<PAGE>
As filed with the Securities and Exchange Commission on May 28, 1999
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-4
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
---------------
HYPERION TELECOMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
Delaware 4813 25-1669404
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification No.)
incorporation or Classification Code
organization) Number)
MAIN AT WATER STREET
COUDERSPORT, PENNSYLVANIA 16915
(814) 274-9830
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
---------------
JAMES P. RIGAS
CHIEF EXECUTIVE OFFICER
HYPERION TELECOMMUNICATIONS, INC.
MAIN AT WATER STREET
COUDERSPORT, PENNSYLVANIA 16915
(814) 274-9830
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------
PLEASE ADDRESS A COPY OF ALL COMMUNICATIONS TO:
CARL E. ROTHENBERGER, JR., ESQUIRE
BUCHANAN INGERSOLL
PROFESSIONAL CORPORATION
21ST FLOOR, 301 GRANT STREET
PITTSBURGH, PENNSYLVANIA 15219
(412) 562-8800
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable
after the effective date of this Registration Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, please check the following box. [_]
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CALCULATION OF REGISTRATION FEE
<TABLE>
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<CAPTION>
Proposed
Proposed maximum
maximum aggregate Amount of
Title of each class of Amount to offering price offering registration
securities to be registered be registered per unit(1) price(1) fee
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<S> <C> <C> <C> <C>
12% Senior Subordinated Notes Due 2007.... $300,000,000 100% $300,000,000 $83,400
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</TABLE>
(1) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(f)(2).
---------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until the Registration Statement
shall become effective on such date as the Securities and Exchange Commission,
acting pursuant to said Section 8(a), may determine.
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<PAGE>
Subject To Completion
Dated May 28, 1999
Offer to Exchange
12% Senior Subordinated Notes due 2007
for
any and all of the existing 12% Senior Subordinated Notes due 2007
HYPERION TELECOMMUNICATIONS, INC.
NEW NOTES
THE EXCHANGE OFFER
. The exchange offer expires 5:00 . The new 12% Senior Subordinated
p.m., New York City time, Notes will evidence the same debt as
, 1999, unless extended the existing 12% Senior Subordinated
by us. Notes and will be entitled to the
benefits of the same Indenture.
. You may withdraw tenders of . The terms of the new 12% Senior
outstanding 12% Senior Subordinated Notes will be
Subordinated Notes any time prior substantially identical to the
to 5:00 p.m., New York City time currently outstanding 12% Senior
on the last day of the exchange Subordinated Notes, except for
offer. transfer restrictions and
registration rights that relate to
. The exchange offer is subject to the existing 12% Senior Subordinated
customary conditions which are Notes.
described more fully in this
prospectus and the accompanying . We believe, based on interpretations
letter of transmittal. made by the SEC staff with respect
to similar transactions, that with
some exceptions, you may offer for
resale, resell, or otherwise
transfer the new 12% Senior
Subordinated Notes without
compliance with registration and
prospectus delivery requirements of
the Securities Act of 1933.
. We will exchange all outstanding . We will not list the new 12% Senior
12% Senior Subordinated Notes Subordinated Notes on any exchange
that are validly tendered and not or in any automated quotation
validly withdrawn. system. Therefore, there may not be
any active trading market for them.
. We will not receive any proceeds
from the
exchange offer.
You should carefully review the "Risk Factors" beginning on page 7 for a
discussion of things you should consider before participating in the exchange
offer.
----------------
Neither the SEC nor any state securities commission has approved or
disapproved of the new 12% Senior Subordinated Notes to be distributed in the
exchange offer, nor have any of these organizations determined that this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The information in the prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the SEC
is effective. This prospectus is not an offer to sell these securities and it
is not soliciting an offer to buy these securities in any state where the offer
or sale is prohibited.
----------------
The date of this Prospectus is , 1999.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
Summary.................................................................. 2
Risk Factors............................................................. 7
Ratio of Earnings to Combined Fixed Charges and Preferred Stock
Dividends............................................................... 21
The Exchange Offer....................................................... 22
Use of Proceeds.......................................................... 33
Description of the Notes................................................. 34
Certain Federal Income Tax Considerations................................ 73
Plan of Distribution..................................................... 76
Where You Can Find More Information...................................... 76
Legal Matters............................................................ 78
Experts.................................................................. 78
</TABLE>
<PAGE>
SUMMARY
"We," "our," "ours," "us" or "Hyperion" means Hyperion Telecommunications,
Inc. together with its majority-owned subsidiaries, except where the context
otherwise requires. Unless the context otherwise requires, references to the
networks mean the telecommunications networks in operation or under
construction owned as of March 31, 1999 which are wholly and majority-owned
subsidiaries of Hyperion or joint ventures managed by Hyperion and in which
Hyperion holds less than a majority equity interest with one or more other
partners, and the additional networks under development as of such date. The
following summary contains basic information about this exchange offer. This
summary may not contain all the information that may be important to you. You
should read the entire prospectus and those documents incorporated by reference
into this document, including the risk factors, financial data and related
notes, before making an investment decision or participating in the exchange
offer.
Hyperion
We are a large competitive local exchange carrier in the eastern United
States. This means that we provide our customers with alternatives to the
incumbent local telephone company for local telephone and telecommunications
services. Hyperion's telephone operations are referred to as being facilities
based, which means we generally own a large portion of the local
telecommunications networks and facilities we use to deliver these services,
rather than leasing or renting the use of another party's networks to do so. We
offer a full range of communications services to customers that include
businesses, governmental and educational end users and other telecommunications
service providers throughout the eastern United States. Our communications
services include local switch dial tone (also known as local phone service),
long distance service, high speed data services, and Internet connectivity. The
customer has a choice of receiving these services individually or as part of a
bundle of services. In order to take advantage of the improved economic returns
from providing services over our own network system, we are in the process of
significantly expanding the reach of our network system. This network system
expansion includes the purchase, lease or construction of fiber optic network
facilities in more than 50 new markets and the interconnection of all of our
existing and new markets with our own fiber optic network facilities. As of
March 31, 1999, we managed and operated telecommunications networks serving 39
metropolitan statistical areas. Hyperion's Class A common stock is quoted on
the Nasdaq National Market under the symbol "HYPT."
The Exchange Offer
On March 2, 1999, we completed private offerings of a total of $300,000,000
of 12% Senior Subordinated Notes due 2007. We will refer to these 12% Senior
Subordinated Notes as old notes in this prospectus. When we refer to the 12%
Senior Subordinated Notes due 2007 that we are offering in exchange for the old
notes, we will call them new notes. When
2
<PAGE>
we refer to the old notes and the new notes together, we will call them the
notes. When we refer to the registration rights agreement we are referring to
the registration rights agreement dated March 2, 1999 between Hyperion and the
initial purchasers of the old notes.
You are entitled to exchange in the exchange offer your outstanding old
notes for registered new notes. We believe that the new notes issued in the
exchange offer may be resold by you without compliance with the registration
and prospectus delivery provisions of the Securities Act, subject to some
conditions. For more information you should read "Description of the Notes."
You should also read the discussion under the headings "Summary of the Terms of
the Exchange Offer" and "The Exchange Offer" for further information regarding
the exchange offer and resale of the notes.
Summary of the Terms of the Exchange Offer
The exchange offer relates to the exchange of up to $300,000,000 aggregate
principal amount of outstanding 12% Senior Subordinated Notes for an equal
aggregate principal amount of new 12% Senior Subordinated Notes. All of the new
notes will be obligations of Hyperion entitled to the benefits of the Indenture
governing the outstanding old notes. When we refer to the Indenture in this
prospectus, we are referring to the Indenture, dated March 2, 1999, between
Hyperion and the Bank of Montreal Trust Company, as Trustee. The form and terms
of the new notes are identical in all material respects to the form and terms
of the outstanding old notes, except that the new notes do not have transfer
restrictions and they have been "registered" under the Securities Act, and
therefore are not entitled to the benefits of the registration rights granted
under the registration rights agreement.
Securities Offered . Up to $300,000,000 aggregate principal amount of
12% Senior Subordinated Notes.
. Terms of the new notes and the old notes are
substantially identical in all material respects,
except for transfer restrictions, registration
rights and liquidated damage provisions which
apply to the old notes but not to the new notes.
The Exchange Offer . We are offering to exchange $1,000 principal
amount of the new notes for each $1,000 principal
amount of old notes. You should read "The Exchange
Offer" for a detailed description of the
procedures for tendering old notes.
. The exchange offer satisfies the registration
obligations of Hyperion under the registration
rights agreement. When the exchange offer is
completed, holders of old
3
<PAGE>
notes that were not prohibited from participating
in the exchange offer and that did not tender
their old notes will not have any registration
rights under the registration rights agreement
with respect to their non-tendered old notes.
Accordingly, non-tendered old notes will continue
to be subject to the restrictions on transfer
contained in the legend on them.
Tenders; Expiration . The exchange offer will expire at 5:00 p.m., New
Date; York City time, on , 1999, or, if we elect
Withdrawal; Exchange to extend the exchange offer, such later date and
Date time to which it is extended. However, we cannot
extend the exchange offer beyond 30 business days
from the date of this prospectus.
. You may withdraw your tender of old notes and
retender at any time prior to the expiration of
the exchange offer.
. Any old notes not accepted for exchange for any
reason will be returned without expense to you as
promptly as practicable after the expiration or
termination of the exchange offer. Your old notes
will be accepted for exchange, if properly
tendered and not withdrawn, for new notes on the
first business day following the last day of the
exchange offer or as soon as practicable
thereafter. We refer to this date of acceptance as
the exchange date.
Accrued Interest on the . Each new note will bear interest from the most
New Notes recent date to which interest has been paid on the
old notes or, if no such payment has been made,
from March 2, 1999.
Federal Income Tax . The exchange offer will not result in any income,
Considerations gain or loss to the holders of notes or to us for
federal income tax purposes. For more information
you should read "Certain Federal Income Tax
Considerations."
Use of Proceeds . We will not receive any proceeds from the exchange
offer.
Exchange Agent . Bank of Montreal Trust Company, the Trustee under
the Indenture is the exchange agent for the
exchange offer.
4
<PAGE>
Consequences of Exchanging or Failure to Exchange Old Notes
Pursuant to the Exchange Offer
Holders that are not Broker-Dealers
. Generally, if you are not an "affiliate" of Hyperion within the meaning
of Rule 405 under the Securities Act, upon the exchange of your old
notes for new notes pursuant to the exchange offer, you will be able to
offer your new notes for resale, resell your new notes and otherwise
transfer your new notes without compliance with the registration and
prospectus delivery provisions of the Securities Act.
. This is true so long as you have acquired the new notes in the ordinary
course of your business, you have no arrangement with any person to
participate in a distribution of the new notes and neither you nor any
other person is engaging in or intends to engage in a distribution of
the new notes.
Holders that are Broker-Dealers
. A broker-dealer who acquired old notes directly from us cannot exchange
those old notes in the exchange offer.
. Otherwise, each broker-dealer that receives new notes for its own
account in exchange for old notes must acknowledge that it will deliver
a prospectus in connection with any resale of the new notes. You should
read "Plan of Distribution" for a more detailed discussion of these
requirements.
Failure to Exchange
. Upon consummation of the exchange offer, holders that were not
prohibited from participating in the exchange offer and did not tender
their old notes will not have any registration rights under the
registration rights agreement with respect to their nontendered old
notes. Accordingly, nontendered old notes will continue to be subject to
the significant restrictions on transfer contained in the legend on
them.
Summary Description of the Notes
Maturity Date . November 1, 2007.
Interest Payment Dates . May 1 and November 1 each year commencing May 1,
1999.
Subordination . These notes are senior subordinated debt.
. They rank behind all current and future
indebtedness (other than trade payables), except
indebtedness that expressly provides that it is
not senior to these notes.
5
<PAGE>
As of March 31, 1999, these notes were:
. subordinated to $478.5 million of our senior
debt, and
. effectively subordinated to $83.8 million of
liabilities of our subsidiaries and joint
ventures.
Optional Redemption . On or after November 1, 2003, we may redeem some
or all of the notes at any time at the redemption
prices listed in the section "Description of the
Notes" under the heading "Optional Redemption."
Before May 1, 2002, we may redeem up to $75.0
million of the notes with the proceeds of certain
Qualified Equity Offerings at the price listed in
the section "Description of the Notes" under the
heading "Optional Redemption."
Mandatory Offer to . If we sell certain assets or experience specific
Repurchase kinds of changes of control, we must offer to
repurchase the notes at the prices listed in the
section "Description of the Notes."
Basic Covenants of . We will issue the new notes under the same
Indenture indenture with Bank of Montreal Trust Company that
governed the old notes. The indenture, among other
things, restricts our ability and the ability of
our subsidiaries and joint ventures to:
. borrow money;
. pay dividends on stock or purchase stock;
. make investments;
. use assets as security in other transactions;
and
. sell certain assets or merge with or into
other companies.
For more details, see the section "Description of the
Notes" under the heading "Certain Covenants."
Registration Rights . Hyperion entered into the registration rights
agreement with the initial purchasers of the old
notes. In that agreement, Hyperion agreed to file
a registration statement, of which this prospectus
is a part, with respect to the exchange offer. You
should read "Description of the Notes-Registration
Rights; Liquidated Damages" for a more detailed
description.
6
<PAGE>
RISK FACTORS
Prospective participants in the exchange offer should consider all of the
information contained in this prospectus in connection with the exchange offer.
In particular, prospective participants should consider the following things
before deciding to participate.
What Happens If You Fail Upon the completion of the exchange offer, if you
To Exchange Your Old were not prohibited from participating in the
Notes For New Notes exchange offer and you did not tender your old
notes, you will no longer have any registration
rights with respect to the old notes you still
hold. These old notes are privately placed
securities and will remain subject to the
restrictions on transfer contained in the legend on
the notes. In general, you cannot sell or offer to
sell the old notes without these restrictions,
unless the old notes are registered under the
Securities Act and applicable state securities
laws. We do not intend to register the old notes
under the Securities Act.
We believe, based on SEC staff interpretations
with respect to other transactions like the one
described in this prospectus, the new notes issued
as part of the exchange offer may be offered for
resale, resold and otherwise transferred by any
holder, other than a holder that is an "affiliate"
of Hyperion within the meaning of Rule 405 under
the Securities Act, without compliance with the
prospectus delivery provisions of the Securities
Act. This is true so long as the new notes are
acquired in the ordinary course of the holder's
business, the holder does not have any arrangement
or understanding with anyone to participate in the
distribution of the new notes and neither the
holder nor anyone else is or intends to engage in a
distribution of the new notes.
A broker-dealer that acquires new notes for its
own account in the exchange offer for old notes
must acknowledge that it will deliver a prospectus
in connection with any resale of new notes. The
letter of transmittal states that by making this
acknowledgment and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the
Securities Act. A broker-dealer may use this
prospectus, as it may be amended or supplemented
from time to time, in connection with resales of
the new notes received in exchange for the old
notes acquired by the broker-dealer as a result of
market-making activities or other trading
activities. We have agreed
7
<PAGE>
that we will make this prospectus available to any
broker-dealer for use in connection with any such
resale for a period of 365 days after the exchange
date or, if earlier, until all participating
broker-dealers have so resold. You should read
"Plan of Distribution" for more information.
High Level Of Indebtedness Hyperion has a substantial amount of debt. We
borrowed this money to purchase and to expand our
telecommu- nications systems and other operations
and, to a lesser extent, for investments and loans
to our affiliates. At March 31, 1999, our
indebtedness and redeemable preferred stock totaled
approximately $1,083,182,000. This included
approximately:
As of March 31, 1999, . $228,531,000 of 13% senior discount notes due
we owed approximately 2003;
$1.1 billion. Our high
level of indebtedness . $250,000,000 of 12 1/4% senior secured notes due
can have important 2004 which are secured by the equity we own in
adverse consequences to some of our telephone networks;
us and to you.
. $300,000,000 of the old notes; and
. $236,293,000 of redeemable preferred stock due
October 15, 2007.
We will have to start funding cash payments on
these debts as follows:
Commencing 1999 we . commencing May 1, 1999--semi-annual interest
will have to begin payments of approximately $18,000,000 on the
funding substantial cash notes;
payments.
. commencing March 1, 2001--semi-annual interest
payments of approximately $15,300,000 on our 12
1/4% senior secured notes due 2004;
. commencing October 15, 2001--semi-annual
interest payments of approximately $19,800,000
on our 13% senior discount notes due 2003;
. commencing October 15, 2002--quarterly cash
dividends of approximately $12,200,000 on our
redeemable preferred stock.
This could affect our Our high level of indebtedness can have important
ability to invest in our adverse consequences to us and to you. In the
business in the future future it will require that we spend a substantial
as well as to our portion of the cash we get from our business to
ability to react to repay the principal and interest on these debts.
changes in our industry Otherwise, we could use these funds for general
or economic downturns. corporate purposes or for capital improvements. Our
ability to obtain new loans for working capital,
capital expenditures,
8
<PAGE>
acquisitions or capital improvements may be limited
by our current level of debt. In addition, having
such a high level of debt could limit our ability
to react to changes in our industry and to economic
conditions generally and may put us at a
competitive disadvantage to competitors who have
lower debt levels.
The Notes Are Subordinated The new notes will be subordinated in right of
To Our Other Borrowings payment to all of our current and future senior
debt. Upon any distribution to our creditors in a
liquidation or dissolution of Hyperion or in a
bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to us
or our property, the holders of senior debt will be
entitled to be paid in full before any payment may
be made with respect to the notes. In the event of
a bankruptcy, liquidation or reorganization of
Hyperion, holders of the notes will participate
ratably with all holders of subordinated
indebtedness of Hyperion that is deemed to be of
the same class as the notes, and potentially with
all other general creditors of Hyperion, based upon
the respective amounts owed to each holder or
creditor, in the remaining assets of Hyperion. We
cannot guarantee that there would be sufficient
assets to pay amounts due on the notes. As a
result, holders of notes may receive less, ratably,
than the holders of senior debt. In addition, under
the subordination provisions of the Indenture,
payments that would otherwise be made to holders of
the notes will instead be paid to holders of senior
debt under certain circumstances. As a result of
these provisions, our other creditors, including
trade creditors that are not holders of senior debt
may recover more, ratably, than the holders, of the
notes. As of March 31, 1999, the aggregate amount
of our senior debt was approximately $478.5
million.
In the event of a In addition, the subordination provisions of the
bankruptcy, you may Indenture will provide that payments with respect
receive less than other to the notes will be blocked in the event of a
creditors because senior payment default on designated senior debt, as
creditors are entitled to defined in the Indenture, including our 13% senior
be paid in full before you discount notes and 12 1/4% senior secured notes,
receive any payment. and may be blocked for up to 179 days each year in
the event of non-payment defaults on such
designated senior debt.
Senior creditors also The Indenture will permit us and our subsidiaries
have the right upon a to borrow substantial additional amounts, including
default under their loan senior debt, in the future.
agreements to block
payments being made to
you.
9
<PAGE>
Our Business Requires Our business requires substantial additional
Substantial Additional financing on a continuing basis for capital
Financing And If We Do expenditures and other purposes including:
Not Obtain That
Financing, We May Not Be . installing additional electronics and computers
Able to Expand Our in our telephone networks that route a telephone
Networks, Offer caller to the number he or she dialed,
Services, Make Payments
When Due or Refinance . expanding our Network Operations and Control
Existing Debt. Center and improving our existing telephone
networks,
. designing, constructing and developing, or
acquiring, new telephone networks,
. continued purchasing of our partners' interests
in the telephone networks we do not wholly own,
and
. scheduled principal and interest payments on our
debt.
There can be no guarantee that we will be able to
issue additional debt or sell stock or other
additional equity on satisfactory terms, or at all,
to meet our future financing needs.
We Have Had Large Losses We have incurred substantial net losses for each
And We Expect This To year of operations since our inception in 1991. Our
Continue recent net losses applicable to our common
stockholders were approximately as follows:
. fiscal year ended March 31, 1996--$13,620,000;
. fiscal year ended March 31, 1997--$30,547,000;
. fiscal year ended March 31, 1998--$81,491,000;
and
. nine months ended December 31, 1998--
$95,302,000.
Our earnings have Our earnings could not pay for our combined fixed
been insufficient to pay charges and preferred stock dividends during these
for our fixed charges periods by the amounts set forth in the table
and preferred stock below.
dividends
<TABLE>
<CAPTION>
Earnings
Deficiency
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<S> <C>
. fiscal year ended March 31, 1997 $ 30,288,000
. fiscal year ended March 31, 1998 $ 85,762,000
. nine months ended December 31, 1998 $105,525,000
. three months ended March 31, 1999 $ 46,895,000
</TABLE>
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If we cannot Historically, we have depended on getting
refinance our debt or additional borrowings and selling equity to meet
obtain new loans, we our cash needs. Although in the past we have been
would likely have to able to obtain additional borrowings and sell
consider various options equity, there can be no guarantee that we will be
such as the sale of able to do so in the future or that the cost to us
additional equity or or the other terms which would affect us would be
some of our assets to as favorable to us as our current indentures. The
meet the principal and covenants in our indentures for our current debt
interest payments we limit our ability to borrow more money.
owe, negotiate with our
lenders to restructure
existing loans or
explore other options
available under
applicable laws
including those under
reorganization or
bankruptcy laws. We
cannot guarantee that
any options available to
us would enable us to
repay our debt in full.
Holding Company Hyperion directly owns no significant assets other
Structure than stock, partnership interests, equity and other
interests in its operating companies. Hyperion does
Hyperion depends on not receive cash flow from operations except to the
its subsidiaries' and extent that its operating companies pay management
joint ventures' cash fees or make distributions to it. In the event of
payments and an insolvency of an operating company, creditors of
distributions to fund that operating company would be entitled to be paid
its cash needs. in full before dividends or other distributions
would be made to Hyperion. In addition, Hyperion
does not own a controlling interest in some of
these operating companies. This business structure
creates risks regarding Hyperion's obtaining cash
from its business operations which could adversely
affect its ability to repay the interest and
principal which it owes, to get new loans, to fund
future development of existing networks and new
networks and to pay cash dividends to its common
stockholders in the future.
New Service Acceptance We are in the process of introducing a number of
By Customers services, primarily local exchange services, that
we believe are important to our long-term growth.
The success of these services will be dependent
upon, among other things, the willingness of
customers to accept us as a new provider of such
new telecommunications services. There is no
guarantee that this acceptance will occur, and the
lack of this acceptance could have a material
adverse effect on Hyperion.
11
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Risks From Rapid Expansion We are in a period of rapid expansion which we
believe will continue and may even accelerate in
the foreseeable future. The operating complexity of
Hyperion, as well as the responsibilities of
management personnel, have increased as a result of
this expansion. Our ability to manage this growth
effectively will require us to continue to expand
and improve our operational and financial systems
and to expand, train and manage our employee base.
In addition, Hyperion and its operating companies
have significantly increased, and intend to
continue, the hiring of additional sales and
marketing personnel. We cannot guarantee that these
new personnel will be successfully integrated into
Hyperion or the operating companies or that we can
hire a sufficient number of qualified personnel.
Our inability to effectively manage the hiring of
additional personnel and expansion could have a
material adverse effect on our business and results
of operations.
Control By Adelphia As of March 31, 1999, Adelphia Communications
Corporation beneficially owned shares representing
Adelphia can control about 66% of the total number of outstanding shares
and can transfer control of both classes of our common stock and about 90%
of stockholder decisions of the total number of outstanding shares of our
on very important Class B common stock. As a result of Adelphia's
matters. stock ownership, Adelphia has the power to elect
all of our directors. In addition, Adelphia could
control stockholder decisions on other matters such
as amendments to our Certificate of Incorporation
and Bylaws, and mergers or other fundamental
corporate transactions. Adelphia could also
transfer control of Hyperion to an unrelated third
person by transferring our Class B common stock.
There Are Potential Adelphia's activities could present a conflict of
Conflicts Of Interest interest with us, such as pursuing business
Between Hyperion And opportunities in the telecommunications industry.
Adelphia In addition, there have been and will continue to
be transactions between us and Adelphia or the
other entities or persons they own or have
affiliations with. Our debt indentures contain
covenants that place some restrictions on
transactions between us and our affiliates.
Need To Obtain Permits We expect that in connection with our planned
And Rights-of-Way construction and development of new networks that
we must obtain and maintain permits and rights-of-
way for the cabling needed to develop and operate
such networks. In addition, we may require pole
attachment or conduit use agreements with incumbent
local exchange carriers, utilities or other local
12
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exchange carriers to operate existing networks and
new networks. There is no guarantee that Hyperion,
its operating companies, its local partners, or
Adelphia will be able to obtain new permits and
rights-of-way, pole attachment and conduit use, to
maintain existing permits and rights-of-way or to
obtain and maintain the other permits and rights-
of-way needed to develop and operate existing
networks and new networks. Failure to obtain or
maintain necessary permits, rights-of-way and
agreements could have a material adverse effect on
Hyperion's ability to operate and expand its
networks.
In addition, the amount of lease payments made by
our operating companies could be affected by the
costs our local partners incur for attachments to
poles, or use of conduit, owned by incumbent local
exchange carriers or electric utilities. Various
state public utility commissions and the FCC are
reviewing whether use of local partner facilities
for telecommunications purposes (as occurs when our
operating companies lease fiber optic capacity from
local partners) should entitle incumbent local
exchange carriers and electric utilities to raise
pole attachment or conduit occupancy fees. Such
increased fees could result in an increase in the
amount of the lease payments made by our operating
companies to the local partners and could have a
significant adverse impact on the profitability of
our operating companies and our results of
operations.
Competition In each of our markets, the competitive local
exchange carrier services offered by us compete
Hyperion's operations principally with the services offered by the
are subject to risk incumbent local telephone exchange carrier company
because Hyperion serving that area. Local telephone companies have
competes principally long-standing relationships with their customers,
with established local have the potential to subsidize competitive
telephone companies that services from monopoly service revenues, and
have long-standing benefit from favorable state and federal
utility relationships regulations. The merger of Bell Atlantic and NYNEX
with their customers and created a very large company whose combined
pricing flexibility for territory covers a substantial portion of our
local telephone markets. Other combinations are occurring in the
services. industry, which may have a material adverse effect
on us.
We think that local telephone companies will gain
increased pricing flexibility from regulators as
competition increases. Our operating results and
cash flow could be materially and adversely
affected by actions by regulators, including
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permitting the incumbent local telephone companies
in our markets to do the following:
. lower their rates substantially;
. engage in aggressive volume and term discount
pricing practices for their customers; or
. charge excessive fees to us for interconnection
to the incumbent local telephone company's
networks.
The regional Bell operating companies can now
If the regional Bell obtain regulatory approval to offer long distance
telephone companies services if they comply with the interconnection
could get regulatory requirements of the federal Telecommunications Act
approval to offer long of 1996. To date, the FCC has denied the requests
distance service in for approval filed by regional Bell operating
competition with our companies in our operating areas. However, an
significant customers, approval of such a request could result in
some of our major decreased market share for the major long distance
customers could lose carriers which are among our significant customers.
market share. This could have a material adverse effect on us.
The regional Bell Some of the regional Bell operating companies have
telephone companies also recently filed petitions with the FCC
continue to seek other requesting waivers of other obligations under the
regulatory approvals federal Telecommunications Act of 1996. These
that could significantly involve services we also provide such as high speed
enhance their data, long distance, and services to Internet
competitive position Service Providers. If the FCC grants the regional
against us. Bell operating companies' petitions, this could
have a material adverse effect on us.
Potential competitors Our potential competitors include other competitive
to our local exchange carriers, incumbent local telephone
telecommunications companies which are not subject to regional Bell
services include the operating companies' restrictions on offering long
regional Bell telephone distance service, AT&T, MCIWorldCom, Sprint and
companies, AT&T, other long distance carriers, cable television
MCIWorldCom and Sprint, companies, electric utilities, microwave carriers,
electric utilities and wireless telecommunications providers and private
other companies that networks built by large end users. Both AT&T and
have advantages over us. MCIWorldCom have announced that they have begun to
offer local telephone services in some areas of the
country, and AT&T recently announced a new wireless
technology for providing local telephone service.
AT&T and Tele-Communications, Inc. also recently
merged. Although we have good relationships with
the long distance carriers, they could build their
own facilities, purchase other carriers or their
facilities, or resell the services of other
carriers rather
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than use our services when entering the market for
local exchange services.
Many of our current and potential competitors,
particularly incumbent local telephone companies,
have financial, personnel and other resources
substantially greater than our resources, as well
as other competitive advantages over us.
We Are Subject To The federal Telecommunications Act of 1996
Extensive Regulation substantially changed federal, state and local laws
and regulations governing telecommunications
The federal Telecom- businesses. This law could materially affect the
munications Act of 1996 growth and operation of the telephone industry and
may have a significant the services we provide. There are numerous
impact on our rulemakings that have been and continue to be
businesses. undertaken by the FCC which will interpret and
implement the provisions of this law. Furthermore,
portions of this law have been, and likely other
portions will be, challenged in the courts. In
addition, the federal Telecommunications Act of
1996 removes entry barriers for all companies and
could increase substantially the number of
competitors offering comparable services in our
markets or potential markets. We cannot predict the
outcome of such rulemakings or lawsuits or the
short- and long-term effect, financial or
otherwise, of this law and FCC rulemakings on us.
Furthermore, we cannot guarantee that rules adopted
by the FCC or state regulators or other legislative
or judicial initiatives relating to the
telecommunications industry will not have a
material adverse effect on us.
Although the federal Telecommunications Act of 1996
requires local telephone companies to interconnect
with and sell services to us, these interconnection
agreements may have short terms, requiring us
renegotiate them repeatedly. Local telephone
companies may not provide timely or adequate
service to us which would impair our reputation
with customers who could easily change back to
using the local telephone company. In addition, the
prices we pay in these agreements may be subject to
significant increases if state public utility
commissions establish prices to pass on to
competitive local exchange carriers part of the
cost of providing universal service.
Our operating companies that provide intrastate
services are also generally subject among other
matters to certification and tariff filing
requirements by state regulators. Challenges
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<PAGE>
to our tariffs and certificates by third parties or
by the states could cause us to incur substantial
legal and administrative expense.
Risks Arising From Our Most of our operating companies' local partner
Joint Ventures agreements contain mandatory buy/sell provisions
that, after a period of years, can be initiated by
Mandatory Buy/Sell either partner and result in one partner purchasing
Proceedings all of the other partner's interests. There can be
no guarantee that we can continue in partnership
with our current local partners, or any other
partner, in our respective markets, or that we will
have sufficient funds to purchase the partnership
interest of a local partner who starts the buy/sell
process, which would force us to sell our interests
to the local partner.
Termination of a The bankruptcy or insolvency of a local partner or
Local Partner agreement an operating company could result in the
termination of that local partner agreement and the
related fiber lease agreement. The effect of such
terminations could be materially adverse to us.
Similarly, all of our management agreements, and
some of our local partner and fiber lease
agreements can be terminated by a local partner at
various times during the next seven years. There
can be no guarantee that a local partner will not
seek to terminate one or more of these agreements.
The termination of any of these agreements could
materially adversely affect us. In addition, the
failure of a local partner to make required capital
contributions could have a material adverse effect
on us. We expect that some of the operating
companies may begin to incur substantial
indebtedness in the foreseeable future.
Risks Related To Local Local multipoint distribution service is a new
Multipoint Distribution service, and major telecommunications equipment
Service Strategy manufacturers have yet to introduce products for
the local multipoint distribution service frequency
band. As a result, no wireless local loop systems
are currently operating under local multipoint
distribution service, and implementation of such
systems could be subject to unforeseen delays,
costs and possible quality and implementation
issues. Material aspects of our local multipoint
distribution service implementation strategy
16
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are still being developed and defined, and there
can be no guarantee that we will develop and
implement a successful and profitable local
multipoint distribution service strategy, or that
implementation of our local multipoint distribution
service strategy will not involve substantial cost.
Rapid Technological The telecommunications industry is subject to rapid
Change and significant changes in technology. While we
believe that for the foreseeable future these
changes will neither materially affect the
continued use of fiber optic telecommunications
networks nor materially hinder our ability to
acquire necessary technologies, the effect of
technological changes on our business cannot be
predicted. Thus, there can be no guarantee that
technological developments will not have a material
adverse effect on us.
Year 2000 Issues Present The year 2000 issue refers to the inability of
Risks To Our Business computerized systems and technologies to recognize
Operations In Several and process dates beyond December 31, 1999. This
Ways could present risks to the operation of our
business in several ways. Our computerized business
applications that could be adversely affected by
the year 2000 issue include:
. information processing and financial reporting
systems,
. customer billing systems,
. customer service systems,
. telecommunication transmission and reception
systems, and
. facility systems.
System failure or miscalculation could result in an
inability to process transactions, send invoices,
accept customer orders or provide customers with
products and services. Although we are evaluating
the impact of the year 2000 issue on our business
and are seeking to implement necessary solutions,
this process has not been completed.
There can be no assurance that the systems of other
companies on which our systems rely will be year
2000 ready or timely converted into systems
compatible with our systems. Our failure or a
third-party's failure to become year 2000 ready, or
our inability to become compatible with third
parties with which we have a material relationship,
may have a material adverse effect on us, including
significant service
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<PAGE>
interruption or outages; however, we cannot
currently estimate the extent of any such adverse
effects.
Dependence Upon Network Our success in marketing our services to business
Infrastructure, Risk Of and government users requires that we provide
System Failure Or superior reliability, capacity and security through
Security Breach our network infrastructure. Our networks are
subject to physical damage, power loss, capacity
limitations, software defects, breaches of security
(by computer virus, break-ins or otherwise) and
other factors, any of which may cause interruptions
in service or reduced capacity for our customers.
Interruptions in service, capacity limitations or
security breaches could have a material adverse
effect on us.
Dependence On Key Our growth strategy depends in large part on our
Personnel ability to attract and retain key management,
marketing and operations personnel. Currently, our
business is managed by a small number of management
and operating personnel with certain other
services, including financial and certain
accounting services, provided by Adelphia. There
can be no assurance that we will attract and retain
the qualified personnel needed to manage, operate
and further develop our business. In addition, the
loss of the services of any one or more members of
our senior management team could have a material
adverse effect on Hyperion.
Dependence On Business For the nine months ended December 31, 1998 and the
From Interexchange three months ended March 31, 1999, approximately
Carriers 41% and 42%, respectively, of the operating
companies' combined revenues were attributable to
access services provided to MCIWorldCom, AT&T and
other interexchange carriers. The loss of access
revenues from interexchange carriers in general or
the loss of MCIWorldCom or AT&T as a customer could
have a material adverse effect on our current
revenue stream.
In addition, the federal Telecommunications Act of
1996 establishes procedures under which the
regional Bell operating companies can obtain
authority to compete with the interexchange
carriers in the long distance market, which could
result in a decreased market share for
interexchange carriers. Due to our operating
companies' dependence on business from
interexchange carriers, any significant loss of
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<PAGE>
market share by the interexchange carriers could
have a material adverse effect on us.
We May Not Have The The Indenture and our other public debt indentures
Resources To Repurchase contain provisions requiring Hyperion, upon a
The Notes Upon A Change change of control, to offer to redeem the notes. In
of Control the event a change of control occurs, there is no
assurance that Hyperion will have the ability to
make an offer to redeem the notes, that it will
have sufficient funds to repurchase all of the
notes or that it would be able to obtain any
additional debt or equity financing in an amount
sufficient to repurchase the notes.
No Public Market Exists The notes are new securities for which there is
For The Notes currently no market. Hyperion does not intend to
apply for listing of the notes on any securities
exchange or automated quotation system. Although
the initial purchasers have advised Hyperion that
they currently intend to make a market in the
notes, they are not obligated to do so. Therefore,
any market making activities may be discontinued at
any time without notice. We cannot assure you that
any market for the notes will develop, or that that
market will provide liquidity for holders of the
notes. If a market for the notes does develop, the
notes could trade at prices that may be higher or
lower than their initial offering price depending
upon many factors, including prevailing interest
rates, Hyperion's operating results and the markets
for similar securities. Historically, the market
for non-investment grade debt has been subject to
disruptions that have caused the prices of
securities similar to the notes to fluctuate
dramatically. There can be no assurance that, if a
market for the notes does develop, that market
would not be subject to similar disruption.
Forward-Looking The statements contained or incorporated by
Statements In This reference in this prospectus that are not
Prospectus Are Subject historical facts are "forward-looking statements"
To Risks and and can be identified by the use of forward-looking
Uncertainties terminology such as "believes," "expects," "may,"
"will," "should," "intends" or "anticipates" or the
negative thereof or other variations thereon or
comparable terminology, or by discussions of
strategy that involve risks and uncertainties.
Certain information included or incorporated by
reference in this prospectus, is forward-looking,
such as information relating to the effects of
future regulation, future capital
19
<PAGE>
commitments and the effects of competition. These
statements appear in a number of places in this
prospectus and our most recent Form 10-K and Form
10-Q, including "Summary," "Management's Discussion
and Analysis of Financial Condition and Results of
Operations" and "Business," and include statements
regarding the intent, belief and current
expectations of Hyperion and its directors and
officers. Such forward-looking information involves
important risks and uncertainties that could
significantly affect expected results in the future
from those expressed in any forward-looking
statements made by, or on behalf of, Hyperion.
These risks and uncertainties include, but are not
limited to, uncertainties relating to Hyperion's
ability to successfully market its services to
current and new customers, access markets on a
nondiscriminatory basis, identify, design and
construct fiber optic networks, install cable and
facilities (including switching electronics), and
obtain rights-of-way, building access rights and
any required governmental authorizations,
franchises and permits, all in a timely manner, at
reasonable costs and on satisfactory terms and
conditions, as well as risks and uncertainties
relating to general economic conditions, the cost
and availability of capital, acquisitions and
divestitures, government and regulatory policies,
the pricing and availability of equipment,
materials, and inventories, technological
developments, year 2000 issues and changes in the
competitive environment in which Hyperion operates.
Persons reading this prospectus are cautioned that
such statements are only predictions and that
actual events or results may differ materially. In
evaluating such statements, readers should
specifically consider the various factors which
could cause actual events or results to differ
materially from those indicated by such forward-
looking statements.
20
<PAGE>
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
The following table sets forth the ratio of earnings to combined fixed
charges and preferred stock dividends of Hyperion for the periods indicated.
For purposes of calculating the ratio of earnings available to cover combined
fixed charges and preferred stock dividends:
. earnings consist of loss before income taxes and extraordinary items
plus fixed charges, excluding capitalized interest, and
. fixed charges consist of interest, whether expensed or capitalized, plus
amortization of debt issuance costs plus the assumed interest component
of rent expense.
<TABLE>
<CAPTION>
Fiscal Year Ended Nine Months Ended Three Months Ended
- ------------------------------------------------------------ ----------------- ------------------
March 31, 1995 March 31, 1996 March 31, 1997 March 31, 1998 December 31, 1998 March 31, 1999
- -------------- -------------- -------------- -------------- ----------------- ------------------
<S> <C> <C> <C> <C> <C>
-- -- -- -- -- --
</TABLE>
For the years ended March 31, 1995, 1996, 1997 and 1998, the nine months
ended December 31, 1998, and the three months ended March 31, 1999, Hyperion's
earnings were insufficient to cover its combined fixed charges and preferred
stock dividends by approximately $7,700,000, $13,800,000, $30,300,000,
$85,800,000, $105,500,000 and $46,900,000, respectively. Pro forma for the
issuance of the old notes, Hyperion's earnings were insufficient to cover its
combined fixed charges and preferred stock dividends by approximately
$132,500,000 and approximately $55,900,000 for the nine months ended December
31, 1998 and the three months ended March 31, 1999, respectively.
21
<PAGE>
THE EXCHANGE OFFER
Purpose and Effect of the Exchange Offer
On March 2, 1999, Hyperion issued $300,000,000 aggregate principal amount of
old notes to Salomon Smith Barney, Chase Securities Inc. and First Union
Capital Markets, the initial purchasers. We did not register that issuance
under the Securities Act. Rather, we relied upon the private placement
exemptions under Rule 144A and Section 4(2) of the Securities Act. In
connection with the issuance and sale of the old notes, we entered into the
registration rights agreement. The registration rights agreement requires us
to:
. cause the old notes to be registered under the Securities Act; or
. file with the SEC a registration statement under the Securities Act with
respect to the issuance of new notes; and
. use our best efforts to cause such registration statement to become
effective under the Securities Act, and
. upon the effectiveness of that registration statement, to offer to the
holders of the old notes the opportunity to exchange their old notes for
a like principal amount of new notes, which will be issued without a
restrictive legend and may be reoffered and resold by the holder without
restrictions or limitations under the Securities Act.
A copy of the registration rights agreement has been filed as an exhibit to
the registration statement of which this prospectus is a part. The exchange
offer is being made pursuant to the registration rights agreement to satisfy
our obligations under it.
Based on no-action letters issued by the staff of the SEC to third parties,
we believe that holders of the new notes issued in exchange for old notes may
offer for resale, resell and otherwise transfer the new notes, other than any
such holder which is an "affiliate" of Hyperion within the meaning of Rule 405
under the Securities Act, without compliance with the registration and
prospectus delivery provisions of the Securities Act. This is true so long as
the new notes are acquired in the ordinary course of the holder's business, the
holder has no arrangement or understanding with any person to participate in
the distribution of the new notes and neither the holder nor any other person
is engaging in or intends to engage in a distribution of the new notes. A
broker-dealer who acquired old notes directly from Hyperion cannot exchange
such old notes in the exchange offer. Any holder who tenders in the exchange
offer for the purpose of participating in a distribution of the new notes
cannot rely on such interpretation by the staff of the SEC and must comply with
the registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. Each broker-dealer that receives new
notes for its own account in exchange for old notes, where the old notes were
acquired by the broker-dealer as a result of market-making activities or other
trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such new notes. You should read "Plan of
Distribution" for more information.
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<PAGE>
Terms of the Exchange Offer
Upon the terms and subject to the conditions set forth in this prospectus
and in the accompanying letter of transmittal, which together constitute the
exchange offer, Hyperion will accept any and all old notes validly tendered and
not withdrawn prior to 5:00 p.m., New York City time, on the last day of the
exchange offer. Hyperion will issue a principal amount of new notes in exchange
for an equal principal amount of outstanding old notes tendered and accepted in
the exchange offer. You may tender some or all of your old notes pursuant to
the exchange offer. The date of acceptance for exchange of the old notes for
the new notes will be the first business day following the last day of the
exchange offer or as soon as practicable thereafter.
The terms of the new notes and the old notes are substantially identical in
all material respects, except for certain transfer restrictions, registration
rights and liquidated damages for registration defaults, as more fully
described under "Description of the Notes," relating to the old notes which
will not apply to the new notes. You should read "Description of the Notes" for
more information. The new notes will evidence the same debt as the old notes.
The new notes will be issued under and entitled to the benefits of the
Indenture pursuant to which the old notes were issued.
As of the date of this prospectus, $300,000,000 aggregate principal amount
of the old notes are outstanding. This prospectus, together with the letter of
transmittal, is being sent to all registered holders of the old notes.
You do not have any appraisal or dissenters' rights under state law or the
Indenture in connection with the exchange offer. Hyperion intends to conduct
the exchange offer in accordance with the provisions of the registration rights
agreement and the applicable requirements of the Exchange Act and the rules and
regulations of the SEC. Old notes which are not tendered and were not
prohibited from being tendered for exchange in the exchange offer will remain
outstanding and continue to accrue interest and to be subject to transfer
restrictions, but will not be entitled to any rights or benefits under the
registration rights agreement.
Upon satisfaction or waiver of all the conditions to the exchange offer, on
the first business day following the last day of the exchange offer, Hyperion
will accept all old notes properly tendered and not withdrawn and will issue
new notes in exchange therefor. For purposes of the exchange offer, we will be
deemed to have accepted properly tendered old notes for exchange when, as and
if we had given oral or written notice to that effect to the Exchange Agent.
The Exchange Agent will act as agent for the tendering holders for the purposes
of receiving the new notes from Hyperion.
In all cases, we will issue new notes for old notes that are accepted for
exchange only after timely receipt by the Exchange Agent of such old notes, a
properly completed and duly executed letter of transmittal and all other
required documents. We nevertheless reserve the absolute right to waive any
defects or irregularities in the tender or conditions of the exchange offer. If
we do not accept any tendered old notes for any reason set forth in the
23
<PAGE>
terms and conditions of the exchange offer or if you submit old notes for a
greater principal amount than you desire to exchange, we will return the
unaccepted or nonexchanged old notes or substitute old notes evidencing the
unaccepted portion, as appropriate, without expense to the tendering holder as
promptly as practicable after the expiration or termination of the exchange
offer.
If you tender old notes in the exchange offer, you will not pay brokerage
commissions or fees or, subject to the instructions in the letter of
transmittal, transfer taxes with respect to the exchange. We will pay all
charges and expenses, other than certain applicable taxes described below, in
connection with the exchange offer. For more information you should read "Fees
and Expenses."
Expiration Date; Extensions; Amendments
When we use the term expiration date, we mean 5:00 p.m., New York City time,
on , 1999, unless we, in our sole discretion, extend the exchange
offer, in which case the term expiration date means the latest date and time to
which we extend the exchange offer. However, we cannot extend the exchange
offer beyond 30 business days after the date of this prospectus.
If we decide to extend the expiration date, we will notify the Exchange
Agent of the extension by oral or written notice and will mail to the
registered holders an announcement of the extension, prior to 9:00 a.m., New
York City time, on the next business day after the then expiration date.
We reserve the right, in our sole discretion:
. to delay accepting any old notes, to extend the exchange offer or to
terminate the exchange offer if any of the conditions set forth below
under "Conditions" have not been satisfied, by giving oral or written
notice of such delay, extension or termination to the Exchange Agent, or
. to amend the terms of the exchange offer.
Any such delay in acceptance, extension, termination or amendment will be
followed as promptly as practicable by oral or written notice of the event. If
we amend the exchange offer in a manner that we believe constitutes a material
change, we will promptly disclose such amendment in a manner reasonably
calculated to inform the holders of old notes of that amendment.
Without limiting the manner in which we may choose to make a public
announcement of any delay, extension, amendment or termination of the exchange
offer, we will have no obligation to publish, advertise, or otherwise
communicate any such public announcement, other than by making a timely release
to an appropriate news agency.
Interest on the New Notes
New notes will bear interest at the rate of 12% per year, payable semi-
annually, in cash, on May 1 and November 1 of each year, from the most recent
date to which interest has been paid on the old notes or, if no such payment
has been made, from March 2, 1999.
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<PAGE>
Conditions
Notwithstanding any other term of the exchange offer, Hyperion will not be
required to exchange any new notes for any old notes, and may terminate or
amend the exchange offer before the acceptance of any old notes for exchange,
if:
. any action or proceeding is instituted or threatened in any court or by
or before any governmental agency with respect to the exchange offer
which seeks to restrain or prohibit the exchange offer or, in our
judgment, would materially impair the ability of us to proceed with the
exchange offer, or
. any law, statute, rule or regulation is proposed, adopted or enacted, or
any existing law, statute, rule, order or regulation is interpreted, by
any government or governmental authority which, in our judgment, would
materially impair the ability of us to proceed with the exchange offer,
or
. the exchange offer or its consummation would otherwise violate or be
prohibited by applicable law.
If we determine in our sole discretion that any of these conditions is not
satisfied, we may:
. refuse to accept any old notes and return all tendered old notes to the
tendering holders,
. extend the exchange offer and retain all old notes tendered prior to the
expiration of the exchange offer, subject, however, to the rights of
holders who tendered such old notes to withdraw their tendered old
notes, or
. waive such unsatisfied conditions with respect to the exchange offer and
accept all properly tendered old notes which have not been withdrawn. If
such waiver constitutes a material change to the exchange offer, we will
promptly disclose such waiver by means of a prospectus that will be
distributed to the registered holders, and we will extend the exchange
offer for a period of five to ten business days, depending upon the
significance of the waiver and the manner of disclosure to the
registered holders, if the exchange offer would otherwise expire during
such five to ten business day period.
These conditions are for our sole benefit and we may assert them regardless
of the circumstances giving rise to any such condition or we may waive them in
whole or in part at any time, and from time to time, in our sole discretion.
Our failure at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right, and each such right shall be deemed an
ongoing right which may be asserted at any time and from time to time. Any
determination by us concerning the events described above shall be final and
binding on all parties.
Procedures for Tendering
The tender of old notes by a holder as set forth below, including the tender
of old notes by book-entry delivery pursuant to the procedures of DTC (the
Depository Trust Company),
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<PAGE>
and the acceptance thereof by us will constitute an agreement between such
holder and us in accordance with the terms and subject to the conditions set
forth in this prospectus and in the letter of transmittal.
Only a holder of old notes may tender old notes in the exchange offer. To
tender in the exchange offer, you must:
. complete, sign and date the letter of transmittal, or a facsimile of the
letter of transmittal, have the signatures guaranteed if required by the
letter of transmittal, and mail or otherwise deliver the letter of
transmittal or such facsimile, together with the old notes (unless such
tender is being effected pursuant to the procedure for book-entry
transfer described below) and any other required documents, to the
Exchange Agent prior to 5:00 p.m., New York City time, on the expiration
date, or
. comply with the guaranteed delivery procedures described below.
Delivery of all documents must be made to the Exchange Agent at its address
set forth in this prospectus.
Please Note:
. The method of delivery of old notes and the letter of transmittal and
all other required documents to the exchange agent is at your election
and your risk.
. Instead of delivery by mail, we recommend that you use an overnight or
hand delivery service.
. In all cases, you should allow sufficient time to assure delivery to the
Exchange Agent before the expiration date.
. You should not send the letter of transmittal or your old notes to
Hyperion. You may request your broker, dealer, commercial bank, trust
company or nominee to handle the above transactions for you.
Any beneficial owner whose old notes are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee and who wishes to
tender should contact the registered holder promptly and instruct such
registered holder to tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender on its own behalf, that owner must, prior to
completing and executing the letter of transmittal and delivering the owner's
old notes, either make appropriate arrangements to register ownership of the
old notes in the owner's name or obtain a properly completed bond power from
the registered holder. The transfer of registered ownership may take
considerable time.
Signatures on a letter of transmittal or a notice of withdrawal, as the case
may be, must be guaranteed by any Eligible Institution (as defined below)
unless the old notes tendered pursuant thereto are tendered (i) by a registered
holder who has not completed the box entitled "Special Payment Instructions" or
"Special Delivery Instructions" on the letter of transmittal or (ii) for the
account of an Eligible Institution. In the event that signatures on a letter of
transmittal or a notice of withdrawal are required to be guaranteed, the
guarantee
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<PAGE>
must be by an Eligible Institution, which means a member firm of a registered
national securities exchange or of the National Association of Securities
Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States or an "eligible guarantor institution"
within the meaning of Rule 17Ad-15 under the Exchange Act.
If the letter of transmittal is signed by a person other than the registered
holder of any old notes listed therein, the old notes must be endorsed or
accompanied by a properly completed bond power, which the registered holder has
signed as such its name appears on the old notes, with the signature on it
guaranteed by an Eligible Institution. If the letter of transmittal or any old
notes or bond powers are signed by trustees, executors, administrators,
guardians, attorneys-in-fact, officers of corporations or others acting in a
fiduciary or representative capacity, these persons should indicate this when
signing, and unless waived by Hyperion, submit evidence satisfactory to
Hyperion of their authority to act with the letter of transmittal.
Any financial institution that is a participant in the book-entry transfer
facility, DTC, for the old notes, may make book-entry delivery of old notes by
causing DTC to transfer such old notes into the Exchange Agent's account with
respect to the old notes in accordance with DTC's procedures for such transfer,
including if applicable the procedures under the Automated Tender Offer
Program. Such delivery must be accompanied by either:
. the letter of transmittal or facsimile thereof, with any required
signature guarantees, or
. an Agent's Message, and any other required documents, must, in any case,
be transmitted to and received by the Exchange Agent at the address set
forth below under "Exchange Agent" on or prior to the expiration date or
the guaranteed delivery procedures described below must be complied
with.
The Exchange Agent will make a request to establish an account with respect
to the old notes at DTC for purposes of the exchange offer.
The term "Agent's Message" means a message, transmitted by DTC, received by
the Exchange Agent and forming part of a book-entry transfer where a tender is
initiated, which states that DTC has received an express acknowledgement from a
participant tendering old notes that such participant has received and agrees
to be bound by the terms of the letter of transmittal and that Hyperion may
enforce such agreement against the participant.
We will determine all questions as to the validity, form, eligibility
(including time of receipt), acceptance of tendered old notes and withdrawal of
tendered old notes in our discretion, which determination will be final and
binding. We reserve the absolute right to reject any and all old notes not
properly tendered or any old notes for which, in the opinion of our counsel,
our acceptance would be unlawful. We also reserve the right to waive any
defects, irregularities or conditions of tender as to particular old notes. Our
interpretation of the terms and conditions of the exchange offer (including the
instructions in the letter of transmittal) will be final and binding on all
parties. Unless waived, any defects or irregularities in connection with
tenders of old notes must be cured within such time as we
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<PAGE>
shall determine. Although we intend to notify holders of defects or
irregularities with respect to tenders of old notes, neither Hyperion, the
Exchange Agent nor any other person shall be liable for failure to give
notification. We will not deem tenders of old notes to have been made until
such defects or irregularities have been cured or waived. If the Exchange Agent
receives any old notes that are not properly tendered and as to which the
defects or irregularities have not been cured or waived will return these
notes, the Exchange Agent will return these notes to the tendering holders,
unless otherwise provided in the letter of transmittal, as soon as practicable
following the expiration date.
In addition, we reserve the right in our sole discretion to purchase or make
offers for any old notes that remain outstanding subsequent to the expiration
date or, as set forth above under "Conditions," to terminate the exchange offer
and, to the extent permitted by applicable law, purchase old notes in the open
market, in privately negotiated transactions or otherwise, with terms of offer
or purchase that could differ from the terms of the exchange offer.
By tendering, you will be representing to us:
. that the new notes you will acquire are being obtained in the ordinary
course of business of the person receiving such new notes, whether or
not such person is the holder,
. that neither you nor any such person has an arrangement or understanding
with any person to participate in the distribution of such new notes,
and
. that neither you nor any such other person is an "affiliate," as defined
in Rule 405 under the Securities Act, of Hyperion, or that if you are an
"affiliate," that you will comply with the registration and prospective
delivery requirements of the Securities Act to the extent applicable.
Guaranteed Delivery Procedures
If you wish to tender your old notes and:
. your old notes are not immediately available,
. you cannot deliver your old notes, the letter of transmittal or any
other required documents to the Exchange Agent prior to the expiration
date, or
. you cannot complete the procedures for book-entry transfer of old notes
to the Exchange Agent's account with DTC prior to the expiration date.
You may still complete a tender if:
. the tender is made through an Eligible Institution,
. on or prior to the expiration date, the Exchange Agent receives from the
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth your name and address, the certificate number(s) of such
old notes (if possible) and the principal
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<PAGE>
amount of old notes tendered, stating that the tender is being made
thereby and guaranteeing that, within three business trading days after
the expiration date,
. the letter of transmittal (or facsimile thereof) together with
the certificate(s) representing the old notes and any other
documents required by the letter of transmittal will be
deposited by the Eligible Institution with the Exchange Agent,
or
. that book-entry transfer of such old notes into the Exchange
Agent's account at DTC will be effected and confirmation of
such book-entry transfer will be delivered to the Exchange
Agent, and
. the properly completed and executed letter of transmittal (or facsimile
thereof), as well as the certificate(s) representing all tendered old
notes in proper form for transfer and all other documents required by
the letter of transmittal, or confirmation of book-entry transfer of the
old notes into the Exchange Agent's account at DTC, are received or
deemed to be received by the Exchange Agent within three business
trading days after the expiration date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their old notes according to the guaranteed
delivery procedures set forth above.
Terms and Conditions of the Letter of Transmittal
The letter of transmittal contains, among other things, the following terms
and conditions, which are part of the exchange offer:
By tendering your old notes, you exchange, assign and transfer the old notes
to us and irrevocably constitute and appoint the Exchange Agent as your agent
and attorney-in-fact to cause the old notes to be assigned, transferred and
exchanged. You represent and warrant to us and the Exchange Agent that:
. you have full power and authority to tender, exchange, assign and
transfer the old notes and to acquire the new notes in exchange for the
old notes,
. when the old notes are accepted for exchange, we will acquire good and
unencumbered title to the old notes, free and clear of all liens,
restrictions, charges and encumbrances and not subject to any adverse
claim,
. you will, upon request, execute and deliver any additional documents
deemed by us to be necessary or desirable to complete the exchange,
assignment and transfer of tendered old notes, and
. acceptance of any tendered old notes by us and the issuance of new notes
in exchange therefor will constitute performance in full by us of our
obligations under the registration rights agreement and we will have no
further obligations or liabilities thereunder to such holders (except
with respect to accrued and unpaid Liquidated Damages, if any). All
authority conferred by you as a holder will survive your death
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<PAGE>
or incapacity and all of your obligations will be binding upon your
heirs, legal representatives, successors, assigns, executors and
administrators of the holder.
By tendering, you will also certify that you:
. are not an "affiliate" of Hyperion within the meaning of Rule 405 under
the Securities Act or that, if you are an "affiliate," you will comply
with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable,
. are acquiring the new notes in the ordinary course of your business, and
. have no arrangement with any person or intent to participate in, and you
are not participating in, the distribution of the new notes.
Withdrawal of Tenders
Except as otherwise provided herein, tenders of old notes may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the expiration date.
To withdraw a tender of old notes in the exchange offer, you must send a
telegram, telex, facsimile transmission or letter indicating notice of
withdrawal which must be received by the Exchange Agent at its address set
forth below prior to 5:00 p.m., New York City time, on the expiration date. Any
such notice of withdrawal must:
. specify the name of the person having tendered the old notes to be
withdrawn, the Depositor,
. identify the old notes to be withdrawn (including the certificate number
or numbers and principal amount of such old notes),
. be signed by the holder in the same manner as the original signature on
the letter of transmittal by which the old notes were tendered
(including any required signature guarantees) or be accompanied by
documents of transfer sufficient to have the Trustee for the old notes
register the transfer of such old notes into the name of the person
withdrawing the tender, and
. specify the name in which any such old notes are to be registered, if
different from that of the Depositor.
If old notes have been tendered pursuant to the procedure for book-entry
transfer, any notice of withdrawal must specify the name and number of the
account at DTC to be credited with the withdrawn old notes or otherwise comply
with DTC's procedures. Hyperion will determine all questions as to the
validity, form and eligibility (including time of receipt) of such notices, and
its determination will be final and binding on all parties. We will deem any
old notes so withdrawn to have been not validly tendered for purposes of the
exchange offer and we will not issue any new notes with respect thereto unless
the old notes so withdrawn are validly retendered. Any old notes you have
tendered but which are not accepted for payment will be returned to you without
cost as soon as practicable after withdrawal, rejection of tender or
termination of the exchange offer. You may retender
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<PAGE>
properly withdrawn old notes by following one of the procedures described
above under "Procedures for Tendering" at any time prior to the expiration
date.
Untendered Old Notes
Holders of old notes whose old notes are not tendered or are tendered but
not accepted in the exchange offer will continue to hold such old notes and
will be entitled to all the rights and preferences and subject to the
limitations applicable thereto under the Indenture. Following consummation of
the exchange offer, the holders of old notes will continue to be subject to
the existing restrictions upon transfer thereof and we will have no further
obligations to such holders, other than the initial purchaser, to provide for
the registration under the Securities Act of the old notes held by them. To
the extent that old notes are tendered and accepted in the exchange offer, the
trading market for untendered and tendered but unaccepted old notes could be
adversely affected.
Exchange Agent
Bank of Montreal Trust Company, the Trustee under the Indenture has been
appointed as Exchange Agent of the exchange offer. Questions and requests for
assistance, requests for additional copies of this prospectus or of the letter
of transmittal and requests for Notices of Guaranteed Delivery should be
directed to the Exchange Agent addressed as follows:
By Registered or Certified Mail, by By Facsimile:
hand or by Overnight Courier: Bank of Montreal Trust Company
Bank of Montreal Trust Company Attention: Reorganization
Wall Street Plaza Department
88 Pine Street, 19th Floor (212) 701-7636
New York, NY 10005
Attention: Reorganization Department Confirm by Telephone:
(212) 701-7624
Delivery to an address other than as set forth above or transmission of
instructions via facsimile other than as set forth above will not constitute a
valid delivery.
Fees and Expenses
We will bear the expenses of soliciting tenders. We are making the
principal solicitation by mail; however, we may make additional solicitation
by telegraph, telephone or in person by officers, regular employees or agents
of Hyperion and its affiliates.
We have not retained any dealer-manager in connection with the exchange
offer and will not make any payments to brokers, dealers or others soliciting
acceptances of the exchange offer. We, however, will pay the Exchange Agent
reasonable and customary fees for its services and will reimburse it for its
reasonable out-of-pocket expenses in connection therewith and will pay the
reasonable fees and expenses of holders in delivering their old notes to the
Exchange Agent.
We will pay the cash expenses we incur in connection with the performance
and completion of the exchange offer. These expenses include fees and expenses
of the Exchange Agent and Trustee, accounting and legal fees and printing
costs, among others.
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<PAGE>
We will pay all transfer taxes, if any, applicable to the exchange of old
notes pursuant to the exchange offer. If, however, certificates representing
new notes or old notes for principal amounts not tendered or accepted for
exchange are to be delivered to, or are to be issued in the name of, any person
other than the registered holder of the old notes tendered, or if tendered old
notes are registered in the name of any person other than the person signing
the letter of transmittal, or if a transfer tax is imposed for any reason other
than the exchange of old notes pursuant to the exchange offer, then the amount
of any such transfer taxes (whether imposed on the registered holder or any
other persons) will be payable by the tendering holder. If satisfactory
evidence of payment of such taxes or exemption therefrom is not submitted with
the letter of transmittal, the amount of such transfer taxes will be billed
directly to such tendering holder.
Consequences of Failure to Exchange
Upon consummation of the exchange offer, holders of old notes that were not
prohibited from participating in the exchange offer and did not tender their
old notes will not have any registration rights under the registration rights
agreement with respect to their nontendered old notes and, accordingly, their
old notes will continue to be subject to the restrictions on transfer contained
in the legend on them. In general, the old notes may not be offered or sold,
unless registered under the Securities Act and applicable state securities
laws, except pursuant to an exemption from, or in a transaction not subject to,
the Securities Act and applicable state securities laws. We do not intend to
register the old notes under the Securities Act. Based on interpretations by
the staff of the SEC with respect to similar transactions, we believe that a
holder may offer for resale, resell or otherwise transfer the new notes issued
pursuant to the exchange offer in exchange for old notes (other than any such
holder which is an "affiliate" of Hyperion within the meaning of Rule 405 under
the Securities Act) without compliance with the registration and prospectus
delivery provisions of the Securities Act, provided that the holder acquired
its new notes in the ordinary course of its business, the holder has no
arrangement or understanding with any person to participate in the distribution
of such new notes and neither the holder nor any other person is engaging in or
intends to engage in a distribution of the new notes. If any holder has any
arrangement or understanding with respect to the distribution of the new notes
to be acquired pursuant to the exchange offer, the holder:
. could not rely on the applicable interpretations of the staff of the SEC,
and
. must comply with the registration and prospectus delivery requirements
of the Securities Act in connection with any resale transaction.
Each broker-dealer that receives new notes for its own account in exchange
for old notes must acknowledge that it will deliver a prospectus in connection
with any resale of its new notes. For more information you should read "Plan of
Distribution." The new notes may not be offered or sold unless they have been
registered or qualified for sale under applicable state securities laws or an
exemption from registration or qualification is available and is complied with.
The registration rights agreement requires Hyperion to register the new notes
in any jurisdiction requested by the holders, subject to certain limitations.
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<PAGE>
Other
Participation in the exchange offer is voluntary and you should carefully
consider whether to accept. Holders of the old notes are urged to consult their
financial and tax advisors in making their own decisions on what action to
take.
Upon consummation of the exchange offer, holders of the old notes that were
not prohibited from participating in the exchange offer and did not tender
their old notes will not have any registration rights under the registration
rights agreement with respect to such nontendered old notes and, accordingly,
such old notes will continue to be subject to the restrictions on transfer
contained in the legend on them. However, in the event Hyperion fails to
consummate the exchange offer or a holder of old notes notifies Hyperion in
accordance with the registration rights agreement that it will be unable to
participate in the exchange offer due to circumstances delineated in the
registration rights agreement, then the holder of the old notes will have
certain rights to have its old notes registered under the Securities Act
pursuant to the registration rights agreement, subject to applicable
conditions.
We have not entered into any arrangement or understanding with any person to
distribute the new notes to be received in the exchange offer, and to the best
of our information and belief, each person participating in the exchange offer
is acquiring the new notes in its ordinary course of business and has no
arrangement or understanding with any person to participate in the distribution
of the new notes to be received in the exchange offer. In this regard, we will
make each person participating in the exchange offer aware (through this
prospectus or otherwise) that any holder using the exchange offer to
participate in a distribution of new notes to be acquired in the registered
exchange offer:
. may not rely on the staff position enunciated in Morgan Stanley and Co.
Inc. (avail. June 5, 1991) and Exxon Capital Holding Corp. (avail. May
13, 1988) or similar letters, and
. must comply with registration and prospectus delivery requirements of
the Securities Act in connection with a secondary resale transaction.
Accounting Treatment
The new notes will be recorded at the same carrying value as the old notes
as reflected in Hyperion's accounting records on the exchange date.
Accordingly, no gain or loss for accounting purposes will be recognized by
Hyperion. The costs of the exchange offer will be expensed over the term of the
new notes.
USE OF PROCEEDS
There will be no cash proceeds payable to us from the issuance of the new
notes pursuant to the exchange offer. The net proceeds less offering costs
received by us from the March 2, 1999 sale of old notes were approximately
$295,000,000. We have used or intend to use these net proceeds, which include
the net proceeds from the sale of $100,000,000 of old notes to an entity
controlled by members of the immediate family of John J. Rigas, to fund our
acquisition of interests held by local partners in some of our operating
companies, capital expenditures, working capital requirements, operating losses
and pro rata investments in operating companies and for general corporate
purposes.
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DESCRIPTION OF THE NOTES
General
The New Notes, like the Old Notes, will be issued pursuant to the March 2,
1999 Indenture, as supplemented (the "Indenture"), between Hyperion and Bank of
Montreal Trust Company, as trustee (the "Trustee"). As used in this section,
(i) the term Old Notes refers to the 12% Senior Subordinated Notes due 2007
which were privately placed, (ii) the term New Notes refers to the 12% Senior
Subordinated Notes due 2007 which we are offering in exchange for the Old
Notes, and (iii) the term Notes refers to both the Old Notes and the New Notes.
The terms of the Notes include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939 (the
"Trust Indenture Act"). The terms of the New Notes are substantially identical
to the Old Notes in all material respects, including interest rate and
maturity, except that (i) the New Notes will not be subject to the restrictions
on transfer (other than with respect to holders that are broker-dealers,
persons who participated in the distribution of the Old Notes or affiliates)
and (ii) the Registration Rights Agreement covenants regarding registration and
the related liquidated damages (other than those that have accrued and were not
paid) with respect to registration defaults will have been deemed satisfied.
The Notes are subject to all such terms, and holders of Notes are referred to
the Indenture and the Trust Indenture Act for a statement thereof. The
following summary of certain provisions of the Indenture does not purport to be
complete and is qualified by reference to the Indenture including the
definitions of certain terms used below. A copy of the Indenture and
Registration Rights Agreement is available as set forth under "Where You Can
Find More Information." As used in this section, the term Registration Rights
Agreement refers to the Registration Rights Agreement between Hyperion and the
initial purchasers of the Old Notes, dated March 2, 1999. The definitions of
certain terms used in the following summary are set forth below under "--
Certain Definitions." As used in this section, the term "Hyperion" refers only
to Hyperion Telecommunications, Inc. and not to its subsidiaries.
As of the date of this prospectus, $300,000,000 principal amount of the Old
Notes was outstanding.
The New Notes are general unsecured obligations of Hyperion. The New Notes
will rank pari passu or senior in right of payment to all existing and future
Indebtedness of Hyperion that expressly provides that it is not senior to the
New Notes. The New Notes will be subordinated in right of payment to all
existing and future Senior Debt (other than trade payables) of Hyperion,
including, without limitation, the 13% Notes and the 12 1/4% Notes.
Hyperion is the sole obligor with respect to the Notes. However, the
operations of Hyperion are conducted through its Subsidiaries and Joint
Ventures and, therefore, Hyperion is dependent upon the operations and cash
flow of its Subsidiaries and Joint Ventures to meet its obligations, including
its obligations under the Notes. The New Notes will be effectively subordinated
to all Indebtedness and other liabilities and commitments (including, without
limitation, trade payables and lease obligations) of Hyperion's Subsidiaries
and Joint Ventures. Any right of Hyperion to receive assets of any of its
Subsidiaries and Joint
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<PAGE>
Ventures upon such Subsidiary's or Joint Venture's liquidation or
reorganization (and the consequent right of the Holders of the Notes to
participate in those assets) will be effectively subordinated to the claims of
that Subsidiary's or Joint Venture's creditors except to the extent that
Hyperion is itself recognized as a creditor of such Subsidiary or Joint
Venture, in which case the claims of Hyperion would still be subordinate to the
claims of such creditors who hold any security in the assets of such Subsidiary
or Joint Venture and to the claims of such creditors who hold Indebtedness of
such Subsidiary or Joint Venture senior to that held by Hyperion. As of March
31, 1999, Hyperion had approximately $478.5 million of Senior Debt (other than
trade payables) outstanding and Hyperion's Subsidiaries and Joint Ventures had
approximately $83.8 million of Indebtedness (excluding trade payables and other
accrued liabilities) outstanding. See "Risk Factors--The Notes Are Subordinated
To Our Other Borrowings" and "--Holding Company Structure."
Principal, Maturity and Interest
The New Notes will be general unsecured obligations of Hyperion, limited in
aggregate principal amount to $300,000,000 and will mature on November 1, 2007.
Interest on the New Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the date of
original issuance. Interest on the Notes will accrue at a rate of 12.0% per
annum and will be payable semi-annually in cash on May 1 and November 1,
commencing May 1, 1999, to holders of record on the immediately preceding April
15 and October 15. Interest on the Notes will be computed on the basis of a
360-day year comprised of twelve 30-day months.
Principal, premium, if any, and interest on the Notes will be payable at the
office or agency of Hyperion maintained for such purpose within the City and
State of New York or, at the option of Hyperion, payment of interest may be
made by check mailed to the Holders of the Notes at their respective addresses
set forth in the register of Holders of Notes; provided that all payments with
respect to Notes, the Holders of which have given wire transfer instructions to
Hyperion, will be required to be made by wire transfer of same day funds to the
accounts specified by the Holders thereof. Until otherwise designated by
Hyperion, Hyperion's office or agency in New York will be the office of the
Trustee maintained for such purpose. The New Notes will be issued in
denominations of $1,000 and integral multiples thereof.
Subordination
The payment of principal, interest and premium and Liquidated Damages, if
any, on the Notes will be subordinated to the prior payment in full of all
Senior Debt of Hyperion, including Senior Debt incurred after the date of the
Indenture.
The holders of Senior Debt will be entitled to receive payment in full of
all Obligations due in respect of Senior Debt (including interest after the
commencement of any bankruptcy proceeding at the rate specified in the
applicable Senior Debt) before the Holders of Notes will be entitled to receive
any payment with respect to the Notes (except that Holders of Notes may receive
and retain Permitted Junior Securities and payments made from the trust
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<PAGE>
described under "--Legal Defeasance and Covenant Defeasance"), in the event of
any distribution to creditors of Hyperion: (a) in a liquidation or dissolution
of Hyperion; (b) in a bankruptcy, reorganization, insolvency, receivership or
similar proceeding relating to Hyperion or its property; (c) in an assignment
for the benefit of creditors; or (d) in any marshaling of Hyperion's assets and
liabilities.
Hyperion also may not make any payment in respect of the Notes (except in
Permitted Junior Securities or from the trust described under "--Legal
Defeasance and Covenant Defeasance") if (a) a payment default on Designated
Senior Debt occurs and is continuing beyond any applicable grace period or (b)
any other default occurs and is continuing on any series of Designated Senior
Debt that permits holders of that series of Designated Senior Debt to
accelerate its maturity and the Trustee receives a notice of such default (a
"Payment Blockage Notice") from Hyperion or the holders of any Designated
Senior Debt. Payments on the Notes may and shall be resumed (x) in the case of
a payment default, upon the date on which such default is cured or waived; and
(y) in case of a nonpayment default, the earlier of the date on which such
nonpayment default is cured or waived or 179 days after the date on which the
applicable Payment Blockage Notice is received, unless the maturity of any
Designated Senior Debt has been accelerated. No new Payment Blockage Notice may
be delivered unless and until 360 days have elapsed since the delivery of the
immediately prior Payment Blockage Notice and all scheduled payments of
principal, interest and premium and Liquidated Damages, if any, on the Notes
that have come due have been paid in full in cash. No nonpayment default that
existed or was continuing on the date of delivery of any Payment Blockage
Notice to the Trustee shall be, or be made, the basis for a subsequent Payment
Blockage Notice unless such default shall have been cured or waived for a
period of not less than 90 days.
If the Trustee or any Holder of the Notes receives a payment in respect of
the Notes (except in Permitted Junior Securities or from the trust described
under "--Legal Defeasance and Covenant Defeasance") when the payment is
prohibited by these subordination provisions and the Trustee or the Holder has
actual knowledge that the payment is prohibited, the Trustee or the Holder, as
the case may be, shall hold the payment in trust for the benefit of the holders
of Senior Debt. Upon the proper written request of the holders of Senior Debt,
the Trustee or the Holder, as the case may be, shall deliver the amounts in
trust to the holders of Senior Debt or their proper representative. Hyperion
must promptly notify holders of Senior Debt if payment of the Notes is
accelerated because of an Event of Default.
As a result of the subordination provisions described above, in the event of
a bankruptcy, liquidation or reorganization of Hyperion, Holders of Notes may
recover less ratably than creditors of Hyperion who are holders of Senior Debt.
See "Risk Factors--The Notes Are Subordinated To Our Other Borrowings."
Optional Redemption
The Notes will not be redeemable prior to November 1, 2003, except as
discussed below under "--Mandatory Redemption." Thereafter, the Notes will be
subject to redemption at
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the option of Hyperion, in whole or in part, upon not less than 30 nor more
than 60 days' notice, at the redemption prices (expressed as percentages of
principal amount) set forth below plus accrued and unpaid interest thereon to
the applicable redemption date, if redeemed during the twelve-month period
beginning on November 1 of the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2003............................................................ 106.000%
2004............................................................ 103.000%
2005 and thereafter............................................. 100.000%
</TABLE>
Notwithstanding the foregoing, Hyperion, on or prior to May 1, 2002, may
redeem up to a maximum of 25% of the aggregate principal amount of the Notes
then outstanding at a redemption price of 112.000% of the principal amount
thereof, with the net proceeds from either (i) an underwritten public offering
of the common stock of Hyperion or (ii) a sale of the Capital Stock (other than
Disqualified Stock) of Hyperion to a Strategic Investor (excluding Affiliates
of Hyperion) in a single transaction or a series of related transactions for at
least $25.0 million (clauses (i) and (ii) together, collectively referred to
herein as "Qualified Equity Offerings"); provided that, in either case, at
least 75% in aggregate principal amount of the Notes remain outstanding
immediately after the occurrence of such redemption; and provided, further,
that such redemption shall occur within 90 days of the date of the closing of
such Qualified Equity Offering.
Mandatory Redemption
Except as set forth under "--Offer to Purchase upon Change of Control," and
"--Certain Covenants--Asset Sales," Hyperion is not required to make mandatory
redemption or sinking fund payments with respect to the Notes.
Offer to Purchase upon Change of Control
Upon the occurrence of a Change of Control, Hyperion will be required to
make an offer (the "Change of Control Offer") to each Holder of Notes to
repurchase all or any part (equal to $1,000 or an integral multiple thereof) of
such Holder's Notes at a purchase price equal to 101% of the aggregate
principal amount thereof, plus accrued and unpaid interest to the date of
repurchase, in accordance with the procedures set forth in the Indenture.
Within ten days following any Change of Control, Hyperion will mail a notice to
each Holder describing the transaction or transactions that constitute the
Change of Control and offering to repurchase Notes pursuant to the procedures
required by the Indenture and described in such notice. Hyperion will comply
with the requirements of Rule 14e-l under the Exchange Act and any other
securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of the Notes as a
result of a Change of Control.
Prior to complying with any of the Change of Control provisions described
above, but in any event within 90 days following a Change of Control, Hyperion
will either repay all
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outstanding Senior Debt or obtain the requisite consents, if any, under all
agreements governing outstanding Senior Debt to permit the repurchase of Notes
required by this covenant.
The Change of Control provisions described above will be applicable whether
or not any other provisions of the Indenture are applicable. Except as
described above with respect to a Change of Control, the Indenture does not
contain provisions that permit the Holders of the Notes to require that
Hyperion repurchase or redeem the Notes in the event of a takeover,
recapitalization or similar transaction.
"Change of Control" means the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of Hyperion and its Subsidiaries, taken as a
whole to any "person" (as such term is used in Section 13(d)(3) of the Exchange
Act) other than the Principals or their Affiliates, (ii) the adoption of a plan
relating to the liquidation or dissolution of Hyperion, (iii) the consummation
of any transaction (including, without limitation, any merger or consolidation)
the result of which is that any "person," other than the Principals and their
Affiliates, becomes the "beneficial owner" (as such term is defined in Rule
13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly, of more
than 50% of the voting power of the Capital Stock of Hyperion, (iv) the
consummation of the first transaction (including, without limitation, any
merger or consolidation) the result of which is that any "person" becomes the
"beneficial owner," directly or indirectly, of more of the voting power of the
Capital Stock of Hyperion than is at the time "beneficially owned" by the
Principals and their Affiliates in the aggregate or (v) the first day on which
a majority of the members of the Board of Directors of Hyperion are not
Continuing Directors. For purposes of this definition, any transfer of an
Equity Interest of an entity that was formed for the purpose of acquiring
voting power of Capital Stock of Hyperion will be deemed to be a transfer of
such portion of such voting power of Capital Stock as corresponds to the
portion of the equity of such entity that has been so transferred.
The definition of Change of Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"
of the assets of Hyperion and its subsidiaries. Although there is a developing
body of case law interpreting the phrase "substantially all," there is no
precise established definition of the phrase under applicable law. Accordingly,
the ability of a Holder of Notes to require the Company to repurchase such
Notes as a result of a sale, lease, transfer, conveyance or other disposition
of less than all of the assets of Hyperion to another person may be uncertain.
The agreements governing Hyperion's outstanding Senior Debt currently limit
Hyperion's ability to purchase any Notes. Any future credit agreements or other
agreements relating to Senior Debt to which the Company becomes a party may
contain similar restrictions and provisions. In the event a Change of Control
or an Asset Sale occurs at a time when Hyperion is prohibited from purchasing
Notes, Hyperion could seek the consent of its senior lenders to the purchase of
Notes or could attempt to refinance the borrowings that contain such
prohibition. If Hyperion does not obtain such a consent or repay such
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borrowings, Hyperion will remain prohibited from purchasing Notes. In such
case, Hyperion's failure to purchase tendered Notes would constitute an Event
of Default under the Indenture, which would, in turn, constitute a default
under such Senior Debt. In such circumstances, the subordination provisions in
the Indenture would likely restrict payments to the Holders of the Notes.
Selection and Notice
If fewer than all of the Notes are to be redeemed at any time, selection of
Notes for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which
the Notes are listed, or, if the Notes are not so listed, on a pro rata basis,
by lot or by such method as the Trustee shall deem fair and appropriate;
provided that no Notes of $1,000 or less shall be redeemed in part. Notices of
redemption shall be mailed by first class mail at least 30 but not more than 60
days before the redemption date to each Holder of Notes to be redeemed at its
registered address. If any Note is to be redeemed in part only, the notice of
redemption that relates to such Note shall state the portion of the principal
amount thereof to be redeemed. A new Note in principal amount equal to the
unredeemed portion thereof will be issued in the name of the Holder thereof
upon cancellation of the original Note. On and after the redemption date,
interest ceases to accrue on Notes or such portions of them called for
redemption, as the case may be.
Certain Covenants
Restricted Payments
The Indenture provides that (i) Hyperion will not, and will not permit any
of its Subsidiaries or Joint Ventures to, directly or indirectly: (a) declare
or pay any dividend or make any other payment or distribution on account of
Hyperion's Equity Interests (other than dividends or distributions payable in
Equity Interests (other than Disqualified Stock) of Hyperion or dividends or
distributions payable to Hyperion or any Wholly Owned Subsidiary); (b)
purchase, redeem or otherwise acquire or retire for value any Equity Interests
of Hyperion or any direct or indirect parent of Hyperion (other than Equity
Interests owned by Hyperion or any Wholly Owned Subsidiary of Hyperion); or (c)
purchase, redeem or otherwise acquire or retire for value, prior to a scheduled
mandatory sinking fund payment date or maturity date, any Indebtedness of the
Company which ranks subordinate in right to payment to the Notes and (ii)
Hyperion will not, and will not permit any of its Subsidiaries or Permitted
Joint Ventures to, make any Investment other than a Permitted Investment (all
such payments and other actions set forth in clauses (i) and (ii) above being
collectively referred to as "Restricted Payments") unless, at the time of and
after giving effect to such Restricted Payment:
(x) no Default or Event of Default shall have occurred and be continuing or
would occur as a consequence thereof; and
(y) such Restricted Payment, together with the aggregate amount of all other
Restricted Payments (including, without limitation, all Restricted Payments
referred to in clauses (a),
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(b)(1) and (e) below but excluding those made under clauses (b)(2), (c) and (d)
below) made by Hyperion and its Subsidiaries after August 21, 1997 is less than
the sum of: (1) the excess of (A) Cumulative Pro Forma EBITDA over (B) 1.5
times Cumulative Interest Expense plus (2) the aggregate net cash proceeds
received by Hyperion after August 21, 1997 (other than from a Subsidiary or
Joint Venture) (A) as capital contributions to Hyperion, (B) from the issuance
and sale of Equity Interests (other than Disqualified Stock) and (C) from the
issuance and sale of Indebtedness that is convertible into Capital Stock (other
than Disqualified Stock), to the extent such Indebtedness is actually converted
into such Capital Stock (clauses (A), (B) and (C) collectively referred to as
"Equity Issuances"), other than any such net cash proceeds from Equity
Issuances that were used as set forth in clauses (b) and (c) below; and
(z) Hyperion would, at the time of such Restricted Payment and after giving
pro forma effect thereto as if such Restricted Payment had been made at the
beginning of the applicable four-quarter period, have been permitted to incur
at least $1.00 of additional Indebtedness pursuant to the first paragraph of
the covenant entitled "--Incurrence of Indebtedness and Issuance of Preferred
Stock."
The foregoing provisions will not prohibit the following Restricted
Payments:
(a) the payment of any dividend within 60 days after the date of declaration
thereof, if at said date of declaration such payment would have complied with
the provisions of the Indenture;
(b) so long as no Default or Event of Default shall have occurred and be
continuing, Investments in Telecommunications Businesses, which at the time any
such Investment was made, did not cause the aggregate amount of all Investments
then outstanding under this clause (b) to exceed (1) $20.0 million plus (2) the
net cash proceeds from Equity Issuances not used as set forth in clause (y) of
the preceding paragraph and clause (c) below; or
(c) the redemption, repurchase, retirement, defeasance or other acquisition
of any subordinated Indebtedness of Hyperion or of any Equity Interests of
Hyperion in exchange for, or out of the net cash proceeds of the substantially
concurrent sale (other than to a Subsidiary of Hyperion) of, Equity Interests
of Hyperion (other than Disqualified Stock); provided that the amount of any
such net cash proceeds that are utilized for any such redemption, repurchase,
retirement, defeasance or other acquisition shall be excluded from clause
(b)(2) above and clause (y) of the preceding paragraph;
(d) the defeasance, redemption, repurchase or other acquisition of
subordinated Indebtedness of the Company with the net cash proceeds from an
incurrence of Refinancing Indebtedness; or
(e) the repurchase, redemption or other acquisition or retirement for value
of any Equity Interests of Hyperion or any Subsidiary or Permitted Joint
Venture of Hyperion held by any member of the Company's (or any of its
Subsidiaries' or Permitted Joint Ventures') management pursuant to any
management equity subscription agreement or stock option agreement in effect as
of the date of the Indenture; provided that the aggregate price paid for
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all such repurchased, redeemed, acquired or retired Equity Interests shall not
exceed $1,000,000 in any twelve-month period.
For purposes of this covenant, in the event that a Restricted Joint Venture
becomes a Permitted Joint Venture or otherwise ceases to be a Restricted Joint
Venture, all of the then outstanding Investments made by such entity since the
date of the Indenture shall be deemed to have been made as of the date that
such Restricted Joint Venture becomes a Permitted Joint Venture or otherwise
ceases to be a Restricted Joint Venture; provided that if a Restricted Joint
Venture ceases to be a Restricted Joint Venture as a result of (i) the loss of
its Local Partner or (ii) the loss of management control of such Restricted
Joint Venture, then the provisions of this paragraph shall not be applied to
such entity.
The amount of all Restricted Payments, other than cash, shall be the fair
market value (evidenced by a resolution of the Board of Directors set forth in
an Officers' Certificate delivered to the Trustee) on the date of such
Restricted Payment of the asset(s) proposed to be transferred by Hyperion or
such Subsidiary, as the case may be, pursuant to such Restricted Payment. Not
later than the date of making any Restricted Payment, Hyperion shall deliver to
the Trustee an Officers' Certificate stating that such Restricted Payment is
permitted and setting forth the basis upon which the calculations required by
the covenant "Restricted Payments" were computed, which calculations may be
based upon Hyperion's latest available financial statements.
Asset Sales
The Indenture provides that Hyperion will not, and will not permit any
Subsidiary to, directly or indirectly, whether in a single transaction or a
series of related transactions occurring within any twelve-month period, make
any Asset Sale, unless:
(i) Hyperion or the Subsidiary, as the case may be, receives consideration
at the time of such Asset Sale at least equal to the fair market value (as
determined in good faith by the Board of Directors) for the shares or assets
sold or otherwise disposed of; and
(ii) at least 85% of such consideration consists of cash, provided that
(A) an amount equal to the fair market value (as determined in good faith by
the Board of Directors) of:
(1) Telecommunications Related Assets received by Hyperion or any Subsidiary
from the transferee that will be used by Hyperion or such Subsidiary in the
operation of a Telecommunications Business;
(2) the Voting Stock of any Person engaged in a Telecommunications Business
received by Hyperion or any Subsidiary; provided that on the date such Voting
Stock is received, such Investment in Voting Stock constitutes a Permitted
Joint Venture Investment; and
(3) the publicly tradeable Voting Stock of any person engaged in the
Telecommunications Business received by Hyperion or any Subsidiary as
consideration for a
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sale of an Equity Interest in any Restricted Joint Venture, will, for the
purposes of this covenant, be deemed to be cash which was applied in accordance
with the first sentence of the penultimate paragraph of this covenant; and
(B) in the event that any of Hyperion Telecommunications of Pennsylvania,
Inc., Hyperion Telecommunications of Tennessee, Inc. or Hyperion
Telecommunications of New York, Inc. sell their respective partnership
interests in the partnerships to which each is a partner to the respective
partnerships in the manner specified by the applicable Local Partner Agreement,
(1) the principal amount of any seller note issued to Hyperion or any of its
Wholly Owned Subsidiaries in connection with the sale of such partnership
interest shall be deemed to be cash for purposes of this covenant and (2) the
payments of principal pursuant to such seller note shall be deemed to be Net
Cash Proceeds (for purposes of the penultimate paragraph of this covenant) as
and when such payments are received.
For purposes of this covenant, the first $1.0 million of Net Cash Proceeds
received from Asset Sales in any fiscal year shall not be subject to the
restrictions contained in this covenant.
The Indenture provides that, in determining the fair market value with
respect to any Asset Sale or series of related Asset Sales involving aggregate
consideration in excess of $25.0 million, the Board of Directors of the Company
must obtain an opinion as to the fairness to the Holders of the Notes of such
Asset Sales from a financial point of view issued by a nationally recognized
investment banking firm with total assets in excess of $1.0 billion; provided
that no such opinion shall be required if such Asset Sale is in accordance with
the terms of any Local Partner Agreement to which Hyperion or any of its
Subsidiaries is a party on the date of the Indenture.
The Indenture also provides that Hyperion may apply the Net Cash Proceeds
from such Asset Sale (a) to the permanent repurchase, redemption or other
repayment of Senior Debt of Hyperion (with a corresponding reduction to any
commitments relating thereto) or (b) to an investment in Telecommunications
Related Assets in a Telecommunications Service Market within 180 days after any
Asset Sale; provided that if Hyperion determines to make such investment in a
New Telecommunications Service Market, Hyperion will be deemed to have complied
with the first clause of this sentence if, Hyperion (y) within 180 days of such
Asset Sale, delivers to the Trustee a resolution adopted by a majority of the
Board of Directors set forth in an Officer's Certificate certifying that
Hyperion intends to utilize the Net Cash Proceeds of such Asset Sale to invest
in a specific New Telecommunications Service Market and (z) completes such
investment within 360 days of such Asset Sale. Hyperion will be deemed to have
completed its investment for purposes of the preceding clause (z), so long as
Hyperion has (i) a business plan that sets forth Hyperion's investment plans
for the applicable Telecommunications Service Market and (ii) issued all
material purchase orders to the appropriate parties that are necessary to
complete such business plan. Any Net Cash Proceeds from an Asset Sale that are
not applied or invested as provided in the preceding sentence shall constitute
Excess Proceeds. When the aggregate amount of Excess Proceeds exceeds $2.5
million, Hyperion shall commence an offer (an "Asset Sale Offer") to the
Holders of Notes and all holders of other Indebtedness that is pari passu with
the Notes
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containing provisions similar to those set forth in the Indenture with respect
to offers to purchase or redeem with the proceeds of sales of assets to
purchase the maximum principal amount of Notes and such other pari passu
Indebtedness that may be purchased out of the Excess Proceeds, at an offer
price in cash equal to 100% of aggregate principal amount thereof, plus accrued
and unpaid interest to the date of repurchase in accordance with the procedures
set forth in the Indenture. To the extent that the aggregate principal amount
of Notes and such other pari passu Indebtedness, plus accrued and unpaid
interest to the date of repurchase tendered pursuant to an Asset Sale Offer is
less than the Excess Proceeds, Hyperion may use such remaining Excess Proceeds
for any purpose not prohibited by the Indenture. If the aggregate principal
amount thereof, plus accrued and unpaid interest to the date of repurchase of
the Notes and such other pari passu Indebtedness surrendered by holders thereof
exceeds the amount of Excess Proceeds, the Trustee shall select the Notes and
such other pari passu Indebtedness to be purchased on a pro rata basis based on
the principal amount of the Notes and such other pari passu Indebtedness
tendered. Upon completion of such offer, the amount of Excess Proceeds shall be
reset at zero. Hyperion will comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to
the extent such laws and regulations are applicable in connection with the
repurchase of the Notes as a result of an Asset Sale.
Notwithstanding the foregoing, Hyperion will not, and will not permit any
Subsidiary to, directly or indirectly, make any Asset Sale of any Equity
Interests of any Subsidiary (at least 80% of the voting power of the Capital
Stock of which is owned by Hyperion) except pursuant to an Asset Sale of all of
the Equity Interests of such Subsidiary; provided that any sale of any Equity
Interest of any such Subsidiary to a Strategic Investor shall be deemed not to
be an Asset Sale for purposes of this covenant, so long as such sale of such
Equity Interests does not result in such Subsidiary ceasing to be a Subsidiary
of Hyperion.
Incurrence of Indebtedness and Issuance of Preferred Stock
The Indenture provides that Hyperion will not, and will not permit any of
its Subsidiaries or Joint Ventures to, directly or indirectly, create, incur,
issue, assume, guaranty or otherwise become directly or indirectly liable,
contingently or otherwise, with respect to (collectively, "incur") any
Indebtedness (including, without limitation, Acquired Indebtedness) and that
Hyperion will not issue any Disqualified Stock and will not permit any of its
Subsidiaries or Joint Ventures to issue any shares of Preferred Stock; provided
that the Company may incur Indebtedness (including, without limitation,
Acquired Indebtedness) or issue shares of Disqualified Stock if Hyperion's
Consolidated Leverage Ratio as of the last day of Hyperion's most recently
ended fiscal quarter for which internal financial statements are available
immediately preceding the date on which such Indebtedness is incurred, or such
Disqualified Stock is issued, as the case may be, would have been (a) greater
than zero and less than 5.5 to 1.0, if such incurrence or issuance is on or
prior to March 31, 2002, and (b) greater than zero and less than 5.0 to 1.0, if
such incurrence or issuance is after March 31, 2002, determined on a pro forma
basis (including pro forma application of the net proceeds therefrom) as if
such Indebtedness had been incurred, or such
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Disqualified Stock had been issued, as the case may be, at the beginning of
such fiscal quarter.
The foregoing provisions will not apply to:
(i) the incurrence of Indebtedness by Hyperion, any Subsidiary (other than a
General Partner Subsidiary) or any Permitted Joint Venture pursuant to Credit
Agreement(s), provided that the aggregate principal amount of such Credit
Agreement(s) at any one time outstanding under this clause (i) does not exceed
$100.0 million for Hyperion, all of its Subsidiaries (other than a General
Partner Subsidiary) and all of its Permitted Joint Ventures combined;
(ii) the incurrence of Vendor Debt by Hyperion, any Subsidiary (other than a
General Partner Subsidiary) or any Permitted Joint Venture, provided that the
aggregate principal amount of such Vendor Debt does not exceed 100% of the
total cost of the Telecommunications Related Assets financed therewith;
(iii) Refinancing Indebtedness;
(iv) the incurrence of Indebtedness by Hyperion not to exceed, at any one
time outstanding, (a) 2.0 times (1) the net cash proceeds received by Hyperion
after August 21, 1997 from the issuance and sale of its Capital Stock (other
than Disqualified Stock) to the extent that such net cash proceeds have not
been used to make Restricted Payments pursuant to clauses (b) or (c) of the
second paragraph of the covenant entitled "--Restricted Payments" plus (2) the
fair market value at the time of issuance of Equity Interests (other than
Disqualified Stock) issued after August 21, 1997 in connection with any
acquisition of a Telecommunications Related Business, in each case to a Person
other than a Subsidiary or a Joint Venture of Hyperion minus (b) the aggregate
principal amount of the Notes then outstanding; provided that such Indebtedness
does not mature prior to the Stated Maturity of the Notes and has a Weighted
Average Life to Maturity longer than the Notes;
(v) the incurrence by Hyperion of Indebtedness (in addition to Indebtedness
permitted by any other clause of this paragraph) in an aggregate principal
amount (or accreted value, as applicable) at any time outstanding not to exceed
$10.0 million;
(vi) the incurrence by any Restricted Joint Venture of Non-Recourse Debt,
provided that if any Non-Recourse Debt of a Restricted Joint Venture ceases to
be Non-Recourse Debt, such event shall be deemed to constitute an incurrence of
Indebtedness as of the date such Indebtedness ceases to be Non-Recourse Debt;
(vii) the guarantee of Indebtedness by a General Partner Subsidiary in
connection with the incurrence of Indebtedness by the Restricted Joint Venture
of which such General Partner Subsidiary is a general partner;
(viii) the incurrence by any Subsidiary (other than a General Partner
Subsidiary) or any Permitted Joint Venture of Indebtedness (including, without
limitation, Acquired Debt) so long as all of the net proceeds of such
incurrence are used by such Subsidiary or Permitted
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Joint Venture, as the case may be, directly in connection with the design,
construction, development or acquisition of a Telecommunications Service
Market, provided that, as of the last day of Hyperion's most recent fiscal
quarter for which internal financial statements are available immediately
preceding the date on which such Indebtedness is incurred, either: (a) the
aggregate principal amount of all Indebtedness of such Subsidiary or such
Permitted Joint Venture does not exceed 1.75 times the Invested Equity Capital
of such Subsidiary or such Permitted Joint Venture; or (b) the Consolidated
Leverage Ratio of such Subsidiary or such Permitted Joint Venture would not
have been greater than 3.5 to 1.0, in each case determined on a pro forma basis
(including pro forma application of the net proceeds therefrom) as if such
Indebtedness had been incurred at the beginning of such fiscal quarter, and
provided, further that (1) any Indebtedness incurred by any such Subsidiary
(other than Related Networks) pursuant to this paragraph shall be non-recourse
with respect to Hyperion and (2) any such Indebtedness incurred by any such
Permitted Joint Venture (other than Related Networks) shall be non-recourse
with respect to Hyperion or any Subsidiary or any other Joint Venture; and
(ix) the incurrence by Hyperion and its Subsidiaries of Existing
Indebtedness.
For purposes of this covenant, the Indenture will provide that, in the event
that Hyperion proposes to incur Indebtedness pursuant to clause (iv) above,
Hyperion shall, simultaneously with the incurrence of such Indebtedness,
deliver to the Trustee a resolution of the Board of Directors set forth in an
Officers' Certificate stating that the sale or sales of Capital Stock forming
the basis for the incurrence of such Indebtedness (i) constitutes a long term
investment in Hyperion and (ii) has not been made for the purpose of
circumventing this covenant. The Indenture also provides that, in the event
that Hyperion rescinds, reverses or unwinds such sale of Capital Stock or
otherwise returns or refunds all or any portion of the net cash proceeds of
such sale of Capital Stock (whether by dividend, distribution or otherwise)
within 270 days of the date of the incurrence of such Indebtedness, such
Indebtedness will be deemed to be incurred on the date of, and immediately
after giving effect to, such rescission, reversal, unwinding, return or refund.
For purposes of this covenant, in the event that a Restricted Joint Venture
becomes a Permitted Joint Venture or otherwise ceases to be a Restricted Joint
Venture, all of the then outstanding Indebtedness of such entity shall be
deemed to have been incurred as of the date that such Restricted Joint Venture
becomes a Permitted Joint Venture or otherwise ceases to be a Restricted Joint
Venture.
No Senior Subordinated Debt
The Indenture provides that Hyperion will not incur, create, issue, assume,
guarantee or otherwise become liable for any Indebtedness that is subordinate
or junior in right of payment to any Senior Debt of the Company and senior in
any respect in right of payment to the Notes.
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Liens
The Indenture provides that Hyperion will not, and will not permit any of
its Subsidiaries or Permitted Joint Ventures to, directly or indirectly,
create, incur, assume or suffer to exist any Lien of any kind securing
Indebtedness or trade payables (other than Permitted Liens) upon any of their
property or assets, now owned or hereafter acquired, unless all payments due
under the Indenture and the Notes are secured on an equal and ratable basis
with the obligations so secured until such time as such obligations are no
longer secured by a Lien.
Limitations on Sale and Leaseback Transactions
The Indenture provides that Hyperion will not, and will not permit any of
its Subsidiaries to, enter into any Sale and Leaseback Transaction; provided
that Hyperion or any Subsidiary (other than a General Partner Subsidiary) may
enter into a Sale and Leaseback Transaction if (i) Hyperion or other entity
could have incurred the Indebtedness relating to such Sale and Leaseback
Transaction pursuant to the "--Incurrence of Indebtedness and Issuance of
Preferred Stock" and "--Liens" covenants to incur secured Indebtedness in an
amount equal to the Attributable Debt with respect to such transaction, (ii)
the net proceeds of such Sale and Leaseback Transaction are at least equal to
the fair market value of such property as determined in good faith by the Board
of Directors of Hyperion and (iii) such proceeds are applied in accordance with
the "--Asset Sales" covenant.
Dividends and Other Payment Restrictions Affecting Subsidiaries
The Indenture provides that Hyperion will not, and will not permit any of
its Subsidiaries to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any encumbrance or restriction on the
ability of any Subsidiary to:
(i) (a) pay dividends or make any other distributions to Hyperion or any of
its Subsidiaries (1) on its Capital Stock or (2) with respect to any other
interest or participation in, or measured by, its profits, or (b) pay any
Indebtedness owed to Hyperion or any of its Subsidiaries.
(ii) make loans or advances to Hyperion or any of its Subsidiaries,
(iii) grant liens or grant security interests on its assets in favor of the
Holders of the Notes or guarantee the payment of the Notes; or
(iv) transfer any of its properties or assets to Hyperion or any of its
Subsidiaries, except for such encumbrances or restrictions existing under or by
reason of:
(a) Existing Indebtedness as in effect on the date of the Indenture;
(b) any Credit Agreement creating or evidencing Indebtedness permitted by
the Indenture and any amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings thereof;
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(c) the Indenture and the Notes;
(d) applicable law;
(e) by reason of customary non-assignment provisions in leases entered
into in the ordinary course of business and consistent with past practices;
(f) purchase money obligations or Vendor Debt for property acquired in
the ordinary course of business that impose restrictions of the nature
described in clause (iv) above on the property so acquired;
(g) Indebtedness incurred pursuant to clause (viii) under the "--
Incurrence of Indebtedness and Issuance of Preferred Stock" covenant,
provided that such encumbrance or restriction only relates to the
Subsidiary or Permitted Joint Venture incurring such Indebtedness; and
(h) Refinancing Indebtedness, provided that such encumbrances or
restrictions are no more restrictive than those contained in the
documentation governing the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded.
Merger, Consolidation or Sale of Assets
The Indenture provides that Hyperion may not consolidate or merge with or
into (whether or not Hyperion is the surviving corporation), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
properties or assets in one or more related transactions, to another
corporation, Person or entity unless (i) Hyperion is the surviving corporation
or the entity or the Person formed by or surviving any such consolidation or
merger (if other than Hyperion) or to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made is a corporation
organized or existing under the laws of the United States, any state thereof or
the District of Columbia; (ii) the entity or Person formed by or surviving any
such consolidation or merger (if other than Hyperion) or the entity or Person
to which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made assumes all the obligations of Hyperion under
the Notes and the Indenture pursuant to a supplemental indenture in a form
reasonably satisfactory to the Trustee; (iii) immediately after such
transaction no Default or Event of Default exists; and (iv) except in the case
of a merger of Hyperion with or into a Wholly Owned Subsidiary of Hyperion, the
Company or the entity or Person formed by or surviving any such consolidation
or merger (if other than Hyperion), or to which such sale, assignment,
transfer, lease, conveyance or other disposition shall have been made (A) will
have Consolidated Net Worth immediately after the transaction equal to or
greater than the Consolidated Net Worth of Hyperion immediately preceding the
transaction and (B) will, at the time of such transaction and after giving pro
forma effect thereto as if such transaction had occurred at the beginning of
the applicable four-quarter period, either (x) be permitted to incur at least
$1.00 of additional Indebtedness pursuant to the first paragraph of the
covenant entitled "--Incurrence of Indebtedness and Issuance of Preferred
Stock" or (y) have a Consolidated Leverage Ratio no greater than the
Consolidated Leverage Ratio of Hyperion immediately prior to such transaction.
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Transactions with Affiliates
The Indenture provides that Hyperion will not, and will not permit any of
its Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any contract, agreement,
understanding, loan, advance or guarantee with, or for the benefit of, any
Affiliate (each of the foregoing, an "Affiliate Transaction"), or series of
Affiliate Transactions, involving in the aggregate in excess of $1.0 million,
unless Hyperion delivers to the Trustee (a) with respect to any Affiliate
Transaction or series of related Affiliate Transactions involving aggregate
consideration in excess of $1.0 million, a resolution adopted in good faith by
a majority of the disinterested members of the Board of Directors of Hyperion
is set forth in an Officers' Certificate certifying that such Affiliate
Transaction is on terms that are no less favorable to Hyperion or the relevant
Subsidiary other than those that would have been obtained in a comparable
transaction by Hyperion or such Subsidiary with an unrelated Person; and (b)
with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $25.0 million, an
opinion as to the fairness to the Company of such Affiliate Transaction from a
financial point of view issued by a nationally recognized consulting firm,
business valuation firm or investment banking firm; provided that (i) all
agreements and arrangements with Affiliates, including without limitation the
Local Partner Agreements, the Fiber Lease Agreements, the Management
Agreements, network monitoring agreements and transactions in connection
therewith or pursuant thereto existing on the date of the Senior Discount Note
Indenture and through the current term thereof; (ii) all arrangements and
transactions with Adelphia, including existing intercompany Indebtedness,
overhead charges made in the ordinary course of business, fiber lease
arrangements and similar services existing on the date of the Senior Discount
Note Indenture and through the current term thereof; (iii) all employment
arrangements approved by the Board of Directors; (iv) all Restricted Payments
made pursuant to the covenant entitled "--Restricted Payments" hereof; (v)
transactions between or among Hyperion and/or its Wholly Owned Subsidiaries;
(vi) transactions between a General Partner Subsidiary and the Restricted Joint
Venture of which such General Partner Subsidiary is a general partner; and
(vii) management and network monitoring agreements between Hyperion and any of
its Joint Ventures, shall not be deemed Affiliate Transactions.
Loans to Subsidiaries and Joint Ventures
The Indenture provides that all loans to Subsidiaries or Joint Ventures made
by Hyperion from time to time after the date of the Indenture will be evidenced
by Intercompany Notes in favor of Hyperion. The Indenture also provides that
all loans by Hyperion to any Subsidiary or Joint Venture outstanding on the
date of the Indenture will be evidenced by an unsecured Intercompany Note. The
Indenture will prohibit loans by Subsidiaries to other Subsidiaries and will
prohibit loans by Subsidiaries to Joint Ventures in which such Subsidiary does
not have an Equity Interest, except that such loans may be (i) incurred and
maintained between and among Hyperion, its Subsidiaries and Permitted Joint
Ventures in connection with the incurrence of Indebtedness pursuant to clause
(i) of the
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covenant entitled "--Incurrence of Indebtedness and Issuance of Preferred
Stock" or (ii) incurred and maintained between and among Related Networks in
connection with the incurrence of Indebtedness by such Related Networks
pursuant to the last proviso of paragraph (viii) of the covenant entitled "--
Incurrence of Indebtedness and Issuance of Preferred Stock." A form of
Intercompany Note will be attached as an annex to the Indenture.
Limitation on Status as Investment Company
The Indenture provides that Hyperion will not, and will not permit any of
its Subsidiaries to, conduct its business in a fashion that would cause it to
be required to register as an "investment company" (as that term is defined in
the Investment Company Act of 1940, as amended) or otherwise become subject to
regulation under the Investment Company Act of 1940.
Payments for Consent
The Indenture provides that neither Hyperion nor any of its Subsidiaries
shall, directly or indirectly, pay or cause to be paid any consideration,
whether by way of interest, fee or otherwise, to any holder of any Notes for or
as inducement to any consent, waiver or amendment of any terms or provisions of
the Notes unless such consideration is offered to be paid or agreed to be paid
to all holders of the Notes which so consent, waive or agree to amend in the
time frame set forth in solicitation documents relating to such consent, waiver
or agreement.
Business Activities
Hyperion will not, and will not permit any Subsidiary to, engage in any
business other than the Telecommunications Business and such business
activities as are incidental or related thereto.
Reports
The Indenture provides that, whether or not required by the rules and
regulations of the Securities and Exchange Commission (the "Commission"), so
long as any Notes are outstanding, Hyperion shall furnish to the Holders of
Notes (i) all quarterly and annual financial information that would be required
to be contained in a filing with the SEC on Forms 10-Q and 10-K if Hyperion
were required to file such Forms, including a "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and, with respect to
the annual information only, a report thereon by Hyperion's certified
independent accountants; (ii) all current reports that would be required to be
filed with the SEC on Form 8-K if Hyperion were required to file such reports;
and (iii) on a quarterly basis, certain financial information and operating
data with respect to each Subsidiary and Joint Venture engaged in a
Telecommunications Business, in the form specified by a schedule to the
Indenture. In addition, whether or not required by the rules and regulations of
the SEC, Hyperion shall file a copy of all such information and reports with
the SEC
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for public availability (unless the SEC will not accept such a filing) and make
such information available to securities analysts and prospective investors
upon request. In addition, for so long as any Notes remain outstanding, the
Indenture will require Hyperion to furnish to all Holders and to securities
analysts and prospective investors, promptly upon their request, the
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act.
Events of Default and Remedies
The Indenture provides that each of the following constitutes an Event of
Default:
(i) a default in payment when due of interest on, or Liquidated Damages with
respect to, the Notes and such default continues for a period of 30 days,
whether or not prohibited by the subordination provisions of the Indenture;
(ii) a default in the payment when due of principal of or premium, if any,
on the Notes when the same becomes due and payable at maturity, upon redemption
(including, without limitation, in connection with an offer to purchase) or
otherwise, whether or not prohibited by the subordination provisions of the
Indenture;
(iii) failure by Hyperion to comply with the provisions described under the
captions "--Mandatory Redemption--Offer to Purchase upon Change of Control,"
"--Certain Covenants--Restricted Payments," "--Asset Sales," or "--Merger,
Consolidation or Sale of Assets";
(iv) failure by Hyperion to comply with the provisions described under the
caption "--Certain Covenants--Incurrence of Indebtedness and Issuance of
Preferred Stock"; provided that for purposes of the last paragraph such
provision only, in the event that Hyperion fails to comply with such paragraph
because Indebtedness is deemed to be incurred by a Restricted Joint Venture
solely as a result of such Restricted Joint Venture ceasing to be a Restricted
Joint Venture as a result of (i) the loss of a Local Partner or (ii) the loss
of management control of such Restricted Joint Venture, such failure continues
for 90 days;
(v) failure by Hyperion to observe or perform any other covenant,
representation, warranty or other agreement in the Indenture or the Notes for
30 days after notice to Hyperion by the Trustee or the Holders of at least 25%
in principal amount of the Notes then outstanding;
(vi) default under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced any Indebtedness
for money borrowed by Hyperion or any of its Subsidiaries (or the payment of
which is guaranteed by Hyperion or any of its Subsidiaries) whether such
Indebtedness or guarantee now exists, or is created after the date of the
Indenture, which default (a) is caused by a failure to pay principal of or
premium, if any, or interest on such Indebtedness prior to the expiration of
the grace period provided in such Indebtedness on the date of such default (a
"Payment Default") or (b) results in the acceleration of such Indebtedness
prior to its express maturity and, in each
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case, the principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated, aggregates
$5.0 million or more;
(vii) failure by Hyperion or any of its Significant Subsidiaries, or by any
group of Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary, to pay final judgments aggregating in excess of $5.0 million, which
judgments are not paid within, discharged by or stayed for a period of 60 days;
and
(viii) certain events of bankruptcy or insolvency with respect to Hyperion
or any of its Significant Subsidiaries or any of its Joint Ventures that would,
if it were a Subsidiary, constitute a Significant Subsidiary.
If any Event of Default occurs and is continuing, the Trustee or the Holders
of at least 25% in principal amount of the then outstanding Notes may declare
all the Notes to be due and payable immediately. Notwithstanding the foregoing,
in the case of an Event of Default arising from certain events of bankruptcy or
insolvency, with respect to Hyperion, any Significant Subsidiary or any group
of Subsidiaries that, taken together, would constitute a Significant
Subsidiary, all outstanding Notes will become due and payable without further
action or notice. Holders of the Notes may not enforce the Indenture or the
Notes except as provided in the Indenture. Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding Notes may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of the Notes notice of any continuing Default or Event of
Default (except a Default or Event of Default relating to the payment of
principal or interest) if it determines that withholding notice is in their
interest.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of Hyperion with the
intention of avoiding payment of the premium that Hyperion would have had to
pay if Hyperion then had elected to redeem the Notes pursuant to the optional
redemption provisions of the Indenture, an equivalent premium shall also become
and be immediately due and payable to the extent permitted by law upon the
acceleration of the Notes. If an Event of Default occurs prior to November 1,
2003 by reason of any willful action (or inaction) taken (or not taken) by or
on behalf of Hyperion with the intention of avoiding the prohibition on
redemption of the Notes prior to November 1, 2003, then the premium specified
in the Indenture shall also become immediately due and payable to the extent
permitted by law upon the acceleration of the Notes.
The Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of the
Notes waive any existing Default or Event of Default and its consequences under
the Indenture except a continuing Default or Event of Default in the payment of
interest on, or the principal of, the Notes.
Hyperion is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and Hyperion is required upon becoming
aware of any Default or Event of Default, to deliver to the Trustee a statement
specifying such Default or Event of Default.
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No Personal Liability of Directors, Officers, Employees and Stockholders
No director, officer, employee, incorporator or stockholder of Hyperion, as
such, shall have any liability for any obligations of Hyperion under the Notes
or the Indenture or for any claim based on, in respect of, or by reason of,
such obligations or their creation. Each Holder of Notes by accepting a Note
waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes. Such waiver may not be effective to
waive liabilities under the federal securities laws and it is the view of the
Commission that such a waiver is against public policy.
Legal Defeasance and Covenant Defeasance
Hyperion may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding Notes ("Legal
Defeasance"), except for:
(i) the rights of Holders of outstanding Notes to receive payments in
respect of the principal of, premium, if any, and interest on such Notes when
such payments are due from the trust referred to below;
(ii) Hyperion's obligations with respect to the Notes that concern issuing
temporary Notes, registration of Notes, mutilated, destroyed, lost or stolen
Notes and the maintenance of an office or agency for payment and money for
security payments held in trust;
(iii) the rights, powers, trusts, duties and immunities of the Trustee, and
Hyperion's obligations in connection therewith; and
(iv) the Legal Defeasance provisions of the Indenture.
In addition, Hyperion may, at its option and at any time, elect to have the
obligations of Hyperion released with respect to certain covenants that are
described in the Indenture ("Covenant Defeasance") and thereafter any omission
to comply with such obligations shall not constitute a Default or Event of
Default with respect to the Notes. In the event Covenant Defeasance occurs,
certain events (not including non-payment, bankruptcy, receivership,
rehabilitation and insolvency events) described under "Events of Default" will
no longer constitute an Event of Default with respect to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance:
(i) Hyperion must irrevocably deposit with the Trustee, in trust, for the
benefit of the Holders of the Notes, cash in U.S. dollars, non-callable U.S.
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent
public accountants, to pay the principal of, premium, if any, and interest on
the outstanding Notes on the stated maturity or on the applicable redemption
date, as the case may be, and Hyperion must specify whether the Notes are being
defeased to maturity or to a particular redemption date;
(ii) in the case of Legal Defeasance, Hyperion shall have delivered to the
Trustee an opinion of counsel in the United States reasonably acceptable to the
Trustee confirming that
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(A) Hyperion has received from, or there has been published by, the Internal
Revenue Service a ruling or (B) since the date of the Indenture, there has been
a change in the applicable federal income tax law, in either case to the effect
that, and based thereon such opinion of counsel shall confirm that, the Holders
of the outstanding Notes will not recognize income, gain or loss for federal
income tax purposes as a result of such Legal Defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Legal Defeasance had not occurred;
(iii) in the case of Covenant Defeasance, Hyperion shall have delivered to
the Trustee an opinion of counsel in the United States reasonably acceptable to
the Trustee confirming that the Holders of the outstanding Notes will not
recognize income, gain or loss for federal income tax purposes as a result of
such Covenant Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case
if such Covenant Defeasance had not occurred;
(iv) no Default or Event of Default shall have occurred and be continuing on
the date of such deposit (other than a Default or Event of Default resulting
from the borrowing of funds to be applied to such deposit) or insofar as Events
of Default from bankruptcy or insolvency events are concerned, at any time in
the period ending on the 91st day after the date of deposit;
(v) such Legal Defeasance or Covenant Defeasance will not result in a breach
or violation of, or constitute a default under any material agreement or
instrument (other than the Indenture) to which Hyperion or any of its
Subsidiaries is a party or by which Hyperion or any of its Subsidiaries is
bound;
(vi) Hyperion must have delivered to the Trustee an opinion of counsel to
the effect that after the 91st day following the deposit, the trust funds will
not be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally;
(vii) Hyperion must deliver to the Trustee an Officers' Certificate stating
that the deposit was not made by Hyperion with the intent of preferring the
Holders of Notes over the other creditors of Hyperion with the intent of
defeating, hindering, delaying or defrauding creditors of Hyperion or others;
and
(viii) Hyperion must deliver to the Trustee an Officers' Certificate and an
opinion of counsel, each stating that all conditions precedent relating to the
Legal Defeasance or the Covenant Defeasance have been complied with.
Transfer and Exchange
A Holder may transfer or exchange Notes in accordance with the Indenture.
The Registrar and the Trustee may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and Hyperion may
require a Holder to pay any taxes and fees required by law or permitted by the
Indenture. Hyperion is not required to transfer
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or exchange any Note selected for redemption. Also, Hyperion is not required to
transfer or exchange any Note for a period of 15 days before a selection of
Notes to be redeemed.
The registered Holder of a Note will be treated as the owner of it for all
purposes.
Amendment, Supplement and Waiver
Except as provided in the next two succeeding paragraphs, the Indenture
and/or the Notes may be amended or supplemented with the consent of the Holders
(excluding Holders that are Affiliates of Hyperion) of at least a majority in
aggregate outstanding principal amount of the Notes (including, without
limitation, consents obtained in connection with a purchase of, or tender offer
or exchange offer for, Notes), and any existing default or compliance with any
provision of the Indenture or the Notes may be waived with the consent of the
Holders (excluding Holders that are Affiliates of Hyperion) of a majority in
principal amount of the then outstanding Notes (including, without limitation,
consents obtained in connection with a tender offer or exchange offer for
Notes).
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any Notes held by a non-consenting Holder):
(i) reduce the principal amount of Notes whose Holders must consent to an
amendment, supplement or waiver;
(ii) reduce the principal of or change the fixed maturity of any Note or
alter the provisions with respect to the redemption of the Notes (other than
provisions relating to the covenants described above under the caption "--
Mandatory Redemption--Offer to Purchase upon Change of Control" and "--Certain
Covenants--Asset Sales");
(iii) reduce the rate of or change the time for payment of interest on any
Note;
(iv) waive a Default or Event of Default in the payment of principal of or
premium, if any, or interest on the Notes (except a rescission of acceleration
of the Notes by the Holders of at least a majority in aggregate principal
amount of the Notes and a waiver of the payment default that resulted from such
acceleration);
(v) make any Note payable in money other than that stated in the Notes;
(vi) make any change in the provisions of the Indenture relating to waivers
of past Defaults or the rights of Holders of Notes to receive payments of
principal of or premium, if any, or interest on the Notes;
(vii) waive a redemption payment with respect to any Note (other than a
payment required by the covenants described above under the captions "--
Mandatory Redemption--Offer to Purchase upon Change of Control" or "--Certain
Covenants--Asset Sales"); or
(viii) make any change in the foregoing amendment and waiver provisions.
In addition, any amendment to, or waiver of, the provisions of the Indenture
relating to subordination that adversely affects the rights of the Holders of
the Notes will require the
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consent of the Holders of at least 75% in aggregate principal amount of the
Notes then outstanding. Notwithstanding the foregoing, without the consent of
any Holder of Notes, Hyperion and the Trustee may amend or supplement the
Indenture or the Notes to cure any ambiguity, defect or inconsistency, to
provide for uncertificated Notes in addition to or in place of certificated
Notes, to provide for the assumption of the Company's obligations to Holders of
Notes in the case of a merger or consolidation, to make any change that would
provide any additional rights or benefits to the Holders of Notes or that does
not adversely affect the legal rights under the Indenture of any such Holder or
to comply with requirements of the Commission in order to effect or maintain
the qualification of the Indenture under the Trust Indenture Act.
Concerning the Trustee
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any
such claim as security or otherwise. The Trustee will be permitted to engage in
other transactions; however, if it acquires any conflicting interest it must
eliminate such conflict within 90 days, apply to the Commission for permission
to continue or resign.
The Holders of a majority in principal amount of the then outstanding Notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event of Default
shall occur (which shall not be cured), the Trustee will be required, in the
exercise of its power, to use the degree of care of a prudent man in the
conduct of his own affairs. Subject to such provisions, the Trustee will be
under no obligation to exercise any of its rights or powers under the Indenture
at the request of any Holder of Notes, unless such Holder shall have offered to
the Trustee security and indemnity satisfactory to it against any loss,
liability or expense.
Additional Information
Anyone who receives this prospectus may obtain a copy of the Indenture or
the Registration Rights Agreement without charge by writing to Hyperion
Telecommunications, Inc., Main at Water Street, Coudersport, Pennsylvania
16915; Attention: Vice President, Finance.
Book-Entry, Delivery and Form
The Notes were initially offered and sold to qualified institutional buyers
in reliance on Rule 144A and in share transactions pursuant to Regulation S
under the Securities Act. Except as set forth below, the Notes will be issued
in registered, global form in minimum denominations of $1,000 and integral
multiples thereof.
The New Notes initially will be represented by one or more Notes, in
registered, global form without interest coupons (the "Global Note"). The
Global Note will be deposited with,
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or on behalf of, DTC in New York, New York, and registered in the name of DTC
or its nominee, in each case for credit to an account of a direct or indirect
participant in DTC as described below.
Except as set forth below, the Global Note may be transferred, in whole and
not in part, only to another nominee of DTC or to a successor of DTC or its
nominee. Beneficial interests in the Global Note may not be exchanged for Notes
in certificated form except in the limited circumstances described below. For
more information you should read "--Exchange of Book-Entry Notes for
Certificated Notes."
The Old Notes (including beneficial interests in the Global Note) are
subject to certain restrictions on transfer and will bear a restrictive legend.
In addition, transfer of beneficial interests in the Global Note will be
subject to the applicable rules and procedures of DTC and its direct or
indirect participants, which may change from time to time.
Initially, the Trustee will act as Paying Agent and Registrar for the Notes.
The Notes may be presented for registration of transfer and exchange at the
offices of the Registrar.
Depositary Procedures
The Depositary has advised Hyperion that the Depositary is a limited-purpose
trust company that was created to hold securities for its participating
organizations (collectively, the "Participants" or the "Depositary's
Participants") and to facilitate the clearance and settlement of transactions
in such securities between Participants through electronic book-entry changes
in accounts of its Participants. The Depositary's Participants include
securities brokers and dealers (including the Initial Purchasers), banks and
trust companies, clearing corporations and certain other organizations. Access
to the Depositary's system is also available to other entities such as banks,
brokers, dealers and trust companies (collectively, the "Indirect Participants"
or the "Depositary's Indirect Participants") that clear through or maintain a
custodial relationship with a Participant, either directly or indirectly.
Persons who are not Participants may beneficially own securities held by or on
behalf of the Depositary only through the Depositary's Participants or the
Depositary's Indirect Participants.
Hyperion expects that pursuant to procedures established by the Depositary
(i) upon deposit of the Global Notes, the Depositary will credit the accounts
of Participants designated by the Initial Purchasers with portions of the
principal amount of the Global Notes and (ii) ownership of a series of Notes
evidenced by a Global Note will be shown on, and the transfer of ownership
thereof will be effected only through, records maintained by the Depositary
(with respect to the interests of the Depositary's Participants), the
Depositary's Participants and the Depositary's Indirect Participants.
Prospective purchasers are advised that the laws of some states require that
certain persons take physical delivery in definitive form of securities that
they own. Consequently, the ability to transfer Notes evidenced by a Global
Note will be limited to such extent. For certain other restrictions on the
transferability of the Notes, see "Notice to Investors."
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Beneficial owners of a series of Notes evidenced by the Global Note for such
series will not be considered the owners or Holders thereof under the
applicable Indentures for any purpose, including with respect to the giving of
any directions, instructions or approvals to the Trustee hereunder. Neither
Hyperion nor the Trustee will have any responsibility or liability for any
aspect of the records of the Depositary or for maintaining, supervising or
reviewing any records of the Depositary relating to the Notes.
Payments in respect of the principal of and premium, interest and Liquidated
Damages, if any, on any Notes registered in the name of the Global Note Holder
on the applicable record date will be payable by the Trustee to or at the
direction of the Global Note Holder in its capacity as the registered Holder
under Indenture. Under the terms of the Indenture, Hyperion and the Trustee may
treat the persons in whose names Notes, including the Global Note for such
tranche, are registered as the owners thereof for the purpose of receiving such
payments. Consequently, neither Hyperion nor the Trustee has or will have any
responsibility or liability for the payment of such amounts to beneficial
owners of Notes. Hyperion believes, however, that it is currently the policy of
the Depositary to immediately credit the accounts of the relevant Participants
with such payments, in amounts proportionate to their respective holdings of
beneficial interests in the relevant security as shown on the records of the
Depositary. Payments by the Depositary's Participants and the Depositary's
Indirect Participants to the beneficial owners of Notes will be governed by
standing instructions and customary practice and will be the responsibility of
the Depositary's Participants or the Depositary's Indirect Participants.
Certificated Securities
Subject to certain conditions, any person having a beneficial interest in
the Global Note may, upon request to the Trustee, exchange such beneficial
interest for Notes in the form of Certificated Securities. Upon any such
issuance, the Trustee is required to register such Certificated Securities in
the name of, and cause the same to be delivered to, such person or persons (or
the nominee of any thereof). In addition, if (i) Hyperion notifies the Trustee
in writing that the Depositary is no longer willing or able to act as a
depositary and Hyperion is unable to locate a qualified successor within 90
days or (ii) Hyperion, at its option, notifies the Trustee in writing that it
elects to cause the issuance of Notes in the form of Certificated Securities
under the Indenture, then, upon surrender by the Global Note Holder of its
Global Note, Notes in such form will be issued to each person that the Global
Note Holder and the Depositary identify as being the beneficial owner of the
related Notes.
Neither Hyperion nor the Trustee will be liable for any delay by the Global
Note Holder or the Depositary in identifying the beneficial owners of Notes and
Hyperion and the Trustee may conclusively rely on, and will be protected in
relying on, instructions from the Global Note Holder or the Depositary for all
purposes.
Same-Day Settlement and Payment
The Indenture will require that payments in respect of the Notes represented
by the Global Note (including principal, premium, if any, and interest) be made
by wire transfer of
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immediately available same day funds to the accounts specified by the Global
Note Holder. With respect to Certificated Securities, Hyperion will make all
payments of principal, premium, if any, and interest by wire transfer of
immediately available funds to the accounts specified by the Holders thereof
or, if no such account is specified, by mailing a check to each such Holder's
registered address. Secondary trading in long-term notes and debentures of
corporate issuers is generally settled in clearing-house or next-day funds. In
contrast, the New Notes represented by the Global Note are expected to be
eligible to trade in the Depositary's Same-Day Funds Settlement System, and any
permitted secondary market trading activity in such Notes will, therefore, be
required by the Depositary to be settled in immediately available funds.
Hyperion expects that secondary trading in the Certificated Securities will
also be settled in immediately available funds.
Certain Definitions
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as
any other capitalized terms used herein for which no definition is provided.
"Acquired Indebtedness" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall
mean the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise. For purposes of the
Indenture, beneficial ownership of 10% or more of the Voting Stock of a Person
shall be deemed to be control; provided, that no Local Partner will be deemed
an affiliate of a Subsidiary or a Joint Venture solely as a result of such
Local Partner's ownership of more than 10% of the Voting Stock of such
Subsidiary or Joint Venture.
"Annualized Pro Forma EBITDA" means with respect to any Person, such
Person's Pro Forma EBITDA for the fiscal quarter with respect to which a
calculation of Hyperion's Consolidated Leverage Ratio is being made under the
Indenture multiplied by four.
"Asset Sale" means
(i) the sale, lease, conveyance, disposition or other transfer of any assets
(including, without limitation, by way of a Sale and Leaseback Transaction)
other than (a) sales of inventory in the ordinary course of business consistent
with past practices and (b) issuances
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and sales by Hyperion of its Equity Interests (provided that the sale, lease,
conveyance, disposition or other transfer of all or substantially all of the
assets of Hyperion and its Subsidiaries taken as a whole will be governed by
the provisions of the Indenture described above under the caption "--Mandatory
Redemption," "--Offer to Purchase Upon Change of Control" and/or the provisions
described above under the caption "--Merger, Consolidation or Sale of Assets"
and not by the provisions of the Asset Sale covenant), and
(ii) the issuance or sale by Hyperion or any of its Subsidiaries of Equity
Interests of any of Hyperion's Subsidiaries or Joint Ventures, in the case of
either clause (i) or (ii), whether in a single transaction or a series of
related transactions (a) that have a fair market value in excess of $1.0
million or (b) for net proceeds in excess of $1.0 million.
Notwithstanding the foregoing: (x) a transfer of assets by Hyperion to a Wholly
Owned Subsidiary or by a Subsidiary to Hyperion or to another Wholly Owned
Subsidiary, (y) an issuance of Equity Interests by a Subsidiary to Hyperion or
to a Wholly Owned Subsidiary and (z) a Restricted Payment that is permitted by
the covenant described above under the caption "--Certain Covenants--Restricted
Payments" will not be deemed to be Asset Sales.
"Attributable Debt" in respect of a sale and leaseback transaction means, at
the time of determination, the present value (discounted at the rate of
interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership, partnership interests
(whether general or limited) and (iv) any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, the issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof having maturities of not more than one
year from the date of acquisition, (iii) certificates of deposit and eurodollar
time deposits with maturities of one year or less from the date of acquisition,
bankers' acceptances with maturities not exceeding one year and overnight bank
deposits, in each case with any U.S. commercial bank having capital and surplus
in excess of $500 million and a Keefe Bank Watch Rating of "B" or better, (iv)
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clauses (ii) and (iii) above entered into
with any financial institution meeting the qualifications specified in clause
(iii) above and (v) commercial paper
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having the highest rating obtainable from Moody's Investors Service, Inc. or
Standard & Poor's Corporation and in each case maturing within six months after
the date of acquisition.
"Closing Date" means the date on which the Notes are originally issued under
the Indenture.
"Consolidated Interest Expense" means, for any Person, for any period, the
aggregate of the following for such Person for such period determined on a
consolidated basis in accordance with GAAP: (a) the amount of interest in
respect of Indebtedness (including amortization of original issue discount,
amortization of debt issuance costs, and non-cash interest payments on any
Indebtedness and the interest portion of any deferred payment obligation) and
(b) the interest component of rentals in respect of any Capital Lease
Obligation paid, in each case whether accrued or scheduled to be paid or
accrued by such Person during such period to the extent such amounts were
deducted in computing Consolidated Net Income, determined on a consolidated
basis in accordance with GAAP. For purposes of this definition, interest on a
Capital Lease Obligation shall be deemed to accrue at an interest rate
reasonably determined by such Person to be the rate of interest implicit in
such Capital Lease Obligation in accordance with GAAP consistently applied.
"Consolidated Leverage Ratio" means, for any Person, as of any date, the
ratio of (i) the sum of the aggregate outstanding amount of all Indebtedness of
a Person and its Subsidiaries (other than any Indebtedness of a General Partner
Subsidiary to the extent that such Indebtedness has been incurred in connection
with such General Partner Subsidiary's partnership interest in the Restricted
Joint Venture of which such General Partner Subsidiary is a general partner)
determined on a consolidated basis in accordance with GAAP to (ii) Annualized
Pro Forma EBITDA.
"Consolidated Net Income" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Subsidiaries for such
period, on a consolidated basis, determined in accordance with GAAP; provided
that (i) the Net Income (but not loss) of any Person that is not a Subsidiary
or that is accounted for by the equity method of accounting shall be included
only to the extent of the amount of dividends or distributions actually paid in
cash to the referent Person or a Wholly Owned Subsidiary thereof, (ii) the Net
Income of any Subsidiary shall be excluded to the extent that the declaration
or payment of dividends or similar distributions by that Subsidiary of that Net
Income is not at the date of determination permitted without any prior
governmental approval (that has not been obtained) or, directly or indirectly,
by operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable to
that Subsidiary or its stockholders, (iii) the Net Income of any Person
acquired in a pooling of interests transaction for any period prior to the date
of such acquisition shall be excluded and (iv) the cumulative effect of a
change in accounting principles shall be excluded.
"Consolidated Net Worth" means, with respect to any Person as of any date,
the sum of (i) the consolidated equity of the common stockholders of such
Person and its consolidated Subsidiaries as of such date plus (ii) the
respective amounts reported on such Person's
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balance sheet as of such date with respect to any series of preferred stock
(other than Disqualified Stock) that by its terms is not entitled to the
payment of dividends unless such dividends may be declared and paid only out of
net earnings in respect of the year of such declaration and payment, but only
to the extent of any cash received by such Person upon issuance of such
preferred stock, less (x) all write-ups (other than write-ups resulting from
foreign currency translations and write-ups of tangible assets of a going
concern business made within 12 months after the acquisition of such business)
subsequent to the date of the Indenture in the book value of any asset owned by
such Person or a consolidated Subsidiary of such Person, (y) all investments as
of such date in unconsolidated Subsidiaries and in Persons that are not
Subsidiaries (except, in each case, Permitted Investments) and (z) all
unamortized debt discount and expense and unamortized deferred charges as of
such date, all of the foregoing determined in accordance with GAAP.
"Continuing Directors" means, as of any date of determination, any member of
the Board of Directors of Hyperion who (i) was a member of such Board of
Directors on the date of the Indenture or (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.
"Credit Agreement" means, with respect to any Person, any agreement entered
into by and among such Person and one or more commercial banks or financial
institutions, providing for senior term or revolving credit borrowings of a
type similar to credit agreements typically entered into by commercial banks
and financial institutions, including any related notes, Guarantees, collateral
documents, instruments and agreements executed in connection therewith, as such
credit agreement and related agreements may be amended, extended, refinanced,
renewed, restated, replaced or refunded from time to time.
"Cumulative Interest Expense" means the aggregate amount of Consolidated
Interest Expense of the Company paid or accrued by Hyperion from and after the
first day of the first fiscal quarter beginning after August 21, 1997 to the
end of the fiscal quarter immediately preceding a proposed Restricted Payment,
determined on a consolidated basis in accordance with GAAP.
"Cumulative Pro Forma EBITDA" means the cumulative EBITDA of Hyperion from
and after the first day of the first fiscal quarter beginning after August 21,
1997 to the end of the fiscal quarter immediately preceding the date of a
proposed Restricted Payment, or, if such cumulative EBITDA for such period is
negative, minus the amount by which such cumulative EBITDA is less than zero.
"Default" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
"Designated Senior Debt" means any Indebtedness outstanding under the 13%
Notes, the 12 1/4% Notes and any Credit Agreement; and any other Senior Debt
permitted under the Indenture the principal amount of which is $100.0 million
or more and that has been designated by Hyperion as "Designated Senior Debt."
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"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable
at the option of the Holder thereof, in whole or in part, on or prior to the
date that is 91 days after the date on which the Notes mature; provided,
however, that any Capital Stock which would not constitute Disqualified Stock
but for provisions thereof giving holders thereof the right to require Hyperion
to repurchase or redeem such Capital Stock upon the occurrence of a Change of
Control occurring prior to the final maturity of the Notes shall not constitute
Disqualified Stock if the change of control provisions applicable to such
Capital Stock are no more favorable to the holders of such Capital Stock than
the provisions applicable to the Notes contained in the covenant described
under "--Mandatory Redemption" or "--Offer to Purchase upon a Change of
Control" and such Capital Stock specifically provides that Hyperion will not
repurchase or redeem any such stock pursuant to such provisions prior to
Hyperion's repurchase of such Notes as are required to be repurchased pursuant
to the covenants described under "--Mandatory Redemption" or "--Offer to
Purchase upon Change of Control."
"EBITDA" means, for any Person, for any period, an amount equal to (A) the
sum of (i) Consolidated Net Income for such period plus (ii) the provision for
taxes for such period based on income or profits to the extent such income or
profits were included in computing Consolidated Net Income and any provision
for taxes utilized in computing net loss under clause (i) hereof plus (iii)
Consolidated Interest Expense for such period, plus (iv) depreciation for such
period on a consolidated basis plus (v) amortization of intangibles for such
period on a consolidated basis, plus (vi) any other non-cash items reducing
Consolidated Net Income for such period minus (B) all non-cash items increasing
Consolidated Net Income for such period, all for such Person and its
Subsidiaries determined in accordance with GAAP consistently applied.
"Enhanced Services Provider" means (i) !NTERPRISE, a wholly owned subsidiary
of US West, (ii) any nationally recognized Person which provides enhanced
telecommunications services, including but not limited to, frame relay,
Asynchronous Transfer Mode data transport, business video conferencing, private
line data interconnect service and LAN connection and monitoring services, or
(iii) any Person that has least 500 existing enhanced data services
installations in the United States.
"Enhanced Services Venture" means any entity in which any Qualified
Subsidiary or Permitted Joint Venture owns at least 50% of the Equity
Interests, provided that the remainder of the Equity Interests are owned by an
Enhanced Services Provider.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Existing Indebtedness" means any Indebtedness of Hyperion or Hyperion's
Subsidiaries (other than Indebtedness under any Credit Agreement or the Notes)
in existence on the date of the Indenture.
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"Existing Networks" means the telecommunications networks operated by
Hyperion, its Subsidiaries and Joint Ventures, including, but not limited to,
all networks under construction, on the date of the Indenture.
"Fiber Lease Agreements" means the agreements relating to fiber leases as
set forth on a schedule to the Indenture.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date of the Indenture.
"General Partner Subsidiary" means a direct or indirect Wholly Owned
Subsidiary of Hyperion that (i) is a general partner or stockholder of a
Restricted Joint Venture and (ii) (a) is not engaged in any trade or business
other than the holding, voting, disposing of or taking any action with respect
to its Equity Interest in such Restricted Joint Venture, (b) has no material
assets other than its Equity Interest in such Restricted Joint Venture, (c) has
no material liabilities other than liabilities arising (1) as a result of the
guarantee by such General Partner Subsidiary of Indebtedness incurred by the
Restricted Joint Venture of which such General Partner Subsidiary is a general
partner or (2) by operation of law; provided that, for purposes of this
definition, Hyperion Telecommunications of Virginia, Inc. shall be deemed to be
a General Partner Subsidiary for all purposes so long as Hyperion
Telecommunications of Virginia, Inc. does not engage in any operations or
business that is materially different from the operations or business engaged
in by such companies on the date hereof.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Indebtedness" means, with respect to any Person, (a) any liability of any
Person, whether or not contingent (i) for borrowed money, or under any
reimbursement obligation relating to a letter of credit, bankers' acceptance or
note purchase facility; or (ii) evidenced by a bond, note, debenture or similar
instrument (including a purchase money obligation); or (iii) for the payment of
money relating to a lease that is required to be classified as a Capitalized
Lease Obligation in accordance with GAAP; or (iv) for Disqualified Stock; or
(v) for preferred stock of any Subsidiary (other than preferred stock held by
Hyperion or any of its Subsidiaries); (b) any liability of others described in
the preceding clause (a) that the Person has guaranteed, that is recourse to
such Person or that is otherwise its legal liability; and (c) any amendment,
supplement, modification, deferral, renewal, extension or refunding of any
liability of the types referred to in clauses (a) and (b) above.
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"Invested Equity Capital" means, with respect to any of Hyperion's
Subsidiaries or Joint Ventures as of any date, the sum of (i) the total dollar
amount contributed in cash plus the value of all property contributed (valued
at the lower of fair market value of such property at the time of contribution,
determined in good faith by Hyperion's Board of Directors, or the book value of
such property at the time of contribution on the books of the Person making
such contribution) to such Subsidiary or Joint Venture, as the case may be,
since the date of its formation in the form of common equity plus, without
duplication, (ii) the total dollar amount contributed in cash plus the value of
all property contributed (valued at the lower of fair market value of such
property at the time of contribution, determined in good faith by Hyperion's
Board of Directors, or the book value of such property at the time of
contribution on the books of the Person making such contribution) to such
Subsidiary or Joint Venture, as the case may be, since the date of its
formation by Local Partners (and their Affiliates) in consideration of the
issuance of preferred equity on a basis that is substantially proportionate to
their common equity interests plus, without duplication, (iii) the total dollar
amount contributed in cash plus the value of all property contributed (valued
at the lower of fair market value of such property at the time of contribution,
determined in good faith by Hyperion's Board of Directors, or the book value of
such property at the time of contribution on the books of the Person making
such contribution) to such Subsidiary or Joint Venture since the date of its
formation by Hyperion in consideration of the issuance of preferred equity less
(iv) the fair market value of all dividends and other distributions (in respect
of any Equity Interest and in whatever form and however designated) made by
such Subsidiary or Joint Venture, as the case may be, since the date of its
formation to the holders of its common equity (and their Affiliates); provided
that in no event shall the aggregate amount of such dividends and other
distributions made by such Subsidiary or Joint Venture, as the case may be, to
any such Person (or its Affiliates) reduce the Invested Equity Capital of such
Subsidiary or Joint Venture, as the case may be, by more than the total
contributions (per clauses (i) through (iii) above) to such Subsidiary or Joint
Venture, as the case may be, by such Person (and its Affiliates).
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances (excluding commission, travel and similar advances to officers and
employees made in the ordinary course of business), capital contributions,
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP;
provided that an acquisition of assets, Equity Interests or other securities by
Hyperion for consideration consisting solely of common equity securities of
Hyperion shall not be deemed to be an Investment. If Hyperion or any Subsidiary
of Hyperion sells or otherwise disposes of any Equity Interests of any direct
or indirect Subsidiary of Hyperion such that, after giving effect to any such
sale or disposition, such Person is no longer a Subsidiary of Hyperion,
Hyperion shall be deemed to have made an Investment on the date of any such
sale or disposition equal to the fair market value of the Equity Interests of
such Subsidiary not sold or disposed of.
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"Joint Venture" means a corporation, partnership or other entity engaged in
one or more Telecommunications Businesses (i) in which Hyperion or its
Subsidiaries owns, directly or indirectly, an Equity Interest with the balance
of the Equity Interest thereof being held by one or more Local Partners and
(ii) that is managed and operated by Hyperion or any of its Subsidiaries.
"Joint Venture Investment" means Investments in Joint Ventures.
"Lien" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset, whether
or not filed, recorded or otherwise perfected under applicable law (including
any conditional sale or other title retention agreement, any lease in the
nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement
under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction)
"Local Partner" means, with respect to any Joint Venture (i) the Joint
Venture partners set forth on a schedule to the Indenture, and (ii) any other
Person, provided that such other Person (a) is a major cable company or utility
that has a substantial presence within the specific market of such Joint
Venture, which presence shall be evidenced, (1) in the case of a cable company,
by such company having a market share consisting of at least 50% of the total
number of cable subscribers in such market and (2) in the case of a utility
company, by such company having at least 75% of the total customer base of such
market or (b) is a Wholly Owned Subsidiary of a major cable company or utility
that (1) meets the criteria set forth in the immediately preceding clause (a)
or (2) has all of its initial capital contributions under the agreement
governing the Joint Venture fully and unconditionally guaranteed, until such
time as all such contributions have been made, by one or more Persons who meet
the criteria set forth in the immediately preceding clause (a).
"Local Partner Agreements" means the joint venture agreements with Local
Partners, as set forth on a schedule to the Indenture.
"Management Agreements" means the agreements governing the management of the
networks, as set forth on a schedule to the Indenture.
"Net Cash Proceeds" means the aggregate cash proceeds received by Hyperion
or any of its Subsidiaries in respect of any Asset Sale (including, without
limitation, any cash received upon the sale or other disposition of any non-
cash consideration received in any Asset Sale and principal payments on
indebtedness received in any Asset Sale, as and when received), net of the
direct costs relating to such Asset Sale (including, without limitation, legal,
accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements) and any reserve for adjustment in
respect of the sale price of such asset or assets established in accordance
with GAAP.
"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock
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dividends, excluding, however, (i) any gain or loss, together with any related
provision for taxes on such gain or loss, realized in connection with (a) any
Asset Sale (including, without limitation, dispositions pursuant to Sale and
Leaseback Transactions) or (b) the disposition of any securities by such Person
or any of its Subsidiaries or the extinguishment of any Indebtedness of such
Person or any of its Subsidiaries and (ii) any extraordinary or nonrecurring
gain or loss, together with any related provision for taxes on such
extraordinary or nonrecurring gain or loss.
"New Telecommunications Service Market" means a Telecommunications Service
Market in an area that is not within ten miles of any of Hyperion's Existing
Networks.
"Non-Recourse Debt" means Indebtedness (i) as to which neither Hyperion nor
any of its Subsidiaries nor any of its Permitted Joint Ventures (a) provides
credit support of any kind (including any undertaking, agreement or instrument
that would constitute Indebtedness), (b) is directly or indirectly liable (as a
guarantor, co-obligor or otherwise) or (c) constitutes the lender; and (ii) no
default with respect to which (including any rights that the holders thereof
may have to take enforcement action against a Restricted Joint Venture) would
permit (upon notice, lapse of time, the occurrence, or failure to occur, of any
other condition or event or any combination thereof) any holder of any other
Indebtedness of Hyperion, any of its Subsidiaries or any of its Permitted Joint
Ventures to declare a default on such other Indebtedness or cause or permit the
payment thereof to be accelerated prior to its stated maturity; and (iii) as to
which the lenders have been notified in writing that they will not have any
recourse to the stock or assets of Hyperion, any of its Subsidiaries or any of
its Permitted Joint Ventures; provided that the recourse (if any) of a holder
of such Indebtedness to the General Partner Subsidiary of a Restricted Joint
Venture in which such General Partner Subsidiary is a general partner as a
result of being a general partner of such Restricted Joint Venture will not be
considered credit support or direct or indirect liability of such General
Partner Subsidiary for purposes of clauses (i)(a), (ii)(b) and (iii) above.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Permitted Investments" means
(a) any Investment in a Wholly Owned Subsidiary of Hyperion that is engaged,
either directly or indirectly through a Qualified Subsidiary or Joint Venture,
in the Telecommunications Business;
(b) any Investment in a Qualified Subsidiary of Hyperion that is directly
engaged in the Telecommunications Business;
(c) any Investment in Cash Equivalents;
(d) any Investment in a Person that is not a Subsidiary of Hyperion, if as a
result of such Investment (i)(A) such Person becomes a Qualified Subsidiary or
Wholly Owned Subsidiary of Hyperion or (B) such Person is merged, consolidated
or amalgamated with or
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into, or transfers or conveys substantially all of its assets to, or is
liquidated into, Hyperion or a Qualified Subsidiary and (ii)(A) such Wholly
Owned Subsidiary, either directly or indirectly through a Qualified Subsidiary
or a Joint Venture, is engaged in the Telecommunications Business or (B) such
Qualified Subsidiary is directly engaged in the Telecommunications Business;
(e) any Permitted Joint Venture Investment;
(f) any Investment made as a result of the receipt of non-cash consideration
(whether or not such non-cash consideration is deemed to be cash for the
purposes of such covenant) from an Asset Sale that was made pursuant to and in
compliance with the covenant described above under the caption "--Certain
Covenants--Asset Sales;" or
(g) any Investment in an Enhanced Services Venture.
"Permitted Junior Securities" means (a) Equity Interests in Hyperion or (b)
debt securities that are subordinated to all Senior Debt and any debt
securities issued in exchange for Senior Debt that are subordinated to
substantially the same extent as, or to a greater extent than, the Notes are
subordinated to Senior Debt under the Indenture.
"Permitted Joint Venture" means any Joint Venture in which Hyperion has,
directly or indirectly, a 45% or greater Equity Interest.
"Permitted Joint Venture Investment" means any Joint Venture Investment by
Hyperion or a Wholly Owned Subsidiary of Hyperion if, after such Joint Venture
Investment such Joint Venture is a Permitted Joint Venture.
"Permitted Liens" means
(i) Liens on the property of Hyperion, any Subsidiary or any Permitted Joint
Venture securing Obligations under Senior Debt that may be incurred pursuant to
clause (i) of the covenant entitled "--Certain Covenants--Incurrence of
Indebtedness and Issuance of Preferred Stock;"
(ii) Liens on the property of Hyperion, any Subsidiary or any Permitted
Joint Venture securing Senior Debt under the 12 1/4% Notes;
(iii) Liens in favor of Hyperion;
(iv) Liens on property of a Person existing at the time such Person is
merged into or consolidated with Hyperion, any Subsidiary or any Permitted
Joint Venture; provided that such Liens were in existence prior to the
contemplation of such merger or consolidation and do not extend to any assets
other than those of the Person merged into or consolidated with Hyperion;
(v) Liens on property existing at the time of acquisition thereof by
Hyperion, any Subsidiary or any Permitted Joint Venture, provided that such
Liens were in existence prior to the contemplation of such acquisition;
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(vi) Liens to secure the performance of statutory obligations, surety or
appeal bonds, performance bonds or other obligations of a like nature incurred
in the ordinary course of business;
(vii) Liens existing on the date of the Indenture;
(viii) Liens on property of Subsidiaries and Permitted Joint Ventures
securing Obligations under Indebtedness incurred pursuant to the proviso in
clause (viii) of the second paragraph of the covenant entitled "--Certain
Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock," but
only to the extent that (a) in the case of Subsidiaries and Permitted Joint
Ventures that are incurring Indebtedness other than Related Network Debt, such
Liens secure only such Indebtedness incurred by such Subsidiary or such Joint
Venture; and (b) in the case of Subsidiaries and Joint Ventures that are
incurring Related Network Debt, such Liens secure only such Related Network
Debt;
(ix) Liens securing Obligations under the Notes and the Indenture;
(x) Liens securing Obligations under Vendor Debt pursuant to clause (ii) of
the covenant entitled "--Certain Covenants--Incurrence of Indebtedness and
Issuance of Preferred Stock," provided that the principal amount of such Vendor
Debt secured by such Lien does not exceed 100% of the purchase price or cost of
acquisition, construction or improvement of the Telecommunications Related
Assets subject to such Liens;
(xi) Liens for taxes, assessments or governmental charges or claims that are
not yet delinquent or that are being contested in good faith by appropriate
proceedings promptly instituted and diligently concluded, provided that any
reserve or other appropriate provision as shall be required in conformity with
GAAP shall have been made therefor;
(xii) Liens incurred in the ordinary course of business of Hyperion, any
Subsidiary or any Permitted Joint Venture with respect to obligations that do
not exceed $5.0 million at any one time outstanding and that (a) are not
incurred in connection with the borrowing of money or the obtaining of advances
or credit (other than trade credit in the ordinary course of business) and (b)
do not in the aggregate materially detract from the value of the property or
materially impair the use thereof in the operation of business by the Company,
such Subsidiary or such Permitted Joint Venture; and
(xiii) Liens securing Refinancing Indebtedness, but only if, and to the
extent, that such Liens that are incurred in connection with such Refinancing
Indebtedness do not encumber any assets or properties (or interests therein)
other than those assets or properties (or interests therein) subject to Liens
pursuant to the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded.
"Preferred Stock" for any Person means Capital Stock of such Person of any
class or classes (however designated) that ranks prior, as to the payment of
dividends or as to the distribution of assets upon any voluntary or involuntary
liquidation, dissolution or winding up of such Person, to shares of Capital
Stock of any other class of such Person.
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"Principals" means John J. Rigas and members of his immediate family, any of
their respective spouses, estates, lineal descendants, heirs, executors,
personal representatives, administrators, trusts for any of their benefit and
charitable foundations to which shares of Hyperion's Capital Stock beneficially
owned by any of the foregoing have been transferred.
"Pro Forma EBITDA" means, for any Person, for any period, the EBITDA of such
Person as determined on a consolidated basis in accordance with GAAP
consistently applied, after giving effect to the following: (i) if, during or
after such period, such Person or any of its Subsidiaries shall have made any
Asset Sale, Pro Forma EBITDA for such Person and its Subsidiaries for such
period shall be reduced by an amount equal to the Pro Forma EBITDA (if
positive) directly attributable to the assets which are the subject of such
Asset Sale for the period or increased by an amount equal to the Pro Forma
EBITDA (if negative) directly attributable thereto for such period and (ii) if,
during or after such period, such Person or any of its Subsidiaries completes
an acquisition of any Person or business which immediately after such
acquisition is a Subsidiary of such Person, Pro Forma EBITDA shall be computed
so as to give pro forma effect to such Asset Sale or the acquisition of such
Person or business, as the case maybe, as if such acquisition had been
completed as of the beginning of such period, and (iii) if, during or after
such period, such Person or any of its Subsidiaries incurs any Indebtedness
(including without limitation, any Acquired Indebtedness) or issues any
Disqualified Stock, Pro Forma EBITDA shall be computed so as to give pro forma
effect (including pro forma application of the proceeds therefrom) thereto as
if such Indebtedness or Disqualified Stock had been incurred as of the
beginning of such period.
"Qualified Subsidiary" means any Subsidiary in which a Local Partner or
Local Partners own at least 5% but less than 50% of the Equity Interests of
such Subsidiary; provided that such Subsidiary remains a Subsidiary of Hyperion
at all times for purposes under the Indenture.
"Refinancing Indebtedness" means any Indebtedness of Hyperion, any of its
Subsidiaries or any of its Permitted Joint Ventures issued in exchange for, or
the net proceeds of which are used to extend, refinance, renew, replace,
defease or refund other Indebtedness of Hyperion, any of its Subsidiaries or
any of its Permitted Joint Ventures; provided that: (i) the principal amount
(or accreted value, if applicable) of such Refinancing Indebtedness does not
exceed the principal amount (or accreted value, if applicable) of the
Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded
(plus the amount of reasonable expenses incurred in connection therewith); (ii)
such Refinancing Indebtedness has a final maturity date later than the final
maturity date of, and has a Weighted Average Life to Maturity equal to or
greater than the Weighted Average Life to Maturity of, the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded; (iii) if the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded is subordinated in right of payment to the Notes, such Refinancing
Indebtedness has a final maturity date later than the final maturity date of
the Notes, and is subordinated in right of payment to the Notes on terms at
least as favorable to the Holders of Notes as those contained in the
documentation governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; (iv) to the extent that the Indebtedness being
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extended, refinanced, renewed, replaced, defeased or refunded was secured by
Liens, any Liens being incurred in connection with such Refinancing
Indebtedness are at least as favorable to the Holders of Notes as those
contained in the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; and (v) such Indebtedness
is incurred either by Hyperion, the Subsidiary or the Permitted Joint Venture
who is the obligor on the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded.
"Related Networks" means any group of Qualified Subsidiaries or Permitted
Joint Ventures in which the same Local Partner owns, or the same group of Local
Partners own, all the Equity Interests of each such Qualified Subsidiary or
Permitted Joint Venture that comprise such Related Network that are not owned
by the Company.
"Related Network Debt" means any Credit Agreement entered into by and among
the Qualified Subsidiaries and/or Permitted Joint Ventures that comprise a
Related Network.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Joint Venture" means any Joint Venture that is not a Permitted
Joint Venture, but only if such Joint Venture: (a) has no Indebtedness other
than Non-Recourse Debt; (b) is not a party to any agreement, contract,
arrangement or understanding with Hyperion, any of its Subsidiaries or any of
its Permitted Joint Ventures unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to Hyperion, such Subsidiary
or such Permitted Joint Venture than those that might be obtained at the time
from Persons who are not Affiliates of Hyperion; and (c) has not guaranteed or
otherwise directly or indirectly provided credit support for any Indebtedness
of Hyperion, any of its Subsidiaries or any of its Permitted Joint Ventures.
If, at any time, a Restricted Joint Venture fails to meet the requirements of a
Restricted Joint Venture by becoming a Permitted Joint Venture or otherwise, it
shall thereafter cease to be a Restricted Joint Venture for purposes of the
Indenture and (i) all of the then outstanding Indebtedness of such entity shall
be deemed to be incurred as of the date on which such entity becomes a
Permitted Joint Venture or otherwise ceases to be a Restricted Joint Venture
for purposes of the covenant entitled "--Certain Covenants--Incurrence of
Indebtedness and Issuance of Preferred Stock" (and if such Indebtedness is not
permitted to be incurred as of such date under such covenant, Hyperion shall be
in default of such covenant) and (ii) all of the then outstanding Investments
made by such entity since the date of the Indenture shall be deemed to have
been made as of the date that such Restricted Joint Venture becomes a Permitted
Joint Venture or otherwise ceases to be a Restricted Joint Venture for purposes
of the covenant entitled "--Certain Covenants--Restricted Payments" (and if
such Investments are not permitted to be made as of such date under such
covenant, Hyperion shall be in default of such covenant); provided that if a
Restricted Joint Venture ceases to be a Restricted Joint Venture as a result of
(i) the loss of its Local Partner or (ii) the loss of management control of
such Restricted Joint Venture, then the provisions of the covenant entitled "--
Certain Covenants--Restricted Payments" shall not be applied to such entity.
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"Restricted Joint Venture Investment" means any Joint Venture Investment by
a General Partner Subsidiary if, after such Joint Venture Investment, such
Joint Venture is a Restricted Joint Venture.
"Sale and Leaseback Transaction" of any Person means an arrangement with any
lender or investor or to which such lender or investor is a party providing for
the leasing by such Person of any property or asset of such Person which has
been or is being sold or transferred by such Person more than 365 days after
the acquisition thereof or the completion of construction or commencement of
operation thereof to such lender or investor or to any Person to whom funds
have been or are to be advanced by such lender or investor on the security of
such property or asset. The stated maturity of such arrangement shall be the
date of the last payment of rent or any other amount due under such arrangement
prior to the first date on which such arrangement may be terminated by the
lessee without payment of a penalty.
"Senior Debt" means (a) all Indebtedness of Hyperion outstanding under the
13% Notes and the 12 1/4% Notes; (b) any other Indebtedness of Hyperion
permitted to be incurred under the terms of the Indenture, unless the
instrument under which such Indebtedness is incurred expressly provides that it
is on a parity with or subordinated in right of payment to the Notes; and (c)
all Obligations with respect to the items listed in the preceding clauses (a)
and (b). Notwithstanding anything to the contrary in the preceding, Senior Debt
will not include (i) any liability for federal, state, local or other taxes
owed or owing by Hyperion; (ii) any Indebtedness of Hyperion to any of its
Subsidiaries, Joint Ventures or other Affiliates; (iii) any trade payables; or
(iv) the portion of any Indebtedness that is incurred in violation of the
Indenture.
"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Act, as such Regulation is in effect on the date hereof.
"Stated Maturity" means with respect to any debt security, the date
specified in such debt security as the fixed date on which the final
installment of principal of such debt security is due and payable.
"Strategic Investor" means a corporation, partnership or other entity
engaged in one or more Telecommunications Businesses that has 80% or more of
the voting power of its Capital Stock owned by a Person that has, an equity
market capitalization, at the time (i) of its initial Investment in Hyperion or
(ii) it purchases an Equity Interest in a Subsidiary or Joint Venture of
Hyperion, as the case may be, in excess of $2.0 billion.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity (other than a partnership) of which more
than 50% of the total voting power of shares of Capital Stock entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the other Subsidiaries
of that Person (or a combination thereof) and (ii) any partnership of which
more
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than 50% of the partnership's capital accounts, distribution rights or general
or limited partnership interests are owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries of that
Person or a combination thereof.
"Telecommunications Business" means the business of (i) transmitting, or
providing services relating to the transmission of, voice, video or data
through owned or leased transmission facilities, (ii) creating, developing or
marketing communications related network equipment, software and other devices
for use in a telecommunications business or (iii) evaluating, participating or
pursuing any other activity or opportunity that is primarily related to those
identified in (i) or (ii) above; provided that the determination of what
constitutes a Telecommunications Business shall be made in good faith by the
Board of Directors of Hyperion.
"Telecommunications Related Assets" means all assets, rights (contractual or
otherwise) and properties, whether tangible or intangible, used or intended for
use in connection with a Telecommunications Business.
"Telecommunications Service Market" means a network built by Hyperion to
service a market.
"Vendor Debt" means any purchase money Indebtedness of Hyperion, any
Subsidiary (other than a General Partner Subsidiary) or any Permitted Joint
Venture incurred in connection with the acquisition of Telecommunications
Related Assets.
"Voting Stock" of any person means Capital Stock of such person which
ordinarily has voting power for the election of directors (or persons
performing similar functions) of such person, whether at all times or only so
long as no senior class of securities has voting power by reason of any
contingency.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment, by (ii) the then outstanding
principal amount of such Indebtedness.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person
all of the outstanding Capital Stock or other ownership interests of which
(other than directors' qualifying shares) shall at the time be owned by such
Person or by one or more Wholly Owned Subsidiaries of such Person or a
combination thereof.
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is a summary of certain federal income tax
considerations relevant to the exchange of the old notes for the new notes, but
does not purport to be a complete analysis of all potential tax effects. The
discussion is based upon the Internal Revenue Code, Treasury Regulations, IRS
rulings and pronouncements and judicial decisions now in effect, all of which
are subject to change at any time by legislative, judicial or administrative
action. Any such changes may be applied retroactively in a manner that could
adversely affect a holder of the new notes. The following discussion assumes
that holders hold the old notes and the new notes as capital assets within the
meaning of Section 1221 of the Internal Revenue Code.
Hyperion has not sought and will not seek any rulings from the IRS with
respect to the positions of Hyperion discussed below. There can be no assurance
that the IRS will not take a different position concerning the tax consequences
of the exchange of the old notes for the new notes or that any such position
would not be sustained.
The tax treatment of a holder may vary depending on his or its particular
situation or status. This summary does not address the tax consequences to
taxpayers who are subject to special rules such as insurance companies, tax-
exempt organizations, financial institutions, broker-dealers, foreign entities
and individuals, persons holding old notes or new notes as a part of a hedging
or conversion transaction or a straddle and holders whose "functional currency"
is not the U.S. dollar, or aspects of federal income taxation that may be
relevant to a prospective investor based upon such investor's particular tax
situation. In addition, the description does not consider the effect of any
applicable foreign, state, local or other tax laws.
You should consult your own tax adviser as to the particular tax
consequences to you of exchanging old notes for new notes including the
applicability and effect of any state, local or foreign tax laws.
Exchange
The exchange of the new notes for old notes pursuant to the exchange offer
will not constitute a recognition event for federal income tax purposes.
Consequently, holders will not recognize gain or loss upon receipt of the new
notes. For purposes of determining gain or loss upon the subsequent exchange of
new notes, a holder's basis in the new notes will be the same as a holder's
basis in the old notes exchanged. Holders will be considered to have held the
new notes from the time of their original acquisition of the old notes.
Interest on the New Notes
A holder of a new note will be required to report as income for federal
income tax purposes interest earned on a new note in accordance with the
holder's method of tax accounting. A holder of a new note using the accrual
method of accounting for tax purposes is, as a general rule, required to
include interest in income as such interest accrues. A cash
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basis holder must include interest in income when cash payments are received by
(or made available to) such holder.
Market Discount
If a holder acquired an old note at a market discount, i.e., at a price less
than the stated redemption price at maturity of the old note, the old note is
subject to the market discount rules of the Internal Revenue Code unless the
market discount is de minimis. Market discount is de minimis if it is less than
one quarter of one percent of the principal amount of the old note multiplied
by the number of complete years to maturity after the holder acquired the old
note. If the holder exchanges an old note that has more than de minimis market
discount for a new note, the new note also will be subject to the market
discount rules of the Internal Revenue Code. New notes purchased by a
subsequent purchaser also will be subject to the market discount rules if the
new notes are purchased with more than a de minimis amount of market discount.
Notes that have more than de minimis market discount are herein referred to as
market discount notes.
Any gain recognized on the maturity, sale or other disposition of a market
discount note will be treated as ordinary income to the extent that such gain
does not exceed the accrued market discount on the market discount note. The
amount of market discount treated as having accrued will be determined either:
. on a ratable basis by multiplying the market discount times a fraction,
the numerator of which is the number of days the new note was held by
the holder and the denominator of which is the total number of days
after the date such holder acquired the new note up to and including the
date of its maturity, or
. if the holder so elects, on a constant interest rate method.
A holder may elect to include market discount in income currently over the
life of the market discount note. Such an election shall apply to all debt
instruments with market discount acquired by the holder on or after the first
day of the first taxable year to which the election applies and all subsequent
taxable years. This election may not be revoked without the consent of the IRS.
Market discount will accrue on a ratable inclusion basis unless the holder
elects to accrue market discount on a constant yield to maturity basis. Such an
election shall apply only to the market discount note with respect to which it
is made and may not be revoked without the consent of the IRS. If an election
is made to include market discount in income currently, the basis of the new
note in the hands of the holder will be increased by the market discount
thereon as it is included in income. A holder who does not elect to include
market discount in income currently generally will be required to defer
deductions for interest on borrowings allocable to a market discount note in an
amount not exceeding the accrued market discount on the market discount note
until the maturity or disposition of the market discount note.
Amortizable Bond Premium
A holder that purchased an old note for an amount in excess of its principal
amount may elect to treat such excess as "amortizable bond premium," in which
case the amount
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required to be included in the holder's income each year with respect to
interest on the old note will be reduced by the amount of amortizable bond
premium allocable (based on the yield to maturity of the old note) to such
year. If a holder made an election to amortize bond premium with respect to an
old note and exchanges the old note for a new note pursuant to the exchange
offer, the election will apply to the new note. A holder who exchanges an old
note for which an election has not been made for a new note, and a subsequent
purchaser of a new note, may also elect to amortize bond premium if the holder
acquired the notes for an amount in excess of its principal amount. Any
election to amortize bond premium shall apply to all bonds, other than bonds
the interest on which is excludable from gross income, held by the holder at
the beginning of the first taxable year to which the election applies or
thereafter acquired by the holder, and is irrevocable without the consent of
the IRS.
Disposition of the Notes
Subject to the market discount rules discussed above, a holder of notes will
recognize gain or loss upon the sale, redemption, retirement or other
disposition of such securities equal to the difference between:
. the amount of cash and the fair market value of the property received,
except to the extent attributable to the payment of accrued interest,
and
. the holder's adjusted tax basis in the securities. Gain or loss
recognized will be capital gain or lossprovided the notes are held as
capital assets by the holder, and will be long-term capital gain or loss
if the holder has held such securities or is treated as having held such
securities for more than one year.
Backup Withholding and Information Reporting
Holders of notes may be subject to backup withholding at a rate of 31% with
respect to interest paid on the notes unless such holder:
. is a corporation or comes within certain other exempt categories and,
when required, demonstrates this fact, or
. provides a correct taxpayer identification number, certifies as to no
loss of exemption from backup withholding and otherwise complies with
the requirements of the backup withholding rules.
Hyperion will report to the holders of the notes and the IRS the amount of
any "reportable payment" for each calendar year and amount of tax withheld, if
any, with respect to payments on the notes.
You should consult your own tax advisor with respect to the tax consequences
to you of the acquisition, ownership, and disposition of the notes, including
the applicability and effect of state, local, foreign, and other tax laws.
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PLAN OF DISTRIBUTION
Each broker-dealer that receives new notes for its own account pursuant to
the exchange offer must acknowledge that it will deliver a prospectus in
connection with any resale of the new notes. This prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of new notes received in exchange for old notes
acquired as a result of market-making activities or other trading activities.
We have agreed that we will make this prospectus available to any broker-dealer
for use in connection with any such resale for a period of 365 days after the
expiration date or until all participating broker-dealers have so resold.
We will not receive any proceeds from any sale of new notes by broker-
dealers. New notes received by broker-dealers for their own account pursuant to
the exchange offer may be sold from time to time in one or more transactions in
the over-the-counter market, in negotiated transactions, through the writing of
options on the new notes or a combination of such methods of resale, at market
prices prevailing at the time of resale, at prices related to such prevailing
market prices or negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concession from any such broker-dealer and/or the
purchasers of any new notes. Any broker-dealer that resells new notes that were
received by it for its own account pursuant to the exchange offer and any
broker-dealer that participates in a distribution of new notes may be deemed to
be an "underwriter" within the meaning of the Securities Act, and any profit on
any resale of new notes and any commissions or concessions received by any such
persons may be deemed to be underwriting compensation under the Securities Act.
The letter of transmittal states that by acknowledging that it will deliver and
by delivering a prospectus, a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.
We have not entered into any arrangement or understanding with any person to
distribute the new notes to be received in the exchange offer, and to the best
of our information and belief, each person participating in the exchange offer
is acquiring the new notes in its ordinary course of business and has no
arrangement or understanding with any person to participate in the distribution
of the new notes to be received in the exchange offer.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, as well as proxy statements
and other information with the SEC. You may read and copy any document we file
with the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549 or at its Regional Offices in Chicago, Illinois or New
York, New York. You may obtain further information about the operation of the
Public Reference Room by calling the SEC at 1-800- SEC-0330. Our SEC filings
are also available to the public over the Internet at the SEC's web site at
http://www.sec.gov, which contains reports, proxy statements and other
information regarding registrants like us that file electronically with the
SEC.
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This prospectus is part of a registration statement on Form S-4 filed by us
with the SEC under the Securities Act. As permitted by SEC rules, this
prospectus does not contain all of the information included in the registration
statement and the accompanying exhibits filed with the SEC. You may refer to
the registration statement and its exhibits for more information.
The SEC allows us to "incorporate by reference" into this prospectus the
information we file with the SEC. This means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this prospectus. If we
subsequently file updating or superseding information in a document that is
incorporated by reference into this prospectus, the subsequent information will
also become part of this prospectus and will supersede the earlier information.
We are incorporating by reference the following documents that we have filed
with the SEC:
. our Transition Report on Form 10-K for the nine months ended December
31, 1998. We refer to this Transition Report on Form 10-K in this
prospectus as the Form 10-K;
. our Form 10-Q for the quarter ended March 31, 1999. We refer to this
Form 10-Q in this prospectus as the Form 10-Q;
. our definitive proxy statement dated September 14, 1998, with respect to
the Annual Meeting of Stockholders held October 6, 1998;
. our Form 8-Ks for the events dated February 16, 1999, February 25, 1999
and March 30, 1999; and
. the description of our Class A common stock contained in our
registration statement filed with the SEC under Section 12 of the
Securities Exchange Act of 1934 and subsequent amendments and reports
filed to update such description.
We are also incorporating by reference into this prospectus all of our
future filings with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the
Securities Exchange Act of 1934 until this exchange offer has been completed.
You may obtain a copy of any of our filings that are incorporated by
reference, at no cost, by writing to or telephoning us at the following
address:
Hyperion Telecommunications, Inc.
Main at Water Street
Coudersport, Pennsylvania 16915
Attention: Investor Relations
Telephone: (814) 274-9830
You should rely only on the information provided in this prospectus or
incorporated by reference. We have not authorized anyone to provide you with
different information. You should not assume that the information in this
prospectus is accurate as of any date other
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than the date on the cover of the prospectus. This exchange offer is not being
made to, nor will we accept surrenders for exchange from, holders of currently
outstanding old notes in any jurisdiction in which this exchange offer or the
acceptance thereof would not be in compliance with the Securities or Blue Sky
laws of such jurisdiction.
LEGAL MATTERS
The validity of the new notes will be passed upon on behalf of Hyperion by
Buchanan Ingersoll Professional Corporation, Pittsburgh, Pennsylvania.
Attorneys of that firm who are representing Hyperion in the exchange offer own
an aggregate of 15,100 shares of Hyperion's Class A common stock.
EXPERTS
The consolidated financial statements of Hyperion as of March 31, 1998 and
December 31, 1998, and for the years ended March 31, 1997 and 1998 and the nine
months ended December 31, 1998, all incorporated in this prospectus by
reference from Hyperion's Transition Report on Form 10-K for the nine months
ended December 31, 1998, have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report, which is incorporated herein
by reference, and have been so incorporated in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.
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Hyperion Telecommunications, Inc.
New 12% Senior Subordinated Notes Due 2007
----------------
PROSPECTUS
----------------
We have not authorized any dealer, salesperson or other person to give any
information or represent anything contained in this prospectus. You must not
rely on any unauthorized information. This prospectus does not offer to sell
nor does it solicit to buy any Notes in any jurisdiction where it is unlawful.
The information in this prospectus is current as of , 1999.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law provides in general that
a corporation may indemnify its directors, officers, employees or agents
against expenditures (including judgments, fines, amounts paid in settlement
and attorneys' fees) made by them in connection with certain lawsuits to which
they may be made parties by reason of their being directors, officers,
employees or agents and shall so indemnify such persons against expenses
(including attorneys' fees) if they have been successful on the merits or
otherwise. The bylaws of Hyperion provide for indemnification of the officers
and directors of Hyperion to the full extent permissible under Delaware law.
Hyperion's Certificate of Incorporation also provides, pursuant to Section
102(b)(7) of the Delaware General Corporation Law, that directors of Hyperion
shall not be personally liable to Hyperion or its stockholders for monetary
damages for breach of fiduciary duty as a director for acts or omissions,
provided that directors shall nonetheless be liable for breaches of the duty of
loyalty, bad faith, intentional misconduct, knowing violations of law, unlawful
distributions to stockholders, or transactions from which a director derived an
improper personal benefit.
Item 21. Exhibits and Financial Statement Schedules
(a) The following is a complete list of Exhibits filed as part of this
Registration Statement, which are incorporated herein:
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<C> <S>
3.1 Certificate of Incorporation of Registrant, together with all
amendments thereto. (Incorporated herein by reference is Exhibit
3.01 to Registrant's Current Report on Form 8-K for the event
dated October 9, 1997.)
3.2 Bylaws of Registrant. (Incorporated herein by reference is Exhibit
3.2 to Registration Statement No. 333-12619 on Form S-1.)
4.1 Indenture, dated as of April 15, 1996, between the Registrant and
Bank of Montreal Trust Company. (Incorporated herein by reference
is Exhibit 4.1 to Registration Statement No. 333-06957 on Form S-
4.)
4.2 First Supplemental Indenture, dated as of September 11, 1996,
between, the Registrant and Bank of Montreal Trust Company.
(Incorporated herein by reference is Exhibit 4.2 to Statement No.
333-12619 on Form S-4.)
4.3 Form of 13% Senior Discount Note. (Incorporated herein reference
is Exhibit 4.3 to Registration Statement No. 333-12619 on Form S-
4.)
4.4 Form of Class A Common Stock Certificate. (Incorporated herein by
reference is Exhibit 4.1 to Registrant's Registration Statement on
Form 8-A, dated October 23, 1996.)
4.5 Indenture, dated as of August 27, 1997, with respect to the
Registrant's 12 1/4% Senior Secured Notes due 2004, between the
Registrant and the Bank of Montreal Trust Company. (Incorporated
herein by reference is Exhibit 4.01 to Form 8-K dated August 27,
1997.) (File No. 0-21605)
4.6 Form of 12 1/4% Senior Secured Note due 2004 (contained in Exhibit
4.5).
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<C> <S>
4.7 Pledge Agreement between the Registrant and the Bank of Montreal
Trust Company as Collateral Agent, dated as of August 27, 1997.
(Incorporated herein by reference is Exhibit 4.03 to Form 8-K
dated August 27, 1997.) (File No. 0-21605)
4.8 Pledge, Escrow and Disbursement Agreement, between the Registrant
and the Bank of Montreal Trust Company, dated as of August 27,
1997. (Incorporated herein by reference is Exhibit 4.05 to Form 8-
K dated August 27, 1997.) (File No. 0-21605)
4.9 Second Supplemental Indenture, dated as of August 27, 1997,
between the Registrant and the Bank of Montreal Trust Company,
regarding the Registrant's 13% Senior Discount Notes due 2003.
(Incorporated herein by reference is Exhibit 4.06 to Form 8-K
dated August 27, 1997.) (File No. 0-21605)
4.10 Certificate of Designation for 12 7/8% Series A and Series B
Senior Exchangeable Redeemable Preferred Stock due 2007.
(Contained in Exhibit 3.01 to Registrant's Current Report on Form
8-K for the event dated October 9, 1997 which is incorporated
herein by reference.) (File No. 0-21605)
4.11 Form of Certificate for 12 7/8% Senior Exchangeable Redeemable
Preferred Stock due 2007. (Incorporated herein by reference is
Exhibit 4.02 to the Registrant's Current Report on Form 8-K the
event dated October 9, 1997.) (File No. 0-21605)
4.12 Form of Indenture, with respect to the Registrant's 12 7/8% Senior
Subordinated Exchange Debentures due 2007. (Contained as Annex A
in Exhibit 3.01 to Registrant's Current Report on Form 8-K for the
event dated October 9, 1997 which is incorporated herein by
reference.) (File No. 0-21605)
4.13 Indenture dated as of March 2, 1999, with respect to Hyperion
Telecommunications, Inc. 12% Senior Subordinated Notes due 2007,
between Hyperion and the Bank of Montreal Trust Company
(Incorporated by reference herein is Exhibit 4.01 to the Current
Report on Form 8-K for Adelphia Communications Corporation filed
on March 10, 1999.) (File No. 0-16014)
4.14 Form of 12% Senior Subordinated Note due 2007 (Contained in
Exhibit 4.13).
4.15 Registration Rights Agreement between Hyperion Telecommunications,
Inc. and the Initial Purchasers, dated March 2, 1999, regarding
Hyperion's 12% Senior Subordinated Notes due 2007 (Incorporated by
reference herein is Exhibit 10.04 from Adelphia Communications
Corporation's Current Report on Form 8-K filed on March 10, 1999.)
(File No. 0-16014)
5.01** Opinion of Buchanan Ingersoll Professional Corporation.
12.01** Computation of Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends.
23.01** Consent of Buchanan Ingersoll Professional Corporation (contained
in its opinion filed as Exhibit 5.01 hereto).
23.02** Consent of Deloitte & Touche LLP.
24.01** Power of Attorney (Appearing on signature page).
25.01** Form T-1 Statement of Eligibility of Trustee.
99.01** Form of Letter of Transmittal and Notice of Guaranteed Delivery
for Notes.
</TABLE>
- --------
** Filed herewith
II-2
<PAGE>
(b) Financial Statement Schedules
The following schedules are included in the Registrant's Transition Report
on Form 10-K for the nine months ended December 31, 1998 contained herein by
reference.
Schedule II--Valuation and Qualifying Accounts.
Item 22. Undertakings
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrants pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Securities
Act of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of
whether such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
The Registrant hereby undertakes to respond to requests for information that
is incorporated by reference into the prospectus pursuant to Item 4, 10(b), 11,
or 13 of the Form S-4, within one business day of receipt of such request, and
to send the incorporated documents by first-class mail or other equally prompt
means. This includes information contained in documents filed subsequent to the
effective date of the registration statement through the date of responding to
the request.
The Registrant hereby undertakes to supply by means of a post-effective
amendment all information concerning a transaction, and the company being
acquired involved therein, that was not the subject of and included in the
registration statement when it became effective.
The undersigned Registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
Registrant undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other Items of the applicable form.
The Registrant undertakes that every prospectus (i) that is filed pursuant
to the paragraph immediately preceding, or (ii) that purports to meet the
requirements of section 10(a)(3) of the Securities Act of 1933 and is used in
connection with an offering of securities subject to Rule 415, will be filed as
a part of an amendment to the registration statement and will not be used until
such amendment is effective, and that, for purposes of determining any
liability under the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of a Registration Statement in reliance upon Rule 430A and contained in the
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act of 1933 shall be deemed part of the
Registration Statement as of the time it was declared effective.
II-3
<PAGE>
(2) For purposes of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities at such
time shall be deemed to be the initial bona fide offering thereof.
(3) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the SEC pursuant to Rule 424(b) (230.424(b) of this chapter), if,
in the aggregate, the changes in volume and price represent no more than
a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
Provided, however, that paragraphs (3)(i) and (3)(ii) above do not apply if
the registration statement is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the SEC by the
registrant pursuant to section 13 or section 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in the registration statement.
(4) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(5) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(6) For purposes of determining any liability under the Securities Act
of 1933, each filing of the Registrant's annual report pursuant to section
13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Coudersport,
Commonwealth of Pennsylvania, on the 28th day of May, 1999.
HYPERION TELECOMMUNICATIONS, INC.
/s/ Daniel R. Milliard
By: _________________________________
Daniel R. Milliard
President
POWER OF ATTORNEY
Know All Men By These Presents that each person whose signature appears
below constitutes and appoints John J. Rigas, Michael J. Rigas, Timothy J.
Rigas, James P. Rigas and Daniel R. Milliard, and each of them, such person's
true and lawful attorneys-in-fact and agents, with full power of substitution
and revocation, for such person and in such person's name, place and stead, in
any and all amendments (including post-effective amendments to this
Registration Statement) and to file the same with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as
such person might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ John J. Rigas Chairman and Director May 28, 1999
______________________________________
John J. Rigas
/s/ Timothy J. Rigas Vice Chairman, Treasurer, May 28, 1999
______________________________________ Chief Financial Officer
Timothy J. Rigas and Director
/s/ Michael J. Rigas Vice Chairman and Director May 28, 1999
______________________________________
Michael J. Rigas
/s/ James P. Rigas Vice Chairman, Chief May 28, 1999
______________________________________ Executive Officer and
James P. Rigas Director
/s/ Daniel R. Milliard Vice Chairman, President, May 28, 1999
______________________________________ Secretary and Director
Daniel R. Milliard
Director May , 1999
______________________________________
Pete J. Metros
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
Director May , 1999
______________________________________
James L. Gray
Director May , 1999
______________________________________
Randolph F. Fowler
/s/ Edward E. Babcock, Jr. Chief Accounting Officer May 28, 1999
______________________________________
Edward E. Babcock, Jr.
</TABLE>
II-6
<PAGE>
Exhibit Index
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<C> <S>
3.1 Certificate of Incorporation of Registrant, together with all
amendments thereto. (Incorporated herein by reference is Exhibit
3.01 to Registrant's Current Report on Form 8-K for the event
dated October 9, 1997.)
3.2 Bylaws of Registrant. (Incorporated herein by reference is Exhibit
3.2 to Registration Statement No. 333-12619 on Form S-1.)
4.1 Indenture, dated as of April 15, 1996, between the Registrant and
Bank of Montreal Trust Company. (Incorporated herein by reference
is Exhibit 4.1 to Registration Statement No. 333-06957 on Form S-
4.)
4.2 First Supplemental Indenture, dated as of September 11, 1996,
between, the Registrant and Bank of Montreal Trust Company.
(Incorporated herein by reference is Exhibit 4.2 to Statement No.
333-12619 on Form S-4.)
4.3 Form of 13% Senior Discount Note. (Incorporated herein reference
is Exhibit 4.3 to Registration Statement No. 333-12619 on Form S-
4.)
4.4 Form of Class A Common Stock Certificate. (Incorporated herein by
reference is Exhibit 4.1 to Registrant's Registration Statement on
Form 8-A, dated October 23, 1996.)
4.5 Indenture, dated as of August 27, 1997, with respect to the
Registrant's 12 1/4% Senior Secured Notes due 2004, between the
Registrant and the Bank of Montreal Trust Company. (Incorporated
herein by reference is Exhibit 4.01 to Form 8-K dated August 27,
1997.) (File No. 0-21605)
4.6 Form of 12 1/4% Senior Secured Note due 2004 (contained in Exhibit
4.5).
4.7 Pledge Agreement between the Registrant and the Bank of Montreal
Trust Company as Collateral Agent, dated as of August 27, 1997.
(Incorporated herein by reference is Exhibit 4.03 to Form 8-K
dated August 27, 1997.) (File No. 0-21605)
4.8 Pledge, Escrow and Disbursement Agreement, between the Registrant
and the Bank of Montreal Trust Company, dated as of August 27,
1997. (Incorporated herein by reference is Exhibit 4.05 to Form 8-
K dated August 27, 1997.) (File No. 0-21605)
4.9 Second Supplemental Indenture, dated as of August 27, 1997,
between the Registrant and the Bank of Montreal Trust Company,
regarding the Registrant's 13% Senior Discount Notes due 2003.
(Incorporated herein by reference is Exhibit 4.06 to Form 8-K
dated August 27, 1997.) (File
No. 0-21605)
4.10 Certificate of Designation for 12 7/8% Series A and Series B
Senior Exchangeable Redeemable Preferred Stock due 2007.
(Contained in Exhibit 3.01 to Registrant's Current Report on Form
8-K for the event dated October 9, 1997 which is incorporated
herein by reference.) (File No. 0-21605)
4.11 Form of Certificate for 12 7/8% Senior Exchangeable Redeemable
Preferred Stock due 2007. (Incorporated herein by reference is
Exhibit 4.02 to the Registrant's Current Report on Form 8-K the
event dated October 9, 1997.) (File No. 0-21605)
4.12 Form of Indenture, with respect to the Registrant's 12 7/8% Senior
Subordinated Exchange Debentures due 2007. (Contained as Annex A
in Exhibit 3.01 to Registrant's Current Report on Form 8-K for the
event dated October 9, 1997 which is incorporated herein by
reference.) (File No. 0-21605)
4.13 Indenture dated as of March 2, 1999, with respect to Hyperion
Telecommunications, Inc. 12% Senior Subordinated Notes due 2007,
between Hyperion and the Bank of Montreal Trust Company
(Incorporated by reference herein is Exhibit 4.01 to the Current
Report on Form 8-K for Adelphia Communications Corporation filed
on March 10, 1999.) (File No. 0-16014)
</TABLE>
II-7
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<C> <S>
4.14 Form of 12% Senior Subordinated Note due 2007 (Contained in
Exhibit 4.13).
4.15 Registration Rights Agreement between Hyperion Telecommunications,
Inc. and the Initial Purchasers, dated March 2, 1999, regarding
Hyperion's 12% Senior Subordinated Notes due 2007 (Incorporated by
reference herein is Exhibit 10.04 from Adelphia Communications
Corporation's Current Report on Form 8-K filed on March 10, 1999.)
(File No. 0-16014)
5.01** Opinion of Buchanan Ingersoll Professional Corporation.
12.01** Computation of Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends.
23.01** Consent of Buchanan Ingersoll Professional Corporation (Contained
in its opinion filed as Exhibit 5.01 hereto).
23.02** Consent of Deloitte & Touche LLP.
24.01** Power of Attorney (Appearing on signature page).
25.01** Form T-1 Statement of Eligibility of Trustee.
99.01** Form of Letter of Transmittal and Notice of Guaranteed Delivery
for Notes.
</TABLE>
- --------
** Filed herewith
II-8
<PAGE>
EXHIBIT 5.01
May 28, 1999
Hyperion Telecommunications, Inc.
Main at Water Street
Coudersport, PA 16915
Dear Sirs:
We have acted as counsel to Hyperion Telecommunications, Inc., a Delaware
corporation ("Hyperion", the "Company" or the "Registrant"), in connection with
the proposed exchange (the "Exchange") by the Company of the new 12% Senior
Subordinated Notes Due 2007 (the "New Notes") for an equal principal amount of
its outstanding 12% Senior Subordinated Notes Due 2007 (the "Old Notes").
In connection with the proposed Exchange, we have examined the Company's
Certificate of Incorporation and Bylaws, as presently in effect, the Company's
relevant corporate proceedings, the draft Registration Statement on Form S-4
covering the proposed Exchange (the "Registration Statement"), including the
Prospectus filed as a part of the Registration Statement, the Indenture dated
March 2, 1999, in respect of the Old Notes and the New Notes (the "Indenture),
and such other documents, records, certificates or public officials, statutes
and decisions as we considered necessary to express the opinions contained
herein. In the examination of such documents, we have assumed the genuiness of
all signatures and the authenticity of all document submitted to us as originals
and the conformity to the original documents of all documents submitted to us as
certified or photostatic copies.
We understand that the New Notes are to be issued to the holders of the Old
Notes in the Exchange and are to be available for resale by such holders, all in
the manner described in the Prospectus, which is a part of the Registration
Statement, and in the Indenture.
Based on the foregoing, we are of the opinion that:
1. The issuance of the New Notes to the holders of the Old Notes pursuant to
the terms of the Exchange and the Indenture have been duly authorized by
proper corporate action of the Registrant.
2. When the Registration Statement shall have been declared effective by order
of the Securities and Exchange Commission and the New Notes have been duly
issued to and exchanged for the Old Notes, all in accordance with the terms
of the Exchange, the Indenture and the Registration Statement, such New
<PAGE>
Hyperion Telecommunications, Inc.
May 28, 1999
Page 2
Notes will be validly issued and will constitute binding obligations of the
Registrant, subject, as to enforcement (i) to any applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar
laws relating to or affecting creditors' rights and remedies generally and
(ii) to general principles of judicial discretion and equity, including
principles of commercial reasonableness, good faith and fair dealing
(regardless of whether enforcement is sought in a proceeding at law or in
equity or in a bankruptcy proceeding and except that (i) rights to
contribution or indemnification may be limited by the laws, rules or
regulations of any governmental authority or agency thereof or by public
policy and (ii) waivers as to usury, stay or extension laws may be
unenforceable).
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to any reference to us in the Prospectus which is a
part hereof.
Sincerely,
BUCHANAN INGERSOLL
PROFESSIONAL CORPORATION
By: /s/ Carl E. Rothenberger, Jr.
------------------------------
Carl E. Rothenberger, Jr.
<PAGE>
EXHIBIT 12.01
HYPERION TELECOMMUNICATIONS, INC.
CALCULATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
(Dollars in thousands)
<TABLE>
<CAPTION>
Pro forma
Pro forma Three Three
Nine Months Nine Months Months Months
Year Ended March 31, Ended Ended Ended Ended
------------------------------------ December 31, December 31, March 31, March 31,
1995 1996 1997 1998 1998 1998 1999 1999
------- ------- -------- -------- ------------ ------------ --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Loss before Income Taxes
and Equity in Net Loss
of Joint Ventures...... $(5,922) $(9,525) $(23,065) $(56,115) $(64,842) $(91,842) $(32,317) $(41,317)
Add:
Equity in net loss of
joint ventures........ (1,799) (4,292) (7,223) (12,967) (9,580) (9,580) (3,803) (3,803)
Fixed charges,
excluding capitalized
interest.............. 3,321 6,088 29,337 51,302 40,775 67,775 16,289 25,289
------- ------- -------- -------- -------- -------- -------- --------
Net Loss Available for
Combined Fixed Charges
and Preferred Stock
Dividends:............. (4,400) (7,729) (951) (17,780) (33,647) (33,647) (19,831) (19,831)
------- ------- -------- -------- -------- -------- -------- --------
Combined Fixed Charges
and Preferred Stock
Dividends:
Interest expense....... 3,321 6,088 28,377 49,334 38,638 65,638 15,533 24,533
Capitalized interest... -- -- -- 4,271 9,986 9,986 3,296 3,296
Amortization of debt
issuance costs........ -- -- 960 1,968 2,137 2,137 756 756
Preferred stock
dividends............. -- -- -- 12,409 21,117 21,117 7,479 7,479
------- ------- -------- -------- -------- -------- -------- --------
Total Combined Fixed
Charges and Preferred
Stock Dividends........ 3,321 6,088 29,337 67,982 71,878 98,878 27,064 36,064
------- ------- -------- -------- -------- -------- -------- --------
Ratio of Earnings to
Combined Fixed Charges
and Preferred Stock
Dividends.............. -- -- -- -- -- -- -- --
Deficiency in Earnings
Required to Cover
Combined Fixed Charges
and Preferred Stock
Dividends.............. $ 7,721 $13,817 $ 30,288 $ 85,762 $105,525 $132,525 $ 46,895 $ 55,895
======= ======= ======== ======== ======== ======== ======== ========
</TABLE>
<PAGE>
EXHIBIT 23.02
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Hyperion Telecommunications, Inc. on Form S-4 of our report dated May 17, 1999
appearing in the Transition Report on Form 10-K of Hyperion Telecommunications,
Inc. for the nine months ended December 31, 1998 and to the reference to us
under the heading "Experts" in the prospectus, which is part of this
Registration Statement.
/s/ Deloitte & Touche LLP
Pittsburgh, Pennsylvania
May 27, 1999
<PAGE>
================================================================================
Exhibit 25.01
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________________
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an Application to Determine Eligibility of a trustee Pursuant to
Section 305(b) ____
BANK OF MONTREAL TRUST COMPANY
(Exact name of trustee as specified in its charter)
New York 13-4941093
(Jurisdiction of incorporation or organization (I.R.S. employer
if not a U.S. national bank) identification no.)
Wall Street Plaza
88 Pine Street
New York, New York 10005
(Address of principal executive offices) (Zip code)
Mark F. McLaughlin
Bank of Montreal Trust Company
Wall Street Plaza
88 Pine Street, New York, New York 10005
(212) 701-7602
(Name, address and telephone number of agent for service)
____________________________________
Hyperion Telecommunications, Inc.
(Exact name of obligor as specified in its charter)
Delaware 25-1669404
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification
number)
Main at Water Street
Coudersport, PA 16915
(Address of principal executive offices)
______________________________________
12% Senior Subordinated Debt Securities due 2007
================================================================================
<PAGE>
- 2 -
Item 1. General Information.
--------------------
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
Federal Reserve Bank of New York
33 Liberty Street, New York N.Y. 10045
State of New York Banking Department
2 Rector Street, New York, N.Y. 10006
(b) Whether it is authorized to exercise corporate trust powers.
The Trustee is authorized to exercise corporate trust powers.
Item 2. Affiliations with the Obligor.
------------------------------
If the obligor is an affiliate of the trustee, describe each such
affiliation.
The obligor is not an affiliate of the trustee.
Item 16. List of Exhibits.
-----------------
List below all exhibits filed as part of this statement of eligibility.
Exhibit 1 - Copy of Organization Certificate of Bank of Montreal Trust
Company to transact business and exercise corporate trust powers;
incorporated herein by reference as Exhibit "A" filed with Form T-1
Statement, Registration No. 33-46118.
Exhibit 4 - Copy of the existing By-Laws of Bank of Montreal Trust Company;
incorporated herein by reference as Exhibit "B" filed with Form T-1
Statement, Registration No. 33-80928.
Exhibit 6 -The consent of the Trustee required by Section 321(b) of the
Act; incorporated herein by reference as Exhibit "C" with Form T-1
Statement, Registration No. 33-46118.
Exhibit 7 - A copy of the latest report of condition of Bank of Montreal
Trust Company published pursuant to law or the requirements of its
supervising or examining authority, attached hereto as Exhibit "D".
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, Bank of Montreal Trust Company, a corporation organized and
existing under the laws of the State of New York, has duly caused this
statement of eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of New York, and State of New
York, on the 2nd day of March, 1999.
BANK OF MONTREAL TRUST COMPANY
By: /s/ Mark F. McLaughlin
-------------------------
Mark F. McLaughlin
Vice President
<PAGE>
EXHIBIT "D"
STATEMENT OF CONDITION
BANK OF MONTREAL TRUST COMPANY
NEW YORK
-----------------------------------
ASSETS
Due From Banks $ 677,400
-----------
Investment Securities:
State & Municipal 16,513,582
Other 100
-----------
Total Securities 16,513,682
Loans and Advances
Federal Funds Sold 20,900,000
Overdrafts 12,169
-----------
Total Loans and Advances 20,912,169
Investment in Harris Trust, NY 8,725,608
Premises and Equipment 475,614
Other Assets 2,636,845
-----------
11,838,067
-----------
TOTAL ASSETS $49,941,318
===========
LIABILITIES $ 8,191,549
16,944,443
Trust Deposits -----------
Other Liabilities 25,135,992
TOTAL LIABILITIES
CAPITAL ACCOUNTS
1,000,000
Capital Stock, Authorized, Issued and 4,222,188
Fully Paid - 10,000 Shares of $100 Each 19,605,350
Surplus (22,212)
Retained Earnings -----------
Equity - Municipal Gain/Loss 24,805,326
-----------
TOTAL CAPITAL ACCOUNTS
$49,941,318
TOTAL LIABILITIES ===========
AND CAPITAL ACCOUNTS
I, Mark F. McLaughlin, Vice President, of the above-named bank do
hereby declare that this Report of Condition is true and correct to the best of
my knowledge and belief.
Mark F. McLaughlin
June 30, 1998
We, the undersigned directors, attest to the correctness of this
statement of resources and liabilities. We declared that it has been examined
by us, and to the best of our knowledge and belief has been prepared in
conformance with the instructions and is true and correct.
Sanjiv Tandon
Kevin O. Healy
Steven R. Rothbloom
<PAGE>
EXHIBIT 99.01
LETTER OF TRANSMITTAL
for
12% Senior Subordinated Notes due 2007
of
Hyperion Telecommunications, Inc.
Pursuant to the Exchange Offer in Respect of
All of their Outstanding 12% Senior Subordinated Notes due 2007
for
New 12% Senior Subordinated Notes due 2007
Pursuant to the Prospectus dated , 1999
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 1999, OR SUCH LATER DATE AND TIME TO WHICH THE EXCHANGE OFFER MAY BE
EXTENDED (THE "EXPIRATION DATE"). TENDERS OF OLD NOTES MAY BE WITHDRAWN
PRIOR TO THE EXPIRATION DATE.
To: Bank of Montreal Trust Company (the "Exchange Agent")
By Registered or Certified Mail, By Facsimile:
Hand or Overnight Courier: Attention: Reorganization
Bank of Montreal Trust Company Department:
Wall Street Plaza (212) 701-7636
88 Pine Street, 19th Floor
New York, NY 10005 Confirm by Telephone:
Attention: Reorganization Department (212) 701-7624
Delivery of this Letter of Transmittal to an address, or transmission via
telegram, telex or facsimile, other than as set forth above will not
constitute a valid delivery. The instructions contained herein should be read
carefully before this Letter of Transmittal is completed.
HOLDERS WHO WISH TO BE ELIGIBLE TO RECEIVE NEW NOTES FOR THEIR OLD NOTES
PURSUANT TO THE EXCHANGE OFFER MUST VALIDLY TENDER (AND NOT WITHDRAW) THEIR
OLD NOTES TO THE EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE.
By execution hereof, the undersigned acknowledges receipt of the Prospectus
(the "Prospectus"), dated , 1999, of Hyperion Telecommunications, Inc.
(the "Issuer"), which, together with this Letter of Transmittal and the
Instructions hereto (the "Letter of Transmittal"), constitute the Issuer's
offer (the "Exchange Offer") to exchange $1,000 principal amount of its new
12% Senior Subordinated Notes due 2007 (the "New Notes") that have been
registered under the Securities Act of 1933, as amended (the "Securities
Act"), pursuant to a Registration Statement of which the Prospectus
constitutes a part, for each $1,000 principal amount of its outstanding 12%
Senior Subordinated Notes due 2007 originally issued on March 2, 1999 (the
"Old Notes"), upon the terms and subject to the conditions set forth in the
Prospectus.
The Company has not entered into any arrangement or understanding with any
person to distribute the New Notes to be received in the Exchange Offer, is
acquiring the New Notes in its ordinary course of business and has no
arrangement or understanding with any person to participate in the
distribution of the New Notes to be received in the Exchange Offer.
<PAGE>
This Letter of Transmittal is to be used by Holders if: (i) certificates
representing Old Notes are to be physically delivered to the Exchange Agent
herewith by Holders; (ii) tender of Old Notes is to be made by book-entry
transfer to the Exchange Agent's account at The Depository Trust Company
("DTC") pursuant to the procedures set forth in the Prospectus under "The
Exchange Offer--Procedures for Tendering" by any financial institution that is
a participant in DTC and whose name appears on a security position listing as
the owner of Old Notes (such participants, acting on behalf of Holders (as
defined below), are referred to herein, together with such Holders, as "Acting
Holders"); or (iii) tender of Old Notes is to be made according to the
guaranteed delivery procedures set forth in the Prospectus under "The Exchange
Offer--Guaranteed Delivery Procedures." Delivery of documents to DTC does not
constitute delivery to the Exchange Agent.
The term "Holder" with respect to the Exchange Offer means any person: (i)
in whose name Old Notes are registered on the books of the Issuer or any other
person who has obtained a properly completed bond power from the registered
Holder or (ii) whose Old Notes are held of record by DTC and who desires to
deliver such Old Notes by book entry transfer at DTC.
The undersigned has completed, executed and delivered this Letter of
Transmittal to indicate the action the undersigned desires to take with
respect to the Exchange Offer. Holders who wish to tender their Old Notes must
complete this Letter of Transmittal in its entirety.
All capitalized terms used herein and not defined herein shall have the
meaning ascribed to them in the Prospectus.
The instructions included with this Letter of Transmittal must be followed.
Questions and requests for assistance or for additional copies of the
Prospectus, this Letter of Transmittal and the Notice of Guaranteed Delivery
may be directed to the Exchange Agent. See Instruction 9 herein.
HOLDERS WHO WISH TO ACCEPT THE EXCHANGE OFFER AND TENDER THEIR OLD NOTES
MUST COMPLETE THIS LETTER OF TRANSMITTAL IN ITS ENTIRETY.
List below the Old Notes to which this Letter of Transmittal relates. If the
space provided below is inadequate, list the certificate numbers and principal
amounts on a separately executed schedule and affix the schedule to this
Letter of Transmittal. Tenders of Old Notes will be accepted only in principal
amounts equal to $1,000 or integral multiples thereof.
DESCRIPTION OF OLD NOTES
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Name(s) and
Address(es)
of
Holder(s) Certificate Aggregate
(Please Number(s)* Principal Amount
fill in, if (Attach signed list Tendered
blank) if necessary) (if less than all)**
- -----------------------------------------------------
<S> <C> <C>
-------------- --------------
-------------- --------------
-------------- --------------
-------------- --------------
-------------- --------------
-------------- --------------
-------------- --------------
-------------- --------------
- -----------------------------------------------------
TOTAL PRINCIPAL AMOUNT OF OLD NOTES TENDERED
- -----------------------------------------------------
</TABLE>
* Need not be completed by Holders tendering by book-entry transfer.
** Need not be completed by Holders who wish to tender with respect to all
Old Notes listed. See Instruction 2.
2
<PAGE>
[_]CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY DTC TO THE EXCHANGE
AGENT'S ACCOUNT AT DTC AND COMPLETE THE FOLLOWING:
Name of Tendering Institution: _____________________________________________
DTC Book-Entry Account No.: ________________________________________________
Transaction Code No.: ______________________________________________________
If Holders desire to tender Old Notes pursuant to the Exchange Offer and (i)
certificates representing such Old Notes are not lost but are not immediately
available, (ii) time will not permit this Letter of Transmittal, certificates
representing such Old Notes or other required documents to reach the Exchange
Agent prior to the Expiration Date or (iii) the procedures for book-entry
transfer cannot be completed prior to the Expiration Date, such Holders may
effect a tender of such Old Notes in accordance with the guaranteed delivery
procedures set forth in the Prospectus under "The Exchange Offer--Guaranteed
Delivery Procedures."
- -------------------------------------------------------------------------------
[_]CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name(s) of Holder(s) of Old Notes: _________________________________________
Window Ticket No. (if any): ________________________________________________
Date of Execution of Notice of Guaranteed Delivery: ________________________
Name of Eligible Institution that Guaranteed Delivery: _____________________
DTC Book-Entry Account No.: ________________________________________________
If Delivered by Book-Entry Transfer, Name of Tendering Institution: ________
Transaction Code No.: ______________________________________________________
- -------------------------------------------------------------------------------
[_]CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name: ______________________________________________________________________
Address: ___________________________________________________________________
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
3
<PAGE>
Ladies and Gentlemen:
Subject to the terms of the Exchange Offer, the undersigned hereby tenders
to the Issuer the principal amount of Old Notes indicated above. Subject to
and effective upon the acceptance for exchange of the principal amount of Old
Notes tendered in accordance with this Letter of Transmittal, the undersigned
sells, assigns and transfers to, or upon the order of, the Issuer all right,
title and interest in and to the Old Notes tendered hereby. The undersigned
hereby irrevocably constitutes and appoints the Exchange Agent as its agent
and attorney-in-fact (with full knowledge that the Exchange Agent also acts as
the agent of the Issuer and as Trustee under the Indenture for the Old Notes
and the New Notes) with respect to the tendered Old Notes with full power of
substitution to (i) deliver certificates for such Old Notes to the Issuer, or
transfer ownership of such Old Notes on the account books maintained by DTC,
together, in either such case, with all accompanying evidences of transfer and
authenticity to, or upon the order of, the Issuer and (ii) present such Old
Notes for transfer on the books of the Issuer and receive all benefits and
otherwise exercise all rights of beneficial ownership of such Old Notes, all
in accordance with the terms of the Exchange Offer. The power of attorney
granted in this paragraph shall be deemed irrevocable and coupled with an
interest.
The undersigned hereby represents and warrants that he or she has full power
and authority to tender, sell, assign and transfer the Old Notes tendered
hereby and that the Issuer will acquire good and unencumbered title thereto,
free and clear of all liens, restrictions, charges and encumbrances and not
subject to any adverse claim when the same are acquired by the Issuer. The
undersigned also acknowledges that this Exchange Offer is being made in
reliance upon an interpretation by the staff of the Securities and Exchange
Commission that the New Notes issued in exchange for the Old Notes pursuant to
the Exchange Offer may be offered for resale, resold and otherwise transferred
by the holders thereof (other than any such holder that is an "affiliate" of
the Issuer within the meaning of Rule 405 under the Securities Act) without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that such New Notes are acquired in the ordinary
course of such holders' business and such holders have no arrangement with any
person to participate in the distribution of such New Notes. The undersigned
acknowledges that if he or she is participating in the Exchange Offer for the
purpose of distributing the New Notes, the undersigned must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with a secondary resale transaction. If the undersigned is not a
broker-dealer, the undersigned represents that it is not engaged in, and does
not intend to engage in, a distribution of the New Notes. If the undersigned
is a broker-dealer that will receive New Notes for its own account in exchange
for Old Notes and the undersigned represents that such Old Notes were acquired
as a result of market-making activities or other trading activities and
acknowledges that it will deliver a prospectus in connection with any resale
of such New Notes, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
The undersigned represents that (i) the New Notes acquired pursuant to the
Exchange Offer are being obtained in the ordinary course of such Holder's
business, (ii) such Holder has no arrangements with any person to participate
in the distribution of such New Notes and (iii) such Holder is not an
"affiliate," as defined under Rule 405 of the Securities Act, of the Issuer
or, if such Holder is an affiliate, that such Holder will comply with the
registration and prospectus delivery requirements of the Securities Act to the
extent applicable.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Exchange Agent or the Issuer to be necessary or
desirable to complete the assignment and transfer of the Old Notes tendered
hereby.
For purposes of the Exchange Offer, the Issuer shall be deemed to have
accepted validly tendered Old Notes when, as and if the Issuer has given oral
or written notice thereof to the Exchange Agent. If any tendered Old Notes are
not accepted for exchange pursuant to the Exchange Offer for any reason,
certificates for any such unaccepted Old Notes will be terminated (except as
noted below with respect to tenders through DTC), without expense, to the
undersigned at the address shown below or at a different address shown below
or at a different address as may be indicated under "Special Issuance
Instructions" as soon as practicable following the Expiration Date.
4
<PAGE>
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall survive the death, incapacity or dissolution of the
undersigned and every obligation under this Letter of Transmittal shall be
binding upon the undersigned's heirs, personal representatives, successors and
assigns.
The undersigned understands that tenders of Old Notes pursuant to the
procedures described under the caption "The Exchange Offer--Procedures for
Tendering" in the Prospectus and in the instructions hereto will constitute a
binding agreement between the undersigned and the Issuer upon the terms and
subject to the conditions of the Exchange Offer.
Unless otherwise indicated under "Special Issuance Instructions," please
issue the certificates representing the New Notes issued in exchange for the
Old Notes accepted for exchange and return any Old Notes not tendered or not
exchanged, in the name(s) of the undersigned (or in such event in the case of
Old Notes tendered by DTC, by credit to the account at DTC). Similarly, unless
otherwise indicated under "Special Delivery Instructions," please send the
certificates representing the New Notes issued in exchange for the Old Notes
accepted for exchange and any certificates for Old Notes not tendered or not
exchanged (and accompanying documents, as appropriate) to the undersigned at
the address shown below the undersigned's signatures, unless, in either event,
tender is being made through DTC. In the event that both "Special Issuance
Instructions" and "Special Delivery Instructions" are completed, please issue
the certificates representing the New Notes issued in exchange for the Old
Notes accepted for exchange and return any Old Notes not tendered or not
exchanged in the name(s) of, and send said certificates to, the person(s) so
indicated. The undersigned recognizes that the Issuer has no obligation
pursuant to the "Special Issuance Instructions" and "Special Delivery
Instructions" to transfer any Old Notes from the name of the registered
holder(s) thereof if the Issuer does not accept for exchange any of the Old
Notes so tendered.
5
<PAGE>
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS OF OLD NOTES REGARDLESS
OF WHETHER OLD NOTES ARE BEING PHYSICALLY DELIVERED HEREWITH)
This Letter of Transmittal must be signed by the Holder(s) of Old Notes
exactly as their name(s) appear(s) on certificate(s) for Old Notes or, if
tendered by a participant in DTC, exactly as such participant's name appears
on a security position listing as the owner of Old Notes, or by person(s)
authorized to become registered Holder(s) by endorsements and documents
transmitted with this Letter of Transmittal. If signature is by a trustee,
executor, administrator, guardian, attorney-in-fact, officer or other person
acting in a fiduciary or representative capacity, such person must set forth
his or her full title below under "Capacity" and submit evidence satisfactory
to the Issuer of such person's authority to so act. See Instruction 3 herein.
If the signature appearing below is not of the registered Holder(s) of the Old
Notes, then the registered Holder(s) must sign a valid proxy.
X __________________________________ Date: ______________________________
X __________________________________ Date: ______________________________
Signature(s) of Holder(s) or
Authorized Signatory
Name(s): ___________________________ Address: ___________________________
____________________________________ ____________________________________
(Please Print) (Including Zip Code)
Capacity: __________________________ Area Code and Telephone No.: _______
Social Security No.: _______________
SIGNATURE GUARANTEE (See Instruction 3 herein)
Certain Signatures Must be Guaranteed by an Eligible Institution
_____________________________________________________________________________
(Name of Eligible Institution Guaranteeing Signatures)
_____________________________________________________________________________
(Address (including zip code) and Telephone Number
(including area code) of Firm)
_____________________________________________________________________________
(Authorized Signatures)
_____________________________________________________________________________
(Printed Name)
_____________________________________________________________________________
(Title)
Date: ______________________________
6
<PAGE>
SPECIAL ISSUANCE INSTRUCTIONS
(See Instruction 3 and 4 herein)
To be completed ONLY if
certificates for Old Notes in a
principal amount not tendered are
to be issued in the name of, or the
New Notes issued pursuant to the
Exchange Offer are to be issued to
the order of, someone other than
the person or persons whose
signature(s) appear(s) within this
Letter of Transmittal or issued to
an address different from that
shown in the box entitled
"Description of Old Notes" within
this Letter of Transmittal, or if
Old Notes tendered by book-entry
transfer that are not accepted for
purchase are to be credited to an
account maintained at DTC.
Name: ______________________________
(Please Print)
Address: ___________________________
(Please Print)
Zip Code: __________________________
____________________________________
Taxpayer Identification or
Social Security Number
SPECIAL DELIVERY INSTRUCTIONS
(See instructions 3 and 4 herein)
To be completed ONLY if
certificates for Old Notes in a
principal amount not tendered or
not accepted for purchase or the
New Notes issued pursuant to the
Exchange Offer are to be sent to
someone other than the person or
persons whose signature(s)
appear(s) within this Letter of
Transmittal or to an address
different from that shown in the
box entitled "Description of Old
Notes" within this Letter of
Transmittal.
Name: ______________________________
(Please Print)
Address: ___________________________
(Please Print)
Zip Code: __________________________
7
<PAGE>
TO BE COMPLETED BY ALL TENDERING HOLDERS
(SEE INSTRUCTION 5)
PAYOR'S NAME: HYPERION TELECOMMUNICATIONS, INC.
SUBSTITUTE Part 1--PLEASE PROVIDE YOUR TIN:------------
Form W-9 TIN IN THE BOX AT RIGHT AND Social security
Department of CERTIFY BY SIGNING AND DATING number
the Treasury BELOW. OR
Internal
Revenue Service
------------------
Employer
identification
number
-----------------------------------------------------
Payer's Request for Part 2--Tin Applied For [_]
Taxpayer Identification Payor's Request for Taxpayer Identification Number
Number (TIN) ("TIN") and Certification
(1) the number shown on this form is my correct
Taxpayer Identification Number (or I am
waiting for a number to be issued to me).
(2) I am not subject to backup withholding either
because: (a) I am exempt from backup
withholding, or (b) I have not been notified
by the Internal Revenue Service (the "IRS")
that I am subject to backup withholding as a
result of a failure to report all interest or
dividends, or (c) the IRS has notified me that
I am no longer subject to backup withholding,
and
(3) any other information provided on this form is
true and correct.
-----------------------------------------------------
You must cross out item (2) of the above
certification if you have been notified by the IRS
that you are subject to backup withholding because
of underreporting of interest or dividends on your
tax return and you have not been notified by the
IRS that you are no longer subject to backup
withholding.
SIGNATURE _________________ DATE _________________
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 2 OF
SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer Identification
Number has not been issued to me, and either (a) I have mailed or
delivered an application to receive a Taxpayer Identification Number to
the appropriate Internal Revenue Service Center or Social Security
Administrative Office or (b) I intend to mail or deliver an application in
the near future. I understand that if I do not provide a Taxpayer
Identification Number by the time of the exchange, 31 percent of all
reportable payments made to me thereafter will be withheld until I provide
a number.
------------------------------------- -----------------------------------
Signature Date
8
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Exchange Offer
1. Delivery of this Letter of Transmittal and Old Notes. The certificates
for the tendered Old Notes (or a confirmation of a book-entry into the
Exchange Agent's account at DTC of all Old Notes delivered electronically), as
well as a properly completed and duly executed copy of this Letter of
Transmittal or facsimile hereof and any other documents required by this
Letter of Transmittal must be received by the Exchange Agent at its address
set forth herein prior to 5:00 p.m., New York City time, on the Expiration
Date. The method of delivery of the tendered Old Notes, this Letter of
Transmittal and all other required documents to the Exchange Agent is at the
election and risk of the Holder and, except as otherwise provided below, the
delivery will be deemed made only when actually received by the Exchange
Agent. Instead of delivery by mail, it is recommended that the Holder use an
overnight or hand delivery service. In all cases, sufficient time should be
allowed to assume timely delivery. No Letter of Transmittal or Old Notes
should be sent to the Issuer.
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available or (ii) who cannot deliver their Old Notes, this Letter
of Transmittal or any other documents required hereby to the Exchange Agent
prior to the Expiration Date must tender their Old Notes and follow the
guaranteed delivery procedures set forth in the Prospectus. Pursuant to such
procedures: (i) such tender must be made by or through an Eligible
Institution; (ii) prior to the Expiration Date, the Exchange Agent must have
received from the Eligible Institution a properly completed and duly executed
Notice of Guaranteed Delivery (by facsimile transmission, mail or hand
delivery) setting forth the name and address of the Holder of the Old Notes,
the certificate number or numbers of such Old Notes and the principal amount
of Old Notes tendered, stating that the tender is being made thereby and
guaranteeing that, within three business days after the Expiration Date, this
Letter of Transmittal (or facsimile thereof) together with the certificate(s)
representing the Old Notes (or a confirmation of electronic delivery of book-
entry delivery into the Exchange Agent's account at DTC) and any of the
required documents will be deposited by the Eligible Institution with the
Exchange Agent; and (iii) such properly completed and executed Letter of
Transmittal (or facsimile hereof), as well as all other documents required by
this Letter of Transmittal and the certificate(s) representing all tendered
Old Notes in proper form for transfer (or a confirmation of electronic mail
delivery of book-entry delivery into the Exchange Agent's account at DTC),
must be received by the Exchange Agent within three business days after the
Expiration Date, all as provided in the Prospectus under the caption
"Guaranteed Delivery Procedures." Any Holder of Old Notes who wishes to tender
his Old Notes pursuant to the guaranteed delivery procedures described above
must ensure that the Exchange Agent receives the Notice of Guaranteed Delivery
prior to 5:00 p.m., New York City time, on the Expiration Date.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Old Notes will be determined
by the Issuer in its sole discretion, which determination will be final and
binding. The Issuer reserves the absolute right to reject any and all Old
Notes not properly tendered or any Old Notes the Issuer's acceptance of which
would, in the opinion of counsel for the Issuer, be unlawful. The Issuer also
reserves the right to waive any irregularities or conditions of tender as to
particular Old Notes. The Issuer's interpretation of the terms and conditions
of the Exchange Offer (including the instructions in this Letter of
Transmittal) will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of Old Notes must be
cured within such time as the Issuer shall determine. Neither the Issuer, the
Exchange Agent nor any other person shall be under any duty to give
notification of defects or irregularities with respect to tenders of Old
Notes, nor shall any of them incur any liability for failure to give such
notification. Tenders of Old Notes will not be deemed to have been made until
such defects or irregularities have been cured or waived. Any Old Notes
received by the Exchange Agent that are not properly tendered and as to which
the defects or irregularities have not been cured or waived will be returned
without cost by the Exchange Agent to the tendering Holders of Old Notes,
unless otherwise provided in this Letter of Transmittal, as soon as
practicable following the Expiration Date.
2. Partial Tenders. Tenders of Old Notes will be accepted in all
denominations of $1,000 and integral multiples in excess thereof. If less than
the entire principal amount of any Old Notes is tendered, the tendering
9
<PAGE>
Holders should fill in the principal amount tendered in the third column of
the chart entitled "Description of Old Notes." The entire principal amount of
Old Notes delivered to the Exchange Agent will be deemed to have been tendered
unless otherwise indicated. If the entire principal amount of all Old Notes is
not tendered, Old Notes for the principal amount of Old Notes delivered to the
Exchange Agent will be deemed to have been tendered unless otherwise
indicated. If the entire principal amount of all Old Notes is not tendered,
Old Notes for the principal amount of Old Notes not tendered and a certificate
or certificates representing New Notes issued in exchange of any Old Notes
accepted will be sent to the Holder at his or her registered address, unless a
different address is provided in the appropriate box on this Letter of
Transmittal or unless tender is made through DTC, promptly after the Old Notes
are accepted for exchange.
3. Signatures on the Letter of Transmittal; Bond Powers and Endorsements;
Guarantee of Signatures. If this Letter of Transmittal (or facsimile hereof)
is signed by the registered Holder(s) of the Old Notes tendered hereby, the
signature must correspond with the name(s) as written on the face of the Old
Notes without alteration, enlargement or any change whatsoever.
If this Letter of Transmittal (or facsimile hereof) is signed by the
registered Holder(s) of Old Notes tendered and the certificate(s) for New
Notes issued in exchange thereof is to be issued (or any untendered principal
amount of Old Notes is to be reissued) to the registered Holder, such Holder
need not and should not endorse any tendered Old Note, nor provide a separate
bond power. In any other case, such Holder must either properly endorse the
Old Notes tendered or transmit a properly completed separate bond power with
this Letter of Transmittal, with the signatures on the endorsement or bond
power guaranteed by an Eligible Institution.
If this Letter of Transmittal (or facsimile hereof) or any Old Notes or bond
powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, or officers of corporations or others acting in a fiduciary
or representative capacity, such persons should so indicate when signing, and
unless waived by the Issuer, evidence satisfactory to the Issuer of their
authority so to act must be submitted with this Letter of Transmittal.
Endorsements on Old Notes or signatures on bond powers required by this
Instruction 3 must be guaranteed by an Eligible Institution.
Signatures on this Letter of Transmittal (or facsimile hereof) must be
guaranteed by an Eligible Institution unless the Old Notes tendered pursuant
thereto are tendered (i) by a registered Holder (including any participant in
DTC whose name appears on a security position listing as the owner of Old
Notes) who has not completed the box set forth herein entitled "Special
Issuance Instructions" or the box entitled "Special Delivery Instructions" or
(ii) for the account of an Eligible Institution.
4. Special Issuance and Delivery Instructions. Tendering Holders should
indicate, in the applicable spaces, the name and address to which New Notes or
substitute Old Notes for principal amounts not tendered or not accepted for
exchange are to be issued or sent, if different from the name and address of
the person signing this Letter of Transmittal (or in the case of tender of the
Old Notes through DTC, if different from DTC). In the case of issuance in a
different name, the taxpayer identification or social security number of the
person named must also be indicated.
5. Tax Identification Number. Under the federal income tax laws, payments
that may be made by the Company on account of New Notes issued pursuant to the
Exchange Offer may be subject to backup withholding at the rate of 31%. In
order to avoid such backup withholding, each tendering holder should complete
and sign the Substitute Form W-9 included in this Letter of Transmittal and
either (a) provide the correct taxpayer identification number ("TIN") and
certify, under penalties of perjury, that the TIN provided is correct and that
(i) the holder has not been notified by the Internal Revenue Service (the
"IRS") that the holder is subject to backup withholding as a result of failure
to report all interest or dividends or (ii) the IRS has notified the holder
that the holder is no longer subject to backup withholding; or (b) provide an
adequate basis for exemption. If the tendering holder has not been issued a
TIN and has applied for one, or intends to apply for one in the near future,
such holder should write "Applied For" in the space provided for the TIN in
Part I of the Substitute Form W-9,
10
<PAGE>
sign and date the Substitute Form W-9 and sign the Certificate of Payee
Awaiting Taxpayer Identification Number. If "Applied For" is written in Part
I, the Company (or the Transfer Agent with respect to the New Notes or a
broker or custodian) may still withhold 31% of the amount of any payments made
on account of the New Notes until the holder furnishes the Company or the
Transfer Agent with respect to the New Notes, broker or custodian with its
TIN. In general, if a holder is an individual, the taxpayer identification
number is the Social Security number of such individual. If the Exchange Agent
or the Company is not provided with the correct TIN, the holder may be subject
to a $50 penalty imposed by the IRS. Certain holders (including, among others,
all corporations and certain foreign individuals) are not subject to these
backup withholding and reporting requirements. In order for a foreign
individual to qualify as an exempt recipient, such holder must submit a
statement (generally, IRS Form W-8), signed under penalties of perjury,
attesting to that individual's exempt status. Such statements can be obtained
from the Exchange Agent.
Failure to complete the Substitute Form W-9 will not, by itself, cause Old
Notes to be deemed invalidly tendered, but may require the Company or the
Transfer Agent with respect to the New Notes, broker or custodian to withhold
31% of the amount of any payments made on account of the New Notes. Backup
withholding is not an additional federal income tax. Rather, the federal
income tax liability of a person subject to backup withholding will be reduced
by the amount of tax withheld. If withholding results in an overpayment of
taxes, a refund may be obtained from the IRS.
6. Transfer Taxes. The Issuer will pay all transfer taxes, if any,
applicable to the exchange of Old Notes pursuant to the Exchange Offer. If,
however, certificates representing New Notes or Old Notes for principal
amounts not tendered or accepted for exchange are to be delivered to, or are
to be registered or issued in the name of, any person other than the
registered Holder of the Old Notes tendered hereby, or if tendered Old Notes
are registered in the name of any person other than the person signing this
Letter of Transmittal, or if a transfer tax is imposed for any reason other
than the exchange of Old Notes pursuant to the Exchange Offer, then the amount
of any such transfer taxes (whether imposed on the registered Holder or any
other person) will be payable by the tendering Holder. If satisfactory
evidence of payment of such taxes or exemption therefrom is not submitted with
this Letter of Transmittal, the amount of such transfer taxes will be billed
directly to such tendering Holder.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Old Notes listed in this Letter of
Transmittal.
7. Waiver of Conditions. The Issuer reserves the absolute right to amend,
waive or modify specified conditions in the Exchange Offer in the case of any
Old Notes tendered.
8. Mutilated, Lost, Stolen or Destroyed Old Notes. Any tendering Holder
whose Old Notes have been mutilated, lost, stolen or destroyed should contact
the Exchange Agent at the address indicated herein for further instruction.
9. Requests for Assistance or Additional Copies. Questions and requests for
assistance and requests for additional copies of the Prospectus or this Letter
of Transmittal may be directed to the Exchange Agent at the address specified
in the Prospectus. Holders may also contact their broker, dealer, commercial
bank, trust company or other nominee for assistance concerning the Exchange
Offer.
11
<PAGE>
Notice of Guaranteed Delivery
for Tender of
12% Senior Subordinated Notes due 2007
(the "Old Notes")
of
HYPERION TELECOMMUNICATIONS, INC.
This form, or one substantially equivalent hereto, must be used to tender
Old Notes pursuant to the Exchange Offer described in the Prospectus dated
, 1999 (the "Prospectus") of Hyperion Telecommunications, Inc. (the
"Company"), if a holder of Old Notes cannot deliver a Letter of Transmittal to
the Exchange Agent listed below (the "Exchange Agent") or cannot either
deliver the Old Notes to be tendered or complete the procedure for book-entry
transfer prior to 5:00 P.M., New York City time, on , 1999 or such
later date and time to which the Exchange Offer may be extended (the
"Expiration Date"). This form, or one substantially equivalent hereto, must be
delivered by hand or sent by facsimile transmission or mail to the Exchange
Agent, and must be received by the Exchange Agent on or prior to the
Expiration Date. See "The Exchange Offer--Procedures for Tendering" in the
Prospectus. Capitalized terms used herein and not defined herein shall have
the meanings ascribed thereto in the Prospectus.
To: Bank of Montreal Trust Company, Exchange Agent
By Mail, by Hand or Overnight Delivery:
Bank of Montreal Trust Company
Wall Street Plaza
88 Pine Street, 19th Floor
New York, NY 10005
Attn: Reorganization Department
By Facsimile:
Attention: Reorganization Department
(212) 701-7636
Confirm by Telephone:
(212) 701-7624
Delivery of this instrument to an address other than as set forth above or
transmission of instructions via facsimile other than as set forth above does
not constitute a valid delivery.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby represents that he or she is the holder of the Old
Notes indicated below and that the Letter of Transmittal cannot be delivered
to the Exchange Agent and/or either the certificates representing such Old
Notes cannot be delivered to the Exchange Agent or the procedure for book-
entry transfer cannot be completed prior to the Expiration Date. The
undersigned hereby tenders the Old Notes indicated below pursuant to the
guaranteed delivery procedures set forth in the Prospectus and the Letter of
Transmittal, receipt of which is hereby acknowledged.
Name(s) of Tender Holder(s): __________________________________________________
_______________________________________________________________________________
Please Print or Type
_______________________________________________________________________________
Signature
Address(es): __________________________________________________________________
____________________________________________________________________________
Telephone Number(s): __________________________________________________________
Name(s) in which Old Notes are registered: ____________________________________
_______________________________________________________________________________
Certificate No(s). (if applicable)* Principal Amount Transferred
- -------------------------------------------------------------------------------
____________________________________ ____________________________________
____________________________________ ____________________________________
____________________________________ ____________________________________
____________________________________ ____________________________________
____________________________________ ____________________________________
*Need not be completed by book-entry holders.
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GUARANTEE OF DELIVERY (Not to be used for signature guarantee)
The undersigned, a member firm of a registered national securities
exchange or of the National Association of Securities Dealers, Inc., a
commercial bank or trust company having an office or a correspondent in the
United States or an "eligible guarantor institution" within the meaning of
Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended, hereby
guarantees that the undersigned will deliver to the Exchange Agent the
certificates representing the Old Notes being tendered hereby in proper form
for transfer (or a confirmation of book-entry transfer of such Old Notes,
into the Exchange Agent's account at the book-entry transfer facility) with
delivery of a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), with any required signature guarantees and any other
required documents, all within three business days after the Expiration
Date.
Name of Firm _______________________ ____________________________________
Authorized Signature
Address ____________________________ Name ______________________________
Please Print or Type
____________________________________ Title _____________________________
Zip Code
Telephone No. _____________________ Dated _____________________________
The institution that completes this form must communicate the guarantee to
the Exchange Agent and must deliver the certificates representing any Old
Notes (or a confirmation of book-entry transfer of such Old Notes into the
Exchange Agent's account at the book-entry transfer facility) and the Letter
of Transmittal to the Exchange Agent within the time period shown herein.
Failure to do so could result in a financial loss to such institution.
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