<PAGE>
As filed with the Securities and Exchange Commission on January 6, 2000
Registration No. 333-71525
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 2
TO FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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RCN CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 22-3498533
(State or jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
105 Carnegie Center
Princeton, NJ 08540-6215
(609) 734-3700
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
John J. Jones, Esq.
RCN Corporation
105 Carnegie Center
Princeton, NJ 08540-6215
(609) 734-3700
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copy to:
Julia K. Cowles, Esq. Vincent J. Pisano
Davis Polk & Wardwell Skadden, Arps, Slate, Meagher & Flom LLP
450 Lexington Avenue 919 Third Avenue
New York, NY 10017 New York, NY 10022
(212) 450-4000 (212) 735-3000
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Approximate date of commencement of proposed sale to the public: From time
to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
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<TABLE>
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Proposed
Maximum Proposed
Title of Each Class of Offering Maximum Amount of
Securities to be Amount to be Price Aggregate Registration
Registered Registered Per Share Offering Price Fee (4)
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<S> <C> <C> <C> <C>
Common Stock, Preferred
Stock and Debt
Securities............ N/A N/A $937,842,823(1)(2) $260,720.30
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Common Stock........... 1,240,817 50 3/32 $62,157,177(3) $17,279.70
</TABLE>
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(1) Such indeterminate number or amount of Common Stock, Preferred Stock and
Debt Securities as may from time to time be issued at indeterminate prices.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) and exclusive of accrued interest and dividends, if
any.
(3) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c), based on the average high and low prices of the
Common Stock on January 5, 2000 on The Nasdaq Stock Market, which was $50
3/32.
(4) $278,000 was paid in connection with the filing of the Registration
Statement on February 1, 1999.
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The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission 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 not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS SUBJECT TO COMPLETION, DATED JANUARY 6, 2000
[LOGO OF RCN]
$1,000,000,000
consisting of:
$937,842,823
Common Stock, Preferred Stock, Debt Securities
1,240,817 Shares
Common Stock
RCN Corporation
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We may offer common stock, preferred stock or debt securities, and three of
our shareholders may offer up to 1,240,817 shares of our common stock, from
time to time. Specific terms of securities offered by us will be provided in
supplements to this prospectus. You should read this prospectus and any
supplement carefully before you invest.
------------
Our common stock trades on the Nasdaq National Market under the symbol
"RCNC".
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Investing in these securities involves certain risks. See "Risk Factors"
beginning on page 3.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities, or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
The date of this prospectus is , 2000
<PAGE>
You should rely only on the information contained in or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
different information. We are not making an offer of these securities in any
state where the offer is not permitted. You should not assume that the
information contained in or incorporated by reference in this prospectus is
accurate as of any date other than the date on the front of this prospectus.
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TABLE OF CONTENTS
<TABLE>
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Page
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<S> <C>
Summary.................................................................... 2
Risk Factors............................................................... 3
Where You Can Find More Information........................................ 9
Special Note on Forward-Looking Statements................................. 9
Use of Proceeds............................................................ 10
Dividends.................................................................. 10
Market Price and Dividend Information...................................... 10
Description of Capital Stock............................................... 12
Description of Debt Securities............................................. 17
Selling Shareholders....................................................... 24
Plan of Distribution....................................................... 25
Legal Matters.............................................................. 26
Experts.................................................................... 26
</TABLE>
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SUMMARY
This summary may not contain all the information that may be important to
you. You should read the entire prospectus, including the financial data and
related notes, before making an investment decision.
We are building high-speed, high-capacity advanced fiber optic networks in
selected markets with high levels of population density. Our strategy is to
become the leading single source provider of voice, video and data services to
residential customers in each of our markets by offering individual or bundled
service options, superior customer service and competitive prices. We are also
constructing our networks with significant excess capacity in order to
accommodate expanded services in the future.
Our initial advanced fiber optic networks have been established in selected
markets in the Boston to Washington, D.C. corridors, which includes New York
City, and also in the San Francisco Bay area. In Boston and Washington, we
operate through joint ventures with Boston Edison Company and PEPCO
Communications, L.L.C., respectively. We are typically building the first true
local network to compete with the aging infrastructure of the incumbent service
providers in our markets.
Our principal executive offices are located at 105 Carnegie Center,
Princeton, New Jersey, 08540, and our telephone number is (609) 734-3700. We
maintain a website at www.rcn.com where general information about us is
available. We are not incorporating the contents of the website into this
prospectus.
About this Prospectus
This prospectus is part of a registration statement that we filed with the
SEC utilizing a "shelf" registration process. Under this shelf process, we may
sell any combination of the securities described in this prospectus in one or
more offerings for up to an aggregate total dollar amount of $937,842,823, and
three of our shareholders may offer up to 1,240,817 shares of our common stock.
This prospectus provides you with a general description of the securities we
may offer. Each time we sell securities, we will provide a prospectus
supplement that will contain specific information about the terms of that
offering. The prospectus supplement may also add, update or change information
contained in this prospectus. Sales by the selling shareholder may not require
the provision of a prospectus supplement. You should read both this prospectus
and any prospectus supplement together with additional information described
under the heading WHERE YOU CAN FIND MORE INFORMATION.
Risk Factors
You should carefully consider all of the information in this prospectus and,
in particular, you should evaluate the specific risk factors set forth under
the caption "Risk Factors", beginning on page 3.
2
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RISK FACTORS
You should carefully consider each of the following risks and all of the
other information set forth in this prospectus before deciding to invest in our
securities. Some of the following risks relate principally to our business in
general and the industry in which we operate. Other risks relate principally to
the securities markets and ownership of our securities. The risks and
uncertainties described below are not the only ones facing our company.
Additional risks and uncertainties not presently known to us or that we
currently believe to be immaterial may also adversely affect our business.
If any of the following risks and uncertainties develop into actual events,
our business, financial condition or results of operations could be materially
adversely affected. In such case, the trading price of our securities could
decline, and you may lose all or part of your investment.
This prospectus contains forward-looking statements that involve risks and
uncertainties. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including the risks faced by us described below and elsewhere in this
prospectus.
We have a limited operating history and have incurred negative cash flow and
operating losses
We have only recently begun operating a voice, video and data services
business. Accordingly, you will need to evaluate our performance based on a
limited operating history. In connection with entering this business, we have
incurred operating and net losses and negative cash flows and expect to
continue to do so for the next five to seven years as we expand our network and
customer base. Whether we continue to have negative cash flow in the future
will be affected by a variety of factors including:
. our pace of entry into new markets;
. the time and expense required for constructing our fiber optic
network as we planned;
. our success in marketing services;
. the intensity of competition; and
. the availability of additional capital to pursue our business plans.
We had operating losses after depreciation and amortization and nonrecurring
charges of $158,793,000, $70,875,000 and $13,078,000 for the years ended
December 31, 1998, 1997 and 1996. We can not assure you that we will achieve or
sustain profitability or positive cash flows from operating activities in the
future.
Additional growth will require additional capital, and our total capital needs
may be substantial
We expect that we will require substantial additional capital to expand the
development of our network and operations into new areas. We will need capital
to fund the construction of our advanced fiber optic networks, upgrade our
hybrid fiber/coaxial plant and fund operating losses and pay our debts. Based
on our current growth plan, we currently estimate that our capital requirements
for the period from January 1, 1999 through 2000 will be approximately $1.8
billion, which include capital expenditures of approximately $700 million in
1999 and approximately $1 billion in 2000. These capital expenditures do not
include amounts our joint venture partners contribute to the Boston and
Washington, D.C. joint ventures. We are obligated to pay our portion of any
capital contributions required by the joint ventures' annual budget or capital
contribution schedule. If our joint venture partner(s) fail to make anticipated
capital contributions, it could have a material adverse effect on our business.
See "Business--Network Development and Financing Plan."
We may seek additional sources of funding from vendor financing, public
offerings or private placements of equity and/or debt securities, and bank
loans. We cannot assure you that additional financing will be available to us
or, if available, that it can be obtained on a timely basis and on acceptable
terms. If we fail to obtain such financing, it could result in the delay or
curtailment of our development and expansion plans and expenditures and could
have a material adverse effect on our business.
3
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Our estimates of capital requirements are forward-looking statements that
are subject to change. The actual timing and amount of capital required to
develop our network and to fund operating losses may vary materially from our
estimates if there are significant departures from the current business plan,
unforeseen delays, cost overruns, engineering design changes or other
unanticipated expenses or occurrences.
Our substantial indebtedness limits our business flexibility
We have indebtedness that is substantial in relation to our shareholders'
equity and cash flow. As of December 31, 1998, we had an aggregate of
approximately $1,267 million of indebtedness outstanding. As a result of our
substantial indebtedness, fixed charges are expected to exceed earnings for the
foreseeable future, and our operating cash flow may not be sufficient to pay
principal and interest on our various debt securities. The extent of our
leverage may also have the following consequences:
. limit our ability to obtain necessary financing in the future for
working capital, capital expenditures, debt service requirements or
other purposes;
. require that a substantial portion of our cash flows from operations
be dedicated to paying principal and interest on our indebtedness
and therefore not be available for other purposes;
. limit our flexibility in planning for, or reacting to, changes in
our business;
. place us at a competitive disadvantage as compared with our
competitors who do not have as much debt; and
. render us more vulnerable in the event of a downturn in our
business.
Our outstanding debt securities contain customary covenants limiting our
flexibility, including covenants limiting our ability to incur additional debt,
make liens, make investments, consolidate, merge or acquire other businesses
and sell assets, pay dividends and other distributions, make capital
expenditures and enter into transactions with affiliates.
Our holding company structure structurally subordinates our creditors,
including holders of our debt securities
We are a holding company with limited assets that conducts substantially all
of our operations through subsidiaries and joint ventures. The securities will
be solely our obligations and no other entity has any obligation, contingent or
otherwise, to make any payments under the securities. Accordingly, we will be
dependent on dividends and other distributions from subsidiaries and joint
ventures to pay off our obligations, including the principal and interest on
debt securities that may be issued by means of this prospectus. The ability of
our subsidiaries and joint ventures to pay dividends to us will be subject to
the terms of their debt instruments and applicable law. In addition, our joint
ventures require our consent and the consent of our joint venture partner to
distribute or advance funds to us. Claims of holders of the debt securities
will be effectively junior in priority to the debt and other liabilities and
commitments of our subsidiaries and joint ventures. Our interest in the joint
ventures will be limited to the extent of our direct or indirect equity
interest in the joint ventures. Consequently, in the event our subsidiaries or
joint ventures become insolvent, liquidate, reorganize, dissolve or otherwise
wind up their business, our creditors' claims will be junior to the prior
claims of those entities' creditors, including trade creditors, and any prior
or equal claim of any joint venture partner. Any distributions of our equity
interests in our non-wholly owned subsidiaries or in joint ventures may be
expected to be made on an equal basis to all equity holders. We expect that a
majority of our cash flow in the advanced fiber optic network business will
ultimately be derived from our joint venture investments. The indenture under
which the debt securities will be issued will permit substantial indebtedness
to be incurred by our subsidiaries and joint ventures. The indenture does not,
except under limited circumstances, require our subsidiaries to guarantee the
debt securities. In addition, the indenture will permit our subsidiaries and
joint ventures to become parties to debt instruments that limit these entities'
ability to pay dividends or make distributions to us.
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We may not be able to manage our growth or integrate our acquisitions
The expansion and development of our operations, including the construction
and development of additional networks, will depend on several factors,
including our ability to:
. access markets,
. design fiber optic network backbone routes,
. install or lease fiber optic cable and other facilities, including
switches, and
. obtain rights-of-way, building access rights and any government
authorizations, franchises and permits,
all in a timely manner, at reasonable costs and on satisfactory terms and
conditions.
In addition to the markets we are presently developing, we continually
evaluate other potential markets. These markets may be within the Boston to
Washington, D.C. corridor or in non-contiguous areas. As is the case in our
present markets, we intend to evaluate potential markets in terms of population
density and favorable demographics, and to apply a strategy of building network
facilities to meet the needs of targeted subscribers in new markets. We cannot
assure you that we will be able to expand our existing network or to identify
and develop new markets. Furthermore, our ability to manage our expansion
effectively will also require us to continue to implement and improve our
operating and administrative systems and attract and retain qualified
management and professional and technical personnel. If we are not able to
manage our planned expansion effectively, it could have a material adverse
effect on our business.
We recently announced our intention to begin developing advanced fiber optic
networks in selected high density markets outside of the Boston to Washington,
D.C. corridor, initially in the San Francisco Bay Area. Our proposed expansion
into non-contiguous markets could place additional strain on management
resources. Furthermore, although we believe that our experience in the
Northeast will provide us with strategic advantages in developing new markets,
we cannot assure you that our experience in our current markets will be
replicated in the western United States.
We have experienced significant growth through acquisitions and will
continue to consider acquisition opportunities that arise from time to time.
Acquisitions may place a significant strain on our resources, and we may incur
additional expenses during the integration of the acquired company with our
business. For instance, the process of integrating the Internet service
provider businesses we acquired in 1998 may take a significant period of time
and require significant expenditure, including costs to upgrade the systems and
internal controls of these businesses. As a result, we cannot assure you that
we will be able to integrate these businesses successfully or in a timely
manner.
Our business is dependent upon acceptance of fiber optic technology as the
platform of choice
The telecommunications industry has been and will continue to be subject to
rapid and significant changes in technology. The effect of technological
changes on our business cannot be predicted, and we cannot assure you that the
fiber optic technology that we use will not be supplanted by new or different
technologies.
We are dependent on our strategic relationships and joint ventures
We have entered into a number of strategic alliances and relationships which
allowed us to enter into the market for telecommunications services earlier
than if we had made the attempt independently. As our network is further
developed, we will be dependent on some of these arrangements to provide a full
range of telecommunications service offerings. Our key strategic relationships
include:
. our arrangements with MFS Communications Company, Inc. (a subsidiary
of WorldCom, Inc.) to lease portions of MFS/WorldCom's fiber optic
network in New York City and Boston;
5
<PAGE>
. our joint venture with Boston Edison Company under which we have
access to its extensive fiber optic network in Greater Boston;
. our joint venture with Pepco Communications to develop and operate
an advanced fiber optic network in the Washington, D.C. market; and
. our agreement with Level 3 to provide us with access to its cross-
country fiber network.
Our joint venture agreements with Boston Edison Company and Pepco
Communications contain provisions for the management, governance and ownership
of the RCN-BECOCOM and Starpower joint ventures, respectively. Certain matters
require the approval of our joint venture partner, including some matters
beyond our control, such as a change of control. In addition, although certain
covenants contained in our indentures apply to the joint venture companies,
neither the joint venture companies nor our joint venture partners are parties
to these indentures and are not bound to comply with the indentures. A
disagreement with our joint venture partners over certain business actions,
including actions related to compliance with these indentures, could impede our
ability to conduct our business. It may also trigger deadlock provisions in the
joint venture agreements which could force us to sell our interest in the
relevant joint venture or buy out the interest of the other joint venturer.
In addition, any disruption of our relationships or arrangements with
incumbent local exchange carriers, such as Bell Atlantic, could have a material
adverse effect on our company. We cannot assure you that we will successfully
negotiate agreements with the incumbent local exchange carrier in new markets
or renew existing agreements. Our failure to negotiate or renew required
interconnection and resale agreements could have a material adverse effect on
our business.
We may encounter difficulties in competing in the highly competitive
telecommunications industry
In each of the markets where we offer our services, we face significant
competition from larger, better-financed telephone carriers and cable
companies. Virtually all markets for voice, video and data services are
extremely competitive, and we expect that competition will intensify in the
future. Our principal competitors include:
. traditional and competitive telephone companies, including Bell
Atlantic, AT&T, Sprint, and MCI WorldCom, some of which are
constructing extensive fiber optic networks and expanding into data
services;
. cable television service operators such as Time Warner, some of
which are beginning to offer telephone and data services through
cable networks using fiber optic networks and high-speed modems;
. established online services, such as America Online and Internet
services of other telecommunications companies;
. alliances and combinations of telephone companies, cable service
providers and Internet companies, including the recently announced
alliance that will combine services of AT&T, TCI and At Home; and
. developing technologies such as Internet-based telephony and
satellite communications services.
It may be difficult to gain customers from the incumbent providers which have
historically dominated their markets.
Other new technologies may become competitive with services that we offer.
Advances in communications technology as well as changes in the marketplace and
the regulatory and legislative environment are constantly occurring. In
addition, a continuing trend toward business combinations and alliances in the
telecommunications industry may also create significant new competitors. We
cannot predict the extent to which competition from such developing and future
technologies or from such future competitors will impact our operations.
6
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Our business plan depends upon continued application of regulations that have
been challenged in the past
Our ability to provide telephone and video programming transmission services
was made possible by important changes in government regulations which have
been subsequently challenged and may be subject to change in the future. These
regulations often have a direct or indirect impact on the costs of operating
our networks, and therefore the profitability of our services. In addition, we
will continue to be subject to other regulations at the federal, state and
local levels, all of which may change in the future. We cannot assure you that
we will be able to obtain all of the authorizations we need to construct
advanced fiber optic network facilities or to retain the authorizations we have
already acquired. It is possible that changes in existing regulations could
have an adverse impact on our ability to obtain or retain authorizations and on
our business.
We may not be able to procure programming services from the third parties we
depend on
Our video programming services are dependent upon our management's ability
to procure programming that is attractive to our customers at reasonable
commercial rates. We are dependent upon third parties for the development and
delivery of programming services. These programming suppliers charge us for the
right to distribute the channels to our customers. The costs to us for
programming services is determined through negotiations with these programming
suppliers. Management believes that the availability of sufficient programming
on a timely basis will be important to our future success. We cannot assure you
that we will have access to programming services or that management can secure
rights to such programming on commercially acceptable terms.
The expansion of our Internet services business has subjected us to additional
risks
The expansion of our Internet services business has subjected us to
additional risks. These risks will affect our ability to develop a profitable
Internet services business. These special factors include:
. evolving industry standards which have the potential to make our
services obsolete by replacing or providing lower-cost alternatives
to our services;
. constraints on server capacity or supply of equipment (such as
modems and servers) which could result in a strain on incoming
access lines, causing busy signals and/or delays for our
subscribers;
. network infrastructure and risk of system failure, such as viruses,
which could lead to interruptions, delays, or cessation of our
services, as well as corruption of our or our subscribers' computer
systems;
. possible claims of liability against us as a result of computer
viruses or security breaches; and
. the evolving competitive and regulatory environment concerning
Internet services.
Our management may have conflicts of interest with other companies
Level 3 Telecom beneficially owns approximately 46% of our common stock.
Level 3 Telecom effectively has the power to elect a majority of our directors
and to decide the outcome of substantially all matters voted on by
shareholders. This may tend to deter non-negotiated tender offers or other
efforts to obtain control of our company and thereby deprive shareholders of
opportunities to sell shares at prices higher than the prevailing market price.
Moreover, a disposition by Level 3 Telecom of a significant portion of our
common stock, or the perception that such a disposition may occur, could affect
the trading price of our common stock and the control of our company. The
common stock of Level 3 Telecom is owned 90% by Level 3 and 10% by David C.
McCourt, our Chairman and Chief Executive Officer. Mr. McCourt has been a
member of the Board of Directors and President of Level 3 Telecom since
September 1992. Based upon a review of documents filed with the SEC, we believe
that as of December 31, 1998, 16.1% of the common stock of Level 3 was owned by
directors and executive officers of Level 3, five of whom (Walter Scott, Jr.,
Richard R. Jaros, David C. McCourt, James Q. Crowe and Michael B. Yanney) are
executive officers or directors of RCN. The remaining shares of Level 3 common
stock are owned by other persons, none of whom own more than 5% of outstanding
shares.
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As a result of the September 30, 1997 spin-off of our shares to holders of
common equity of Commonwealth Telephone Enterprises, Inc., relationships exist
that may lead to conflicts of interest. Level 3 Telecom effectively controls
both us and Commonwealth Telephone. In addition, the majority of our named
executive officers are also directors and/or executive officers of Commonwealth
Telephone. Our success may be affected by the degree which our officers and
directors are involved in our business and the abilities of officers, directors
and employees in managing both our company and Commonwealth Telephone. We will
deal with potential conflicts of interest on a case-by-case basis taking into
consideration relevant factors including the requirements of The Nasdaq
National Market and prevailing corporate practices.
In February 1999, we announced that we have entered into joint construction
agreements with Level 3. We also recently announced that we have entered into a
letter of intent with Level 3 for Level 3 to provide us with cross-country
capacity to allow our customers to connect to major Internet connection points
in the United States. Although these arrangements are designed to reflect
similar arrangements entered into by parties negotiating at arm's length, we
cannot assure you that we would not be able to obtain better terms from an
unrelated third party.
The price of our securities may fluctuate significantly following any offering
Prior to an offering, there has been no public market for the debt
securities and the preferred stock. We cannot assure you that any market will
develop for the debt securities or the preferred stock. After we issue
securities, they may trade at prices that are higher or lower than your
purchase price. The trading price for our securities will depend on prevailing
interest rates, the market for similar securities and other factors, including
economic conditions and our financial condition, performance and prospects. In
particular, the prices of non-investment grade securities historically have
been highly volatile. We cannot assure you that the future market for our debt
securities will not be subject to similar volatility.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document that we file at
the Public Reference Room of the SEC at 450 Fifth Street, NW, Washington, D.C.
20549. You may obtain information on the operation of the Public Reference Room
by calling the SEC at 1-800-SEC-0330. You may also inspect our filings at the
regional offices of the SEC located at Citicorp, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661 and 7 World Trade Center, New York, New York
10048 or over the Internet at the SEC's WEB site at http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file with
them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings made
with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Securities
Exchange Act of 1934 until we sell all of the securities:
(a) Current Report on Form 8-K dated May 8, 1998;
(b) Current Report on Form 8-K dated March 19, 1999;
(c) Current Report on Form 8-K dated August 17, 1999;
(d) Current Report on Form 8-K dated October 1, 1999;
(e) Current Report on Form 8-K dated December 12, 1999;
(f) Current Report on Form 8-K dated December 17, 1999;
(g) Quarterly Report on Form 10-Q for the quarter ended March 31, 1999;
(h) Quarterly Report on Form 10-Q for the quarter ended June 30, 1999;
(i) Quarterly Report on Form 10-Q for the quarter ended September 30,
1999; and
(j) Annual Report on Form 10-K for the year ended December 31, 1998.
You may request a copy of these filings at no cost, by writing or
telephoning the office of Valerie Haertel, RCN Corporation, 105 Carnegie
Center, Princeton, N.J. 08540-6215, telephone number (609) 734 -3700.
SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements. We have based these
forward-looking statements on our current expectations and projections about
future events. These forward-looking statements are subject to risks,
uncertainties, and assumptions about our business, including, among other
things:
. plans to develop networks and upgrade facilities;
. opportunities presented by target markets;
. plans to connect certain wireless video, resale telephone and
Internet service customers to advanced fiber optic networks;
. development of existing businesses;
. current and future markets for services and products;
. anticipated capital expenditures;
. impact of the Year 2000 issue;
. anticipated sources of capital; and
. effects of regulatory reform and competitive and technological
developments.
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We have no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or risks. New
information, future events or risks may cause the forward-looking events we
discuss in this prospectus not to occur.
USE OF PROCEEDS
Unless otherwise indicated in a prospectus supplement, the net proceeds from
the sale of the securities will be used to fund our network development,
operating losses and for general corporate purposes. We will not receive any
proceeds from the sale of shares by the selling shareholder.
DIVIDENDS
We anticipate that future revenues will be used principally to support
operations and finance business growth. Accordingly, we do not intend to
declare or pay cash dividends in the foreseeable future. Our Board of Directors
has the discretion to declare or pay any cash dividends in the future. Their
decision to declare any dividends and the amount of any dividends will depend
on a number of factors, including our financial condition, capital
requirements, funds from operations, future business prospects and any other
factor that they may deem relevant. We are a holding company and our ability to
pay cash dividends is dependent on our ability to receive cash dividends,
advances and other payments from our subsidiaries. Our credit agreement
contains restrictions on our subsidiaries' ability to pay dividends. In
addition, we have entered into indentures in connection with our debt
securities which also restrict our and certain of our subsidiaries' ability to
pay dividends. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations" in our 10-K for the year ended December 31, 1998.
MARKET PRICE AND DIVIDEND INFORMATION
Our common stock (symbol: "RCNC") currently trades on the Nasdaq National
Market.
The following table sets forth the high and low bid prices per share of the
common stock on the Nasdaq National Market and cash dividends declared on the
common stock since September 30, 1997:
<TABLE>
<CAPTION>
Common stock
-----------------------------
Market Price($) Cash
----------------- Dividends
High Low Declared($)
-------- -------- -----------
<S> <C> <C> <C>
1997
Quarter ending September 30....................... 15 11/16 10 9/16 0
Quarter ending December 31........................ 21 1/2 12 1/2 0
1998
Quarter ending March 31........................... 30 5/8 15 7/8 0
Quarter ending June 30............................ 29 3/8 19 1/4 0
Quarter ending September 30....................... 24 5/16 12 3/8 0
Quarter ending December 31........................ 25 8 3/4 0
1999
Quarter ending March 31........................... 39 3/4 17 / 3/4 0
Quarter ending June 30............................ 54 1/2 33 3/4 0
Quarter ending September 30....................... 51 1/2 32 1/4 0
Quarter ending December 31........................ 54 1/4 37 5/16 0
</TABLE>
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Our common stock was distributed on September 30, 1997 to holders of record
of the common stock of Commonwealth Telephone Enterprises, Inc. on September
19, 1997. Accordingly, market price and dividend information have only been set
forth in the table above for the quarter ending September 30, 1997 and
subsequent periods. Information for the quarter ending September 30, 1997
reflects the partial period between September 19, 1997 through September 30,
1997.
The last reported sale price per share of our common stock on January 5,
2000, the last practicable date prior to the filing of this prospectus, was 48
3/4.
On October 1, 1999, there were approximately 2,821 holders of common stock.
On October 1, 1999, 76,324,768 shares of common stock were outstanding.
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DESCRIPTION OF CAPITAL STOCK
The following description of our capital stock is based upon our certificate
of incorporation ("Certificate of Incorporation"), our bylaws ("Bylaws") and
applicable provisions of law. We have summarized certain portions of the
Certificate of Incorporation and Bylaws below. The summary is not complete. The
Certificate of Incorporation and Bylaws are incorporated by reference to the
registration statement for these securities that we have filed with the SEC,
and have been filed as exhibits to our 10-K for the year ended December 31,
1997. You should read the Certificate of Incorporation and Bylaws for the
provisions that are important to you.
Certain provisions of the Delaware General Corporation Law ("DGCL"), the
Certificate of Incorporation and the Bylaws summarized in the following
paragraphs may have an anti-takeover effect. This may delay, defer or prevent a
tender offer or takeover attempt that a shareholder might consider in its best
interests, including those attempts that might result in a premium over the
market price for its shares.
Authorized Capital Stock
Our Certificate of Incorporation authorizes us to issue 200 million shares
of common stock, par value $1.00 per share, 400 million shares of Class B
common stock, par value $1.00 per share, and 25 million shares of preferred
stock par value $1.00 per share.
Common Stock
Subject to the rights of the holders of any preferred stock which may be
outstanding, each holder of common stock is entitled to receive any dividends
our Board of Directors declares out of funds legally available to pay
dividends. If we liquidate our business, holders of common stock are entitled
to share equally in any distribution of our assets after we pay our liabilities
and the liquidation preference of any outstanding preferred stock. Each holder
of common stock is entitled to one vote per share, and is entitled to vote on
all matters presented to a vote of shareholders, including the election of
directors. Holders of common stock have no cumulative voting rights or
preemptive rights to purchase or subscribe for any stock or other securities.
In addition, there are no conversion rights or redemption or sinking fund
provisions. On September 30, 1999, there were 76,324,222 shares of common stock
issued and outstanding. The common stock is admitted for trading on the Nasdaq
National Market.
The Certificate of Incorporation contains no restrictions on the
alienability of the common stock. Except as disclosed in the section entitled
"Charter and Bylaw Provisions," below, there are no provision in the
Certificate of Incorporation or Bylaws and or any agreement or plan involving
RCN that would discriminate against any existing or prospective holder of
common stock as a result of a holder owning a substantial amount of common
stock.
Class B Stock
The Class B common stock is virtually identical to the Common Stock except
that:
. the Class B common stock is generally non-voting,
. the common stock is convertible at the option of the holder into Class B
common stock and
. in certain mergers, distributions and other transactions in which the
holders of common stock are entitled to receive equity interests of one
or more corporations (including RCN), the equity interests distributed
to holders of common stock and the Class B common stock may have rights
and privileges that are substantially equivalent to the current rights
and privileges of the common stock and the Class B common stock,
respectively.
As of January 6, 2000, there are no outstanding shares of Class B common
stock and we do not have any current plan or intention to issue any Class B
common stock.
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Preferred Stock
This prospectus describes certain general terms and provisions of our
preferred stock. When we offer to sell a particular series of preferred stock,
we will describe the specific terms of the securities in a supplement to this
prospectus. The prospectus supplement will also indicate whether the general
terms and provisions described in this prospectus apply to the particular
series of preferred stock. The preferred stock will be issued under a
certificate of designations relating to each series of preferred stock, and is
also subject to our Certificate of Incorporation.
We have summarized certain terms of the certificate of designations below.
The summary is not complete. The certificate of designations will be filed with
the SEC in connection with an offering of preferred stock.
Under the Certificate of Incorporation, our Board of Directors has the
authority to
. create one or more series of preferred stock,
. issue shares of preferred stock in any series up to the maximum number
of shares of preferred stock authorized, and
. determine the preferences, rights, privileges and restrictions of any
series.
Our Board may issue authorized shares of preferred stock, as well as
authorized but unissued shares of common stock, without further shareholder
action, unless shareholder action is required by applicable law or by the rules
of a stock exchange or quotation system on which any series of our stock may be
listed or quoted.
The prospectus supplement will describe the terms of any preferred stock
being offered, including:
. the number of shares and designation or title of the shares;
. any liquidation preference per share;
. any date of maturity;
. any redemption, repayment or sinking fund provisions;
. any dividend rate or rates and the dates of payment (or the method for
determining the dividend rates or dates of payment);
. any voting rights;
. if other than the currency of the United States, the currency or
currencies including composite currencies in which the preferred stock
is denominated and/or in which payments will or may be payable;
. the method by which amounts in respect of the preferred stock may be
calculated and any commodities, currencies or indices, or value, rate or
price, relevant to such calculation;
. whether the preferred stock is convertible or exchangeable and, if so,
the securities or rights into which the preferred stock is convertible
or exchangeable, and the terms and conditions of conversion or exchange;
. the place or places where dividends and other payments on the preferred
stock will be payable; and
. any additional voting, dividend, liquidation, redemption and other
rights, preferences, privileges, limitations and restrictions.
All shares of preferred stock offered will be fully paid and non-assessable.
Any shares of preferred stock that are issued will have priority over the
common stock with respect to dividend or liquidation rights or both.
Our Board of Directors could create and issue a series of preferred stock
with rights, privileges or restrictions which effectively discriminates against
an existing or prospective holder of preferred stock as a
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<PAGE>
result of the holder beneficially owning or commencing a tender offer for a
substantial amount of common stock. One of the effects of authorized but
unissued and unreserved shares of capital stock may be to make it more
difficult or discourage an attempt by a potential acquirer to obtain control
of our company by means of a merger, tender offer, proxy contest or otherwise.
This protects the continuity of our management. The issuance of these shares
of capital stock may defer or prevent a change in control of our company
without any further shareholder action.
The transfer agent for each series of preferred stock will be described in
the prospectus supplement.
Charter and Bylaw Provisions
Classified Board of Directors; Removal of Directors. Our Board of Directors
are divided into three classes. The term of office of the first class expires
at the 2001 annual meeting, the term of office of the second class expires at
the 1999 annual meeting, and the term of office of the third class expires at
the 2000 annual meeting. At each annual meeting, beginning with the 1999
annual meeting, a class of directors will be elected to replace the class
whose term has just expired. As a result, approximately one-third of the
members of our Board of Directors will be elected each year and generally,
each of the directors serves a staggered three-year term. Moreover, as the
DGCL permits in the case of a corporation having a classified board, our
directors may be removed only for cause.
These provisions could prevent a shareholder or a group of shareholders
having majority voting power from obtaining control of our Board of Directors
until the second annual meeting following the date the shareholder obtains
majority voting power. Accordingly, these provisions could have the effect of
discouraging a potential acquirer from making a tender offer or otherwise
attempting to obtain control of our company.
Shareholder Action by Written Consent; Special Meetings. No action required
or permitted to be taken at an annual or special meeting of shareholders may
be taken without a meeting. No action may be taken by the written consent of
shareholders instead of a meeting. Only our Board, our Chairman of the Board
or our Chief Executive Officer may call a special meeting of shareholders.
These provisions may make it more difficult for shareholders to take action
opposed by our Board.
Advance Notice Provisions. Shareholders seeking to nominate candidates to
be elected as directors at an annual meeting or to bring business before an
annual meeting must comply with an advanced written procedure. Only persons
who are nominated by or at the direction of our Board, or by a shareholder who
has given timely written notice to our Secretary before the meeting to elect
directors, will be eligible as directors. At any shareholders' meeting the
business to be conducted is limited to business brought before the meeting by
or at the direction of the Board of Directors, or a shareholder who has given
timely written notice to our Secretary of its intention to bring business
before an annual meeting. A shareholder must give notice which is received at
our principal executive offices in writing between 60 to 90 days before the
meeting. If, however, we gave less than 70 days' notice or prior public
disclosure of the meeting date, we must receive the shareholder's notice no
later than the close of business on the 10th day following the day we gave the
notice or public disclosure of the meeting date. A shareholder's notice must
also contain certain information specified in the Bylaws. These provisions may
preclude or deter some shareholders from bringing matters before, or making
nominations for directors at, an annual meeting.
Amendment of Certain Charter and Bylaw Provisions. Our Board may adopt,
amend or repeal any provision of the Bylaws. Bylaw provisions may be adopted,
amended or repealed by the affirmative vote of shareholders holding at least
66 2/3% of the total number of votes entitled to be cast in the election of
directors.
Any amendment, modification or repeal of the provisions of the Certificate
of Incorporation relating to
. the election and removal of directors,
. the right to call special meetings,
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<PAGE>
. the prohibition on action by written consent,
. amendment of the Bylaws and
. the limitation of liability and indemnification of officers and
directors
will require approval by the affirmative vote of shareholders holding at least
66 2/3% of the total number of votes entitled to vote in the election of
directors.
Delaware Takeover Statute
We are subject to Section 203 of the DGCL ("Section 203"). In general,
Section 203 prohibits a publicly held Delaware corporation from engaging in a
"business combination" with an "interested shareholder" for a period of three
years following the date that the shareholder became an interested shareholder,
unless:
(a) before such date either the business combination or the transaction
which resulted in the shareholder becoming an interested shareholder is
approved by the board of directors of the corporation,
(b) upon consummation of the transaction which resulted in the shareholder
becoming an interested shareholder, the interested shareholder owns at
least 85% of the voting stock of the corporation outstanding at the
time the transaction commenced (excluding for purposes of determining
the number of shares outstanding, shares owned by
(1) persons who are both directors and officers and
(2) employee stock plans in certain circumstances), or
(c) on or after such date the business combination is approved by the board
and authorized at an annual or special meeting of shareholders, and not
by written consent, by the affirmative vote of at least 66 2/3% of the
outstanding voting stock which is not owned by the interested
shareholder.
A "business combination" includes a merger, consolidation, asset sale, or
other transaction resulting in a financial benefit to the interested
shareholder. An "interested shareholder" is a person who, together with
affiliates and associates, owns (or within three years, did own) 15% or more of
the corporation's voting stock.
The restrictions imposed by Section 203 will not apply to a corporation if,
among other things:
(a) the corporation's original certificate of incorporation contains a
provision expressly electing not to be governed by Section 203 or
(b) 12 months have passed after the corporation, by action of its
shareholders holding a majority of the outstanding stock, adopts an
amendment to its certificate of incorporation or bylaws expressly
electing not to be governed by Section 203.
The restrictions imposed by Section 203 will apply to us since we have not
elected not to be governed by that section. Our Board of Directors approved of
Level 3 becoming an interested shareholder and, consequently, Section 203 would
not apply to any business combination with Level 3.
Liability and Indemnification of Directors and Officers
Certain provisions of the DGCL and the Certificate of Incorporation and the
Bylaws relate to the limitation of liability and indemnification of our
directors and officers. These various provisions are described below.
Our Certificate of Incorporation provides that our directors are not
personally liable to us or our shareholders for monetary damages for breach of
their fiduciary duties as a director to the fullest extent permitted by the
DGCL. Under the DGCL, directors would not be personally liable to us or our
shareholders for monetary damages for breach of their fiduciary duties as a
director, except for
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<PAGE>
(a) any breach of the director's duty of loyalty to us or our shareholders,
(b) acts or omissions not in good faith or involving intentional misconduct
or a knowing violation of law,
(c) any transaction from which the director derived improper personal
benefit or
(d) the unlawful payment of dividends or unlawful stock repurchases or
redemptions.
This exculpation provision may have the effect of reducing the likelihood of
derivative litigation against directors and may discourage or deter
shareholders or us from bringing a lawsuit against our directors for breach of
their fiduciary duties as directors. However, the provision does not affect
equitable remedies such as an injunction or rescission from being available.
We will indemnify and hold harmless to the fullest extent permitted by the
DGCL each person who was or is a party or is threatened to be made a party to
any threatened, pending or completed action or proceeding. These include civil,
criminal, administrative or investigative proceedings, if that person is or was
a director or officer of RCN or is or was serving at our request as a director
or officer of another corporation, partnership, joint venture, trust or other
enterprise. We will also pay the expenses incurred in connection with these
proceedings before its final disposition to the fullest extent authorized by
the DGCL. This right to indemnification is a contract right. By action of our
Board of Directors, we provide indemnification to our employees and agents to
the extent our Board determines to be appropriate and authorized by the DGCL.
We purchase and maintains insurance on behalf of any person who is or was a
director, officer, employee or agent of RCN, or is or was serving at our
request as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise
against any liability asserted against him or her and incurred by him or her in
any such capacity, or arising out of his or her status, whether or not we would
have the power or the obligation to indemnify him or her against the liability
under the Certificate of Incorporation.
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DESCRIPTION OF DEBT SECURITIES
This prospectus describes certain general terms and provisions of the debt
securities. When we offer to sell a particular series of debt securities, we
will describe the specific terms for the securities in a supplement to this
prospectus. The prospectus supplement will also indicate whether the general
terms and provisions described in this prospectus apply to a particular series
of debt securities. The debt securities will be issued under an indenture
between us and The Chase Manhattan Bank, as trustee.
We have summarized certain terms and provisions of the indenture. The
summary is not complete. The indenture has been incorporated by reference as an
exhibit to the registration statement for these securities that we have filed
with the SEC. You should read the indenture for the provisions which may be
important to you. Capitalized terms used in this summary have the meanings
specified in the indenture. The indenture is subject to and governed by the
Trust Indenture Act of 1939, as amended.
General
The indenture will not limit the amount of debt securities which we may
issue. We may issue debt securities up to an aggregate principal amount as we
may authorize from time to time. The prospectus supplement will describe the
terms of any debt securities being offered, including:
. the designation, aggregate principal amount and authorized
denominations;
. the maturity date;
. the interest rate, if any, and the method for calculating the interest
rate;
. the interest payment dates and the record dates for the interest
payments;
. any mandatory or optional redemption terms or prepayment, conversion,
sinking fund or exchangeability or convertability provisions;
. the place where we will pay principal and interest;
. if other than denominations of $1,000 or multiples of $1,000, the
denominations the debt securities will be issued in;
. whether the debt securities will be issued in the form of global
securities or certificates;
. additional provisions, if any, relating to the defeasance of the debt
securities;
. the currency or currencies, if other than the currency of the United
States, in which principal and interest will be paid;
. whether the debt securities will be issuable in registered form or
bearer form or both and, if bearer securities are issuable, any
restrictions which apply to the exchange of one form for another and the
offer, sale and delivery of bearer securities;
. any United States federal income tax consequences;
. the dates on which premium, if any, will be paid;
. our right, if any, to defer payment interest and the maximum length of
this deferral period;
. any listing on a securities exchange;
. the initial public offering price; and
. other specific terms, including any additional events of default or
covenants.
As described in each prospectus supplement relating to any particular series
of debt securities we offer, the indenture may contain covenants limiting:
. the incurrence of additional debt by us and certain of our subsidiaries
and affiliates;
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<PAGE>
. the making of certain payments by us and certain of our subsidiaries and
affiliates;
. business activities of us and certain of our subsidiaries and
affiliates;
. the issuance of preferred stock of certain of our subsidiaries and
affiliates;
. certain asset dispositions;
. certain transactions with affiliates;
. restrictions on dividend payments by certain subsidiaries and
affiliates;
. a change of control of our company;
. issuance of certain guarantees;
. liens; and
. mergers and consolidations involving our company.
Book-Entry System
Unless we specify otherwise in a prospectus supplement, debt securities of
any series may be issued under a book-entry system in the form of one or more
global securities (each, a "Global Security"). Each Global Security will be
deposited with, or on behalf of, a depositary, which will be The Depository
Trust Company, New York, New York (the "Depositary"). The Global Securities
will be registered in the name of the Depositary or its nominee.
The Depositary has advised us that the Depositary is a limited purpose trust
company organized under the laws of the State of New York, a "banking
organization" within the meaning of the New York banking law, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code, and a "clearing agency" registered pursuant to
the provisions of Section 17A of the Exchange Act. The Depositary was created
to hold securities of its participants and to facilitate the clearance and
settlement of securities transactions among its participants through electronic
book-entry changes in accounts of the participants, thereby eliminating the
need for physical movement of securities certificates. The Depositary's
participants include securities brokers and dealers, banks, trust companies,
clearing corporations, and certain other organizations, some of which (and/or
their representatives) own the Depositary. Access to the Depositary's book-
entry system is also available to others, such as banks, brokers, dealers, and
trust companies that clear through or maintain a custodial relationship with a
participant, either directly or indirectly.
When a Global Security in issued in registered form, the Depositary will
credit, on its book-entry registration and transfer system, the respective
principal amounts of the debt securities represented by each Global Security to
the participants' accounts. The underwriters, dealers, or agents, if any, will
designate the accounts to be credited. If debt securities are offered and sold
directly by us, we will designate the accounts to be credited. Only
participants or persons that may hold interests through participants will be
able to own beneficial interest in the Global Security. Ownership of beneficial
interests by participants in the Global Security will be shown on, and the
transfer of that ownership interest will be effected only through, the
participants' records. The laws of some jurisdictions may require that certain
purchasers of securities take physical delivery of securities in definitive
form, which may impair the ability to transfer beneficial interests in a Global
Security.
So long as the Depositary or its nominee is the owner of record of a Global
Security, we consider the Depositary or its nominee the sole owner or holder of
the debt securities represented by the Global Security. Generally, owners of
beneficial interests in a Global Security will not (a) be entitled to have the
debt security represented by a Global Security registered in their names, (b)
receive or be entitled to receive physical delivery of debt securities in
definitive form and (c) be considered the owners or holders of the debt
securities.
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Accordingly, each person owning a beneficial interest in a Global Security must
rely on the Depositary's procedures. Persons who are not participants must rely
on the procedures of the participant through which it owns its interest. We
understand that under existing industry practices, if we request any action of
holders or if any owner of a beneficial interest in a Global Security desires
to give or take any action which a holder is entitled to give or take under the
indenture, the Depositary would authorize the participants holding the relevant
beneficial interests to give or take the action. The participants would in turn
authorize beneficial owners owning through them to give or take action or would
otherwise act upon the instruction of beneficial owners holding through them.
Payments of principal, premium, if any, and interest on debt securities
represented by a Global Security registered in the name of the Depositary or
its nominee will be made to the Depositary or nominee as the registered owner.
None of RCN, the trustee or any other agent of RCN or agent of the trustee will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial ownership interests in the Global
Security or for maintaining, supervising, or reviewing any records relating to
such beneficial ownership interests.
We have been advised by the Depositary that the Depositary will credit
participants' accounts with payments of principal, premium, if any, or interest
on the payment dates in amounts which are proportionate to their respective
beneficial interests in the principal amount of the Global Security as shown on
the Depositary's records. We expect that payments by participants to owners of
beneficial interests in the Global Security held through such participants will
be governed by standing instructions and customary practices, as is now the
case with securities held for the accounts of customers registered in "street
name," and will be the responsibility of the participants.
A Global Security may not be transferred except as a whole:
. by the Depositary to a nominee or successor of the Depositary or
. by a nominee of the Depositary to another nominee of the Depositary.
A Global Security representing all but not part of an offering of debt
securities is exchangeable for debt securities in definitive form of like tenor
and terms if:
. the Depositary notifies us that it is unwilling or unable to continue as
depositary for the Global Security or if at any time the Depositary is
no longer eligible to be or in good standing as a clearing agency
registered under the Exchange Act, and we do not appoint a successor
depositary within 90 days after we receive notice or
. RCN in our sole discretion at any time decides not to have all of the
debt securities represented in an by a Global Security and notifies the
trustee.
If a Global Security is exchangeable, then it is exchangeable for debt
securities registered in the names and in authorized denominations as the
Depositary directs.
Payments of Principal and Interest
The payment of principal premium, if any, and interest on the debt
securities will rank equally with all of our unsecured and unsubordinated debt.
Events of Default
When we use the term "Event of Default" in the indenture with respect to the
debt securities of any series, here are some examples of what we mean:
(1) default in paying interest on the debt securities when it becomes due
and the default continues for a period of 30 days or more;
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(2) default in paying principal, or premium, if any, on the debt securities
when due;
(3) default in the performance, or breach, of any covenant in the indenture
(other than defaults specified in clause (1) or (2) above) and the
default or breach continues for a period of 30 days or more after we
receive written notice from the trustee or the trustee receives notice
from the holders of at least 25% in aggregate principal amount of the
outstanding debt securities of the series;
(4) certain events of bankruptcy, insolvency, reorganization,
administration or similar proceedings with respect to RCN or any
material subsidiary has occurred; or
(5) any other Events of Default set forth in the prospectus supplement.
If an Event of Default (other than an Event of Default specified in clause
(4) with respect to RCN) under the indenture occurs with respect to the debt
securities of any series and is continuing, then the trustee or the holders of
at least 25% in principal amount of the outstanding debt securities of that
series may by written notice, and the trustee at the request of the holders of
not less than 25% in principal amount of the outstanding debt securities of
such series will, require us to repay immediately the entire principal amount
of the outstanding debt securities of that series (or such lesser amount as may
be provided in the terms of the securities), together with all accrued and
unpaid interest and premium, if any.
If an Event of Default under the indenture specified in clause (4) with
respect to RCN occurs and is continuing, then the entire principal amount of
the outstanding debt securities (or such lesser amount as may be provided in
the terms of the securities) will automatically become due immediately and
payable without any declaration or other act on the part of the trustee or any
holder.
After a declaration of acceleration or any automatic acceleration under
clause (4) described above, the holders of a majority in principal amount of
outstanding debt securities of any series may rescind this accelerated payment
requirement if all existing Events of Default, except for nonpayment of the
principal and interest on the debt securities of that series that has become
due solely as a result of the accelerated payment requirement, have been cured
or waived and if the rescission of acceleration would not conflict with any
judgment or decree. The holders of a majority in principal amount of the
outstanding debt securities of any series also have the right to waive past
defaults, except a default in paying principal or interest on any outstanding
debt security, or in respect of a covenant or a provision that cannot be
modified or amended without the consent of all holders of the debt securities
of that series.
Holders of at least 25% in principal amount of the outstanding debt
securities of a series may seek to institute a proceeding only after they have
made written request, and offered reasonable indemnity, to the trustee to
institute a proceeding and the trustee has failed to do so within 60 days after
it received this notice. In addition, within this 60-day period the trustee
must not have received directions inconsistent with this written request by
holders of a majority in principal amount of the outstanding debt securities of
that series. These limitations do not apply, however, to a suit instituted by a
holder of a debt security for the enforcement of the payment of principal,
interest or any premium on or after the due dates for such payment.
During the existence of an Event of Default, the trustee is required to
exercise the rights and powers vested in it under the indenture and use the
same degree of care and skill in its exercise as a prudent person would under
the circumstances in the conduct of that person's own affairs. If an Event of
Default has occurred and is continuing, the trustee is not under any obligation
to exercise any of its rights or powers at the request or direction of any of
the holders unless the holders have offered to the trustee reasonable security
or indemnity. Subject to certain provisions, the holders of a majority in
principal amount of the outstanding debt securities of any series have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the trustee, or exercising any trust, or power conferred on
the trustee.
The trustee will, within 45 days after any Default occurs, give notice of
the Default to the holders of the debt securities of that series, unless the
Default was already cured or waived. Unless there is a default in paying
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principal, interest or any premium when due, the trustee can withhold giving
notice to the holders if it determines in good faith that the withholding of
notice is in the interest of the holders.
We are required to furnish to the trustee an annual statement as to
compliance with all conditions and covenants under the indenture.
Modification and Waiver
The indenture may be amended or modified without the consent of any holder
of debt securities in order to:
. cure ambiguities, defects or inconsistencies;
. provide for the assumption of our obligations in the case of a merger or
consolidation;
. make any change that would provide any additional rights or benefits to
the holders of the debt securities of a series;
. add Guarantors with respect to the debt securities of a series;
. secure the debt securities of a series;
. establish the form or forms of debt securities of any series;
. maintain the qualification of the indenture under the Trust Indenture
Act; or
. make any change that does not adversely affect the rights of any holder.
Other amendments and modifications of the indenture or the debt securities
issued may be made with the consent of the holders of not less than a majority
of the aggregate principal amount of the outstanding debt securities of each
series affected by the amendment or modification (each series voting as a
separate class). However, no modification or amendment may, without the consent
of the holder of each outstanding debt security affected:
. reduce the principal amount, or extend the fixed maturity, of the debt
securities, alter or waive the redemption provisions of the debt
securities;
. change the currency in which principal, any premium or interest is paid;
. reduce the percentage in principal amount outstanding of debt securities
of any series which must consent to an amendment, supplement or waiver
or consent to take any action;
. impair the right to institute suit for the enforcement of any payment on
the debt securities;
. waive a payment default with respect to the debt securities or any
Guarantee;
. reduce the interest rate or extend the time for payment of interest on
the debt securities;
. adversely affect the ranking of the debt securities of any series; or
. release any Guarantor from any of its obligations under its Guarantee or
the indenture, except in compliance with the terms of the indenture.
Consolidation, Merger, Sale of Assets, Etc.
We will not consolidate or combine with or merge with or into or, directly
or indirectly, sell, assign, convey, lease, transfer or otherwise dispose of
all or substantially all of our properties and assets to any person or persons
in a single transaction or through a series of transactions, unless:
. RCN shall be the continuing person or, if RCN is not the continuing
person, the resulting, surviving or transferee person (the "surviving
entity") is a company organized and existing under the laws of the
United States or any State or territory;
21
<PAGE>
. the surviving entity will expressly assume all of our obligations under
the debt securities and the indenture, and will, if required by law to
effectuate the assumption, execute a supplemental indenture which will
be delivered to the trustee and will be in form and substance reasonably
satisfactory to the trustee;
. immediately after giving effect to such transaction or series of
transactions on a pro forma basis, no Default has occurred and is
continuing; and
. RCN or the surviving entity will have delivered to the trustee an
officers' certificate and opinion of counsel stating that the
transaction or series of transactions and a supplemental indenture, if
any, complies with this covenant and that all conditions precedent in
the indenture relating to the transaction or series of transactions have
been satisfied.
If any consolidation or merger or any sale, assignment, conveyance, lease,
transfer or other disposition of all or substantially all of our assets occurs
in accordance with the indenture, the successor corporation will succeed to,
and be substituted for, and may exercise every right and power of RCN under the
indenture with the same effect as if such successor corporation had been named
as RCN. Except for (1) any lease or (2) any sale, assignment, conveyance,
transfer, lease or other disposition to certain subsidiaries of RCN, we will be
discharged from all obligations and covenants under the indenture and the debt
securities.
Satisfaction and Discharge of the Indenture; Defeasance
We may terminate our obligations under the indenture, when:
. either:
-- all debt securities of any series issued that have been
authenticated and delivered have been delivered to the trustee for
cancellation; or
-- all the debt securities of any series issued that have not been
delivered to the trustee for cancellation will become due and
payable (a "Discharge") under irrevocable arrangements satisfactory
to the trustee for the giving of notice of redemption by such
trustee in our name, and at our expense and we have irrevocably
deposited or caused to be deposited with the trustee sufficient
funds to pay and discharge the entire indebtedness on the series of
debt securities to pay principal, interest and any premium;
. we have paid or caused to be paid all other sums then due and payable
under the indenture; and
. we have delivered to the trustee an officers' certificate and an opinion
of counsel, each stating that all conditions precedent under the
indenture relating to the satisfaction and discharge of the indenture
have been complied with.
We may elect to have our obligations under the indenture discharged with
respect to the outstanding debt securities of any series ("legal defeasance").
Legal defeasance means that we will be deemed to have paid and discharged the
entire indebtedness represented by the outstanding debt securities of such
series under the indenture, except for:
. the rights of holders of the debt securities to receive principal, interest
and any premium when due;
. our obligations with respect to the debt securities concerning issuing
temporary debt securities, registration of transfer of debt securities,
mutilated, destroyed, lost or stolen debt securities and the maintenance
of an office or agency for payment and money for security payments held
in trust;
. the rights, powers, trusts, duties and immunities of the trustee; and
. the defeasance provisions of the indenture.
22
<PAGE>
In addition, we may elect to have our obligations released with respect to
certain covenants in the indenture ("covenant defeasance"). Any omission to
comply with these obligation will not constitute a Default or an Event of
Default with respect to the debt securities of any series. In the event
covenant defeasance occurs, certain events, not including non-payment,
bankruptcy and insolvency events, described under "Events of Default" will no
longer constitute an Event of Default for that series.
In order to exercise either legal defeasance or covenant defeasance with
respect to outstanding debt securities of any series:
. we must irrevocably have deposited or caused to be deposited with the
trustee as trust funds for the purpose of making the following payments,
specifically pledged as security for, and dedicated solely to the
benefits of the holders of the debt securities of a series:
-- money in an amount;
-- U.S. Government Obligations; or
-- a combination of money and U.S. Government Obligations,
in each case sufficient without reinvestment, in the written opinion of an
internationally recognized firm of independent public accountants to pay
and discharge, and which shall be applied by the trustee to pay and
discharge, all of the principal, interest and any premium at due date or
maturity or if we have made irrevocable arrangements satisfactory to the
trustee for the giving of notice of redemption by the trustee in our name
and at our expense, the redemption date;
. in the case of legal defeasance, we have delivered to the trustee an
opinion of counsel stating that, under then applicable Federal income
tax law, the holders of the debt securities of that series will not
recognize gain or loss for federal income tax purposes as a result of
the deposit, defeasance and discharge to be effected and will be subject
to the same federal income tax as would be the case if the deposit,
defeasance and discharge did not occur;
. in the case of covenant defeasance, we have delivered to the trustee an
opinion of counsel to the effect that the holders of the debt securities
of that series will not recognize gain or loss for U.S. federal income
tax purposes as a result of the deposit and covenant defeasance to be
effected and will be subject to the same federal income tax as would be
the case if the deposit and covenant defeasance did not occur;
. no Default with respect to the outstanding debt securities of that
series has occurred and is continuing at the time of such deposit after
giving effect to the deposit or, in the case of legal defeasance, no
Default relating to bankruptcy or insolvency has occurred and is
continuing at any time on or before the 91st day after the date of such
deposit, it being understood that this condition is not deemed satisfied
until after the 91st day;
. the legal defeasance or covenant defeasance will not cause the trustee
to have a conflicting interest within the meaning of the Trust Indenture
Act, assuming all debt securities of a series were in default within the
meaning of such Act;
. the defeasance or covenant defeasance will not result in a breach or
violation of, or constitute a default under, any other agreement or
instrument to which we are a party;
. the legal defeasance or covenant defeasance will not result in the trust
arising from such deposit constituting an investment company within the
meaning of the Investment Company Act of 1940, as amended, unless the
trust is registered under such Act or exempt from registration; and
. we have delivered to the trustee an officers' certificate and an opinion
of counsel stating that all conditions precedent with respect to the
defeasance or covenant defeasance have been complied with.
23
<PAGE>
SELLING SHAREHOLDERS
As of January 6, 2000, Boston Edison Company ("BECO") beneficially owned
1,107,539 shares of our common stock. Registration of these shares does not
necessarily mean that BECO will sell all or any of these shares. Although BECO
does not, as of January 6, 2000, own any other equity securities of RCN, it
continues to have the right to convert additional percentages of its equity
interest in RCN BECOCOM, LLC, the joint venture entity it owns with RCN, into
shares of our common stock. In May 1999, BECO exercised its right to convert an
additional percentage of such interest. The number of our shares which BECO is
entitled to receive on this additional conversion and the effect that the
conversion will have on the current ownership interests of the parties in RCN
BECOCOM, LLC is yet to be determined. Because BECO may sell all or some of the
1,107,539 shares, no estimate can be given as to the number of shares of our
common stock that will be held by BECO after completion of any offering. Thomas
May, Chairman, President and Chief Executive Officer of BECO, was appointed as
a director of RCN in September 1997.
As of January 6, 2000, David Epstein, an employee of RCN, beneficially owned
66,639 shares of our common stock. Registration of these shares does not
necessarily mean that Mr. Epstein will sell all or any of these shares. Because
Mr. Epstein may sell all or some of the 66,639 shares, no estimate can be given
as to the number of shares of our common stock that will be held by Mr. Epstein
after completion of any offering.
As of January 6, 2000, Zachary Julius, an employee of RCN, beneficially
owned 66,639 shares of our common stock. Registration of these shares does not
necessarily mean that Mr. Julius will sell all or any of these shares. Because
Mr. Julius may sell all or some of the 66,639 shares, no estimate can be given
as to the number of shares of our common stock that will be held by Mr. Julius
after completion of any offering.
24
<PAGE>
PLAN OF DISTRIBUTION
We may sell the securities in any of three ways (or in any combination): (a)
through underwriters or dealers; (b) directly to a limited number of purchasers
or to a single purchaser; or (c) through agents. The prospectus supplement will
set forth the terms of the offering of such securities, including
(a) the name or names of any underwriters, dealers or agents and the
amounts of securities underwritten or purchased by each of them,
(b) the initial public offering price of the securities and the proceeds
to us and any discounts, commissions or concessions allowed or
reallowed or paid to dealers, and
(c) any securities exchanges on which the securities may be listed.
Any initial public offering price and any discounts or concessions allowed
or reallowed or paid to dealers may be changed from time to time.
If underwriters are used in the sale of any securities, the securities will
be acquired by the underwriters for their own account and may be resold from
time to time in one or more transactions, including negotiated transactions, at
a fixed public offering price or at varying prices determined at the time of
sale. The securities may be either offered to the public through underwriting
syndicates represented by managing underwriters, or directly by underwriters.
Generally, the underwriters' obligations to purchase the securities will be
subject to certain conditions precedent. The underwriters will be obligated to
purchase all of the securities if they purchase any of the securities.
We may sell the securities through agents from time to time. The prospectus
supplement will name any agent involved in the offer or sale of the securities
and any commissions we pay to them. Generally, any agent will be acting on a
best efforts basis for the period of its appointment.
We may authorize underwriters, dealers or agents to solicit offers by
certain purchasers to purchase the securities from at the public offering price
set forth in the prospectus supplement pursuant to delayed delivery contracts
providing for payment and delivery on a specified date in the future. The
contracts will be subject only to those conditions set forth in the prospectus
supplement, and the prospectus supplement will set forth any commissions we pay
for solicitation of these contracts.
This prospectus, including any amendment or supplement, may also be used in
connection with sales of up to 1,107,539 shares of our common stock issued to
BECO under the terms of an exchange agreement between BECO and RCN. The
exchange agreement provides BECO with registration rights with respect to our
common stock. BECO has agreed to provide us with advance written notice of
their intent to make such sales. This prospectus, including any amendment or
supplement, may also be used in connection with sales of up to 66,639 shares of
our common stock issued to David Epstein, an employee of RCN. This prospectus,
including any amendment or supplement, may also be used in connection with
sales of up to 66,639 shares of our common stock issued to Zachary Julius, an
employee of RCN.
BECO, Mr. Epstein and Mr. Julius may offer their shares of RCN common stock
at various times in one or more of the following transactions: in exchange or
the over-the-counter market transactions; in private transactions other than
exchange or over-the-counter market transactions; in connection with short
sales of RCN common stock; and by pledge to secure debts and other obligations.
BECO, Mr. Epstein and Mr. Julius may sell their shares at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices, at negotiated prices or fixed prices. BECO, Mr. Epstein and Mr. Julius
may use broker-dealers to sell their shares. If this happens, broker-dealers
will either receive discounts or commissions from BECO, Mr. Epstein or Mr.
Julius, as the case may be, or they will receive commissions from purchasers of
shares for whom they acted as agents. In connection with any resales by BECO,
Mr. Epstein or Mr. Julius, a prospectus supplement, if required, will be filed
under Rule 424(b) under the Securities Act, disclosing the number of shares
involved and other details of such resale to the extent appropriate.
25
<PAGE>
Agents and underwriters may be entitled to indemnification by us against
certain civil liabilities, including liabilities under the Securities Act, or
to contribution with respect to payments which the agents or underwriters may
be required to make in respect thereof. Agents and underwriters may be
customers of, engage in transactions with, or perform services for us in the
ordinary course of business.
LEGAL MATTERS
The validity of the securities in respect of which this prospectus is being
delivered will be passed on for us by Davis Polk & Wardwell, New York, New
York. The validity of the securities owned by the selling shareholders is being
passed on by John Jones, Executive Vice President and General Counsel of RCN.
EXPERTS
The consolidated financial statements of RCN Corporation as of December 31,
1998 and 1997, and for the years ended December 31, 1998, 1997 and 1996,
appearing in the RCN 10-K for the year ended December 31, 1998 and incorporated
by reference into this registration statement have been audited by
PricewaterhouseCoopers LLP, independent accountants, as set forth in their
report thereon incorporated by reference herein, and are included in reliance
upon such report given upon the authority of such firm as experts in accounting
and auditing.
The consolidated financial statements of 21st Century Telecom Group, Inc. as
of December 31, 1998 and March 31, 1998, and for the nine months ended December
31, 1998 and for each of the two years in the period ended March 31, 1998,
appearing in the 21st Century Telecom Group, Inc. 10-K for the nine months
ended December 31, 1998 and included in RCN's Form 8-K filed December 17, 1999
have been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and is included herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said report.
26
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth the costs and expenses payable by the
Registrant in connection with the sale of the securities being registered
hereby. All amounts are estimates except the registration fee.
<TABLE>
<CAPTION>
Amount to
be Paid
----------
<S> <C>
Registration fee.............................................. $ 278,000
Printing...................................................... 250,000
Legal fees and expenses....................................... 500,000
Accounting fees and expenses.................................. 200,000
Miscellaneous................................................. 25,000
----------
TOTAL......................................................... $1,253,000
==========
</TABLE>
Item 15. Indemnification of Directors and Officers
Reference is made to Section 102(b)(7) of the Delaware General Corporation
Law, which enables a corporation in its original certificate of incorporation
or an amendment thereto to eliminate or limit the personal liability of a
director for violations of the director's fiduciary duty, except (i) for any
breach of the director's duty of loyalty to the corporation or it stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the
Delaware General Corporation Law (providing for liability of directors for the
unlawful payment of dividends or unlawful stock purchases or redemptions) or
(iv) for any transaction from which a director derived an improper personal
benefit.
Section 145 of the Delaware General Corporation Law empowers RCN to
indemnify, subject to the standards set forth therein, any person in connection
with any action, suit or proceeding brought before or threatened by reason of
the fact that the person was a director, officer, employee or agent of such
company, or is or was serving as such with respect to another entity at the
request of such company. The Delaware General Corporation Law also provides
that RCN may purchase insurance on behalf of any such director, officer,
employee or agent.
RCN's Amended and Restated Articles of Incorporation provides in effect for
the elimination of the personal liability of RCN directors for breaches of
fiduciary duty and for the indemnification by RCN of each director and officer
of RCN, in each case, to the fullest extent permitted by applicable law.
RCN purchases and maintains insurance on behalf of any person who is or was
a director, officer, employee or agent of RCN, or is or was serving at the
request of RCN as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise against any liability asserted against him or her and incurred by
him or her in any such capacity, or arising out of his or her status as such,
whether or not RCN would have the power or the obligation to indemnify him or
her against such liability under the provisions of the RCN Certificate of
Incorporation.
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits
II-1
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Document
------- --------
<C> <S>
1.1* Form of Underwriting Agreement
2.1 Form of Distribution Agreement among C-TEC Corporation, Cable
Michigan, Inc. and RCN Corporation (incorporated by reference to
Exhibit 2.1 to Amendment No. 2 to RCN's Information Statement on Form
10/A ("Form 10") filed on September 5, 1997)
2.2 Tax Sharing Agreement by and among C-TEC Corporation, Cable Michigan,
Inc. and the Registrant (incorporated by reference to Exhibit 10.1 to
RCN's Form 10)
2.3 Agreement and Plan of Merger dated as of January 21, 1998 among Erols
Internet, Inc., Erol Onaran, Gold & Appel Transfer, S.A., RCN
Corporation and ENET Holding, Inc. (incorporated by reference to
Exhibit 2.1 to RCN's Current Report on Form 8-K ("March 1998 8-K")
filed on March 6, 1998)
2.4 Amendment No. 1 to Agreement and Plan of Merger dated as of January
21, 1998 among Erols Internet, Inc., Erol Onaran, Gold & Appel
Transfer, S.A., RCN Corporation and ENET Holding, Inc. (incorporated
by reference to Exhibit 2.2 to RCN's March 1998 8-K)
3.1* Certificate of Designations, Preferences and Rights of Series A 7%
Senior Convertible Preferred Stock dated April 7, 1999
4.1 Indenture dated as of February 6, 1998 between RCN, as Issuer, and The
Chase Manhattan Bank, as trustee, with respect to the 9.80% Senior
Discount Notes due 2008 (incorporated by reference to Exhibit 4.1 to
RCN's Registration Statement on Form S-4 (Commission File No. 333-
48487) ("1998 Form S-4") filed on March 23, 1998)
4.2 Form of the 9.80% Senior Discount Notes due 2008, Series B (included
in Exhibit 4.1) (incorporated by reference to Exhibit 4.2 to RCN's
1998 Form S-4)
4.3 Indenture dated as of October 17, 1997 between RCN, as Issuer, and The
Chase Manhattan Bank, as trustee, with respect to the 10% Senior Notes
due 2007 (incorporated by reference to Exhibit 4.1 to RCN's
Registration Statement on Form S-4 (Commission File No. 333-41081)
("Form S-4") filed on November 26, 1997)
4.4 Form of the 10% Senior Exchange Notes due 2007 (included in Exhibit
4.4) (incorporated by reference to Exhibit 4.2 to RCN's Form S-4)
4.5 Indenture dated as of October 17, 1997 between RCN, as Issuer, and The
Chase Manhattan Bank, as trustee, with respect to the 11 1/8% Senior
Discount Notes due 2007 (incorporated by reference to Exhibit 4.3 to
RCN's Form S-4)
4.6 Form of the 11 1/8% Senior Discount Exchange Notes due 2007 (included
in Exhibit 4.6) (incorporated by reference to Exhibit 4.4 to RCN's
Form S-4)
4.7 Indenture dated June 24, 1998 between RCN, as Issuer, and The Chase
Manhattan Bank, as trustee, with respect to the 11% Senior Discount
Notes due 2008 (incorporated by Reference to Exhibit 4.8 to RCN's
Registration Statement on Form S-1 (Commission File No. 333-55673))
4.8 Form of 11% Senior Discount Note due 2008 (included in Exhibit 4.8)
(incorporated by reference to Exhibit 4.8 to RCN's Registration
Statement on Form S-1 (Commission File No. 333-55673))
4.9 Escrow Agreement dated as of October 17, 1997 among The Chase
Manhattan Bank, as escrow agent, The Chase Manhattan Bank, as trustee
under the Indenture (as defined therein), and RCN (incorporated by
reference to Exhibit 4.6 to RCN's Form S-4)
4.10 Credit Agreement dated as of July 1, 1997 among C-TEC Cable Systems,
Inc., ComVideo Systems, Inc., C-TEC Cable Systems of New York, Inc.
and First Union National Bank, as agent (incorporated by reference to
Exhibit 4.1 to RCN's Form 10)
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Document
------- --------
<C> <S>
4.11* Form of Indenture relating to Debt Securities issued hereunder
5.1* Opinion of Davis Polk & Wardwell
5.2 Opinion of John Jones
11.1* Statement regarding Computation of Per Share Earnings (included in the
Notes to the Consolidated Financial Statements)
12.1* Statement re computation of ratios
23.1 Consent of PricewaterhouseCoopers LLP with respect to RCN Corporation
Consent of Arthur Andersen LLP with respect to 21st Century Telecom
23.2 Group, Inc.
Power of Attorney (included on the signature page of the Registration
24.1* Statement)
25.1* Statement of Eligibility of Trustee
</TABLE>
- --------
* Previously filed.
Item 17. Undertakings
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made
of securities registered hereby, 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 Securities and Exchange Commission pursuant to Rule 424(b)
under the Securities Act of 1933 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 the undertakings set forth in paragraph (i) and
(ii) above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed by the registrant pursuant to section 13 or section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by
reference in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
herein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
II-3
<PAGE>
(b) The undersigned registrant hereby understands that, 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 that is
incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the
securities offered herein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(c) 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 registrants have been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, the registrants will, unless in the opinion of
their counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this post-effective
amendment No. 2 to the registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Princeton, State of New
Jersey, on January 6, 2000.
RCN CORPORATION
/s/ Bruce C. Godfrey
By: _________________________________
Bruce C. Godfrey
Executive Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* Director, Chairman and January 6, 2000
___________________________________________ Chief Executive Officer
David C. McCourt
* Director, President and January 6, 2000
___________________________________________ Chief Operating Officer
Michael J. Mahoney
/s/ Bruce C. Godfrey Director, Executive Vice January 6, 2000
___________________________________________ President and Chief
Bruce C. Godfrey Financial Officer
* Director January 6, 2000
___________________________________________
James Q. Crowe
* Director January 6, 2000
___________________________________________
Alfred Fasola
* Director January 6, 2000
___________________________________________
Stuart E. Graham
* Director January 6, 2000
___________________________________________
Richard R. Jaros
Director January 6, 2000
___________________________________________
Michael J. Levitt
* Director January 6, 2000
___________________________________________
Thomas May
* Director January 6, 2000
___________________________________________
Thomas P. O'Neill, III
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* Director January 6, 2000
___________________________________________
Eugene Roth
* Director January 6, 2000
___________________________________________
Walter Scott, Jr.
* Director January 6, 2000
___________________________________________
Michael B. Yanney
* Senior Vice President and January 6, 2000
___________________________________________ Chief Accounting Officer
Ralph S. Hromisin
</TABLE>
By: /s/ Bruce C. Godfrey
_________________________________
Bruce C. Godfrey
Attorney-in-fact
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Document
------- --------
<C> <S>
1.1* Form of Underwriting Agreement
2.1 Form of Distribution Agreement among C-TEC Corporation, Cable
Michigan, Inc. and RCN Corporation (incorporated by reference to
Exhibit 2.1 to Amendment No. 2 to RCN's Information Statement on Form
10/A ("Form 10") filed on September 5, 1997)
2.2 Tax Sharing Agreement by and among C-TEC Corporation, Cable Michigan,
Inc. and the Registrant (incorporated by reference to Exhibit 10.1 to
RCN's Form 10)
2.3 Agreement and Plan of Merger dated as of January 21, 1998 among Erols
Internet, Inc., Erol Onaran, Gold & Appel Transfer, S.A., RCN
Corporation and ENET Holding, Inc. (incorporated by reference to
Exhibit 2.1 to RCN's Current Report on Form 8-K ("March 1998 8-K")
filed on March 6, 1998)
2.4 Amendment No. 1 to Agreement and Plan of Merger dated as of January
21, 1998 among Erols Internet, Inc., Erol Onaran, Gold & Appel
Transfer, S.A., RCN Corporation and ENET Holding, Inc. (incorporated
by reference to Exhibit 2.2 to RCN's March 1998 8-K)
3.1* Certificate of Designations, Preferences and Rights of Series A 7%
Senior Convertible Preferred Stock dated April 7, 1999
4.1 Indenture dated as of February 6, 1998 between RCN, as Issuer, and The
Chase Manhattan Bank, as trustee, with respect to the 9.80% Senior
Discount Notes due 2008 (incorporated by reference to Exhibit 4.1 to
RCN's Registration Statement on Form S-4 (Commission File No. 333-
48487) ("1998 Form S-4") filed on March 23, 1998)
4.2 Form of the 9.80% Senior Discount Notes due 2008, Series B (included
in Exhibit 4.1) (incorporated by reference to Exhibit 4.2 to RCN's
1998 Form S-4)
4.3 Indenture dated as of October 17, 1997 between RCN, as Issuer, and The
Chase Manhattan Bank, as trustee, with respect to the 10% Senior Notes
due 2007 (incorporated by reference to Exhibit 4.1 to RCN's
Registration Statement on Form S-4 (Commission File No. 333-41081)
("Form S-4") filed on November 26, 1997)
4.4 Form of the 10% Senior Exchange Notes due 2007 (included in Exhibit
4.4) (incorporated by reference to Exhibit 4.2 to RCN's Form S-4)
4.5 Indenture dated as of October 17, 1997 between RCN, as Issuer, and The
Chase Manhattan Bank, as trustee, with respect to the 11 1/8% Senior
Discount Notes due 2007 (incorporated by reference to Exhibit 4.3 to
RCN's Form S-4)
4.6 Form of the 11 1/8% Senior Discount Exchange Notes due 2007 (included
in Exhibit 4.6) (incorporated by reference to Exhibit 4.4 to RCN's
Form S-4)
4.7 Indenture dated June 24, 1998 between RCN, as Issuer, and The Chase
Manhattan Bank, as trustee, with respect to the 11% Senior Discount
Notes due 2008 (incorporated by Reference to Exhibit 4.8 to RCN's
Registration Statement on Form S-1 (Commission File No. 333-55673))
4.8 Form of 11% Senior Discount Note due 2008 (included in Exhibit 4.8)
(incorporated by reference to Exhibit 4.8 to RCN's Registration
Statement on Form S-1 (Commission File No. 333-55673))
4.9 Escrow Agreement dated as of October 17, 1997 among The Chase
Manhattan Bank, as escrow agent, The Chase Manhattan Bank, as trustee
under the Indenture (as defined therein), and RCN (incorporated by
reference to Exhibit 4.6 to RCN's Form S-4)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Document
------- --------
<C> <S>
4.10 Credit Agreement dated as of July 1, 1997 among C-TEC Cable Systems,
Inc., ComVideo Systems, Inc., C-TEC Cable Systems of New York, Inc.
and First Union National Bank, as agent (incorporated by reference to
Exhibit 4.1 to RCN's Form 10)
4.11* Form of Indenture relating to Debt Securities issued hereunder
5.1* Opinion of Davis Polk & Wardwell
5.2 Opinion of John Jones
11.1* Statement regarding Computation of Per Share Earnings (included in the
Notes to the Consolidated Financial Statements)
12.1* Statement re computation of ratios
23.1 Consent of PricewaterhouseCoopers LLP with respect to RCN Corporation
23.2 Consent of Arthur Andersen LLP with respect to 21st Century Telecom
Group, Inc.
24.1* Power of Attorney (included on the signature page of the Registration
Statement)
25.1* Statement of Eligibility of Trustee
</TABLE>
- --------
* Previously filed.
<PAGE>
EXHIBIT 5.2
RCN Corporation
105 Carnegie Center
Princeton, NJ 08540-6215
January 6, 2000
RCN Corporation
105 Carnegie Center
Princeton, NJ 08540-6215
Ladies and Gentlemen:
I am Executive Vice President and General Counsel of RCN
Corporation, a Delaware corporation (the "Company").
This opinion is being furnished in accordance with the
requirements of Item 601(b)(5) of Regulation S-K under the Securities Act of
1933, as amended (the "Act").
In connection with this opinion, I or attorneys under my
supervision have examined originals or copies, certified or otherwise identified
to my satisfaction, of (i) the Registration Statement on Form S-3 (File No. 333-
71525) filed with the Securities and Exchange Commission (the "Commission") on
February 1, 1999 under the Securities Act of 1933, as amended (the "Act"), and
any and all amendments thereto, including post-effective amendments, relating to
(i) the offering from time to time pursuant to Rule 415 of the Act of the
Company's common stock, par value $1.00 per share ("Common Stock"), preferred
stock and debt securities and (ii) the offering of up to 1,107,539 shares of
Common Stock by Boston Edison Company ("BECO") and up to 66,639 shares of Common
Stock by each of David Epstein and Zachary Julius (such shares held by BECO, Mr.
Epstein and Mr. Julius being collectively known as the "Shares") (such
Registration Statement, as so amended, being hereinafter referred to as the
"Registration Statement"); (ii) the prospectus contained in the Registration
Statement (the "Prospectus"); (iii) a specimen certificate representing the
Common Stock; (iv) the Certificate of Incorporation of the Company, as currently
in effect (the "Certificate of Incorporation"); (v) the By-laws of the Company,
as currently in effect (the "By-laws"); and (vi) certain resolutions of the
Board of Directors of the Company. I or attorneys under my supervision have also
examined originals or copies, certified or otherwise identified to our
satisfaction, of such records of the Company and such agreements, certificates
of public officials, certificates of officers or other representa-
<PAGE>
RCN Corporation
January 6, 2000
Page 2
tives of the Company and others, and such other documents, certificates and
records as I have deemed necessary or appropriate as a basis for the opinion set
forth herein.
In my examination, I have assumed the legal capacity of all
natural persons, the genuineness of all signatures, the authenticity of all
documents submitted to me as originals, the conformity to original documents of
all documents submitted to me as certified or photostatic copies and the
authenticity of the originals of such latter documents. In making my examination
of documents executed by parties other than the Company, I have assumed that
such parties had the power, corporate or other, to enter into and perform all
obligations thereunder and have also assumed the due authorization by all
requisite action, corporate or other, and execution and delivery by such
parties of such documents and the validity and binding effect thereof. As to any
facts material to the opinions expressed herein which I did not independently
establish or verify, I have relied upon oral or written statements and
representations of officers and other representatives of the Company and others.
I am admitted to the bar in the State of New York, and I do
not express any opinion as to the laws of any other jurisdiction other than the
laws of the United States of America to the extent referred to specifically
herein.
Based upon and subject to the limitations, qualifications,
exceptions and assumptions set forth herein, I am of the opinion that the Shares
have been duly authorized by the Company and have been validly issued, are fully
paid and non-assessable.
I hereby consent to the filing of this opinion with the
Commission as an exhibit to the Registration Statement. I also consent to the
use of my name under the caption "Legal Matters" in the Registration Statement.
In giving this consent, I do not thereby admit that I am included in the
category of persons whose consent is required under Section 7 of the Act or the
rules and regulations of the Commission.
Very truly yours,
/s/ John Jones
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement
of RCN Corporation on Form S-3 (No. 333-71525) and the related Prospectus, of
our report dated March 8, 1999, except Note 20, as to which the date is March
18, 1999, on our audits of the consolidated financial statements of RCN
Corporation as of December 31, 1998 and 1997 and for the years ended December
31, 1998, 1997 and 1996. We also consent to the reference to our Firm under the
caption "Experts."
/s/ PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
January 6, 2000
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in Registration Statement No. 333-71525 of our report dated February
5, 1999, included in RCN Corporation's Form 8-K dated December 17, 1999,
covering 21st Century Telecom Group, Inc.'s consolidated financial statements as
of December 31, 1998 and March 31, 1998 and the results of its operations and
its cash flows for the nine months ended December 31, 1998 and for each of the
two years in the period ended March 31, 1998. It should be noted that we have
not audited any financial statements of the company subsequent to December 31,
1998 or performed any audit procedures subsequent to the date of our report. We
also consent to the reference to our firm under the caption "Experts".
/s/ Arthur Andersen LLP
Chicago, Illinois
January 6, 2000
