consolidated
financial statements. In the opinion of management, our unaudited selected
consolidated financial statements include all adjustments, consisting of normal
recurring adjustments that are necessary for a fair presentation of our
consolidated financial position and results of operations for these periods. The
selected consolidated historical financial data include certain
reclassifications to conform to our current presentation. The selected
consolidated historical data should be read together with 'Management's
Discussion and Analysis of Financial Condition and Results of Operations' and
the consolidated financial statements and related notes from our Annual Report
on Form 10-K for the year ended December 31, 2002 and our Quarterly Reports on
Form 10-Q for the quarters ended September 30, 2002 and 2003, incorporated by
reference herein.
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------------------------------ -----------------------
1998 1999 2000 2001 2002 2002 2003
---- ---- ---- ---- ---- ---- ----
(IN THOUSANDS, EXCEPT PER SHARE DATA)
STATEMENT OF OPERATIONS DATA:
Operating revenues(1)........... $ -- $ -- $ -- $ -- $ 805 $ 120 $ 7,922
Operating expenses(2)........... (39,079) (63,518) (125,634) (168,456) (313,932) (222,451) (320,335)
Operating loss.................. (39,079) (63,518) (125,634) (168,456) (313,127) (222,331) (312,413)
Net loss(3)(4).................. (48,396) (62,822) (134,744) (235,763) (422,481) (300,395) (78,437)
Preferred stock dividends....... (19,380) (30,321) (39,811) (41,476) (45,300) (33,494) (8,574)
Preferred stock deemed
dividends(5)................... (11,676) (3,535) (8,260) (680) (685) (513) (79,634)
Accretion of dividends in
connection with the issuance of
warrants on preferred stock.... (6,501) (303) (900) -- -- -- --
Net loss applicable to common
stockholders................... (85,953) (96,981) (183,715) (277,919) (468,466) (334,402) (166,645)
Net loss per share applicable to
common stockholders (basic and
diluted)....................... $ (4.79) $ (3.96) $ (4.72) $ (5.30) $ (6.13) $ (4.41) $ (0.22)
Weighted average common shares
outstanding
Basic and diluted............ 17,932 24,470 38,889 52,427 76,394 75,820 755,009
BALANCE SHEET DATA (END OF
PERIOD):
Cash and cash equivalents....... $150,190 $ 81,809 $ 14,397 $ 4,726 $ 18,375 $ 63,966 $ 450,508
Marketable securities(6)........ 115,433 317,810 121,862 304,218 155,327 184,732 28,603
Restricted investments(7)....... -- 67,454 48,801 21,998 7,200 7,200 9,007
Working capital................. 180,996 303,865 143,981 275,732 151,289 171,911 439,267
Total assets.................... 643,880 1,206,612 1,323,582 1,527,605 1,340,940 1,433,545 1,568,301
Short-term notes payable........ 70,863 114,075 -- -- -- -- --
Current portion of long-term
debt........................... -- -- -- 15,000 -- 41,500 --
Long-term debt, net of current
portion........................ 183,573 538,690 522,602 639,990 670,357 547,414 259,686
Accrued interest, net of current
portion........................ 784 5,140 10,881 17,201 46,914 22,354 --
10 1/2% Series C Preferred
Stock.......................... 156,755 149,285 -- -- -- -- --
9.2% Series A Junior Cumulative
Convertible Preferred Stock.... 137,755 148,894 162,380 177,120 193,230 189,030 --
9.2% Series B Junior Cumulative
Convertible Preferred Stock.... -- 64,238 70,507 77,338 84,781 82,843 --
9.2% Series D Junior Cumulative
Convertible Preferred Stock.... -- -- 210,125 230,710 253,142 247,302 --
Accumulated deficit............. (71,669) (134,491) (269,235) (504,998) (927,479) (805,393) (1,005,916)
Stockholders' equity............ 77,953 134,179 290,483 322,649 36,846 170,404 1,231,596
---------
(1) We were a development stage company until we entered commercial operations
on February 14, 2002.
(footnotes continued on next page)
S-4
(footnotes continued from previous page)
(2) Operating expenses include non-cash stock compensation expense (benefit) of
$104, $1,206, $7,178, $14,044, $(7,867), $(7,995) and $2,716 for the years
ended December 31, 1998, 1999, 2000, 2001 and 2002, and for the nine months
ended September 30, 2002 and 2003, respectively.
(3) Included in the net loss of $48,396 for the year ended December 31, 1998 is
$25,682 of special charges related primarily to the termination of launch
and orbit related contracts required when we decided to enhance our
satellite delivery system to include a third in-orbit satellite.
(4) Included in the net loss of $78,437 for the nine months ended September 30,
2003 is other income of $256,538 related to our debt restructuring.
(5) The deemed dividend for the year ended December 31, 1998 relates primarily
to the conversion feature associated with our 9.2% Series A Junior
Cumulative Convertible Preferred Stock. We computed these deemed dividends
in accordance with the SEC's position on accounting for preferred stock
which is convertible at a discount to the market price. The deemed dividends
for the years ended December 31, 1999 and 2000 relate primarily to the
conversions of our 10 1/2% Series C Convertible Preferred Stock for shares
of our common stock. The deemed dividend for the nine months ended
September 30, 2003 relates primarily to the exchange of our preferred stock
for shares of our common stock and warrants to purchase our common stock.
(6) Marketable securities are stated at fair market value and consist of fixed
income securities with a maturity at the time of purchase of greater than
three months.
(7) Restricted investments include securities held by the trustee of our senior
secured notes to pay interest in full on those notes through May 15, 2002.
Also included in restricted investments are certificates of deposit and
government agency obligations pledged to secure our reimbursement
obligations under letters of credit required by lessors and other creditors.
S-5
RISK FACTORS
In addition to the other information in this prospectus supplement, in the
related prospectus and incorporated by reference herein, the following risk
factors should be considered carefully in evaluating us and our business and in
deciding whether to invest in our common stock.
FUTURE SALES OF OUR COMMON STOCK MAY DEPRESS OUR STOCK PRICE.
Sales of a substantial number of shares of our common stock in the public
market or otherwise, by the company or a major stockholder, could depress the
market price of our common stock and impair our ability to raise capital through
the sale of additional equity securities. None of our existing stockholders or
directors have agreed to refrain from making sales of our common stock following
this offering.
WE MAY ISSUE ADDITIONAL EQUITY SECURITIES, WHICH WOULD LEAD TO DILUTION OF OUR
ISSUED AND OUTSTANDING STOCK.
The issuance of additional equity securities or securities convertible into
equity securities would result in dilution of existing stockholders' equity
interest in us. We are authorized to issue, without stockholder approval,
50,000,000 shares of preferred stock, $.001 par value per share, in one or more
series, which may give other stockholders dividend, conversion, voting, and
liquidation rights, among other rights, which may be superior to the rights of
holders of our common stock. Our board of directors has no present intention of
issuing any such preferred series, but reserves the right to do so in the
future. In addition, we are authorized to issue, without stockholder approval,
up to approximately 1,100,000,000 additional shares of common stock, $.001 par
value per share. We are also authorized to issue, without stockholder approval,
securities convertible into either common stock or preferred stock.
We believe we are in advanced stages of negotiations for certain significant
distribution and programming agreements which, if completed, are likely to
require us to award significant equity-based compensation.
THE MARKET PRICE OF OUR SECURITIES COULD BE HURT BY SUBSTANTIAL PRICE AND VOLUME
FLUCTUATIONS.
Historically, securities prices and trading volumes for emerging companies
fluctuate widely for a number of reasons, including some reasons that may be
unrelated to their businesses or results of operations. This market volatility
could depress the price of our securities 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 securities would likely significantly decrease.
EXISTING STOCKHOLDERS MAY CONTROL US AND THEIR INTERESTS MAY CONFLICT WITH
YOURS.
As of September 30, 2003, affiliates of OppenheimerFunds, Inc. and Apollo
Management, L.P. beneficially owned approximately 36.7% of our outstanding
common stock. As a result of this concentration of ownership, these
stockholders, if they choose to act in concert, may exert considerable influence
over our management and policies. Similarly, some or all of these stockholders
could delay, defer or prevent a change of control.
OUR RIGHTS PLAN AND ANTI-TAKEOVER PROVISIONS IN OUR CHARTER DOCUMENTS COULD
PREVENT AN ACQUISITION OF OUR COMPANY.
Our stockholders rights plan, the anti-takeover provisions in our charter
documents and future issuance of our preferred stock could be deemed to have
anti-takeover effects and may delay, deter or prevent an acquisition of our
company that a stockholder might consider to be in his or her best interest. Our
board of directors has the authority to issue shares of preferred stock in one
or more series and to determine the price, rights, preferences and privileges of
those shares without any further vote or action by stockholders. We have adopted
a stockholders rights plan
S-6
and in connection with the stockholders rights plan, our board of directors
designated 300,000 shares of preferred stock as Series B Preferred Stock. Any
issuance of our preferred stock, including preferred stock with voting and
conversion rights, may adversely affect the voting power of the holders of
common stock.
We also may become subject to the anti-takeover provisions of Section 203 of
the Delaware General Corporation Law. These provisions could delay or prevent a
change of our control or adversely affect the market price of our common stock.
Furthermore, the severance provisions of employment agreements with some of our
executive officers provide for payments that could discourage an attempted
change in our control.
S-7
USE OF PROCEEDS
We will receive net proceeds from the offering of approximately $149.6
million ($172.1 million if the underwriter exercises its over-allotment option
in full) after deducting estimated discounts, commissions and other expenses. We
intend to use the net proceeds from the sale of our common stock in this
offering for general corporate purposes, including investments in programming
and retail and automotive distribution.
We believe we are in advanced stages of negotiations for certain significant
distribution and programming agreements. These agreements, which we believe
would be beneficial to our business, are likely to require us to make material
cash payments, both initially and over time, and to award significant
equity-based consideration, which may be dilutive to our common stockholders. We
cannot assure you that we will successfully conclude any of these negotiations
or that we will derive any long term benefit from the agreements that may
result.
PRICE RANGE OF COMMON STOCK
Our common stock is traded on the Nasdaq National Market under the symbol
'SIRI.' The following table sets forth the high and low closing bid price for
our common stock, as reported by Nasdaq, for the periods indicated below:
HIGH LOW
---- ---
Year ended December 31, 2001
First Quarter........................................... $35.00 $12.44
Second Quarter.......................................... 18.34 6.91
Third Quarter........................................... 10.81 3.34
Fourth Quarter.......................................... 11.63 2.30
Year ended December 31, 2002
First Quarter........................................... 10.88 4.14
Second Quarter.......................................... 5.78 3.28
Third Quarter........................................... 3.77 0.76
Fourth Quarter.......................................... 1.32 0.52
Year ending December 31, 2003
First Quarter........................................... 1.36 0.41
Second Quarter.......................................... 2.35 0.63
Third Quarter........................................... 2.02 1.53
Fourth Quarter (through November 18, 2003).............. 2.62 1.85
On November 18, 2003, the closing bid price of our common stock on the
Nasdaq National Market was $2.23 per share. On November 18, 2003, there were
approximately 220,000 beneficial holders of our common stock.
DIVIDEND POLICY
We have never paid cash dividends on our capital stock. We currently intend
to retain earnings, if any, for use in our business and do not anticipate paying
any cash dividends in the foreseeable future.
S-8
DILUTION
The net tangible book value of our common stock at September 30, 2003 was
approximately $1,148 million, or $1.15 per share. Net tangible book value per
share represents the amount of our stockholders' equity, less intangible assets
(the book value of our FCC license), divided by the number of shares of common
stock outstanding as of September 30, 2003.
Pro forma net tangible book value dilution per share represents the
difference between the amount per share paid by purchasers of shares of common
stock in this offering, and the pro forma net tangible book value per share of
common stock immediately after completion of this offering. After the sale of
the 73,170,732 shares of common stock we are offering and after deducting
underwriting discounts, commissions and estimated offering expenses payable by
us, the pro forma net tangible book value at September 30, 2003 would have been
approximately $1,298 million, or $1.21 per share. This represents an immediate
increase in pro forma net tangible book value of $0.06 per share to existing
stockholders and an immediate dilution in pro forma net tangible book value of
$0.89 per share to new investors purchasing our common stock in this offering as
illustrated in the following table:
Price to public per share................................... $2.10
Net tangible book value per share at
September 30, 2003.................................... $1.15
Increase per share attributable to new investors........ 0.06
-----
Pro forma net tangible book value per share after this
offering.................................................. 1.21
-----
Pro forma net tangible book value dilution per share to new
investors................................................. $0.89
-----
-----
S-9
CAPITALIZATION
The following table sets forth our cash, restricted investments and
capitalization as of September 30, 2003 (1) on an actual basis and (2) adjusted
for the issuance of the common stock in this offering after deducting discounts,
commissions and other estimated expenses.
AS OF SEPTEMBER 30, 2003
------------------------
ACTUAL AS ADJUSTED
------ -----------
(UNAUDITED)
(IN THOUSANDS)
Cash, cash equivalents and marketable securities(1)......... $ 479,111 $ 628,711
---------- ----------
---------- ----------
Restricted investments(2)................................... $ 9,007 $ 9,007
---------- ----------
---------- ----------
Debt securities:
15% Senior Secured Discount Notes due 2007.............. $ 29,200 $ 29,200
14 1/2% Senior Secured Notes due 2009................... 27,492 27,492
3 1/2% Convertible Notes due 2008....................... 201,250 201,250
8 3/4% Convertible Subordinated Notes due 2009.......... 1,744 1,744
---------- ----------
Total debt securities............................... 259,686 259,686
---------- ----------
Stockholders' equity:
Common stock, at par value, $0.001 per share(3)......... 998 1,071
Additional paid-in capital(3)........................... 2,285,204 2,434,731
Deferred compensation................................... (48,676) (48,676)
Accumulated other comprehensive loss.................... (14) (14)
Accumulated deficit..................................... (1,005,916) (1,005,916)
---------- ----------
Total stockholders' equity.............................. 1,231,596 1,381,196
---------- ----------
Total capitalization................................ $1,491,282 $1,640,882
---------- ----------
---------- ----------
---------
(1) Marketable securities are stated at fair market value and
consist of fixed income securities with a maturity at the
time of purchase of greater than three months.
(2) Restricted investments include certificates of deposit and
government agency obligations pledged to secure our
reimbursement obligations under letters of credit required
by lessors and other creditors.
(3) Excludes: (a) 74,383,138 shares of common stock issuable
upon the exercise of outstanding and unexercised options and
restricted stock units as of September 30, 2003,
(b) 8,000,000 shares of common stock issuable upon the
exercise of warrants held by Ford Motor Company and
DaimlerChrysler Corporation, (c) 2,100,000 shares of common
stock issuable upon the exercise of warrants held by Lehman
Commercial Paper Inc., (d) 4,233,389 shares of common stock
issuable upon the exercise of other warrants, (e) 61,274
shares of common stock issuable upon the conversion of our
8 3/4% Convertible Subordinated Notes due 2009,
(f) 145,833,337 shares of common stock issuable upon the
conversion of our 3 1/2% Convertible Notes due 2008 and
(g) 87,577,114 shares of common stock issuable upon exercise
of warrants held by affiliates of Apollo Management, L.P.
and The Blackstone Group L.P. ('Blackstone') as of
September 30, 2003. On November 5, 2003, Blackstone
exercised 21,027,512 warrants each with an exercise price of
$1.04 per share, through a cashless exercise. In connection
with this exercise, 11,531,805 shares of our common stock
were issued to Blackstone.
S-10
CERTAIN UNITED STATES TAX CONSEQUENCES TO NON-U.S. HOLDERS
The following summary describes the material U.S. federal income and estate
tax consequences of the ownership of our common stock by a Non-U.S. Holder (as
defined below) as of the date hereof. This discussion does not address all
aspects of U.S. federal income and estate taxes and does not deal with foreign,
state and local consequences that may be relevant to such Non-U.S. Holders in
light of their personal circumstances. Special rules may apply to certain
Non-U.S. Holders, such as United States expatriates, 'controlled foreign
corporations,' 'passive foreign investment companies,' 'foreign personal holding
companies,' corporations that accumulate earnings to avoid U.S. federal income
tax, and investors in pass-through entities that are subject to special
treatment under the Internal Revenue Code of 1986, as amended (the 'Code'). Such
Non-U.S. Holders should consult their own tax advisors to determine the U.S.
federal, state, local and other tax consequences that may be relevant to them.
Furthermore, the discussion below is based upon the provisions of the Code, and
regulations, rulings and judicial decisions thereunder as of the date hereof,
and such authorities may be repealed, revoked or modified, perhaps
retroactively, so as to result in U.S. federal income tax consequences different
from those discussed below. PERSONS CONSIDERING THE PURCHASE, OWNERSHIP OR
DISPOSITION OF OUR COMMON STOCK SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING
THE U.S. FEDERAL INCOME TAX CONSEQUENCES IN LIGHT OF THEIR PARTICULAR SITUATIONS
AS WELL AS ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY OTHER TAXING
JURISDICTION.
If a partnership holds our common stock, the tax treatment of a partner will
generally depend upon the status of the partner and the activities of the
partnership. Persons who are partners of partnerships holding our common stock
should consult their tax advisors.
As used herein, a 'U.S. Holder' of common stock means a holder that is for
U.S. federal income tax purposes (i) a citizen or resident of the United States,
(ii) a corporation or partnership created or organized in or under the laws of
the United States or any political subdivision thereof, (iii) an estate the
income of which is subject to U.S. federal income taxation regardless of its
source or (iv) a trust if it (X) is subject to the primary supervision of a
court within the United States and one or more U.S. persons have the authority
to control all substantial decisions of the trust or (Y) has a valid election in
effect under applicable U.S. Treasury regulations to be treated as a U.S.
person. A 'Non-U.S. Holder' is a holder that is not a U.S. Holder.
DIVIDENDS
Dividends paid to a Non-U.S. Holder of our common stock generally will be
subject to withholding of U.S. federal income tax at a 30% rate or such lower
rate as may be specified by an applicable income tax treaty. However, dividends
that are effectively connected with the conduct of a trade or business by the
Non-U.S. Holder within the United States and, where an income tax treaty
applies, are attributable to a U.S. permanent establishment of the Non-U.S.
Holder, are not subject to the withholding tax, but instead are subject to U.S.
federal income tax on a net income basis at applicable graduated individual or
corporate rates. Certain certification and disclosure requirements must be
satisfied for effectively connected income to be exempt from withholding. Any
such effectively connected dividends received by a foreign corporation may be
subject to an additional 'branch profits tax' at a 30% rate or such lower rate
as may be specified by an applicable income tax treaty.
A Non-U.S. Holder of our common stock who wishes to claim the benefit of an
applicable treaty rate (and avoid backup withholding as discussed below) for
dividends, will be required to (a) complete Internal Revenue Service ('IRS')
Form W-8BEN (or other applicable form) and certify under penalties of perjury,
that such holder is not a U.S. person or (b) if the common stock is held through
certain foreign intermediaries, satisfy the relevant certification requirements
of applicable U.S. Treasury regulations. Special certification and other
requirements apply to certain Non-U.S. Holders that are entities rather than
individuals.
S-11
A Non-U.S. Holder of our common stock eligible for a reduced rate of U.S.
withholding tax pursuant to an income tax treaty may obtain a refund of any
excess amounts withheld by filing an appropriate claim for refund with the IRS.
GAIN ON DISPOSITION OF COMMON STOCK
A Non-U.S. Holder generally will not be subject to U.S. federal income tax
with respect to gain recognized on a sale or other disposition of common stock
unless (i) the gain is effectively connected with a trade or business of the
Non-U.S. Holder in the United States, and, where an income tax treaty applies,
is attributable to a U.S. permanent establishment of the Non-U.S. Holder,
(ii) in the case of a Non-U.S. Holder who is an individual and holds our common
stock as a capital asset, such holder is present in the United States for 183 or
more days in the taxable year of the sale or other disposition and certain other
conditions are met, or (iii) we are or have been a 'U.S. real property holding
corporation' for U.S. federal income tax purposes.
An individual Non-U.S. Holder described in clause (i) above will be subject
to tax on the net gain derived from the sale under regular graduated U.S.
federal income tax rates. An individual Non-U.S. Holder described in
clause (ii) above will be subject to a flat 30% tax on the gain derived from the
sale, which may be offset by U.S. source capital losses (even though the
individual is not considered a resident of the United States). If a Non-U.S.
Holder that is a foreign corporation falls under clause (i) above, it will be
subject to tax on its gain under regular graduated U.S. federal income tax rates
and, in addition, may be subject to the branch profits tax equal to 30% of its
effectively connected earnings and profits or at such lower rate as may be
specified by an applicable income tax treaty.
We believe we are not and do not anticipate becoming a 'U.S. real property
holding corporation' for U.S. federal income tax purposes. If we are or become a
U.S. real property holding corporation, so long as the common stock continues to
be regularly traded on an established securities market, only a Non-U.S. Holder
who holds or held (at any time during the shorter of the five year period
preceding the date of disposition or the holder's holding period) more than 5%
of our common stock will be subject to U.S. federal income tax on the
disposition of our common stock.
FEDERAL ESTATE TAX
Common stock held by an individual Non-U.S. Holder at the time of death will
be included in such holder's gross estate for U.S. federal estate tax purposes,
unless an applicable estate tax treaty provides otherwise.
INFORMATION REPORTING AND BACKUP WITHHOLDING
We must report annually to the IRS and to each Non-U.S. Holder the amount of
dividends paid to such holder and the tax withheld with respect to such
dividends, regardless of whether withholding was required. Copies of the
information returns reporting such dividends and withholding may also be made
available to the tax authorities in the country in which the Non-U.S. Holder
resides under the provisions of an applicable income tax treaty.
A Non-U.S. Holder will be subject to backup withholding unless applicable
certification requirements are met.
Information reporting and, depending on the circumstances, backup
withholding, will apply to the proceeds of a sale of common stock within the
United States or conducted through United States-related financial
intermediaries unless the beneficial owner certifies under penalties of perjury
that it is a Non-U.S. Holder (and the payor does not have actual knowledge or
reason to know that the beneficial owner is a U.S. person) or the holder
otherwise establishes an exemption.
Any amounts withheld under the backup withholding rules may be allowed as a
refund or a credit against such holder's U.S. federal income tax liability
provided the required information is furnished to the IRS.
S-12
UNDERWRITING
We are offering the shares of our common stock described in this prospectus
supplement through UBS Securities LLC, the underwriter for this offering. Under
the terms and subject to the conditions contained in an underwriting agreement
dated the date of this prospectus supplement, UBS Securities LLC has agreed to
purchase, and we have agreed to sell, all of the 73,170,732 shares of common
stock in this offering. However, the underwriter is not required to take or pay
for the shares covered by the underwriter's over-allotment option described
below.
OVER-ALLOTMENT OPTION
We have granted the underwriter an option to buy up to an aggregate of
10,975,610 additional shares of our common stock. The underwriter may exercise
this option solely for the purpose of covering over-allotments, if any, made in
connection with this offering. The underwriter has 30 days from the date of this
prospectus supplement to exercise this option.
COMMISSION AND DISCOUNTS
Shares sold by the underwriter to the public will initially be offered at
the initial offering price set forth on the cover of this prospectus supplement.
Any shares sold by the underwriter to securities dealers may be sold at a
discount of up to $0.01 per share from the initial public offering price. Any of
these securities dealers may resell any shares purchased from the underwriter to
other brokers or dealers at no discount to the initial public offering price. If
all the shares are not sold at the public offering price, the underwriter may
change the offering price and the other selling terms. Sales of shares made
outside of the United States may be made by affiliates of the underwriter. The
underwriter will be obligated to purchase the shares at the price and upon the
terms stated in the underwriting agreement, and, as a result, will thereafter
bear any risk associated with changing the offering price to the public or other
selling terms.
The following table shows the per share and total underwriting discounts and
commissions we will pay to the underwriter assuming both no exercise and full
exercise of the underwriter's option to purchase up to an additional 10,975,610
shares.
NO EXERCISE FULL EXERCISE
-----------------------------------------------------------------------------------------
Per share................................................... $ 0.05 $ 0.05
Total....................................................... $3,658,537 $4,207,317
NO SALES OF SIMILAR SECURITIES
We have entered into a lock-up agreement with the underwriter. Under the
agreement, we may not, without the prior written approval of UBS Securities LLC,
subject to certain permitted exceptions:
offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right
or warrant to purchase, lend or otherwise transfer or dispose of directly
or indirectly, any shares of our common stock or any securities convertible
into or exercisable or exchangeable for our common stock; or
enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of our
common stock;
whether any transaction described above is to be settled by delivery of our
common stock or such other securities, in cash or otherwise; or
file or cause to become effective a registration statement relating to the
offer and sale of any shares of common stock or any securities convertible
into or exercisable or exchangeable for common stock.
S-13
The restrictions described in the preceding paragraph do not apply to:
the issuance of our common stock upon the exercise of options, warrants or
other rights exercisable for, or the conversion of securities convertible
into, our common stock outstanding as of the date of this prospectus
supplement of which UBS Securities LLC has been advised in writing; and
the issuance by us of additional options under our existing stock option
plans, provided that such options are not exercisable during such 90-day
period.
These restrictions will be in effect for a period of 90 days after the date
of this prospectus supplement. At any time and without public notice, UBS
Securities LLC may in its sole discretion, release all or some of the securities
from the lock-up agreement.
We have agreed to indemnify the underwriter against certain liabilities,
including liabilities under the Securities Act. If we are unable to provide this
indemnification, we will contribute to payments the underwriter may be required
to make in respect of those liabilities.
NASDAQ NATIONAL MARKET QUOTATION
Our common stock is quoted on the Nasdaq National Market under the symbol
'SIRI.'
PRICE STABILIZATIONS, SHORT POSITIONS
In connection with this offering, the underwriter may engage in activities
that stabilize, maintain or otherwise affect the price of our common stock
including:
stabilizing transactions;
short sales;
purchases to cover positions created by short sales; and
syndicate covering transactions.
Stabilizing transactions consist of bids or purchases made for the purpose
of preventing or retarding a decline in the market price of our common stock
while this offering is in progress. These transactions may also include making
short sales of our common stock, which involves the sale by the underwriter of a
greater number of shares of common stock than they are required to purchase in
this offering, and purchasing shares of common stock on the open market to cover
positions created by short sales. Short sales may be 'covered' shorts, which are
short positions in an amount not greater than the underwriter's over-allotment
option referred to above, or may be 'naked' shorts, which are short positions in
excess of that amount.
The underwriter may close out any covered short position by either
exercising its over-allotment option, in whole or in part, or by purchasing
shares in the open market. In making this determination, the underwriter will
consider, among other things, the price of shares available for purchase in the
open market as compared to the price at which it may purchase shares through the
over-allotment option.
Naked short sales are in excess of the over-allotment option. The
underwriter must close out any naked short position by purchasing shares of
common stock in the open market. A naked short position is more likely to be
created if the underwriter is concerned that there may be downward pressure on
the price of the common stock in the open market that could adversely affect
investors who purchased in this offering.
In addition, in connection with this offering, the underwriter may engage in
passive market making transactions in the common stock on the Nasdaq National
Market prior to the pricing and completion of this offering. Passive market
making consists of displaying bids on the Nasdaq National Market no higher than
the bid prices of independent market makers and making purchases at prices no
higher than these independent bids and effected in response to order flow. Net
purchases by a passive market maker on each day are limited to a specified
percentage of the passive market maker's average daily trading volume in the
common stock during a specified
S-14
period and must be discontinued when such limit is reached. Passive market
making may cause the price of the common stock to be higher than the price that
otherwise would exist in the open market in the absence of such transactions. If
passive market making is commenced, it may be discontinued at any time.
As a result of these activities, the price of our common stock may be higher
than the price that otherwise might exist in the open market. If these
activities are commenced, they may be discontinued by the underwriter at any
time. The underwriter may carry out these transactions on the Nasdaq National
Market, in the over-the-counter market or otherwise.
The underwriter and its affiliates have provided and may provide certain
financial advisory and investment banking services for us for which they receive
customary fees.
The underwriter and its affiliates may from time to time in the future
engage in transactions with us and perform services for us in the ordinary
course of their business.
LEGAL MATTERS
The validity of the common stock offered hereby has been passed upon for us
by Simpson Thacher & Bartlett LLP, New York, New York. Cravath, Swaine & Moore
LLP, New York, New York, has represented the underwriter.
S-15
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PROSPECTUS
$500,000,000
[SIRIUS SATELLITE LOGO]
DEBT SECURITIES, PREFERRED STOCK,
COMMON STOCK AND WARRANTS
We from time to time may offer:
secured or unsecured debt securities in one or more series;
shares of preferred stock in one or more series;
shares of common stock;
warrants or other rights to purchase debt securities, preferred stock or common
stock or any combination of securities; and
any combination of debt securities, preferred stock, common stock or warrants,
at an aggregate initial public offering price not to exceed $500,000,000.
The number, amount, prices, net proceeds to Sirius Satellite Radio Inc. and
specific terms of the securities will be determined at or before the time of
sale and will be set forth in an accompanying prospectus supplement.
The net proceeds to us from the sale of the securities will be the initial
public offering price or the purchase price of those securities less any
applicable commission or discount, and less any other expenses we incur in
connection with the issuance and distribution of those securities.
If any agents or any underwriters are involved in the sale of the foregoing
securities, their names and any applicable commission or discount will be set
forth in the accompanying prospectus supplement.
This prospectus may not be used for the sale of any securities unless it is
accompanied by a prospectus supplement. The accompanying prospectus supplement
may modify or supersede any statement in this prospectus.
Nasdaq National Market trading symbol: 'SIRI.'
INVESTING IN OUR SECURITIES INVOLVES RISK, INCLUDING THE RISKS DESCRIBED IN
THE DOCUMENTS INCORPORATED BY REFERENCE IN THIS PROSPECTUS. YOU SHOULD CAREFULLY
CONSIDER THE IMPORTANT RISK FACTORS SET FORTH IN THE DOCUMENTS INCORPORATED BY
REFERENCE IN THIS PROSPECTUS AND IN THE ACCOMPANYING PROSPECTUS SUPPLEMENT
BEFORE INVESTING IN OUR SECURITIES.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
----------------------------
The date of this prospectus is November 18, 2003.
TABLE OF CONTENTS
PAGE
----
Special Note Regarding Forward-Looking Statements........... 2
About This Prospectus....................................... 3
About Sirius................................................ 3
Risk Factors................................................ 4
Ratio of Earnings to Combined Fixed Charges and Preferred
Stock Dividends........................................... 4
Use of Proceeds............................................. 4
Description of Debt Securities.............................. 5
Description of Capital Stock................................ 17
Description of Warrants..................................... 21
Plan of Distribution........................................ 25
Legal Matters............................................... 26
Experts..................................................... 26
Incorporation by Reference.................................. 27
Where You May Find Additional Available Information About
Us........................................................ 27
-------------------
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS AND THE
OTHER DOCUMENTS TO WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO
PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT. THIS PROSPECTUS MAY ONLY BE USED
WHERE IT IS LEGAL TO SELL THESE SECURITIES. THE INFORMATION IN THIS PROSPECTUS
MAY ONLY BE ACCURATE ON THE DATE OF THIS PROSPECTUS.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
The following cautionary statements identify important factors that could
cause our actual results to differ materially from those projected in the
forward-looking statements made in this prospectus. Any statements about our
beliefs, plans, objectives, expectations, assumptions or future events or
performance are not historical facts and may be forward-looking. These
statements are often, but not always, made through the use of words or phrases
such as 'will likely result,' 'are expected to,' 'will continue,' 'is
anticipated,' 'estimated,' 'intends,' 'plans,' 'projection' and 'outlook.' Any
forward-looking statements are qualified in their entirety by reference to the
factors discussed throughout this prospectus, and particularly the risk factors
described under 'Risk Factors' in this prospectus. Among the significant factors
that could cause our actual results to differ materially from those expressed in
the forward-looking statements are:
our competitive position, as XM Satellite Radio, the other
satellite radio service provider in the United States, has
substantially more subscribers than us and may have certain
competitive advantages;
our dependence upon third parties to manufacture,
distribute, market and sell SIRIUS radios and components for
those radios;
the unproven market for our service; and
the useful life of our satellites, which have experienced
circuit failures on their solar arrays and may not be
covered by insurance.
The risk factors referred to above could cause actual results or outcomes to
differ materially from those expressed in any forward-looking statements made by
us or on our behalf. Accordingly, you should not place undue reliance on any of
these forward-looking statements. In addition, any forward-looking statement
speaks only as of the date on which it is made, and we undertake no obligation
to update any forward-looking statement or statements to reflect events or
circumstances after the date on which the statement is made, to reflect the
occurrence of unanticipated events or otherwise. New factors emerge from time to
time, and it is not possible for us to predict which will arise or to assess
with any precision the impact of each factor on our business or the extent to
which any factor, or combination of factors, may cause actual results to differ
materially from those contained in any forward-looking statements.
2
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission using a 'shelf' registration process. Under
this shelf process, we may 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 provides you with a general description of the
securities we may offer. Each time we sell securities, we will provide a
prospectus supplement that will contain specific information about the terms of
that offering. 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 the additional information described
under the heading 'Where You May Find Additional Available Information About
Us.'
ABOUT SIRIUS
From our three orbiting satellites, we directly broadcast more than 100
channels, which we call 'streams', of digital-quality audio throughout the
continental United States for a monthly subscription fee of $12.95. We deliver
60 streams of 100% commercial-free music in virtually every genre, and over 40
streams of news, sports, weather, talk, comedy, public radio and children's
programming. Our broad and deep range of music as well as our news, sports and
entertainment programming is not available on conventional radio in any market
in the United States. We hold one of only two licenses issued by the Federal
Communications Commission to operate a national satellite radio system.
On September 30, 2003, we had 149,612 subscribers. Our primary source of
revenues is subscription and activation fees. In addition, we derive revenues
from selling limited advertising on our non-music streams.
We have agreements with Ford Motor Company, DaimlerChrysler Corporation, BMW
of North America, LLC, Nissan North America, Inc. and Volkswagen of America,
Inc. that contemplate the manufacture and sale of vehicles that include SIRIUS
radios. These alliances cover all major brands and affiliates of these
automakers, including Ford, Lincoln, Mercury, Jaguar, Land Rover, Chrysler,
Mercedes, BMW, MINI, Jaguar, Mazda, Dodge, Jeep, Volvo, Nissan, Infiniti,
Volkswagen, Audi and Freightliner and Sterling heavy trucks. None of our
automaker partners are required to manufacture or sell vehicles that include
SIRIUS radios pursuant to these agreements.
In the autosound aftermarket, SIRIUS radios are available for sale at
various national and regional retailers, such as Best Buy, Circuit City,
Ultimate Electronics, Tweeter Home Entertainment Group, Crutchfield and Good
Guys. On September 30, 2003, SIRIUS radios were available at approximately 5,500
retail locations.
Sirius Satellite Radio Inc. was incorporated in the State of Delaware on
May 17, 1990. Our executive offices are located at 1221 Avenue of the Americas,
New York, New York 10020, our telephone number is (212) 584-5100 and our
internet address is sirius.com. Sirius.com is an inactive text reference only,
meaning that the information contained on the website is not part of this
prospectus and is not incorporated in this prospectus by reference.
3
RISK FACTORS
Investing in our securities involves risk, including any risks described in
the accompanying prospectus supplement and in the documents incorporated by
reference in this prospectus, including our Annual Report on Form 10-K for the
year ended December 31, 2002, our Quarterly Reports on Form 10-Q for the
quarters ended March 31, 2003, June 30, 2003 and September 30, 2003, our Current
Reports on Form 8-K dated May 1, 2003, May 14, 2003, May 21, 2003, May 30, 2003,
June 16, 2003, July 30, 2003, August 6, 2003 and October 29, 2003 and in any
filings made with the Securities and Exchange Commission after the date of this
prospectus pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act. You should carefully consider the risk factors before investing in
our securities.
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
The following table sets forth our ratio of earnings to combined fixed
charges and preferred stock dividends for the periods indicated.
FOR THE
NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED
----------------------------------------------- SEPTEMBER 30,
1998 1999 2000 2001 2002 2003
---- ---- ---- ---- ---- ----
Ratio of earnings to fixed
charges(1)...................... -- -- -- -- -- --(2)
Ratio of earnings to combined
fixed charges and preferred
stock dividends(1).............. -- -- -- -- -- --(2)(3)
---------
(1) No figure is provided for any period during which the
applicable ratio was less than 1.00.
(2) Includes the effects of other income of $256.5 million
associated with our March 2003 debt restructuring.
(3) Includes the effects of a $79.5 million deemed dividend
associated with the exchange of our preferred stock for
common stock and warrants.
The ratio of earnings to fixed charges is computed by dividing our earnings,
which include income before taxes (excluding the cumulative and transition
effects of accounting changes), fixed charges and amortization of capitalized
interest, by fixed charges. The ratio of earnings to combined fixed charges and
preferred stock dividends is computed by dividing earnings by the sum of fixed
charges and dividends on preferred stock. 'Fixed charges' consist of interest on
debt and a portion of rentals determined to be representative of interest. For
the years ended December 31, 1998, 1999, 2000, 2001 and 2002, and for the nine
months ended September 30, 2003, our earnings were insufficient to cover our
fixed charges by approximately $62.3 million, $119.4 million, $198.5 million,
$255.0 million, $417.6 million and $69.7 million, respectively. Earnings were
also inadequate to cover our combined fixed charges and preferred stock
dividends over the same periods by approximately $99.9 million, $153.5 million,
$247.4 million, $297.2 million, $463.6 million and $157.9 million, respectively.
In connection with our restructuring, most of our debt and all of our
outstanding preferred stock was retired and cancelled in March 2003. In May
2003, we issued $201,250,000 in aggregate principal amount of our 3 1/2%
Convertible Notes due 2008.
USE OF PROCEEDS
Unless otherwise indicated in the applicable prospectus supplement, we will
use the net proceeds from the sale of the offered securities for general
corporate purposes, including capital expenditures, the reduction of
indebtedness and other purposes. We may invest funds not required immediately
for such purposes in short-term obligations or we may use them to reduce the
future level of our indebtedness.
4
DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the debt securities sets forth
certain general terms that may apply to the debt securities. The particular
terms of any debt securities will be described in the prospectus supplement
relating to those debt securities. For purposes of this 'Description of Debt
Securities,' the term 'Sirius' refers to our company but not to any of its
subsidiaries.
Any senior debt securities will be issued in one or more series under an
indenture, as supplemented or amended from time to time, between us and an
institution that we will name in the related prospectus supplement, as trustee.
Any subordinate debt securities will be issued in one or more series under an
indenture, as supplemented or amended from time to time, between us and an
institution that we will name in the related prospectus supplement, as trustee.
For ease of reference, we will refer to the indenture relating to any senior
debt securities as the senior indenture and to the indenture relating to any
subordinate debt securities as the subordinate indenture.
This summary of the terms and provisions of the debt securities and the
indentures is not necessarily complete, and we refer you to the copy of the
forms of the indentures which are filed as exhibits to the registration
statement of which this prospectus forms a part. Whenever we refer to particular
defined terms of the indentures in this section or in a prospectus supplement,
we are incorporating these definitions into this prospectus or the prospectus
supplement.
GENERAL
The debt securities will be issuable in one or more series in accordance
with an indenture supplemental to the applicable indenture or a resolution of
our board of directors or a committee of the board. Unless otherwise specified
in a prospectus supplement, each series of senior debt securities will rank
equally in right of payment with all of our other senior obligations. Each
series of subordinate debt securities will be subordinated and junior in right
of payment to the extent and in the manner described in the subordinate
indenture and any supplemental indenture relating to the subordinate debt
securities. Except as otherwise provided in a prospectus supplement, the
indentures do not limit our ability to incur other secured or unsecured debt,
whether under the indentures, any other indenture that we may enter into in the
future or otherwise. For more information, you should read the prospectus
supplement relating to a particular offering of securities.
The applicable prospectus supplement will describe the following terms of
the series of debt securities with respect to which this prospectus is being
delivered:
the title of the debt securities of the series and whether
such series constitutes senior debt securities or
subordinated debt securities;
any limit on the aggregate principal amount of the debt
securities;
the person to whom any interest on a debt security shall be
payable, if other than the person in whose name that debt
security is registered on the regular record date;
the date or dates on which the principal and premium, if
any, of the debt securities of the series are payable or the
method of that determination or the right to defer any
interest payments;
the rate or rates (which may be fixed or variable) at which
the debt securities will bear interest, if any, or the
method of determining the rate or rates, the date or dates
from which such interest will accrue, the interest payment
dates on which any such interest will be payable or the
method by which the dates will be determined, the regular
record date for any interest payable on any interest payment
date and the basis upon which interest will be calculated if
other than that of a 360-day year of twelve 30-day months;
the place or places where the principal of and any premium
and any interest on the debt securities of the series will
be payable, if other than the Borough of Manhattan, The City
of New York;
5
the period or periods within which, the date or dates on
which, the price or prices at which and the terms and
conditions upon which the debt securities of the series may
be redeemed, in whole or in part, at our option or
otherwise;
our obligation, if any, to redeem, purchase or repay the
debt securities of the series pursuant to any sinking fund
or analogous provisions or at the option of the holders and
the period or periods within which, the price or prices at
which, the currency or currencies including currency unit or
units in which and the terms and conditions upon which, the
debt securities shall be redeemed, purchased or repaid, in
whole or in part;
the terms, if any, upon which the debt securities of the
series may be convertible into or exchanged for other debt
securities, preferred stock or common stock of Sirius and
the terms and conditions upon which the conversion or
exchange shall be effected, including the initial conversion
or exchange price or rate, the conversion or exchange period
and any other additional provisions;
the denominations in which any debt securities will be
issuable, if other than denominations of $1,000 and any
integral multiple thereof;
the currency, currencies or currency units in which payment
of principal of and any premium and interest on debt
securities of the series shall be payable, if other than
United States dollars;
any index, formula or other method used to determine the
amount of payments of principal of and any premium and
interest on the debt securities;
if the principal amount payable at the stated maturity of
debt securities of the series will not be determinable as of
any one or more dates before the stated maturity, the amount
that will be deemed to be the principal amount as of any
date for any purpose, including the principal amount thereof
which will be due and payable upon any maturity other than
the stated maturity or which will be deemed to be
outstanding as of any date (or, in any such case, the manner
in which the deemed principal amount is to be determined),
and if necessary, the manner of determining the equivalent
thereof in United States currency;
if the principal of or any premium or interest on any debt
securities is to be payable, at our election or the election
of the holders, in one or more currencies or currency units
other than that or those in which such debt securities are
stated to be payable, the currency, currencies or currency
units in which payment of the principal of and any premium
and interest on such debt securities shall be payable, and
the periods within which and the terms and conditions upon
which such election is to be made;
if other than the principal amount thereof, the portion of
the principal amount of the debt securities which will be
payable upon declaration of the acceleration of the maturity
thereof or provable in bankruptcy;
the applicability of, and any addition to or change in, the
covenants and definitions then set forth in the applicable
indenture or in the terms then set forth in such indenture
relating to permitted consolidations, mergers or sales of
assets;
any changes or additions to the provisions of the applicable
indenture dealing with defeasance, including the addition of
additional covenants that may be subject to our covenant
defeasance option;
whether any of the debt securities are to be issuable in
permanent global form and, if so, the depositary or
depositaries for such global security and the terms and
conditions, if any, upon which interests in such debt
securities in global form may be exchanged, in whole or in
part, for the individual debt securities represented thereby
in definitive registered form, and the form of any legend or
legends to be borne by the global security in addition to or
in lieu of the legend referred to in the applicable
indenture;
the appointment of any trustee, any authenticating or paying
agents, transfer agent or registrars;
6
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 provisions of the applicable indenture as then in
effect;
the terms, if any, of the transfer, mortgage, pledge or
assignment as security for the debt securities of the series
of any properties, assets, moneys, proceeds, securities or
other collateral, including whether certain provisions of
the Trust Indenture Act are applicable and any corresponding
changes to provisions of the applicable indenture as then in
effect;
any addition to or change in the events of default with
respect to the debt securities of the series and any change
in the right of the trustee or the holders to declare the
principal, premium and interest with respect to the debt
securities due and payable;
any applicable subordination provisions in addition to those
set forth herein with respect to subordinated debt
securities;
if the securities of the series are to be secured, the
property covered by the security interest, the priority of
the security interest, the method of perfecting the security
interest and any escrow arrangements related to the security
interest; and
any other terms of the debt securities not inconsistent with
the provisions of the applicable indenture.
We may sell debt securities at a substantial discount below their stated
principal amount or debt securities that bear no interest or bear interest at a
rate which at the time of issuance is below market rates. We will describe the
material United States federal income tax consequences, accounting and other
special considerations applicable to the debt securities in the applicable
prospectus supplement.
If the purchase price of any of the debt securities is payable in one or
more foreign currencies or currency units or if any debt securities are
denominated in one or more foreign currencies or currency units or if the
principal of, premium, if any, or interest, if any, on any debt securities is
payable in one or more foreign currencies or currency units, we will set forth
the restrictions, elections, specific terms and other information with respect
to such issue of debt securities and such foreign currency or currency units in
the applicable prospectus supplement.
EXCHANGE, REGISTRATION, TRANSFER AND PAYMENT
Unless otherwise indicated in the applicable prospectus supplement,
principal, premium, if any, and interest, if any, on the debt securities will be
payable, without coupons, and the exchange of and the transfer of debt
securities will be registrable, at our office or agency maintained for such
purpose in the Borough of Manhattan, The City of New York and at any other
office or agency maintained for such purpose. Unless otherwise indicated in the
applicable prospectus supplement, the debt securities will be issued in
denominations of $1,000 and any integral multiples thereof.
Holders may present each series of debt securities for exchange as provided
above, and for registration of transfer, with the form of transfer endorsed
thereon, or with a satisfactory written instrument of transfer, duly executed,
at the office of the appropriate securities registrar or at the office of any
transfer agent designated by us for such purpose and referred to in the
applicable prospectus supplement, without service charge and upon payment of any
taxes and other governmental charges as described in the indenture. We will
appoint the trustee of each series of debt securities as securities registrar
for such series under the indenture. If the applicable prospectus supplement
refers to any transfer agents, in addition to the securities registrar initially
designated by us with respect to any series, we may at any time rescind the
designation of any such transfer agent or approve a change in the location
through which any such transfer agent acts, provided that we maintain a transfer
agent in each place of payment for the series. We may at any time designate
additional transfer agents with respect to any series of debt securities.
All moneys paid by us to a paying agent for the payment of principal,
premium, if any, or interest, if any, on any debt security which remain
unclaimed for two years after such principal,
7
premium or interest has become due and payable may be repaid to us, and after
such time, the holder of such debt security may look only to us for payment.
In the event of any redemption, we shall not be required to (a) issue,
register the transfer of or exchange debt securities of any series during a
period beginning at the opening of business 15 days before the day of the
mailing of a notice of redemption of debt securities of that series to be
redeemed and ending at the close of business on the day of such mailing or (b)
register the transfer of or exchange any debt security called for redemption,
except, in the case of any debt securities being redeemed in part, any portion
not being redeemed.
BOOK-ENTRY SYSTEM
The provisions set forth below in this section headed 'Book-Entry System'
will apply to the debt securities of any series if the prospectus supplement
relating to such series so indicates.
Unless otherwise indicated in the applicable prospectus supplement, the debt
securities of such series will be represented by one or more global securities
registered with a depositary named in the prospectus supplement relating to such
series. Except as set forth below, a global security may be transferred, in
whole but not in part, only to the depositary or another nominee of the
depositary.
The specific terms of the depositary arrangement with respect to a series of
debt securities will be described in the prospectus supplement relating to the
series. We anticipate that the following provisions will generally apply to
depositary arrangements.
Upon the issuance of a global security, the depositary will credit, on its
book-entry registration and transfer system, the respective principal amounts of
the debt securities represented by such global security to the accounts of
institutions or persons, commonly known as participants, that have accounts with
the depositary or its nominee. The accounts to be credited will be designated by
the underwriters, dealers or agents. Ownership of beneficial interests in a
global security will be limited to participants or persons that may hold
interests through participants. Ownership of interests in such global security
will be shown on, and the transfer of those ownership interests will be effected
only through, records maintained by the depositary (with respect to
participants' interests) and such participants (with respect to the owners of
beneficial interests in such global security). The laws of some jurisdictions
may require that certain purchasers of securities take physical delivery of the
securities in definitive form. These limits and laws may impair the ability to
transfer beneficial interests in a global security.
So long as the depositary, or its nominee, is the registered holder and
owner of such global security, the depositary or such nominee, as the case may
be, will be considered the sole owner and holder for all purposes of the debt
securities and for all purposes under the applicable indenture. Except as set
forth below or as otherwise provided in the applicable prospectus supplement,
owners of beneficial interests in a global security will not be entitled to have
the debt securities represented by such global security registered in their
names, will not receive or be entitled to receive physical delivery of debt
securities in definitive form and will not be considered to be the owners or
holders of any debt securities under the applicable indenture or such global
security. Accordingly, each person owning a beneficial interest in a global
security must rely on the procedures of the depositary and, if such person is
not a participant, on the procedures of the participant through which such
person owns its interest, to exercise any rights of a holder of debt securities
under the applicable indenture of such global security. We understand that under
existing industry practice, in the event we request any action of holders of
debt securities or if an owner of a beneficial interest in a global security
desires to take any action that the depositary, as the holder of such global
security is entitled to take, the depositary would authorize the participants to
take such action, and that the participants would authorize beneficial owners
owning through such participants to take such actions or would otherwise act
upon the instructions of beneficial owners owning through them.
Payments of principal of and premium, if any, and interest, if any, on debt
securities represented by a global security will be made to the depositary or
its nominee, as the case may
8
be, as the registered owner and holder of such global security, against
surrender of the debt securities at the principal corporate trust office of the
trustee. Interest payments will be made at the principal corporate trust office
of the trustee or by a check mailed to the holder at its registered address.
Payment in any other manner will be specified in the prospectus supplement.
We expect that the depositary, upon receipt of any payment of principal,
premium, if any, of interest, if any, in respect of a global security, will
credit immediately participants' accounts with payments in amounts proportionate
to their respective beneficial interests in the principal amount of such global
security as shown on the records of the depositary. We expect that payments by
participants to owners of beneficial interests in a global security held through
such participants will be governed by standing instructions and customary
practices, as is now the case with securities held for the accounts of customers
in bearer form or registered in 'street name,' and will be the responsibility of
such participant. Neither Sirius nor the trustee nor any agent of Sirius or the
trustee will have any responsibility or liability for any aspect of the records
relating to, or payments made on account of, beneficial ownership interests in a
global security or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests or for any other aspect of the
relationship between the depositary and its participants or the relationship
between such participants and the owners of beneficial interests in such global
security owning through such participants.
Unless and until it is exchanged in whole or in part for debt securities in
definitive form, a global security may not be transferred except as a whole by
the depositary to a nominee of such depositary or by a nominee of such
depositary to such depositary or another nominee of such depositary.
Unless otherwise provided in the applicable prospectus supplement, debt
securities represented by a global security will be exchangeable for debt
securities in definitive form of like tenor as such global security in
denominations of $1,000 and in any greater amount that is an integral multiple
thereof if:
the depositary notifies us and the trustee that it is
unwilling or unable to continue as depositary for such
global security or if at any time the depositary ceases to
be a clearing agency registered under the Exchange Act and a
successor depositary is not appointed by us within 90 days;
we, in our sole discretion, determine not to have all of the
debt securities represented by a global security and notify
the trustee thereof; or
there shall have occurred and be continuing an event of
default or an event which, with the giving of notice or
lapse of time, or both, would constitute an event of default
with respect to the debt securities.
Any debt security that is exchangeable pursuant to the preceding sentence is
exchangeable for debt securities registered in such names as the depositary
shall instruct the trustee. It is expected that such instructions may be based
upon directions received by the depositary from its participants with respect to
ownership of beneficial interests in such global security. Subject to the
foregoing, a global security is not exchangeable except for a global security or
global securities of the same aggregate denominations to be registered in the
name of the depositary or its nominee.
OPTION TO DEFER INTEREST PAYMENTS OR TO PAY-IN-KIND
If so described in the applicable prospectus supplement, we will have the
right, at any time and from time to time during the term of any series of debt
securities, to defer the payment of interest for such number of consecutive
interest payment periods as may be specified in the applicable prospectus
supplement, subject to the terms, conditions and covenants, if any, specified in
such prospectus supplement, provided that an extension period may not extend
beyond the stated maturity of the final installment of principal of the series
of debt securities. If provided in the applicable prospectus supplement, we will
have the right, at any time and from time to time during the term of any series
of debt securities, to make payments of interest by delivering additional debt
securities of the same series.
9
COVENANTS
The covenants, if any, that will apply to a particular series of debt
securities will be set forth in the indenture relating to such series of debt
securities. Except as otherwise specified in the applicable prospectus
supplement with respect to any series of debt securities, we may remove or add
covenants without the consent of holders of the securities.
DEFEASANCE AND COVENANT DEFEASANCE
We may be discharged from our obligations on the debt securities of any
series that have matured or will mature or be redeemed within one year if we
deposit with the trustee enough cash to pay all the principal, interest and any
premium due to the stated maturity date or redemption date of the debt
securities and comply with certain other conditions set forth in the applicable
indenture.
Each indenture contains a provision that permits us to elect either:
to be discharged after 90 days from all of our obligations
(subject to limited exceptions) with respect to any series
of debt securities then outstanding ('defeasance'); and/or
to be released from our obligations under certain covenants
and from the consequences of an event of default resulting
from a breach of those covenants or cross-default ('covenant
defeasance').
To make either of the above elections, we must deposit in trust with the trustee
money and/or U.S. Government Obligations, if the debt securities are denominated
in U.S. dollars, and/or Foreign Government Securities, if the debt securities
are denominated in a foreign currency, which through the payment of principal
and interest under their terms will provide sufficient money, without
reinvestment, to repay in full those senior or subordinate debt securities. As a
condition to defeasance or covenant defeasance, we must deliver to the trustee
an opinion of counsel that the holders of the debt securities will not recognize
income, gain or loss for federal income tax purposes as a result of the
defeasance.
If either of the above events occur, the holders of the debt securities of
the series will not be entitled to the benefits of the indenture, except for
registration of transfer and exchange of debt securities and replacement of
lost, stolen or mutilated debt securities.
EVENTS OF DEFAULT
The following events are defined in the indentures as 'Events of Default'
with respect to a series of debt securities (unless such event is specifically
inapplicable to a particular series as described in the applicable prospectus
supplement):
failure to pay any interest on any debt security of that
series when due, which failure continues for 30 days;
failure to pay principal of or any premium on any debt
security of that series when due;
failure to deposit any sinking fund payment, within 30 days
of when due, in respect of any debt security of that series;
with respect to each series of debt securities, failure to
perform any other of our covenants applicable to that
series, which failure continues for 90 days after written
notice to us by the trustee or to us and the trustee by the
holders of at least 25% in principal amount of the
outstanding debt securities of that series specifying such
failure, requiring it to be remedied and stating that such
notice is a 'Notice of Default';
certain events of bankruptcy, insolvency or reorganization
involving us; and
any other Event of Default provided with respect to debt
securities of that series.
If an Event of Default for any series of debt securities occurs and
continues, the trustee or holders of at least 25% in principal amount of the
debt securities of that series may declare the entire principal amount of all
the debt securities of that series to be due and payable immediately.
10
Subject to certain conditions, the declaration may be annulled and past defaults
(except uncured payment defaults and certain other specified defaults) may be
waived by the holders of a majority of the principal amount of the outstanding
debt securities of that series.
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 an indenture.
Each indenture will require the trustee, within 90 days after the occurrence
of a default known to it with respect to any outstanding series of debt
securities, to give the holders of that series notice of the default if uncured
or not waived. However, the trustee may withhold this notice if it determines in
good faith that the withholding of this notice is in the interest of those
holders, except that the trustee may not withhold this notice in the case of a
payment default. The term 'default' for the purpose of this provision means any
event that is, or after notice or lapse of time or both would become, an Event
of Default with respect to debt securities of that series.
Other than the duty to act with the required standard of care during an
Event of Default, a trustee is not obligated to exercise any of its rights or
powers under the applicable indenture at the request or direction of any of the
holders of debt securities, unless the holders have offered to the trustee
reasonable indemnification. Each indenture provides that the holders of a
majority in principal amount of outstanding debt securities of any series may in
certain circumstances direct the time, method and place of conducting any
proceeding for any remedy available to the trustee, or exercising any trust or
other power conferred on the trustee.
The senior indenture will include a covenant that we will file annually with
the trustee a certificate of no default, or specifying any default that exists.
MODIFICATION, WAIVER AND MEETINGS
We and the trustee may enter into supplemental indentures without the
consent of the holders of debt securities for one or more of the following
purposes:
to evidence the succession of another person to us pursuant
to the provisions of the applicable indenture relating to
consolidations, mergers and sales of assets and the
assumption by the successor of our covenants, agreements and
obligations in the applicable indenture and in the debt
securities;
to surrender any right or power conferred upon us by the
applicable indenture, to add to our covenants such further
covenants, restrictions, conditions or provisions for the
protection of the holders of all or any series of debt
securities as our board of directors shall consider to be
for the protection of the holders of the debt securities,
and to make the occurrence, or the occurrence and
continuance, of a default in any of the additional
covenants, restrictions, conditions or provisions a default
or an Event of Default under the applicable indenture
(provided, however, that with respect to any such additional
covenant, restriction, condition or provision, the
supplemental indenture may provide for a period of grace
after default, which may be shorter or longer than that
allowed in the case of other defaults, may provide for an
immediate enforcement upon the default, may limit the
remedies available to the trustee upon the default, or may
limit the right of holders of a majority in aggregate
principal amount of any or all series of debt securities to
waive the default);
to cure any ambiguity or omission or to correct or
supplement any provision contained in the applicable
indenture, in any supplemental indenture or in any debt
securities that may be defective or inconsistent with any
other provision contained therein, to convey, transfer,
assign, mortgage or pledge any property to or with the
trustee, or to make such other provisions in regard to
matters or questions arising under the applicable indenture,
in each case as shall not adversely affect the interests of
any holders of debt securities of any series in any material
respect;
to modify or amend the applicable indenture to permit the
qualification of such indenture or any supplemental
indenture under the Trust Indenture Act as then in effect;
11
to add guarantees with respect to any or all of the debt
securities or to secure any or all of the debt securities;
to add to, change or eliminate any of the provisions of the
applicable indenture with respect to one or more series of
debt securities; so long as any such addition, change or
elimination not otherwise permitted under the applicable
indenture shall (1) neither apply to any debt security of
any series created before the execution of the supplemental
indenture and entitled to the benefit of the provision nor
modify the rights of the holders of any debt security with
respect to the provision, or (2) become effective only when
there is no such debt security outstanding;
to evidence and provide for the acceptance of appointment by
a successor or separate trustee with respect to the debt
securities of one or more series and to add to or change any
of the provisions of the applicable indenture as shall be
necessary to provide for or facilitate the administration of
such indenture by more than one trustee;
to establish the form or terms of debt securities of any
series;
to provide for uncertificated debt securities in addition to
or in place of certificated debt securities (provided that
the uncertificated debt securities are issued in registered
form for purposes of Section 163(f) of the Internal Revenue
Code or in a manner such that the uncertificated debt
securities are described in Section 163(f)(2)(B) of such
Code); and
to make any change that does not adversely affect the rights
of any holder.
Modifications and amendments of the applicable indenture may be made by us
and the trustee with the consent of the holders of a majority in principal
amount of the outstanding debt securities of each series affected by such
modification or amendment; provided, however, that no such modification or
amendment may, without the consent of the holder of each outstanding debt
security affected thereby:
change the stated maturity of the principal of, or any
installment of principal of or interest on, any debt
security;
reduce the principal amount of, rate of interest on or any
premium payable upon the redemption of any debt security;
reduce the amount of principal of an original issue discount
security payable upon acceleration of the maturity thereof;
change the place of payment where, or the coin or currency
in which, any debt security or any premium or interest
thereon is payable;
impair the right to institute suit for the enforcement of
any payment on or with respect to any debt security after
the stated maturity, redemption date or repayment date;
reduce the percentage in principal amount of outstanding
debt securities of any series, the consent of whose holders
is required for modification or amendment of the applicable
indenture or for waiver of compliance with certain
provisions of such indenture or for waiver of certain
defaults;
change the optional redemption or repurchase provisions in a
manner adverse to any holder; or
modify any of the provisions set forth in this paragraph,
except to increase the percentage of holders whose consent
is required for modifications and amendments of the
applicable indenture or to provide that certain other
provisions of the applicable indenture may not be modified
or waived without the consent of the holder of each
outstanding debt security affected thereby.
The holders of a majority in principal amount of the outstanding debt
securities of each series may, on behalf of the holders of all the debt
securities of that series, waive, insofar as that series is concerned,
compliance by us with certain restrictive provisions of the applicable
indenture. The holders of a majority in principal amount of the outstanding debt
securities of each series may, on behalf of all holders of debt securities of
that series and any coupons relating to such series, waive
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any past default under the applicable indenture with respect to debt securities
of the series, except a default (a) in the payment of principal of or any
premium or interest on any debt security of such series or (b) in respect of a
covenant or provision of the applicable indenture which cannot be modified or
amended without the consent of each holder of outstanding debt securities of the
affected series.
The indentures provide that in determining whether the holders of the
requisite principal amount of the outstanding debt securities have given any
request, demand, authorization, direction, notice, consent or waiver thereunder
or whether a quorum is present at a meeting of holders of debt securities:
the principal amount of an original issue discount security
that shall be deemed to be outstanding shall be the amount
of the principal thereof that would be due and payable as of
the date of such determination upon acceleration of the
maturity thereof;
the principal amount of a debt security denominated in other
than U.S. dollars shall be the U.S. dollar equivalent,
determined on the date of original issuance of such debt
security, of the principal amount of such debt security (or,
in the case of an original issue discount security, the U.S.
dollar equivalent on the date of original issuance of such
debt security of the amount determined (as provided above)
of such debt security); and
debt securities owned by us or any subsidiary of ours shall
be disregarded and deemed not to be outstanding.
In addition, we and the trustees may execute, without the consent of any
holder of the debt securities, any supplemental indenture for the purpose of
creating any new series of debt securities.
SUBORDINATION
Except as set forth in the applicable prospectus supplement, the subordinate
indenture provides that the subordinate debt securities are subordinate and
junior in right of payment to all of our senior indebtedness.
If an Event of Default occurs with respect to any senior indebtedness
permitting the holders thereof to accelerate the maturity thereof and the
default is the subject of judicial proceedings or written notice of such Event
of Default, requesting that payments on subordinate debt securities cease, is
given to us by the holders of senior indebtedness, then unless and until
(1) the default in payment or Event of Default shall have been cured or waived
or (2) 120 days shall have passed after written notice is given and the default
is not the subject of judicial proceedings, no direct or indirect payment, in
cash, property or securities, by set-off or otherwise, will be made or agreed to
be made on account of the subordinate debt securities or interest thereon or in
respect of any repayment, redemption, retirement, purchase or other acquisition
of subordinate debt securities.
Except as set forth in the applicable prospectus supplement, the subordinate
indenture provides that in the event of:
any insolvency, bankruptcy, receivership, reorganization or
other similar proceeding relating to us, our creditors or
our property; or
any proceeding for the liquidation or dissolution of Sirius,
all present and future senior indebtedness, including interest accruing after
the commencement of the proceeding, will first be paid in full before any
payment or distribution, whether in cash, securities or other property, will be
made by us on account of subordinate debt securities. In that event, any payment
or distribution, whether in cash, securities or other property, other than
securities of Sirius or any other corporation provided for by a plan of
reorganization or a readjustment, the payment of which is subordinate, at least
to the extent provided in the subordination provisions of the indenture, to the
payment of all senior indebtedness at the time outstanding and to any securities
issued in respect thereof under any such plan of reorganization or readjustment
and other than payments made from any trust described in the 'Defeasance and
Covenant Defeasance' above, which would otherwise but for the subordination
provisions be payable or deliverable in respect of subordinate debt securities,
including any such payment or
13
distribution which may be payable or deliverable by reason of the payment of any
other indebtedness of ours being subordinate to the payment of subordinated debt
securities, will be paid or delivered directly to the holders of senior
indebtedness or to their representative or trustee, in accordance with the
priorities then existing among such holders, until all senior indebtedness shall
have been paid in full. No present or future holder of any senior indebtedness
will be prejudiced in the right to enforce subordination of the indebtedness
evidenced by subordinate debt securities by any act or failure to act on our
part.
The term 'Senior Indebtedness' means:
(1) the principal, premium, if any, interest and all other amounts owed
in respect of all our (A) indebtedness for money borrowed and (B)
indebtedness evidenced by securities, debentures, bonds or other similar
instruments;
(2) all our capital lease obligations;
(3) all our obligations issued or assumed as the deferred purchase price
of property, all our conditional sale obligations and all our obligations
under any title retention agreement (but excluding trade accounts payable
arising in the ordinary course of business);
(4) all our obligations for the reimbursement of any letter of credit,
banker's acceptance, security purchase facility or similar credit
transaction;
(5) all obligations of the type referred to in clauses (1) through (4)
above of other persons for the payment of which we are responsible or liable
as obligor, guarantor or otherwise; and
(6) all obligations of the type referred to in clauses (1) through (5)
above of other persons secured by any lien on any property or asset of ours
(whether or not such obligation is assumed by us),
except for in all such cases (x) any such indebtedness that is by its
terms subordinated to or pari passu with the subordinate debt securities and
(y) any indebtedness between or among us or our affiliates, including all
other debt securities and guarantees in respect of those debt securities
issued to any trust, or trustee of such trust, partnership or other entity
affiliated with us that is, directly or indirectly, a financing vehicle of
ours (a 'Financing Entity') in connection with the issuance by such
Financing Entity of preferred securities or other securities that rank pari
passu with, or junior to, the subordinate debt securities.
Except as provided in the applicable prospectus supplement, the subordinate
indenture for a series of subordinated debt does not limit the aggregate amount
of senior indebtedness that may be issued by us. The subordinate debt securities
are effectively subordinated to all existing and future liabilities of our
subsidiaries.
By reason of such subordination, in the event of a distribution of assets
upon insolvency, some of our general creditors may recover more, ratably, than
holders of the subordinated debt securities.
A subordinate indenture may provide that the subordination provisions
thereof will not apply to money and securities held in trust pursuant to the
satisfaction and discharge and the legal defeasance provisions of the
subordinate indenture.
If this prospectus is being delivered in connection with the offering of a
series of subordinated debt securities, the accompanying prospectus supplement
or the information incorporated by reference therein will set forth the
approximate amount of senior indebtedness outstanding as of a recent date.
CONSOLIDATION, MERGER AND SALE OF ASSETS
Except as may otherwise be provided in the prospectus supplement, each
indenture provides that we may not consolidate with or merge with or into any
person, or convey, transfer or lease
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all or substantially all of our assets, or permit any person to consolidate with
or merge into us, unless the following conditions have been satisfied:
(a) either (1) we shall be the continuing person in the case of a merger or
(2) the resulting, surviving or transferee person, if other than us (the
'Successor Company'), shall be a corporation organized and existing
under the laws of the United States, any State or the District of
Columbia and shall expressly assume all our obligations under the debt
securities and the applicable indenture;
(b) immediately after giving effect to the transaction (and treating any
indebtedness that becomes an obligation of the Successor Company or any
subsidiary of ours as a result of the transaction as having been
incurred by the Successor Company or the subsidiary at the time of the
transaction), no default, Event of Default or event that, after notice
or lapse of time, would become an Event of Default under the applicable
indenture shall have occurred and be continuing; and
(c) we shall have delivered to the trustee under each indenture an officers'
certificate and an opinion of counsel, each stating that the
consolidation, merger, transfer or lease complies with the provisions of
the applicable indenture.
Upon completion of any such transaction, the Successor Company resulting
from such consolidation or into which we are merged or the transferee or lessee
to which such conveyance, transfer or lease is made, will succeed to, and be
substituted for, and may exercise every right and power of, us under each
indenture, and thereafter, except in the case of a lease, the predecessor (if
still in existence) will be released from its obligations and covenants under
each indenture and all outstanding debt securities.
NOTICES
Except as otherwise provided in the indentures, notices to holders of debt
securities will be given by mail to the addresses of such holders as they appear
in the Security Register.
CONVERSION OR EXCHANGE
If and to the extent indicated in the applicable prospectus supplement, the
debt securities of any series may be convertible or exchangeable into other
securities. The specific terms on which debt securities of any series may be so
converted or exchanged will be set forth in the applicable prospectus
supplement. These terms may include provisions for conversion or exchange,
either mandatory, at the option of the holder, or at our option, in which case
the number of shares of other securities to be received by the holders of debt
securities would be calculated as of a time and in the manner stated in the
applicable prospectus supplement.
TITLE
Before due presentment of a debt security for registration of transfer, we,
the trustee and any agent of ours or the trustee may treat the person in whose
name such debt security is registered as the owner of such debt security for the
purpose of receiving payment of principal of and any premium and any interest
(other than defaulted interest or as otherwise provided in the applicable
prospectus supplement) on such debt security and for all other purposes
whatsoever, whether or not such debt security be overdue, and neither Sirius,
the trustee nor any agent of ours or the trustee shall be affected by notice to
the contrary.
REPLACEMENT OF DEBT SECURITIES
Any mutilated debt security will be replaced by us at the expense of the
holder upon surrender of such debt security to the trustee. Debt securities that
become destroyed, stolen or lost will be replaced by us at the expense of the
holder upon delivery to the trustee of the debt security or evidence of the
destruction, loss or theft thereof satisfactory to us and the trustee. In the
case of a destroyed, lost or stolen debt security, an indemnity satisfactory to
the trustee and us may be required at the expense of the holder of such debt
security before a replacement debt security will be issued.
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GOVERNING LAW
The indentures and the debt securities will be governed by, and construed in
accordance with, the laws of the State of New York.
REGARDING THE TRUSTEE
We may appoint a separate trustee for any series of debt securities. As used
herein in the description of a series of debt securities, the term 'trustee'
refers to the trustee appointed with respect to the series of debt securities.
The indentures contain certain limitations on the right of the trustee,
should it become a creditor of ours, to obtain payment of claims in certain
cases or to realize for its own account on certain property received in respect
of any such claim as security or otherwise. The trustee will be permitted to
engage in certain other transactions; however, if it acquires any conflicting
interest and there is a default under the debt securities of any series for
which the trustee serves as trustee, the trustee must eliminate such conflict or
resign.
The trustee or its affiliate may provide certain banking and financial
services to us in the ordinary course of business.
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DESCRIPTION OF CAPITAL STOCK
Our amended and restated certificate of incorporation provides for
authorized capital of 2,550,000,000 shares, consisting of 2,500,000,000 shares
of common stock, par value $.001 per share, and 50,000,000 shares of preferred
stock, par value $.001 per share.
The following description sets forth the terms and provisions of our common
stock and preferred stock. The terms of any shares of our capital stock offered
by any prospectus supplement, but not set forth below, will be described in the
prospectus supplement relating to such shares of capital stock.
COMMON STOCK
As of September 30, 2003, we had 998,205,643 shares of common stock
outstanding beneficially held by approximately 220,000 persons, and had reserved
for issuance 433,519,831 shares of common stock with respect to incentive stock
plans and outstanding common stock purchase warrants.
Holders of our common stock are entitled to cast one vote for each share
held of record on all matters acted upon at any stockholder's meeting and to
receive dividends if, as and when declared by our board of directors out of
funds legally available therefor. There are no cumulative voting rights. If
there is any liquidation, dissolution or winding-up of our company, each holder
of our common stock will be entitled to participate, taking into account the
rights of any outstanding preferred stock, ratably in all of our assets
remaining after payment of liabilities. Holders of our common stock have no
preemptive or conversion rights. All outstanding shares of our common stock,
including shares of common stock issued upon the exercise of the common stock
warrants, will be fully paid and non-assessable.
Our common stock is quoted on the Nasdaq National Market under the symbol
'SIRI.'
PREFERRED STOCK
Our board of directors is authorized, subject to any limitations prescribed
by law, without further stockholder approval, to issue from time to time up to
an aggregate of 50,000,000 shares of our preferred stock, in one or more series.
Each such series of preferred stock will have such number of shares,
designations, preferences, powers, qualifications and special or relative rights
or privileges as will be determined by our board of directors, which may
include, among others, dividend rights, voting rights, redemption and sinking
fund provisions, liquidation preferences, conversion rights and preemptive
rights. The rights of the holders of our common stock will be subject to the
rights of holders of any preferred stock issued in the future. The issuance of
preferred stock, while providing desirable flexibility in connection with
possible acquisitions and other corporate purposes, could have the effect of
making it more difficult for a third party to acquire, or of discouraging a
third party from acquiring, a majority of our outstanding voting stock.
In connection with our recent restructuring, all of our then outstanding
preferred stock was retired and cancelled as of March 7, 2003.
The specific terms of any preferred stock being offered will be described in
the prospectus supplement relating to that preferred stock. The following
summaries of the provisions of the preferred stock are subject to, and are
qualified in their entirety by reference to, the certificate of designation
relating to the particular class or series of preferred stock. Reference is made
to the prospectus supplement relating to the preferred stock offered with that
prospectus for specific terms, including:
the designation of the preferred stock;
the number of shares of the preferred stock offered, the liquidation
preference per share and the initial offering price of the preferred stock;
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the dividend rate(s), period(s) and/or payment date(s) or method(s) of
calculating these items applicable to the preferred stock;
the date from which dividends on the preferred stock will accumulate, if
applicable;
the procedures for any auction and remarketing of the preferred stock;
the provision of a sinking fund, if any, for the preferred stock;
the provision for redemption, if applicable, of the preferred stock;
any listing of the preferred stock on any securities exchange;
the terms and conditions, if applicable, upon which the preferred stock
will be convertible into or exchangeable for common stock, and whether at
our option or the option of the holder;
whether the preferred stock will rank senior or junior to or on a parity
with any other class or series of preferred stock;
the voting rights, if any, of the preferred stock;
any other specific terms, preference, rights, limitations or restrictions
of the preferred stock; and
a discussion of United States federal income tax considerations applicable
to the preferred stock.
PREFERRED STOCK PURCHASE RIGHTS
On October 22, 1997, our board of directors adopted a stockholders rights
plan and, in connection with the adoption of this plan, declared a dividend
distribution of one 'Right' for each outstanding share of common stock to
stockholders of record at the close of business on November 3, 1997 (the 'Rights
Record Date'). Except as described below, each Right entitles the registered
holder of the Right to purchase from us one-hundredth of a share of Series B
Preferred Stock, par value $0.001 per share (the 'Series B Shares'), at a
purchase price of $115.00 (the 'Purchase Price'), which may be adjusted. The
Purchase Price shall be paid in cash. The description and terms of the Rights
are set forth in a Rights Agreement, dated October 22, 1997 (the 'Rights
Agreement'), by and between us and The Bank of New York (the successor to
Continental Stock Transfer & Trust Company), as Rights Agent, and in amendments
to the Rights Agreement dated October 13, 1998, November 13, 1998, December 22,
1998, June 11, 1999, September 29, 1999, December 23, 1999, January 28, 2000,
August 7, 2000, January 8, 2002, October 22, 2002, March 6, 2003, March 30,
2003, April 30, 2003 and July 30, 2003.
Initially, no separate Right certificates were distributed and the Rights
were evidenced, with respect to any shares of common stock outstanding on the
Rights Record Date, by the certificates representing the shares of common stock.
Until the Rights Separation Date (as defined below), the Rights will be
transferred with, and only with, certificates for shares of common stock. Until
the earlier of the Rights Separation Date and the redemption or expiration of
the Rights, new certificates for shares of common stock issued after the Rights
Record Date will contain a notation incorporating the Rights Agreement by
reference. The Rights are not exercisable until the earlier to occur of (1) 10
business days following a public announcement that a person or group of
affiliated or associated persons (an 'Acquiring Person') has acquired, or
obtained the right to acquire, beneficial ownership of 15% or more of the
outstanding shares of common stock (except by reason of (a) exercise by this
person of stock options granted to this person by us under any of our stock
option or similar plans (b) the exercise of conversion rights contained in
specified classes of Preferred Stock, or (c) the exercise of warrants owned on
the date of the Rights Agreement, which include warrants to acquire 1,740,000
shares of common stock issued to an affiliate of Everest Capital Fund, Ltd. or
(2) 15 business days following the commencement of a tender offer or exchange
offer by any person (other than Sirius, any subsidiary of Sirius or any employee
benefit plan of Sirius) if, upon the completion of this tender offer or exchange
offer, this person or group would be the beneficial owner of 15% or more of the
outstanding shares of
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common stock (the earlier of these dates being called the 'Rights Separation
Date'), and will expire on January 15, 2004, unless earlier extended or redeemed
by us as described below. As soon as practicable following the Rights Separation
Date, separate certificates evidencing the Rights will be mailed to holders of
record of the shares of common stock as of the close of business on the Rights
Separation Date and, thereafter, the separate Rights certificates alone will
evidence the Rights. A holder of 15% or more of the common stock as of the date
of the Rights Agreement will be excluded from the definition of 'Acquiring
Person' unless the holder increases the aggregate percentage of its and its
affiliates' beneficial ownership interest in us by an additional 1%.
On March 6, 2003, we amended the Rights Agreement to (1) render the Rights
Agreement inapplicable to the issuance of common stock to Lehman Commercial
Paper Inc. in the restructuring transactions and to permit Lehman to acquire up
to an additional 1% of the outstanding shares of common stock, without Lehman
becoming an 'Acquiring Person' within the meaning of the Rights Agreement and
(2) permit each of OppenheimerFunds, Inc., Apollo Management, L.P., The
Blackstone Group L.P. and their respective affiliates and affiliated investment
funds to acquire up to 25% of the outstanding shares of common stock, without
becoming 'Acquiring Persons' within the meaning of the Rights Agreement.
If, at any time following the Rights Separation Date, (1) we are the
surviving corporation in a merger with an Acquiring Person and our shares of
common stock are not changed or exchanged, (2) a person (other than Sirius, any
subsidiary of Sirius or any employee benefit plan of Sirius), together with its
Affiliates and Associates (as defined in the Rights Agreement), becomes an
Acquiring Person (in any manner, except by (a) the exercise of stock options
granted under our existing and future stock option plans, (b) the exercise of
conversion rights contained in specified preferred stock issues, (c) the
exercise of warrants specified in the Rights Agreement or (d) a tender offer for
any and all outstanding shares of common stock made as provided by applicable
laws, which remains open for at least 40 Business Days (as defined in the Rights
Agreement) and into which holders of 80% or more of our outstanding shares of
common stock tender their shares), (3) an Acquiring Person engages in one or
more 'self-dealing' transactions as described in the Rights Agreement or
(4) during the time when there is an Acquiring Person, an event occurs (e.g., a
reverse stock split), that results in the Acquiring Person's ownership interest
being increased by more than one percent, the Rights Agreement provides that
proper provision shall be made so that each holder of a Right will thereafter be
entitled to receive, upon the exercise of the Right at the then current exercise
price of the Right, shares of common stock (or, in some circumstances, cash,
property or other securities of ours) having a value equal to two times the
exercise price of the Right.
If, at any time following the first date of public announcement by us or an
Acquiring Person indicating that this Acquiring Person has become an Acquiring
Person (the 'Shares Acquisition Date'), (1) we consolidate or merge with another
person and we are not the surviving corporation, (2) we consolidate or merge
with another person and are the surviving corporation, but in the transaction
our shares of common stock are changed or exchanged or (3) 50% or more of our
assets or earning power is sold or transferred, the Rights Agreement provides
that proper provision shall be made so that each holder of a Right shall
thereafter have the right to receive, upon the exercise of the Right at the then
current exercise price of the Right, shares of common stock of the acquiring
company having a value equal to two times the exercise price of the Right.
Our board of directors may, at its option, at any time after the right of
the board to redeem the Rights has expired or terminated (with some exceptions),
exchange all or part of the then outstanding and exercisable Rights (other than
those held by the Acquiring Person and Affiliates and Associates of the
Acquiring Person) for shares of common stock at a ratio of one share of common
stock per Right, as adjusted; provided, however, that the Right cannot be
exercised once a person, together with the person's Affiliates and Associates,
becomes the beneficial owner of 50% or more of the shares of common stock then
outstanding. If our board of directors authorizes this exchange, the Rights will
immediately cease to be exercisable.
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Notwithstanding any of the foregoing, following the occurrence of any of the
events described in the fourth and fifth paragraphs of this section, any Rights
that are, or (under some circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person or Affiliate or Associate of an
Acquiring Person shall immediately become null and void. The Rights Agreement
contains provisions intended to prevent the utilization of voting trusts or
similar arrangements that could have the effect of rendering ineffective or
circumventing the beneficial ownership rules described in the Rights Agreement.
The Purchase Price payable, and the number of Series B Shares or other
securities or property issuable, upon exercise of the Rights may be adjusted
from time to time to prevent dilution (1) in the event of a dividend of
Series B Shares on, or a subdivision, combination or reclassification of, the
Series B Shares, (2) upon the grant to holders of the Series B Shares of
specific rights or warrants to subscribe for Series B Shares or securities
convertible into Series B Shares at less than the current market price of the
Series B Shares or (3) upon the distribution to holders of the Series B Shares
of debt securities or assets (excluding regular quarterly cash dividends and
dividends payable in Series B Shares) or of subscription rights or warrants
(other than those referred to above).
At any time after the date of the Rights Agreement until ten Business Days
(a period that can be extended) following the Shares Acquisition Date, the board
of directors, with the concurrence of a majority of the independent directors
(those members of our board who are not officers or employees of ours or of any
subsidiary of ours and who are not Acquiring Persons or their Affiliates,
Associates, nominees or representatives, and who either (1) were members of the
board before the adoption of the Rights Plan or (2) were subsequently elected to
our board and were recommended for election or approved by a majority of the
independent directors then on our board), may redeem the Rights, in whole but
not in part, at a price of $0.01 per Right, which may be adjusted. Thereafter,
our board of directors may redeem the Rights only in specified circumstances
including in connection with specific events not involving an Acquiring Person
or an Affiliate or Associate of an Acquiring Person. In addition, our right of
redemption may be reinstated if (1) an Acquiring Person reduces its beneficial
ownership to 10% or less of the outstanding shares of common stock in a
transaction or series of transactions not involving us and (2) there is at the
time no other Acquiring Person. The Rights Agreement may also be amended, as
described below, to extend the period of redemption.
Until a Right is exercised, the holder of the Right, as such, will have no
rights as a stockholder, including the right to vote or to receive dividends.
While the distribution of the Rights will not be taxable to stockholders or to
us, stockholders may, depending upon the circumstances, recognize taxable income
if the Rights become exercisable for shares of our common stock (or other
consideration) or for shares of common stock of the Acquiring Person.
Other than those provisions relating to the principal economic terms of the
Rights or imposing limitations on the right to amend the Rights Agreement, any
of the provisions of the Rights Agreement may be amended by our board of
directors with the concurrence of a majority of the independent directors or by
special approval of our stockholders before the Rights Separation Date.
Thereafter, the period during which the Rights may be redeemed may be extended
(by action of our board of directors, with the concurrence of a majority of the
independent directors or by special approval of our stockholders), and other
provisions of the Rights Agreement may be amended by action of our board of
directors with the concurrence of a majority of the independent directors or by
special approval of our stockholders; provided, however, that (a) this amendment
will not adversely affect the interests of holders of Rights (excluding the
interests of any Acquiring Person) and (b) no amendment shall be made at a time
when the Rights are no longer redeemable (except for the possibility of the
right of redemption being reinstated as described above).
DELAWARE ANTI-TAKEOVER LAW AND PROVISIONS IN OUR CHARTER
Section 203 of the Delaware General Corporation Law ('Section 203')
generally provides that a stockholder acquiring more than 15% of the outstanding
voting stock of a corporation subject to
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the statute (an 'Interested Stockholder') but less than 85% of this stock may
not engage in some types of Business Combinations (as defined in Section 203)
with the corporation for a period of three years after the time the stockholder
became an Interested Stockholder. The prohibition of Section 203 does not apply
under the following circumstances:
before the time of the acquisition, the corporation's board of directors
approved either the Business Combination or the transaction in which the
stockholder became an Interested Stockholder; or
the Business Combination is approved by the corporation's board of
directors and authorized at a stockholders' meeting by a vote of at least
two-thirds of the corporation's outstanding voting stock not owned by the
Interested Stockholder.
Under Section 203, these restrictions will not apply to specific Business
Combinations proposed by an Interested Stockholder following the earlier of the
announcement or notification of specific extraordinary transactions involving
the corporation and a person who was not an Interested Stockholder during the
previous three years, who became an Interested Stockholder with the approval of
the corporation's board of directors or who became an Interested Stockholder at
a time when the restrictions contained in Section 203 did not apply for reasons
specified in Section 203. The above exception applies if the extraordinary
transaction is approved or not opposed by a majority of the directors who were
directors prior to the person becoming an Interested Stockholder during the
previous three years or were recommended for election or elected to succeed
those directors by a majority of those directors.
Section 203 defines the term 'Business Combination' to encompass a wide
variety of transactions with or caused by an Interested Stockholder. These
include transactions in which the Interested Stockholder receives or could
receive a benefit on other than a pro rata basis with other stockholders,
transactions with the corporation which increase the proportionate interest in
the corporation directly or indirectly owned by the Interested Stockholder or
transactions in which the Interested Stockholder receives other benefits.
The provisions of Section 203, coupled with our board of directors'
authority to issue preferred stock without further stockholder action, could
delay or frustrate the removal of incumbent directors or a change in our
control. The provisions could also discourage, impede or prevent a merger,
tender offer or proxy contest, even if the event would be favorable to the
interests of stockholders. Our stockholders, by adopting an amendment to our
amended and restated certificate of incorporation, may elect not to be governed
by Section 203 effective 12 months after the adoption. Neither our certificate
of incorporation nor our by-laws exclude us from the restrictions imposed by
Section 203.
DESCRIPTION OF WARRANTS
We may issue warrants for the purchase of debt securities, preferred stock,
common stock or any combination thereof. Warrants may be issued independently or
together with any other securities offered in an applicable prospectus
supplement and may be attached to or separate from such securities. Warrants may
be issued under warrant agreements (each, a 'warrant agreement') to be entered
into between us and a warrant agent specified in the applicable prospectus
supplement. The warrant agent will act solely as our agent in connection with
the warrants of a particular series and will not assume any obligation or
relationship of agency or trust for or with any holders or beneficial owners of
warrants. The following sets forth certain general terms and provisions of
warrants which may be offered. Further terms of the warrants and the applicable
warrant agreement will be set forth in an applicable prospectus supplement.
DEBT WARRANTS
The prospectus supplement relating to a particular issue of warrants for the
purchase of debt securities ('debt warrants') will describe the terms of the
debt warrants, including the following:
the title of the debt warrants;
the offering price for the debt warrants, if any;
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the aggregate number of the debt warrants;
the designation and terms of the debt securities purchasable upon exercise
of the debt warrants;
if applicable, the designation and terms of the debt securities that the
debt warrants are issued with and the number of debt warrants issued with
each debt security;
if applicable, the date from and after which the debt warrants and any debt
securities issued with them will be separately transferable;
the principal amount of debt securities that may be purchased upon exercise
of a debt warrant and the price at which the debt securities may be
purchased upon exercise (which may be payable in cash, securities or other
property);
the dates on which the right to exercise the debt warrants will commence
and expire;
if applicable, the minimum or maximum amount of the debt warrants that may
be exercised at any one time;
information with respect to book-entry procedures, if any;
the currency or currency units in which the offering price, if any, and the
exercise price are payable;
if applicable, a discussion of material United States federal income tax
considerations;
the antidilution provisions of the debt warrants, if any;
the redemption or call provisions, if any, applicable to the debt warrants;
and
any additional terms of the debt warrants, including terms, procedures, and
limitations relating to the exchange and exercise of the debt warrants.
STOCK WARRANTS
The prospectus supplement relating to a particular issue of warrants for the
purchase of common stock or preferred stock will describe the terms of the
warrants, including the following:
the title of the warrants;
the offering price for the warrants, if any;
the aggregate number of the warrants;
the designation and terms of the common stock or preferred stock that may
be purchased upon exercise of the warrants;
if applicable, the designation and terms of the securities that the
warrants are issued with and the number of warrants issued with each
security;
if applicable, the date from and after which the warrants and any
securities issued with the warrants will be separately transferable;
the number of shares of common stock or preferred stock that may be
purchased upon exercise of a warrant and the price at which such shares may
be purchased upon exercise;
the dates on which the right to exercise the warrants will commence and
expire;
if applicable, the minimum or maximum amount of the warrants that may be
exercised at any one time;
the currency or currency units in which the offering price, if any, and the
exercise price are payable;
if applicable, a discussion of material United States federal income tax
considerations;
the antidilution provisions of the warrants, if any;
the redemption or call provisions, if any, applicable to the warrants; and
any additional terms of the warrants, including terms, procedures, and
limitations relating to the exchange and exercise of the warrants.
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EXERCISE OF WARRANTS
Each warrant will entitle the holder of warrants to purchase for cash the
amount of shares of preferred stock, shares of common stock or debt securities
at the exercise price as shall in each case be set forth in, or be determinable
as set forth in, the prospectus supplement relating to the warrants offered
thereby. Warrants may be exercised at any time up to the close of business on
the expiration date set forth in the prospectus supplement relating to the
warrants offered thereby. After the close of business on the expiration date,
unexercised warrants will become void.
Warrants may be exercised as set forth in the prospectus supplement relating
to the warrants offered thereby. Upon receipt of payment and the warrant
certificate properly completed and duly executed at the corporate trust office
of the warrant agent or any other office indicated in the prospectus supplement,
we will, as soon as practicable, forward the shares of preferred stock, shares
of common stock or debt securities purchasable upon such exercise. If less than
all of the warrants represented by the warrant certificate are exercised, a new
warrant certificate will be issued for the remaining warrants.
THE UNIT OFFERING WARRANTS
On May 18, 1999, we issued units composed of our 14 1/2% Senior Secured
Notes due 2009 and warrants to purchase an aggregate of 2,190,000 shares of
common stock at a price of $28.60 per share. These warrants were issued under a
warrant agreement, dated as of May 15, 1999, between us, as issuer, and United
States Trust Company of New York, as warrant agent. The number of shares of
common stock to be issued under these warrants will be adjusted in some cases if
we issue additional shares of common stock, options, warrants or convertible
securities and in some other events. These warrants expire on May 15, 2009. As
of September 30, 2003, there were 578,990 such warrants outstanding to purchase
2,425,389 shares of common stock at a price of $24.92 per share.
THE FORD WARRANT
On October 7, 2002, we canceled an existing warrant previously issued to
Ford and issued a new warrant to Ford which entitles Ford to purchase up to
4,000,000 shares of our common stock at a purchase price of $3.00 per share.
Ford's right to exercise this warrant vests:
with respect to 200,000 shares of our common stock, on the
date the first Ford vehicle with a Sirius radio installed by
Ford or one of its dealers (each, a 'Ford Enabled Vehicle')
is activated by us for a bona fide customer;
with respect to 200,000 shares of our common stock, on the
date the first Ford Enabled Vehicle that has a
factory-installed Sirius radio is activated by us for a bona
fide customer;
with respect to 200,000 shares of our common stock, on the
date that Ford and we jointly launch a national advertising
campaign promoting our satellite radio service in Ford
vehicles;
with respect to 100,000 shares of our common stock, on each
date that a Sirius radio is first available to be ordered by
a bona fide customer as an original equipment option on a
Ford vehicle line; provided that in no event will more than
1,400,000 shares of our common stock vest and become
exercisable pursuant to this provision;
with respect to one share of our common stock, upon the
manufacture by Ford of each of the first 375,000 Ford
Enabled Vehicles;
with respect to 625,000 shares of our common stock, on the
date that Ford has manufactured an aggregate of 375,000 Ford
Enabled Vehicles;
with respect to 500,000 shares of our common stock, on the
date that Ford has manufactured an aggregate of 750,000 Ford
Enabled Vehicles; and
with respect to 500,000 shares of our common stock, on the
date that Ford has manufactured an aggregate of 1,500,000
Ford Enabled Vehicles.
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If Ford terminates the exclusivity provisions contained in our agreement, we
may reduce by one-half the number of shares granted and the number of shares of
our common stock that vest and become exercisable under this warrant.
The number of shares of common stock to be issued under this warrant will be
adjusted in some cases if we issue stock dividends, combine stock, reorganize or
reclassify capital stock, merge, sell all of our assets and in some other
events. This warrant will expire on the earlier of October 6, 2012 and the date
of termination or expiration of the agreement, dated October 7, 2002, between us
and Ford.
We are required to give Ford notice of adjustments in the number of shares
issuable under this warrant and of extraordinary corporate events.
THE DAIMLERCHRYSLER WARRANT
On October 25, 2002, we canceled an existing warrant previously issued to
DaimlerChrysler and issued a new warrant to DaimlerChrysler which entitles
DaimlerChrysler to purchase up to 4,000,000 shares of our common stock at a
purchase price of $3.00 per share.
DaimlerChrysler's right to exercise this warrant vests:
with respect to 1,000,000 shares of common stock, on the
date that DaimlerChrysler and its affiliates have
manufactured 250,000 new vehicles containing Sirius radios
('DaimlerChrysler Enabled Vehicles');
with respect to an additional 500,000 shares of common
stock, on the date that DaimlerChrysler and its affiliates
have manufactured an aggregate of 800,000 DaimlerChrysler
Enabled Vehicles;
with respect to an additional 500,000 shares of common
stock, on the date that DaimlerChrysler and its affiliates
have manufactured an aggregate of 1,600,000 DaimlerChrysler
Enabled Vehicles;
with respect to an additional 1,000,000 shares of common
stock, on the date that DaimlerChrysler and its affiliates
have manufactured an aggregate of 2,400,000 DaimlerChrysler
Enabled Vehicles; and
with respect to an additional 1,000,000 shares of common
stock, on the date that DaimlerChrysler and its affiliates
have manufactured an aggregate of 3,200,000 DaimlerChrysler
Enabled Vehicles.
The number of shares of common stock to be issued under this warrant will be
adjusted in some cases if we issue stock dividends, combine stock, reorganize or
reclassify capital stock, merge, sell all of our assets and in some other
events. This warrant will expire on the date of termination or expiration of the
agreement, dated October 25, 2002, among us, DaimlerChrysler Corporation,
Freightliner Corporation and Mercedes-Benz USA, Inc.
We are required to give DaimlerChrysler notice of adjustments in the number
of shares issuable under this warrant and of extraordinary corporate events.
THE LEHMAN WARRANTS
We have issued to Lehman warrants to purchase up to 2,100,000 shares of our
common stock at a purchase price of $15.00 per share. All of these warrants have
vested.
525,000 of these warrants expire on December 27, 2010, 1,050,000 of these
warrants expire on March 7, 2011 and 525,000 warrants expire on April 4, 2011.
The number of shares of common stock to be issued under these warrants and the
exercise price of the warrants will be adjusted in some cases if we issue stock
dividends, subdivide or combine stock, reorganize or reclassify capital stock,
distribute cash dividends, issue common stock or other securities convertible
into common stock (other than in a bona fide underwritten public offering) and
in certain other events. We are also required to give Lehman notice of
adjustments in the number of shares issuable under these warrants and of
extraordinary corporate events.
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THE SERIES A WARRANTS AND SERIES B WARRANTS
In connection with our recapitalization in March 2003, we issued (i) to
affiliates of Blackstone (a) Series A warrants to purchase up to 25,296,255
shares of our common stock at a purchase price of $1.04 per share and
(b) Series B warrants to purchase up to 16,864,169 shares of our common stock at
a purchase price of $0.92 per share and (ii) to affiliates of Apollo
(a) Series A warrants to purchase up to 27,250,013 shares of our common stock at
a purchase price of $1.04 per share and (b) Series B warrants to purchase up to
18,166,677 shares of our common stock at a purchase price of $0.92 per share.
All of these warrants are currently exercisable. The Series A warrants and
the Series B warrants held by affiliates of Apollo may be exercised any time
prior to the close of business on March 7, 2005. The Series A warrants and the
Series B warrants held by affiliates of Blackstone may be exercised any time
prior to the close of business on September 7, 2004. On November 5, 2003,
Blackstone exercised 21,027,512 warrants, each with an exercise price of $1.04
per share, through a cashless exercise. In connection with this exercise, we
issued 11,531,805 shares of our common stock to Blackstone. The number of shares
of common stock to be issued under these warrants and the exercise price of the
warrants will be adjusted in some cases if we issue stock dividends, subdivide
or combine stock, reorganize or reclassify capital stock, distribute cash
dividends, issue common stock or other securities convertible into common stock
(other than in a bona fide underwritten public offering) and in certain other
events. We are also required to give the warrantholders notice of adjustments in
the number of shares issuable under these warrants and of extraordinary
corporate events.
PLAN OF DISTRIBUTION
We may sell the securities:
to one or more underwriters or dealers for public offering and sale by
them; and
to investors directly or through agents.
The distribution of securities may be effected from time to time in one or
more transactions at a fixed price or prices (which may be changed from time to
time), at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at negotiated prices. Each prospectus
supplement will describe:
the method of distribution of the securities offered thereby;
the purchase price and the proceeds we will receive from the sale; and
any securities exchanges on which the securities of such series may be
listed.
In connection with the sale of the securities, underwriters, dealers or
agents may receive compensation from us or from purchasers of the securities for
whom they may act as agents, in the form of discounts, concessions or
commissions. The underwriters, dealers or agents that participate in the
distribution of the securities may be deemed to be underwriters under the
Securities Act and any discounts or commissions received by them and any profit
on the resale of the securities received by them may be deemed to be
underwriting discounts and commissions thereunder. Any such underwriter, dealer
or agent will be identified and any such compensation received from us will be
described in the applicable prospectus supplement. Any such underwriter,
including any underwriter for an 'at the market offering' within the meaning of
Rule 415 under the Securities Act, may include Bank of America Securities LLC,
Bear, Stearns & Co. Inc., BNY Capital Markets, Inc., Citigroup Capital Markets,
Inc., HSBC Securities (USA) Inc., J.P. Morgan Securities Inc., Morgan Stanley &
Co. Incorporated, Lehman Brothers Inc., Merrill Lynch Capital Markets, SG Cowen
Securities Corporation, UBS Securities LLC or any of their respective affiliated
entities. Any initial public offering price and any discounts or concessions
allowed or paid to dealers may be changed from time to time.
Under the agreements that may be entered into with us, underwriters, dealers
and agents may be entitled to indemnification by us against certain civil
liabilities, including liabilities under the
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Securities Act, or to contribution with respect to payments which the
underwriters, dealers or agents may be required to make in respect thereof.
Each underwriter, dealer and agent participating in the distribution of any
securities that are issuable in bearer form will agree that it will not offer,
sell, resell or deliver, directly or indirectly, securities in bearer form to
persons located in the United States or to United States persons (other than
qualifying financial institutions), in connection with the original issuance of
the securities.
Certain of the underwriters or agents and their associates may be customers
of, engage in transactions with and perform services for us in the ordinary
course of business.
Certain persons participating in an offering may engage in transactions that
stabilize, maintain or otherwise affect the price of the securities, including
over-allotment, stabilizing and short-covering transactions in such securities,
the imposition of a penalty bid, and bidding for and purchasing shares of our
common stock in the open market during and after an offering.
LEGAL MATTERS
Simpson Thacher & Bartlett LLP, New York, New York, will pass upon specific
legal matters under state law with respect to the securities.
EXPERTS
Our audited consolidated financial statements appearing in our Annual Report
on Form 10-K as of December 31, 2002 and for the year then ended have been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
thereon included therein and incorporated herein by reference. Such consolidated
financial statements are incorporated herein by reference in reliance upon such
report given on authority of such firm as experts in accounting and auditing.
Our audited consolidated financial statements appearing in our Annual Report
on Form 10-K as of December 31, 2001 and for each of the two years in the period
ended December 31, 2001 have been audited by Arthur Andersen LLP, independent
public accountants, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given on the
authority of such firm as experts in accounting and auditing.
Section 11(a) of the Securities Act provides that if a registration
statement at the time it becomes effective contains an untrue statement of a
material fact, or omits a material fact required to be stated therein or
necessary to make the statements therein not misleading, any person acquiring a
security pursuant to such registration statement (unless it is proven that at
the time of such acquisition such person knew of such untruth or omission) may
assert a claim against, among others, an accountant who has consented to be
named as having certified any part of the registration statement or as having
prepared any report for use in connection with the registration statement.
On April 11, 2002, we dismissed Arthur Andersen LLP as our independent
auditors and appointed Ernst & Young LLP. Prior to the date of this prospectus,
the Arthur Andersen partner responsible for the audit of our most recent audited
financial statements as of and for the year ended December 31, 2001 resigned
from Arthur Andersen LLP. As a result, after reasonable efforts, we have been
unable to obtain Arthur Andersen's written consent to the incorporation by
reference into this prospectus of its audit reports with respect to our
consolidated financial statements as of December 31, 2001 and for each of the
two years in the period ended December 31, 2001. Under these circumstances,
Rule 437a under the Securities Act permits us to file this prospectus without a
written consent from Arthur Andersen LLP. However, as a result, Arthur Andersen
LLP will not have any liability under Section 11(a) of the Securities Act for
any untrue statements of a material fact contained in the consolidated financial
statements audited by Arthur Andersen LLP or any omissions of a material fact
required to be stated therein. Accordingly, you will be unable to assert a claim
against Arthur Andersen LLP under Section 11(a) of the Securities Act because it
has not consented to the incorporation by reference of its previously issued
report into this prospectus.
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INCORPORATION BY REFERENCE
The SEC allows us to 'incorporate by reference' in this prospectus other
information we file with them, which means that we can disclose important
information to you by referring you to those documents. This prospectus
incorporates important business and financial information about us that is not
included in or delivered with this prospectus. The information we file later
with the SEC will automatically update and supersede the information included in
and incorporated by reference in this prospectus. We incorporate by reference
the documents listed below and any future filings made with the SEC under
Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act (excluding any
information furnished pursuant to Item 9 or Item 12 on any Current Report on
Form 8-K) until we sell all the securities covered by this prospectus.
1. Our Annual Report on Form 10-K for the year ended December 31, 2002.
2. Our Quarterly Reports on Form 10-Q for the quarters ended March 31,
2003, June 30, 2003 and September 30, 2003.
3. Our Current Reports on Form 8-K dated May 1, 2003, May 14, 2003,
May 21, 2003, May 30, 2003, June 16, 2003, July 30, 2003, August 6, 2003 and
October 29, 2003.
4. The description of our common stock contained in our Registration
Statement on Form 8-A filed pursuant to Section 12(g) of the Exchange Act.
We have filed each of these documents with the SEC and they are available
from the SEC's internet site and public reference rooms described under 'Where
You May Find Additional Available Information About Us' in this prospectus. You
may also request a copy of these filings, at no cost, by writing or calling us
at the following address or telephone number:
Patrick L. Donnelly
Executive Vice President, General Counsel and Secretary
Sirius Satellite Radio Inc.
1221 Avenue of the Americas, 36th Floor
New York, New York 10020
(212) 584-5100
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with different information.
WHERE YOU MAY FIND ADDITIONAL AVAILABLE INFORMATION ABOUT US
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy any of these reports, statements
or other information at the SEC's public reference room at 450 Fifth Street,
N.W., Washington, D.C. 20549 or at its regional offices. You can request copies
of those documents, upon payment of a duplicating fee, by writing to the SEC.
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. Our SEC filings are also available to the public at the SEC's
internet site at http://www.sec.gov.
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