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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 10, 2001.
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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METROMEDIA FIBER NETWORK, INC.
(Exact name of registrant as specified in its charter)
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DELAWARE 4813 11-3168327
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of incorporation) Classification Code Number) Identification No.)
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360 HAMILTON AVENUE
WHITE PLAINS, NY 10601
PHONE: (914) 421-6700
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
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ROBERT SOKOTA, ESQ.
SENIOR VICE PRESIDENT AND GENERAL COUNSEL AND SECRETARY
METROMEDIA FIBER NETWORK, INC.
C/O METROMEDIA COMPANY
ONE MEADOWLAND PLAZA
EAST RUTHERFORD, NJ 07073
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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Copies to:
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DOUGLAS A. CIFU, ESQ. NICHOLAS P. SAGGESE, ESQ.
PAUL, WEISS, RIFKIND, WHARTON & GARRISON SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
1285 AVENUE OF THE AMERICAS 300 SOUTH GRAND AVENUE
NEW YORK, NY 10019-6064 LOS ANGELES, CA 90071-3144
(212) 373-3000 (213) 687-5000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time or at one time after the effective date of this Registration Statement
as determined by the Registrant.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, 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. / /
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(CONTINUED ON FOLLOWING PAGE)
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CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1)(2) PER SHARE(1)(2) OFFERING PRICE(1)(3) REGISTRATION FEE(4)
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Primary Offering:
Debt Securities.........................
Preferred Stock, par value $.01 per
share(5)..............................
Class A Common Stock, par value $.01 per
share(6)..............................
Warrants(7).............................
Total: $1,010,075,000 $252,519
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(1) There are being registered under this Registration Statement such
indeterminate number of shares of Class A Common Stock and Preferred Stock
of the Registrant, such indeterminate number of Warrants of the Registrant
and such indeterminate principal amount of Debt Securities of the
Registrant, as shall have an aggregate initial offering price not to exceed
$1,010,075,000. If any Debt Securities are issued at an original issue
discount, then the securities registered shall include such additional Debt
Securities as may be necessary such that the aggregate initial public
offering price of all securities issued pursuant to this Registration
Statement will equal $1,010,075,000. Any securities registered under this
Registration Statement may be sold separately or as units with other
securities registered under this Registration Statement. The proposed
maximum initial offering price per unit will be determined, from time to
time, by the Registrant in connection with the issuance by the Registrant of
the securities registered under this Registration Statement.
(2) Not specified with respect to each class of securities to be registered
pursuant to General Instruction II.D. of Form S-3 under the Securities Act.
(3) Estimated solely for the purpose of calculating the registration fee. Any
offering of Debt Securities denominated in any foreign currency or currency
unit will be treated as the equivalent in U.S. dollars based on the exchange
rate applicable to the purchase of such Debt Securities from the Registrant.
(4) Calculated pursuant to Rule 457 of the rules and regulations under the
Securities Act. A filing fee aggregating $136,199 was paid previously for
$489,925,000 aggregate principal amount of securities to be sold in primary
offerings which are being carried forward from a registration statement
filed earlier into the prospectus filed as part of this Registration
Statement. The filing fee of $252,519 relates solely to the registration of
$1,010,075,000 aggregate principal amount of securities not previously
registered.
(5) Including such indeterminate number of shares of Preferred Stock as may,
from time to time, be issued (i) at indeterminate prices or (ii) upon
conversion or exchange of Debt Securities registered hereunder, to the
extent any such Debt Securities are, by their terms, convertible into
Preferred Stock.
(6) Including such indeterminate number of shares of Class A Common Stock as
may, from time to time, be issued (i) at indeterminate prices or (ii) upon
conversion or exchange of Debt Securities or Preferred Stock registered
hereunder, to the extent any of such Debt Securities or shares of Preferred
Stock are, by their terms, convertible into Class A Common Stock.
(7) Including such indeterminate number of Warrants as may from time to time to
be issued at indeterminate prices, representing rights to purchase certain
of the Class A Common Stock, Preferred Stock or Debt Securities registered
hereunder.
Pursuant to Rule 429 under the Securities Act, this Registration Statement
contains a combined prospectus that also relates to $489,925,000 aggregate
principal amount of Debt Securities, Preferred Stock, Class A Common Stock and
Warrants that remain eligible for sale in primary offerings, all of which were
previously registered under the Registration Statement on Form S-3 (File No.
333-89087) of Metromedia Fiber Network, Inc., which was declared effective on
October 28, 1999. In the event any such previously registered Debt Securities,
Preferred Stock, Class A Common Stock or Warrants are offered prior to the
effective date of this Registration Statement, they will not be included in any
prospectus hereunder. The amount of Debt Securities, Preferred Stock, Class A
Common Stock and Warrants being registered under this Registration Statement
together with Debt Securities, Preferred Stock, Class A Common Stock and
Warrants registered under Registration Statement on Form S-3 (File No.
333-89087) represents the maximum amount of Debt Securities, Preferred Stock,
Class A Common Stock and Warrants which are expected to be offered for sale.
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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SUBJECT TO COMPLETION DATED, JANUARY 10, 2001
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.
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P R O S P E C T U S
[LOGO]
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From time to time, we may sell in primary offerings any of the following
securities with an aggregate initial offering price not to exceed
$1,500,000,000.
- Debt Securities
- Preferred Stock
- Class A Common Stock
- Warrants
We will provide the specific terms of these securities in one or more
supplements to this prospectus. You should read this prospectus and any
prospectus supplement carefully before you invest.
Our class A common stock is traded over-the-counter on The Nasdaq Stock
Market's National Market under the trading symbol "MFNX". The applicable
prospectus supplement will contain information, where applicable, as to any
other listing on The Nasdaq Stock Market's National Market or any securities
exchange of the securities covered by the prospectus supplement.
The securities may be sold directly by us to investors, through agents
designated from time to time or to or through underwriters or dealers. See "Plan
of Distribution." If any underwriters are involved in the sale of any securities
in respect of which this prospectus is being delivered, the names of such
underwriters and any applicable commissions or discounts will be set forth in a
prospectus supplement. The net proceeds we expect to receive from such sale also
will be set forth in a prospectus supplement.
This prospectus may not be used to offer or sell any securities unless
accompanied by a prospectus supplement. We urge you to read carefully this
prospectus and the accompanying prospectus supplement, which will describe the
specific terms of the securities being offered to you, before you make your
investment decision.
INVESTING IN THE SECURITIES INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON
PAGE 3.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THE SECURITIES TO BE ISSUED UNDER THIS
PROSPECTUS OR DETERMINED IF THIS PROSPECTUS IS ACCURATE OR ADEQUATE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is , 2001
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TABLE OF CONTENTS
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RISK FACTORS................................................ 3
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS........... 13
ABOUT THIS PROSPECTUS....................................... 14
BUSINESS.................................................... 14
RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK
DIVIDENDS................................................. 15
USE OF PROCEEDS............................................. 15
DESCRIPTION OF DEBT SECURITIES.............................. 16
DESCRIPTION OF CAPITAL STOCK................................ 25
DESCRIPTION OF WARRANTS..................................... 31
PLAN OF DISTRIBUTION........................................ 32
VALIDITY OF SECURITIES...................................... 33
EXPERTS..................................................... 34
WHERE YOU CAN FIND MORE INFORMATION......................... 34
INCORPORATION OF INFORMATION WE FILE WITH THE SEC........... 35
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RISK FACTORS
WE HAVE A LIMITED HISTORY OF OPERATIONS
You have limited historical financial information upon which to base your
evaluation of our performance. We were formed in April 1993 and have a limited
operating history. We currently have a limited number of customers and are still
in the process of building many of our networks. Accordingly, you must consider
our prospects in light of the risks, expenses and difficulties frequently
encountered by companies in their early stage of development.
WE HAVE INCURRED SIGNIFICANT NET LOSSES IN CONNECTION WITH THE CONSTRUCTION OF
OUR NETWORK AND THERE CAN BE NO ASSURANCE THAT WE WILL GENERATE NET INCOME OR
THAT WE WILL SUSTAIN POSITIVE CASH FLOW IN THE FUTURE
We have incurred and expect to continue incurring losses while we
concentrate on the development and construction of our networks and until our
networks have established an adequate revenue-generating customer base. In
addition, our anticipated acquisition of SiteSmith, Inc. is expected to increase
net losses of the combined entity because SiteSmith is a start-up business. As a
result, the amortization of SiteSmith's goodwill will not be offset by any
revenue generated by SiteSmith's business and is expected to increase net
losses. The combined entity also expects to incur losses during the initial
startup phases of any services that it may provide. Although, pursuant to our
business plan, we anticipate to reach positive EBITDA by 2003, we cannot assure
you that we will succeed in establishing the adequate revenue base or that our
services will generate the results required to achieve this goal.
Continued negative EBITDA may prevent us from pursuing our strategies for
growth and could cause us to be unable to meet our debt service obligations,
capital expenditure requirements or working capital needs.
WE HAVE SUBSTANTIAL DEBT WHICH MAY LIMIT OUR ABILITY TO BORROW, RESTRICT THE USE
OF OUR CASH FLOWS AND CONSTRAIN OUR BUSINESS STRATEGY, AND WE MAY NOT BE ABLE
TO MEET OUR DEBT OBLIGATIONS
We have substantial debt and debt service requirements. We had a total debt
of approximately $2.68 billion as of September 30, 2000. Our substantial debt
has important consequences, including:
- our ability to borrow additional amounts for working capital, capital
expenditures or other purposes is limited,
- a substantial portion of our cash flow from operations is required to make
debt service payments, and
- our leverage could limit our ability to capitalize on significant business
opportunities and our flexibility to react to changes in general economic
conditions, competitive pressures and adverse changes in government
regulation.
We cannot assure you that our cash flow and capital resources will be
sufficient to repay our existing indebtedness and any indebtedness we may incur
in the future, or that we will be successful in obtaining alternative financing.
In the event that we are unable to repay our debts, we may be forced to reduce
or delay the completion or expansion of our networks, sell some of our assets,
obtain additional equity capital or refinance or restructure our debt. If we are
unable to meet our debt service obligations or comply with our covenants, a
default under our debt agreements would result. To avoid a default, we may need
waivers from third parties, which might not be granted.
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WE MAY NOT BE ABLE TO SUCCESSFULLY IMPLEMENT OUR BUSINESS STRATEGY BECAUSE WE
DEPEND ON FACTORS BEYOND OUR CONTROL, WHICH COULD ADVERSELY AFFECT OUR RESULTS
OF OPERATIONS
Our future largely depends on our ability to implement our business strategy
and proposed expansion in order to create new business and revenue
opportunities. Our results of operations will be adversely affected if we cannot
fully implement our business strategy. Successful implementation depends on
numerous factors beyond our control, including economic, competitive and other
conditions and uncertainties, the ability to obtain licenses, permits,
franchises and rights-of-way on reasonable terms and conditions and the ability
to hire and retain qualified management personnel.
WE CANNOT ASSURE YOU THAT WE WILL SUCCESSFULLY COMPLETE THE CONSTRUCTION OF OUR
NETWORKS
The construction of future networks and the addition of internet service
exchange facilities entail significant risks, including management's ability to
effectively control and manage these projects, shortages of materials or skilled
labor, unforeseen engineering, environmental or other regulatory or geological
problems, work stoppages, weather interference, floods and unanticipated cost
increases. The failure to obtain necessary licenses, permits and authorizations
could prevent or delay the completion of construction of all or part of our
networks or increase completion costs. In addition, our establishment and
maintenance of interconnections with other network providers at various public
and private points, often referred to as "peering arrangements," is necessary
for us to provide cost efficient co-location and internet connectivity services.
We cannot assure you that the budgeted costs of our current and future projects
will not be exceeded or that these projects will commence operations within the
contemplated schedules, if at all.
WE OBTAIN SOME OF THE KEY COMPONENTS USED IN OUR FIBER OPTIC NETWORK FROM A
SINGLE SOURCE OR A LIMITED GROUP OF SUPPLIERS, AND THE PARTIAL OR COMPLETE
LOSS OF ONE OF THESE SUPPLIERS COULD DISRUPT OUR OPERATIONS AND RESULT IN A
SUBSTANTIAL LOSS OF REVENUE
We depend upon a small group of suppliers for some of the key components and
parts used in our network. In particular, we purchase cable from Lucent,
Lucent-Fitel and from Corning, and we purchase fiber optic equipment from Nortel
and Lucent. Any delay or extended interruption in the supply of any of the key
components, changes in the pricing arrangements with our suppliers and
manufacturers or delay in transitioning a replacement supplier's product into
our network could disrupt our operations.
OUR FIBER OPTIC NETWORK AND INTERNET SERVICE EXCHANGE FACILITIES ARE VULNERABLE
TO PHYSICAL DAMAGE, CATASTROPHIC OUTAGES, POWER LOSS AND OTHER DISRUPTIONS
BEYOND OUR CONTROL, AND THE OCCURRENCE OF ANY OF THESE FAILURES COULD RESULT
IN IMMEDIATE LOSS OF REVENUE, PAYMENT OF OUTAGE CREDITS TO OUR CUSTOMERS AND,
MORE IMPORTANTLY, THE LOSS OF OUR CUSTOMERS' CONFIDENCE AND OUR BUSINESS
REPUTATION
Our success in marketing our services to our customers requires that we
provide high reliability, high bandwidth and a secure network. Our network,
facilities and the infrastructure upon which we depend are subject to physical
damage, power loss, capacity limitations, software defects, breaches of security
and other disruptions beyond our control that may cause interruptions in service
or reduced capacity for customers. Our agreements with our customers typically
provide for the payment of outage related credits (a predetermined reduction or
offset against our lease rate when a customer's leased facility is
non-operational and/or otherwise does not meet certain operating parameters) or
damages in the event of a disruption in service. These credits or damages could
be substantial and could significantly decrease our net revenue. Significant or
lengthy outages would also undermine our customers' confidence in our fiber
optic network and injure our business reputation.
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WE CANNOT ASSURE YOU THAT A MARKET FOR OUR CURRENT OR FUTURE SERVICES WILL
DEVELOP
The practice of leasing dark fiber, which is fiber optic cable without any
of the electronic or optronic equipment necessary to use the fiber for
transmission, is not widespread and we cannot assure you that the market will
develop or that we will be able to enter into contracts, comply with the terms
of these contracts or maintain relationships with communications carriers and
corporate and government customers. We also cannot assure you that these
contracts or relationships will be on economically favorable terms or that
communications carriers and corporate and government customers will not choose
to compete against, rather than cooperate with us. If we are unable to enter
into contracts, comply with the terms of the contracts or maintain relationships
with these customers, our operations would be materially and adversely affected.
We cannot predict whether providing services to governments will evolve into a
significant market because governments usually already control existing
rights-of-way and often build their own communications infrastructure. We will
need to strengthen our marketing efforts and increase our staff to handle future
marketing and sales requirements. If we fail to obtain significant, widespread
commercial and public acceptance of our networks and access to sufficient
buildings our visibility in the telecommunications market could be jeopardized.
We cannot assure you that we will be able to secure customers for the commercial
use of our proposed networks or access to sufficient buildings in each market.
In addition, the market for our co-location and internet services is new and
evolving. We cannot assure you that our co-location and internet services will
achieve widespread acceptance in this new market. Further, the success of our
co-location and internet services business depends in large part on growth in
the use of the internet. The growth of the internet is highly uncertain and
depends on a variety of factors.
We may expand the range of services that we offer. These services may
include assisting customers with the integration of their leased dark fiber with
appropriate electronic and optronic equipment by facilitating the involvement of
third party suppliers, vendors and contractors. We cannot assure you that a
market will develop for our new services, that implementing these services will
be technically or economically feasible, that we can successfully develop or
market them or that we can operate and maintain our new services profitably.
SEVERAL OF OUR CUSTOMERS MAY TERMINATE THEIR AGREEMENTS WITH US OR INVOKE
LIQUIDATED DAMAGES PROVISIONS IF WE DO NOT PERFORM BY SPECIFIED TIMES
We currently have some contracts to supply leased fiber capacity which allow
the lessee to terminate the contracts and/or provide for liquidated damages if
we do not supply the stated fiber capacity by a specified time. Our ability to
install and supply fiber at the times required by our contracts is dependent on
a number of factors, some of which are beyond our control, including the ability
of our subcontractors to perform on time and state and local regulation.
Termination of any of these contracts or the invocation of liquidated damage
provisions could adversely affect our operating results.
WE MAY BE UNABLE TO RAISE THE ADDITIONAL FINANCING NECESSARY TO COMPLETE THE
CONSTRUCTION OF OUR NETWORKS, WHICH WOULD ADVERSELY AFFECT OUR LONG-TERM
BUSINESS STRATEGY
We may need significant amounts of additional capital to complete the
build-out of our planned fiber optic communications networks, to expand our
network infrastructure, to build additional co-location facilities and to meet
our long-term business strategies, including expanding our networks to
additional cities and constructing our networks in Europe. If we need additional
funds, our inability to raise them will have an adverse effect on our
operations. If we decide to raise additional funds by incurring debt, we may
become more leveraged and subject to additional or more restrictive financial
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covenants and ratios. In addition, if we issue equity securities or securities
convertible or exchangeable into our equity securities, current stockholders may
face dilution.
Our ability to arrange financing and the cost of financing depends upon many
factors, including:
- general economic and capital markets conditions, and in particular the
non-investment grade debt market;
- conditions in the telecommunications and internet markets;
- regulatory developments;
- credit availability from banks or other lenders;
- investor confidence in the telecommunications and internet industries and
in our company;
- the success of our fiber optic communications network and internet
services; and
- provisions of tax and securities laws that are conducive to raising
capital.
COMPETITORS OFFER SERVICES SIMILAR TO OURS IN OUR CURRENT OR PLANNED MARKETS
WHICH WOULD AFFECT OUR RESULTS OF OPERATIONS
The telecommunications industry and the co-location and internet services
business are extremely competitive, particularly with respect to price and
service, which may adversely affect our results of operations. A significant
increase in industry capacity or reduction in overall demand would adversely
affect our ability to maintain or increase prices. In the telecommunications
industry, we compete against incumbent local exchange carriers, which have
historically provided local telephone services and currently dominate their
local telecommunications markets, and competing carriers in the local services
market. In addition to these carriers, several other potential competitors, such
as facilities-based communications service providers, cable television
companies, electric utilities, microwave carriers, satellite carriers, wireless
telephone system operators and large end-users with private networks, are
capable of offering, and in some cases offer, services similar to those offered
by us. Furthermore, several of these service providers, such as wireless service
providers, could build wireless networks more rapidly and at lower cost than
fiber optic networks. Additionally, the co-location and internet services
business is highly competitive due to a lack of barriers to entry and high price
sensitivity. Many of our competitors have greater financial, research and
development and other resources than we do.
Some of our principal competitors already own fiber optic cables as part of
their telecommunications networks. Accordingly, any of these carriers, some of
which already have franchise and other agreements with local and state
governments and substantially greater resources and more experience than us,
could directly compete with us in the market for leasing fiber capacity, if they
are willing to offer this capacity to their customers. In addition, some
communications carriers and local cable companies have extensive networks in
place that could be upgraded to fiber optic cable, as well as numerous personnel
and substantial resources to begin construction to equip their networks. If
communications carriers and local cable companies decide to equip their networks
with fiber optic cable, they could become significant competitors. Our franchise
and other agreements with the city of New York and other local and state
governments are not exclusive. Potential competitors with greater resources and
more experience than us could enter into franchise and other agreements with
local and state governments and compete directly with us. Other companies may
choose to compete with us in our current or planned markets, including Europe,
by leasing fiber capacity, including dark fiber, to our targeted customers. This
additional competition could materially and adversely affect our operations.
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WE DEPEND ON A LIMITED NUMBER OF CUSTOMERS AND HAVE A LONG SALES CYCLE, AND AS A
RESULT ARE MORE VULNERABLE TO CHANGING ECONOMIC CONDITIONS
We are particularly dependent on a limited number of customers. In addition,
our co-location and internet services business has a long sales cycle. We are,
therefore, more susceptible to the impact of poor economic conditions than our
competitors with a more balanced mix of business.
GOVERNMENTAL REGULATION MAY LIMIT THE DEVELOPMENT OF OUR NETWORKS AND AFFECT OUR
COMPETITIVE POSITION
Existing and future government laws and regulations greatly influence how we
operate our business, our business strategy and ultimately, our viability. U.S.
Federal and state laws and the laws of foreign countries in which we operate
directly shape the telecommunications and internet market. Consequently,
regulatory requirements and changes could adversely affect our operations and
also influence the market for Internet, web hosting and related services.
However, we cannot predict the future regulatory framework of our business.
U.S. LAWS MAY NEGATIVELY IMPACT OUR BUSINESS AND RESULTS OF OPERATIONS BY
REGULATING OUR OPERATIONS AND OUR CUSTOMERS' OPERATIONS
U.S. Federal telecommunications law imposes legal requirements on common
carriers who engage in interstate or foreign communication by wire or radio, and
on telecommunications carriers. Should these regulations be applied to us, they
may have a material adverse impact on our business and results of operation. If
providing dark fiber facilities or related services provided by us were deemed
to be a telecommunications service, then regulations, both Federal and state,
applicable to telecommunications carriers might apply to us. This could subject
the revenues we receive from facility leases in interstate commerce to
assessment by the Federal Communications Commission Universal Service Fund and
the offering of those facilities or services would be subject to common carrier
regulation. In addition, several of our customers and, in the case of Bell
Atlantic (doing business as Verizon Communications), one of our shareholders,
are local exchange carriers or long distance carriers, subject to regulation by
the Federal Communications Commission. Our business may be affected by
regulations applicable to these telecommunications carriers. For example, the
Federal Communications Commission has recently taken steps, and may take further
steps, to reduce access charges, the fees paid by long distance carriers to
local exchange carriers for originating and terminating long distance calls on
the incumbent local exchange carriers' local networks, and to give the local
exchange carriers greater flexibility in setting these charges. While we cannot
predict the precise effect reduction in access charge will have on our
operations, the reduction will likely make it more attractive for long distance
carriers to use local exchange carriers facilities, rather than our fiber optic
telecommunications network. In addition, a recent decision by the Federal
Communications Commission to require unbundling of incumbent local exchange
carriers' dark fiber could decrease the demand for our dark fiber by allowing
our potential customers to obtain dark fiber from incumbent local exchange
carriers at cost-based rates, and thereby have an adverse effect on the results
of our operations.
STATE LEGISLATION AFFECTS OUR PRICING POLICIES AND OUR COSTS
Our offering of transmission services, which is different from dark fiber
capacity, may be subject to regulation in each state to the extent that these
services are offered for intrastate use, and this regulation may have an adverse
effect on the results of our operations. We cannot assure you that these
regulations, if any, as well as future regulatory, judicial or legislative
action will not have a material adverse effect on us. In particular, state
regulators have the authority to determine both the rates we will pay to
incumbent local exchange carriers for certain interconnection arrangements, such
as physical co-location, and the prices that incumbent local exchange carriers
will be able to charge our potential customers for services and facilities that
compete with our services. We will also incur costs in
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order to comply with regulatory requirements such as the filing of tariffs,
submission of periodic financial and operational reports to regulators and
payment of regulatory fees and assessments, including contributions to state
universal service funds. In some jurisdictions, our pricing flexibility for
intrastate services may be limited because of regulation, although our direct
competitors will be subject to similar restrictions.
LOCAL GOVERNMENTS' CONTROL OVER RIGHTS-OF-WAY CAN LIMIT THE DEVELOPMENT OF
OUR NETWORKS
Local governments exercise legal authority that may have an adverse effect
on our business because of our need to obtain rights-of-way for our fiber
network. While local governments may not prohibit persons from providing
telecommunications services nor treat telecommunication service providers in a
discriminating manner, they can affect the timing and costs associated with our
use of public rights-of-way.
THE REGULATORY FRAMEWORK FOR OUR INTERNATIONAL OPERATIONS IS EXTENSIVE AND
CONSTANTLY CHANGING, ADDING UNCERTAINTIES TO OUR PLANNED EXPANSION INTO
FOREIGN COUNTRIES
Various regulatory requirements and limitations also will influence our
business as we attempt to enter international markets. Regulation of the
international telecommunications industry is changing rapidly. We are unable to
predict how the Federal Communications Commission and foreign regulatory bodies
will resolve the various pending international policy issues and the effect of
such resolutions on us. Our U.K. subsidiary is a U.S. international common
carrier subject to U.S. regulation under Title II of the Communications Act of
1934. We are also licensed as a U.S. international common carrier subject to
U.S. regulation under Title II of the Communications Act of 1934. Our U.K.
subsidiary is, and we also are, required, under Sections 214 and 203 of the
Communications Act of 1934, respectively, to obtain authorization and file an
international service tariff containing rates, terms and conditions before
initiating service. International carriers are also subject to certain annual
fees and filing requirements such as the requirement to file contracts with
other carriers, including foreign carrier agreements, and reports describing
international circuit, traffic and revenue data service. So long as our U.K.
subsidiary and we operate as international common carriers, our U.K. subsidiary
and we will also be required to comply with the rules of the Federal
Communications Commission. The international services provided by our U.K.
subsidiary are and our international services are also subject to regulation in
the United Kingdom and other European jurisdictions in which we may operate.
National regulations of relevant European and other foreign countries, as well
as policies and regulations of the European Union and other foreign governments,
impose separate licensing, service and other conditions on our foreign joint
ventures and our international service operations, and these requirements may
have a material adverse impact on us.
OUR FRANCHISES, LICENSES OR PERMITS COULD BE CANCELED OR NOT RENEWED, WHICH
WOULD IMPAIR THE DEVELOPMENT OF MAJOR MARKETS FOR OUR SERVICES
Termination or non-renewal of our franchise with the city of New York or of
other rights-of-way or franchises that we use for our networks could have a
material adverse effect on our business, results of operations and financial
condition. We will also need to obtain additional franchises, licenses and
permits for our planned intracity networks, intercity networks and international
networks. We cannot assure you that we will be able to maintain on acceptable
terms our existing franchises, licenses or permits or to obtain and maintain the
other franchises, licenses or permits needed to implement our strategy.
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PRIVACY CONCERNS, GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES MAY LIMIT THE
GROWTH IN THE USE OF THE INTERNET, WHICH WOULD PREVENT US FROM ESTABLISHING A
VIABLE CUSTOMER BASE FOR OUR INTERNET AND CO-LOCATION SERVICES
Laws and regulations that apply directly to the internet are becoming more
prevalent. The U.S. Congress recently considered internet laws regarding privacy
and security relating to the collection and transmission of information over the
internet, entrusting the FTC with strong enforcement power. The U.S. Congress
also addressed the need for regulation on the protection of children,
copyrights, trademarks, domain names, taxation and the transmission of sexually
explicit material over the internet. The European Union adopted its own privacy
regulations and other countries may do so in the future. Other nations have
taken actions to restrict the free flow of material deemed objectionable over
the internet. Although such legislation and regulations do not regulate our
business directly, they may dampen the growth of the internet and decrease its
acceptance as a commercial medium. As a result, they could restrain the growth
of our customer base and impede the development of our internet and co-location
services.
Also, the scope of certain laws and regulations applicable to the internet
is subject to conflicting interpretations and developments. The applicability to
the internet of laws and regulations from various jurisdictions governing issues
such as property ownership, sales tax, libel and personal privacy is unsettled
and may take years to resolve. For example, the Telecommunications Act of 1996
prohibits the transmission of certain types of information and content over the
internet but the scope of this prohibition is currently unsettled. In addition,
although courts held unconstitutional substantial parts of the Communication
Decency Act, federal or state governments may enact, and courts may uphold
similar legislation as well as laws covering issues such as intellectual
property rights over the internet and the characteristics and quality of
internet services and consumer protection laws. Foreign countries may also enact
laws in these fields. The development of laws governing these areas together
with the application to these areas of existing laws not designed for the
internet may expose companies involved in the internet to liability, increase
their costs and discourage the development of the internet as a commercial
medium. As a result, we would not succeed in establishing a satisfactory
customer base for our internet and co-location services.
WE MAY NOT BE ABLE TO OBTAIN AND MAINTAIN THE RIGHTS-OF-WAY AND OTHER PERMITS
NECESSARY TO IMPLEMENT OUR BUSINESS STRATEGY
We must obtain additional rights-of-way and other permits from railroads,
utilities, state highway authorities, local governments and transit authorities
to install conduit and fiber for the expansion of our intracity networks,
intercity networks and international networks. We cannot assure you that we will
be successful in obtaining and maintaining these right-of-way agreements or
obtaining these agreements on acceptable terms. Some of these agreements may be
short-term or revocable at will, and we cannot assure you that we will continue
to have access to existing rights-of-way after they have expired or terminated.
If any of these agreements were terminated or could not be renewed and we were
forced to remove our fiberoptic cable from under the streets or abandon our
networks, the termination could have a material adverse effect on our
operations. In addition, landowners have asserted that railroad companies and
others to whom they granted easements to their properties are not entitled as a
result of these easements to grant rights of way to telecommunications
providers. If these disputes are resolved in the landowners' favor, we could be
obligated to make substantial lease payments to these landowners for the lease
of these rights of way. More specifically, our New York/New Jersey network
relies upon, and our planned expansions into Long Island and Westchester County
will rely upon, right-of-way agreements with Bell Atlantic Corporation and
Empire City Subway Company (Ltd.). The current agreements may be terminated at
any time without cause with three months notice. In case of termination, we may
be required to remove our fiber optic cable from the conduits or poles of Bell
Atlantic. This termination would have a material adverse effect on our
operations.
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RAPID TECHNOLOGICAL CHANGES COULD AFFECT THE CONTINUED USE OF FIBER OPTIC CABLE
AND OUR RESULTS OF OPERATIONS
The telecommunications industry is subject to rapid and significant changes
in technology that could materially affect the continued use of our services,
including fiber optic cable and internet connectivity services. We cannot
predict the effect of technological changes on our business. We also cannot
assure you that technological changes in the communications industry and
internet related industry will not have a material adverse effect on our
operations.
WE MAY EXPERIENCE RISKS AS A RESULT OF EXPANDING OUR NETWORKS AND OPERATIONS
INTO FOREIGN COUNTRIES, WHICH MAY ADVERSELY AFFECT OUR RESULTS OF OPERATIONS
Our strategy includes expanding our services to provide fiber optic cable,
developing regional internet service exchange facilities and, following the
merger of SiteSmith, Inc. into our subsidiary Aqueduct Acquisition Corp.,
offering internet infrastructure solutions in foreign countries. We are present
in most countries of the European Union and have taken steps to develop our
operations in Canada, Denmark, Ireland, Spain, Switzerland, The Czech Republic,
Hungary, Israel and Japan. These planned international operations are subject to
a number of risks, including:
- difficulties in staffing and managing our operations in foreign countries;
- difficulty in maintaining effective communications due to distance,
language and cultural barriers;
- cost of adapting products and techniques to foreign countries;
- longer sales cycles;
- longer payment cycles;
- problems in collecting accounts receivable;
- fluctuations in currency exchange rates;
- potentially adverse tax consequences;
- slower adoption of the internet in Europe;
- the impact of recessions in countries outside the United States;
- political and economic instability in Israel;
- import and export restrictions of certain technologies and products such
as fiber;
- trade barriers and barriers to foreign investment, especially in the
telecommunications industry;
- reduced protection for intellectual property rights in some countries;
- higher levels of regulation specific to the telecommunications industry,
such as administrative authorizations required by most countries in the
European Union;
- unexpected changes in the regulatory requirements;
- delays from customs brokers or government agencies encountered as a result
of exporting fiber from the United States to foreign countries in which we
may operate; and
- potentially adverse consequences resulting from operating in multiple
countries, each with its own laws and regulations, including tax laws and
industry related regulations.
We cannot assure you that we will be successful in overcoming these risks or
any other problems arising because of expansion into Europe and other foreign
countries.
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WE MAY NOT BE ABLE TO SUCCESSFULLY IDENTIFY, MANAGE AND ASSIMILATE FUTURE
ACQUISITIONS, INVESTMENTS AND STRATEGIC ALLIANCES, WHICH WOULD ADVERSELY
AFFECT OUR RESULTS OF OPERATIONS
We have in the past, and may in the future, acquire, make investments in or
enter into strategic alliances, including joint ventures in which we hold less
than a majority interest, with companies that have customer bases, switching
capabilities, existing networks or other assets in our current markets or in
areas into which we intend to expand our networks. Any acquisitions,
investments, strategic alliances or related efforts will be accompanied by risks
such as:
- the difficulty of identifying appropriate acquisition candidates;
- the difficulty of assimilating the operations of the respective entities;
- the potential disruption of our pre-existing business;
- the potential inability to control joint ventures in which we hold less
than a majority interest;
- the inability of management to capitalize on the opportunities presented
by acquisitions, investments, strategic alliances or related efforts;
- the failure to successfully incorporate licensed or acquired technology
and rights into our services;
- the inability to maintain uniform standards, controls, procedures and
policies; and
- the impairment of relationships with employees and customers as a result
of changes in management.
We cannot assure you that we will be successful in overcoming these risks or
any other problems encountered with such acquisitions, investments, strategic
alliances or related efforts.
IN THE TELECOMMUNICATIONS INDUSTRY, CONTINUED PRICING PRESSURES FROM OUR
COMPETITORS AND AN EXCESS OF NETWORK CAPACITY CONTINUE TO CAUSE PRICES FOR OUR
SERVICES TO DECLINE
We anticipate that prices for our services specifically, and transmission
services in general, will continue to decline over the next several years due
primarily to the following:
- price competition as various network providers continue to install
networks that might compete with our networks;
- recent technological advances that permit substantial increases in the
transmission capacity of both new and existing fiber; and
- strategic alliances or similar transactions, such as long distance
capacity purchasing alliances among regional Bell operating companies,
that increase the parties' purchasing power.
OUR BUSINESS DEPENDS ON A LIMITED NUMBER OF KEY PERSONNEL THE LOSS OF WHOM COULD
ADVERSELY AFFECT OUR BUSINESS
Our business is managed by a small number of key management and operating
personnel. We believe that the success of our business strategy and our ability
to operate profitably depend on the continued employment of our senior
management team led by Stephen A. Garofalo, Chairman of the Board of Directors
and Chief Executive Officer. Our business and financial results could be
materially affected if Mr. Garofalo or other members of our senior management
team became unable or unwilling to continue in their present positions.
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WE MAY EXPERIENCE ADDITIONAL RISKS AS A RESULT OF OUR CO-LOCATION AND INTERNET
SERVICES
We have no patented technology and rely on a combination of copyright,
trademark, service mark and trade secret laws and contractual restrictions to
establish and protect certain proprietary rights in our technology.
Despite our design and implementation of a variety of internet network
security measures, unauthorized access, computer viruses, accidental or
intentional action and other disruptions could occur. In addition, we may incur
significant costs to prevent breaches in our internet security or to alleviate
problems caused by those breaches.
The law relating to the liability of online services companies and internet
access providers for information carried on or disseminated through their
networks is currently unsettled. It is possible that claims could be made
against online services companies, co-location companies and internet access
providers. We may need to implement measures to reduce our exposure to this
potential liability.
METROMEDIA COMPANY EFFECTIVELY CONTROLS OUR COMPANY AND HAS THE POWER TO CAUSE
OR PREVENT A CHANGE OF CONTROL
Metromedia Company and one of its general partners currently own 100% of our
class B common stock, which represents more than a majority of our total voting
power and which is entitled to elect 75% of the members of our board of
directors. Accordingly, Metromedia Company is able to control the board of
directors and all stockholder decisions and, in general, to determine the
outcome of any corporate transaction or other matter submitted to the
stockholders for approval, including mergers, consolidations and the sale of all
or substantially all of our assets, without the consent of other stockholders.
In addition, Metromedia Company has the power to prevent or cause a change in
control of our company.
OFFICERS AND DIRECTORS OWN A SUBSTANTIAL PORTION OF OUR VOTING STOCK AND MAY
HAVE CONFLICTS OF INTEREST
Our executive officers and directors have substantial equity interests in
our company. As of December 31, 2000, our directors and executive officers as a
group collectively beneficially owned approximately 21.8% of its outstanding
class A common stock and 100% of its outstanding class B common stock, including
shares beneficially owned by Metromedia Company.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Any statements in this prospectus about our expectations, belief, plans,
objectives, assumptions or future events or performance are not historical facts
and are forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
These statements are often, but not always, made through the use of words or
phrases such as "will likely result," "expect," "will continue," "anticipate,"
"estimate," "intend," "plan," "projection," "would" and "outlook." Accordingly,
these statements involve estimates, assumptions and uncertainties which could
cause actual results to differ materially from those expressed in them. Any
forward-looking statements are qualified in their entirety by reference to the
factors discussed throughout this document. The following cautionary statements
identify important factors that could cause our actual results to differ
materially from those projected in the forward-looking statements made in this
document. Among the key factors that have a direct bearing on our results of
operation are:
- general economic and business conditions;
- the existence or absence of adverse publicity;
- changes in, or failure to comply with, government regulations;
- changes in marketing and technology;
- changes in political, social and economic conditions, especially with
respect to our foreign operations;
- competition in the telecommunications and internet-related industries;
- industry capacity;
- general risks of the telecommunications and internet-related industries;
- success of acquisition and operating initiatives, including our ability to
successfully integrate our acquisitions;
- changes in business strategy or development plans;
- management of growth;
- availability, terms and deployment of capital;
- construction schedules;
- costs and other effects of legal and administrative proceedings;
- dependence on senior management;
- business abilities and judgments of personnel;
- availability of qualified personnel; and
- labor and employee benefit costs.
These factors and the risk factors referred to above could cause actual
results or outcomes to differ materially from those expressed in any
forward-looking statements made by us. You should not place undue reliance on
any such forward-looking statements. Further, any forward-looking statement
speaks only as of the date on which it is made, and we undertake no obligation
to update any forward-looking statement or statements to reflect events or
circumstances after the date on which such statement is made or to reflect the
occurrence of unanticipated events. New factors emerge from time to time, and it
is not possible for us to predict which will arise. In addition, we cannot
assess the impact of each factor on our business or the extent to which any
factor, or combination of factors, may cause actual results to differ materially
from those contained in any forward-looking statements.
For a discussion of important risks of an investment in our securities,
including factors that could cause actual results to differ materially from
results referred to in the forward-looking statements, see "Risk Factors." You
should carefully consider the information set forth under the caption "Risk
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Factors." In light of these risks, uncertanities and assumptions, the
forward-looking events discussed in or incorporated by reference in this
prospectus might not occur.
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,
over the next two years, sell any combination of the securities described in
this prospectus in one or more offerings up to a total dollar amount of
$1,500,000,000.
This prospectus provides you with a general description of the securities we
may offer. Each time we sell securities, we will provide a prospectus supplement
that will contain specific information about the terms of that offering. The
prospectus supplement may also add, update or change information contained in
this prospectus. You should read both this prospectus and any prospectus
supplement together with additional information described immediately below
under the heading "Where You Can Find More Information."
BUSINESS
We provide dedicated fiber optic infrastructure and high-bandwidth internet
connectivity for our communications intensive customers. We are a
facilities-based provider of technologically advanced, high-bandwidth, fiber
optic communications infrastructure to communications carriers and corporate and
government customers in the United States and Europe. We have installed and
intend to install local intracity networks in major metropolitan markets in the
United States and Europe enabling technologically sophisticated organizations to
implement the latest data, video, internet and multimedia applications. In
addition, through our subsidiary AboveNet Communications Inc., we provide
facilities-based, managed services for customer-owned webservers and related
equipment, known as co-location, and high performance internet connectivity
solutions for electronic commerce and other business critical internet
operations.
Our company was founded in 1993 and is a Delaware corporation and our
executive offices are located at 360 Hamilton Avenue, White Plains, NY 10601.
Our web site is www.mmfn.com. Information on our web site is not incorporated by
reference in this prospectus.
RECENT DEVELOPMENTS
We recently entered into a commitment letter with Citicorp USA, Inc. and
Salomon Smith Barney which provides for senior credit facilities in the
aggregate amount of $350 million. Citicorp will act as lender and administrative
agent under the facilities and Salomon Smith Barney will act as sole advisor,
lead arranger and sole book manager. The commitment letter provides for a
revolving credit facility of up to $150 million and a term loan facility of up
to $200 million. The commitment letter provides us access to additional
revolving credit or term loan facilities not to exceed $100 million upon terms
to be agreed upon. The commitment of Citicorp and Salomon Smith Barney, which is
subject to customary conditions, will expire on May 15, 2001 if we have not
entered into definitive documentation for the senior credit facilities by then.
Borrowings under the senior credit facilities will bear interest at Adjusted
LIBOR plus 2.75-3.00% or an Alternative Base Rate plus 1.75-2.00%. The margins
will depend upon the credit ratings that the facilities receive. Our obligations
under the senior credit facilities will be guaranteed by our existing and future
subsidiaries and will be secured by all of our assets and the assets of each
guarantor, to the extent permitted in the trust indenture governing our
outstanding notes. The senior credit facilities will contain customary
provisions relating to prepayments, representations and warranties, covenants
and events of default. Borrowings under the senior credit facilities will be
subject to customary conditions.
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RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth our consolidated ratio of earnings to fixed
charges, the deficiency of our consolidated earnings to cover fixed charges, our
consolidated ratio of earnings to combined fixed charges and preferred stock
dividends and the deficiency of our consolidated earnings to cover combined
fixed charges and preferred stock dividends for the periods indicated. We have
no preferred stock outstanding as of December 31, 2000.
<TABLE>
<CAPTION>
NINE MONTHS
YEARS ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
---------------------------------------------------- -------------------
1995 1996 1997 1998 1999 1999 2000
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS OF DOLLARS, EXCEPT RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
Consolidated ratio of
earnings to fixed
charges................... -- -- -- 1.61 -- -- --
Deficiency of consolidated
earnings to cover fixed
charges................... $4,319 $10,359 $26,259 -- $114,938 $44,290 $272,487
Consolidated ratio of
earnings to combined fixed
charges and preferred
stock dividends........... -- -- -- 1.61 -- -- --
Deficiency of consolidated
earnings to cover combined
fixed charges and
preferred stock
dividends................. $4,319 $10,359 $26,259 -- $114,938 $44,290 $272,487
</TABLE>
For purposes of computing the ratios of earnings to fixed charges and
earnings to combined fixed charges and preferred stock dividends, earnings
represent income (loss) before income taxes and fixed charges. Fixed charges
consist of interest expense, the interest component of operating leases and
amortization of deferred financing costs.
USE OF PROCEEDS
We will use the net proceeds from our sale of the securities for the
development, engineering, construction, installation, acquisition, lease,
development or improvement of our telecommunications assets and for our general
corporate purposes, which may include, repaying indebtedness, making additions
to our working capital, funding future acquisitions or for any other purpose we
describe in the applicable prospectus supplement.
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DESCRIPTION OF DEBT SECURITIES
The following is a summary of the general terms of the debt securities. We
will file a prospectus supplement that may contain additional terms when we
issue debt securities. The terms presented here, together with the terms in a
related prospectus supplement, which could be different from the terms described
below, will be a description of the material terms of the debt securities. You
should also read the indenture. We have filed the form of indenture with the SEC
as an exhibit to the registration statement of which this prospectus is a part.
All capitalized terms have the meanings specified in the indenture. The terms
and provisions of the debt securities below will most likely be modified by the
documents that set forth the specific terms of the debt securities issued.
We may issue, from time to time, debt securities, in one or more series,
that will consist of either our senior debt, our senior subordinated debt, our
subordinated debt or our junior subordinated debt. The debt securities we offer
will be issued under an indenture between us and the trustee. Debt securities,
whether senior, senior subordinated, subordinated or junior subordinated, may be
issued as convertible debt securities or exchangeable debt securities.
GENERAL TERMS OF THE INDENTURE
The indenture does not limit the amount of debt securities that we may
issue. It provides that we may issue debt securities up to the principal amount
that we may authorize and may be in any currency or currency unit that we may
designate. The terms of the indenture do not contain any covenants or other
provisions designed to give holders of any debt securities protection against
changes in our operations, financial condition or transactions involving us, but
such provisions may be included in the documents that set forth the specific
terms of the debt securities.
We may issue the debt securities issued under the indenture as "discount
securities," which means they may be sold at a discount below their stated
principal amount. These debt securities, as well as other debt securities that
are not issued at a discount, may, for United States federal income tax
purposes, be treated as if they were issued with "original issue discount"
because of interest payment and other characteristics. Special United States
federal income tax considerations applicable to debt securities issued with
original issue discount will be described in more detail in any applicable
prospectus supplement.
The applicable prospectus supplement for a series of debt securities that we
issue will describe, among other things, the following terms of the offered debt
securities:
- the title;
- any limit on the aggregate principal amount;
- whether issued in fully registered form without coupons or in a form
registered as to principal only with coupons or in bearer form with
coupons;
- whether issued in the form of one or more global securities and whether
all or a portion of the principal amount of the debt securities is
represented thereby;
- the price or prices at which the debt securities will be issued;
- the date or dates on which principal is payable;
- the place or places where and the manner in which principal, premium or
interest will be payable and the place or places where the debt
securities may be presented for transfer and, if applicable, conversion
or exchange;
- interest rates, and the dates from which interest, if any, will accrue,
and the dates when interest is payable and the maturity;
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- the right, if any, to extend the interest payment periods and the
duration of the extensions;
- our rights or obligations to redeem or purchase the debt securities;
- any sinking fund provisions;
- conversion or exchange provisions, if any, including conversion or
exchange prices or rates and adjustments thereto;
- the currency or currencies of payment of principal or interest;
- the terms applicable to any debt securities issued at a discount from
their stated principal amount;
- the terms, if any, under which any debt securities will rank junior to
any of our other debt;
- if the amount of payments of principal or interest is to be determined by
reference to an index or formula, or based on a coin or currency other
than that in which the debt securities are stated to be payable, the
manner in which these amounts are determined and the calculation agent,
if any, with respect thereto;
- if other than the entire principal amount of the debt securities when
issued, the portion of the principal amount payable upon acceleration of
maturity as a result of a default on our obligations;
- if applicable, covenants affording holders of debt protection against
changes in our operations, financial condition or transactions involving
us;
- if other than dollars, the coin, currency or currencies in which the
series of debt securities are denominated; and
- any other specific terms of any debt securities.
The applicable prospectus supplement will present United States federal
income tax considerations for holders of any debt securities and the securities
exchange or quotation system on which any debt securities are listed or quoted.
SENIOR DEBT SECURITIES
Payment of the principal of, premium, if any, and interest on senior debt
securities will rank on a parity with all of our other unsecured and
unsubordinated debt.
SENIOR SUBORDINATED DEBT SECURITIES
Payment of the principal of, premium, if any, and interest on senior
subordinated debt securities will be junior in right of payment to the prior
payment in full of all of our unsubordinated debt, including senior debt
securities. We will state in the applicable prospectus supplement relating to
any senior subordinated debt securities the subordination terms of the
securities as well as the aggregate amount of outstanding debt, as of the most
recent practicable date, that by its terms would be senior to the senior
subordinated debt securities. We will also state in such prospectus supplement
limitations, if any, on issuance of additional senior debt.
SUBORDINATED DEBT SECURITIES
Payment of the principal of, premium, if any, and interest on subordinated
debt securities will be subordinated and junior in right of payment to the prior
payment in full of all of our senior debt, including our senior subordinated
debt. We will state in the applicable prospectus supplement relating to any
subordinated debt securities the subordination terms of the securities as well
as the aggregate
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amount of outstanding indebtedness, as of the most recent practicable date, that
by its terms would be senior to the subordinated debt securities. We will also
state in such prospectus supplement limitations, if any, on issuance of
additional senior indebtedness.
JUNIOR SUBORDINATED DEBT SECURITIES
Payment of the principal of, premium, if any, and interest on junior
subordinated debt securities will be subordinated and junior in right of payment
to the prior payment in full of all of our senior, senior subordinated and
subordinated debt. We will state in the applicable prospectus supplement
relating to any junior subordinated debt securities the subordination terms of
the securities as well as the aggregate amount of outstanding debt, as of the
most recent practicable date, that by its terms would be senior to the junior
subordinated debt securities. We will also state in such prospectus supplement
limitations, if any, on issuance of additional senior indebtedness.
CONVERSION OR EXCHANGE RIGHTS
Debt securities may be convertible into or exchangeable for shares of our
equity securities or equity securities of our subsidiaries or affiliates. The
terms and conditions of conversion or exchange will be stated in the applicable
prospectus supplement. The terms will include, among others, the following:
- the conversion or exchange price;
- the conversion or exchange period;
- provisions regarding the convertibility or exchangeability of the debt
securities, including who may convert or exchange;
- events requiring adjustment to the conversion or exchange price;
- provisions affecting conversion or exchange in the event of our
redemption of the debt securities; and
- any anti-dilution provisions, if applicable.
EVENTS OF DEFAULT
Unless otherwise provided for in the prospectus supplement, the term "Event
of Default," when used in the indenture, unless otherwise indicated, means any
of the following:
- failure to pay interest for 30 days after the date payment is due and
payable; provided that if we extend an interest payment period in
accordance with the terms of the debt securities, the extension will not
be a failure to pay interest;
- failure to pay principal or premium, if any, on any debt security when
due, either at maturity, upon any redemption, by declaration or
otherwise;
- failure to make sinking fund payments when due;
- failure to perform other covenants for 60 days after notice that
performance was required;
- events in bankruptcy, insolvency or reorganization of our company; or
- any other Event of Default provided in the applicable resolution of our
Board or the supplemental indenture under which we issue a series of debt
securities.
An Event of Default for a particular series of debt securities does not
necessarily constitute an Event of Default for any other series of debt
securities issued under the indenture. If an Event of Default relating to the
payment of interest, principal or any sinking fund installment involving any
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series of debt securities has occurred and is continuing, the trustee or the
holders of not less than 25% in aggregate principal amount of the debt
securities of each affected series may declare the entire principal of all the
debt securities of that series to be due and payable immediately.
If an Event of Default relating to the performance of other covenants occurs
and is continuing for a period of 60 days after notice of such, or if any other
Event of Default occurs and is continuing involving all of the series of senior
debt securities, then the trustee or the holders of not less than 25% in
aggregate principal amount of all of the series of senior debt securities may
declare the entire principal amount of all of the series of senior debt
securities due and payable immediately.
Similarly, if an Event of Default relating to the performance of other
covenants occurs and is continuing for a period of 60 days after notice of such,
or if any other Event of Default occurs and is continuing involving all of the
series of subordinated securities, then the trustee or the holders of not less
than 25% in aggregate principal amount of all of the series of subordinated
securities may declare the entire principal amount of all of the series of
subordinated securities due and payable immediately.
If, however, the Event of Default relating to the performance of other
covenants or any other Event of Default that has occurred and is continuing is
for less than all of the series of senior debt securities or subordinated
securities, as the case may be, then, the trustee or the holders of not less
than 25% in aggregate principal amount of each affected series of the senior
debt securities or the subordinated securities, as the case may be, may declare
the entire principal amount of all debt securities of such affected series due
and payable immediately. The holders of not less than a majority, or any
applicable supermajority, in aggregate principal amount of the debt securities
of a series may, after satisfying conditions, rescind and annul any of the
above-described declarations and consequences involving the series.
If an Event of Default relating to events in bankruptcy, insolvency or
reorganization of our company occurs and is continuing, then the principal
amount of all of the debt securities outstanding, and any accrued interest, will
automatically become due and payable immediately, without any declaration or
other act by the trustee or any holder.
The indenture imposes limitations on suits brought by holders of debt
securities against us. Except for actions for payment of overdue principal or
interest, no holder of debt securities of any series may institute any action
against us under the indenture unless:
- the holder has previously given to the trustee written notice of default
and continuance of such default;
- the holders of at least 25% in principal amount of the outstanding debt
securities of the affected series have requested that the trustee
institute the action;
- the requesting holders have offered the trustee reasonable indemnity for
expenses and liabilities that may be incurred by bringing the action;
- the trustee has not instituted the action within 60 days of the request;
and
- the trustee has not received inconsistent direction by the holders of a
majority in principal amount of the outstanding debt securities of the
series.
We will be required to file annually with the trustee a certificate, signed
by an officer of our company, stating whether or not the officer knows of any
default by us in the performance, observance or fulfillment of any condition or
covenant of the indenture.
REGISTERED GLOBAL SECURITIES
We may issue the debt securities of a series in whole or in part in the form
of one or more fully registered global securities. We will deposit any
registered global securities with a depositary or with a
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nominee for a depositary identified in the applicable prospectus supplement and
registered in the name of such depositary or nominee. In such case, we will
issue one or more registered global securities denominated in an amount equal to
the aggregate principal amount of all of the debt securities of the series to be
issued and represented by such registered global security or securities.
Unless and until it is exchanged in whole or in part for debt securities in
definitive registered form, a registered global security may not be transferred
except as a whole:
- by the depositary for such registered global security to its nominee;
- by a nominee of the depositary to the depositary or another nominee of
the depositary; or
- by the depositary or its nominee to a successor of the depositary or a
nominee of the successor.
The prospectus supplement relating to a series of debt securities will
describe the specific terms of the depositary arrangement involving any portion
of the series represented by a registered global security.
We anticipate that the following provisions will apply to all depositary
arrangements for debt securities:
- ownership of beneficial interests in a registered global security will be
limited to persons that have accounts with the depositary for such
registered global security, these persons being referred to as
"participants," or persons that may hold interests through participants;
- upon the issuance of a registered global security, the depositary for the
registered global security will credit, on its book-entry registration
and transfer system, the participants' accounts with the respective
principal amounts of the debt securities represented by the registered
global security beneficially owned by the participants;
- any dealers, underwriters, or agents participating in the distribution of
the debt securities will designate the accounts to be credited; and
- ownership of beneficial interest in such registered global security will
be shown on, and the transfer of such ownership interest will be effected
only through, records maintained by the depositary for such registered
global security for interests of participants, and on the records of
participants for interests of persons holding through participants.
The laws of some states may require that specified purchasers of securities
take physical delivery of the securities in definitive form. These laws may
limit the ability of those persons to own, transfer or pledge beneficial
interests in registered global securities.
So long as the depositary for a registered global security, or its nominee,
is the registered owner of such registered global security, the depositary or
such nominee, as the case may be, will be considered the sole owner or holder of
the debt securities represented by the registered global security for all
purposes under the indenture. Except as stated below, owners of beneficial
interests in a registered global security:
- will not be entitled to have the debt securities represented by a
registered global security registered in their names;
- will not receive or be entitled to receive physical delivery of the debt
securities in the definitive form; and
- will not be considered the owners or holders of the debt securities under
the Indenture.
Accordingly, each person owning a beneficial interest in a registered global
security must rely on the procedures of the depositary for the registered global
security and, if the person is not a
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participant, on the procedures of a participant through which the person owns
its interest, to exercise any rights of a holder under the indenture.
We understand that under existing industry practices, if we request any
action of holders or if an owner of a beneficial interest in a registered global
security desires to give or take any action that a holder is entitled to give or
take under the indenture, the depositary for the registered global security
would authorize the participants holding the relevant beneficial interests to
give or take the action, and the participants would authorize beneficial owners
owning through the participants to give or take the action or would otherwise
act upon the instructions of beneficial owners holding through them.
We will make payments of principal and premium, if any, and interest, if
any, on debt securities represented by a registered global security registered
in the name of a depositary or its nominee to the depositary or its nominee, as
the case may be, as the registered owners of the registered global security.
None of our company, the trustee or any other agent of our company or the
trustee will be responsible or liable for any aspect of the records relating to,
or payments made on account of, beneficial ownership interests in the registered
global security or for maintaining, supervising or reviewing any records
relating to the beneficial ownership interests.
We expect that the depositary for any debt securities represented by a
registered global security, upon receipt of any payments of principal and
premium, if any, and interest, if any, in respect of the registered global
security, will immediately credit participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the registered
global security as shown on the records of the depositary. We also expect that
standing customer instructions and customary practices will govern payments by
participants to owners of beneficial interests in the registered global security
held through the participants, as is now the case with the securities held for
the accounts of customers in bearer form or registered in "street name." We also
expect that any of these payments will be the responsibility of the
participants.
If the depositary for any debt securities represented by a registered global
security is at any time unwilling or unable to continue as depositary or stops
being a clearing agency registered under the Securities Exchange Act of 1934, we
will appoint an eligible successor depositary. If we fail to appoint an eligible
successor depositary within 90 days, we will issue the debt securities in
definitive form in exchange for the registered global security. In addition, we
may at any time and in our sole discretion decide not to have any of the debt
securities of a series represented by one or more registered global securities.
In that event,we will issue debt securities of the series in a definitive form
in exchange for all of the registered global securities representing the debt
securities. The trustee will register any debt securities issued in definitive
form in exchange for a registered global security in the name or names as the
depositary, based upon instructions from its participants, shall instruct the
trustee.
We may also issue bearer debt securities of a series in the form of one or
more global securities, referred to as "bearer global securities." We will
deposit these securities with a common depositary for Euroclear System and
Clearstream Banking, or with a nominee for the depositary identified in the
prospectus supplement relating to the series. The prospectus supplement relating
to a series of debt securities represented by a bearer global security will
describe the applicable terms and procedures. These will include the specific
terms of the depositary arrangement and any specific procedures for the issuance
of debt securities in definitive form in exchange for a bearer global security,
in proportion to the series represented by a bearer global security.
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
We can discharge or defease our obligations under the indenture as stated
below or as provided in the prospectus supplement.
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Unless otherwise provided in the applicable prospectus supplement, we may
discharge obligations to holders of any series of debt securities that have not
already been delivered to the trustee for cancellation and that have either
become due and payable or are by their terms to become due and payable, or are
scheduled for redemption, within one year. We may effect a discharge by
irrevocably depositing with the trustee cash or U.S. government obligations, as
trust funds, in an amount certified to be enough to pay when due, whether at
maturity, upon redemption or otherwise, the principal of, premium, if any, and
interest on the debt securities and any mandatory sinking fund payments.
Unless otherwise provided in the applicable prospectus supplement, we may
also discharge any and all of our obligations to holders of any series of debt
securities at any time, referred to as "defeasance." We may also be released
from the obligations imposed by any covenants of any outstanding series of debt
securities and provisions of the indenture, and we may omit to comply with those
covenants without creating an event of default under the indenture, referred to
as "covenant defeasance." We may effect defeasance and covenant defeasance only
if, among other things:
- we irrevocably deposit with the trustee cash or U.S. government
obligations, as trust funds, in an amount certified to be enough to pay
at maturity, or upon redemption, the principal, premium, if any, and
interest on all outstanding debt securities of the series;
- we deliver to the trustee an opinion of counsel from a nationally
recognized law firm to the effect that (i) in the case of covenant
defeasance, the holders of the series of debt securities will not
recognize income, gain or loss for U.S. federal income tax purposes as a
result of such defeasance, and will be subject to tax in the same manner
and at the same times as if no covenant defeasance had occurred and
(ii) in the case of defeasance, either we have received from, or there
has been published by, the Internal Revenue Service a ruling or there has
been a change in applicable U.S. federal income tax law, and based
thereon, the holders of the series of debt securities will not recognize
income, gain or loss for U.S. federal income tax purposes as a result of
such defeasance, and will be subject to tax in the same manner as if no
defeasance had occurred; and
- in the case of subordinated debt securities, no event or condition shall
exist that, based on the subordination provisions applicable to the
series, would prevent us from making payments of principal of, premium,
if any, and interest on any of the applicable subordinated debt
securities at the date of the irrevocable deposit referred to above or at
any time during the period ending on the 91st day after the deposit date.
Although we may discharge or decrease our obligations under the indenture as
described in the two preceding paragraphs, we may not avoid, among other things,
our duty to register the transfer or exchange of any series of debt securities,
to replace any temporary, mutilated, destroyed, lost or stolen series of debt
securities or to maintain an office or agency in respect of any series of debt
securities.
MODIFICATION OF THE INDENTURE
Except as provided in the prospectus supplement, the indenture provides that
we and the trustee may enter into supplemental indentures without the consent of
the holders of debt securities to:
- secure any debt securities;
- evidence the assumption by a successor corporation of our obligations;
- add covenants for the protection of the holders of debt securities;
- cure any ambiguity or correct any inconsistency in the indenture;
- establish the forms or terms of debt securities of any series; and
- evidence and provide for the acceptance of appointment by a successor
trustee.
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The indenture also provides that we and the trustee may, with the consent of
the holders of not less than a majority in aggregate principal amount of debt
securities of all series of senior debt securities or of subordinated
securities, as the case may be, then outstanding and affected, voting as one
class, add any provisions to, or change in any manner, eliminate or modify in
any way the provisions of, the indenture or modify in any manner the rights of
the holders of the debt securities. We and the trustee may not, however, without
the consent of the holder of each outstanding debt security affected thereby:
- extend the final maturity of any debt security;
- reduce the principal amount or premium, if any;
- reduce the rate or extend the time of payment of interest;
- reduce any amount payable on redemption;
- change the currency in which the principal, unless otherwise provided for
a series, premium, if any, or interest is payable;
- reduce the amount of the principal of any debt security issued with an
original issue discount that is payable upon acceleration or provable in
bankruptcy;
- impair the right to institute suit for the enforcement of any payment on
any debt security when due; or
- reduce the percentage of holders of debt securities of any series whose
consent is required for any modification of the indenture.
CONCERNING THE TRUSTEE
The indenture provides that there may be more than one trustee under the
indenture, each for one or more series of debt securities. If there are
different trustees for different series of debt securities, each trustee will be
a trustee under the indenture separate and apart from the trust administered by
any other trustee under the indenture. Except as otherwise indicated in this
prospectus or any prospectus supplement, any action permitted to be taken by a
trustee may be taken by such trustee only on the one or more series of debt
securities for which it is the trustee under the indenture. Any trustee under
the indenture may resign or be removed from one or more series of debt
securities. All payments of principal of, premium, if any, and interest on, and
all registration, transfer, exchange, authentication and delivery of, the debt
securities of a series will be effected by the trustee for such series at an
office designated by such trustee in New York, New York.
If the trustee becomes a creditor of our company, the indenture places
limitations on the right of the trustee to obtain payment of claims or to
realize on property received in respect of any such claim as security or
otherwise. The trustee may engage in other transactions. If it acquires any
conflicting interest relating to any duties concerning the debt securities,
however, it must eliminate the conflict or resign as trustee.
The holders of a majority in aggregate principal amount of any series of
debt securities then outstanding will have the right to direct the time, method
and place of conducting any proceeding for exercising any remedy available to
the trustee concerning the applicable series of debt securities, provided that
the direction:
- would not conflict with any rule of law or with the indenture;
- would not be unduly prejudicial to the rights of another holder of the
debt securities; and
- would not involve any trustee in personal liability.
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The indenture provides that in case an Event of Default shall occur, not be
cured and be known to any trustee, the trustee must use the same degree of care
as a prudent person would use in the conduct of his or her own affairs in the
exercise of the trustee's power. The trustee will be under no obligation to
exercise any of its rights or powers under the indenture at the request of any
of the holders of the debt securities, unless they shall have offered to the
trustee security and indemnity satisfactory to the trustee.
NO INDIVIDUAL LIABILITY OF INCORPORATORS, SHAREHOLDERS, OFFICERS OR DIRECTORS
The indenture provides that no incorporator and no past, present or future
shareholder, officer or director of our company or any successor corporation in
their capacity as such shall have any individual liability for any of our
obligations, covenants or agreements under the debt securities or the indenture.
GOVERNING LAW
The indenture and the debt securities will be governed by, and construed in
accordance with, the laws of the State of New York.
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DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 2,404,031,240 shares of class A
common stock, par value $.01 per share, 522,254,782 shares of class B common
stock, par value $.01 per share, and 20,000,000 shares of preferred stock, par
value $.01 per share. As of December 31, 2000, there were 484,504,304 shares of
class A common stock outstanding, 67,538,544 shares of class B common stock
outstanding and no shares of preferred stock outstanding.
COMMON STOCK
The shares of class A common stock and class B common stock are identical in
all respects, except for different voting rights described below and conversion
rights and restrictions on transfer applicable only to the class B common stock
that we also describe below.
VOTING RIGHTS. The holders of class A common stock are entitled to one vote
per share. Holders of class B common stock are entitled to ten votes per share.
Holders of all classes of common stock are entitled to vote together as a single
class on all matters presented to our stockholders for their vote or approval
except for the election and the removal of directors and as otherwise required
by applicable law. With respect to the election of directors, our amended and
restated certificate of incorporation provides that holders of class B common
stock vote as a separate class to elect at least 75% of the members of our
board.
Directors may be removed, with or without cause, only by the holders of the
class of common stock or series of preferred stock that, as of the date such
removal is effected, would be entitled to elect such director at the next annual
meeting of stockholders. Vacancies in a directorship may be filled only by:
- the remaining directors elected by holders of each class of common stock
or series of preferred stock that elected such director and as of the date
such vacancy is filled, would be entitled to elect such director at the
next annual meeting of the stockholders; or
- if there are no such remaining directors, then by the vote of the holders
of the class or classes of common stock or series of preferred stock,
that, as of the date such vacancy is filled, would be entitled to elect
such director at the next annual meeting of stockholders, voting as a
separate class at a meeting, special or otherwise, of the holders of
common stock of such class or series of preferred stock.
DIVIDENDS. Holders of class A common stock and the class B common stock are
entitled to receive dividends at the same rate if, as and when such dividends
are declared by our board out of assets legally available therefor after payment
of dividends required to be paid on shares of outstanding preferred stock. We
may not make any dividend or distribution to any holder of any class of common
stock unless simultaneously with such dividend or distribution we make the same
dividend or distribution with respect to each outstanding share of common stock
regardless of class. In the case of a dividend or other distribution payable in
shares of a class of common stock, including distributions pursuant to stock
splits or divisions of common stock, only shares of class A common stock may be
distributed with respect to class A common stock and only shares of class B
common stock may be distributed with respect to class B common stock. Whenever a
dividend or distribution, including distributions pursuant to stock splits or
divisions of the common stock, is payable in shares of a class of common stock,
the number of shares of each class of common stock payable per share of such
class of common stock will be equal in number. In the case of dividends or other
distributions consisting of our other voting securities or of voting securities
of any corporation which is our wholly-owned subsidiary, we will declare and pay
such dividends in two separate classes of such voting securities, identical in
all respects except that:
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- the voting rights of each security issued to the holders of class A common
stock will be one-tenth of the voting rights of each security issued to
holders of class B common stock;
- such security issued to holders of class B common stock will convert into
the security issued to the holders of class A common stock into class A
common stock and will have the same restrictions on transfer and ownership
applicable to the transfer and ownership of the class B common stock; and
- with respect only to dividends or other distributions of voting securities
of any corporation which is our wholly owned subsidiary, the respective
voting rights of each such security issued to holders of the class A
common stock and class B common stock with respect to election of
directors shall otherwise be as comparable as is practicable to those of
the class A common stock and class B common stock.
In the case of dividends or other distributions consisting of securities
convertible into, or exchangeable for, our voting securities or of voting
securities of any corporation which is our wholly owned subsidiary, we will
provide that such convertible or exchangeable securities and the underlying
securities be identical in all respects (including, without limitation, the
conversion or exchange rate) except that the underlying securities may have the
same difference as they would have if we issued voting securities of our wholly
owned subsidiary rather than issuing securities convertible into or exchangeable
for, such securities. We do not anticipate paying cash dividends in the
foreseeable future.
RESTRICTIONS ON ADDITIONAL ISSUANCES AND TRANSFER. We may not issue or sell
any shares of class B common stock or any securities (including, without
limitation, any rights, options, warrants or other securities) convertible into,
or exchangeable or exercisable for, shares of class B common stock to any person
or entity other than to Metromedia Company, John W. Kluge and Stuart Subotnick,
their affiliates, relatives and other permitted holders that are controlled by
these persons. Additionally, shares of class B common stock may not be
transferred, whether by sale, assignment, gift, bequest, appointment or
otherwise, to a person other than to a permitted holder. Notwithstanding the
foregoing:
- any permitted holder may pledge his, her or its shares of class B common
stock to a financial institution pursuant to a bona fide pledge of such
shares as collateral security for indebtedness due to the pledgee as long
as such shares remain subject to the transfer restrictions and that, in
the event of foreclosure or other similar action by the pledgee, such
pledged shares of class B common stock may only be transferred to a
permitted holder or converted into shares of class A common stock, as the
pledgee may elect; and
- the foregoing transfer restrictions do not apply in the case of a merger,
consolidation or business combination of us with or into another
corporation in which all of the outstanding shares of common stock and
preferred stock regardless of class are purchased by the acquiror.
CONVERSION. Class A common stock has no conversion rights. Shares of
class B common stock are convertible into class A common stock, in whole or in
part, at any time and from time to time at the option of the holders, on the
basis of one share of class A common stock for each share of class B common
stock converted. Additionally, at such time as a person ceased to be a permitted
holder, any share of class B common stock held by such person at such time shall
convert into a share of class A common stock. We agree that:
- we will at all times reserve and keep available out of our authorized but
unissued shares of class A common stock, such number of shares of class A
common stock issuable upon the conversion of all outstanding shares of
class B common stock;
- we will cause any shares of class A common stock issuable upon conversion
of a share of class B common stock that require registration with or
approval of any governmental authority under
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federal or state law before such shares may be issued upon conversion to
be so registered or approved; and
- we will use our best efforts to list the shares of class A common stock
required to be delivered upon conversion prior to such delivery upon such
national securities exchange upon which the outstanding class A common
stock is listed at the time of such delivery.
RECLASSIFICATION AND MERGER. In the event of a reclassification or other
similar transaction as a result of which the shares of class A common stock are
converted into another security, then a holder of class B common stock will be
entitled to receive upon conversion the amount of such other securities that the
holder would have received if the conversion occurred immediately prior to the
record date of such reclassification or other similar transaction. No
adjustments in respect of dividends will be made upon the conversion of any
share of class B common stock. If a share is converted subsequent to the record
date for the payment of a dividend or other distribution on shares of class B
common stock but prior to such payment, then the registered holder of such share
at the close of business on such record date will be entitled to receive the
dividend or other distribution payable on such date regardless of the conversion
thereof or our default in payment of the dividend due on such date.
In the event we enter into any consolidation, merger, combination or other
transaction in which shares of common stock are exchanged for or changed into
other stock or securities, cash and/or any other property, then, and in such
event, the shares of each class of common stock will be exchanged for or changed
into either:
- the same amount of stock, securities, cash and/or any other property, as
the case may be, into which or for which each share of any other class of
common stock is exchanged for or changed into shares of capital stock,
such shares so exchanged for or changed into may differ only to the extent
that the class A common stock and the class B common stock differ as
provided in our amended and restated certificate of incorporation; or
- if holders of each class of common stock are to receive different
distributions of stock, securities, cash and/or any other property, an
amount of stock, securities, cash and/or property per share having a value
as determined by an independent investment banking firm of national
reputation selected by the board of directors, equal to the value per
share into which or for which each share of any other class of common
stock is exchanged or changed.
LIQUIDATION. In the event of our liquidation, after payment of our debts
and other liabilities and after making provision for the holders of preferred
stock, if any, our remaining assets will be distributable ratably among the
holders of the class A common stock and class B common stock treated as a single
class.
OTHER PROVISIONS. Except as described below, the holders of the class A
common stock and class B common stock are not entitled to preemptive rights.
None of the class A common stock or class B common stock may be subdivided or
combined in any manner unless the other classes are subdivided or combined in
the same proportion. We may not make any offering of options, rights or warrants
to subscribe for shares of class B common stock. If we make an offering of
options, rights or warrants to subscribe for shares of any other class or
classes of capital stock (other than class B common stock) to all holders of a
class of common stock, then we are required to simultaneously make an identical
offering to all holders of the other classes of common stock other than to any
class the holders of which, voting as a separate class, agrees that such
offerings need not be made to such class. All such options, rights or warrants
offerings will offer the respective holders of class A common stock and class B
common stock the right to subscribe at the same rate per share. All outstanding
shares of common stock are, and all shares of common stock offered hereby when
issued will be upon payment therefor, validly issued, fully paid and
nonassessable.
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PREFERRED STOCK
The board has the authority, without any further action by our stockholders
to issue from time to time shares of preferred stock in one or more series and
to fix the designations, preferences, rights, qualifications, limitations and
restrictions thereof, including voting rights, dividend rights, dividend rates,
conversion rights, terms of redemption, redemption prices, liquidation
preferences and the number of shares constituting any series. The issuance of
preferred stock with voting rights could have an adverse effect on the voting
power of holders of common stock by increasing the number of outstanding shares
having voting rights. In addition, if the board authorizes preferred stock with
conversion rights, the number of shares of common stock outstanding could
potentially be increased up to the authorized amount. The issuance of preferred
stock could decrease the amount of earnings and assets available for
distribution to holders of common stock. Any such issuance could also have the
effect of delaying, deterring or preventing a change in control of the company
and may adversely affect the rights of holders of common stock.
CERTIFICATE OF INCORPORATION AND BY-LAWS
Stockholders' rights and related matters are governed by the Delaware
General Corporation Law and our certificate of incorporation and the by-laws.
Certain provisions of our certificate of incorporation and by-laws, which are
summarized below, may have the effect, either alone or in combination with each
other, of discouraging or making more difficult a tender offer or takeover
attempt that is opposed by our board of directors but that a stockholder might
consider to be in its best interest. Such provisions may also adversely affect
prevailing market prices for the common stock. We believe that such provisions
are necessary to enable us to develop our business in a manner that will foster
our long-term growth without disruption caused by the threat of a takeover not
deemed by our board of directors to be in our best interests and those of our
stockholders.
ADVANCE NOTICE REQUIREMENTS FOR STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS
Our by-laws establish advance notice procedures for stockholder proposals
and the nomination, other than by or at the direction of the board of directors,
of candidates for election as directors. These procedures provide that the
notice of stockholder proposals and stockholder nominations for the election of
directors at an annual meeting must be in writing and received by our secretary
at least 60 days but not more than 90 days prior to the scheduled date of the
annual meeting. However, if public disclosure of our annual meeting date is made
less than 70 days before the annual meeting, notice by a stockholder will be
considered timely if it is delivered not later than the 10th day following the
earlier of (i) the day on which public disclosure of the date of the annual
meeting was made or (ii) the day on which such notice of the date of the meeting
was mailed. The notice of nominations for the election of directors must set
forth certain information concerning the stockholder giving the notice and each
nominee.
By requiring advance notice of nominations by stockholders, these procedures
will afford our board of directors an opportunity to consider the qualifications
of the proposed nominees and, to the extent deemed necessary or desirable by the
board of directors, to inform stockholders about these qualifications. By
requiring advance notice of other proposed business, these procedures will
provide our board of directors with an opportunity to inform stockholders of any
business proposed to be conducted at a meeting, together with any
recommendations as to the board of directors' position on action to be taken on
such business. This should allow stockholders to better decide whether to attend
a meeting or to grant a proxy for the disposition of any such business.
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DILUTION
Our certificate of incorporation provides that our board of directors is
authorized to create and issue, whether or not in connection with the issuance
and sale of any of its stock or other securities or property, rights entitling
the holders to purchase from us shares of stock or other securities of us or of
any other corporation. Our board of directors is authorized to issue these
rights even though the creation and issuance of these rights could have the
effect of discouraging third parties from seeking, or impairing their right to
seek, to:
(1) acquire a significant portion of our outstanding securities;
(2) engage in any transaction which might result in a change of control of
the corporation; or
(3) enter into any agreement, arrangement or understanding with another
party to accomplish these transactions or for the purpose of acquiring,
holding, voting or disposing of any of our securities.
SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW
Section 203 of the Delaware General Corporation Law prohibits certain
transactions between a Delaware corporation and an "interested stockholder",
which is defined as a person who, together with any affiliates and/or associates
of such person, beneficially owns, directly or indirectly, 15% or more of the
outstanding voting shares of a Delaware corporation. This provision prohibits
certain business combinations between an interested stockholder and a
corporation for a period of three years after the date the interested
stockholder acquired its stock, unless:
- the business combination is approved by the corporation's board of
directors prior to the date the interested stockholder acquired shares;
- the interested stockholder acquired at least 85% of the voting stock of
the corporation in the transaction in which it became an interested
stockholder; or
- the business combination is approved by a majority of the board of
directors and by the affirmative vote of two-thirds of the outstanding
voting stock owned by disinterested stockholders at an annual or special
meeting.
A business combination is defined broadly to include mergers,
consolidations, sales or other dispositions of assets having an aggregate value
of 10% or more of the consolidated assets of the corporation and certain
transactions that would increase the interested stockholder's proportionate
share ownership in the corporation. A Delaware corporation, under a provision in
its certificate of incorporation or by-laws, may elect not to be governed by
Section 203 of the Delaware General Corporation Law. We are subject to the
restrictions imposed by Section 203.
Under certain circumstances, Section 203 makes it more difficult for a
person who could be an "interested stockholder" to effect various business
combinations with a corporation for a three-year period, although the
stockholders may elect to exclude a corporation from the restrictions imposed
thereunder. Our certificate of incorporation does not exclude us from the
restrictions imposed under Section 203 of the Delaware General Corporation Law.
It is anticipated that the provisions of Section 203 of the Delaware General
Corporation Law may encourage companies interested in acquiring us to negotiate
in advance with the board of directors, since the stockholder approval
requirement would be avoided if a majority of the directors then in office
approves, prior to the date on which a stockholder becomes an interested
stockholder, either the business combination or the transaction which results in
the stockholder becoming an interested stockholder. Mr. Stephen Garafalo and
Metromedia Company are interested stockholders under the Delaware General
Corporation Law. However since their acquisition of our securities was approved
in advance by our board, they would not be prohibited from engaging in a
business transaction with us.
29
<PAGE>
LIMITATIONS OF DIRECTORS' LIABILITY
Our certificate of incorporation provides that none of our directors will be
personally liable to us or our stockholders for monetary damages for breach of
fiduciary duty as a director except for liability:
- for any breach of the director's duty of loyalty to us or our
stockholders;
- for acts of omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
- under Section 174 of the Delaware General Corporation Law; or
- for any transaction from which the director derived an improper personal
benefit.
The effect of these provisions will be to eliminate our rights and our
stockholders (through stockholders' derivatives suits on behalf of us) to
recover monetary damages against a director for breach of fiduciary duty as a
director (including breaches resulting from grossly negligent behavior), except
in the situations described above. These provisions will not limit the liability
of directors under federal securities laws and will not affect the availability
of equitable remedies such as an injunction or rescission based upon a
director's breach of his duty of care.
TRANSFER AGENT
The Transfer Agent and Registrar for our class A common stock is Mellon
Investor Services LLC.
30
<PAGE>
DESCRIPTION OF WARRANTS
We may issue warrants for the purchase of debt securities, preferred stock
or common stock. Warrants may be issued independently or together with debt
securities, preferred stock or common stock offered by any prospectus supplement
and may be attached to or separate from any such offered securities. Each series
of warrants will be issued under a separate warrant agreement to be entered into
between us and a bank or trust company, as warrant agent. The warrant agent will
act solely as our agent in connection with the warrants and will not assume any
obligation or relationship of agency or trust for or with any holders or
beneficial owners of warrants. The following summary of certain provisions of
the warrants does not purport to be complete and is subject to, and qualified in
its entirety by reference to, the provisions of the warrant agreement that will
be filed with the SEC in connection with the offering of such warrants.
DEBT WARRANTS
The prospectus supplement relating to a particular issue of debt warrants
will describe the terms of the debt warrants, including the following:
- the title of the debt warrants;
- the offering price for the debt warrants, if any;
- the aggregate number of the debt warrants;
- the designation and terms of the debt securities purchasable upon exercise
of the debt warrants;
- if applicable, the designation and terms of the debt securities with which
the debt warrants are issued and the number of such debt warrants issued
with each debt security;
- if applicable, the date from and after which the debt warrants and any
debt securities issued therewith will be separately transferable;
- the principal amount of debt securities purchasable upon exercise of a
debt warrant and the price at which the principal amount of debt
securities may be purchased upon exercise (which price may be payable in
cash, securities, or other property);
- the date on which the right to exercise the debt warrants shall commence
and the date on which the right shall expire;
- if applicable, the minimum or maximum amount of the debt warrants that may
be exercised at any one time;
- whether the debt warrants represented by the debt warrant certificates or
debt securities that may be issued upon exercise of the debt warrants will
be issued in registered or bearer form;
- information with respect to book-entry procedures, if any;
- the currency or currency units in which the offering price, if any, and
the exercise price are payable;
- if applicable, a discussion of material United States federal income tax
considerations;
- the antidilution provisions of the debt warrants, if any;
- the redemption or call provisions, if any, applicable to such debt
warrants; and
- any additional terms of the debt warrants, including terms, procedures,
and limitations relating to the exchange and exercise of the debt
warrants.
31
<PAGE>
STOCK WARRANTS
The prospectus supplement relating to any particular issue of preferred
stock warrants or common stock warrants will describe the terms of the warrants,
including the following:
- the title of the warrants;
- the offering price for the warrants, if any;
- the aggregate number of the warrants;
- the designation and terms of the common stock or preferred stock
purchasable upon exercise of the warrants;
- if applicable, the designation and terms of the offered securities with
which the warrants are issued and the number of the warrants issued with
each such offered security;
- if applicable, the date from and after which the warrants and any offered
securities issued therewith will be separately transferable;
- the number of shares of common stock or preferred stock purchasable upon
exercise of a warrant and the price at which the shares may be purchased
upon exercise;
- the date on which the right to exercise the warrants shall commence and
the date on which the right shall expire;
- if applicable, the minimum or maximum amount of the warrants that may be
exercised at any one time;
- the currency or currency units in which the offering price, if any, and
the exercise price are payable;
- if applicable, a discussion of material United States federal income tax
considerations;
- the antidilution provisions of the warrants, if any;
- the redemption or call provisions, if any, applicable to such warrants;
and
- any additional terms of the warrants, including terms, procedures and
limitations relating to the exchange and exercise of the warrants.
PLAN OF DISTRIBUTION
The distribution of the securities may be effected from time to time in one
or more transactions at a fixed price or prices (which may be changed from time
to time), at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at negotiated prices. Each prospectus
supplement will describe the method of distribution of the securities offered
therein.
Each prospectus supplement will describe the terms of the securities to
which the prospectus supplement relates, the amount of securities to be sold,
the name or names of any underwriters or agents with whom we have entered into
arrangements with respect to the sale of the securities, the public offering or
purchase price of the securities and the net proceeds we will receive from the
sale. In addition, each prospectus supplement will describe any underwriting
discounts and other items constituting underwriters' compensation, any discounts
and commissions allowed or paid to dealers, if any, any commissions allowed or
paid to agents, and the securities exchange or exchanges, if any, on which the
securities will be listed. Dealer trading may take place in certain of the
securities, including securities not listed on any securities exchange. Such
underwriters or agents may include Salomon Smith Barney Inc.
32
<PAGE>
If so indicated in the applicable prospectus supplement, we will authorize
underwriters or agents to solicit offers by certain institutions to purchase
securities from us pursuant to delayed delivery contracts providing for payment
and delivery at a future date. Institutions with which the contracts may be made
include, among others:
- commercial and savings banks;
- insurance companies;
- pension funds;
- investment companies; and
- educational and charitable institutions.
In all cases, the institutions must be approved by us. Unless otherwise set
forth in the applicable prospectus supplement, the obligations of any purchaser
under any contract will not be subject to any conditions except that (i) the
purchase of the securities will not at the time of delivery be prohibited under
the laws of the jurisdiction to which the purchaser is subject and (ii) if the
securities are also being sold to underwriters acting as principals for their
own account, the underwriters will have purchased the securities not sold for
delayed delivery. The underwriters and such other persons will not have any
responsibility in respect of the validity or performance of such contracts.
Any underwriter or agent participating in the distribution of the securities
may be deemed to be an underwriter, as that term is defined in the Securities
Act, of the securities so offered and sold and any discounts or commissions
received by them, and any profit realized by them on the same or resale of the
securities may be deemed to be underwriting discounts and commissions under the
Securities Act.
Certain of any such underwriters and agents including their associates, may
be customers of, engage in transactions with and perform services for us and our
subsidiaries in the ordinary course of business. One or more of our affiliates
may from time to time act as an agent or underwriter in connection with the sale
of the securities to the extent permitted by applicable law. The participation
of any such affiliate in the offer and sale of the securities will comply with
Rule 2720 of the Conduct Rules of the National Association of Securities
Dealers, Inc. regarding the offer and sale of securities of an affiliate.
Under agreements which may be entered into by us, the underwriters, dealers
and agents who participate in the distribution of securities may be entitled to
indemnification by us against, or contribution toward, some liabilities,
including liabilities under the Securities Act.
Except as indicated in the applicable prospectus supplement, the securities
are not expected to be listed on a securities exchange, except for the class A
common stock, which is listed on The Nasdaq Stock Market's National Market, and
any underwriters or dealers will not be obligated to make a market in
securities. We cannot predict the activity or liquidity of any trading in the
securities.
VALIDITY OF SECURITIES
The validity of the securities offered hereby will be passed upon for us by
Paul, Weiss, Rifkind, Wharton & Garrison, New York, New York, and certain
matters may be passed upon for the underwriters or agents, if any, by Skadden,
Arps, Slate, Meagher & Flom LLP, Los Angeles, California and New York, New York.
Skadden, Arps, Slate, Meagher & Flom LLP has represented us on other unrelated
matters.
33
<PAGE>
EXPERTS
The consolidated financial statements of Metromedia Fiber Network, Inc.
appearing in Metromedia Fiber Network, Inc.'s Annual Report on Form 10-K for the
year ended December 31, 1999, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given on the
authority of such firm as experts in accounting and auditing.
The financial statements of SiteSmith Inc. as of December 31, 1999 and
June 30, 2000 and for the period from September 8, 1999 (inception) through
December 31, 1999 and for the six months ended June 30, 2000 incorporated by
reference in this registration statement by reference to the Registration
Statement on Form S-4 (Registration No. 333-49684) of Metromedia Fiber Network,
Inc. dated November 9, 2000, have been so incorporated in reliance on the report
of PricewaterhouseCoopers LLP, independent accountants, given on the authority
of said firm as experts in auditing and accounting.
The consolidated financial statements of AboveNet Communications Inc. as of
June 30, 1998 and 1999 and for each of the three years in the period ended
June 30, 1999 incorporated in this prospectus by reference have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report, which is
incorporated herein by reference, and have been so included in reliance upon the
report of such firm given upon their authority as experts in accounting and
auditing.
The Combined Statement of Assets to be Acquired and Liabilities to be
Assumed of Palo Alto Internet Exchange as of December 26, 1998 and December 27,
1997 and the related Combined Statement of Revenues and Direct Expenses for the
period June 12, 1998 through December 26, 1998, the period December 28, 1997
through June 11, 1998 and the fiscal years ended December 27, 1997 and
December 29, 1996, that are incorporated by reference in this prospectus by
reference to the Registration Statement on Form S-4 (Registration
No. 333-49684) of Metromedia Fiber Network, Inc. dated November 9, 2000, have
been so incorporated in reliance on the reports of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov. You may also read and copy
any document we file with the SEC at the SEC's following public reference
facilities:
<TABLE>
<S> <C> <C>
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, New York 10048 Suite 1400
Chicago, Illinois 60661-2511
</TABLE>
You may also obtain copies of the documents at prescribed rates by writing
to the Public Reference Section of the SEC at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549. Please call 1-800-SEC-0330 for further information on
the operations of the public reference facilities. Our SEC filings are also
available at the offices of The Nasdaq Stock Market at 1735 K Street, N.W.,
Washington, D.C. 20006.
34
<PAGE>
INCORPORATION OF INFORMATION WE FILE WITH THE SEC
The SEC allows us to "incorporate by reference" the information we file with
them, which means: incorporated documents are considered part of this
prospectus; we can disclose important information to you by referring you to
those documents; and information that we file with the SEC will automatically
update and supersede this incorporated information.
We incorporate by reference the documents listed below which were filed with
the SEC:
- Our Annual Report on Form 10-K for the year ended on December 31, 1999;
- Our Quarterly Report on Form 10-Q for the three months ended March 31,
2000;
- Our Quarterly Report on Form 10-Q for the six months ended June 30, 2000;
- Our Quarterly Report on Form 10-Q for the nine months ended September 30,
2000;
- Our Current Reports on Form 8-K dated October 11, 2000 and January 10,
2001;
- The "Metromedia Fiber Unaudited Pro Forma Condensed Combining Financial
Information" and "Business of SiteSmith" sections and the financial
statements of SiteSmith, Inc., AboveNet Communications Inc. and Palo Alto
Internet Exchange contained in our Registration Statement on Form S-4
dated November 9, 2000 (Registration No. 333-49684); and
- The description of our class A common stock contained in our Registration
Statement on Form 8-A, filed on October 17, 1997.
We also incorporate by reference each of the following documents that we
will file with the SEC after the date of the initial filing of the registration
statement and prior to the time we sell all of the securities offered by this
prospectus:
- Reports filed under Section 13(a) and (c) of the Exchange Act;
- Definitive proxy or information statements filed under Section 14 of the
Exchange Act in connection with any subsequent shareholders meeting; and
- Any reports filed under Section 15(d) of the Exchange Act.
You can obtain any of the filings incorporated by reference in this document
through us, or from the SEC through the SEC's web site or at the addresses
listed above. Documents incorporated by reference are available from us without
charge, excluding any exhibits to those documents, unless the exhibit is
specifically incorporated by reference in those documents. You can obtain
documents incorporated by reference in this prospectus by requesting them in
writing or by telephone from us at the following address and telephone number:
Metromedia Fiber Network, Inc.
360 Hamilton Avenue
White Plains, New York 10601
Attention: Investor Relations
Telephone: (914) 421-6700
If you request any incorporated documents from us, we will mail them to you
by first class mail, or another equally prompt means, within one business day
after we receive your request.
35
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
Registration fee to the Securities and Exchange
Commission................................................ $ 252,519
Accounting fees and expenses................................ $ 200,000
Legal fees and expenses..................................... $ 500,000
Printing and engraving expenses............................. $ 500,000
Miscellaneous expenses...................................... $ 547,481
----------
Total................................................. $2,000,000
</TABLE>
The foregoing items, except for the registration fee to the Securities and
Exchange Commission, are estimated. All expenses of the offering will be paid by
the Registrant.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law provides that a Delaware
corporation may indemnify any person who was or is a party or is threatened to
be made a party, to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (a
"proceeding") (other than an action by or in the right of the corporation) by
reason of the fact that this person is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by this person in connection with such action, suit or proceeding if
this person acted in good faith and in a manner this person reasonably believed
to be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
his or her conduct was unlawful. A Delaware corporation may indemnify any person
under such section in connection with a proceeding by or in the right of the
corporation to procure judgment in its favor, as provided in the preceding
sentence, against expenses (including attorneys' fees) actually and reasonably
incurred by him or her in connection with the defense or settlement of such
action, except that no indemnification shall be made in respect thereof unless,
and then only to the extent that, a court of competent jurisdiction shall
determine upon application that this person is fairly and reasonably entitled to
indemnity for such expenses as the court shall deem proper. A Delaware
corporation must indemnify any person who was successful on the merits or
otherwise in defense of any action, suit or proceeding or in defense of any
claim, issue or matter in any proceeding, by reason of the fact that this person
is or was a director, officer, employee or agent of the corporation or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees) actually and reasonably
incurred by this person in connection therewith. A Delaware corporation may pay
for the expenses (including attorneys' fees) incurred by an officer or director
in defending a proceeding in advance of the final disposition upon receipt of an
undertaking by or on behalf of this director or officer to repay such amount if
it shall ultimately be determined that he or she is not entitled to be
indemnified by the corporation.
The Registrant's Amended and Restated Certificate of Incorporation provides
that the Registrant will indemnify any person, including persons who are not
directors or officers of the Registrant, to the extent permitted by Section 145
of the Delaware General Corporation Law.
II-1
<PAGE>
Section 102(b)(7) of the Delaware General Corporation Law provides that a
Delaware corporation may in its articles of incorporation eliminate or limit the
personal liability of a director to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director except for
liability: for any breach of the director's duty of loyalty to the corporation
or its stockholder; for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law; under Section 174
(pertaining to certain prohibited acts including unlawful payment of dividends
or unlawful purchase or redemption of the corporation's capital stock); or for
any transaction from which the director derived an improper personal benefit.
The Registrant's Amended and Restated Certificate of Incorporation eliminates
the liability of directors for monetary damages for breach of fiduciary duty as
a director, except for liability (i) for any breach of the director's duty of
loyalty to the Registrant or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the Delaware General Corporation Law, or
(iv) for any transaction from which the director derived an improper personal
benefit, and provides that if the Delaware General Corporation Law is amended to
authorize corporate action further eliminating or limiting the personal
liability of directors, then the liability of a director of the Registrant shall
be eliminated or limited to the fullest extent permitted by the Delaware General
Corporation Law, as so amended.
The Delaware General Corporation Law permits the purchase of insurance on
behalf of directors and officers against any liability asserted against
directors and officers and incurred by such persons in their capacity, or
arising out of their status as such, whether or not the corporation would have
the power to indemnify officers and directors against this liability. The
Registrant's Amended and Restated Certificate of Incorporation allows the
Registrant to maintain insurance, at its expense, to protect itself and any
director, officer, employee or agent of the Registrant or another corporation,
partnership, joint venture, trust or other enterprise against any expense,
liability or loss, whether or not the Registrant would have the power to
indemnify this person against this expense, liability or loss under the Delaware
General Corporation Law. The Registrant has obtained liability coverage, which
includes coverage to reimburse the Registrant for amounts required or permitted
by law to be paid to indemnify directors and officers.
The Registrant's Amended and Restated Certificate of Incorporation limits
the liability of directors thereof to the extent permitted by Section 102(b)(7)
of the Delaware General Corporation Law.
The Registrant's Directors' and Officers' liability insurance policy is
designed to reimburse the Registrant for payments made by it pursuant to the
foregoing indemnification. This policy has aggregate coverage of $25 million.
No person has been authorized to give any information or to make any
representations other than those contained in this prospectus, and, if given or
made, this information or representations must not be relied upon as having been
authorized. This prospectus does not constitute an offer to sell or the
solicitation of an offer to buy any securities other than the securities to
which it relates or an offer to sell or the solicitation of an offer to buy such
securities in any circumstances in which such offer or solicitation is unlawful.
Neither the delivery of this prospectus nor any sale made hereunder shall, under
any circumstances, create any implication that there has been no change in the
affairs of the Registrant since the date hereof or that the information
contained herein is correct as of any time subsequent to its date.
II-2
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
--------------------- ------------------------------------------------------------
<C> <S>
1.1* Form of Underwriting Agreement (Debt)
1.2* Form of Underwriting Agreement (Equity)
2.1 Agreement and Plan of Merger by and among Metromedia Fiber
Network, Inc., SiteSmith Inc. and Aqueduct Acquisition
Corp., dated October 9, 2000 (incorporated by reference to
the Company's Current Report on Form 8-K filed on
October 11, 2000).
3.1 Amended and Restated Certificate of Incorporation of
Metromedia Fiber Network, Inc. (incorporated by reference to
Exhibit 3.1 of the Company's Registration Statement on Form
S-1 (Registration No. 333-33653)).
3.2 Amended and Restated Bylaws of Metromedia Fiber Network,
Inc. (incorporated by reference to Exhibit 3.2 of the
Company's Registration Statement on Form S-1 (Registration
No. 333-33653)).
4.1 Specimen Class A Common Stock Certificate of Metromedia
Fiber Network, Inc. (incorporated by reference to
Exhibit 4.1 of the Company's Registration Statement on Form
S-1 (Registration No. 333-33653)).
4.2 Form of Indenture between Metromedia Fiber Network, Inc. and
The Bank of New York (incorporated by reference to
Exhibit 4.2 of the Company's Registration Statement on
Form S-3 (Registration No. 333-89087)).
5.1 Opinion of Paul, Weiss, Rifkind, Wharton & Garrison
regarding the legality of the securities.
12.1 Statement re Computation of Ratios
23.1 Consent of Ernst & Young LLP
23.2 Consent of PricewaterhouseCoopers LLP
23.3 Consent of Deloitte & Touche LLP
23.4 Consent of PricewaterhouseCoopers LLP
23.5 Consent of Paul, Weiss, Rifkind, Wharton & Garrison
(included in the opinion filed as Exhibit 5.1 to this
Registration Statement).
24.1 Power of Attorney from officers and directors (included in
the signature pages hereto).
25.1 Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of The Bank of New York, as trustee
under the Indenture.
</TABLE>
------------------------
* To be filed by a post-effective amendment to the Registration Statement or
incorporated by reference from documents filed with the SEC under the
Securities Exchange Act of 1934.
(B) FINANCIAL DATA SCHEDULES.
None.
II-3
<PAGE>
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described under Item 15, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission this indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against these 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 this director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether this
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of this issue.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities
Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of this 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 this 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 this Registration Statement or
any material change to such information in this Registration Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that
are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof; and
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of
the offering.
The undersigned Registrant hereby undertakes that for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration
II-4
<PAGE>
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
The undersigned registrant hereby undertakes to supplement the prospectus,
after the expiration of the subscription period, to set forth the results of the
subscription offer, the transactions by the underwriters during the subscription
period, the amount of unsubscribed securities to be purchased by the
underwriters, and the terms of any subsequent reoffering thereof. If any public
offering by the underwriters is to be made on terms differing from those set
forth on the cover page of the prospectus, a post-effective amendment will be
filed to set forth the terms of such offering.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of 1933,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Metromedia Fiber Network, Inc. certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form S-3 and has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on January 10, 2001.
<TABLE>
<S> <C> <C>
METROMEDIA FIBER NETWORK, INC.
By: /s/ STEPHEN A. GAROFALO
-----------------------------------------
Name: Stephen A. Garofalo
Title: CHIEF EXECUTIVE OFFICER
AND CHAIRMAN OF THE
BOARD OF DIRECTORS
</TABLE>
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Silvia
Kessel and Gerard Benedetto, and each or either of them, his true and lawful
attorney-in-fact, with full power of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities to sign this
Registration Statement (with all exhibits thereto) on Form S-3 any and all
supplements and amendments (including post-effective amendments and including,
without limitation, Registration Statements filed pursuant to Rule 462 under the
Securities Act of 1933, as amended, or any successor thereto (the "Securities
Act")) to this Registration Statement and to cause the same to be filed, with
all exhibits thereto and the other documents in connection therewith, with the
Securities and Exchange Commission, hereby granting to said attorneys-in-fact
and agents, and each of them full power and authority to do and perform each and
every act and thing whatsoever requisite or desirable to be done, as fully to
all intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or either
of them, or their or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement and the foregoing Power-of-Attorney have been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
Chief Executive Officer and
/s/ STEPHEN A. GAROFALO Chairman of the Board of
------------------------------------------- Directors (Principal January 10, 2001
Stephen A. Garofalo Executive Officer)
Senior Vice
/s/ GERARD BENEDETTO President--Chief
------------------------------------------- Financial Officer January 10, 2001
Gerard Benedetto (Principal Financial and
Accounting Officer)
/s/ NICHOLAS M. TANZI President, Chief Operating
------------------------------------------- Officer and Director January 10, 2001
Nicholas M. Tanzi
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ SILVIA KESSEL Executive Vice President
------------------------------------------- and Director January 10, 2001
Silvia Kessel
/s/ JOHN W. KLUGE Director
------------------------------------------- January 10, 2001
John W. Kluge
/s/ DAVID RAND Executive Vice President
------------------------------------------- and Director January 10, 2001
David Rand
/s/ DAVID ROCKEFELLER Director
------------------------------------------- January 10, 2001
David Rockefeller
/s/ STUART SUBOTNICK Director
------------------------------------------- January 10, 2001
Stuart Subotnick
/s/ SHERMAN TUAN Director
------------------------------------------- January 10, 2001
Sherman Tuan
/s/ LEONARD WHITE Director
------------------------------------------- January 10, 2001
Leonard White
</TABLE>
II-7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
--------------------- ------------------------------------------------------------
<C> <S>
1.1* Form of Underwriting Agreement (Debt)
1.2* Form of Underwriting Agreement (Equity)
2.1 Agreement and Plan of Merger by and among Metromedia Fiber
Network, Inc., SiteSmith Inc. and Aqueduct Acquisition
Corp., dated October 9, 2000 (incorporated by reference to
the Company's Current Report on Form 8-K filed on
October 11, 2000).
3.1 Amended and Restated Certificate of Incorporation of
Metromedia Fiber Network, Inc. (incorporated by reference to
Exhibit 3.1 of the Company's Registration Statement on Form
S-1 (Registration No. 333-33653)).
3.2 Amended and Restated Bylaws of Metromedia Fiber Network,
Inc. (incorporated by reference to Exhibit 3.2 of the
Company's Registration Statement on Form S-1 (Registration
No. 333-33653)).
4.1 Specimen Class A Common Stock Certificate of Metromedia
Fiber Network, Inc. (incorporated by reference to
Exhibit 4.1 of the Company's Registration Statement on Form
S-1 (Registration No. 333-33653)).
4.2 Form of Indenture between Metromedia Fiber Network, Inc. and
The Bank of New York (incorporated by reference to Exhibit
4.2 of the Company's Registration Statement on Form S-3
(Registration No. 333-89087)).
5.1 Opinion of Paul, Weiss, Rifkind, Wharton & Garrison
regarding the legality of the securities.
12.1 Statement re Computation of Ratios.
23.1 Consent of Ernst & Young LLP
23.2 Consent of PricewaterhouseCoopers LLP
23.3 Consent of Deloitte & Touche LLP
23.4 Consent of PricewaterhouseCoopers LLP
23.5 Consent of Paul, Weiss, Rifkind, Wharton & Garrison
(included in the opinion filed as Exhibit 5.1 to this
Registration Statement).
24.1 Power of Attorney from officers and directors (included in
the signature pages hereto).
25.1 Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of The Bank of New York, as trustee
under the Indenture.
</TABLE>
------------------------
* To be filed by a post-effective amendment to the Registration Statement or
incorporated by reference from documents filed with the SEC under the
Securities Exchange Act of 1934.
