INTERMEDIA COMMUNICATIONS OF FLORIDA INC
S-3, 1997-12-23
TELEPHONE COMMUNICATIONS (NO RADIOTELEPHONE)
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<PAGE>
 
As filed with the Securities and Exchange Commission on ____________, 1997

                                             Registration No. 333-
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                             _____________________



                                    FORM S-3
                             REGISTRATION STATEMENT
                                     UNDER
                           THE SECURITIES ACT OF 1933
                             _____________________

                         INTERMEDIA COMMUNICATIONS INC.
             (Exact name of registrant as specified in its charter)
                             _____________________

           Delaware                                        59-29-13586
(State or other jurisdiction                               (I.R.S. Employer
of incorporation or organization)                          Identification No.)

                             3625 Queen Palm Drive
                              Tampa, Florida 33619
                                 (813) 829-0011
         (Address, including zip code, and telephone number, including
            area code, of registrant's principal executive offices)
                             _____________________

                    David C. Ruberg, Chairman of the Board,
                     President and Chief Executive Officer
                        Intermedia Communications, Inc.
                             3625 Queen Palm Drive
                              Tampa, Florida 33619
                                 (813) 829-0011
           (Name, address, including zip code, and telephone number,
                   including area code, of agent for service)
                             _____________________

                                    Copy to:
                            Ralph J. Sutcliffe, Esq.
                      Kronish, Lieb, Weiner & Hellman LLP
                          1114 Avenue of the Americas
                         New York, New York 10036-7798
                              _____________________

          Approximate date of commencement of proposed sale to public:  From
time to time after the effective date of this Registration Statement.

          If the only securities being registered on this form are being offered
pursuant to dividend on 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.  [_]
<PAGE>
 
                             _____________________

                        CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
 Title of Securities      Amount to be      Price        Aggregate         Amount of
   to be Registered        Registered     Per Share        Price       Registration Fee
- ---------------------------------------------------------------------------------------
<S>                     <C>               <C>         <C>              <C>
Depositary Shares          8,000,000      $26.75 (1)  $  214,000,000            $63,130
each representing a
one hundredth
interest in a share
of 7% Series E
Junior Convertible
Preferred Stock
(liquidation
preference $25.00
per share)
- ---------------------------------------------------------------------------------------
7% Series E Junior            80,000        N.A.           N.A.                    (2)
Convertible
Preferred Stock,
liquidation
preference $2,500
per share, $1.00
par value per share
- ---------------------------------------------------------------------------------------
Common Stock,          3,307,425 (3)(4)     N.A.           N.A.                    (2)
$.01 par value per
share issuable upon
conversion of the
Depositary Shares
and 7% Series E
Junior Convertible
Preferred Stock
- ---------------------------------------------------------------------------------------
Common Stock,               (5)             (5)       $28,000,000 (5)           $ 8,260
$.01 par value
issuable as
dividends on the
7% Series E Junior
Convertible
Preferred Stock
- ---------------------------------------------------------------------------------------
                                                          Total:                $71,390
- ---------------------------------------------------------------------------------------
</TABLE>
                                        
(1) Average of the bid and asked prices on December 17, 1997, pursuant to Rule
457(c).

(2) Pursuant to Rule 457(i), a registration fee is not required in connection
with the registration of the Series E Preferred Stock or the Common Stock
issuable upon conversion of the Depositary Shares or shares of the Series E
Preferred Stock.

(3) An indeterminate number of additional shares of Common Stock are registered
hereunder which may be issued in the event that fractional shares of Depositary
Shares or Series E Preferred Stock are rounded up to the nearest whole share in
connection with the conversion of Depositary Shares or shares of Series E
Preferred Stock.

(4) Pursuant to Rule 416, an indeterminate number of additional shares of Common
Stock are registered hereunder which may be issued in the event that applicable
antidilution provisions with respect to conversion of the Depositary Shares and
Series E Preferred Stock become operative.

(5) Pursuant to Rule 457(o), an indeterminate number of shares of Common Stock
are registered hereunder which may be issued by the Company from time to time in
lieu of cash during the two year period commencing on the effective date of this
Registration Statement as dividends on the 7% Series E Junior Convertible
Preferred Stock.

                             _____________________

          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 OR DATES AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
<PAGE>
 
PROSPECTUS


                        INTERMEDIA COMMUNICATIONS INC.

   8,000,000 DEPOSITARY SHARES EACH REPRESENTING A ONE HUNDREDTH INTEREST IN A
   SHARE OF 7% SERIES E JUNIOR CONVERTIBLE PREFERRED STOCK, 80,000 SHARES OF 7%
   SERIES E JUNIOR CONVERTIBLE PREFERRED STOCK, 3,307,425 SHARES OF COMMON STOCK
   ISSUABLE UPON CONVERSION OF THE DEPOSITARY SHARES AND/OR THE 7% SERIES E
   JUNIOR CONVERTIBLE PREFERRED STOCK, AND COMMON STOCK ISSUABLE AS DIVIDENDS ON
   THE 7% SERIES E JUNIOR CONVERTIBLE PREFERRED STOCK

                                _______________

             This Prospectus is being used in connection with the offering from
   time to time by certain holders (the "Selling Securityholders") of (1)
   depositary shares (the "Depositary Shares") each representing a one hundredth
   interest in a share of 7% Series E Junior Convertible Preferred Stock
   ("Series E Preferred Stock"), liquidation preference $2,500 per share
   (equivalent to $25.00 per Depositary Share; the "Liquidation Preference"),
   par value $1.00 per share of Intermedia Communications Inc. (the "Company" or
   "Intermedia"), and (2) the shares of Series E Preferred Stock and the shares
   (the "Common Shares") of common stock, $.01 par value per share, of the
   Company (the "Common Stock") issuable upon conversion of the Series E
   Preferred Stock and/or the Depositary Shares (the Depositary Shares, Series E
   Preferred Stock and Common Shares are collectively referred to herein as the
   "Securities").  This Prospectus is also being used in connection with the
   issuance by the Company from time to time during the two-year period
   commencing on the date of this Prospectus and in accordance with the
   Certificate of Designation (as defined herein) of an indeterminate number of
   shares of Common Stock issuable by the Company in lieu of cash as dividends
   on the Series E Preferred Stock (the "Dividend Shares").  See "Description of
   Series E Preferred Stock--Dividends."  The Depositary Shares were originally
   issued by the Company in a private placement on October 30, 1997 (the "First
   Closing") and purchased by Bear Stearns & Co., Inc. and Salomon Brothers Inc
   (the "Initial Purchasers") pursuant to a purchase agreement (the "Purchase
   Agreement") dated as of October 24, 1997 between the Company and the Initial
   Purchasers.  Subsequently, the Initial Purchasers exercised the over-
   allotment option in connection therewith with respect to 1,000,000 Depositary
   Shares. The First Closing and the over-allotment exercise are collectively
   referred to herein as the "October 30 Equity Offering".  The Initial
   Purchasers, in turn, resold the Depositary Shares in private sales pursuant
   to exemptions from registration under the Securities Act of 1933, as amended.

                                                        (continued on next page)

            PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY MATTERS
             DISCUSSED UNDER THE CAPTION "RISK FACTORS" ON PAGE 1.

                             --------------------

            THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED 
       BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE SECURITIES 
     AND EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS 
     PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

                             --------------------

        NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. 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 COMPANY
SINCE THE DATE HEREOF.

        THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BY ANY SALE OF THESE SECURITIES
IN ANY STATE INWHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO
REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

                THE DATE OF THIS PROSPECTUS IS _______, 1997. 
<PAGE>
 
             Holders of the Depositary Shares are entitled to all proportional
   rights and preferences of the Series E Preferred Stock (including dividend,
   voting, redemption and liquidation rights).  Dividends on the Series E
   Preferred Stock accrue at a rate per annum equal to 7% of the Liquidation
   Preference per share of Series E Preferred Stock and are payable quarterly,
   in arrears, on January 15, April 15, July 15 and October 15 of each year,
   commencing on January 15, 1998. Dividends are payable in cash or at the
   option of the Company, in shares of Common Stock, or a combination thereof.
   The Depositary Shares are convertible, subject to prior redemption at any
   time after December 29, 1997, at the option of the holder thereof into Common
   Stock at a conversion price of $60.47 per share, subject to certain
   adjustments.

             The Series E Preferred Stock and the Depositary Shares are
   redeemable, in whole or in part, at the option of the Company at any time on
   or after October 18, 2000, at the redemption prices set forth herein, plus
   accumulated and unpaid dividends and Preferred Stock Liquidated Damages (as
   defined herein), if any, thereon to the redemption date. See "Description of
   Series E Preferred Stock" and "Description of Depositary Shares." Upon the
   occurrence of a Preferred Stock Change of Control (as defined herein), the
   Company will be required to make an offer to repurchase all outstanding
   shares of Series E Preferred Stock at a price equal to 100% of the
   Liquidation Preference thereof, plus accumulated and unpaid dividends and
   Preferred Stock Liquidated Damages, if any, thereon to the repurchase date.

             The Series E Preferred Stock ranks (i) senior to all Junior
   Securities (as defined herein), including all Common Stock of the Company;
   (ii) on a parity with any Parity Securities (as defined herein), including
   the Company's outstanding 7% Series D Junior Convertible Preferred Stock (the
   "Series D Preferred Stock"); and (iii) junior to each class of Senior
   Securities (as defined herein), including the Company's outstanding 13 1/2%
   Series B Redeemable Exchangeable Preferred Stock due 2009 ("Series B
   Preferred Stock"), and junior to all indebtedness and other obligations of
   the Company and its subsidiaries. As of September 30, 1997, on a pro forma
   basis after giving effect to the pending acquisition of Shared Technologies
   Fairchild Inc. ("Shared Technologies"), the October 30 Equity Offering and
   the concurrent private placement of $260.3 million principal amount at
   maturity of 8 7/8% Notes on October 30, 1997 (including the exercise of the
   over-allotment option in connection therewith) (the "October 30 Debt
   Offering", and collectively with the October 30 Equity Offering, the "October
   30 Offerings") and the application of the proceeds therefrom, the Series E
   Preferred Stock would have been junior in right of payment to approximately
   $1.3 billion of liquidation preference of Series B Preferred Stock and total
   indebtedness and other obligations of the Company and its subsidiaries ($1.7
   billion if the December Offering (as defined herein) is consummated). See
   "Description of Series E Preferred Stock-Ranking."

             The Securities may be sold from time to time to purchasers directly
   by the Selling Securityholders. Alternatively, the Selling Securityholders
   may from time to time offer the Securities through brokers, dealers or agents
   who may receive compensation in the form of discounts, concessions or
   commissions from the Selling Securityholders and/or the purchasers of the
   Securities for whom they may act as agent. The Selling Securityholders and
   any such brokers, dealers or agents who participate in the distribution of
   the Securities may be deemed to be "underwriters", and any profits on the
   sale of the Securities by them and any discounts, commissions or concessions
   received by any such brokers, dealers or agents might be deemed to be
   underwriting discounts and commissions under the Securities Act. To the
   extent the Selling Securityholders may be deemed to be underwriters, the
   Selling Securityholders may be subject to certain statutory liabilities of
   the Securities Act, including, but not limited to, Sections 11, 12 and 17 of
   the Securities Act and Rule 10b-5 under the Exchange Act. See "Plan of
   Distribution."  The Selling Securityholders and any other person
   participating in such distribution will be subject to applicable provisions
   of the Exchange Act and the rules and regulations thereunder, including,
   without limitation, Regulation M, which may limit the timing of purchases and
   sales of any of the Securities by the Selling Securityholders and any other
   such person. All of the foregoing may affect the marketability of the
   Securities and the ability of any person or entity to engage in market-making
   activities with respect to the Securities.

             The Company will not receive any proceeds from the sale of the
   Securities or the issuance of the Dividend Shares offered hereby.  The
   Company has agreed to pay substantially all of the expenses incidental to the
   registration, offering and sale of the Securities to the public other than
   commissions, fees and discounts of underwriters, brokers, dealers and agents.

             On December 15, 1997, the closing price for the Common Stock as
   quoted on the National Association of Securities Dealers, Inc. Automated
   Quotation System National Market ("Nasdaq National Market"), under the symbol
   "ICIX", was $53 5/16 per share.  The Company has not and does not intend to
   apply for the listing of the Depositary Shares or the Series E Preferred
   Stock on any securities exchange or for quotation through the Nasdaq National
   Market. The Series  E Preferred Stock and the Depositary Shares are eligible
   for trading in the National Association of Securities Dealers' Private
   Offerings, Resales and Trading Through Automative Linkages ("PORTAL") Market.
<PAGE>
 
                             AVAILABLE INFORMATION

             The Company is subject to the informational requirements of the
   Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
   accordance therewith, files reports, proxy statements and other information
   with the Securities and Exchange Commission (the "Commission").  Such
   reports, proxy and information statements and other information can be
   inspected and copied at the public reference facilities maintained by the
   Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, its Midwest
   Regional Office, 500 West Madison Street, Suite 1400, Chicago, Illinois
   60661-2511 and at its Northeast Regional Office, 7 World Trade Center, Suite
   1300, New York, New York 10048.  Copies of such material can be obtained from
   the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
   Washington, D.C. 20549, at prescribed rates.  Such material can also be
   inspected at the Web site of the Commission located at http://www.sec.gov.
   The Common Stock is listed on the Nasdaq National Market under the symbol
   "ICIX".  Reports, proxy and information statements, and other information
   concerning the Company can also be inspected at the Nasdaq National Market at
   1735 17 Street, N.W., Washington, D.C.  20006-1506.

             Statements contained in this Prospectus as to the contents of any
   contract or other document are not necessarily complete, and reference is
   made to the copy of such contract or other document filed as an exhibit to
   the Registration Statement of which this Prospectus forms a part, each such
   statement being qualified in all respects by such reference.

                INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
        The following documents or information have been filed by the Company
   with the Commission and are incorporated herein by reference:

        The Company's Annual Report on Form 10-K for the year ended December 31,
          1996.
        The Company's Annual Report on Form 10-K/A for the year ended December 
          31, 1996 filed with the Commission on May 15, 1997.
        The portions of the Proxy Statement for the Annual Meeting of
        Stockholders of the Company held on May 22, 1997 that have been 
          incorporated by reference into the Company's Annual Report on Form
          10-K for the year ended December 31, 1996.
        The Company's Current Report on Form 8-K filed with the Commission on
          February 24, 1997.
        The Company's Quarterly Report on Form 10-Q for the quarter ended March
          31, 1997.
        The Company's Current Report on Form 8-K filed with the Commission on
          March 14, 1997.
        The Company's Current Report on Form 8-K filed with the Commission on
          June 5, 1997.
        The Company's Current Report on Form 8-K filed with the Commission on
          July 17, 1997.
        The Company's Current Report on Form 8-K/A filed with the Commission on
          August 4, 1997.
        The Company's Quarterly Report on Form 10-Q for the quarter ended June
          30, 1997.
        The Company's Current Report on Form 8-K filed with the Commission on
          October 27, 1997.
        The Company's Current Report on Form 8-K filed with the Commission on
          November 6, 1997.
        The Company's Quarterly Report on Form 10-Q for the quarter ended
          September 30, 1997.
        The Company's Current Report on Form 8-K filed with the Commission on
          November 25, 1997.
        The Company's Current Report on Form 8-K/A filed with the Commission on
          December 4, 1997.
        The Company's Current Report on Form 8-K/A filed with the Commission on
          December 16, 1997.    
        The Company's Current Report on Form 8-K filed with the Commission on 
          December 18, 1997.    
        The Company's Current Report on Form 8-K/A filed with the Commission 
          on December 22, 1997.
        The description of the capital stock contained in the Company's
          registration statements on Form 8-A under the Exchange Act, filed
          April 7, 1992, April 28, 1992 and April 30, 1992 (File No. 0-20135).


                                      ii
<PAGE>
 
     All documents subsequently filed by the Company with the Commission
   pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the
   date of this Prospectus and prior to the termination of the offering covered
   by this Prospectus will be deemed incorporated by reference into this
   Prospectus and to be a part hereof from the date of filing of such documents.
   Any statement contained in a document incorporated by reference herein shall
   be deemed to be modified or superseded for purposes of this Prospectus to the
   extent that a statement contained herein modifies or supersedes such
   statement.  Any statement so modified or superseded shall not be deemed,
   except as so modified or superseded, to constitute a part of this Prospectus.

             THE COMPANY HEREBY UNDERTAKES TO PROVIDE WITHOUT CHARGE TO EACH
   PERSON TO WHOM A COPY OF THIS PROSPECTUS HAS BEEN DELIVERED, UPON THE WRITTEN
   OR ORAL REQUEST OF SUCH PERSON TO INTERMEDIA COMMUNICATIONS, INC., 3625 QUEEN
   PALM DRIVE, TAMPA, FLORIDA 33619 (TELEPHONE 813-829-0011), ATTENTION:
   INVESTOR RELATIONS, A COPY OF ANY OR ALL OF THE DOCUMENTS REFERRED TO ABOVE
   (OTHER THAN EXHIBITS TO SUCH DOCUMENTS) WHICH HAVE BEEN INCORPORATED BY
   REFERENCE IN THIS PROSPECTUS.


                                      iii
<PAGE>
 
                                  RISK FACTORS

             Prospective investors should consider carefully the following
   factors relating to the business of the Company and this offering, in
   addition to other information set forth elsewhere in this Prospectus and in
   the Company's Annual Report on Form 10-K, before purchasing the Securities
   offered hereby.
 
             Substantial Indebtedness; Insufficiency of Earnings to Cover Fixed
   Charges, Including Dividends on the Series E Preferred Stock. The Company is
   highly leveraged.  At September 30, 1997, after giving pro forma effect to
   the pending acquisition of Shared Technologies, the October 30 Offerings and
   the application of the net proceeds of the October 30 Offerings, the Company
   would have had outstanding approximately $993.8 million ($1.3 billion if the
   December Offering is consummated) in aggregate principal amount of
   indebtedness and other liabilities on a consolidated basis (including trade
   payables), approximately $312.0 million of obligations with respect to
   dividend payments and the mandatory redemption of the Series B Preferred
   Stock, $170.1 million of obligations with respect to the Series D Preferred
   Stock and $193.7 million of obligations with respect to the Series E
   Preferred Stock. The degree to which the Company is leveraged could have
   important consequences to holders of the Series E Preferred Stock, including
   the following: (i) a substantial portion of the Company's cash flow from
   operations will be dedicated to payment of the principal and interest on its
   indebtedness, to payment of dividends on and the redemption of the Series B
   Preferred Stock and the payment of dividends on the Series D Preferred Stock
   and the Series E Preferred Stock, thereby reducing funds available for other
   purposes; (ii) the Company's significant degree of leverage could increase
   its vulnerability to changes in general economic conditions or increases in
   prevailing interest rates; (iii) the Company's ability to obtain additional
   financing for working capital, capital expenditures, acquisitions, general
   corporate purposes or other purposes could be impaired; and (iv) the Company
   may be more leveraged than certain of its competitors, which may be a
   competitive disadvantage.

             The Company's historical earnings have been insufficient to cover
   combined fixed charges and dividends on preferred stock by $0.6 million, $2.3
   million, $3.3 million, $19.8 million and $60.0 million for each of the years
   ended December 31, 1992, 1993, 1994, 1995 and 1996, respectively. In
   addition, insufficiencies of $37.6 million and $187.0 million were
   experienced in the nine-month periods ended September 30, 1996 and 1997,
   respectively. On a pro forma basis, after giving applicable effect to the
   DIGEX, EMI, NetSolve and UTT acquisitions, the pending acquisition of Shared
   Technologies and the March 1997 offerings, July 1997 Offerings (as defined
   herein) and October 30 Offerings, the Company's earnings were insufficient to
   cover combined fixed charges and dividends on preferred stock by $238.9
   million ($269.6 million if the December Offering is consummated) for the year
   ended December 31, 1996 and by $294.8 million ($317.8 million if the December
   Offering is consummated) for the nine months ended September 30, 1997. The
   Company anticipates that earnings will be insufficient to cover fixed charges
   for the next several years. In order for the Company to meet its debt service
   obligations, its dividend and redemption obligations with respect to the
   Series B Preferred Stock and its dividend obligations with respect to the
   Series D Preferred Stock and Series E Preferred Stock the Company will need
   to substantially improve its operating results. There can be no assurance
   that the Company's operating results will be of sufficient magnitude to
   enable the Company to meet such debt service, dividend and redemption
   obligations. In the absence of such operating results, the Company could face
   substantial liquidity problems and might be required to raise additional
   financing through the issuance of debt or equity securities; however, there
   can be no assurance that Intermedia would be successful in raising such
   financing, or the terms or timing thereof.

             Restrictions on the Company's Ability to Pay Dividends on the
   Series E Preferred Stock. To date, the Company has not paid cash dividends on
   its shares of capital stock. The ability of Intermedia to pay cash dividends
   on the Series E Preferred Stock is substantially restricted under various
   covenants and conditions contained in the Indenture (the "12 1/2% Notes
   Indenture") governing the Company's 12 1/2% Senior Notes due 2006 (the "12
   1/2% Notes"), the Indenture (the "11 1/4% Notes Indenture") governing the
   Company's 11 1/4% Senior Discount Notes due 2007 (the "11 1/4% Notes"), and
   the Indenture (the "8 7/8% Notes Indenture" and together with the 12 1/2
   Notes Indenture and the 11 1/4 Notes Indenture, the "Existing Senior Notes
   Indentures") governing the Company's 8 7/8% Notes due 2007 (the "8 7/8% 
   Notes" and together with the 12 1/2% Notes and the 11 1/4% Notes, the
   "Existing Senior Notes") and the Certificate of Designation (the "Series B
   Certificate of Designation") setting forth the rights of the Series B
   Preferred Stock. In addition to the limitations

                                       1
<PAGE>
 
   imposed on the payment of dividends by the Existing Senior Notes Indentures
   and the Series B Certificate of Designation, under Delaware law the Company
   is permitted to pay dividends on its capital stock, including the Series E
   Preferred Stock, only out of its surplus, or in the event that it has no
   surplus, out of its net profits for the year in which a dividend is declared
   or for the immediately preceding fiscal year. Surplus is defined as the
   excess of a company's total assets over the sum of its total liabilities and
   the liquidation preference of its preferred stock plus the par value of its
   outstanding capital stock.  At September 30, 1997, the Company had
   stockholders equity of $(90.8) million and surplus of $(90.9) million. The
   Company has had net losses in each of the last five years and expects to
   operate at a net loss for the next several years. These net losses will
   further reduce stockholders' equity and the surplus of the Company. For the
   nine months ended September 30, 1997, the Company had a net loss attributable
   to common stockholders of $228.3 million ($336.1 million on a pro forma basis
   after giving effect to the DIGEX Acquisition (as defined herein), the pending
   acquisition of Shared Technologies and the October 30 Offerings and the
   application of proceeds therefrom and $359.1 million if the December Offering
   is consummated). In order to pay dividends in cash, the Company must have
   surplus or net profits equal to the full amount of the cash dividend at the
   time such dividend is declared. The Company cannot predict what the value of
   its assets or the amount of its liabilities will be in the future and,
   accordingly, there can be no assurance that the Company will be able to pay
   cash dividends on the Series E Preferred Stock.

             In the event dividends are paid in shares of Common Stock, the
   number of shares of Common Stock to be issued on each dividend payment date
   will be determined by dividing the total dividend to be paid on each
   Depositary Share by 95% of the average of the high and low sales prices of
   the Common Stock as reported by the Nasdaq National Market or any national
   securities exchange upon which the Common Stock is then listed, for each of
   the ten consecutive trading days immediately preceding the fifth business day
   preceding the record date for such dividend. If such average is greater than
   5.05% higher than the market value for the Common Stock on the dividend
   payment date and the holder sells at such lower price, the holder's actual
   dividend yield would be lower than the stated dividend yield on the Series E
   Preferred Stock. In addition, the holder is likely to incur commissions and
   other transaction costs in connection with the sale of such Common Stock.

             The Certificate of Designation provides that upon (a) the
   accumulation of accrued and unpaid dividends on the outstanding Series E
   Preferred Stock in an amount equal to six quarterly dividends (whether or not
   consecutive) and (b) the failure of the Company to make a Preferred Stock
   Change of Control Offer or to repurchase the Series E Preferred Stock
   tendered in a Preferred Stock Change of Control, the sole remedy to the
   holders of the Series E Preferred Stock is the voting rights arising from a
   Voting Rights Triggering Event (as defined herein). See "Description of
   Series E Preferred Stock-Voting Rights."

             Subordination of the Series E Preferred Stock. The Company's
   obligations with respect to the Series E Preferred Stock are subordinate and
   junior in right of payment to all present and future indebtedness of the
   Company and its subsidiaries, including the Existing Senior Notes, to the
   Series B Preferred Stock and to all subsequent series of preferred stock of
   the Company which by their terms rank senior to the Series E Preferred Stock.
   In addition to the substantial dividend restrictions set forth in the
   Existing Senior Notes Indentures, no cash dividend payments may be made with
   respect to the Series E Preferred Stock if (i) the obligations with respect
   to the Existing Senior Notes or Series B Preferred Stock are not paid when
   due or (ii) any other event of default has occurred under the Existing Senior
   Notes Indentures or Series B Certificate of Designation, and is continuing or
   would occur as a consequence of such payment. As of September 30, 1997, on a
   pro forma basis after giving effect to the October 30 Offerings and the
   application of the net proceeds therefrom, the Series E Preferred Stock would
   have been junior in right of payment to $1.3 billion of indebtedness and
   other liabilities and commitments and liquidation preference of the Company
   and its subsidiaries. In the event of bankruptcy, liquidation or
   reorganization of the Company, the assets of the Company will be available to
   pay obligations on the Series E Preferred Stock only after all Senior
   Securities and all indebtedness of the Company have been paid, and there may
   not be sufficient assets remaining to pay amounts due on any or all of the
   Series E Preferred Stock then outstanding. The Company has entered into
   preliminary discussions with several banks looking toward the establishment
   of a $250.0 million senior credit facility.  Although there can be no
   assurance that such negotiations will be successful, or that the ultimate
   amount of the credit line will amount to $250.0 million, the 

                                       2
<PAGE>
 
   credit facility would likely be secured by substantially all of the assets of
   the Company. See "Description of Series E Preferred Stock-Ranking."

             Risks Associated with Acquisitions.   The Company intends to use
   the net proceeds of the October 30 Offerings and the December Offering, if
   consummated, to expand its networks and service offerings through internal
   development and acquisitions. The Company has used a portion of such net
   proceeds to fund a pending acquisition of Shared Technologies.  On December
   17, 1997, the Company entered into a definitive agreement for the LDS
   Acquisition (as defined herein).  Such acquisitions, if made, could divert
   the resources and management time of the Company and would require
   integration with the Company's existing networks and services. There can be
   no assurance that the pending acquisitions of Shared Technologies and LDS (as
   defined herein) will be consummated or that any other acquisitions will occur
   or that any such acquisitions, including the acquisitions of Shared
   Technologies and LDS, if made, would be on terms favorable to the Company or
   would be successfully integrated into the Company's operations.

             Consistent with its strategy, the Company is currently evaluating,
   has made offers with respect to, and is engaged in discussions regarding
   various acquisition opportunities. These acquisitions could be funded by cash
   (including the proceeds of the October 30 Offerings and the December
   Offering, if consummated) and/or the Company's securities. It is possible
   that one or more of such possible future acquisitions, if completed, could
   adversely affect the Company's funds from operations or cash available for
   distribution, in the short term or the long term or both, or increase the
   Company's debt, or such an acquisition could be followed by a decline in the
   market value of the Company's securities. Under the terms of the purchase
   agreement with the Initial Purchasers, the Company is not prohibited from
   issuing equity securities in connection with an acquisition during the 90-day
   "lock-up" period following the October 30 Offerings.

             On November 20, 1997, Intermedia, Moonlight Acquisition Corp., a
   wholly-owned subsidiary of Intermedia, and Shared Technologies signed a
   definitive merger agreement pursuant to which holders of Shared Technologies'
   common stock would receive $15.00 per share in cash upon consummation of the
   merger. In connection with the proposed acquisition of Shared Technologies
   and in anticipation of Shared Technologies becoming a "Restricted Subsidiary"
   within the meaning of the Company's Existing Senior Notes Indentures and the
   Series B Certificate of Designation, the Company purchased certain equity
   interests and certain notes issued by Shared Technologies.  See "Recent
   Developments -- Acquisitions."  If the proposed acquisition of Shared
   Technologies is not consummated before April 22, 1998 and, as a result,
   Shared Technologies does not become a Restricted Subsidiary of the Company,
   an Event of Default may occur under the terms of each of the Existing Senior
   Notes Indentures and the Series B Certificate of Designation unless the
   Company disposes of its investment in Shared Technologies without a loss or
   holds its investment through an Unrestricted Subsidiary.  If such an event of
   default occurs, upon receipt of notice from the trustee under any of the
   Existing Senior Notes Indentures, or the holders of at least 25% of the
   outstanding principal amounts of the 12 1/2% Notes, the 11 1/4% Notes or the
   8 7/8% Notes, acceleration of the 12 1/2% Notes, the 11 1/4% Notes or the 8 
   7/8% Notes, respectively, would result. The occurrence of an Event of Default
   would not lead to the acceleration of the Series B Preferred Stock. If all of
   the Existing Senior Notes were accelerated, the Company would not have
   sufficient funds available to repay the Existing Senior Notes, unless it
   could arrange a refinancing of the Existing Senior Notes.

             Effect of Substantial Additional Indebtedness on the Company's
   Ability to Make Payments on the Series E Preferred Stock. The Existing Senior
   Notes Indentures and the Series B Certificate of Designation limit, but do
   not prohibit, the incurrence of additional indebtedness by the Company and
   its subsidiaries, and the Company may incur substantial additional
   indebtedness during the next few years to finance the construction of
   networks and purchase of network electronics, including local/long distance
   voice and data switches. The Company has contracted to issue the 8 1/2%
   Senior Notes and may establish a bank credit facility for up to $250 million.
   All additional indebtedness of the Company will rank senior in right of
   payment to any payment obligations with respect to the Series E Preferred
   Stock. The debt service requirements of any additional indebtedness would
   make it more difficult for the Company to pay cash dividends with respect to
   the Series E Preferred Stock.

                                       3
<PAGE>
 
             Regulatory Approval of the October 30 Offerings. Nine of the states
   in which the Company is certificated provide for prior approval or
   notification of the issuance of securities by the Company. Because of time
   constraints, the Company did not expect to have obtained such approval from
   any of the nine states prior to consummation of the October 30 Offerings or
   the December Offering. The requirements for these filings may have been pre-
   empted by the National Securities Market Improvement Act of 1996, although
   there is no case law on this point. The Company filed the necessary
   notifications and applications for approval in these states prior to the
   October 30 Offerings and has obtained approval in three states and will file
   such notifications and applications following the December Offering. After
   consultation with counsel, the Company believes the remaining approvals will
   be granted and that obtaining such approvals subsequent to the October 30
   Offerings and the December Offering should not result in any material adverse
   consequences to the Company, although there can be no assurance that such a
   consequence will not result.

             Maintenance of Peering Relationships. The Internet is comprised of
   many Internet service providers ("ISPs") who operate their own networks and
   interconnect with other ISPs at various peering points. The establishment and
   maintenance of peering relationships with other ISPs is necessary in order to
   exchange traffic with other ISPs without having to pay settlement charges.
   Although the Company meets the industry's current standards for peering,
   there is no assurance that other national ISPs will maintain peering
   relationships with the Company. In addition, there may develop increasing
   requirements associated with maintaining peering with the major national ISPs
   with which the Company may have to comply. There can be no assurance that the
   Company will be able to expand or adapt its network infrastructure to meet
   the industry's evolving standards on a timely basis, at a commercially
   reasonable cost, or at all.

             Potential Liability of On-Line Service Providers. The law in the
   United States relating to the liability of on-line service providers and ISPs
   for information carried on, disseminated through or hosted on their systems
   is currently unsettled. Several private lawsuits seeking to impose such
   liability are currently pending. In one case brought against an ISP,
   Religious Technology Center v. Netcom On-Line Communication Services, Inc.,
   the United States District Court for the Northern District of California
   ruled in a preliminary phase that under certain circumstances ISPs could be
   held liable for copyright infringement. The Telecommunications Act of 1996
   (the "1996 Act") prohibits and imposes criminal penalties for using an
   interactive computer service to transmit certain types of information and
   content, such as indecent or obscene communications. On June 26, 1997, the
   Supreme Court affirmed the decision of a panel of three federal judges which
   granted a preliminary injunction barring enforcement of this portion of the
   1996 Act to the extent that enforcement is based upon allegations other than
   obscenity or child pornography as an impermissible restriction on the First
   Amendment's right of free speech. In addition, numerous states have adopted
   or are currently considering similar types of legislation. The imposition
   upon ISPs or Web hosting sites of potential liability for materials carried
   on or disseminated through its systems could require the Company to implement
   measures to reduce its exposure to such liability, which may require the
   expenditure of substantial resources or the discontinuation of certain
   product or service offerings. The Company believes that it is currently
   unsettled whether the 1996 Act prohibits and imposes liability for any
   services provided by the Company should the content or information
   transmitted be subject to the statute. The increased attention focused upon
   liability issues as a result of these lawsuits, legislation and legislative
   proposals could affect the growth of Internet use. Any such liability or
   asserted liability could have a material adverse effect on the Company's
   business, financial condition and results of operations.

             Dependence upon Network Infrastructure; Risk of System Failure;
   Security Risks. The Company's success in marketing its services to business
   and government users requires that the Company provide superior reliability,
   capacity and security via its network infrastructure. The Company's networks
   are subject to physical damage, power loss, capacity limitations, software
   defects, breaches of security (by computer virus, break-ins or otherwise) and
   other factors, certain of which have caused, and will continue to cause,
   interruptions in service or reduced capacity for the Company's customers.
   Similarly, the Company's ISP business relies on the availability of its
   network infrastructure for the provision of Internet connectivity.
   Interruptions in service, capacity limitations or security breaches could
   have a material adverse effect on the Company's business, financial condition
   and results of operations.

             Absence of a Public Market for the Depositary Shares. The Series E
   Preferred Stock and the Depositary Shares were issued by the Company in the
   October 30 Equity Offering.  The Company does not intend to apply for listing
   of the Depositary Shares or the Series E Preferred Stock on any securities
   exchange or on the Nasdaq National Market. The Initial Purchasers have
   informed the Company that they make a market for the Depositary Shares, but
   they are not

                                       4
<PAGE>
 
   obligated to do so and their market making activity may be discontinued at
   any time without notice.  Accordingly, there can be no assurance as to the
   liquidity or continuation of any market for the Depositary Shares. The
   Depositary Shares may trade at prices that may be higher or lower than their
   initial offering price depending upon many factors, including prevailing
   interest rates, the Company's operating results and the markets for similar
   securities. Historically, the market for securities such as the Depositary
   Shares has been subject to disruptions that have caused substantial
   volatility in the prices of securities similar to the Depositary Shares.
   There can be no assurance that the market for the Depositary Shares would not
   be subject to similar disruptions. The Company does not expect a market for
   the Series E Preferred Stock to develop.

             Certain Tax Considerations. For a discussion of certain material
   federal income tax considerations which are relevant to the purchase,
   ownership and disposition of the Depositary Shares and the Series E Preferred
   Stock, see "Certain Federal Income Tax Consequences."

             Anti-Takeover Provisions. The Company's Certificate of
   Incorporation and Bylaws, the provisions of the Delaware General Corporation
   Law (the "DCGL"), the Existing Senior Notes Indentures, the Series B
   Certificate of Designation, the Series D Certificate of Designation and the
   Certificate of Designation (as defined herein) may make it difficult in some
   respects to effect a change in control of the Company and replace incumbent
   management. In addition, the Company's Board of Directors has adopted a
   Stockholder's Rights Plan, pursuant to which rights to acquire a series of
   preferred stock, exercisable upon the occurrence of certain events, were
   distributed to its stockholders. The existence of these provisions may have a
   negative impact on the price of the Common Stock, may discourage third party
   bidders from making a bid for the Company, or may reduce any premiums paid to
   stockholders for their Common Stock. In addition, the Board has the authority
   to fix the rights and preferences of, and to issue shares of, the Company's
   preferred stock, which may have the effect of delaying or preventing a change
   in control of the Company without action by its stockholders.

             Shares Eligible for Future Sale. Future sales of shares by existing
   stockholders under Rule 144 of the Securities Act, or through the exercise of
   outstanding registration rights or the issuance of shares of Common Stock
   upon the exercise of options or warrants or conversion of convertible
   securities could materially adversely affect the market price of shares of
   Common Stock and could materially impair the Company's future ability to
   raise capital through an offering of equity securities. Substantially all of
   the Company's outstanding shares, other than those held by affiliates, are
   transferable without restriction under the Securities Act.  No predictions
   can be made as to the effect, if any, that market sales of such shares or the
   availability of such shares for future sale will have on the market price of
   shares of Common Stock prevailing from time to time.

             Limited Operations of Certain Services; History of Net Losses. The
   Company's business commenced in 1987. Substantially all of the Company's
   revenues are derived from local exchange services, enhanced data services,
   long distance services, integration services and certain local network
   services. Many of these services have only recently been initiated or their
   availability only recently expanded in new market areas. The Company is
   expecting to substantially increase the size of its operations in the near
   future. Prospective investors, therefore, have limited historical financial
   information about the Company upon which to base an evaluation of the
   Company's performance. Given the Company's limited operating history, there
   is no assurance that it will be able to compete successfully in the
   telecommunications business.

             The development of the Company's business and the expansion of its
   networks require significant capital, operational and administrative
   expenditures, a substantial portion of which are incurred before the
   realization of revenues. These capital expenditures will result in negative
   cash flow until an adequate customer base is established. Although its
   revenues have increased in each of the last three years, Intermedia has
   incurred significant increases in expenses associated with the installation
   of local/long distance voice switches and expansion of its fiber optic
   networks, services and customer base. Intermedia reported net losses of
   approximately $3.1 million, $20.7 million, $57.2 million 

                                       5
<PAGE>
 
   for the years ended December 31, 1994, 1995 and 1996 and a net loss of $201.2
   million for the nine months ended September 30, 1997, respectively. The
   Company anticipates recording a significant net loss in 1997 that is expected
   to be substantially greater than the loss in 1996 and expects net losses to
   continue for the next several years. In addition, the Company expects to have
   negative EBITDA in 1997. There can be no assurance that Intermedia will
   achieve or sustain profitability or positive EBITDA in the future.

             Class Action by DIGEX Stockholders.  On June 5, 1997, the Company
   announced that it had agreed to acquire 100% of the outstanding equity of
   DIGEX, Incorporated ("DIGEX"; the "DIGEX Acquisition").  The acquisition was
   consummated through a tender offer for all of the outstanding shares of
   DIGEX, which closed on July 9, 1997, followed by a cash merger effective on
   July 11, 1997 (the "Merger").

             On June 20, 1997, two purported class action complaints were filed
   in the Court of Chancery of the State of Delaware in and for New Castle
   County respectively by TAAM Associates, Inc. and David and Chaile Steinberg
   (the "Complaints"), purported stockholders of DIGEX, on behalf of all non-
   affiliated common stockholders of DIGEX, against Intermedia, DIGEX and the
   Directors of DIGEX (the "DIGEX Directors"). The Complaints allege that the
   DIGEX Directors violated their fiduciary duties to the public stockholders of
   DIGEX by agreeing to vote in favor of the Merger and that Intermedia
   knowingly aided and abetted such violation by offering to retain DIGEX
   management in their present positions and consenting to stock option grants
   to certain executive officers of DIGEX. The Complaints sought preliminary and
   permanent injunctions enjoining the Merger but no applications were made for
   such injunctions prior to the consummation of the Merger on July 11, 1997. In
   addition, the Complaints seek cash damages from the DIGEX Directors. In
   August 1997, a motion to dismiss the Complaints was filed on behalf of
   Intermedia, DIGEX and the DIGEX Directors. The action has been dormant since
   that time.

             These cases are in their very early stages and no assurance can be
   given as to their ultimate outcome. Intermedia, after consultation with its
   counsel, believes that there are meritorious factual and legal defenses to
   the claims in the Complaints. Intermedia intends to defend vigorously the
   claims in the Complaints.

             Significant Capital Requirements and Need for Additional Financing.
   Expansion of the Company's existing networks and services and the development
   of new networks and services require significant capital expenditures.
   Intermedia expects to fund its capital requirements through existing
   resources, joint ventures, debt or equity financing (including capital raised
   through the October 30 Offerings and the December Offering, if consummated),
   credit availability and internally generated funds.  Assuming the
   consummation of the December Offering, the Company expects that continued
   expansion of its business will require raising equity and/or debt by the end
   of fiscal 1999. Depending on market conditions, the Company may determine to
   raise additional capital before such time.  There can be no assurance,
   however, that Intermedia will be successful in raising sufficient debt or
   equity on terms that it will consider acceptable.  Moreover, the Existing
   Senior Notes Indentures,  the Series B Certificate of Designation, the Series
   D Certificate of Designation and the Certificate of Designation impose
   certain restrictions upon the Company's ability to incur additional
   indebtedness or issue additional preferred stock. In addition, the Company's
   future capital requirements will depend upon a number of factors, including
   marketing expenses, staffing levels and customer growth, as well as other
   factors that are not within the Company's control, such as competitive
   conditions, government regulation and capital costs. Failure to generate
   sufficient funds may require Intermedia to delay or abandon some of its
   future expansion or expenditures, which would have a material adverse effect
   on its growth and its ability to compete in the telecommunications industry.

             Expansion Risk. The Company is experiencing a period of rapid
   expansion which management expects will increase in the near future. This
   growth has increased the operating complexity of the Company as well as the
   level of responsibility for both existing and new management personnel. The
   Company's ability to manage its expansion effectively will require it to
   continue to implement and improve its operational and financial systems and
   to expand, train and manage its employee base. The Company's inability to
   effectively manage its expansion could have a material adverse effect on its
   business.

                                       6
<PAGE>
 
             A portion of the Company's expansion may occur through acquisitions
   as an alternative to direct investments in the assets required to implement
   the expansion. No assurance can be given that suitable acquisitions can be
   identified, financed and completed on acceptable terms, or that the Company's
   future acquisitions, if any, will be successful or will not impair the
   Company's ability to service its outstanding obligations.

             Risks of Implementation; Need to Obtain Permits and Rights of Way.
   The Company is continuing to expand its existing networks. The Company has
   identified other expansion opportunities in the eastern half of the United
   States and is currently extending the reach of its networks to pursue such
   opportunities. There can be no assurance that the Company will be able to
   expand its existing networks or construct or acquire new networks as
   currently planned on a timely basis. The expansion of the Company's existing
   networks and its construction or acquisition of new networks will be
   dependent, among other things, on its ability to acquire rights-of-way and
   any required permits on satisfactory terms and conditions and on its ability
   to finance such expansion, acquisition and construction. In addition, the
   Company may require pole attachment agreements with utilities and incumbent
   local exchange carriers ("ILECs") to operate existing and future networks,
   and there can be no assurance that such agreements will be obtained or
   obtainable on reasonable terms. These factors and others could adversely
   affect the expansion of the Company's customer base on its existing networks
   and commencement of operations on new networks. If the Company is not able to
   expand, acquire or construct its networks in accordance with its plans, the
   growth of its business would be materially adversely affected.

             Competition. In each of its markets, the Company faces significant
   competition for the local network services, including local exchange
   services, it offers from ILECs, which currently dominate their local
   telecommunications markets. ILECs have long-standing relationships with their
   customers which relationships may create competitive barriers. Furthermore,
   ILECs may have the potential to subsidize competitive service from monopoly
   service revenues. In addition, a continuing trend toward business
   combinations and alliances in the telecommunications industry may create
   significant new competitors to the Company. The Company also faces
   competition in most markets in which it operates from one or more integrated
   communications services providers ("ICPs") and ILECs operating fiber optic
   networks. In addition, the Company faces competition in its integration
   services business from equipment manufacturers, the regional Bell operating
   companies ("RBOCs") and other ILECs, long distance carriers and systems
   integrators, and in its enhanced data services business (including Internet)
   from local telephone companies, long distance carriers, very small aperture
   terminal ("VSAT") providers, other ISPs and others. In particular, the market
   for Internet services is extremely competitive and there are limited barriers
   to entry. Many of the Company's existing and potential competitors have
   financial, personnel and other resources significantly greater than those of
   the Company.

             The Company believes that various legislative initiatives,
   including the recently enacted 1996 Act, have removed remaining legislative
   barriers to local exchange competition. Nevertheless, in light of the passage
   of the 1996 Act, regulators are also likely to provide ILECs with increased
   pricing flexibility as competition increases. If ILECs are permitted to lower
   their rates substantially or engage in excessive volume or term discount
   pricing practices for their customers, the net income or cash flow of ICPs
   and competitive local exchange carriers ("CLECs"), including the Company,
   could be materially adversely affected. In addition, while the Company
   currently competes with AT&T, MCI and others in the interexchange services
   market, the recent federal legislation permits the RBOCs to provide
   interexchange services once certain criteria are met. Once the RBOCs begin to
   provide such services, they will be in a position to offer single source
   service similar to that being offered by Intermedia. In addition, AT&T and
   MCI have entered and other interexchange carriers have announced their intent
   to enter into the local exchange services market, which is facilitated by the
   1996 Act's resale and unbundled network element provisions. The Company
   cannot predict the number of competitors that will emerge as a result of
   existing or new federal and state regulatory or legislative actions.
   Competition from the RBOCs with respect to interexchange services or from
   AT&T, MCI or others with respect to local exchange services could have a
   material adverse effect on the Company's business.

             Regulation. The Company is subject to varying degrees of federal,
   state and local regulation. The Company is not currently subject to price cap
   or rate of return regulation at the state or federal level, nor is it
   currently required to obtain FCC authorization for the installation,
   acquisition or operation of its interstate network facilities. Further, the
   FCC issued an order holding that non-dominant carriers, such as the Company,
   are required to withdraw interstate 

                                       7
<PAGE>
 
   tariffs for domestic long distance service. That order has been stayed by a
   federal appeals court and it is not clear at this time whether the
   detariffing order will be implemented. Until further action is taken by the
   court, the Company will continue to maintain tariffs for these services. In
   June 1997, the FCC issued another order stating that non-dominant carriers,
   such as the Company, could withdraw their tariffs for interstate access
   services. While the Company has no immediate plans to withdraw its tariff,
   this FCC order allows the Company to do so. The FCC also requires the Company
   to file interstate tariffs on an ongoing basis for international traffic. The
   Company is generally subject to certification and tariff or price list filing
   requirements for intrastate services by state regulators. Although passage of
   the 1996 Act should result in increased opportunities for companies that are
   competing with the ILECs, no assurance can be given that changes in current
   or future regulations adopted by the FCC or state regulators or other
   legislative or judicial initiatives relating to the telecommunications
   industry would not have a material adverse effect on the Company. In
   addition, although the 1996 Act provides incentives to the ILECs that are
   subsidiaries of RBOCs to enter the long distance service market by requiring
   ILECs to negotiate interconnection agreements with local competitors, there
   can be no assurance that these ILECs will negotiate quickly with competitors
   such as the Company for the required interconnection of the competitor's
   networks with those of the ILECs or that such agreements will be favorable.

             Potential Diminishing Rate of Growth. During the period from 1994
   through 1996, the Company's revenues grew at a compound annual growth rate of
   169%. While the Company expects to continue to grow, as its size increases it
   is likely that its rate of growth will diminish.

             Risk of New Service Acceptance by Customers. The Company has
   recently introduced a number of services, primarily local exchange services,
   that the Company believes are important to its long-term growth. The success
   of these services will be dependent upon, among other things, the willingness
   of customers to accept the Company as the provider of such services. No
   assurance can be given that such acceptance will occur; the lack of such
   acceptance could have a material adverse effect on the Company.

             Rapid Technological Changes. The telecommunications industry is
   subject to rapid and significant changes in technology. While Intermedia
   believes that, for the foreseeable future, these changes will neither
   materially affect the continued use of its fiber optic networks nor
   materially hinder its ability to acquire necessary technologies, the effect
   on the business of Intermedia of technological changes such as changes
   relating to emerging wireline and wireless transmission technologies,
   including software protocols, cannot be predicted.

             Dependence on Key Personnel. The Company's business is managed by a
   small number of key management and operating personnel, the loss of certain
   of whom could have a material adverse impact on the Company's business. The
   Company believes that its future success will depend in large part on its
   continued ability to attract and retain highly skilled and qualified
   personnel. None of the Company's key executives, other than David C. Ruberg,
   President, Chief Executive Officer and Chairman of the Board, is a party to a
   long-term employment agreement with the Company.

             Risk of Cancellation or Non-Renewal of Network Agreements, Licenses
   and Permits. The Company has lease and/or purchase agreements for rights-of-
   way, utility pole attachments, conduit and dark fiber for its fiber optic
   networks. Although the Company does not believe that any of these agreements
   will be cancelled in the near future, cancellation or non-renewal of certain
   of such agreements could materially adversely affect the Company's business
   in the affected metropolitan area. In addition, the Company has certain
   licenses and permits from local government authorities. The 1996 Act requires
   that local government authorities treat telecommunications carriers in a
   competitively neutral, non-discriminatory manner, and that most utilities,
   including most ILECs and electric companies, afford alternative carriers
   access to their poles, conduits and rights-of-way at reasonable rates on non-
   discriminatory terms and conditions. There can be no assurance that the
   Company will be able to maintain its existing franchises, permits and rights
   or to obtain and maintain the other franchises, permits and rights needed to
   implement its strategy on acceptable terms.

                                       8
<PAGE>
 
             Dependence on Business from Interexchange Carriers ("IXCs"). For
   the year ended December 31, 1996, approximately 10% of the Company's
   consolidated revenues were attributable to access services provided to IXCs.
   The loss of access revenues from IXCs in general could have a material
   adverse effect on the Company's business.

             In addition, the Company's growth strategy assumes increased
   revenues from IXCs from the deployment of local/long distance voice switches
   on its networks and the provision of switched access origination and
   termination services. There is no assurance that the IXCs will continue to
   increase their utilization of the Company's services, or will not reduce or
   cease their utilization of the Company's services, which could have a
   material adverse effect on the Company.

             Business Combinations; Change of Control. The Company has from time
   to time held, and continues to hold, preliminary discussions with (i)
   potential strategic investors who have expressed an interest in making an
   investment in or acquiring the Company and (ii) potential joint venture
   partners looking toward the formation of strategic alliances that would
   expand the reach of the Company's networks or services without necessarily
   requiring an additional investment in the Company. In addition to providing
   additional growth capital, management believes that an alliance with an
   appropriate strategic investor would provide operating synergy to, and
   enhance the competitive positions of, both Intermedia and the investor within
   the rapidly consolidating telecommunications industry. There can be no
   assurance that agreements for any of the foregoing will be reached. An
   investment, business combination or strategic alliance could constitute a
   change of control. The Existing Senior Notes Indentures and the Series B
   Certificate of Designation provide that a change of control would require the
   Company to repay the indebtedness and redeem the Series B Preferred Stock
   outstanding under such instruments. A change of control also requires the
   Company to offer to redeem the Series D Preferred Stock and the Series E
   Preferred Stock. The terms of the Existing Senior Notes Indentures and the
   Series B Certificate of Designation contain provisions that may prohibit the
   repurchase of the Series E Preferred Stock. If a change of control does
   occur, there is no assurance that the Company would have sufficient funds to
   make such repayments and redemption or could obtain any additional debt or
   equity financing that could be necessary in order to repay the Existing
   Senior Notes and to redeem the Series B Preferred Stock in order to redeem
   the Series E Preferred Stock.

             Forward Looking Statements. The statements contained in this
   Prospectus that are not historical facts are "forward-looking statements" (as
   such term is defined in the Private Securities Litigation Reform Act of
   1995), which can be identified by the use of forward-looking terminology such
   as "estimates," "projects," "anticipates," "expects," "intends," "believes,"
   or the negative thereof or other variations thereon or comparable
   terminology, or by discussions of strategy that involve risks and
   uncertainties. Management wishes to caution the reader that these forward-
   looking statements are only estimates or predictions. No assurance can be
   given that future results will be achieved; actual events or results may
   differ materially as a result of risks facing the Company or actual results
   differing from the assumptions underlying such statements.

                                       9
<PAGE>
 
   RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS

             The Company's historical earnings have been insufficient to cover
   combined fixed charges and dividends on preferred stock by $0.6 million, $2.3
   million, $3.3 million, $19.8 million and $60.0 million for each of the years
   ended December 31, 1992, 1993, 1994, 1995 and 1996, respectively. In
   addition, insufficiencies of $37.6 million and $187.0 million were
   experienced in the nine-month periods ended September 30, 1996 and 1997,
   respectively. On a pro forma basis, after giving effect to the DIGEX, EMI,
   NetSolve and UTT acquisitions, the pending acquisition of Shared Technologies
   and the March 1997 offerings, July 1997 Offerings and October 30, 1997
   Offerings, the Company's earnings were insufficient to cover combined fixed
   charges and dividends on preferred stock by $238.9 million ($269.6 million if
   the December Offering is consummated) for the year ended December 31, 1996
   and by $294.8 million ($317.8 million if the December Offering is
   consummated) for the nine months ended September 30, 1997.

             See "Risk Factors Substantial Indebtedness; Insufficiency of
   Earnings to Cover Fixed Charges Including Dividends on the Series E Preferred
   Stock" for a further discussion of factors which may have an impact on the
   Company's ratio of earnings to combined fixed charges and preferred stock
   dividends.

                                       10
<PAGE>
 
                                  THE COMPANY

             Intermedia is a rapidly growing ICP, offering a full suite of
   local, long distance and enhanced data telecommunications services to
   business and government end user customers, long distance carriers, ISPs,
   resellers and wireless communications companies. Founded in 1987, the Company
   is currently the third largest (based on annualized telecommunications
   services revenues) among providers generally referred to as CLECs after MFS
   Communications Company, Inc. and Teleport Communications Group Inc. As of
   September 30, 1997, the Company had sales offices in 43 cities throughout the
   eastern half of the United States and offered a full product package of
   telecommunications services in 19 metropolitan statistical areas. In April
   1996, Intermedia became one of the first ICPs in the United States to provide
   integrated switched local and long distance service and as of December 16,
   1997 had thirteen switches in service.  The Company provides enhanced data
   services, including frame relay, a synchronous transfer mode ("ATM") and
   Internet access services, primarily to business and government customers
   (including over 100 ISPs), in approximately 3,800 cities nationwide,
   utilizing 130 Company-owned data switches. Intermedia also serves as a
   facilities-based interexchange carrier to approximately 15,000 customers
   nationwide. Intermedia continues to increase its customer base and network
   density in the eastern half of the United States and is pursuing attractive
   opportunities to add additional services and expand into complementary
   geographic markets.

             Intermedia was incorporated in the State of Delaware on November 9,
   1987, as the successor to a Florida corporation that was founded in 1986. The
   Company's principal offices are located at 3625 Queen Palm Drive, Tampa,
   Florida 33619, and its telephone number is (813) 829-0011.

   RECENT DEVELOPMENTS

             Acquisitions.   On December 17, 1997 the Company entered into a
   definitive agreement for the acquisition of the Long Distance Savers group of
   companies ("LDS") for a purchase price of approximately $151.0 million, of
   which $120.0 million is payable in Intermedia common stock and $31.0 million
   is payable in cash, in each case, subject to certain adjustments (the "LDS
   Acquisition").  Closing of the LDS Acquisition, expected to occur in the
   first quarter of 1998, is subject to customary conditions, including
   regulatory approvals, and there can be no assurance that the LDS Acquisition
   will be consummated.

             LDS is a regional interexchange carrier, providing long distance
   services and Internet access to more than 45,000 business subscribers and
   employs over 100 sales and customer service professional in Louisiana, Texas,
   Oklahoma, Mississippi and Florida.  LDS had revenues of $101.7 million and
   $82.3 million and EBITDA of $15.0 million and $9.9 million for the year ended
   December 31, 1996 and the nine months ended September 30, 1997, respectively.
   The LDS Acquisition will provide a significant time-to-market advantage in a
   region important to Intermedia's expansion plan, while also contributing an
   experienced regional management team and established sales platform.  Because
   LDS's service portfolio and footprint complements Intermedia's, management of
   the Company believes that the LDS Acquisition also presents significant
   synergy realization opportunities.  By joining forces with an established
   operating company with a staff of experienced sales, management and technical
   personnel, Intermedia expects to expedite its entry into these Southern
   markets.

             On November 20, 1997, Intermedia, through Moonlight Acquisition
   Corp., a wholly-owned subsidiary of Intermedia, entered into a definitive
   merger agreement with Shared Technologies.  The total deemed purchase price
   for Shared Technologies is estimated to be approximately $640 million,
   excluding certain transaction expenses and fees relating to certain
   agreements.  In addition, Intermedia agreed to settle certain litigation.  As
   part of the agreement, Intermedia was granted irrevocable options, which
   together with other common stock of Shared Technologies owned by Intermedia,
   gives Intermedia control of over 50% of Shared Technologies common stock  on
   a fully diluted basis. Intermedia has commenced a tender offer for four
   million additional shares of Shared Technologies at $15 per share in cash,
   which expires on December 26, 1997.
 
             Shared Technologies is the nation's largest provider of shared
   telecommunications services and systems.  Through its technical
   infrastructure and 800 employees, Shared Technologies acts as a single point
   of contact for business

                                       11
<PAGE>
 
   telecommunications services at more than 465 buildings throughout the United
   States and Canada.  For the year ended December 31, 1996 and the nine months
   ended September 30, 1997, Shared Technologies' revenues were approximately
   $157.2 million and $141.8 million, respectively, and its EBITDA for such
   periods were approximately $34.9 million and $33.4 million, respectively.
   This acquisition is expected to enhance Intermedia's national presence in
   telecommunications markets, enabling it to provide a bundled offering of
   local, long distance, data, Internet and systems integration services to
   Shared Technologies' existing 15,000 business customers.  If this acquisition
   is consummated, the Company will have approximately 160,000 CLEC access
   lines, making it the third largest independent CLEC in the U.S., serving more
   than 2,000 buildings.

             The merger agreement is expected to be consummated during the first
   quarter of 1998.  Consummation of the merger agreement is subject to various
   customary conditions, including approval by Shared Technologies's
   stockholders and receipt of necessary regulatory approvals.

             On July 11, 1997, the Company consummated the final step in the
   DIGEX Acquisition through the merger of Daylight Acquisition Corp.
   ("Daylight"), a wholly-owned subsidiary of the Company, with DIGEX. The
   aggregate consideration for the DIGEX Acquisition, which was funded with the
   Company's then existing cash reserves, was approximately $160 million. DIGEX,
   headquartered in suburban Washington, D.C., is a national ISP, which provides
   a comprehensive range of industrial strength Internet solutions, including
   high speed dedicated business Internet connectivity, Web site management and
   private network solutions, primarily to business and government customers.
   For the nine months ended September 30, 1997, DIGEX's revenues were
   approximately $33.5 million.

             The Company is currently evaluating, has made offers with respect
   to and is engaged in discussions regarding various acquisition opportunities.
   These acquisitions could be funded by cash (including the proceeds of the
   October 30 Offerings and the December Offering) and/or the Company's
   securities.  Except as described in this Registration Statement, Intermedia
   is not a party to any agreement for any material acquisition nor can there be
   any assurance that any such acquisition will be consummated. Under the terms
   of the Purchase Agreement with the Initial Purchasers, the Company is not
   prohibited from issuing equity securities, including common stock, in
   connection with an acquisition during the 90-day "lock-up" period following
   the October 30 Offerings.
 
             Offerings. On December 18, 1997, the Company contracted with the
   Initial Purchasers for a private placement (the "December Offering") of
   $350.0 million of 8 1/2% Senior Notes due 2008 (the "8 1/2% Senior Notes").
   The Initial Purchasers were also granted an over-allotment option with
   respect to $50.0 million of 8 1/2% Notes.

             On October 30, 1997, the Company completed private placements of
   the Depositary Shares and the 8 7/8% Notes. The aggregate gross proceeds from
   the October 30 Offerings (including the subsequent exercise of the over-
   allotment options with respect to the Depositary Shares and the 8 7/8% 
   Notes in connection therewith) were $460.3 million.

             In July 1997, the Company completed private placements (the "July
   1997 Offerings") of 6,900,000 Depositary Shares (including the exercise of
   the over-allotment option with respect to such Depositary Shares) (the
   "Series D Depositary Shares"), each representing a one-hundredth interest
   in a share of Series D Preferred Stock, and $649.0 million principal amount
   at maturity of 11/1//4% Notes (including the exercise of the over-allotment
   option with respect to such Notes). The aggregate gross proceeds from the
   July 1997 Offerings were approximately $547.3 million.

             Regulatory Changes.   The Telecommunications Act of 1996 (the
   "1996 Act") and the issuance by the Federal Communications Commission
   ("FCC") of rules governing local competition, particularly those requiring
   the interconnection of all networks and the exchange of traffic among the
   incumbent local exchange carriers ("ILECs") and CLECs, as well as pro-
   competitive policies already developed by state regulatory commissions, have
   caused fundamental changes in the structure of the local exchange markets. On
   July 18, 1997, the U.S. Court of Appeals for the Eighth Circuit issued a
   final decision vacating the FCC's pricing and "most favored nation" rules,
   as well as certain other of the FCC's interconnection rules. On October 14,
   1997, the Eighth Circuit Court issued an order

                                       12
<PAGE>
 
   clarifying its previous decision. In this order, the Court held that ILECs
   have an obligation under the 1996 Act to offer other carriers access to the
   ILECs network elements on an unbundled basis, but the ILECs do not have an
   obligation to recombine those elements for use by other carriers. The FCC and
   other parties have requested the Supreme Court to review these decisions.
   These issues also remain subject to scrutiny and oversight by state
   regulatory commissions. Although the Company is not able to predict the
   impact of these decisions on future efforts to negotiate interconnection
   agreements with ILECs, the Company's analysis shows that interconnection
   arrangements that have been approved or mandated by state regulatory
   commissions have been consistent with the intent of the 1996 Act and the
   Company's business plan. These regulatory developments create opportunities
   for new entrants offering local exchange services to capture a portion of the
   ILECs' nearly 100% market share. Due to the rapid development and continuing
   growth of the Company's sales force and its competitive advantages in
   providing integrated telecommunications services, the Company believes that
   it is well positioned to capitalize on the new market opportunities emerging
   in the local exchange market.

             On May 16, 1997, the FCC released an order that fundamentally
   restructured the "access charges" that ILECs charge to interexchange
   carriers and end user customers. The Company believes that the FCC's new
   access charge rules do not adversely affect the Company's business plan, and
   that they in fact present significant new opportunities for new entrants,
   including the Company. Aspects of the access charge order may be changed in
   the future. Numerous parties have either filed appeals with federal courts or
   asked the FCC to reconsider portions of its new rules.

                                       13
<PAGE>
 
                                USE OF PROCEEDS

             The Company will not receive any proceeds from the sale of the
   Securities by the Selling Securityholders or the issuance of the Dividend
   Shares by the Company.



                          DESCRIPTION OF CAPITAL STOCK

             Intermedia's authorized capital stock consists of 50,000,000 shares
   of Common Stock, par value $.01 per share, and 2,000,000 shares of Preferred
   Stock, par value $1.00 per share ("Preferred Stock"). As of November 30,
   1997, there were 17,315,317 shares of Common Stock, 323,499.1404 shares of
   Series B Preferred Stock, 69,000 shares of Series D Preferred Stock and
   80,000 shares of Series E Preferred Stock issued and outstanding. On a fully-
   diluted basis, at that date, the Company had outstanding 32,643,661 shares of
   Common Stock assuming (a) the exercise of the Public Warrants (defined
   below), (b) the exercise of all outstanding options issued pursuant to the
   Company's employee stock option plans and (c) conversions of the Depositary
   Shares, the Series D Preferred Stock and the Series E Preferred Stock.  As of
   November 30, 1997, the Company has reserved (i) 4,364,410 shares of Common
   Stock for issuance pursuant to the Company's employee stock option plans,
   (ii) 350,400 shares of Common Stock for issuance upon exercise of the Public
   Warrants, (iii) 276,500.8596 shares of Series B Preferred Stock for issuance
   as dividends on the outstanding shares of Series B Preferred Stock, (iv)
   40,000 shares of Series C Preferred Stock for issuance in connection with the
   Stockholder's Rights Plan, (v) 4,434,448 shares of Common Stock for issuance
   on conversion of the Series D Preferred Stock, (vi) 1,938,728 shares of
   Common Stock for issuance as dividends on the outstanding shares of Series D
   Preferred Stock, (vii) 3,307,425 shares of Common Stock for issuance on
   conversion of the Series E Preferred Stock and (viii) 933,334 shares of
   Common Stock for issuance as dividends on the outstanding shares of Series E
   Preferred Stock.  All outstanding shares of Common Stock, Series B Preferred
   Stock, Series D Preferred Stock and Series E Preferred Stock  are fully paid
   and non-assessable.

   COMMON STOCK

             Holders of Common Stock are entitled to one vote for each share
   held of record on all matters submitted to a vote of the stockholders.
   Holders of Common Stock do not have cumulative rights, so that holders of
   more than 50% of the shares of Common Stock are able to elect all of
   Intermedia's directors eligible for election in a given year. For a
   description of the classification of the Board, see "-Delaware Law and
   Certain Provisions of Intermedia's Certificate of Incorporation and Bylaws."
   Subject to the preferences that may be applicable to any then outstanding
   Preferred Stock, holders of Common Stock are entitled to receive ratably such
   dividends, if any, as may be declared from time to time by the Board out of
   funds legally available therefor. See "-Dividend Restrictions." Upon any
   liquidation, dissolution or winding up, whether voluntary or involuntary, of
   Intermedia, holders of Common Stock are entitled to receive pro rata all
   assets available for distribution to stockholders after payment or provision
   for payment of the debts and other liabilities of Intermedia and the
   liquidation preferences of any then outstanding Preferred Stock. There are no
   preemptive or other subscription rights, conversion rights, or redemption or
   sinking fund provisions with respect to shares of Common Stock. All
   outstanding shares of Common Stock are, and all shares of Common Stock to be
   outstanding upon exercise of the Public Warrants and conversion of the
   Depositary Shares or shares of Series D Preferred Stock or Series E Preferred
   Stock will be, fully paid and non-assessable.

   PREFERRED STOCK

             The Preferred Stock may be issued at any time or from time to time
   in one or more classes or series with such designations, powers, preferences,
   rights, qualifications, limitations and restrictions (including dividend,
   conversion and voting rights) as may be fixed by the Board, without any
   further vote or action by the stockholders.  As of November 30, 1997, the
   Company had outstanding 323,499.1404 shares of Series B Preferred Stock
   (aggregate liquidation preference of approximately $323.5 million). Dividends
   on the Series B Preferred Stock accumulate at a rate of 13 1/2% of the
   aggregate liquidation preference thereof and are payable quarterly, in
   arrears. Dividends are

                                       14
<PAGE>
 
   payable in cash or, at the Company's option, by the issuance of additional
   Series B Preferred Stock having an aggregate liquidation preference equal to
   the amount of such dividends. The Series B Preferred Stock is subject to
   mandatory redemption at a liquidation preference of $1,000 per share, plus
   accumulated and unpaid dividends on March 31, 2009. The Series B Preferred
   Stock will be redeemable at the option of the Company at any time after March
   31, 2002 at rates commencing with 106.75%, declining to 100% on March 31,
   2007. The Series B Certificate of Designation contains certain covenants
   that, among other things, limit the ability of the Company and its
   subsidiaries to make certain restricted payments, incur additional
   indebtedness and issue additional preferred stock, pay dividends or make
   other distributions, repurchase equity interests, conduct certain lines of
   business or enter into certain mergers and consolidations. In the event of a
   change of control of the Company, holders of the Series B Preferred Stock
   have the right to require the Company to purchase their shares of Series B
   Preferred Stock at a price equal to 101% of the aggregate liquidation
   preference with respect thereto, plus accumulated and unpaid dividends, if
   any, to the date of purchase. This description is intended as a summary and
   is qualified in its entirety by reference to the Series B Certificate of
   Designation.

             The Company may, at its option, exchange some or all of the Series
   B Preferred Stock for the Company's 13 1/2% Senior Subordinated Debentures,
   due 2009 (the "Exchange Debentures"). The Exchange Debentures would  mature
   on March 31, 2009. Interest on the Exchange Debentures would be payable semi-
   annually, and could be paid in the form of additional Exchange Debentures at
   the Company's option. Exchange Debentures would be redeemable by the Company
   at any time after March 31, 2002 at rates commencing with 106.75%, declining
   to 100% on March 31, 2007. The Exchange Debentures contain covenants similar
   to those contained in the Indenture.
 
             As of November 30, 1997, the Company had outstanding 69,000 shares
   of Series D Preferred Stock (aggregate liquidation preference approximately
   $172.5 million).  Dividends on the Series D Preferred Stock accumulate at a
   rate of 7% of the aggregate liquidation preference thereof and are payable
   quarterly, in arrears on each January 15, April 15, July 15 and October 15.
   Dividends are payable in cash or, at the Company's option, by the issuance of
   shares of Common Stock.  The Series D Preferred Stock will be redeemable at
   the option of the Company at any time on or after July 19, 2000 at rates
   commencing with 104%, declining to 100% on July 19, 2004.  The Series D
   Preferred Stock is convertible (since October 7, 1997), at the option of the
   holder, into Common Stock at a conversion price of $38.90 per share of Common
   Stock, subject to certain adjustments.

             See "Description of Series E Preferred Stock" for a description of
   the terms of Series E Preferred Stock.


   DELAWARE LAW AND CERTAIN PROVISIONS OF INTERMEDIA'S CERTIFICATE OF
   INCORPORATION AND BYLAWS

             General. The Certificate of Incorporation and the Bylaws of
   Intermedia contain certain provisions that could make more difficult the
   acquisition of Intermedia by means of a tender offer, a proxy contest or
   otherwise. These provisions are expected to discourage certain types of
   coercive takeover practices and inadequate takeover bids and to encourage
   persons seeking to acquire control of Intermedia first to negotiate with
   Intermedia. Although such provisions may have the effect of delaying,
   deferring or preventing a change in control of Intermedia, the Company
   believes that the benefits of increased protection of Intermedia's potential
   ability to negotiate with the proponent of an unfriendly or unsolicited
   proposal to acquire or restructure the Company outweigh the disadvantages of
   discouraging such proposals because, among other things, negotiation of such
   proposals could result in an improvement of their terms. The description set
   forth below is intended as a summary only and is qualified in its entirety by
   reference to the Certificate of Incorporation and Bylaws of Intermedia.

             Board of Directors. Intermedia's Certificate of Incorporation
   provides that (i) the Board be divided into three classes of directors, with
   each class having a number as nearly equal as possible and with the term of
   each class expiring in a different year and (ii) the Board shall consist of
   not less than three nor more than seven members, the exact number to be
   determined from time to time by the Board. The Board has set the number of
   directors at four.

                                       15
<PAGE>
 
   Subject to any rights of holders of Preferred Stock, a majority of the Board
   then in office will have the sole authority to fill any vacancies on the
   Board. Stockholders can remove members of the Board only for cause.

             Stockholder Action and Special Meetings. Intermedia's Certificate
   of Incorporation provides that (i) any action required or permitted to be
   taken by Intermedia's stockholders must be effected at a duly called annual
   or special meeting of Stockholders and may not be effected by any consent in
   writing and (ii) the authorized number of directors may be changed only by
   resolution of the Board. The Company's Bylaws provide that, subject to any
   rights of holders of any series of Preferred Stock, special meetings of
   stockholders may be called only by the Chairman of the Board or the President
   of Intermedia, by a majority of the Board or by stockholders owning shares
   representing at least a majority of the capital stock of Intermedia issued
   and outstanding and entitled to vote.

             Stockholder's Rights Plan. Intermedia's Board of Directors has
   adopted a Stockholder's Rights Plan, pursuant to which rights to acquire a
   newly created series of Preferred Stock, exercisable upon the occurrence of
   certain events, including the acquisition by a person or group of a specified
   percentage of the Common Stock, were distributed to its stockholders.

             Anti-Takeover Statute. Subject to certain exceptions, Section 203
   of the DGCL prohibits a publicly held Delaware corporation, such as
   Intermedia, from engaging in any "business combination" with an "interested
   stockholder" for a three-year period following the date on which such person
   became an interested stockholder, unless (i) prior to such date, the board of
   directors of the corporation approved either such business combination or the
   transaction that resulted in such person becoming an interested stockholder,
   (ii) upon consummation of the transaction that resulted in such person
   becoming an interested stockholder, such person owned at least 85% of the
   voting stock of the corporation outstanding immediately prior to such
   transaction (excluding certain shares) or (iii) on or subsequent to such
   date, such business combination is approved by the board of directors of the
   corporation and by the affirmative vote of at least 66 2/3% of the 
   outstanding voting stock that is not owned by the interested stockholder. A
   "business combination" includes a merger, asset sale or other transaction
   resulting in a financial benefit to the interested stockholder. An
   "interested stockholder" is essentially a person who, together with
   affiliates and associates, owns (or within the past three years has owned)
   15% or more of the corporation's voting stock. It is anticipated that the
   provisions of Section 203 of the DGCL may encourage any person interested in
   acquiring Intermedia to negotiate in advance with the Board since the
   stockholder approval requirement would be avoided if a majority of
   Intermedia's directors then in office approved either the business
   combination or the transaction that resulted in such person becoming an
   interested stockholder.

   DIVIDEND RESTRICTIONS

             The terms of the Existing Senior Note Indentures restrict the
   Company's ability to pay cash dividends on the Series B Preferred Stock.  The
   existing Senior Note Indentures and the Series B Certificate of Designation
   restrict Intermedia's ability to pay cash dividends on the Common Stock, the
   Series D Preferred Stock and the Series E Preferred Stock.

   TRANSFER AGENT AND REGISTRAR

             The transfer agent and registrar for the Common Stock, Series B
   Preferred Stock, Series D Preferred Stock  and Series E Preferred Stock is
   Continental Stock Transfer & Trust Company.

   OUTSTANDING WARRANTS

             160,000 warrants (the "Public Warrants"), each to purchase 2.19
   shares of Common Stock, at an exercise price of $10.86 per share (subject to
   anti-dilution adjustments) were issued as part of a June 1995 private
   placement. The Public Warrants are currently exercisable. Unless exercised,
   the Public Warrants will expire on June 1, 2000.

                                       16
<PAGE>
 
   RESERVATION OF SHARES

             The Company has authorized and reserved for issuance such number of
   Common Shares as will be issuable upon the conversion of all Depositary
   Shares (or all shares of the Series D Preferred Stock and Series E Preferred
   Stock).  Such Common Shares, when issued, will be duly and validly issued,
   fully paid and non-assessable, free of preemptive rights and free from all
   taxes, liens, charges and security interests with respect to the issue
   thereof.

   REGISTRATION RIGHTS.

             In addition to the rights granted under the Preferred Stock
   Registration Rights Agreement, dated October 30, 1997, among the Company and
   the Initial Purchasers (the "Preferred Stock Registration Rights Agreement"),
   the Company is a party to several agreements pursuant to which certain
   stockholders have the right, among other matters, to require the Company to
   register their shares of Common Stock under the Securities Act under certain
   circumstances. As a result, upon the effectiveness of this Registration
   Statement, substantially all of the Company's outstanding shares, other than
   those held by affiliates, will be transferable without restriction under the
   Securities Act.

                                       17
<PAGE>
 
                    DESCRIPTION OF SERIES E PREFERRED STOCK

   GENERAL

             The terms of the Series E Preferred Stock are set forth in the
   Certificate of Designation of Voting Power, Designation Preferences and
   Relative, Participating, Optional or Other Special Rights and Qualifications,
   Limitations and Restrictions (the "Certificate of Designation"). The
   following summary of the Series E Preferred Stock, the Certificate of
   Designation and the Preferred Stock Registration Rights Agreement is not
   intended to be complete and is subject to, and qualified in its entirety by
   reference to, the Company's Certificate of Incorporation, the Certificate of
   Designation and the Preferred Stock Registration Rights Agreement, including
   the definitions therein of certain terms used below. Copies of the form of
   Certificate of Designation and Preferred Stock Registration Rights Agreement
   are available from the Company, upon request. As used in this Description of
   Series E Preferred Stock, the term "Company" refers to Intermedia
   Communications Inc., excluding its Subsidiaries.

             Certain of the Company's operations are conducted through its
   Subsidiaries and, therefore, the Company is dependent upon the cash flow of
   its Subsidiaries to meet its obligations, including its obligations under the
   Series E Preferred Stock. Any right of the Company to receive assets of any
   of its Subsidiaries is effectively subordinated to all indebtedness and other
   liabilities and commitments (including trade payables and lease obligations)
   of the Company's Subsidiaries. As of September 30, 1997 on a pro forma basis
   after giving effect to the pending acquisition of Shared Technologies, and
   the October 30 Offerings and the application of the proceeds therefrom, the
   aggregate amount of liquidation preference of Senior Securities and
   indebtedness and other obligations of the Company and its Subsidiaries that
   would effectively rank senior in right of payment to the obligations of the
   Company under the Series E Preferred Stock would have been approximately $1.3
   billion ($1.7 billion if the December Offering is consummated). See "Risk
   Factors."

             Pursuant to the Certificate of Designation, 87,500 shares
   (including 17,500 shares which the Initial Purchasers had the option to
   purchase to cover over-allotments) of Series E Preferred Stock with the
   Liquidation Preference were authorized.  Eighty thousand of such shares are
   issued and outstanding and are fully paid and non-assessable.  The Initial
   Purchasers did not exercise their option to purchase the remaining 7,500
   shares.  The holders of the Series E Preferred Stock have no preemptive
   rights.

             The transfer agent for the Series E Preferred Stock is Continental
   Stock Transfer & Trust Co. unless and until a successor is selected by the
   Company (the "Transfer Agent").

   RANKING

             The Series E Preferred Stock, with respect to dividend
   distributions and distributions upon the liquidation, winding-up and
   dissolution of the Company, ranks (i) senior to all classes of common stock
   of the Company and to each other class of capital stock or series of
   preferred stock established after October 24, 1997 by the Board of Directors,
   the terms of which do not expressly provide that it ranks senior to or on a
   parity with the Series E Preferred Stock as to dividend distributions and
   distributions upon the liquidation, winding-up and dissolution of the Company
   (collectively referred to with the common stock of the Company as "Junior
   Securities"); (ii) on a parity with the Series D Preferred Stock, any
   additional shares of Series D Preferred Stock or Series E Preferred Stock
   issued by the Company in the future and any other class of capital stock or
   series of preferred stock issued by the Company established after October 24,
   1997 by the Board of Directors, the terms of which expressly provide that
   such class or series will rank on a parity with the Series E Preferred Stock
   as to dividend distributions and distributions upon the liquidation, winding-
   up and dissolution of the Company (collectively referred to as "Parity
   Securities"); and (iii) junior to the Series B Preferred Stock ($323.5
   million aggregate liquidation preference outstanding at November 30, 1997)
   and to each class of capital stock or series of preferred stock issued by the
   Company established after October 24, 1997 by the Board of Directors the
   terms of which expressly provide that such class or series will rank senior
   to the Series E Preferred Stock as to dividend distributions and
   distributions upon liquidation, winding-up and dissolution of the Company
   (collectively referred to as "Senior Securities").

                                       18
<PAGE>
 
             No dividend whatsoever shall be declared or paid upon, or any sum
   set apart for the payment of dividends upon, any outstanding share of the
   Series E Preferred Stock with respect to any dividend period unless all
   dividends for all preceding dividend periods have been declared and paid, or
   declared and a sufficient sum set apart for the payment of such dividend,
   upon all outstanding shares of Senior Securities.

   DIVIDENDS

             The holders of shares of the Series E Preferred Stock are entitled
   to receive, when, as and if dividends are declared by the Board of Directors
   out of funds of the Company legally available therefor, cumulative dividends
   from October 30, 1997 accruing at the rate per annum of 7% of the Liquidation
   Preference per share, payable quarterly in arrears on each January 15, April
   15, July 15 and October 15, commencing on January 15, 1998 (each, a "Dividend
   Payment Date"). If any such date is not a Business Day, such payment shall be
   made on the next succeeding Business Day, to the holders of record as of the
   next preceding January 1, April 1, July 1 and October 1 (each, a "Record
   Date"). Dividends will be payable (i) in cash, (ii) by delivery of shares of
   Common Stock to holders (based upon 95% of the Average Stock Price (as
   defined below)) or (iii) through any combination of the foregoing. The
   Company intends to pay dividends in shares of Common Stock on each Dividend
   Payment Date to the extent that it is unable to pay dividends in cash. If the
   dividends are paid in shares of Common Stock, the number of shares of Common
   Stock to be issued on each Dividend Payment Date will be determined by
   dividing the total dividend to be paid on each share of Series E Preferred
   Stock by 95% of the average of the high and low sales prices of the Common
   Stock as reported by the Nasdaq National Market or any national securities
   exchange upon which the Common Stock is then listed, for each of the ten
   consecutive trading days immediately preceding the fifth business day
   preceding the Record Date (the "Average Stock Price"). The Transfer Agent is
   authorized and directed in the Certificate of Designation to aggregate any
   fractional shares of Common Stock that are issued as dividends, sell them at
   the best available price and distribute the proceeds to the holders in
   proportion to their respective interests therein. The Company will pay the
   expenses of the Transfer Agent with respect to such sale, including brokerage
   commissions. In the event the sale by the Transfer Agent of such aggregated
   fractional interests would be restricted, the Company and the Transfer Agent
   will agree upon other appropriate arrangements for the cash realization of
   fractional interests. Dividends payable on the Series E Preferred Stock will
   be computed on the basis of a 360-day year consisting of twelve 30-day months
   and will be deemed to accrue on a daily basis.

             Dividends on the Series E Preferred Stock will accrue whether or
   not the Company has earnings or profits, whether or not there are funds
   legally available for the payment of such dividends and whether or not
   dividends are declared. Dividends will accumulate to the extent they are not
   paid on the Dividend Payment Date for the period to which they relate. The
   Certificate of Designation provides that the Company will take all actions
   required or permitted under the DGCL to permit the payment of dividends on
   the Series E Preferred Stock, including, without limitation, through the
   revaluation of its assets in accordance with the DGCL, to make or keep funds
   legally available for the payment of dividends.

             No dividend whatsoever shall be declared or paid upon, or any sum
   set apart for the payment of dividends upon, any outstanding share of the
   Series E Preferred Stock with respect to any dividend period unless all
   dividends for all preceding dividend periods have been declared and paid, or
   declared and a sufficient sum set apart for the payment of such dividend,
   upon all outstanding shares of Series E Preferred Stock. Unless full
   cumulative dividends on all outstanding shares of Series E Preferred Stock
   for all past dividend periods shall have been declared and paid, or declared
   and a sufficient sum for the payment thereof set apart: (i) no dividend
   (other than a dividend payable solely in shares of any Junior Securities)
   shall be declared or paid upon, or any sum set apart for the payment of
   dividends upon, any shares of Junior Securities; (ii) no other distribution
   shall be declared or made upon, or any sum set apart for the payment of any
   distribution upon, any shares of Junior Securities, other than a distribution
   consisting solely of Junior Securities; (iii) no shares of Junior Securities
   shall be purchased, redeemed or otherwise acquired or retired for value
   (excluding an exchange for shares of other Junior Securities) by the Company
   or any of its Subsidiaries; and (iv) no monies shall be paid into or set
   apart or made available for a sinking or other like fund for the

                                       19
<PAGE>
 
   purchase, redemption or other acquisition or retirement for value of any
   shares of Junior Securities by the Company or any of its Subsidiaries.
   Holders of the Series E Preferred Stock will not be entitled to any
   dividends, whether payable in cash, property or stock, in excess of the full
   cumulative dividends as herein described.

             The Existing Senior Notes Indentures contain, and any future credit
   agreements or other agreements relating to Indebtedness to which the Company
   becomes a party may contain, restrictions on the ability of the Company to
   pay dividends on the Series E Preferred Stock.

   OPTIONAL REDEMPTION

             The Series E Preferred Stock may not be redeemed at the option of
   the Company prior to October 18, 2000.  The Series E Preferred Stock may be
   redeemed for cash, in whole or in part, at the option of the Company on or
   after October 18, 2000, at the redemption prices specified below (expressed
   as percentages of the Liquidation Preference thereof), in each case, together
   with accumulated and unpaid dividends (including an amount in cash equal to a
   prorated dividend for any partial dividend period) and Preferred Stock
   Liquidated Damages, if any, to the date of redemption, upon not less than 30
   nor more than 60 days' prior written notice, if redeemed during the 12-month
   period commencing on October 18 of each of the years set forth below:

   Year                                                         Percentage
   ----                                                         ----------
   2000.........................................................104.00%
   2001.........................................................103.00%
   2002.........................................................102.00%
   2003.........................................................101.00%
   2004 and thereafter..........................................100.00%

 
   No optional redemption may be authorized or made unless, prior to giving the
   applicable redemption notice, all accumulated and unpaid dividends for
   periods ended prior to the date of such redemption notice shall have been
   paid in cash or Common Stock. In the event of partial redemptions of Series E
   Preferred Stock, the shares to be redeemed will be determined pro rata or by
   lot, as determined by the Company.

   CONVERSION RIGHTS

             Each share of Series E Preferred Stock will be convertible at any
   time after December 29, 1997, unless previously redeemed, at the option of
   the holder thereof into Common Stock of the Company, at a conversion rate
   equal to the Liquidation Preference divided by the conversion price then
   applicable, except that the right to convert shares of Series E Preferred
   Stock called for redemption will terminate at the close of business on the
   business day preceding the redemption date and will be lost if not exercised
   prior to that time, unless the Company defaults in making the payment due
   upon redemption.

             The initial conversion price is $60.47 per share. The conversion
   price will be subject to adjustment in certain events, including: (i) the
   payment of dividends (and other distributions) in Common Stock on any class
   of capital stock of the Company other than the payment of dividends in Common
   Stock on the Series E Preferred Stock or any other regularly scheduled
   dividend on any other preferred stock which does not trigger any anti-
   dilution provisions in any other security; (ii) the issuance to all holders
   of Common Stock of rights, warrants or options entitling them to subscribe
   for or purchase Common Stock at less than the current market price (as
   calculated pursuant to the Certificate of Designation); (iii) subdivisions,
   combinations and reclassifications of Common Stock; (iv) distributions to all
   holders of Common Stock of evidences of indebtedness of the Company, shares
   of any class of capital stock, cash or other assets (including securities,
   but excluding those dividends, rights, warrants, options and distributions
   referred to in clauses (i) through (iii) above and dividends and
   distributions paid in cash out of the retained earnings of the Company,
   unless the sum of all such cash dividends and distributions made and the
   amount of cash and the fair market value of other consideration paid in
   respect of any repurchases of Common Stock by the Company or any of its

                                       20
<PAGE>
 
   Subsidiaries, in each case within the preceding 12 months in respect of which
   no adjustment has been made, exceeds 20% of the product of the then current
   market price of the Common Stock times the aggregate number of shares of
   Common Stock outstanding on the record date for such dividend or
   distribution).

             No adjustment of the conversion price will be required to be made
   until cumulative adjustments amount to 1% or more of the conversion price as
   last adjusted. Notwithstanding the foregoing, no adjustment to the conversion
   price shall reduce the conversion price below the then applicable par value
   per share of the Common Stock. In addition to the foregoing adjustments, the
   Company will be permitted to make such reductions in the conversion price as
   it considers to be advisable in order that any event treated for federal
   income tax purposes as a dividend of stock or stock rights will not be
   taxable to the holders of the Common Stock.

             In the case of certain consolidations or mergers to which the
   Company is a party or the transfer of substantially all of the assets of the
   Company, each share of Series E Preferred Stock then outstanding would become
   convertible only into the kind and amount of securities, cash and other
   property receivable upon the consolidation, merger or transfer by a holder of
   the number of shares of Common Stock into which such share of Series E
   Preferred Stock might have been converted immediately prior to such
   consolidation, merger or transfer (assuming such holder of Common Stock
   failed to exercise any rights of election and received per share the kind and
   amount receivable per share by a plurality of non-electing shares).

             The holder of record of a share of Series E Preferred Stock at the
   close of business on a record date with respect to the payment of dividends
   on the Series E Preferred Stock will be entitled to receive such dividends
   with respect to such share of Series E Preferred Stock on the corresponding
   Dividend Payment Date, notwithstanding the conversion of such share after
   such Record Date and prior to such Dividend Payment Date. A share of Series E
   Preferred Stock surrendered for conversion during the period from the close
   of business on any Record Date for the payment of dividends to the opening of
   business of the corresponding Dividend Payment Date must be accompanied by a
   payment in cash, Common Stock or a combination thereof, depending on the
   method of payment that the Company has chosen to pay the dividend, in an
   amount equal to the dividend payable on such Dividend Payment Date, unless
   such share of Series E Preferred Stock has been called for redemption on a
   redemption date occurring during the period from the close of business on any
   Record Date for the payment of dividends to the close of business on the
   business day immediately following the corresponding Dividend Payment Date.
   The dividend payment with respect to a share of Series E Preferred Stock
   called for redemption on a date during the period from the close of business
   on any Record Date for the payment of dividends to the close of business on
   the business day immediately following the corresponding Dividend Payment
   Date will be payable on such Dividend Payment Date to the record holder of
   such share on such Record Date, notwithstanding the conversion of such share
   after such Record Date and prior to such Dividend Payment Date. No payment or
   adjustment will be made upon conversion of shares of Series E Preferred Stock
   for accumulated and unpaid dividends or for dividends with respect to the
   Common Stock issued upon such conversion.

   CHANGE OF CONTROL

             Upon the occurrence of a Preferred Stock Change of Control and
   subject to restrictions on repurchase contained in the instruments governing
   Company's outstanding indebtedness and the Series B Preferred Stock
   Certificate of Designation and subject to the participation of any Parity
   Securities, the Company will be required to make an offer (a "Preferred Stock
   Change of Control Offer") to repurchase all or any part of each holder's
   Series E Preferred Stock at an offer price in cash equal to 100% of the
   aggregate Liquidation Preference thereof, plus accumulated and unpaid
   dividends and Preferred Stock Liquidated Damages, if any, thereon to the date
   of repurchase. Within 30 days following a Preferred Stock Change of Control,
   the Company will mail a notice to each holder of Series E Preferred Stock
   describing the transaction that constitutes the Preferred Stock Change of
   Control and offering to repurchase the Series E Preferred Stock pursuant to
   the procedures required by the Certificate of Designation and described in
   such notice; provided that, prior to complying with the provisions of this
   covenant, but in any event within 90 days following a Preferred Stock Change
   of Control, the Company will either repay all outstanding indebtedness or
   obtain the requisite consents, if any, under all agreements governing
   outstanding indebtedness to permit the repurchase of the Series E

                                       21
<PAGE>
 
   Preferred Stock required by this covenant. The Company will comply with the
   requirements of the Exchange Act and any other securities laws and
   regulations thereunder to the extent such laws and regulations are applicable
   in connection with the repurchase of the Series E Preferred Stock as a result
   of a Preferred Stock Change of Control.

             A "Preferred Stock Change of Control" will be deemed to have
   occurred upon the occurrence of any of the following: (a) the sale, lease,
   transfer, conveyance or other disposition (other than by way of merger or
   consolidation), in one or a series of related transactions, of all or
   substantially all of the assets of the Company and its Subsidiaries, taken as
   a whole, (b) the adoption of a plan relating to the liquidation or
   dissolution of the Company, (c) the consummation of any transaction
   (including, without limitation, any merger or consolidation) the result of
   which is that any "person" or "group" (as such terms are used in Section
   13(d)(3) of the Exchange Act) becomes the "beneficial owner" (as such term is
   defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or
   indirectly through one or more intermediaries, of more than 50% of the voting
   power of the outstanding voting stock of the Company, unless (i) the closing
   price per share of Common Stock for any five trading days within the period
   of ten consecutive trading days ending immediately after the announcement of
   such Preferred Stock Change of Control equals or exceeds 105% of the
   conversion price of the Series E Preferred Stock in effect on each such
   trading day or (ii) at least 90% of the consideration in the transaction or
   transactions constituting a Preferred Stock Change of Control pursuant to
   clause (c) consists of shares of Common Stock traded or to be traded
   immediately following such Preferred Stock Change of Control on a national
   securities exchange or the Nasdaq National Market and, as a result of such
   transaction or transactions, the Series E Preferred Stock becomes convertible
   solely into such Common Stock (and any rights attached thereto), or (d) the
   first day on which more than a majority of the members of the Board of
   Directors of the Company are not Preferred Stock Continuing Directors;
   provided, however, that a transaction in which the Company becomes a
   subsidiary of another entity shall not constitute a Preferred Stock Change of
   Control if (i) the stockholders of the Company immediately prior to such
   transaction "beneficially own" (as such term is defined in Rule 13d-3 and
   Rule 13d-5 under the Exchange Act), directly or indirectly through one or
   more intermediaries, at least a majority of the voting power of the
   outstanding voting stock of the Company immediately following the
   consummation of such transaction and (ii) immediately following the
   consummation of such transaction, no "person" or "group" (as such terms are
   defined above), other than such other entity (but including holders of equity
   interests of such other entity), "beneficially owns" (as such term is defined
   above), directly or indirectly through one or more intermediaries, more than
   50% of the voting power of the outstanding voting stock of the Company.

             "Preferred Stock Continuing Directors" means, as of any date of
   determination, any member of the Board of Directors of the Company who (a)
   was a member of the Board of Directors on the date of original issuance of
   the Series E Preferred Stock or (b) was nominated for election to the Board
   of Directors with the approval of, or whose election was ratified by, at
   least two-thirds of the Preferred Stock Continuing Directors who were members
   of the Board of Directors at the time of such nomination or election.

             Except as described above with respect to a Preferred Stock Change
   of Control, the Certificate of Designation does not contain provisions that
   permit the holders of the Series E Preferred Stock to require that the
   Company repurchase or redeem the Series E Preferred Stock in the event of a
   takeover, recapitalization or similar transaction. In addition, the Company
   could enter into certain transactions, including acquisitions, refinancings
   or other recapitalization, that could affect the Company's capital structure
   or the value of the Series E Preferred Stock or the Common Stock, but that
   would not constitute a Preferred Stock Change of Control.

             The Existing Senior Notes or other indebtedness and the Series B
   Preferred Stock could restrict the Company's ability to repurchase the Series
   E Preferred Stock upon a Preferred Stock Change of Control. In the event a
   Preferred Stock Change of Control occurs at a time when the Company is
   prohibited from repurchasing the Series E Preferred Stock, the Company could
   either (i) repay in full or refinance all such outstanding indebtedness or
   Preferred Stock or (ii) obtain the requisite consents, if any, under all
   agreements governing outstanding indebtedness or Preferred Stock to permit
   the repurchase of Series E Preferred Stock required by this covenant. The
   Company must first comply with the covenants in its outstanding indebtedness
   or take the actions described in the preceding sentence before it will be
   required to repurchase shares of Series E Preferred Stock in the event of a
   Preferred Stock Change of Control; provided, that if the Company fails to
   repurchase shares of Series E Preferred Stock, the sole remedy to holders of
                                       22
<PAGE>
 
   Series E Preferred Stock will be the voting rights arising from a Voting
   Rights Triggering Event. Moreover, the Company will not repurchase or redeem
   any Series E Preferred Stock pursuant to this Preferred Stock Change of
   Control provision prior to the Company's repurchase of the Series B Preferred
   Stock pursuant to the change of control covenants in the Series B Preferred
   Stock. As a result of the foregoing, a holder of the Series E Preferred Stock
   may not be able to compel the Company to purchase the Series E Preferred
   Stock unless the Company is able at the time to refinance all such
   indebtedness and the Series B Preferred Stock. See "Risk Factors-Business
   Combinations; Change of Control."

             The Company will not be required to make a Preferred Stock Change
   of Control Offer to the holders of Series E Preferred Stock upon a Preferred
   Stock Change of Control if a third party makes the Preferred Stock Change of
   Control Offer described above in the manner, at the times and otherwise in
   compliance with the requirements set forth in the Certificate of Designation
   applicable to a Preferred Stock Change of Control Offer made by the Company
   and purchases all shares of Series E Preferred Stock validly tendered and not
   withdrawn under such Preferred Stock Change of Control Offer.

   VOTING RIGHTS

             Holders of record of shares of the Series E Preferred Stock have no
   voting rights, except as required by law and as provided in the Certificate
   of Designation. The Certificate of Designation provides that upon (a) the
   accumulation of accrued and unpaid dividends on the outstanding Series E
   Preferred Stock in an amount equal to six quarterly dividends (whether or not
   consecutive) or (b) the failure of the Company to make a Preferred Stock
   Change of Control Offer or to repurchase all of the Series E Preferred Stock
   tendered in a Preferred Stock Change of Control Offer (each of the events
   described in clauses (a) and (b) being referred to herein as a "Voting Rights
   Triggering Event"), then the holders of a majority of the outstanding shares
   of Series E Preferred Stock voting together with any other subsequently
   issued Parity Securities then entitled to voting rights will be entitled to
   elect such number of members to the Board of Directors of the Company
   constituting at least 20% of the then existing Board of Directors before such
   election (rounded to the nearest whole number), provided, however, that such
   number shall be no less than one nor greater than two, and the number of
   members of the Company's Board of Directors will be immediately and
   automatically increased by one or two, as the case may be. Voting rights
   arising as a result of a Voting Rights Triggering Event will continue until
   such time as all dividends in arrears on the Series E Preferred Stock are
   paid in full and all other Voting Rights Triggering Events have been cured or
   waived, at which time the term of office of any such members of the Board of
   Directors so elected shall terminate and such directors shall be deemed to
   have resigned.

             In addition, the Certificate of Designation provides that the
   Company will not authorize any class of Senior Securities or any obligation
   or security convertible or exchangeable into or evidencing a right to
   purchase shares of any class or series of Senior Securities, without the
   approval of holders of at least a majority of the shares of Series E
   Preferred Stock then outstanding, voting or consenting, as the case may be,
   as one class. The Certificate of Designation also provides that the Company
   may not amend the Certificate of Designation so as to affect adversely the
   specified rights, preferences, privileges or voting rights of holders of
   shares of the Series E Preferred Stock or authorize the issuance of any
   additional shares of Series E Preferred Stock, without the approval of the
   holders of at least a majority of the then outstanding shares of Series E
   Preferred Stock voting or consenting, as the case may be, as one class;
   provided, however, that the Company may not amend the Preferred Stock Change
   of Control provisions of the Certificate of Designation (including the
   related definitions) without the approval of the holders of at least 66 2/3%
   of the then outstanding shares of Series E Preferred Stock voting or
   consenting, as the case may be, as one class. The Certificate of Designation
   also provides that, except as set forth above with respect to Senior
   Securities, (a) the creation, authorization or issuance of any shares of
   Junior Securities, Parity Securities or Senior Securities or (b) the increase
   or decrease in the amount of authorized capital stock of any class, including
   any preferred stock, shall not require the consent of the holders of Series E
   Preferred Stock and shall not be deemed to affect adversely the rights,
   preferences, privileges, special rights or voting rights of holders of shares
   of Series E Preferred Stock. The consent of the holders

                                       23
<PAGE>
 
   of Series E Preferred Stock will not be required for the Company to
   authorize, create (by way of reclassification or otherwise) or issue any
   Parity Securities or any obligation or security convertible or exchangeable
   into or evidencing a right to purchase, shares of any class or series of
   Parity Securities.

   MERGER, CONSOLIDATION AND SALE OF ASSETS

             Without the vote or consent of the holders of a majority of the
   then outstanding shares of Series E Preferred Stock, the Company may not
   consolidate or merge with or into, or sell, assign, transfer, lease, convey
   or otherwise dispose of all or substantially all of its assets to, any person
   unless (a) the entity formed by such consolidation or merger (if other than
   the Company) or to which such sale, assignment, transfer, lease, conveyance
   or other disposition shall have been made (in any such case, the "resulting
   entity") is a corporation organized and existing under the laws of the United
   States or any State thereof or the District of Columbia; (b) if the Company
   is not the resulting entity, the Series E Preferred Stock is converted into
   or exchanged for and becomes shares of such resulting entity, having in
   respect of such resulting entity the same (or more favorable) powers,
   preferences and relative, participating, optional or other special rights
   thereof that the Series E Preferred Stock had immediately prior to such
   transaction; and (c) immediately after giving effect to such transaction, no
   Voting Rights Triggering Event has occurred and is continuing. The resulting
   entity of such transaction shall thereafter be deemed to be the "Company" for
   all purposes of the Certificate of Designation.

   LIQUIDATION RIGHTS

             Upon any voluntary or involuntary liquidation, dissolution or
   winding-up of the Company or reduction or decrease in its capital stock
   resulting in a distribution of assets to the holders of any class or series
   of the Company's capital stock, each holder of shares of the Series E
   Preferred Stock will be entitled to payment out of the assets of the Company
   available for distribution of an amount equal to the Liquidation Preference
   per share of Series E Preferred Stock held by such holder, plus accrued and
   unpaid dividends and Preferred Stock Liquidated Damages, if any, to the date
   fixed for liquidation, dissolution, winding-up or reduction or decrease in
   capital stock, before any distribution is made on any Junior Securities,
   including, without limitation, Common Stock. After payment in full of the
   Liquidation Preference and all accrued dividends and Preferred Stock
   Liquidated Damages, if any, to which holders of Series E Preferred Stock are
   entitled, such holders will not be entitled to any further participation in
   any distribution of assets of the Company. If, upon any voluntary or
   involuntary liquidation, dissolution or winding-up of the Company, the
   amounts payable with respect to the Series E Preferred Stock and all other
   Parity Securities are not paid in full, the holders of the Series E Preferred
   Stock and the Parity Securities will share equally and ratably in any
   distribution of assets of the Company in proportion to the full liquidation
   preference and accumulated and unpaid dividends and Preferred Stock
   Liquidated Damages, if any, to which each is entitled. However, neither the
   voluntary sale, conveyance, exchange or transfer (for cash, shares of stock,
   securities or other consideration) of all or substantially all of the
   property or assets of the Company nor the consolidation or merger of the
   Company with or into one or more persons will be deemed to be a voluntary or
   involuntary liquidation, dissolution or winding-up of the Company or
   reduction or decrease in capital stock, unless such sale, conveyance,
   exchange or transfer shall be in connection with a liquidation, dissolution
   or winding-up of the business of the Company or reduction or decrease in
   capital stock.

   REPORTS

             The Certificate of Designation provides that the Company will file
   all annual and quarterly reports and the information, documents, and other
   reports that the Company is required to file with the Commission pursuant to
   Section 13(a) or 15(d) of the Exchange Act ("SEC Reports") with the Transfer
   Agent within 15 days after it files them with the Commission. In the event
   the Company is not required or shall cease to be required to file SEC
   Reports, pursuant to the Exchange Act, the Company will nevertheless continue
   to file such reports with the Commission (unless the Commission will not
   accept such a filing). Whether or not required by the Exchange Act to file
   SEC Reports with the Commission, so long as any Series E Preferred Stock are
   outstanding, the Company will furnish copies of the SEC Reports to the
   holders of Series E Preferred Stock at the time the Company is required to
   make such information available to the Transfer Agent and to investors who
   request it in writing. In addition, the Company has agreed that,
                                       24
<PAGE>
 
   for so long as any shares of Series E Preferred Stock remain outstanding, it
   will furnish to the holders and to securities analysts and prospective
   investors, upon their request, the information required to be delivered
   pursuant to Rule 144A(d)(4) under the Securities Act.

   REGISTRATION RIGHTS; LIQUIDATED DAMAGES

             Pursuant to the Preferred Stock Registration Rights Agreement, the
   Company agreed to file a shelf registration statement (the "Shelf
   Registration Statement") with the Commission covering resales of Preferred
   Stock Transfer Restricted Securities (as defined below) by holders thereof
   (who satisfied certain conditions relating to the provision of information to
   the registrant) on or prior to December 29, 1997, and to use its reasonable
   best efforts to cause such shelf registration statement to become effective
   on or prior to 120 days after such date.

             "Preferred Stock Transfer Restricted Securities" for this purpose,
   means each Depositary Share, each share of Series E Preferred Stock and each
   Common Share until (a) the date on which such security has been effectively
   registered under the Securities Act and disposed of in accordance with the
   Shelf Registration Statement or (b) the date on which such security is
   distributed to the public pursuant to Rule 144 under the Securities Act or
   may be distributed to the public pursuant to Rule 144(k) under the Securities
   Act.

             The Registration Statement of which this Prospectus forms a part
   constitutes the Shelf Registration statement.  The Company is obligated to
   use its best efforts to maintain the effectiveness of the Shelf Registration
   Statement for a period ending on the earlier of October 30, 1999 and the date
   when all Preferred Stock Transfer Restricted Securities covered by the Shelf
   Registration Statement are sold.  If the Shelf Registration Statement ceases
   to be effective or usable for any period of ten consecutive days or for any
   20 days in any 180-day period in connection with resales of Preferred Stock
   Transfer Restricted Securities (provided, that the Company will have the
   option of suspending the effectiveness of the Shelf Registration Statement,
   without becoming obligated to pay Preferred Stock Liquidated Damages for
   periods of up to a total of 60 days in any calendar year if the Board of
   Directors of the Company determines that compliance with the disclosure
   obligations necessary to maintain the effectiveness of the Shelf Registration
   Statement at such time could reasonably be expected to have an adverse effect
   on the Company or a pending corporate transaction) (a "Registration
   Default"), then the Company will pay to each holder of Preferred Stock
   Transfer Restricted Securities liquidated damages ("Preferred Stock
   Liquidated Damages") at a rate of 0.25% per year of the Liquidation
   Preference of the Series E Preferred Stock constituting Preferred Stock
   Transfer Restricted Securities, which shall accrue from the date of the
   Registration Default until such Registration Default is cured. All accrued
   Preferred Stock Liquidated Damages will be paid in shares of Common Stock
   valued at the Average Stock Price by the Company on each Dividend Payment
   Date specified in the Certificate of Designation. Following the cure of all
   Registration Defaults, the accrual of Preferred Stock Liquidated Damages will
   cease.

                                       25
<PAGE>
 
                        DESCRIPTION OF DEPOSITARY SHARES

             Each Depositary Share represents a one-hundredth interest in a
   share of Series E Preferred Stock deposited under the Deposit Agreement
   ("Deposit Agreement"), entered into among Intermedia, Continental Stock
   Transfer & Trust Company, as depositary agent ("Continental"), and the
   holders from time to time of Depositary Receipts issued thereunder. Subject
   to the terms of the Deposit Agreement, each owner of a Depositary Share is
   entitled proportionately to all of the rights and preferences of the shares
   of Series E Preferred Stock represented thereby (including dividend, voting,
   redemption and liquidation rights) contained in the Company's Certificate of
   Incorporation and the Certificate of Designation and summarized above under
   "Description of Series E Preferred Stock." The Company does not expect that
   there will be any public trading market for the Series E Preferred Stock
   except as represented by the Depositary Shares.

             The Depositary Shares are evidenced by depositary receipts issued
   pursuant to the Deposit Agreement ("Depositary Receipts"). The following
   description of Depositary Shares does not purport to be complete and is
   subject to, and qualified in its entirety by, the provisions of the Deposit
   Agreement (which contains the form of Depositary Receipt), a copy of which is
   available from the Company, upon request.

   ISSUANCE OF DEPOSITARY RECEIPTS

             The Series E Preferred Stock was deposited with Continental
   immediately preceding the October 30 Offerings, and Continental in turn
   executed and delivered the Depositary Receipts to the Company. The Company
   delivered the Depositary Receipts to the Initial Purchasers.

   WITHDRAWAL OF SERIES E PREFERRED STOCK

             Upon surrender of the Depositary Receipts at the corporate trust
   office of Continental, the owner of the Depositary Shares evidenced thereby
   is entitled to delivery at such office of the number of whole shares of
   Series E Preferred Stock represented by such Depositary Shares. Owners of
   Depositary Shares are entitled to receive only whole shares of Series E
   Preferred Stock on the basis of one share of Series E Preferred Stock for
   each one hundred Depositary Shares. In no event will fractional shares of
   Series E Preferred Stock (or cash in lieu thereof) be distributed by
   Continental. If the Depositary Receipts delivered by the holder evidence a
   number of Depositary Shares in excess of the number of Depositary Shares
   representing the number of whole shares of Series E Preferred Stock to be
   withdrawn, Continental will deliver to such holder at the same time a new
   Depositary Receipt evidencing such excess number of Depositary Shares.

             The Company has not applied and does not intend to apply for the
   listing of the Depositary Shares or the Series E Preferred Stock on any
   securities exchange or for quotation through the Nasdaq National Market.

   CONVERSION AND CALL PROVISION

             Conversion at the Option of Holder. As described under "Description
   of Series E Preferred Stock- Conversion Rights," the Series E Preferred Stock
   may be converted, in whole or in part, into shares of Common Stock at the
   option of the holders of Series E Preferred Stock at any time after December
   29, 1997, unless previously redeemed. The Depositary Shares held by any
   holder may, at the option of such holders, be converted in whole or from time
   to time in part (but only in lots of 100 Depositary Shares or integral
   multiples thereof), into shares of Common Stock upon the same terms and
   conditions as the Series E Preferred Stock, except that the number of shares
   of Common Stock received upon conversion of each Depositary Share will be
   equal to the number of shares of Common Stock received upon conversion of one
   share of Series E Preferred Stock divided by one hundred. To effect such an
   optional conversion, a holder of Depositary Shares must deliver Depositary
   Receipts evidencing the Depositary Shares to be converted, together with a
   written notice of conversion and a proper assignment of the Depositary
   Receipts to the Company or in blank, to Continental or its agent. A
   Depositary Share surrendered for conversion during the period

                                       26
<PAGE>
 
   from the close of business on any Record Date for the payment of dividends to
   the opening of business of the corresponding Dividend Payment Date must be
   accompanied by a payment in cash, Common Stock or a combination thereof,
   depending on the method of payment that the Company has chosen to pay the
   dividend, in an amount equal to the dividend payable on such Dividend Payment
   Date, unless such Depositary Share has been called for redemption on a
   redemption date occurring during the period from the close of business on any
   Record Date for the payment of dividends to the close of business on the
   Business Day immediately following the corresponding Dividend Payment Date.
   The dividend payment with respect to a Depositary Share called for redemption
   on a date during the period from the close of business on any Record Date for
   the payment of dividends to the close of business on the Business Day
   immediately following the corresponding Dividend Payment Date will be payable
   on such Dividend Payment Date to the record holder of such share on such
   Record Date, notwithstanding the conversion of such share after such Record
   Date and prior to such Dividend Payment Date. Each optional conversion of
   Depositary Shares shall be deemed to have been effected immediately before
   the close of business on the date on which the foregoing requirements shall
   have been satisfied.

             If only a portion of the Depositary Shares evidenced by a
   Depositary Receipt is to be converted, a new Depositary Receipt or Receipts
   will be issued for any Depositary Shares not converted. No fractional shares
   of Common Stock will be issued upon conversion of Depositary Shares, and, if
   such conversion would otherwise result in a fractional share of Common Stock
   being issued, the number of shares of Common Stock to be issued upon such
   conversion shall be rounded up to the nearest whole share.

             After the date fixed for conversion or redemption, the Depositary
   Shares so converted or called for redemption will no longer be deemed to be
   outstanding and all rights of the holders of such Depositary Shares will
   cease, except the holder of such Depositary Shares shall be entitled to
   receive any money or other property to which the holders of such Depositary
   Shares were entitled upon such conversion or redemption, upon surrender to
   Continental of the Depositary Receipt or Receipts evidencing such Depositary
   Shares.

   DIVIDENDS AND OTHER DISTRIBUTIONS

             Continental will distribute all dividends or other distributions in
   respect of the Series E Preferred Stock to the record holders of Depositary
   Receipts in proportion to the number of Depositary Shares owned by such
   holders. See "Description of Series E Preferred Stock - Dividends."

             The amount distributed in any of the foregoing cases will be
   reduced by any amount required to be withheld by the Company or Continental
   on account of taxes.

   RECORD DATE

             Whenever (i) any dividend or other distribution shall become
   payable, any distribution shall be made, or any rights, preferences or
   privileges shall be offered with respect to the Series E Preferred Stock, or
   (ii) Continental shall receive notice of any meeting at which holders of
   Series E Preferred Stock are entitled to vote or of which holders of Series E
   Preferred Stock are entitled to notice, or of any election on the part of the
   Company to call for redemption any Series E Preferred Stock, Continental
   shall in each such instance fix a record date (which shall be the same date
   as the record date for the Series E Preferred Stock) for the determination of
   the holders of Depositary Receipts (x) who shall be entitled to receive such
   dividend, distribution, rights, preference or privileges or the net proceeds
   of the sale thereof, (y) who shall be entitled to give instructions for the
   exercise of voting rights at any such meeting or to receive notice of such
   meeting, or (z) who shall be subject to such redemption, subject to the
   provisions of the Deposit Agreement.

                                       27
<PAGE>
 
   VOTING OF DEPOSITARY SHARES

             Holders of record of Depositary Shares have no voting rights,
   except as required by law and as provided in the Certificate of Designation
   in respect of the Series E Preferred Stock, as described under "Description
   of Series E Preferred Stock - Voting Rights."

   AMENDMENT AND TERMINATION OF DEPOSIT AGREEMENT

             The form of Depositary Receipts and any provision of the Deposit
   Agreement may at any time be amended by agreement between the Company and
   Continental.  However, any amendment that imposes any fees, taxes or other
   charges payable by holders of Depositary Receipts (other than taxes and other
   governmental charges, fees and other expenses payable by such holders as
   stated under "Charges of Continental"), or that otherwise prejudices any
   substantial existing right of holders of Depositary Receipts, will not take
   effect as to outstanding Depositary Receipts until the expiration of 90 days
   after notice of such amendment has been mailed to the record holders of
   outstanding Depositary Receipts. Every holder of Depositary Receipts at the
   time any such amendment becomes effective shall be deemed to consent and
   agree to such amendment and to be bound by the Deposit Agreement, as so
   amended. In no event may any amendment impair the right of any owner of
   Depositary Shares, subject to the conditions specified in the Deposit
   Agreement, upon surrender of the Depositary Receipts evidencing such
   Depositary Shares, to receive Series E Preferred Stock or, upon conversion of
   the Series E Preferred Stock represented by the Depositary Receipts, to
   receive shares of Common Stock, and in each case any money or other property
   represented thereby, except in order to comply with mandatory provisions of
   applicable law.

             Whenever so directed by the Company, Continental will terminate the
   Deposit Agreement after mailing notice of such termination to the record
   holders of all Depositary Receipts then outstanding at least 30 days before
   the date fixed in such notice for such termination. Continental may likewise
   terminate the Deposit Agreement if at any time 45 days shall have expired
   after Continental shall have delivered to the Company a written notice of its
   election to resign and a successor depositary shall not have been appointed
   and accepted its appointment. If any Depositary Receipts remain outstanding
   after the date of termination, Continental thereafter will discontinue the
   transfer of Depositary Receipts, will suspend the distribution of dividends
   to the holders thereof, and will not give any further notices (other than
   notice of such termination) or perform any further acts under the Deposit
   Agreement except as provided below and except that Continental will continue
   (i) to collect dividends on the Series E Preferred Stock and any other
   distributions with respect thereto and (ii) to deliver the Series E Preferred
   Stock together with such dividends and distributions and the net proceeds of
   any sales or rights, preferences, privileges or other property, without
   liability for interest thereon, in exchange for Depositary Receipts
   surrendered. At any time after the expiration of two years from the date of
   termination, Continental may sell the Series E Preferred Stock then held by
   it at public or private sale, at such place or places and upon such terms as
   it deems proper and may thereafter hold the net proceeds of any such sale,
   together with any money and other property then held by it, without liability
   for interest thereon, for the pro rata benefit of the holders of Depositary
   Receipts which have not been surrendered. The Company does not intend to
   terminate the Deposit Agreement or to permit the resignation of Continental
   without appointing a successor depositary.

   CHARGES OF CONTINENTAL

             The Company will pay all charges of Continental including the
   distribution of information to the holders of Depositary Receipts with
   respect to matters on which Series E Preferred Stock are entitled to vote,
   withdrawals of the Series E Preferred Stock by the holders of Depositary
   Receipts or redemption or conversion of the Depositary Receipts, except for
   taxes (including transfer taxes, if any) and other governmental charges and
   such other charges as are provided in the Deposit Agreement to be at the
   expense of the holders of Depositary Receipts or persons depositing Series E
   Preferred Stock.

                                       28
<PAGE>
 
   GENERAL

             Continental will make available for inspection by holders of
   Depositary Receipts at its corporate trust office all reports and
   communications from the Company that are delivered to Continental and made
   generally available to the holders of the Series E Preferred Stock.

             Neither Continental nor the Company will be liable if it is
   prevented or delayed by law or any circumstance beyond its control from or in
   performing its obligations under the Deposit Agreement.

   FORM AND DENOMINATION

             Global Shares; Book-Entry Form.   Depositary Shares sold in
   offshore transactions in reliance on Regulation S ("Regulation S") under
   the Securities Act will initially be represented by one or more global
   certificates in definitive, fully registered form (the "Regulation S
   Temporary Global Certificate") and will be deposited with the Trustee as
   custodian for, and registered in the name of, Cede & Co., as nominee of The
   Depository Trust Company (the "Depositary") (such nominee being referred to
   herein as the "Global Security Holder"). On or prior to the end of the 40
   day restricted period (the "Restricted Period") within the meaning of
   Regulation S, beneficial interests in Depositary Shares sold in offshore
   transactions in reliance on Regulation S may only be held through the
   Regulation S Temporary Global Certificate, held by the Depositary. Upon the
   conclusion of the Restricted Period, interests in the Regulation S Temporary
   Global Certificate may be transferred for interests in a permanent Regulation
   S global certificate (the "Regulation S Global Certificate") or otherwise
   as provided below. Shares of Depositary Shares sold in reliance on Rule 144A
   or to other Accredited Investors will be evidenced initially by one or more
   global certificates (the "Restricted Global Certificate" and, together with
   the Regulation S Global Certificate, the "Depositary Share Global
   Certificate") which will be deposited with, or on behalf of, the Depositary
   and registered in the name of Cede & Co., as nominee of the Depositary (the
   "Global Certificate Holder"). Except as set forth below, record ownership
   of the Depositary Share Global Certificate may be transferred, in whole or in
   part, only to another nominee of the Depositary or to a successor of the
   Depositary or its nominee.

             Owners of a beneficial interest in the Depositary Share Global
   Certificate may hold their interest in the Depositary Share Global
   Certificate directly through the Depositary if such holder is a Participant
   in the Depositary or indirectly through organizations that are Participants
   in the Depositary. Persons who are not Participants may beneficially own
   interests in the Depositary Share Global Certificate held by the Depositary
   only through Participants or certain banks, brokers, dealers, trust companies
   and other parties that clear though or maintain a custodial relationship with
   a Participant, either directly or indirectly. So long as Cede & Co., as the
   nominee of the Depositary, is the registered owner of the Depositary Share
   Global Certificate, Cede & Co. for all purposes will be considered the sole
   holder of the Depositary Share Global Certificate. Owners of beneficial
   interest in the Depositary Share Global Certificate will be entitled to have
   certificates registered in their names and to receive physical delivery of
   certificates in definitive form (the "Definitive Securities").

             Payment of dividends on and any redemption price with respect to
   the Depositary Share Global Certificate will be made to the Global
   Certificate Holder, as registered owner of the Depositary Share Global
   Certificate, by wire transfer of immediately available funds on each Dividend
   Payment Date or redemption date, as applicable. Neither the Company nor the
   Transfer Agent will have any responsibility or liability for any aspect of
   the records relating to or payments made on account of beneficial ownership
   interests in the Depositary Share Global Certificate or for maintaining,
   supervising or reviewing any records relating to such beneficial ownership
   interest.

             The Company has been informed by the Depositary that, with respect
   to any payment of dividends on, or the redemption price with respect to, the
   Depositary Share Global Certificate, the Depositary's practice is to credit
   Participants' accounts on the payment date therefor, with payments in amounts
   proportionate to their respective beneficial interests in the Depositary
   Shares represented by the Depositary Share Global Certificate as shown on the

                                       29
<PAGE>
 
   records of the Depositary, unless the Depositary has reason to believe that
   it will not receive payment on such payment date. Payments by Participants to
   owners of beneficial interests in the Depositary Shares represented by the
   Depositary Share Global Certificate held through such Participants will be
   the responsibility of such Participants, as is now the case with securities
   held for the accounts of customers registered in "street name."

             Transfers between Participants will be effected in the ordinary way
   in accordance with the Depositary's rules and will be settled in immediately
   available funds. The laws of some states require that certain persons take
   physical delivery of securities in definitive form. Consequently, the ability
   to transfer beneficial interests in the Depositary Share Global Certificate
   to such persons may be limited. Because the Depositary can only act on behalf
   of Participants, who in turn act on behalf of Indirect Participants and
   certain banks, the ability of a person having a beneficial interest in the
   Depositary Shares represented by the Depositary Share Global Certificate to
   pledge such interest to persons or entities that do not participate in the
   Depositary system, or otherwise take actions in respect of such interest, may
   be affected by the lack of a physical certificate evidencing such interest.

             Neither the Company nor the Transfer Agent will have responsibility
   for the performance of the Depositary or its Participants or Indirect
   Participants of their respective obligations under the rules and procedures
   governing their operations. The Depositary has advised the Company that it
   will take any action permitted to be taken by a holder of Depositary Shares
   (including, without limitation, the presentation of Depositary Shares for
   exchange) only at the direction of one or more Participants to whose account
   with the Depositary interests in the Depositary Share Global Certificate are
   credited, and only in respect of the Depositary Shares represented by the
   Depositary Share Global Certificate as to which such Participant or
   Participants has or have given such direction.

             The Depositary has also advised the Company that the Depositary is
   a limited purpose trust company organized under the laws of the State of New
   York, a member of the Federal Reserve System, a "clearing corporation" within
   the meaning of the Uniform Commercial Code and a "clearing agency" registered
   pursuant to the provisions of Section 17A of the Exchange Act. The Depositary
   was created to hold securities for its Participants and to facilitate the
   clearance and settlement of securities transactions between Participants
   through electronic book-entry changes to accounts of its Participants,
   thereby eliminating the need for physical movement of certificates.
   Participants include securities brokers and dealers, banks, trust companies
   and clearing corporations and may include certain other organizations such as
   the Initial Purchasers. Certain of such Participants (or their
   representatives), together with other entities, own the Depositary. Indirect
   access to the Depositary system is available to others such as banks,
   brokers, dealers and trust companies that clear through, or maintain a
   custodial relationship with, a Participant, either directly or indirectly.

             Although the Depositary has agreed to the foregoing procedures in
   order to facilitate transfers of interests in the Depositary Share Global
   Certificate among Participants, it is under no obligation to perform or
   continue to perform such procedures, and such procedures may be discontinued
   at any time. If the Depositary is at any time unwilling or unable to continue
   as depositary and a successor depositary is not appointed by the Company
   within 90 days, the Company will cause the Depositary Shares to be issued in
   definitive form in exchange for the Depositary Share Global Certificate.

             Certificated Depositary Shares. Investors in the Depositary Shares
   may request that Definitive Securities be issued in exchange for Depositary
   Shares represented by the Depositary Share Global Certificate. Furthermore,
   Definitive Securities may be issued in exchange for Depositary Shares
   represented by the Depositary Share Global Certificate if no successor
   depositary is appointed by the Company as set forth above.

             Unless determined otherwise by the Company in accordance with
   applicable law, Definitive Securities issued upon transfer or exchange of
   beneficial interests in Depositary Shares represented by the Depositary Share
   Global Certificate will bear a legend setting forth transfer restrictions
   under the Securities Act.   Any request for the transfer of Definitive
   Securities bearing the legend, or for removal of the legend from Definitive
   Securities, must be accompanied by satisfactory evidence, in the form of an
   opinion of counsel, that such transfer complies with the Securities Act or

                                       30
<PAGE>
 
   that neither the legend nor the restrictions on transfer set forth therein
   are required to ensure compliance with the provisions of the Securities Act,
   as the case may be.

                                       31
<PAGE>
 
                    CERTAIN FEDERAL INCOME TAX CONSEQUENCES

             The following discussion summarizes the material United States
   federal income tax considerations generally applicable to persons acquiring
   the Depositary Shares, but does not purport to be a complete analysis of all
   potential consequences. The discussion is based upon the Internal Revenue
   Code of 1986, as amended (the "Code"), Treasury regulations, Internal Revenue
   Service ("IRS") rulings and judicial decisions now in effect, all of which
   are subject to change at any time by legislative, judicial or administrative
   action. Any such changes may be applied retroactively in a manner that could
   adversely affect a holder of the Depositary Shares and Common Stock.

             The discussion assumes that the holders of the Depositary Shares
   and Common Stock will hold them as "capital assets" within the meaning of
   Section 1221 of the Code. The discussion is not binding on the IRS or the
   courts. The Company has not sought and will not seek any rulings from the IRS
   with respect to the positions of the Company discussed herein, and there can
   be no assurance that the IRS will not take a different position concerning
   the tax consequences of the purchase, ownership or disposition of the
   Depositary Shares or Common Stock or that any such position would not be
   sustained.

             The tax treatment of a holder of the Depositary Shares and Common
   Stock may vary depending on such holder's particular situation or status.
   Certain holders (including S corporations, insurance companies, tax-exempt
   organizations, financial institutions, broker-dealers, taxpayers subject to
   alternative minimum tax and persons holding Depositary Shares or Common Stock
   as part of a straddle, hedging or conversion transaction) may be subject to
   special rules not discussed below.  The following discussion does not
   consider all aspects of United States federal income tax that may be relevant
   to the purchase, ownership and disposition of the Depositary Shares and
   Common Stock by a holder in light of such holder's personal circumstances. In
   addition, the discussion does not consider the effect of any applicable
   foreign, state, local or other tax laws, or estate or gift tax
   considerations. PERSONS CONSIDERING THE PURCHASE OF THE DEPOSITARY SHARES
   SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE
   UNITED STATES FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL
   AS ANY TAX CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE, LOCAL, OR
   FOREIGN TAXING JURISDICTION.

             For purposes of this discussion, a "U.S. Holder" means a citizen
   or resident of the United States, a corporation, partnership or other entity
   created or organized in the United States or under the laws of the United
   States or of any political subdivision thereof, an estate whose income is
   includible in gross income for United States federal income tax purposes
   regardless of its source or a trust, if a U.S. court is able to exercise
   primary supervision over the administration of the trust and one or more U.S.
   persons have the authority to control all substantial decisions of the trust.
   A "Non-U.S. Holder" means a holder who is not a U.S. Holder.


                                  INTRODUCTION

             Holders of Depositary Shares will be treated for United States
   federal income tax purposes as if they were owners of the Series E Preferred
   Stock represented by such Depositary Shares. Accordingly, holders of
   Depositary Shares will recognize the items of income, gain, loss and
   deduction that they would recognize if they directly held the Series E
   Preferred Stock. References in this "Certain Federal Income Tax Consequences"
   section to holders of Series E Preferred Stock include holders of Depositary
   Shares, and references to Depositary Shares include Series E Preferred Stock.

                                       32
<PAGE>
 
                        TAX CONSEQUENCES TO U.S. HOLDERS

   DISTRIBUTIONS ON DEPOSITARY SHARES AND COMMON STOCK

             A distribution on the Depositary Shares, whether paid in cash or in
   shares of Common Stock, or a cash distribution on Common Stock will be
   taxable to the U.S. Holder as ordinary dividend income to the extent that the
   amount of the distribution (i.e., the amount of cash and/or the fair market
   value of the Common Stock on the date of distribution) does not exceed the
   Company's current or accumulated earnings and profits allocable to such
   distribution (as determined for federal income tax purposes). To the extent
   that the amount of the distribution exceeds the Company's current or
   accumulated earnings and profits allocable to such distribution, the
   distribution will be treated as a return of capital, thus reducing the
   holder's adjusted tax basis in the Depositary Shares or Common Stock with
   respect to which such distribution is made. The amount of any such excess
   distribution that exceeds the U.S. Holder's adjusted tax basis in the
   Depositary Shares or Common Stock will be taxed as capital gain and will be
   long-term capital gain if the U.S. Holder's holding period for the Depositary
   Shares or Common Stock exceeds one year.  The most favorable tax rate on
   long-term capital gains of non-corporate holders (20%) will not be available
   unless the holding period exceeds 18 months.  A U.S. Holder's initial tax
   basis in Common Stock received as a distribution on the Depositary Shares
   will equal the fair market value of the Common Stock on the date of the
   distribution. The holding period for the Common Stock will commence on the
   day following the distribution. There can be no assurance that the Company
   will have sufficient earnings and profits to cause distributions on the
   Series E Preferred Stock or Common Stock to be treated as dividends for
   federal income tax purposes. For purposes of the remainder of this
   discussion, the term "dividend" refers to a distribution paid out of current
   or accumulated earnings and profits, unless the context indicates otherwise.
   Preferred Stock Liquidated Damages should be taxed in the same manner as
   dividend distributions, except that it is possible that Preferred Stock
   Liquidated Damages might be treated as payment of a fee and hence as ordinary
   income with respect to which no dividends-received deduction is available.

             Dividends received by corporate U.S. Holders will generally be
   eligible for the 70% dividends-received deduction under Section 243 of the
   Code. There are, however, many exceptions and restrictions relating to the
   availability of the dividends-received deduction, such as restrictions
   relating to (i) the holding period of the stock on which the dividends are
   received, (ii) debt-financed portfolio stock, (iii) dividends treated as
   "extraordinary dividends" for purposes of Section 1059 of the Code, and (iv)
   taxpayers that pay alternative minimum tax. Corporate U.S. Holders should
   consult their own tax advisors regarding the extent, if any, to which such
   exceptions and restrictions may apply to their particular factual situations.
   Recently enacted legislation requires a corporate holder to satisfy a
   separate 46 day (91-day, in the case of certain preferred stock dividends)
   holding period requirement with respect to each dividend in order to be
   eligible for the dividends-received deduction with respect to such dividend.

   REDEMPTION PREMIUM

             Under certain circumstances, Section 305(c) of the Code requires
   that any excess of the redemption price of preferred stock over its issue
   price be treated as constructively distributed on a periodic basis prior to
   actual receipt. However, the Company believes that a U.S. Holder of the
   Depositary Shares should not be required to include any redemption premium in
   income under Section 305(c).

   ADJUSTMENT OF CONVERSION PRICE

             Treasury regulations issued under Section 305 of the Code treat
   certain adjustments to conversion provisions of stock such as the Series E
   Preferred Stock as constructive distributions of stock with respect to
   preferred stock. Such constructive distributions of stock would be taxable to
   U.S. Holders of Depositary Shares as described above under the caption
   "Distributions on Depositary Shares and Common Stock." In general, any
   adjustment increasing the number of shares of Common Stock into which the
   Depositary Shares can be converted could constitute a constructive
   distribution of stock to U.S. Holders of Depositary Shares unless made
   pursuant to a bona fide, reasonable adjustment formula that has the effect of
   preventing dilution of the interest of the holders of Depositary Shares. Any
   adjustment in the conversion price to compensate the holders of Depositary
   Shares for taxable distributions of cash or property on any of

                                       33
<PAGE>
 
   the outstanding Common Stock of the Company may be treated as a constructive
   distribution of stock to U.S. Holders of Depositary Shares. The Company is
   unable to predict whether any such adjustment will be made.


   CONVERSION OF SERIES E PREFERRED STOCK

             No gain or loss will generally be recognized for United States
   federal income tax purposes on conversion of the Series E Preferred Stock
   solely into Common Stock. However, if the conversion takes place when there
   is a dividend arrearage on the Series E Preferred Stock, a portion of the
   Common Stock received may be treated as a taxable dividend to the extent of
   such dividend arrearage. Except for any Common Stock treated as payment of a
   dividend, the tax basis for the Common Stock received upon conversion
   (including any fractional share deemed received) will be the tax basis of the
   Series E Preferred Stock converted, and the holding period of the Common
   Stock received upon conversion (including any fractional share deemed
   received) will include the holding period of the Series E Preferred Stock
   converted into such Common Stock. The receipt of cash in lieu of a fractional
   share upon conversion of Series E Preferred Stock into Common Stock will
   generally be treated as a sale of such fractional share of Common Stock in
   which the U.S. Holder will recognize taxable gain or loss equal to the
   difference between the amount of cash received and the U.S. Holder's adjusted
   tax basis in the fractional share redeemed. Such gain or loss will be capital
   gain or loss and will be long-term if the U.S. Holder's holding period for
   the fractional share exceeds one year.  The most favorable tax rate on long-
   term capital gains of non-corporate holders (20%) will not be available
   unless the holding period exceeds 18 months.

   CONVERSION OF SERIES E PREFERRED STOCK AFTER DIVIDEND RECORD DATE

             If a holder whose Series E Preferred Stock has not been called for
   redemption surrenders such Series E Preferred Stock for conversion into
   shares of Common Stock after a dividend record date for the Series E
   Preferred Stock but before payment of the dividend, such holder will be
   required to pay the Company an amount equal to such dividend upon conversion.
   A U.S. Holder will likely recognize the dividend payment as ordinary dividend
   income when it is received and increase the basis of the Common Stock
   received by the amount paid to the Company.

   REDEMPTION, SALE OR OTHER TAXABLE DISPOSITION OF SERIES E PREFERRED STOCK AND
   SALE OR OTHER TAXABLE DISPOSITION OF COMMON STOCK

             A redemption of shares of Series E Preferred Stock for cash will be
   a taxable event.

             A redemption of shares of Series E Preferred Stock for cash will
   generally be treated as a sale or exchange if the holder does not own,
   actually or constructively within the meaning of Section 318 of the Code, any
   stock of the Company other than the Series E Preferred Stock redeemed. If a
   holder does own, actually or constructively, other stock of the Company, a
   redemption of Series E Preferred Stock may be treated as a dividend to the
   extent of the Company's allocable current or accumulated earnings and profits
   (as determined for federal income tax purposes). Such dividend treatment will
   not be applied if the redemption is "not essentially equivalent to a
   dividend" with respect to the holder under Section 302(b)(1) of the Code. A
   distribution to a holder will be "not essentially equivalent to a dividend"
   if it results in a "meaningful reduction" in the holder's stock interest in
   the Company. For this purpose, a redemption of Series E Preferred Stock that
   results in a reduction in the proportionate interest in the Company (taking
   into account any actual ownership of Common Stock and any stock
   constructively owned) of a holder whose relative stock interest in the
   Company is minimal and who exercises no control over corporate affairs should
   be regarded as a meaningful reduction in the holder's stock interest in the
   Company.

             If a redemption of the Series E Preferred Stock for cash is treated
   as a sale or exchange, the redemption will result in capital gain or loss
   equal to the difference between the amount of cash received and the holder's
   adjusted tax basis in the Series E Preferred Stock redeemed, except to the
   extent that the redemption price includes dividends that have been declared
   by the Board of Directors of the Company prior to the redemption. Similarly,
   upon the sale or exchange of the Series E Preferred Stock or Common Stock
   (other than in a redemption, on conversion or pursuant to

                                       34
<PAGE>
 
   a tax-free exchange), the difference between the sum of the amount of cash
   and the fair market value of other property received and the holder's
   adjusted tax basis in the Series E Preferred Stock or Common Stock will be
   capital gain or loss. This gain or loss will be long-term capital gain or
   loss if the holder's holding period for the Series E Preferred Stock or
   Common Stock exceeds one year.  The most favorable tax rate on long-term
   capital gains of individual holders (20%) will not be available unless the
   holding period exceeds 18 months.

             If a redemption of Series E Preferred Stock is treated as a
   distribution that is taxable as a dividend, the amount of the distribution
   will be the amount of cash received by the holder. The holder's adjusted tax
   basis in the redeemed Series E Preferred Stock will be transferred to any
   remaining stock holdings in the Company, subject to reduction or possible
   gain recognition under Section 1059 of the Code with respect to the non-taxed
   portion of such dividend. If the holder does not retain any actual stock
   ownership in the Company (having a stock interest only constructively by
   attribution), the holder may lose the benefit of the basis in the Series E
   Preferred Stock.


                      TAX CONSEQUENCES TO NON-U.S. HOLDERS

   DISTRIBUTIONS ON DEPOSITARY SHARES AND COMMON STOCK

             Dividends paid to a Non-U.S. Holder of Series E Preferred Stock or
   Common Stock that are not effectively connected with the conduct of a trade
   or business within the United States by the Non-U.S. Holder will be subject
   to United States federal income tax, which generally will be withheld at a
   rate of 30% of the gross amount of the dividends unless the rate is reduced
   by an applicable income tax treaty. Under the currently applicable Treasury
   regulations, dividends paid to an address in a country other than the United
   States are subject to withholding (unless the payor has knowledge to the
   contrary).

             Dividends paid to a Non-U.S. Holder of Series E Preferred Stock or
   Common Stock that are effectively connected with a United States trade or
   business conducted by such Non-U.S. Holder are taxed at the graduated rates
   applicable to United States citizens, resident aliens and domestic
   corporations (the "Regular Federal Income Tax"), and are not subject to
   withholding tax if the Non-U.S. Holder gives an appropriate statement to the
   Company or its paying agent in advance of the dividend payment. In addition
   to the Regular Federal Income Tax, effectively connected dividends received
   by a Non-U.S. Holder that is a corporation may also be subject to an
   additional branch profits tax at a rate of 30% (or such lower rate as may be
   specified by an applicable income tax treaty).


   REDEMPTION, SALE OR OTHER TAXABLE DISPOSITION OF SERIES E PREFERRED STOCK AND
   SALE OR OTHER TAXABLE DISPOSITION OF COMMON STOCK

             A Non-U.S. Holder generally will not be subject to United States
   federal income tax or withholding on gain recognized upon the sale or other
   disposition of Series E Preferred Stock or Common Stock unless: (i) the gain
   is effectively connected with the conduct of a trade or business within the
   United States by the Non-U.S. Holder (in which case the branch profits tax
   also may apply if the Non-U.S. Holder is a corporation); (ii) in the case of
   a Non-U.S. Holder who is a non-resident alien individual and holds the Series
   E Preferred Stock or Common Stock as a capital asset, such holder is present
   in the United States for 183 or more days in the taxable year and certain
   other conditions are met; or (iii) the Series E Preferred Stock or Common
   Stock constitutes a United States real property interest by reason of the
   Company's status as a "United States real property holding corporation"
   ("USRPHC") for federal income tax purposes at any time within the shorter
   of the five-year period preceding such disposition or such Non-U.S. Holder's
   holding period for such Series E Preferred Stock or Common Stock. The Company
   does not believe that it is or will become a USRPHC for federal income tax
   purposes.

             If a Non-U.S. Holder falls within clause (i) or (iii) in the
   preceding paragraph, the holder will be taxed on the net gain derived from
   the sale under the Regular Federal Income Tax, and may be subject to
   withholding under certain circumstances (and, with respect to corporate Non-
   U.S. Holders, may also be subject to the branch profits tax). If an

                                       35
<PAGE>
 
   individual Non-U.S. Holder falls under clause (ii) in the preceding
   paragraph, the holder generally will be subject to United States federal
   income tax at a rate of 30% on the gain derived from the sale.


   FEDERAL ESTATE TAXES

             An individual Non-U.S. Holder who owns, or is treated as owning,
   Series E Preferred Stock or Common Stock at the time of his or her death or
   has made certain lifetime transfers of an interest in Series E Preferred
   Stock or Common Stock will be required to include the value of such Series E
   Preferred Stock or Common Stock in his gross estate for United States federal
   estate tax purposes, unless an applicable estate tax treaty provides
   otherwise.


   NEW WITHHOLDING REGULATIONS

             The Treasury Department recently promulgated final regulations
   regarding the withholding and information reporting rules applicable to Non-
   U.S. Holders (the "New Withholding Regulations"). In general, the New
   Withholding Regulations do not significantly alter the substantive
   withholding and information reporting requirements but rather unify current
   certification procedures and forms and clarify reliance standards. The New
   Withholding Regulations are generally effective for payments made after
   December 31, 1998, subject to certain transition rules. NON-U.S. HOLDERS
   SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE IMPACT, IF ANY, OF
   THE NEW WITHHOLDING REGULATIONS.


                  INFORMATION REPORTING AND BACKUP WITHHOLDING

             A U.S. Holder of Depositary Shares or Common Stock may be subject
   to backup withholding at the rate of 31% with respect to dividends paid on,
   or the proceeds of a redemption, sale or exchange of, the Depositary Shares
   or Common Stock, unless such holder (a) is a corporation or comes within
   certain other exempt categories and, when required, demonstrates its
   exemption or (b) provides a correct taxpayer identification number, certifies
   as to no loss of exemption from backup withholding and otherwise complies
   with applicable requirements of the backup withholding rules. A U.S. Holder
   of Depositary Shares or Common Stock who does not provide the Company with
   the holder's correct taxpayer identification number may be subject to
   penalties imposed by the IRS. A Non-U.S. Holder of Depositary Shares or
   Common Stock may also be subject to certain information reporting or backup
   withholding if certain requisite certification is not received or other
   exemptions do not apply. Any amount paid as backup withholding would be
   creditable against the holder's federal income tax liability.

                                       36
<PAGE>
 
                          THE SELLING SECURITYHOLDERS

             The following table sets forth, as of December 18, 1997 certain
   information regarding the Selling Securityholders' ownership of the Company's
   Depositary Shares, Series E Preferred Stock and Common Stock.  Unless
   otherwise disclosed in the footnotes to the table, no Selling Securityholder
   has held any position, office or had any other material relationship with the
   Company, its predecessors or affiliates during the past three years.  All of
   the Depositary Shares and shares of Series E Preferred Stock are registered
   in the name of "Cede & Co." on the books of the Company's Transfer Agent.  To
   the knowledge of the Company, except as disclosed in the table below, the
   Selling Securityholders did not own, nor have any rights to acquire, any
   other Depositary Shares, shares of Series E Preferred Stock or Common Stock
   as of the date of this Prospectus.


<TABLE>
<CAPTION>
===================================================================================================================================
                                              Common Stock                                     Depositary Shares
                                              ------------                      ---------------------------------------------------
- -------------------------  ---------------------------------------------------  ---------------------------------------------------
                                                                Beneficially                                          Beneficially  
Name of Selling                                                     Owned                                              Owned After
   Security-               Beneficially Owned Prior  Offered      After This         Beneficially Owned      Offered  This Offering
   holder(1)                to This Offering(2)(3)   for Sale   Offering(2)(3)  Prior to This Offering(2)    for Sale      (2)
   ---------                ----------------------   --------   --------------  ---------------------------- -------- -------------
                           ------------------------  --------   --------------  ---------------------------- -------- ------------- 
                                                                               
                                                                               
                                                                               
                                                                                  Number of      Percent of 
                            Number of   Percent of                                Depositary     Depositary
                              Shares      Shares                                    Shares         Shares
                              ------      ------                                    ------         ------
<S>                         <C>         <C>          <C>        <C>               <C>            <C>         <C>      <C> 
- ------------------------------------------------------------------------------------------------------------------------------------
Aim High Yield               239,789      1.3848      239,789          0            580,000        7.2500    580,000        0      
- ------------------------------------------------------------------------------------------------------------------------------------
Allstate Insurance Company    49,612           *       49,612          0            120,000        1.5000    120,000        0
- ------------------------------------------------------------------------------------------------------------------------------------
American Travellers Life       5,458           *        5,458          0             13,200             *     13,200        0
 Insurance Co. -
 Convertible
- ------------------------------------------------------------------------------------------------------------------------------------
Bank of America Pension       49,612           *       49,612          0            120,000        1.5000    120,000        0
 Plan
- ------------------------------------------------------------------------------------------------------------------------------------
Bankers Life and Casualty     10,688           *       10,688          0             25,850             *     25,850        0
 Insurance Co. -
 Convertible
- ------------------------------------------------------------------------------------------------------------------------------------
Bear Stearns Securities       90,004           *       90,004          0            217,700        2.7213    217,700        0
 Corp.
- ------------------------------------------------------------------------------------------------------------------------------------
Beneficial Standard Life      13,189           *       13,189          0             31,900             *     31,900        0
 Insurance Co. -
 Convertible
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE> 
<CAPTION> 
================================================================================
                                        Series E Preferred Stock                      
                                        ------------------------                      
- -------------------------  ---------------------------------------------------  
                                                                 Beneficially    
                                                                 Owned After     
Name of Selling                Beneficially Owned                    This         
   Security-                      Prior to This      Offered       Offering
   holder(1)                      Offering(2)(4)     for Sale       (2)(4)
   ---------                      --------------     --------     ---------
                           ------------------------  --------   --------------  
                              Number
                            of shares     Percent
                            of Series        of
                                E         Series E                                        
                            Preferred    Preferred
                              Stock        Stock
                              -----        -----                                
<S>                        <C>           <C>         <C>        <C> 
- ------------------------------------------------------------------------------
Aim High Yield                5,800        7.2500      5,800          0
- ------------------------------------------------------------------------------
Allstate Insurance Company    1,200        1.5000      1,200          0
- ------------------------------------------------------------------------------
American Travellers Life        132             *        132          0
Insurance Co. -
Convertible
- ------------------------------------------------------------------------------
Bank of America Pension       1,200        1.5000      1,200          0
 Plan
- ------------------------------------------------------------------------------
Bankers Life and Casualty       259             *        259          0
 Insurance Co. -
 Convertible
- ------------------------------------------------------------------------------
Bear Stearns Securities       2,177        2.7213      2,177          0
 Corp.
- ------------------------------------------------------------------------------
Beneficial Standard Life        319             *        319          0
 Insurance Co. -
 Convertible
- ------------------------------------------------------------------------------
</TABLE>

                                       37
<PAGE>
 
<TABLE>
<CAPTION>
===================================================================================================================================
                                              Common Stock                                     Depositary Shares
                                              ------------                      ---------------------------------------------------
- -------------------------  ---------------------------------------------------  ---------------------------------------------------
                                                                Beneficially                                          Beneficially  
Name of Selling                                                     Owned                                              Owned After
   Security-               Beneficially Owned Prior  Offered      After This         Beneficially Owned      Offered  This Offering
   holder(1)                to This Offering(2)(3)   for Sale   Offering(2)(3)  Prior to This Offering(2)    for Sale      (2)
   ---------                ----------------------   --------   --------------  ---------------------------- -------- -------------
                           ------------------------  --------   --------------  ---------------------------- -------- ------------- 
                                                                               
                                                                               
                                                                               
                                                                                  Number of      Percent of 
                            Number of   Percent of                                Depositary     Depositary
                              Shares      Shares                                    Shares         Shares
                              ------      ------                                    ------         ------
<S>                         <C>         <C>          <C>        <C>               <C>            <C>         <C>      <C> 
- ------------------------------------------------------------------------------------------------------------------------------------
BNP Arbitrage SNC             41,343           *      41,343             0          100,00          1.2500    100,000           0
- ------------------------------------------------------------------------------------------------------------------------------------
Capitol American Life          5,458           *       5,458             0          13,200               *     13,200           0
 Insurance Co. -
 Convertible
- ------------------------------------------------------------------------------------------------------------------------------------
Chase Securities, Inc.        45,478           *      45,478             0         110,000          1.3750    110,000           0
- ------------------------------------------------------------------------------------------------------------------------------------
Chrysler Corporation          43,038           *      43,038             0         104,100          1.3013    104,100           0
 Master Retirement Trust
- ------------------------------------------------------------------------------------------------------------------------------------
CNA Income Shares, Inc.       16,538           *      16,538             0          40,000               *     40,000           0
- ------------------------------------------------------------------------------------------------------------------------------------
Combined Insurance Company    10,502           *      10,502             0          25,400               *     25,400           0
 of America
- ------------------------------------------------------------------------------------------------------------------------------------
Conseco Fund Group - Asset     4,962           *       4,962             0          12,000               *     12,000           0
 Allocation
- ------------------------------------------------------------------------------------------------------------------------------------
Conseco Series Trust          11,576           *      11,576             0          28,000               *     28,000           0
 -Asset Allocation
- ------------------------------------------------------------------------------------------------------------------------------------
Delaware PERS                  8,269           *       8,269             0          20,000               *     20,000           0
- ------------------------------------------------------------------------------------------------------------------------------------
DeMoss Foundation              2,068           *       2,068             0           5,000               *      5,000           0
- ------------------------------------------------------------------------------------------------------------------------------------
Donaldson, Lufkin &          102,324           *     102,324             0         247,500          3.0938    247,500           0
 Jenrette Sec. Corp.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE> 
<CAPTION> 
================================================================================
                                        Series E Preferred Stock                      
                                        ------------------------                      
- -------------------------  ---------------------------------------------------  
                                                                 Beneficially    
                                                                 Owned After     
Name of Selling                Beneficially Owned                    This         
   Security-                      Prior to This      Offered       Offering
   holder(1)                      Offering(2)(4)     for Sale       (2)(4)
   ---------                      --------------     --------     ---------
                           ------------------------  --------   --------------  
                              Number
                            of shares     Percent
                            of Series        of
                                E         Series E                                        
                            Preferred    Preferred
                              Stock        Stock
                              -----        -----                                
<S>                        <C>           <C>         <C>        <C> 
- ------------------------------------------------------------------------------
BNP Arbitrage SNC             1,000       1.2500       1,000          0
- ------------------------------------------------------------------------------
Capitol American Life           132            *         132          0
 Insurance Co. -
 Convertible
- ------------------------------------------------------------------------------
Chase Securities, Inc.        1,100        1.3750      1,100          0
- ------------------------------------------------------------------------------
Chrysler Corporation          1,041        1.3013      1,401          0
 Master Retirement Trust
- ------------------------------------------------------------------------------
CNA Income Shares, Inc.         400             *        400          0
- ------------------------------------------------------------------------------
Combined Insurance Company      254             *        254          0
 of America
- ------------------------------------------------------------------------------
Conseco Fund Group - Asset      120             *        120          0
 Allocation
- ------------------------------------------------------------------------------
Conseco Series Trust            280             *        280          0
 -Asset Allocation
- ------------------------------------------------------------------------------
Delaware PERS                   200             *        200          0
- ------------------------------------------------------------------------------
DeMoss Foundation                50             *         50          0
- ------------------------------------------------------------------------------
Donaldson, Lufkin &           2,475        3.0938      2,475          0
 Jenrette Sec. Corp.
- ------------------------------------------------------------------------------
</TABLE> 

                                       38
<PAGE>
 
<TABLE>
<CAPTION>
===================================================================================================================================
                                              Common Stock                                     Depositary Shares
                                              ------------                      ---------------------------------------------------
- -------------------------  ---------------------------------------------------  ---------------------------------------------------
                                                                Beneficially                                          Beneficially  
Name of Selling                                                     Owned                                              Owned After
   Security-               Beneficially Owned Prior  Offered      After This         Beneficially Owned      Offered  This Offering
   holder(1)                to This Offering(2)(3)   for Sale   Offering(2)(3)  Prior to This Offering(2)    for Sale      (2)
   ---------                ----------------------   --------   --------------  ---------------------------- -------- -------------
                           ------------------------  --------   --------------  ---------------------------- -------- ------------- 
                                                                               
                                                                               
                                                                               
                                                                                  Number of      Percent of 
                            Number of   Percent of                                Depositary     Depositary
                              Shares      Shares                                    Shares         Shares
                              ------      ------                                    ------         ------
<S>                         <C>         <C>          <C>        <C>               <C>            <C>         <C>      <C> 
- ------------------------------------------------------------------------------------------------------------------------------------
 Eaton Vance High Income
 Portfolio                    76,485           *      76,485          0             185,000        2.3125    185,000        0
- ------------------------------------------------------------------------------------------------------------------------------------
Eaton Vance Income Fund of    18,605           *      18,605          0              45,000             *     45,000        0
 Boston
- ------------------------------------------------------------------------------------------------------------------------------------
Enterprise Accum Trust HY      3,101           *       3,101          0               7,500             *      7,500        0
- ------------------------------------------------------------------------------------------------------------------------------------
Enterprise High Yield Bd.      3,101           *       3,101          0               7,500             *      7,500        0
- ------------------------------------------------------------------------------------------------------------------------------------
Forehooks & Co.               20,672           *      20,672          0              50,000             *     50,000        0
- ------------------------------------------------------------------------------------------------------------------------------------
Forest Convertible               621           *         621          0               1,500             *      1,500        0
 Opportunity Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Forest Fulcrum Fd LP           5,127           *       5,127          0              12,400             *     12,400        0
- ------------------------------------------------------------------------------------------------------------------------------------
Forest Global Convert B2         621           *         621          0               1,500             *      1,500        0
- ------------------------------------------------------------------------------------------------------------------------------------
Forest Global Convert Fund       290           *         290          0                 700             *        700        0
 B-3
- ------------------------------------------------------------------------------------------------------------------------------------
Forest Global Convert Fund     5,292           *       5,292          0              12,800             *     12,800        0
 Ser A-5
- ------------------------------------------------------------------------------------------------------------------------------------
Forest Global Convert Fund       827           *         827          0               2,000             *      2,000        0
 Ser B-5
- ------------------------------------------------------------------------------------------------------------------------------------
Forest Performance Fund          703           *         703          0               1,700             *      1,700        0
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE> 

<TABLE> 
<CAPTION> 
================================================================================
                                        Series E Preferred Stock                      
                                        ------------------------                      
- -------------------------  ---------------------------------------------------  
                                                                 Beneficially    
                                                                 Owned After     
Name of Selling                Beneficially Owned                    This         
   Security-                      Prior to This      Offered       Offering
   holder(1)                      Offering(2)(4)     for Sale       (2)(4)
   ---------                      --------------     --------     ---------
                           ------------------------  --------   --------------  
                              Number
                            of shares     Percent
                            of Series        of
                                E         Series E                                        
                            Preferred    Preferred
                              Stock        Stock
                              -----        -----                                
<S>                        <C>           <C>         <C>        <C> 
- ------------------------------------------------------------------------------ 
 Eaton Vance High Income
 Portfolio                     1,850       2.3125      1,850          0             
- ------------------------------------------------------------------------------
Eaton Vance Income Fund of       450           *         450          0              
 Boston
- ------------------------------------------------------------------------------
Enterprise Accum Trust HY         75           *          75          0               
- ------------------------------------------------------------------------------
Enterprise High Yield Bd.         75           *          75          0               
- ------------------------------------------------------------------------------
Forehooks & Co.                  500           *         500          0       
- ------------------------------------------------------------------------------
Forest Convertible                15           *          15          0               
 Opportunity Fund
- ------------------------------------------------------------------------------
Forest Fulcrum Fd LP             124           *         124          0              
- ------------------------------------------------------------------------------
Forest Global Convert B2          15           *          15          0       
- ------------------------------------------------------------------------------
Forest Global Convert Fund         7           *           7          0       
 B-3
- ------------------------------------------------------------------------------
Forest Global Convert Fund       128           *         128          0       
 Ser A-5
- ------------------------------------------------------------------------------
Forest Global Convert Fund        20           *          20          0       
 Ser B-5                                                                      
- ------------------------------------------------------------------------------
Forest Performance Fund           17           *          17          0       
- ------------------------------------------------------------------------------
</TABLE>

                                       39
<PAGE>
 
<TABLE>
<CAPTION>
===================================================================================================================================
                                              Common Stock                                     Depositary Shares
                                              ------------                      ---------------------------------------------------
- -------------------------  ---------------------------------------------------  ---------------------------------------------------
                                                                Beneficially                                          Beneficially  
Name of Selling                                                     Owned                                              Owned After
   Security-               Beneficially Owned Prior  Offered      After This         Beneficially Owned      Offered  This Offering
   holder(1)                to This Offering(2)(3)   for Sale   Offering(2)(3)  Prior to This Offering(2)    for Sale      (2)
   ---------                ----------------------   --------   --------------  ---------------------------- -------- -------------
                           ------------------------  --------   --------------  ---------------------------- -------- ------------- 
                                                                               
                                                                               
                                                                               
                                                                                  Number of      Percent of 
                            Number of   Percent of                                Depositary     Depositary
                              Shares      Shares                                    Shares         Shares
                              ------      ------                                    ------         ------
<S>                         <C>         <C>          <C>        <C>               <C>            <C>         <C>      <C> 
- ------------------------------------------------------------------------------------------------------------------------------------
Forest Performance
 Greyhound                      827         *          827            0              2,000            *         2,000        0
- ------------------------------------------------------------------------------------------------------------------------------------
Forest Global Convert B-1       703         *          703            0              1,700            *         1,700        0
- ------------------------------------------------------------------------------------------------------------------------------------
Forum Capital Markets LLC     3,101         *        3,101            0              7,500            *         7,500        0
- ------------------------------------------------------------------------------------------------------------------------------------
Fox Family Foundation           497         *          497            0              1,200            *         1,200        0
 10/10/87 c/o Forest
 Investment Management Co.
- ------------------------------------------------------------------------------------------------------------------------------------
Fox Family Portfolio          1,654         *        1,654            0              4,000            *         4,000        0
 Partnership
- ------------------------------------------------------------------------------------------------------------------------------------
General Motors Employees     16,538         *       16,538            0             40,000            *        40,000        0
 Domestic Group Pension
 Trust
- ------------------------------------------------------------------------------------------------------------------------------------
Golden Rule Insurance HY      4,135         *        4,135            0             10,000            *        10,000        0
- ------------------------------------------------------------------------------------------------------------------------------------
Great American Reserve       10,688         *       10,688            0             25,850            *        25,850        0
 Insurance Co. -
 Convertible
- ------------------------------------------------------------------------------------------------------------------------------------
ICI American Holdings         3,308         *        3,308            0              8,000            *         8,000        0
 Pension Trust
- ------------------------------------------------------------------------------------------------------------------------------------
JMG Convertible              41,343         *       41,343            0            100,000         1.2500     100,000        0
 Investments L.P.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE> 
<CAPTION> 
================================================================================
                                        Series E Preferred Stock                      
                                        ------------------------                      
- -------------------------  ---------------------------------------------------  
                                                                 Beneficially    
                                                                 Owned After     
Name of Selling                Beneficially Owned                    This         
   Security-                      Prior to This      Offered       Offering
   holder(1)                      Offering(2)(4)     for Sale       (2)(4)
   ---------                      --------------     --------     ---------
                           ------------------------  --------   --------------  
                              Number
                            of shares     Percent
                            of Series        of
                                E         Series E                                        
                            Preferred    Preferred
                              Stock        Stock
                              -----        -----                                
<S>                        <C>           <C>         <C>        <C> 
- ------------------------------------------------------------------------------
Forest Performance
 Greyhound                      20           *            20           0
- ------------------------------------------------------------------------------
Forest Global Convert B-1       17           *            17           0
- ------------------------------------------------------------------------------
Forum Capital Markets LLC       75           *            75           0
- ------------------------------------------------------------------------------
Fox Family Foundation           12           *            12           0
 10/10/87 c/o Forest
 Investment Management Co.
- ------------------------------------------------------------------------------
Fox Family Portfolio            40           *            40           0
 Partnership
- ------------------------------------------------------------------------------
General Motors Employees       400           *           400           0
 Domestic Group Pension
 Trust
- ------------------------------------------------------------------------------
Golden Rule Insurance HY       100           *           100           0
- ------------------------------------------------------------------------------
Great American Reserve         259           *           259           0
 Insurance Co. -
 Convertible
- ------------------------------------------------------------------------------
ICI American Holdings          80            *            80           0
 Pension Trust
- ------------------------------------------------------------------------------
JMG Convertible             1,000        1.2500        1,000           0
 Investments L.P.
</TABLE> 
<PAGE>
 
<TABLE>
<CAPTION>
===================================================================================================================================
                                              Common Stock                                     Depositary Shares
                                              ------------                      ---------------------------------------------------
- -------------------------  ---------------------------------------------------  ---------------------------------------------------
                                                                Beneficially                                          Beneficially  
Name of Selling                                                     Owned                                              Owned After
   Security-               Beneficially Owned Prior  Offered      After This         Beneficially Owned      Offered  This Offering
   holder(1)                to This Offering(2)(3)   for Sale   Offering(2)(3)  Prior to This Offering(2)    for Sale      (2)
   ---------                ----------------------   --------   --------------  ---------------------------- -------- -------------
                           ------------------------  --------   --------------  ---------------------------- -------- ------------- 
                                                                               
                                                                               
                                                                               
                                                                                  Number of      Percent of 
                            Number of   Percent of                                Depositary     Depositary
                              Shares      Shares                                    Shares         Shares
                              ------      ------                                    ------         ------
<S>                         <C>         <C>          <C>        <C>               <C>            <C>         <C>      <C> 
- ------------------------------------------------------------------------------------------------------------------------------------
J.P. Morgan & Co, Inc.       285,266      1.6475      285,266          0            690,000        8.6250       690,000      0
- ------------------------------------------------------------------------------------------------------------------------------------
KA Management Ltd.            45,478         *         45,478          0            110,000        1.3750       110,000      0
- ------------------------------------------------------------------------------------------------------------------------------------
KA Trading L.P.               45,478         *         45,478          0            110,000        1.3750       110,000      0
- ------------------------------------------------------------------------------------------------------------------------------------
Landing & Co.                 20,672         *         20,672          0             50,000           *          50,000      0
- ------------------------------------------------------------------------------------------------------------------------------------
LB Series Fund, Inc. -High    20,672         *         20,672          0             50,000           *          50,000      0
 Yield Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Lincoln National               8,779         *          8,779          0             21,235           *          21,235      0
 Convertible Securities
 Fund
- ------------------------------------------------------------------------------------------------------------------------------------
LLT Limited                      414         *            414          0              1,000           *           1,000      0
- ------------------------------------------------------------------------------------------------------------------------------------
Lutheran Brother High         12,403         *         12,403          0             30,000           *          30,000      0
 Yield Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Millennium Trading L.P.       53,746         *         53,746          0            130,000         1.6250      130,000      0
- ------------------------------------------------------------------------------------------------------------------------------------
Nalco Chemical Retirement      1,654         *          1,654          0              4,000           *           4,000      0
- ------------------------------------------------------------------------------------------------------------------------------------
Northstar Balance Sheet       16,538         *         16,538          0             40,000           *          40,000      0
 Opportunities
- ------------------------------------------------------------------------------------------------------------------------------------
The Northwestern Mutual       33,075         *         33,075          0             80,000         1.0000       80,000      0
 Life Insurance Company
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE> 
<CAPTION> 
================================================================================
                                        Series E Preferred Stock                      
                                        ------------------------                      
- -------------------------  ---------------------------------------------------  
                                                                 Beneficially    
                                                                 Owned After     
Name of Selling                Beneficially Owned                    This         
   Security-                      Prior to This      Offered       Offering
   holder(1)                      Offering(2)(4)     for Sale       (2)(4)
   ---------                      --------------     --------     ---------
                           ------------------------  --------   --------------  
                              Number
                            of shares     Percent
                            of Series        of
                                E         Series E                                        
                            Preferred    Preferred
                              Stock        Stock
                              -----        -----                                
<S>                        <C>           <C>         <C>        <C> 
- ------------------------------------------------------------------------------
J.P. Morgan & Co, Inc.        6,900        8.6250      6,900          0
- ------------------------------------------------------------------------------
KA Management Ltd.            1,100        1.3750      1,100          0
- ------------------------------------------------------------------------------
KA Trading L.P.               1,100        1.3750      1,100          0
- ------------------------------------------------------------------------------
Landing & Co.                   500          *           500          0
- ------------------------------------------------------------------------------
LB Series Fund, Inc. -High      500          *           500          0
 Yield Portfolio
- ------------------------------------------------------------------------------
Lincoln National                213          *           213          0
 Convertible Securities
 Fund
- ------------------------------------------------------------------------------
LLT Limited                      10          *            10          0
- ------------------------------------------------------------------------------
Lutheran Brother High           300          *           300          0
 Yield Fund
- ------------------------------------------------------------------------------
Millennium Trading L.P.       1,300        1.6250      1,300          0
- ------------------------------------------------------------------------------
Nalco Chemical Retirement        40          *            40          0
- ------------------------------------------------------------------------------
Northstar Balance Sheet         400          *           400          0
 Opportunities
- ------------------------------------------------------------------------------
The Northwestern Mutual         800        1.0000        800          0
 Life Insurance Company
- ------------------------------------------------------------------------------
</TABLE> 

                                       41
<PAGE>
 
<TABLE>
<CAPTION>
===================================================================================================================================
                                              Common Stock                                     Depositary Shares
                                              ------------                      ---------------------------------------------------
- -------------------------  ---------------------------------------------------  ---------------------------------------------------
                                                                Beneficially                                          Beneficially  
Name of Selling                                                     Owned                                              Owned After
   Security-               Beneficially Owned Prior  Offered      After This         Beneficially Owned      Offered  This Offering
   holder(1)                to This Offering(2)(3)   for Sale   Offering(2)(3)  Prior to This Offering(2)    for Sale      (2)
   ---------                ----------------------   --------   --------------  ---------------------------- -------- -------------
                           ------------------------  --------   --------------  ---------------------------- -------- ------------- 
                                                                               
                                                                               
                                                                               
                                                                                  Number of      Percent of 
                            Number of   Percent of                                Depositary     Depositary
                              Shares      Shares                                    Shares         Shares
                              ------      ------                                    ------         ------
<S>                         <C>         <C>          <C>        <C>               <C>            <C>         <C>      <C> 
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
OCM Convertible Trust          62,842        *       62,842            0            152,000        1.9000     152,000       0
- ------------------------------------------------------------------------------------------------------------------------------------
Pacific Life Insurance         43,410        *       43,410            0            105,000        1.3125     105,000       0
 Company
- ------------------------------------------------------------------------------------------------------------------------------------
SBC Warburg Dillon Read       19,432        *       19,432            0             47,000          *         47,000        0
  Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Swiss Bank Corporation         12,403        *       12,403            0             30,000          *         30,000       0
 London Branch
- ------------------------------------------------------------------------------------------------------------------------------------
State Employees'               15,297        *       15,297            0             37,000          *         37,000       0
 Retirement Fund of the
 State of Delaware
- ------------------------------------------------------------------------------------------------------------------------------------
State of Connecticut           56,847        *       56,847            0            137,500        1.7188     137,500       0
 Combined Investment Funds
- ------------------------------------------------------------------------------------------------------------------------------------
Surfboard & Co.                24,806        *       24,806            0             60,000          *         60,000       0
- ------------------------------------------------------------------------------------------------------------------------------------
Susquehanna Capital Group      31,834        *       31,834            0             77,000          *         77,000       0
- ------------------------------------------------------------------------------------------------------------------------------------
Triton Capital Investments     49,612        *       49,612            0            120,000        1.5000     120,000       0
 Ltd.
- ------------------------------------------------------------------------------------------------------------------------------------
The United Bank of Kuwait      82,686        *       82,686            0            200,000        2.5000     200,000       0
 PLC
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE> 
<CAPTION> 
================================================================================
                                        Series E Preferred Stock                      
                                        ------------------------                      
- -------------------------  ---------------------------------------------------  
                                                                 Beneficially    
                                                                 Owned After     
Name of Selling                Beneficially Owned                    This         
   Security-                      Prior to This      Offered       Offering
   holder(1)                      Offering(2)(4)     for Sale       (2)(4)
   ---------                      --------------     --------     ---------
                           ------------------------  --------   --------------  
                              Number
                            of shares     Percent
                            of Series        of
                                E         Series E                                        
                            Preferred    Preferred
                              Stock        Stock
                              -----        -----                                
<S>                        <C>           <C>         <C>        <C> 
- ------------------------------------------------------------------------------
OCM Convertible Trust         1,520        1.9000     1,520           0
- ------------------------------------------------------------------------------
Pacific Life Insurance        1,050        1.3125     1,050           0
 Company
- ------------------------------------------------------------------------------
 SBC Warburg Dillon Read        470          *          470           0
  Inc.
- ------------------------------------------------------------------------------
Swiss Bank Corporation          300          *          300           0
 London Branch
- ------------------------------------------------------------------------------
State Employees'                370          *          370           0
 Retirement Fund of the
 State of Delaware
- ------------------------------------------------------------------------------
State of Connecticut          1,375        1.7188     1,375           0
 Combined Investment Funds
- ------------------------------------------------------------------------------
Surfboard & Co.                 600          *          600           0
- ------------------------------------------------------------------------------
Susquehanna Capital Group       770          *          770           0
- ------------------------------------------------------------------------------
Triton Capital Investments    1,200        1.5000     1,200           0
 Ltd.
- ------------------------------------------------------------------------------
The United Bank of Kuwait     2,000        2.5000     2,000           0
 PLC
- ------------------------------------------------------------------------------
</TABLE>

                                       42
<PAGE>
 
<TABLE>
<CAPTION>
===================================================================================================================================
                                              Common Stock                                     Depositary Shares
                                              ------------                      ---------------------------------------------------
- -------------------------  ---------------------------------------------------  ---------------------------------------------------
                                                                Beneficially                                          Beneficially  
Name of Selling                                                     Owned                                              Owned After
   Security-               Beneficially Owned Prior  Offered      After This         Beneficially Owned      Offered  This Offering
   holder(1)                to This Offering(2)(3)   for Sale   Offering(2)(3)  Prior to This Offering(2)    for Sale      (2)
   ---------                ----------------------   --------   --------------  ---------------------------- -------- -------------
                           ------------------------  --------   --------------  ---------------------------- -------- ------------- 
                                                                               
                                                                               
                                                                               
                                                                                  Number of      Percent of 
                            Number of   Percent of                                Depositary     Depositary
                              Shares      Shares                                    Shares         Shares
                              ------      ------                                    ------         ------
<S>                         <C>         <C>          <C>        <C>               <C>            <C>         <C>      <C> 
- ------------------------------------------------------------------------------------------------------------------------------------
United National Insurance        614         *           614           0             1,485            *          1,485       0
- ------------------------------------------------------------------------------------------------------------------------------------
Vanguard Convertible          38,780         *        38,780           0            93,800         1.1725       93,800       0
 Securities Fund, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Walker Art Center              1,499         *         1,499           0             3,625            *          3,625       0
- ------------------------------------------------------------------------------------------------------------------------------------
Weirton Trust                  3,734         *         3,734           0             9,370            *          9,370       0
- ------------------------------------------------------------------------------------------------------------------------------------
Wm. M. Keck Jr. Foundation     4,135         *         4,135           0            10,000            *         10,000       0
- ------------------------------------------------------------------------------------------------------------------------------------
Zeneca Holdings Pension        3,308         *         3,308           0             8,000            *          8,000       0
 Trust
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE> 
<CAPTION> 
================================================================================
                                        Series E Preferred Stock                      
                                        ------------------------                      
- -------------------------  ---------------------------------------------------  
                                                                 Beneficially    
                                                                 Owned After     
Name of Selling                Beneficially Owned                    This         
   Security-                      Prior to This      Offered       Offering
   holder(1)                      Offering(2)(4)     for Sale       (2)(4)
   ---------                      --------------     --------     ---------
                           ------------------------  --------   --------------  
                              Number
                            of shares     Percent
                            of Series        of
                                E         Series E                                        
                            Preferred    Preferred
                              Stock        Stock
                              -----        -----                                
<S>                        <C>           <C>         <C>        <C> 
- ------------------------------------------------------------------------------
United National Insurance        15          *          15            0
- ------------------------------------------------------------------------------
Vanguard Convertible            938        1.1725      938            0
 Securities Fund, Inc.
- ------------------------------------------------------------------------------
Walker Art Center                37          *          37            0
- ------------------------------------------------------------------------------
Weirton Trust                    94          *          94            0
- ------------------------------------------------------------------------------
Wm. M. Keck Jr. Foundation      100          *         100            0
- ------------------------------------------------------------------------------
Zeneca Holdings Pension          80          *          80            0
 Trust
- ------------------------------------------------------------------------------
</TABLE> 

     *  Less than one percent.  Based on 17,315,317 shares of common stock
     outstanding on November 30, 1997, 8,000,000 Depositary Shares outstanding
     on December 18, 1997 and 80,000 shares of Series E Preferred Stock
     outstanding on December 18, 1997.

     (1)The names of additional Selling Securityholders may be provided
     subsequent hereto pursuant to Section 424(c) of the Securities Act of 1933,
     as amended.

     (2)Under the rules of the Commission, a person is deemed to be the
     beneficial owner of a security if such person has or shares the power to
     vote or direct the voting of such security or the power to dispose or
     direct the disposition of such security.  A person is also deemed to be a
     beneficial owner of any securities if that person has the right to acquire
     beneficial ownership within 60 days.  Accordingly, more than one person may
     be deemed to be a beneficial owner of the same securities.  Unless
     otherwise indicated by footnote, the named individuals have sole voting and
     investment power with respect to the securities beneficially owned.

     (3)Assuming the conversion of all Depositary Shares and/or shares of Series
     E Preferred Stock.  The Depositary Shares and the Series E Preferred Stock
     may not be converted into Common Stock until after December 29, 1997.

                                       43
<PAGE>
 
     (4)  Assuming the conversion of all Depositary Shares into shares of Series
          E Preferred Stock on the basis of one share of Series E Preferred
          Stock for each one hundred Depositary Shares.

               The Common Stock and Depositary Shares owned by the Selling
     Securityholders and the Dividend Shares issuable by the Company represent
     all of the securities covered by the Registration Statement.  The
     Depositary Shares were originally issued by the Company and purchased by
     the Initial Purchasers in the October 30 Equity Offering.  The Initial
     Purchasers, in turn, resold the Depositary Shares in private sales pursuant
     to exemption from registration under the Securities Act of 1933, as
     amended.

                                       44
<PAGE>
 
                              PLAN OF DISTRIBUTION

        The Company will not receive any proceeds from the sale of the
     Securities or the issuance of the Dividend Shares offered hereby. The
     Dividend Shares may be issued by the Company in lieu of cash from time to
     time to holders of record of the Series E Preferred Stock, all in
     accordance with the Certificate of Designation, during the two year period
     commencing on the date of this Prospectus.  See "Description of Series E
     Preferred Stock--Dividends."  The Securities may be sold from time to time
     to purchasers directly by the Selling Securityholders. Alternatively, the
     Selling Securityholders may from time to time offer the Securities through
     brokers, dealers or agents who may receive compensation in the form of
     discounts, concessions or commissions from the Selling Securityholders
     and/or the purchasers of the Securities for whom they may act as agent. The
     Selling Securityholders and any such brokers, dealers or agents who
     participate in the distribution of the Securities may be deemed to be
     "underwriters", and any profits on the sale of the Securities by them and
     any discounts, commissions or concessions received by any such brokers,
     dealers or agents might be deemed to be underwriting discounts and
     commissions under the Securities Act. To the extent the Selling
     Securityholders may be deemed to be underwriters, the Selling
     Securityholders may be subject to certain statutory liabilities under the
     Securities Act, including, but not limited to, Sections 11, 12 and 17 of
     the Securities Act and Rule 10b-5 under the Exchange Act.

        The Securities offered hereby may be sold by the Selling Securityholders
     from time to time in one or more transactions at fixed prices, at
     prevailing market prices at the time of sale, at varying prices determined
     at the time of sale or at negotiated prices. The Securities may be sold by
     one or more of the following methods, without limitation: (a) a block trade
     in which the broker or dealer so engaged will attempt to sell the
     Securities as agent but may position and resell a portion of the block as
     principal to facilitate the transaction; (b) purchases by a broker or
     dealer as principal and resale by such broker or dealer for its account
     pursuant to this Prospectus; (c) ordinary brokerage transactions and
     transactions in which the broker solicits purchasers; (d) an exchange
     distribution in accordance with the rules of such exchange; (e) face-to-
     face transactions between sellers and purchasers without a broker-dealer;
     (f) through the writing of options; and (g) other. At any time a particular
     offer of the Securities is made, a revised Prospectus or Prospectus
     Supplement, if required, will be distributed which will set forth the
     aggregate amount and type of Securities being offered and the terms of the
     offering, including the name or names of any underwriters, dealers or
     agents, any discounts, commissions and other items constituting
     compensation from the Selling Securityholders and any discounts,
     commissions or concessions allowed or reallowed or paid to dealers. Such
     Prospectus Supplement and, if necessary, a post-effective amendment to the
     Registration Statement of which this Prospectus is a part, will be filed
     with the Commission to reflect the disclosure of additional information
     with respect to the distribution of the Securities. In addition, the
     Securities covered by this Prospectus may be sold in private transactions
     or under Rule 144 rather than pursuant to this Prospectus.

        To the best knowledge of the Company, there are currently no plans,
     arrangements or understandings between any Selling Securityholders and any
     broker, dealer, agent or underwriter regarding the sale of the Securities
     by the Selling Securityholders. There is no assurance that any Selling
     Securityholder will sell any or all of the Securities offered by it
     hereunder or that any such Selling Securityholder will not transfer, devise
     or gift such Securities by other means not described herein.

        The Selling Securityholders and any other person participating in such
     distribution will be subject to applicable provisions of the Exchange Act
     and the rules and regulations thereunder, including, without limitation,
     Regulation M, which may limit the timing of purchases and sales of any of
     the Securities by the Selling Securityholders and any other such person.
     All of the foregoing may affect the marketability of the Securities and the
     ability of any person or entity to engage in market-making activities with
     respect to the Securities.

        Pursuant to the Preferred Stock Registration Rights Agreement entered
     into in connection with the offer and sale of the Depositary Shares by the
     Company, each of the Company and the applicable Selling Securityholders
     will be indemnified by the other against certain liabilities, including
     certain liabilities under the Securities Act, or

                                       45
<PAGE>
 
     will be entitled to contribution in connection therewith. The Company has
     agreed to pay substantially all of the expenses incidental to the
     registration, offering and sale of the Securities to the public other than
     commissions, fees and discounts of underwriters, brokers, dealers and
     agents.



                                      LEGAL MATTERS

        The legality of the securities offered hereby has been passed upon for
     the Company by Kronish, Lieb, Weiner & Hellman LLP, 1114 Avenue of the
     Americas, New York, New York 10036-7798. Ralph J. Sutcliffe, a partner of
     Kronish, Lieb, Weiner & Hellman LLP, beneficially owns 5,745 shares of the
     Common Stock and owns a warrant to purchase 100,000 shares of Common Stock
     at an exercise price of $41.50 per share.


                                    EXPERTS

        The consolidated financial statements and schedule of Intermedia
     Communications Inc. appearing in Intermedia Communication Inc.'s Annual
     Report (Form 10-K) for the year ended December 31, 1996, have been audited
     by Ernst & Young LLP, independent certified public accountants, as set
     forth in their report thereon included therein and incorporated herein by
     reference.  Such consolidated financial statements and schedule are
     incorporated herein by reference in reliance upon such report given upon
     the authority of such firm as experts in accounting and auditing.
 
        The consolidated financial statements of DIGEX, Incorporated, appearing
     in DIGEX, Incorporated's Annual Report (Form 10-KSB) for the year ended
     December 31, 1996, 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
     upon the authority of such firm as experts in accounting and auditing.

        The December 31, 1996 audited financial statements of Shared
     Technologies Fairchild Inc. incorporated by reference in this Prospectus
     and elsewhere in the Registration Statement have been audited by Arthur
     Andersen LLP, independent public accountants, as indicated in their report
     with respect thereto, and are included herein in reliance upon the
     authority of said firm as experts in giving said report.

        The consolidated financial statements and schedule of Shared
     Technologies Fairchild Inc. and subsidiaries at December 31, 1995 and for
     each of the two years in the period ended December 31, 1995 incorporated by
     reference in this Prospectus have been audited by Rothstein, Kass &
     Company, P.C., independent certified public accountants, as indicated in
     their report, which includes an explanatory paragraph relating to the
     changing of the method of accounting for its investment in one of its
     subsidiaries, with respect thereto, and are incorporated by reference
     herein in reliance upon the authority of said firm as experts in accounting
     and auditing.

                                       46
<PAGE>
 
                                    PART II

                   INFORMATION NOT REQUIRED IN THE PROSPECTUS

     ITEM 14.  Other Expenses of Issuance and Distribution.

        The following statement sets forth the expenses payable in connection
     with this Registration Statement (estimated except for the registration
     fee), all of which will be borne by the Company:
<TABLE>
<S>                                                                              <C>
Securities and Exchange Commission filing fee...............................$      71,390.00
Legal fees and expenses.....................................................$      25,000.00
Accountant's fees and expenses payable to Ernst & Young LLP.................$      15,000.00
Accountant's fees and expenses payable to Arthur Andersen LLP...............$       3,000.00
Accountant's fees and expenses payable to Rothstein, Kass & Company, P.C....$       2,100.00
Miscellaneous...............................................................$       8,510.00
- --------------------------------------------------------------------------------------------
Total.......................................................................$     125,000.00
                                                                                 ==========
- -------------------------------------------------------------------------------------------
</TABLE>

     ITEM 15.  Indemnification of Directors and Officers.

          The Company's Certificate of Incorporation provides that the Company
     will to the fullest extent permitted by the DGCL indemnify all persons whom
     it may indemnify pursuant thereto.  The Company's By-laws contain a similar
     provision requiring indemnification of the Company's directors and officers
     to the fullest extent authorized by the DGCL.  The DGCL permits a
     corporation to indemnify its directors and officers (among others) against
     expenses (including attorneys' fees), judgments, fines and amounts paid in
     settlement actually and reasonably incurred by them in connection with any
     action, suit or proceeding brought (or threatened to be brought) by third
     parties, if such directors or officers acted in good faith and in a manner
     they 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 their conduct was unlawful.  In a derivative
     action, i.e., one by or in the right of the corporation, indemnification
             ----                                                            
     may be made for expenses (including attorneys' fees) actually and
     reasonably incurred by directors and officers in connection with the
     defense or settlement of such action if they had acted in good faith and in
     a manner they reasonably believed to be in or not opposed to the best
     interests of the corporation, except that no indemnification shall be made
     in respect of any claim, issue or matter as to which such person shall have
     been adjudged liable to the Company unless and only to the extent that the
     Court of Chancery or the court in which such action or suit was brought
     shall determine upon application that, despite the adjudication of
     liability but in view of all the circumstances of the case, such person is
     fairly and reasonably entitled to indemnity for such expenses.  The DGCL
     further provides that, to the extent any director or officer has been
     successful on the merits or otherwise in defense of any action, suit or
     proceeding referred to in this paragraph, or in defense of any claim, issue
     or matter therein, such person shall be indemnified against expenses
     (including attorneys' fees) actually and reasonably incurred by him in
     connection therewith.  In addition, the Company's Certificate of
     Incorporation contains a provision limiting the personal liability of the
     Company's directors for monetary damages for certain breaches of their
     fiduciary duty.  The Company has indemnification insurance under which
     directors and officers are insured against certain liability that may occur
     in their capacity as such.
<PAGE>
 
     ITEM 16.  Exhibits and Financial Data Schedules.

     (a) Exhibits

     1.1   --  Purchase Agreement, dated as of October 24, 1997, among the
               Company and the Initial Purchasers.

     2.1   --  Agreement and Plan of Merger, dated as of June 4, 1997, among the
               Company, Daylight Acquisition Corp. and DIGEX, Incorporated.
               Exhibit 99(c)(1) to the Company's Schedule 14D-1 filed with the
               Commission on June 11, 1997 is incorporated herein by reference.

     2.2   --  Agreement and Plan of Merger, dated as of November 20, 1997, by
               and among the Company, Moonlight Acquisition Corp. and Shared
               Technologies Fairchild Inc. Exhibit 99(c)(1) to the Company's
               Schedule 14D-1 and Schedule 13D filed with the Commission on
               November 26, 1997 is incorporated herein by reference.

     4.1   --  Indenture, dated as of June 2, 1995, between the Company and
               SunBank National Association, as trustee. Exhibit 4.1 to the
               Company's Registration Statement on Form S-4 filed with the
               Commission on June 20, 1995 (No. 33-93622) is incorporated herein
               by reference.

  4.1(a)   --  Amended and Restated Indenture, dated as of April 26, 1996,
               governing the Company's 13 1/2% Series B Senior Notes due 2005,
               between the Company and SunTrust Bank, Central Florida, National
               Association, as trustee. Exhibit 4.1 to the Company's Current
               Report on Form 8-K filed with the Commission on April 29, 1996 is
               incorporated herein by reference.

     4.2   --  Indenture, dated as of May 14, 1996, between the Company and
               SunTrust Bank, Central Florida, National Association, as trustee.
               Exhibit 4.1 to Amendment No. 1 to the Company's Registration
               Statement on Form S-3 (Commission File No. 33-34738) filed with
               the Commission on April 18, 1996 is incorporated herein by
               reference.

     4.3   --  Indenture, dated as of July 9, 1997, between the Company and
               SunTrust Bank, Central Florida, National Association, as trustee.
               Exhibit 4.1 to the Company's Current Report on Form 8-K filed
               with the Commission on July 17, 1997 is incorporated herein by
               reference.

     4.4   --  Indenture, dated as of October 30, 1997, between the Company and
               SunTrust Bank, Central Florida, National Association, as trustee.
               Exhibit 4.1 to the Company's Current Report on Form 8-K filed
               with the Commission on November 6, 1997 is incorporated herein by
               reference.

     4.5   --  Preferred Stock Registration Rights Agreement, dated as of
               October 30, 1997, among the Company and the Initial Purchasers.

     4.6   --  Certificate of Designation of Voting Power, Designation
               Preferences and Relative, Participating, Optional and Other
               Special Rights and Qualifications, Limitations and Restrictions
               of 7% Series E Junior Convertible Preferred Stock of the Company,
               filed with the Secretary of State of the State of Delaware on
               October 29, 1997. Exhibit 4.2 to the Company's Current Report on
               Form 8-K filed with the Commission on November 6, 1997 is
               incorporated herein by reference.

     4.7   --  Deposit Agreement, dated as of October 30, 1997, between the
               Company and Continental Stock Transfer & Trust Company. Exhibit
               4.3 to the Company's Current Report on Form 8-K filed with the
               Commission on November 6, 1997 is incorporated herein by
               reference.
<PAGE>
 
     5.1*  --  Opinion of Kronish, Lieb, Weiner & Hellman LLP.

     8.1*  --  Opinion of Kronish, Lieb, Weiner & Hellman LLP re: Tax matters 
               is contained in their opinion filed as Exhibit 5.1 to this 
               Registration Statement.  
                                                            
     12.1  --  Statement Re: Computation of Ratios.
 
     23.1* --  Consent of Kronish, Lieb, Weiner & Hellman LLP is contained in
               their opinion filed as Exhibit 5.1 to this Registration
               Statement.

                              
     23.2  --  Consent of Ernst & Young LLP.
 
     23.3  --  Consent of Ernst & Young LLP.
 
     23.4  --  Consent of Arthur Andersen LLP
 
     23.5  --  Consent of  Rothstein, Kass & Company, P.C.
 
     24.1  --  Power of Attorney is set forth on the signature page of this
               Registration Statement.
 
- ---------------

      *    To be filed by Amendment.


     (b)   Financial Data Schedules

         Financial Data Schedules are not required to be filed since all
     financial statements have been previously included in filings with the
     Commission.
<PAGE>
 
     ITEM 17.  Undertakings.

              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;

               (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;

               (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 (i) and (ii) above do not apply if the
     --------  -------                                                        
     information required to be included in a post-effective amendment by those
     paragraphs is contained in periodic reports filed by the Company pursuant
     to Section 13 or Section 15(d) of the Exchange Act that are incorporated by
     reference in this Registration Statement.

               (2) That, for the purpose of determining any liability under the
     Securities Act, each such post-effective amendment shall be deemed to be a
     new registration statement relating to the securities offered therein, and
     the offering of such securities at that time shall be deemed to be the
     initial bona fide offering thereof.

               (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.

               (4) That, for purposes of determining any liability under the
     Securities Act, each filing of the registrant's annual report pursuant to
     Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable,
     each filing of an employee benefit plan's annual report pursuant to Section
     15(d) of the Exchange Act) that is incorporated by reference in this
     Registration Statement shall be deemed to be a new registration statement
     relating to the securities offered therein, and the offering of such
     securities at that time shall be deemed to be the initial bona fide
     offering thereof.

               Insofar as indemnification for liabilities arising under the
     Securities Act may be permitted to directors, officers and controlling
     persons of the registrant pursuant to the foregoing provisions, or
     otherwise, the registrant has been advised that in the opinion of the
     Securities and Exchange Commission such indemnification is against public
     policy as expressed in the Securities Act and is, therefore, unenforceable.
     In the event that a claim for indemnification against such liabilities
     (other than the payment by registrant of expenses incurred or paid by a
     director, officer or controlling person of the registrant in the successful
     defense of any action, suit or proceeding) is asserted by such director,
     officer or controlling person in connection with the securities being
     registered, the registrant will, unless in the opinion of its counsel the
     matter has been settled by controlling precedent, submit to a court of
     appropriate jurisdiction the question whether such indemnification by it is
     against public policy as expressed in the Securities Act and will be
     governed by the final adjudication of such issue.
<PAGE>
 
                                   SIGNATURES

               Pursuant to the requirements of the Securities Act of 1933, the
     Registrant certifies that it has reasonable grounds to believe that it
     meets all of the requirements for filing on Form S-3 and has duly caused
     this Registration Statement to be signed on its behalf by the undersigned,
     thereunto duly authorized, in the City of Tampa, State of Florida, on this
     22nd day of December, 1997.

                                INTERMEDIA COMMUNICATIONS INC.

                                By:  /s/ Robert M. Manning
                                   -----------------------------------------
                                   Robert M. Manning,
                                   Chief Financial Officer and Senior Vice
                                   President

               Pursuant to the requirements of the Securities Act of 1933, this
     Registration Statement has been signed below by the following persons in
     the capacities and on the dates indicated.  Each person whose signature
     appears below authorizes David C. Ruberg and Robert M. Manning, or either
     of them, as attorney-in-fact to sign and file in each capacity stated
     below, all amendments and post-effective amendments to this Registration
     Statement.

<TABLE>
<CAPTION>
                  SIGNATURE                                TITLE                   DATE
                  ---------                                -----                   ----

Principal Executive Officers:
<S>                                              <C>                       <C>  
                                                  Chairman of the Board,     December 22, 1997
/s/ David C. Ruberg                                President and Chief
- ----------------------------------------------      Executive Officer
David C. Ruberg
 
Principal Financial and Accounting Officers:
 
                                                  Chief Financial Officer    December 22, 1997
/s/ Robert M. Manning                                       and
- ----------------------------------------------    Senior Vice President
Robert M. Manning
 
 
/s/ Jeanne M. Walters                              Controller and Chief      December 22, 1997
- ----------------------------------------------      Accounting Officer
Jeanne M. Walters

       Other Directors:

/s/ John C. Baker                                        Director            December 22, 1997
- ----------------------------------------------                               
John C. Baker                                                                
                                                                             
/s/ George F. Knapp                                      Director            December 22, 1997
- ----------------------------------------------                               
George F. Knapp                                                              
                                                                             
/s/ Philip A. Campbell                                   Director            December 22, 1997
- ----------------------------------------------          
Philip A. Campbell
</TABLE>
<PAGE>
 
                                 EXHIBIT INDEX
                                        
     Number                         Exhibit                                Page
     ------                         -------                                ----


     1.1   --  Purchase Agreement, dated as of October 24, 1997, among the
               Company and the Initial Purchasers.

     2.1   --  Agreement and Plan of Merger, dated as of June 4, 1997, among the
               Company, Daylight Acquisition Corp. and DIGEX, Incorporated.
               Exhibit 99(c)(1) to the Company's Schedule 14D-1 filed with the
               Commission on June 11, 1997 is incorporated herein by reference.

     2.2   --  Agreement and Plan of Merger, dated as of November 20, 1997, by
               and among the Company, Moonlight Acquisition Corp. and Shared
               Technologies Fairchild Inc. Exhibit 99(c)(1) to the Company's
               Schedule 14D-1 and Schedule 13D filed with the Commission on
               November 26, 1997 is incorporated herein by reference.

     4.1   --  Indenture, dated as of June 2, 1995, between the Company and
               SunBank National Association, as trustee. Exhibit 4.1 to the
               Company's Registration Statement on Form S-4 filed with the
               Commission on June 20, 1995 (No. 33-93622) is incorporated herein
               by reference.

  4.1(a)   --  Amended and Restated Indenture, dated as of April 26, 1996,
               governing the Company's 13 1/2% Series B Senior Notes due 2005,
               between the Company and SunTrust Bank, Central Florida, National
               Association, as trustee. Exhibit 4.1 to the Company's Current
               Report on Form 8-K filed with the Commission on April 29, 1996 is
               incorporated herein by reference.

     4.2   --  Indenture, dated as of May 14, 1996, between the Company and
               SunTrust Bank, Central Florida, National Association, as trustee.
               Exhibit 4.1 to Amendment No. 1 to the Company's Registration
               Statement on Form S-3 (Commission File No. 33-34738) filed with
               the Commission on April 18, 1996 is incorporated herein by
               reference.

     4.3   --  Indenture, dated as of July 9, 1997, between the Company and
               SunTrust Bank, Central Florida, National Association, as trustee.
               Exhibit 4.1 to the Company's Current Report on Form 8-K filed
               with the Commission on July 17, 1997 is incorporated herein by
               reference.

     4.4   --  Indenture, dated as of October 30, 1997, between the Company and
               SunTrust Bank, Central Florida, National Association, as trustee.
               Exhibit 4.1 to the Company's Current Report on Form 8-K filed
               with the Commission on November 6, 1997 is incorporated herein by
               reference.

     4.5   --  Preferred Stock Registration Rights Agreement, dated as of
               October 30, 1997, among the Company and the Initial Purchasers.

     4.6   --  Certificate of Designation of Voting Power, Designation
               Preferences and Relative, Participating, Optional and Other
               Special Rights and Qualifications, Limitations and Restrictions
               of 7% Series E Junior Convertible Preferred Stock of the Company,
               filed with the Secretary of State of the State of Delaware on
               October 29, 1997. Exhibit 4.2 to the Company's Current Report on
               Form 8-K filed with the Commission on November 6, 1997 is
               incorporated herein by reference.

     4.7   --  Deposit Agreement, dated as of October 30, 1997, between the
               Company and Continental Stock Transfer & Trust Company. Exhibit
               4.3 to the Company's Current Report on Form 8-K filed with the
               Commission on November 6, 1997 is incorporated herein by
               reference.
<PAGE>
 
     5.1*  --  Opinion of Kronish, Lieb, Weiner & Hellman LLP.

     8.1*  --  Opinion of Kronish, Lieb, Weiner & Hellman LLP re: Tax matters 
               is contained in their opinion filed as Exhibit 5.1 to this 
               Registration Statement.  
                                                            
     12.1  --  Statement Re: Computation of Ratios.
 
     23.1* --  Consent of Kronish, Lieb, Weiner & Hellman LLP is contained in
               their opinion filed as Exhibit 5.1 to this Registration
               Statement.

                              
     23.2  --  Consent of Ernst & Young LLP.
 
     23.3  --  Consent of Ernst & Young LLP.
 
     23.4  --  Consent of Arthur Andersen LLP
 
     23.5  --  Consent of  Rothstein, Kass & Company, P.C.
 
     24.1  --  Power of Attorney is set forth on the signature page of this
               Registration Statement.
 
- ---------------

      *    To be filed by Amendment.

<PAGE>
 
                                                                     Exhibit 1.1

- --------------------------------------------------------------------------------



                        INTERMEDIA COMMUNICATIONS INC.



  7,000,000 Depositary Shares Each Representing a One-Hundredth Interest in a 
            Share of 7% Series E Junior Convertible Preferred Stock




                      Depositary Share Purchase Agreement

                               October 24, 1997




                           BEAR, STEARNS & CO. INC.

                             SALOMON BROTHERS INC





- --------------------------------------------------------------------------------
<PAGE>
 
                        INTERMEDIA COMMUNICATIONS INC.


  7,000,000 Depositary Shares Each Representing a One-Hundredth Interest in a
            Share of 7% Series E Junior Convertible Preferred Stock


                      DEPOSITORY SHARE PURCHASE AGREEMENT
                      -----------------------------------

                                                                October 24, 1997
                                                              New York, New York

BEAR, STEARNS & CO. INC.
SALOMON BROTHERS INC
c/o Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York  10167

Ladies & Gentlemen:

        Intermedia Communications Inc., a Delaware corporation (the "Company"),
                                                                     -------
proposes to issue and sell to Bear, Stearns & Co. Inc. and Salomon Brothers Inc
(together, the "Initial Purchasers") 7,000,000 Depositary Shares (the
                ------------------
"Depositary Shares"), each representing a one-hundredth interest in a share of
 -----------------
its 7% Series E Junior Convertible Preferred Stock, par value $1.00 per share
(the "Series E Preferred Stock"). The Series E Preferred Stock and the related
      ------------------------
Depositary Shares are to be authorized and issued pursuant to the provisions of
a Certificate of Designation of Voting Power, Designation Preferences and
Relative, Participating, Optional or Other Special Rights and Qualifications,
Limitations and Restrictions (the "Certificate of Designation") to be filed with
                                   --------------------------
the Secretary of State of the State of Delaware. Continental Stock Transfer &
Trust Company will be transfer agent and registrar for the Series E Preferred
Stock and will act as the "Depositary" for the Depositary Shares.
                           ----------

        1. Issuance of Securities. The Company proposes to, upon the terms and
           ----------------------
subject to the conditions set forth herein, issue and sell to the Initial
Purchasers 7,000,000 Depositary Shares (the "Firm Shares"). The Company also
                                             -----------
proposes to sell to the Initial Purchasers, upon the terms and conditions set
forth herein, up to an additional 1,750,000 Depositary Shares (the "Additional
                                                                    ---------- 
Shares", and together with the Firm Shares, the "Company Shares"). The Firm
- ------                                           --------------
Shares, the Additional Shares, and the Series E Preferred Stock are collectively
referred to herein as the "Securities."

        For purposes of this Purchase Agreement (this "Agreement"), the term
                                                       ---------  
"Subsidiaries" shall mean the entities listed on Exhibit D hereto. Capitalized
terms used but not otherwise defined herein shall have the meanings given to
such terms in the Certificate of Designation. Upon original issuance thereof,
and until such time as the same is no longer required under the applicable
requirements of the Act, the Series E Preferred Stock, the Company Shares (and
all securities issued in exchange therefor, in substitution thereof or upon
conversion thereof) shall bear the following legend:
<PAGE>
 
              "THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
        ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE
        UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
        AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE
        TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
        EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS
        HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE
        PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
        THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE
        BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR
        OTHERWISE TRANSFERRED, ONLY (1) TO THE COMPANY, (2) PURSUANT TO A
        REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
        SECURITIES ACT, (3) TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
        INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A IN A TRANSACTION MEETING
        THE REQUIREMENTS OF RULE 144A, (4) PURSUANT TO OFFERS AND SALES TO NON-
        U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES IN A TRANSACTION
        MEETING THE REQUIREMENTS OF RULE 904 OF REGULATION S UNDER THE
        SECURITIES ACT, (5) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
        DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE
        SECURITIES ACT (AN "IAI") THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE
        TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
        AGREEMENTS RELATING TO THE TRANSFER OF THIS SECURITY (THE FORM OF WHICH
        LETTER CAN BE OBTAINED FROM THE TRUSTEE) OR (6) PURSUANT TO ANY OTHER
        AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE
        SECURITIES ACT (AND BASED ON AN OPINION OF COUNSEL IF THE COMPANY SO
        REQUESTS), SUBJECT IN EACH OF THE FOREGOING CASES TO APPLICABLE
        SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
        APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT
        HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY
        EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE."

        2.    Offering. The Company Shares, will be offered and sold to the
              --------
Initial Purchasers pursuant to an exemption from the registration requirements
under the Securities Act of 1933, as amended (the "Act"). The Company has
                                                   ---
prepared a preliminary offering memorandum, dated October 22, 1997 (including
the information in the Exhibits included in the exhibit volume delivered
therewith, the "Preliminary Offering Memorandum"), and a final offering
                -------------------------------
memorandum, dated October 24, 1997 (including the information in the Exhibits
attached thereto, the "Offering Memorandum"), relating to the Company and the
                       -------------------
Series E Preferred Stock (and the related Depositary Shares) and the issuance of
the Senior Notes due 2007.

        The Initial Purchasers have advised the Company that the Initial
Purchasers will make offers of sale (the "Exempt Resales") of the Company
                                          --------------
Shares, on the terms set forth in the Offering Memorandum, as amended or
supplemented, solely (i) to persons whom any of the Initial Purchasers
reasonably believe to be "qualified institutional buyers," as defined in Rule
144A under the Act 

                                       2
<PAGE>
 
("QIBs"), (ii) to a limited number of persons who have represented to the
  ----
Company that they are institutional "Accredited Investors" referred to in Rule
501(a)(1), (2), (3) or (7) under the Act (each, an "Accredited Investor") and
                                                    -------------------
(iii) pursuant to offers and sales that occur outside the United States within
the meaning of Regulation S under Securities Act. The QIBs, Accredited Investors
and the purchasers pursuant to Regulation S are referred to herein as the
"Eligible Purchasers." The Initial Purchasers will offer the Series E Preferred
 -------------------
Stock (and the related Depositary Shares) to such Eligible Purchasers initially
at a price of $2,500.00 (and $25.00 for the related Depositary Shares) per
share. Such price may be changed at any time without notice.

        Holders (including subsequent transferees) of the Series E Preferred
Stock (and the related Depositary Shares) will have the registration rights set
forth in the registration rights agreement relating thereto (the "Registration
                                                                  ------------
Rights Agreement") to be dated the Closing Date (as defined), for so long as
- ----------------
such Series E Preferred Stock (and the related Depositary Shares) constitute
"Transfer Restricted Securities" (as defined in the Registration Rights
Agreement). Pursuant to the Registration Rights Agreement, the Company will
agree to file with the Securities and Exchange Commission (the "Commission"),
                                                                ----------
under the circumstances set forth therein, (i) a shelf registration statement
pursuant to Rule 415 under the Act (the "Shelf Registration Statement") relating
                                         ----------------------------
to the resale by certain holders of the Series E Preferred Stock and the related
Depositary Shares, and (ii) a registration statement (the "Common Registration
                                                           -------------------
Statement") relating to the sale by certain holders of Common Stock of the
- ---------
Company received in connection with conversion of the Series E Preferred Stock,
and to use its best efforts to cause the Shelf Registration Statement and the
Common Registration Statement to be declared effective. This Agreement, the
Certificate of Designation, the Securities, and the Registration Rights
Agreement are hereinafter sometimes referred to collectively as the "Operative
                                                                     ---------
Documents."
- ---------
        3.    Purchase, Sale and Delivery. (a) On the basis of the
              ---------------------------
representations, warranties and covenants contained in this Agreement, and
subject to its terms and conditions, the Company agrees to issue and sell to
each Initial Purchaser, and each Initial Purchaser agrees severally and not
jointly to purchase from the Company, the number of Firm Shares set forth
opposite its name on Schedule I hereto. The purchase price for the Firm Shares,
shall be $24.25 per share.

        The Company also agrees, subject to all the terms and conditions set
forth herein, to sell to the Initial Purchasers, and, upon the basis of the
representations, warranties and agreements of the Company herein contained and
subject to all the terms and conditions set forth herein, the Initial Purchasers
shall have the right to purchase from the Company, solely for the purpose of
covering over-allotments in connection with sales of the Firm Shares, at the
purchase price per Depository Share of $24.25, pursuant to an option (the
"over-allotment option") which may be exercised at any time and from time to
 ---------------------
time prior to 10:00 p.m., New York City time, on the 30th day after the date of
the Offering Memorandum (or, if such 30th day shall be a Saturday or Sunday or a
holiday, on the next business day thereafter when the New York Stock Exchange is
open for trading), up to an aggregate of 1,750,000 Additional Shares. Upon any
exercise of the over-allotment option, each Initial Purchaser, severally and not
jointly, agrees to purchase from the Company the number of Additional Shares
(subject to such adjustments as the Initial Purchasers may determine in order to
avoid fractional Depository Shares) that bears the same proportion to the
aggregate number of Additional Shares to be purchased by the Initial Purchasers
as the number of Firm Shares set forth opposite the name of such Initial
Purchaser on Schedule I hereto bears to the aggregate number of Firm Shares.

        
                                       3
<PAGE>
 
(b)   Delivery of, and payment of the purchase price for, the Firm
Shares shall be made, against payment of the purchase price, at the offices of
Latham & Watkins, 885 Third Avenue, New York, NY 10022, or such other location
as may be mutually acceptable. Such delivery and payment shall be made at 9:00
A.M. New York time, on October 30, 1997, or at such other time as shall be
agreed upon by the Initial Purchasers and the Company. The time and date of such
delivery and payment of the Firm Shares are herein called the "Closing Date."
                                                               ------------   

        (c)   Delivery of, and payment of the purchase price for any Additional
Shares to be purchased by the Initial Purchasers shall be made at the offices of
Latham & Watkins, 885 Third Avenue, New York, NY 10022, or such other location
as may be mutually acceptable, at such time and on such date (the "Option
                                                                   ------
Closing Date"), which may be the same as the Closing Date but shall in no event
- ------------
be earlier than the Closing Date nor later than ten business days after the
giving of the notice hereinafter referred to, as shall be specified in a written
notice from Bear, Stearns & Co. Inc., on behalf of the Initial Purchasers to
purchase a number, specified in such notice, of Additional Shares.

        (d)   The Firm Shares and any Additional Shares to be purchased
hereunder shall initially be issued in the form of one or more Global Securities
(the "Global Securities"), registered in the name of Cede & Co., as nominee of
      -----------------
the Depository Trust Company ("DTC"), having a liquidation preference
                               ---
corresponding to the aggregate liquidation preference of the Firm Shares and the
Additional Shares, as the case may be. The Global Securities shall be delivered
by the Company to the Initial Purchasers (or as the Initial Purchasers direct)
in each case with any transfer taxes payable upon initial issuance thereof duly
paid by the Company against payment of the purchase price by wire transfer of
immediately available funds to the order of the Company. The Global Securities
shall be made available to the Initial Purchasers for inspection not later than
9:30 a.m., New York City time, on the business day immediately preceding the
Closing Date.

        4.    Agreements of the Company. The Company covenants and agrees with
              -------------------------
each of the Initial Purchasers as follows:

              (a)  To advise the Initial Purchasers promptly and, if requested
by the Initial Purchasers, confirm such advice in writing, (i) of the issuance
by any state securities commission of any stop order suspending the
qualification or exemption from qualification of any of the Company Shares for
offering or sale in any jurisdiction, or the initiation of any proceeding for
such purpose by any state securities commission or other regulatory authority
and (ii) of the happening of any event that, in the reasonable opinion of either
counsel to the Company or counsel to the Initial Purchasers, makes any statement
of a material fact made in the Preliminary Offering Memorandum or the Offering
Memorandum untrue or that requires the making of any additions to or changes in
the Preliminary Offering Memorandum or the Offering Memorandum in order to make
the statements therein, in the light of the circumstances under which they are
made, not misleading. The Company shall use its best efforts to prevent the
issuance of any stop order or order suspending the qualification or exemption of
any of the Series E Preferred Stock (and the related Depositary Shares) under
any state securities or Blue Sky laws and, if at any time any state securities
commission or other regulatory authority shall issue an order suspending the
qualification or exemption of any of the Company Shares, under any state
securities or Blue Sky laws, the Company shall use its best efforts to obtain
the withdrawal or lifting of such order at the earliest possible time.

              
                                       4
<PAGE>
 
              (b)  To furnish the Initial Purchasers and those persons
identified by the Initial Purchasers to the Company, without charge, as many
copies of the Preliminary Offering Memorandum and the Offering Memorandum, and
any amendments or supplements thereto, as the Initial Purchasers may reasonably
request. The Company consents to the use of the Preliminary Offering Memorandum
and the Offering Memorandum, and any amendments and supplements thereto required
pursuant hereto, by the Initial Purchasers in connection with Exempt Resales.

              (c)  Not to amend or supplement the Preliminary Offering
Memorandum or the Offering Memorandum prior to the Closing Date unless the
Initial Purchasers shall previously have been advised thereof and shall not have
objected thereto within a reasonable time after being furnished a copy thereof.
The Company shall promptly prepare, upon the Initial Purchasers' request, any
amendment or supplement to the Preliminary Offering Memorandum or the Offering
Memorandum that may be necessary or advisable in connection with Exempt Resales.

              (d)  If, after the date hereof and prior to consummation of any
Exempt Resale, any event shall occur as a result of which, in the judgment of
the Company or in the reasonable opinion of either counsel to the Company or
counsel to the Initial Purchasers, it becomes necessary or advisable to amend or
supplement the Preliminary Offering Memorandum or Offering Memorandum in order
to make the statements therein, in the light of the circumstances when such
Offering Memorandum is delivered to an Eligible Purchaser which is a prospective
purchaser, not misleading, or if it is necessary or advisable to amend or
supplement the Preliminary Offering Memorandum or Offering Memorandum to comply
with applicable law, (i) to notify the Initial Purchasers and (ii) forthwith to
prepare an appropriate amendment or supplement to such Offering Memorandum so
that the statements therein as so amended or supplemented will not, in the light
of the circumstances when it is so delivered, be misleading, or so that such
Offering Memorandum will comply with applicable law.

              (e)  To cooperate with the Initial Purchasers and counsel to the
Initial Purchasers in connection with the qualification or registration of the
Company Shares under the securities or Blue Sky laws of such jurisdictions as
the Initial Purchasers may reasonably request and to continue such qualification
in effect so long as required for the Exempt Resales; provided, however, that
the Company shall not be required in connection therewith to register or qualify
as a foreign corporation where it is not now so qualified or to take any action
that would subject it to service of process in suits or taxation, in each case,
other than as to matters and transactions relating to the Preliminary Offering
Memorandum, the Offering Memorandum or Exempt Resales, in any jurisdiction where
it is not now so subject.

              (f)  Whether or not the transactions contemplated hereby are
consummated or this Agreement becomes effective or is terminated, to pay all
costs, expenses, fees and taxes incident to the performance of the obligations
of the Company hereunder, including in connection with: (i) the preparation,
printing, filing and distribution of the Preliminary Offering Memorandum and the
Offering Memorandum (including, without limitation, financial statements) and
all amendments and supplements thereto required pursuant hereto, (ii) the
preparation (including, without limitation, duplication costs) and delivery of
all preliminary and final Blue Sky memoranda prepared and delivered in
connection herewith and with the Exempt Resales, (iii) the issuance, transfer
and delivery by the Company of the Securities to the Initial Purchasers, (iv)
the qualification or registration of the Securities for offer and sale under the
securities or Blue Sky laws of the several states (including, without
limitation, the reasonable fees and disbursements of 
                                       5
<PAGE>
 
counsel to the Initial Purchasers relating thereto), (v) furnishing such copies
of the Preliminary Offering Memorandum and the Offering Memorandum, and all
amendments and supplements thereto, as may be requested for use in connection
with Exempt Resales, (vi) the preparation of certificates for the Securities
(including, without limitation, printing and engraving thereof), (vii) the fees,
disbursements and expenses of the Company's counsel and accountants, (viii) all
expenses and listing fees in connection with the application for quotation of
the Company Shares in the National Association of Securities Dealers, Inc.
("NASD") Automated Quotation System - PORTAL
                              ----
("PORTAL"), (ix) all fees and expenses (including fees and expenses of counsel
  ------
to the Company) of the Company in connection with the approval of the Securities
by DTC for "book-entry" transfer, (x) rating the Securities by rating agencies,
(xi) the reasonable fees and expenses of the Transfer Agent and its counsel in
connection with the Certificate of Designation, (xii) the performance by the
Company of its other obligations under this Agreement and the other Operative
Documents and (xiii) "roadshow" travel and other expenses incurred in connection
with the marketing and sale of the Securities (other than out-of-pocket expenses
incurred by the Initial Purchasers for travel, meals and lodgings).

              (g)    To use the proceeds from the sale of the Company Shares in
the manner described in the Offering Memorandum under the caption "Use of
Proceeds."

              (h)    To do and perform all things required to be done and
performed under this Agreement by it prior to or after the Closing Date and to
satisfy all conditions precedent on its part to the delivery of the Company
Shares.

              (i)    Not to sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Act) that
would be integrated with the sale of the Company Shares, in a manner that would
require the registration under the Act of the sale to the Initial Purchasers or
Eligible Purchasers of the Company Shares, or to take any other action that
would result in the Exempt Resales not being exempt from registration under the
Act.

              (j)    For so long as any of the Securities remain outstanding and
during any period in which the Company is not subject to Section 13 or 15(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), to make
                                                      ------------
available to any holder of the Company Shares, in connection with any sale
thereof and any prospective purchaser of such Company Shares from such holder,
the information required by Rule 144A(d)(4) under the Act.

              (k)    To comply with all of its agreements set forth in the
Registration Rights Agreement and all agreements set forth in the representation
letters of the Company to DTC relating to the approval of the Company Shares, by
DTC for "book-entry" transfer.

              (l)    To use its best efforts to effect the inclusion of the
Company Shares, in PORTAL and to obtain approval of the Company Shares, by DTC
for "book-entry" transfer.

              (m)    During a period of five years following the Closing Date,
to deliver without charge to each of the Initial Purchasers, as they may
reasonably request, promptly upon their becoming available, copies of (i) all
reports or other publicly available information that the Company shall mail or
otherwise make available to its stockholders and (ii) all reports, financial
statements and proxy or information statements filed by the Company with the
Commission or any national securities exchange and such other publicly available
information concerning the Company or its Subsidiaries, including without
limitation, press releases.

              
                                       6
<PAGE>
 
              (n)    Prior to the Closing Date, to furnish to each of the
Initial Purchasers, as soon as they have been publicly disclosed by the Company,
a copy of any consolidated financial statements and any unaudited interim
financial statements of the Company for any period subsequent to the period
covered by the financial statements appearing in the Offering Memorandum.

              (o)    Neither the Company nor any of its Subsidiaries will take,
directly or indirectly, any action designed to, or that might reasonably be
expected to, cause or result in stabilization or manipulation of the price of
any security of the Company to facilitate the sale or resale of the Company
Shares. Except as permitted by the Act, the Company will not distribute any
preliminary offering memorandum, offering memorandum or other offering material
in connection with the offering and sale of the Company Shares.

              (p)    To comply with the agreements in the Certificate of
Designation, the Indenture, the Registration Rights Agreement and any other
Operative Document.

              (q)    Not to engage in any directed selling efforts with respect
to the Company Shares within the meaning of Regulation S, and that the Company
and each person acting on behalf of the Company has complied and will comply
with the offering restrictions requirement of Regulation S.

              (r)    During the period of 90 days from the date of the Offering
Memorandum, the Company will not offer, sell, contract to sell, grant any option
to purchase, establish a put equivalent position (as defined in Rule 16a-1(h)
under the Exchange Act), pledge or otherwise dispose of, directly or indirectly,
any shares of Common Stock of the Company, or any securities that are
substantially similar to the Common Stock, including, but limited to any
securities that are convertible into or exercisable or exchangeable for, or that
represent the right to receive, Common Stock or any substantially similar
securities or publicly disclose the intention to make any such offer, sale,
pledge or disposal, without the prior written consent of Bear, Stearns & Co.
Inc. except (i) for private sales so long as the purchaser thereof enters into a
corresponding lockup agreement with Bear, Stearns & Co. Inc. for the then
unexpired portion of the 90-day period, (ii) for grants of employee stock
options, restricted stock and other incentive awards in the ordinary course of
business, issuances of Common Stock pursuant to the exercise of such options or
awards or the exercise of any other employee stock options outstanding on the
date hereof, (iii) issuances in connection with the acquisition by the Company
or any of its subsidiaries of Telecommunications Related Assets or a
Telecommunications Business and (iv) dividends on securities outstanding on the
Issue Date in accordance with the terms thereof or issuances in connection with
the exercise of any convertible securities, warrants or option securities
existing on the Issue Date or that are required to be issued pursuant to any
agreement in existence on the Issue Date.

       5.     Representations and Warranties. (a) The Company represents and
              ------------------------------
warrants to each of the Initial Purchasers that:

              (i)    The Preliminary Offering Memorandum and the Offering
Memorandum have been prepared in connection with the Exempt Resales. The
Preliminary Offering Memorandum and the Offering Memorandum do not, and any
supplement or amendment to them will not, contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances 
                                       7
<PAGE>
 
under which they were made, not misleading, except that the representations and
warranties contained in this paragraph shall not apply to statements in or
omissions from the Preliminary Offering Memorandum and the Offering Memorandum
(or any supplement or amendment thereto) made in reliance upon and in conformity
with information relating to the Initial Purchasers furnished to the Company in
writing by the Initial Purchasers expressly for use therein. No stop order
preventing the use of the Preliminary Offering Memorandum or the Offering
Memorandum, or any amendment or supplement thereto, or any order asserting that
any of the transactions contemplated by this Agreement are subject to the
registration requirements of the Act, has been issued.

              (ii)   When the Company Shares are issued and delivered pursuant
to this Agreement, neither the Series E Preferred Stock nor the Company Shares
will be of the same class (within the meaning of Rule 144A under the Act) as
securities of the Company that are listed on a national securities exchange
registered under Section 6 of the Exchange Act, or that are quoted in a United
States automated inter-dealer quotation system.

              (iii)  The Company and each of its Subsidiaries (A) has been duly
organized, is validly existing as a corporation in good standing under the laws
of its respective jurisdiction of incorporation, (B) has all requisite corporate
power and authority to carry on its business as it is currently being conducted
and as described in the Offering Memorandum and to own, lease and operate its
properties, and (C) is duly qualified and in good standing as a foreign
corporation authorized to do business in each jurisdiction in which the nature
of its business or its ownership or leasing of property requires such
qualification except, with respect to this clause (C), where the failure to be
so qualified or in good standing does not and could not reasonably be expected
to (x) individually or in the aggregate, result in a material adverse effect on
the properties, business, results of operations, condition (financial or
otherwise), affairs or prospects of the Company and the Subsidiaries, taken as a
whole, (y) interfere with or adversely affect the issuance or marketability of
the Securities pursuant hereto or (z) in any manner draw into question the
validity of this Agreement or any other Operative Document or the transactions
described in the Offering Memorandum under the caption "Use of Proceeds" (any of
the events set forth in clauses (x), (y) or (z), a "Material Adverse Effect").
                                                    -----------------------

              (iv)   All of the outstanding shares of capital stock of the
Company have been duly authorized, validly issued, and are fully paid and
nonassessable and were not issued in violation of any preemptive or similar
rights. At June 30, 1997 on a combined basis, after giving effect to the
issuance and sale of the Series E Preferred Stock (and the related Depositary
Shares) pursuant hereto, and to the offering of the Senior Notes due 2007 being
issued concurrently herewith and the events stated therein, the Company had an
authorized and outstanding consolidated capitalization as set forth in the
Offering Memorandum under the caption "Capitalization."
                 
              (v)    Except as set forth in the Offering Memorandum, there are
not currently, and will not be as a result of the Offering, any outstanding
subscriptions, rights, warrants, calls, commitments of sale or options to
acquire, or instruments convertible into or exchangeable for, any capital stock
or other equity interest of the Company or any Subsidiary.

              (vi)   The Company has all requisite corporate power and authority
to execute, deliver and perform its obligations under this Agreement and the
other Operative Documents, and to consummate the transactions contemplated
hereby and thereby, including, 
                                       8
<PAGE>
 
without limitation, the corporate power and authority to issue, sell and deliver
the Securities as provided herein and therein.
 
              (vii)  This Agreement has been duly and validly authorized,
executed and delivered by the Company and is the legal, valid and binding
agreement of the Company, enforceable against it in accordance with its terms,
except insofar as indemnification and contribution provisions may be limited by
applicable law or equitable principles and subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization or similar laws affecting the
rights of creditors generally and subject to general principles of equity.

              (viii) The shares of Series E Preferred Stock (and the related
Depositary Shares) have been duly and validly authorized for issuance and sale
to the Initial Purchasers by the Company pursuant to this Agreement and, when
issued, delivered and paid for in accordance with the terms of this Agreement,
will be validly issued, fully paid and non-assessable and entitled to the
rights, privileges and preferences set forth in the Certificate of Designation,
and the issuance of such shares of Series E Preferred Stock (and the related
Depositary Shares) will not be subject to any preemptive or similar rights. The
Series E Preferred Stock (and the related Depositary Shares) will conform in all
material respects with the description thereof in the Offering Memorandum.

              (ix)   The Certificate of Designation has been duly authorized by
all necessary corporate and any necessary stockholder action and, on the Closing
Date will have been duly executed by the Company and filed with the Secretary of
State of the State of Delaware and will conform in all material respects to the
description thereof in the Offering Memorandum.

              (x)    Each of the Registration Rights Agreement and the Deposit
Agreement has been duly and validly authorized by the Company and, when duly
executed and delivered by the Company, will be the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization or similar laws affecting the rights of creditors generally and
subject to general principles of equity and limitations on the validity or
enforceability of provisions relating to rights of indemnity and contribution
set forth therein. The Offering Memorandum contains a fair summary of the terms
of the Registration Rights Agreement and the Deposit Agreement.

              (xi)   None of the Company or any Subsidiary is and, after giving
effect to the Offering, will not be (A) in violation of its charter or bylaws,
(B) in default in the performance of any bond, debenture, note, indenture,
mortgage, deed of trust or other agreement or instrument to which it is a party
or by which it is bound or to which any of its properties is subject, or (C) in
violation of any local, state or Federal law, statute, ordinance, rule,
regulation, requirement, judgment or court decree (including, without
limitation, the Communications Act and the rules and regulations of the FCC and
environmental laws, statutes, ordinances, rules, regulations, judgments or court
decrees) applicable to the Company or any Subsidiary or any of their assets or
properties (whether owned or leased) other than, in the case of clauses (B) and
(C), any default or violation that (1) could not reasonably be expected to have
a Material Adverse Effect or (2) which was disclosed in the Offering Memorandum.
To the best knowledge of the Company, there exists no condition that, with
notice, the passage of time or otherwise, would constitute a default under any
such document or 
                                       9
<PAGE>
 
instrument that could reasonably be expected to result in a Material Adverse
Effect, except as disclosed in the Offering Memorandum.
 
              (xii)  None of (A) the execution, delivery or performance by the
Company of this Agreement and the other Operative Documents, (B) the issuance
and sale of the Series E Preferred Stock (and the related Depositary Shares),
(C) the performance by the Company of its obligations under this Agreement and
the other Operative Documents and (D) the consummation of the transactions
contemplated by this Agreement and the other Operative Documents violate,
conflict with or constitute a breach of any of the terms or provisions of, or a
default under (or an event that with notice or the lapse of time, or both, would
constitute a default), or require consent under, or result in the imposition of
a lien or encumbrance on any properties of the Company or any Subsidiary, or an
acceleration of any indebtedness of the Company or any Subsidiary pursuant to,
(i) the charter or bylaws of the Company or any Subsidiary, (ii) any bond,
debenture, note, indenture, mortgage, deed of trust or other agreement or
instrument to which the Company or any Subsidiary is a party or by which any of
them or their property is or may be bound, (iii) any statute, rule or regulation
applicable to the Company or any Subsidiary or any of their respective assets or
properties or (iv) any judgment, order or decree of any court or governmental
agency or authority having jurisdiction over the Company or the Subsidiaries or
any of their assets or properties, except in the case of clauses (ii), (iii) and
(iv) for such violations conflicts, breaches, defaults, consents, impositions of
liens or accelerations that (1) would not singly, or in the aggregate, have a
Material Adverse Effect or (2) were disclosed in the Offering Memorandum. Other
than as described in the Offering Memorandum, no consent, approval,
authorization or order of, or filing, registration, qualification, license or
permit of or with, (A) any court or governmental agency, body or administrative
agency (including, without limitation, the FCC) or (B) any other person is
required for (1) the execution, delivery and performance by the Company of this
Agreement and the other Operative Documents, or (2) the issuance and sale of the
Securities and the transactions contemplated hereby and thereby, except (x) such
as have been obtained and made (or, in the case of the Registration Rights
Agreement, will be obtained and made) under the Act, the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act") and state securities or Blue Sky
                       -------------------
laws and regulations or such as may be required by the NASD or (y) where the
failure to obtain any such consent, approval, authorization or order of, or
filing registration, qualification, license or permit would not reasonably be
expected to result in a Material Adverse Effect.

              (xiii) There is (i) no action, suit or proceeding before or by any
court, arbitrator or governmental agency, body or official, domestic or foreign,
now pending or, to the best knowledge of the Company or any Subsidiary,
threatened or contemplated to which the Company or any of the Subsidiaries is or
may be a party or to which the business or property of the Company or any
Subsidiary is subject, (ii) no statute, rule, regulation or order that has been
enacted, adopted or issued by any governmental agency or that has been proposed
by any governmental body or (iii) no injunction, restraining order or order of
any nature by a federal or state court or foreign court of competent
jurisdiction to which the Company or any Subsidiary is or may be subject or to
which the business, assets, or property of the Company or any Subsidiary are or
may be subject, that, in the case of clauses (i), (ii) and (iii) above, (x) is
required to be disclosed in the Preliminary Offering Memorandum and the Offering
Memorandum and that is not so disclosed, or (y) could reasonably be expected to
individually or in the aggregate, result in a Material Adverse Effect.

              
                                       10
<PAGE>
 
              (xiv)  No action has been taken and no statute, rule, regulation
or order has been enacted, adopted or issued by any governmental agency that
prevents the issuance of the Series E Preferred (and the related Depositary
Shares) or prevents or suspends the use of the 
 
Offering Memorandum; no injunction, restraining order or order of any nature by
a federal or state court of competent jurisdiction has been issued that prevents
the issuance of the Series E Preferred Stock (and the related Depositary Shares)
or prevents or suspends the sale of the Series E Preferred Stock (and the
related Depositary Shares) in any jurisdiction referred to in Section 4(e)
hereof; and every request of any securities authority or agency of any
jurisdiction for additional information has been complied with in all material
respects.

              (xv)   Except as set forth in the Offering Memorandum, there is
(i) no significant unfair labor practice complaint pending against the Company
or any Subsidiary nor, to the best knowledge of the Company, threatened against
any of them, before the National Labor Relations Board, any state or local labor
relations board or any foreign labor relations board, and no significant
grievance or significant arbitration proceeding arising out of or under any
collective bargaining agreement is so pending against the Company or any
Subsidiary or, to the best knowledge of the Company, threatened against any of
them, (ii) no significant strike, labor dispute, slowdown or stoppage pending
against the Company or any Subsidiary nor, to the best knowledge of the Company,
threatened against the Company or any Subsidiary and (iii) to the best knowledge
of the Company, no union representation question existing with respect to the
employees of the Company or any Subsidiary that, in the case of clauses (i),
(ii) or (iii), could reasonably be expected to result in a Material Adverse
Effect. To the best knowledge of the Company, no collective bargaining
organizing activities are taking place with respect to the Company and the
Subsidiaries that could reasonably be expected to result in a Material Adverse
Effect. None of the Company or any Subsidiary has violated (A) any federal,
state or local law or foreign law relating to discrimination in hiring,
promotion or pay of employees (except as set forth in the Offering Memorandum),
(B) any applicable wage or hour laws or (C) any provision of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or the rules and
                                                     -----
regulations thereunder, which in the case of clause (A), (B) or (C) above could
reasonably be expected to result in a Material Adverse Effect.

              (xvi)  None of the Company or any Subsidiary has violated any
environmental, safety or similar law or regulation applicable to it or its
business or property relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), lacks any permit, license or other approval
               ------------------
required of it under applicable Environmental Laws or is violating any term or
condition of such permit, license or approval which could reasonably be expected
to, either individually or in the aggregate, have a Material Adverse Effect.

              (xvii)  Each of the Company and the Subsidiaries has (i) good and
marketable title to all of the properties and assets described in the Offering
Memorandum as owned by it, free and clear of all liens, charges, encumbrances
and restrictions, (ii) peaceful and undisturbed possession under all material
leases to which any of them is a party as lessee, (iii) all licenses,
certificates, permits, authorizations, approvals, franchises and other rights
from, and has made all declarations and filings with, all federal, state and
local authorities (including, without limitation, the FCC), all self-regulatory
authorities and all courts and other tribunals (each an "Authorization")
                                                         -------------
necessary to engage in the business conducted by any of them in the manner
described in the Offering Memorandum and (iv) no reason to believe that any
governmental body or agency is considering limiting, suspending or revoking any
such Authorization, except 
                                       11
<PAGE>
 
with respect to clauses (i) through (iv) as described in the Offering Memorandum
or as could not reasonably be expected to result in a Material Adverse Effect.
Except where the failure to be in full force and effect would not have a
Material Adverse Effect, all such Authorizations are valid and in full force and
effect and each of the Company and the Subsidiaries is in compliance in all
material respects with the terms and conditions of all such Authorizations and
with the rules and regulations of the regulatory authorities having jurisdiction
with respect thereto. Except as could not reasonably be expected to result in a
Material Adverse Effect, all material leases to which the Company and the
Subsidiaries is a party are valid and binding and no default by the Company or
any Subsidiary has occurred and is continuing thereunder and, to the best
knowledge of the Company and the Subsidiaries no material defaults by the
landlord are existing under any such lease.

              (xviii)  Except as could not reasonably be expected to result in a
Material Adverse Effect, each of the Company and the Subsidiaries owns,
possesses or has the right to employ all patents, patent rights, licenses
(including all FCC, state, local or other jurisdictional regulatory licenses),
inventions, copyrights, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, software, systems
or procedures), trademarks, service marks and trade names, inventions, computer
programs, technical data and information (collectively, the "Intellectual
                                                             ------------
Property") presently employed by it or its Subsidiaries in connection with the
- --------
businesses now operated by it or which are proposed to be operated by it or its
Subsidiaries free and clear of and without violating any right, claimed right,
charge, encumbrance, pledge, security interest, restriction or lien of any kind
of any other person and none of the Company or any Subsidiary has received any
notice of infringement of or conflict with asserted rights of others with
respect to any of the foregoing. The use of the Intellectual Property in
connection with the business and operations of the Company and the Subsidiaries
does not infringe on the rights of any person, except as could not reasonably be
expected to have a Material Adverse Effect.

              (xix)  None of the Company or any Subsidiary, or to the best
knowledge of the Company, any of their respective officers, directors, partners,
employees, agents or affiliates or any other person acting on behalf of the
Company or any Subsidiary has, directly or indirectly, given or agreed to give
any money, gift or similar benefit (other than legal price concessions to
customers in the ordinary course of business) to any customer, supplier,
employee or agent of a customer or supplier, official or employee of any
governmental agency (domestic or foreign), instrumentality of any government
(domestic or foreign) or any political party or candidate for office (domestic
or foreign) or other person who was, is or may be in a position to help or
hinder the business of the Company or any Subsidiary (or assist the Company or
any Subsidiary in connection with any actual or proposed transaction) which (i)
might subject the Company or any Subsidiary, or any other individual or entity
to any damage or penalty in any civil, criminal or governmental litigation or
proceeding (domestic or foreign), (ii) if not given in the past, might have had
a material adverse effect on the assets, business or operations of the Company
or any Subsidiary or (iii) if not continued in the future, might have a Material
Adverse Effect.

              (xx)   All material tax returns required to be filed by the
Company and each of the Subsidiaries in all jurisdictions have been so filed.
All taxes, including withholding taxes, penalties and interest, assessments,
fees and other charges due or claimed to be due from such entities or that are
due and payable have been paid, other than those being contested in good faith
and for which adequate reserves have been provided or those currently payable

                                       12
<PAGE>
 
without penalty or interest. To the knowledge of the Company, there are no
material proposed additional tax assessments against the Company, the assets or
property of the Company or any Subsidiary.
 
              (xxi)  None of the Company or any Subsidiary is (i) an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended, or (ii) a "holding company"
or a "subsidiary company" or an "affiliate" of a holding company within the
meaning of the Public Utility Holding Company Act of 1935, as amended.

              (xxii) Except as disclosed in the Offering Memorandum, and except
with respect to the holders of certain shares of Common Stock issued pursuant to
an Asset Acquisition Agreement dated as of December 6, 1996 among Universal
Telecom, Inc., Intermedia Communications, Inc. and certain individuals, there
are no holders of securities of the Company or the Subsidiaries who, by reason
of the execution by the Company of this Agreement or any other Operative
Document to which it is a party or the consummation by the Company of the
transactions contemplated hereby and thereby, have the right to request or
demand that the Company or any of the Subsidiaries register under the Act or
analogous foreign laws and regulations securities held by them.

              (xxiii) Each of the Company and the Subsidiaries maintains a
system of internal accounting controls sufficient to provide reasonable
assurance that: (i) transactions are executed in accordance with management's
general or specific authorizations; (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets; (iii)
access to assets is permitted only in accordance with management's general or
specific authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect thereto.

              (xxiv)  Each of the Company and the Subsidiaries maintains
insurance covering its properties, operations, personnel and businesses. Such
insurance insures against such losses and risks as are adequate in accordance
with customary industry practice to protect the Company and the Subsidiaries and
their respective businesses. None of the Company or any Subsidiary has received
notice from any insurer or agent of such insurer that substantial capital
improvements or other expenditures will have to be made in order to continue
such insurance. All such insurance is outstanding and duly in force on the date
hereof, subject only to changes made in the ordinary course of business,
consistent with past practice, which do not, singly or in the aggregate,
materially alter the coverage thereunder or the risks covered thereby.

              (xxv)  None of the Company or any Subsidiary has (i) taken,
directly or indirectly, any action designed to, or that might reasonably be
expected to, cause or result in stabilization or manipulation of the price of
any security of the Company to facilitate the sale or resale of the Securities
or (ii) since the date of the Preliminary Offering Memorandum (A) sold, bid for,
purchased or paid any person (other than the Initial Purchasers) any
compensation for soliciting purchases of the Series E Preferred Stock (and the
related Depositary Shares) or (B) paid or agreed to pay to any person any
compensation for soliciting another to purchase any other securities of the
Company.

              
                                       13
<PAGE>
 
              (xxvi)  No registration under the Act of the Series E Preferred
Stock (and the related Depositary Shares) is required for the sale of the Series
E Preferred Stock (and the related Depositary Shares) to the Initial Purchasers
as contemplated hereby or for the Exempt Resales assuming (i) that the
purchasers who buy the Series E Preferred Stock (and the related Depositary
Shares) in the Exempt Resales are Eligible Purchasers and (ii) the accuracy of
the Initial Purchasers' representations regarding the absence of general
solicitation in connection with the sale of Series E Preferred Stock (and the
related Depositary Shares) to the Initial Purchasers and the Exempt Resales
contained herein. No form of general solicitation or general advertising was
used by the Company or any of its representatives (other than the Initial
Purchasers, as to which the Company makes no representation or warranty) in
connection with the offer and sale of any of the Series E Preferred Stock (and
the related Depositary Shares) or in connection with Exempt Resales, including,
but not limited to, articles, notices or other communications published in any
newspaper, magazine, or similar medium or broadcast over television or radio, or
any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising.

              (xxvii)   Set forth on Exhibit A hereto is a list of each employee
                                     ---------
pension or benefit plan with respect to which the Company or any corporation
considered an affiliate of the Company within the meaning of Section 407(d)(7)
of ERISA is a party in interest or disqualified person. The execution and
delivery of this Agreement, the other Operative Documents and the sale of the
Series E Preferred Stock (and the related Depositary Shares) to be purchased by
the Eligible Purchasers will not involve any prohibited transaction within the
meaning of Section 406 of ERISA or Section 4975 of the Internal Revenue Code of
1986. The representation made by the Company in the preceding sentence is made
in reliance upon and subject to the accuracy of, and compliance with, the
representations and covenants made or deemed made by the Eligible Purchasers as
set forth in the Offering Memorandum under the caption "Notice to Investors."

              (xxviii)  Each of the Preliminary Offering Memorandum and the
Offering Memorandum, as of its date, and each amendment or supplement thereto,
as of its date, contains the information specified in, and meets the
requirements of, Rule 144A(d)(4) under the Act.

              (xxix)    Subsequent to the respective dates as of which
information is given in the Offering Memorandum and up to the Closing Date,
except as set forth in the Offering Memorandum, (i) none of the Company or any
Subsidiary has incurred any liabilities or obligations, direct or contingent,
which are material, individually or in the aggregate, to the Company and the
Subsidiaries taken as a whole, nor entered into any transaction not in the
ordinary course of business, (ii) there has not been, singly or in the
aggregate, any change or development, which could reasonably be expected to
result in a Material Adverse Effect and (iii) there has been no dividend or
distribution of any kind declared, paid or made by the Company on any class of
its capital stock, except for dividends paid in respect of the Series B
Preferred Stock or the Series D Junior Convertible Preferred Stock.

              (xxx)     None of the Company or any Subsidiary or any agent
thereof acting on behalf of them has taken, and none of them will take, any
action that might cause this Agreement or the issuance or sale of the Securities
to violate Regulation G (12 C.F.R. Part 207), Regulation T (12 C.F.R. Part 220),
Regulation U (12 C.F.R. Part 221) or Regulation X 

              
                                       14
<PAGE>
 
(12 C.F.R. Part 224) of the Board of Governors of the Federal Reserve System or
analogous foreign laws and regulations.

              (xxxi)    To the best knowledge of the Company, the accountants
who have certified or will certify the financial statements included or to be
included as part of the Offering Memorandum are independent accountants. The
consolidated historical financial statements, together with related schedules
and notes, set forth in the Offering Memorandum comply as to form in all
material respects with the requirements applicable to registration statements on
Form S-1 under the Act and present fairly in all material respects the financial
position and results of operations of the Company and the Subsidiaries at the
respective dates and for the respective periods indicated. Such financial
statements have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods presented. The
pro forma financial statements included in the Offering Memorandum have been
prepared on a basis consistent with such historical statements, except for the
pro forma adjustments specified therein, and give effect to assumptions made on
a reasonable basis and present fairly in all material respects the historical
and proposed transactions contemplated by this Agreement and the other Operative
Documents; and such pro forma financial statements comply as to form in all
material respects with the requirements applicable to pro forma financial
statements included in registration statements on Form S-1 under the Act. The
other financial and statistical information and data included in the Offering
Memorandum, historical and pro forma, are accurately presented in all material
respects and prepared on a basis consistent with the financial statements,
historical and pro forma, included in the Offering Memorandum and the books and
records of the Company and the Subsidiaries, as applicable.

              (xxxii) The Company does not intend to, nor does it believe that
it will, incur debts beyond its ability to pay such debts as they mature. The
present fair saleable value of the assets of the Company on a consolidated basis
exceeds the amount that will be required to be paid on or in respect of the
existing debts and other liabilities (including contingent liabilities) of the
Company on a consolidated basis as they become absolute and matured. The assets
of the Company on a consolidated basis do not constitute unreasonably small
capital to carry out the business of the Company and the Subsidiaries, taken as
a whole, as conducted or as proposed to be conducted. Upon the issuance of the
Series E Preferred Stock (and the related Depositary Shares), the present fair
saleable value of the assets of the Company on a consolidated basis will exceed
the amount that will be required to be paid on or in respect of the existing
debts and other liabilities (including contingent liabilities) of the Company on
a consolidated basis as they become absolute and matured. Upon the issuance of
the Series E Preferred Stock (and the related Depositary Shares), the assets of
the Company on a consolidated basis will not constitute unreasonably small
capital to carry out its businesses as now conducted, including the capital
needs of the Company on a consolidated basis, taking into account the projected
capital requirements and capital availability.

              (xxxiii) Except pursuant to this Agreement, there are no
contracts, agreements or understandings between the Company and any other person
that would give rise to a valid claim against the Company or either of the
Initial Purchasers for a brokerage commission, finder's fee or like payment in
connection with the issuance, purchase and sale of the Securities.

              
                                       15
<PAGE>
 
              (xxxiv) Each certificate signed by any officer of the Company and
delivered to the Initial Purchasers or counsel for the Initial Purchasers shall
be deemed to be a representation and warranty by the Company to the Initial
Purchasers as to the matters covered thereby.

              (xxxv) None of the Company, its Subsidiaries or any of its or
their affiliates or any person acting on its or their behalf has engaged or will
engage in any directed selling efforts within the meaning of Regulation S with
respect to the Company Shares, and the Company, its Subsidiaries and its or
their affiliates and all persons acting on its or their behalf have complied
with and will comply with the offering restrictions requirements of Regulation S
in connection with the offering of the Company Shares outside the United States.

              The Company acknowledges that each of the Initial Purchasers and,
for purposes of the opinions to be delivered to the Initial Purchasers pursuant
to Section 8 hereof, counsel to the Company and counsel to the Initial
Purchasers, will rely upon the accuracy and truth of the foregoing
representations and hereby consents to such reliance.

              (b)    Each of the Initial Purchasers, severally and not jointly,
represents, warrants and covenants to the Company and agrees that:

              (i)    Such Initial Purchaser is a QIB, with such knowledge and
experience in financial and business matters as are necessary in order to
evaluate the merits and risks of an investment in the Company Shares.

              (ii)   Such Initial Purchaser (A) is not acquiring the Company
Shares with a view to any distribution thereof that would violate the Act or the
securities laws of any state of the United States or any other applicable
jurisdiction and (B) will be reoffering and reselling the Company Shares only to
QIBs in reliance on the exemption from the registration requirements of the Act
provided by Rule 144A, to Accredited Investors in a private placement exempt
from the registration requirements of the Act and pursuant to offers and sales
that occur outside the United States in reliance upon the exemption from the
registration requirements of the Act provided by Regulation S.

              (iii)  No form of general solicitation or general advertising has
been or will be used by either of the Initial Purchasers or any of their
representatives in connection with the offer and sale of any of the Company
Shares, including, but not limited to, articles, notices or other communications
published in any newspaper, magazine, or similar medium or broadcast over
television or radio, or any seminar or meeting whose attendees have been invited
by any general solicitation or general advertising.

              (iv)   Each of the Initial Purchasers agrees that, in connection
with the Exempt Resales, it will solicit offers to buy the Company Shares, only
from, and will offer to sell the Company Shares, only to, Eligible Purchasers.
The Initial Purchasers further agree (A) that they will offer to sell the
Company Shares, only to, and will solicit offers to buy the Company Shares, only
from (1) QIBs who in purchasing such Company Shares will be deemed to have
represented and agreed that they are purchasing the Company Shares, for their
own accounts or accounts with respect to which they exercise sole investment
discretion and that they or such accounts are QIBs, (2) Accredited Investors who
make the representations contained in, and execute and return to one of the
Initial Purchasers, a certificate in the form 
                                       16
<PAGE>
 
of Annex B attached to the Offering Memorandum and (3) pursuant to offers and
sales that occur outside the United States within the meaning of Regulation S
under the Securities Act and (B) that such Eligible Purchasers acknowledge and
agree that such Company Shares will not have been registered under the Act and
may be resold, pledged or otherwise transferred only (i) to the Company, (ii)
pursuant to a registration statement which has been declared effective under the
Securities Act, (iii) to a person it reasonably believes is a QIB in a
transaction meeting the requirements of Rule 144A under the Securities Act, (iv)
pursuant to offers and sales to non-U.S. persons that occur outside the United
States in a transaction meeting the requirements of Rule 904 of Regulation S
under the Securities Act, (v) to an institutional "accredited investor" (as
defined in Rule 501(a) (1), (2), (3) or (7) of Regulation D under the Securities
Act (an "IAI") that, prior to such transfer, furnishes to the trustee a signed
letter containing certain representations and agreements relating to the
transfer of the Securities (the form of which letter can be obtained from the
Trustee) or (vi) pursuant to any other available exemption from the registration
requirements of the Securities Act (and based on an opinion of counsel if the
Company so requests), subject in each of the foregoing cases to the applicable
state securities laws of any State of the United States or any other applicable
jurisdiction and (C) that the holder will, and each subsequent holder is
required to, notify any purchaser of the security evidenced thereby of the
resale restrictions set forth in (B) above. Accordingly, each of the Initial
Purchasers agrees that neither it, its affiliates nor any persons acting on its
behalf has engaged or will engage in any directed selling efforts within the
meaning of Rule 902 of Regulation S with respect to the Company Shares, and it,
its affiliates and all persons acting on its or their behalf have complied and
will comply with the offering restrictions requirements of Regulation S.

              (v)    Each of the Initial Purchasers represents and agrees that
the Company Shares offered and sold in reliance on Regulation S have been and
will be offered and sold only in offshore transactions and that such securities
have been and will be represented upon issuance by a global security that may be
exchanged for definitive securities only upon certification of beneficial
ownership of the securities by a non-U.S. person or a U.S. person who purchases
such securities in a transaction that was exempt from the registration
requirements of the Securities Act.

              (vi)   Each of the Initial Purchasers understands that the Company
and, for purposes of the opinions to be delivered to the Initial Purchasers
pursuant to Section 8 hereof, counsel to the Company and counsel to the Initial
Purchasers will rely upon the accuracy and truth of the foregoing
representations and hereby consents to such reliance.

       Terms used in this Section 5 that have meanings assigned to them in
Regulation S are used herein as so defined.

       6.     Indemnification.
              ---------------

              (a)    The Company agrees to indemnify and hold harmless (i) each
of the Initial Purchasers, (ii) each person, if any, who controls any of the
Initial Purchasers within the meaning of Section 15 of the Act or Section 20(a)
of the Exchange Act and (iii) the respective officers, directors, partners,
employees, representatives and agents of any of the Initial Purchasers or any
controlling person to the fullest extent lawful, from and against any and all
losses, liabilities, claims, damages and expenses whatsoever (including but not
limited to attorneys' fees and any and all expenses whatsoever incurred in
investigating, preparing or defending against any 
                                       17
<PAGE>
 
investigation or litigation, commenced or threatened, or any claim whatsoever,
and any and all amounts paid in settlement of any claim or litigation), joint or
several, to which they or any of them may become subject under the Act, the
Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages
or expenses (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in the
Preliminary Offering Memorandum or the Offering Memorandum, or in any supplement
thereto or amendment thereof, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that the Company
will not be liable in any such case to the extent, but only to the extent, that
(i) any such loss, liability, claim, damage or expense arises out of or is based
upon any such untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of the Initial Purchasers
expressly for use therein and (ii) the foregoing indemnity with respect to any
untrue statement contained in or omitted from a preliminary offering memorandum
shall not inure to the benefit of any Initial Purchaser (or any person
controlling such Initial Purchaser), from whom the person asserting any such
loss, liability, claim, damage or expense purchased any of the Company Shares,
which are the subject thereof if it is finally judicially determined that such
loss, liability, claim, damage or expense resulted solely from the fact that the
Initial Purchaser sold the Company Shares, to a person to whom there was not
sent or given, at or prior to the written confirmation of such sale, a copy of
the Offering Memorandum, as amended or supplemented, and (x) the Company shall
have previously and timely furnished sufficient copies of the Offering
Memorandum, as so amended or supplemented, to such Initial Purchaser in
accordance with this Agreement and (y) the Offering Memorandum, as so amended or
supplemented, would have corrected such untrue statement or omission of a
material fact. This indemnity agreement will be in addition to any liability
which the Company may otherwise have, including, under this Agreement.

              (b)    Each Initial Purchaser, severally and not jointly, agrees
to indemnify and hold harmless the Company and each person, if any, who controls
the Company within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, against any losses, liabilities, claims, damages and expenses
whatsoever (including but not limited to attorneys' fees and any and all
expenses whatsoever incurred in investigating, preparing or defending against
any investigation or litigation, commenced or threatened, or any claim
whatsoever and any and all amounts paid in settlement of any claim or
litigation), joint or several, to which they or any of them may become subject
under the Act, the Exchange Act or otherwise, insofar as such losses,
liabilities, claims, damages or expenses (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Preliminary Offering Memorandum or the Offering
Memorandum, or in any amendment thereof or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading, in
each case to the extent, but only to the extent, that any such loss, liability,
claim, damage or expense arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made therein in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of any Initial Purchaser expressly for use therein;
provided, however, that in no case shall any Initial Purchaser be liable or
responsible for any amount in excess of the discounts and commissions received
by such Initial Purchaser, as set forth on the cover page of 
                                       18
<PAGE>
 
the Offering Memorandum. This indemnity agreement will be in addition to any
liability which any Initial Purchaser may otherwise have, including, under this
Agreement.

              (c)    Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 6 except to the extent that it
has been prejudiced in any material respect by such failure or from any
liability which it may otherwise have). In case any such action is brought
against any indemnified party, and it notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. Notwithstanding the foregoing, the
indemnified party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by one of the indemnifying
parties in connection with the defense of such action, (ii) the indemnifying
parties shall not have employed counsel to take charge of the defense of such
action within a reasonable time after notice of commencement of the action, or
(iii) such indemnified party or parties shall have reasonably concluded that
there may be defenses available to it or them which are different from or
additional to those available to one or all of the indemnifying parties (in
which case the indemnifying party or parties shall not have the right to direct
the defense of such action on behalf of the indemnified party or parties), in
any of which events such fees and expenses of counsel shall be borne by the
indemnifying parties; provided, however, that the indemnifying party under
subsection (a) or (b) above, shall only be liable for the legal expenses of one
counsel (in addition to any local counsel) for all indemnified parties in each
jurisdiction in which any claim or action is brought. Anything in this
subsection to the contrary notwithstanding, an indemnifying party shall not be
liable for any settlement of any claim or action effected without its written
consent; provided, however, that such consent was not unreasonably withheld.

       7.     Contribution. In order to provide for contribution in
              ------------
circumstances in which the indemnification provided for in Section 6 is for any
reason held to be unavailable from the Company or is insufficient to hold
harmless a party indemnified thereunder, the Company and the Initial Purchasers
shall contribute to the aggregate losses, claims, damages, liabilities and
expenses of the nature contemplated by such indemnification provision (including
any investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claims
asserted, but after deducting in the case of losses, claims, damages,
liabilities and expenses suffered by the Company, any contribution received by
the Company from persons, other than the Initial Purchasers, who may also be
liable for contribution, including persons who control the Company within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act) to which
the Company and one or more of the Initial Purchasers may be subject, in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Initial Purchasers from the offering of the Company Shares, or,
if such allocation is not permitted by applicable law or indemnification is not
available as a result of the indemnifying party not having received notice as
provided in Section 6, in such proportion as is appropriate to reflect not only
the relative benefits referred to above but also the relative fault of the
Company and the Initial Purchasers in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant 

                                       19
<PAGE>
 
equitable considerations. The relative benefits received by the Company and the
Initial Purchasers shall be deemed to be in the same proportion as (x) the total
proceeds from the offering of Company Shares, (net of discounts but before
deducting expenses) received by the Company and (y) the discounts received by
the Initial Purchasers, respectively, in each case as set forth in the table on
the cover page of the Offering Memorandum. The relative fault of the Company and
of the Initial Purchasers shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Initial Purchasers and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company and the Initial Purchasers agree that it
would not be just and equitable if contribution pursuant to this Section 7 were
determined by pro rata allocation or by any other method of allocation which
does not take into account the equitable considerations referred to above.
Notwithstanding the provisions of this Section 7, (i) in no case shall any of
the Initial Purchasers be required to contribute any amount in excess of the
amount by which the discount applicable to the Company Shares, purchased by such
Initial Purchaser pursuant to this Agreement exceeds the amount of any damages
which such Initial Purchaser has otherwise been required to pay by reason of any
untrue or alleged untrue statement or omission or alleged omission and (ii) no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section 7, (A)
each person, if any, who controls any of the Initial Purchasers within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act and (B)
the respective officers, directors, partners, employees, representatives and
agents of any of the Initial Purchasers or any controlling person shall have the
same rights to contribution as such Initial Purchaser, and each person, if any,
who controls the Company within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act shall have the same rights to contribution as the
Company, subject in each case to clauses (i) and (ii) of this Section 7. Any
party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim for contribution may be made against another party or parties
under this Section 7, notify such party or parties from whom contribution may be
sought, but the failure to so notify such party or parties shall not relieve the
party or parties from whom contribution may be sought from any obligation it or
they may have under this Section 7 or otherwise. No party shall be liable for
contribution with respect to any action or claim settled without its prior
written consent; provided, however, that such written consent was not
unreasonably withheld.

       8.     Conditions of Initial Purchasers' Obligations. The several
              ---------------------------------------------
obligations of the Initial Purchasers to purchase and pay for the Firm Shares
and the Additional Shares, as provided herein, shall be subject to the
satisfaction of the following conditions, except that with respect to the
Additional Shares, references to the Closing Date shall mean the Option Closing
Date:

              (a)    All of the representations and warranties of the Company
contained in this Agreement shall be true and correct on the date hereof and on
the Closing Date with the same force and effect as if made on and as of the date
hereof and the Closing Date, respectively. The Company shall have performed or
complied in all material respects with all of the agreements herein contained
and required to be performed or complied with by it at or prior to the Closing
Date.

              (b)    The Offering Memorandum shall have been printed and copies
distributed to the Initial Purchasers not later than 10:00 a.m., New York City
time, on the day following the date of this Agreement or at such later date and
time as to which the Initial Purchasers may agree, and no stop order suspending
the qualification or exemption from qualification of the Company Shares in any
jurisdiction referred to in Section 4(e) shall have been issued and no
proceeding for that purpose shall have been commenced or shall be pending or
threatened.

              (c)    No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any
governmental agency which would, as of the 

                                       20
<PAGE>
 
Closing Date prevent the issuance of the Company Shares; no action, suit or
proceeding shall have been commenced and be pending against or affecting or, to
the best knowledge of the Company, threatened against, the Company or the
Subsidiaries before any court or arbitrator or any governmental body, agency or
official that (1) could reasonably be expected to result in a Material Adverse
Effect or (2) has not been disclosed in the Offering Memorandum; and no stop
order shall have been issued preventing the use of the Offering Memorandum, or
any amendment or supplement thereto, or which could reasonably be expected to
have a Material Adverse Effect.

              (d)    Since the dates as of which information is given in the
Offering Memorandum and except as contemplated by the Offering Memorandum, (i)
there shall not have been any material adverse change, or any development that
is reasonably likely to result in a material adverse change, in the capital
stock or the long-term debt, or material increase in the short-term debt, of the
Company and the Subsidiaries from that set forth in the Offering Memorandum,
(ii) no dividend or distribution of any kind shall have been declared, paid or
made by the Company or any Subsidiary (other than any dividends or distributions
paid to the Company) on any class of its capital stock, except for regular
dividends paid in respect of the Series B Preferred Stock or Series D Preferred
Stock and (iii) neither the Company nor any Subsidiary shall have incurred any
liabilities or obligations, direct or contingent, that are material,
individually or in the aggregate, to the Company and the Subsidiaries, taken as
a whole, and that are required to be disclosed on a balance sheet or notes
thereto in accordance with generally accepted accounting principles and are not
disclosed on the latest balance sheet or notes thereto included in the Offering
Memorandum. Since the date hereof and since the dates as of which information is
given in the Offering Memorandum, there shall not have occurred any material
adverse change, or any development which may reasonably be expected to involve a
material adverse change, in the properties, business, results of operations,
condition (financial or otherwise), affairs or prospects of the Company and the
Subsidiaries taken as a whole.

              (e)    The Initial Purchasers shall have received a certificate,
dated the Closing Date, signed on behalf of the Company by (i) David C. Ruberg,
Chairman of the Board, President and Chief Executive Officer and (ii) Robert M.
Manning, Senior Vice President and Chief Financial Officer, in form and
substance reasonably satisfactory to the Initial Purchasers, confirming, as of
the Closing Date, the matters set forth in paragraphs (a), (b), (c) and (d) of
this Section 8 and that, as of the Closing Date, the obligations of the Company
to be performed hereunder on or prior thereto have been duly performed in all
material respects.

              (f)    The Initial Purchasers shall have received on the Closing
Date an opinion, dated the Closing Date, in form and substance satisfactory to
the Initial Purchasers and counsel to the Initial Purchasers, of Kronish, Lieb,
counsel for the Company, to the effect set forth in Exhibit B hereto.
                                                    ---------

              (g)    The Initial Purchasers shall have received on the Closing
Date an opinion, dated the Closing Date, in form and substance satisfactory to
the Initial Purchasers and counsel to the Initial Purchasers, of Kelley Drye &
Warren LLP, special regulatory counsel to the Company, to the effect set forth
in Exhibit C hereto.
   ---------

              (h)    The Initial Purchasers shall have received an opinion,
dated the Closing Date, in form and substance reasonably satisfactory to the
Initial Purchasers, of Latham & Watkins, counsel to the Initial Purchasers,
covering such matters as are customarily covered in such opinions.

                                       21
<PAGE>
 
              (i)    At the time this Agreement is executed and at the Closing
Date the Initial Purchasers shall have received from Ernst & Young LLP,
independent public accountants for the Company, dated as of the date of this
Agreement and as of the Closing Date, customary comfort letters addressed to the
Initial Purchasers and in form and substance satisfactory to the Initial
Purchasers and counsel to the Initial Purchasers with respect to the financial
statements and certain financial information of the Company contained in the
Offering Memorandum.

              (j)    Latham & Watkins shall have been furnished with such
documents, in addition to those set forth above, as they may reasonably require
for the purpose of enabling them to review or pass upon the matters referred to
in this Section 8 and in order to evidence the accuracy, completeness or
satisfaction in all material respects of any of the representations, warranties
or conditions herein contained.

              (k)    Prior to the Closing Date, the Company and the Subsidiaries
shall have furnished to the Initial Purchasers such further information,
certificates and documents as the Initial Purchasers may reasonably request.

              (l)    The Company shall have authorized, executed and filed the
Certificate of Designation in accordance with Delaware law and each of the
Initial Purchasers shall have received an original, duly executed by the
Company.

              (m)    The Company shall have entered into each of the
Registration Rights Agreement and the Deposit Agreement and the Initial
Purchasers shall have received counterparts, conformed as executed, thereof.

              (n)    The Company shall have deposited the Series E Preferred
Stock with the Depositary.

              (o)    At or prior to the Closing Date, all FCC or state approvals
required in connection with the Offering shall have been obtained or
applications for such approvals submitted or prepared for submission promptly
following the Closing Date and the Company shall have delivered to the Initial
Purchasers evidence satisfactory to the Initial Purchasers that such FCC or
state approvals have been obtained or applications thereof have been made or
prepared for submission promptly following the Closing Date.

           All opinions, certificates, letters and other documents required by
this Section 8 to be delivered by the Company will be in compliance with the
provisions hereof only if they are reasonably satisfactory in form and substance
to the Initial Purchasers. The Company will furnish the Initial Purchasers with
such conformed copies of such opinions, certificates, letters and other
documents as it shall reasonably request.


                                       22
<PAGE>
 
           9. Initial Purchasers' Information. The Company and the Initial
              -------------------------------
Purchasers severally acknowledge that the statements with respect to the
offering of the Series E Preferred Stock (and the related Depositary Shares) set
forth in the last paragraph of the cover page and the third, eighth, eleventh
and twelfth paragraphs under the caption "Plan of Distribution" in such Offering
Memorandum constitute the only information furnished in writing by the Initial
Purchasers expressly for use in the Offering Memorandum.
 
       10.    Survival of Representations and Agreements. All representations
              ------------------------------------------
and warranties, covenants and agreements of the Initial Purchasers and the
Company contained in this Agreement, including the agreements contained in
Sections 4(f) and 11(d), the indemnity agreements contained in Section 6 and the
contribution agreements contained in Section 7, shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
the Initial Purchasers or any controlling person thereof or by or on behalf of
the Company or any controlling person thereof, and shall survive delivery of and
payment for the Series E Preferred Stock (and the related Depositary Shares) to
and by the Initial Purchasers. The representations contained in Section 5 and
the agreements contained in Sections 4(f), 6, 7 and 11(d) shall survive the
termination of this Agreement, including any termination pursuant to Section 11.

       11.    Effective Date of Agreement; Termination.
              ----------------------------------------

              (a)    This Agreement shall become effective upon execution and
delivery of a counterpart hereof by each of the parties hereto.

              (b)    The Initial Purchasers shall have the right to terminate
this Agreement at any time prior to the Closing Date by notice to the Company
from the Initial Purchasers, without liability (other than with respect to
Sections 6 and 7) on the Initial Purchasers' part to the Company if, on or prior
to such date, (i) the Company shall have failed, refused or been unable to
perform in any material respect any agreement on its part to be performed
hereunder, (ii) any other condition to the obligations of the Initial Purchasers
hereunder as provided in Section 8 is not fulfilled when and as required in any
material respect, (iii) in the reasonable judgment of the Initial Purchasers any
material adverse change shall have occurred since the respective dates as of
which information is given in the Offering Memorandum in the condition
(financial or otherwise), business, properties, assets, liabilities, prospects,
net worth, results of operations or cash flows of the Company and the
Subsidiaries taken as a whole, other than as set forth in the Offering
Memorandum, or (iv)(A) any domestic or international event or act or occurrence
has materially disrupted, or in the opinion of the Initial Purchasers will in
the immediate future materially disrupt, the market for the Company's securities
or for securities in general; or (B) trading in securities generally on the New
York or American Stock Exchanges shall have been suspended or materially
limited, or minimum or maximum prices for trading shall have been established,
or maximum ranges for prices for securities shall have been required, on such
exchange, or by such exchange or other regulatory body or governmental authority
having jurisdiction; or (C) a banking moratorium shall have been declared by
Federal or state authorities, or a moratorium in foreign exchange trading by
major international banks or persons shall have been declared; or (D) there is
an outbreak or escalation of armed hostilities involving the United States on or
after the date hereof, or if there has been a declaration by the United States
of a national emergency or war, the effect of which shall be, in the Initial
Purchasers' judgment, to make it inadvisable or impracticable to proceed with
the offering or delivery of the Company Shares on the terms and in the manner
contemplated in the Offering Memorandum; or (E) there shall have been such a
material adverse change in general economic, political or financial conditions
or if the effect of 

                                       23
<PAGE>
 
international conditions on the financial markets in the
United States shall be such as, in the Initial Purchasers' judgment, makes it
inadvisable or impracticable to proceed with the delivery of the Company Shares
as contemplated hereby.

              (c)    Any notice of termination pursuant to this Section 11 shall
be by telephone, telex, telephonic facsimile, or telegraph, confirmed in writing
by letter.
 
              (d)    If this Agreement shall be terminated pursuant to any of
the provisions hereof (otherwise than pursuant to any of clauses (iii) or (iv)
of Section 11(b), in which case each party will be responsible for its own
expenses), or if the sale of the Series E Preferred Stock (and the related
Depositary Shares) provided for herein is not consummated because any condition
to the obligations of the Initial Purchasers set forth herein is not satisfied
or because of any refusal, inability or failure on the part of the Company to
perform any agreement herein or comply with any provision hereof, the Company
will, subject to demand by the Initial Purchasers, reimburse the Initial
Purchasers for all out-of-pocket expenses (including the reasonable fees and
expenses of Initial Purchasers' counsel), incurred by the Initial Purchasers in
connection herewith.

       12.    Notice. All communications hereunder, except as may be otherwise
              ------
specifically provided herein, shall be in writing and, if sent to the Initial
Purchasers shall be mailed, delivered, or telexed, telegraphed or telecopied and
confirmed in writing to Bear, Stearns & Co. Inc. and Salomon Brothers Inc, c/o
Bear, Stearns & Co. Inc., 245 Park Avenue, New York, New York 10167, Attention:
Corporate Finance Department, telecopy number: (212) 272-3092; and if sent to
the Company, shall be mailed, delivered or telexed, telegraphed or telecopied
and confirmed in writing to Intermedia Communications Inc., 3625 Queen Palm
Drive, Tampa, Florida 33619, Attention: Robert M. Manning, Chief Financial
Officer, telecopy number: (813) 744-2470, with a copy to Kronish, Lieb, Weiner &
Hellman LLP, 1114 Avenue of the Americas, 46th Floor, New York, New York 10036,
Attention: Ralph J. Sutcliffe, telecopy number (212) 997-3527; provided,
however, that any notice pursuant to Section 7 shall be mailed, delivered or
telexed, telegraphed or telecopied and confirmed in writing.

       13.    Parties. This Agreement shall inure solely to the benefit of, and
              -------
shall be binding upon, the Initial Purchasers and the Company and the
controlling persons and agents referred to in Sections 6 and 7, and their
respective successors and assigns, and no other person shall have or be
construed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Agreement or any provision herein contained. The
term "successors and assigns" shall not include a purchaser, in its capacity as
such, of Series E Preferred Stock (and the related Depositary Shares) from the
Initial Purchasers.

       14.    Construction. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
              ------------
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK AS APPLIED TO
CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK. TIME IS OF
THE ESSENCE IN THIS AGREEMENT.

       15.    Captions. The captions included in this Agreement are included
              --------
solely for convenience of reference and are not to be considered a part of this
Agreement.

       16.    Counterparts. This Agreement may be executed in various
              ------------
counterparts which together shall constitute one and the same instrument.


                                       24
<PAGE>
 
If the foregoing correctly sets forth the understanding among the
Initial Purchasers and the Company, please so indicate in the space provided
below for that purpose, whereupon this letter shall constitute a binding
agreement between us.
 
                                                 Very truly yours,

                                                 INTERMEDIA COMMUNICATIONS INC.


                                                 By:/s/ Robert A. Ruh
                                                    -------------------------
                                                 Name:  Robert A. Ruh
                                                 Title: Senior Vice President




Accepted and agreed to as of 
the date first above written:


BEAR, STEARNS & CO. INC.


By:/s/ Stephen Parish
   ----------------------------
Name:  Stephen Parish
Title: Senior Managing Director


SALOMON BROTHERS INC


By:/s/ Peter Westley
   ----------------------------
Name:  Peter Westley
Title: Vice President

                                       25
<PAGE>
 
                                   SCHEDULE I
<TABLE> 
<CAPTION> 
                                                                      Number of
                                                                    Firm Shares
Initial Purchaser                                               to be Purchased
- -----------------                                               ---------------
<S>                                                           <C> 
Bear, Stearns & Co. Inc. .............................................3,500,000
Salomon Brothers Inc. ................................................3,500,000
                                                                  -------------
           Total                                                      7,000,000
</TABLE> 

                                    Sched-I
<PAGE>
 
                                    EXHIBIT A


                   List of Employee Pension and Benefit Plans
                        of Intermedia Communications Inc.
                              and its Subsidiaries

1.  Intermedia Communications Inc. 401(k) Profit Sharing Plan

 

                                      A-1
<PAGE>
 
                                   EXHIBIT B

            Form of Opinion of Kronish, Lieb, Weiner & Hellman LLP

     1.    Each of the Company and the Subsidiaries is duly organized and
validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, and has all requisite corporate power and
authority to carry on its business as it is being conducted and as described in
the Offering Memorandum and to own, lease and operate its properties, and is
duly qualified and in good standing as a foreign corporation authorized to do
business in each jurisdiction in which the nature of its business or its
ownership or leasing of property requires such qualification, except where the
failure to be so qualified would not, singly or in the aggregate, have a
Material Adverse Effect. All of the issued and outstanding shares of capital
stock of, or other ownership interests in, each Subsidiary have been duly
authorized and validly issued, are fully paid and non-assessable and were not
issued in violation of or subject to any preemptive or similar rights under the
Delaware General Corporation Law or known to such counsel, after reasonable
inquiry, and, except as set forth in the Offering Memorandum or on Schedule A
hereto, are owned by the Company of record, and to the knowledge of such
counsel, after reasonable inquiry, beneficially, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or other restriction on transferability or voting.

     2.    All of the outstanding shares of capital stock of the Company have
been duly authorized, validly issued, and are fully paid and nonassessable and
were not issued in violation of any preemptive or similar rights. The
authorized, issued and outstanding capital stock of the Company conforms in all
respects to the description thereof set forth in the Offering Memorandum. Except
as set forth in the Offering Memorandum or on Schedule A hereto, there are no
outstanding subscriptions, rights, warrants, calls, commitments of sale or
options to acquire, or instruments convertible into or exercisable or
exchangeable for, any capital stock or other equity interest in the Company or
any of its Subsidiaries known to such counsel after reasonable inquiry.

     3.    When the Company Shares, are issued and delivered pursuant to this
Agreement, no Company Shares will be of the same class (within the meaning of
Rule 144A under the Act) as securities of the Company that are listed on a
national securities exchange registered under Section 6 of the Exchange Act or
that are quoted in a United States automated inter-dealer quotation system.

     4.    The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement, the
Certificate of Designation, the Deposit Agreement, the Registration Rights
Agreement and the other Operative Documents, as applicable, and to consummate
the transactions contemplated thereby, including, without limitation, the
corporate power and authority to issue, sell and deliver the Securities as
provided herein and therein.

     5.    This Agreement has been duly and validly authorized, executed and
delivered by the Company and, assuming due execution by the other parties
thereto, is the legally valid and binding agreement of the Company.

                                      B-1
<PAGE>
 
     6.    The Certificate of Designation has been duly authorized by all
necessary corporate and stockholder action, executed by the Company and filed
with the Secretary of State of the State of Delaware.

     7.    Each of the Deposit Agreement and the Registration Rights Agreement
has been duly and validly authorized, executed and delivered by the Company and,
assuming due execution by the other parties thereto, is the legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, except that we express no opinion as to the validity or
enforceability of rights of indemnity or contribution, or both and except as
such enforceability may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization or similar laws affecting the rights of creditors
generally and subject to general principles of equity.

     8.    The Series E Preferred Stock (and the related Depositary Shares) have
been duly and validly authorized for issuance and sale to the Initial Purchasers
by the Company pursuant to this Agreement and, when issued, delivered and paid
for in accordance with the terms of this Agreement, will be validly issued,
fully paid and non-assessable and entitled to the rights, privileges and
preferences set forth in the Certificate of Designation, and the issuance of
such shares of Series E Preferred Stock (and the related Depositary Shares) will
not be subject to any preemptive or similar rights.

     9.    The Offering Memorandum contains a fair summary of each of the Series
E Preferred Stock, the Certificate of Designation, the Company Shares, the
Deposit Agreement and the Registration Rights Agreement.

     10.   No registration under the Act of the Series E Preferred Stock (and
the related Depositary Shares) is required for the sale of the Company Shares,
to the Initial Purchasers as contemplated by this Agreement or for the Exempt
Resales assuming (i) that the Initial Purchasers are Qualified Institutional
Buyers, as defined in Rule 144A under the Act ("QIB"), (ii) that the purchasers
                                                ---
who buy the Company Shares, in the Exempt Resales are Eligible Purchasers (iii)
the accuracy of the Initial Purchasers' and the Company's representations
regarding the absence of general solicitation in connection with the sale of
Company Shares, to the Initial Purchasers and the Exempt Resales contained in
this Agreement, (iv) the accuracy of the Company's representations in Sections
5(a)(ii), (xxv),(xxvi) last sentence only and (xxviii) of this Agreement and (v)
with respect to Accredited Investors, the accuracy of the representations made
by each Accredited Investor as set forth in the letters of representation
executed by such Accredited Investor in the form of Annex B to the Offering
                                                    -------
Memorandum.

     11.   The Offering Memorandum, as of its date (except for the financial
statements, including the notes thereto, and supporting schedules and other
financial, statistical and accounting data included therein or omitted
therefrom, as to which no opinion need be expressed), and each amendment or
supplement thereto, as of its date, contains all the information specified in,
and meets the requirements of, Rule 144A(d)(4) under the Act.

                                      B-2
<PAGE>
 
     12.   None of (A) the execution, delivery or performance by the Company of
this Agreement and the other Operative Documents, (B) the issuance and sale of
the Series E Preferred Stock (and the related Depositary Shares), (C) the
performance by the Company of its obligations under this Agreement and the other
Operative Documents and (D) the consummation of the transactions contemplated by
this Agreement and the other Operative Documents violates, conflicts with or
constitutes a breach of any of the terms or provisions of, or a default under
(or an event that with notice or the lapse of time, or both, would constitute a
default), or require consent under, or result in the imposition of a lien or
encumbrance on any properties of the Company or any Subsidiary, or an
acceleration of any indebtedness of the Company or any Subsidiary pursuant to,
(i) the charter or bylaws of the Company or any Subsidiary, (ii) any bond,
debenture, note, indenture, mortgage, deed of trust or other agreement or
instrument to which the Company or any Subsidiary is a party or by which any of
them or their property is or may be bound identified to such counsel by the
Company as material (assuming all of such agreements are governed by New York
law), (iii) any local, state, federal or administrative statute, rule or
regulation applicable to the Company or any Subsidiary or any of their assets or
properties (except such counsel shall express no opinion as to the matters
addressed in the opinion of Kelley Drye & Warren LLP), or (iv) any judgment,
order or decree of any court or governmental agency or authority having
jurisdiction over the Company or any Subsidiary or any of their assets or
properties known to such counsel, except in the case of clauses (ii), (iii) and
(iv) for such violations, conflicts, breaches, defaults, consents, impositions
of liens or accelerations that (x) would not, singly or in the aggregate, have a
Material Adverse Effect or (y) are disclosed in the Offering Memorandum.
Assuming compliance with applicable state securities and Blue Sky laws, as to
which such counsel need express no opinion, and except for the filing of a
registration statement under the Act and qualification of the Indenture under
the Trust Indenture Act of 1939, as amended, in connection with the Registration
Rights Agreement, no consent, approval, authorization or order of, or filing,
registration, qualification, license or permit of or with, any court or
governmental agency, body or administrative agency is required for (1) the
execution, delivery and performance by the Company of this Agreement and the
other Operative Documents, (2) the issuance and sale of the Securities or (3)
consummation by the Company and the Subsidiaries of the transactions described
in the Offering Memorandum under the caption "Use of Proceeds," except (i) such
as have been obtained and made or have been disclosed in the Offering
Memorandum, (ii) where the failure to obtain such consents or waivers would not,
singly or in the aggregate, have a Material Adverse Effect and (iii) such
counsel shall express no opinion as to the matters addressed in the opinion of
Kelley Drye & Warren LLP. To such counsel's knowledge, after reasonable inquiry,
no consents or waivers from any other person are required for the execution,
delivery and performance by the Company of this Agreement and the other
Operative Documents for the issuance and sale of the Securities, other than such
consents and waivers as have been obtained.

     13.   None of the Company or the Subsidiaries is (i) an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended, or (ii) a "holding company"
or a "subsidiary company" or an "affiliate" of a holding company within the
meaning of the Public Utility Holding Company Act of 1935, as amended.

     14.   Except as set forth in this Agreement, the Registration Rights
Agreement or the Registration Rights Agreement in respect of the Senior Notes
due 2007, and except with respect to the holders of certain shares of Common
Stock issued pursuant to an Asset Acquisition Agreement dated as of December 6,
1996 among Universal Telecom, Inc., Intermedia Communications, Inc. and certain

                                      B-3
<PAGE>
 
individuals, to such counsel's knowledge, after reasonable inquiry, there are no
holders of any securities of the Company who, by reason of the execution by the
Company of this Agreement or any other Operative Document to which it is a party
or the consummation by the Company of the transactions contemplated thereby,
have the right to request or demand that the Company register under the Act
securities held by them.

     15.   None of the execution, delivery and performance of this Agreement,
the issuance and sale of the Securities, the application of the proceeds from
the issuance and sale of the Securities and the consummation of the transactions
contemplated thereby as set forth in the Offering Memorandum, will violate
Regulations G, T, U or X promulgated by the Board of Governors of the Federal
Reserve System.

     16.   To the knowledge of such counsel, no search of court records having
been made, there is (i) no action, suit, investigation or proceeding before or
by any court, arbitrator or governmental agency, body or official, domestic or
foreign, now pending, or threatened or contemplated to which any of the Company
or any Subsidiary is or may be a party or to which the business or property of
the Company or any Subsidiary is or may be subject, (ii) no statute, rule,
regulation or order that has been enacted, adopted or issued by any governmental
agency or that has been proposed by any governmental body, or (iii) no
injunction, restraining order or order of any nature by a federal or state court
of competent jurisdiction to which any of the Company or any Subsidiary is or
may be subject or to which the business, assets or property of the Company or
any of the Subsidiaries are or may be subject has been issued that, in the case
of clauses (i), (ii) and (iii) above, (x) is required to be disclosed in the
Preliminary Offering Memorandum and the Offering Memorandum and that is not so
disclosed, (y) could reasonably be expected to have, either individually or in
the aggregate, a Material Adverse Effect, except as disclosed in the Offering
Memorandum or (z) might interfere with, adversely affect or in any manner
question the validity of the issuance and sale of the Series E Preferred Stock
(and the related Depositary Shares) or any of the other transactions
contemplated by this Agreement or any of the other Operative Documents, except
that such counsel shall express no opinion as to the matters addressed in the
opinion of Kelley Drye & Warren LLP.

     17.   The statements under the captions "Description of Preferred Stock"
and "Description of the Depositary Shares" in the Offering Memorandum, insofar
as such statements constitute a summary of documents referred to therein present
a fair summary thereof. The terms of the Certificate of Designation conform to
the descriptions thereof contained in the Offering Memorandum.

     18.   The statements contained in the Offering Memorandum under the caption
"Certain Federal Income Tax Consequences" are a fair and accurate summary of the
matters discussed therein.

           We have participated in conferences with officers and other
representatives of the Company, representatives of the independent certified
public accountants of the Company and the Initial Purchasers and their
representatives at which the contents of the Preliminary Offering Memorandum and
the Offering Memorandum and related matters were discussed and, although we have
not undertaken to investigate or verify independently, and do not assume any
responsibility for, the accuracy, completeness or fairness of the statements
contained in the Preliminary Offering Memorandum or the Offering Memorandum
(except as indicated above), on the basis of the foregoing, no facts have come
to our attention which led us to 

                                      B-4
<PAGE>
 
believe that the Preliminary Offering Memorandum or the Offering Memorandum, as
of its date or the Closing Date, contained an untrue statement of a material
fact or omitted to state any fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading (except we express no opinion as to financial
statements and related notes, the financial statement schedules and other
financial and statistical data included therein).

                                      B-5
<PAGE>
 
                                   EXHIBIT C

                 [Form of Opinion of Kelley Drye & Warren LLP]



                                      C-1
<PAGE>
 
                     [Kelley Drye & Warren LLP Letterhead]


                                October 30, 1997



Bear, Stearns & Co. Inc.
Salomon Brothers Inc
c/o Bear, Stearns & Co. Inc.
245 Park Avenue
New York, N.Y.  10167


Ladies and Gentlemen:

     This opinion is furnished to you pursuant to Section 8(g) of the Purchase
Agreements dated October 24, 1997 (the "Agreements"), between Intermedia
Communications Inc. (the "Company") and Bear, Stearns & Co. Inc., and Salomon
Brothers Inc (together, the "Initial Purchasers"), relating to the sale by the
Company of (i) 7,000,000 depositary shares (the "Depositary Shares")
representing a one-hundredth interest in a share of the Company's 7% Series E
Junior Convertible Preferred Stock (the "Series E Preferred Stock"), and (ii)
$250,000,000 aggregate principal amount at maturity of 8 7/8% Senior Discount
Notes due 2007 (the "Notes").

     This firm has acted as special telecommunications counsel for the Company
and our representation has been limited to federal and state telecommunications
regulatory matters, and this opinion is accordingly limited to such matters.

     We express no opinion as to the laws of any jurisdiction or agency except
the Telecommunications Laws of the Federal Communications Commission (the "FCC")
and State Telecommunications Agencies of those states in which the Company is
providing intrastate service.  For purposes of this opinion, the term "State
Telecommunications Agencies" means "state commissions" as defined in Section 3
of the Communications Act of 1934, as amended.  The term "Telecommunications
Laws" means the statutes governing the FCC and State Telecommunications Agencies
and the rules and regulations promulgated by them.

     To the extent this opinion concerns state Telecommunications Laws, you are
advised that the attorneys in our Firm are not admitted to practice in all of
the states covered by this opinion and, for the purpose of this opinion, we
should not be considered to be experts in the Telecommunications Laws of any
such states. However, in connection with the previous opinion provided to you 
<PAGE>
 
Bear, Stearns & Co.
Salomon Brothers Inc
October 30, 1997
Page 2

dated July 9, 1997, concerning a similar transaction by the Company, we
conducted a review of statutes and regulations relating to state
Telecommunications Laws which we deemed relevant and as they appear in standard
compilations and, in some cases, had direct communications with the staff of
State Telecommunications Agencies. To the best of our knowledge, nothing has
occurred subsequent to this earlier review and those conversations which would
change our understanding of these State Telecommunications Laws with respect to
any matter we deem relevant to this opinion. Our opinion as to state
Telecommunications Laws is based solely upon that earlier review and those
conversations, as supplemented by us in connection with states in which the
Company commenced intrastate service subsequent to July 9, 1997.

     In rendering this opinion, we have examined and relied upon relevant
documents in our files, certificates and other information in the publicly
available files and records of the FCC and State Telecommunications Agencies and
appropriate portions of the Offering Memorandum for the Notes and Depositary
Shares (the "Offering Memorandum") prepared in connection with this transaction.
With your permission, as to all matters of fact concerning the Company and its
operations (including factual conclusions and characterizations), we have relied
entirely upon the relevant statements contained in the Offering Memorandum,
including the exhibits thereto, and in the certificate of David C. Ruberg,
President and CEO, dated October 29, 1997, attached hereto. We have assumed,
without independent inquiry, the accuracy of the representations in the
certificate and have made no independent review of the operations or the
business of the Company for the purpose of rendering this opinion.

     We have assumed the genuineness of all signatures, the conformity to the
originals of all documents reviewed by us as copies, the authenticity and
completeness of all original documents reviewed by us in original or copy form
and the legal competence of each individual executing any document.
<PAGE>
 
Bear, Stearns & Co.
Salomon Brothers Inc
October 30, 1997
Page 3

     When an opinion set forth below is given to the best of our knowledge or
with another similar qualification, the relevant knowledge is limited to the
actual knowledge of the individual attorneys currently in the firm who have
devoted substantive legal attention to representation of the Company as its
telecommunications counsel and we have undertaken no independent inquiry or
investigation in rendering this opinion.

     In reliance upon the foregoing and subject to the qualifications and
limitations set forth herein, we are of the opinion that:

     All of the licenses, permits and authorizations required by the FCC for the
provision of telecommunications services by the Company, as we understand those
services to be provided currently based on the attached certificate, have been
issued to and are validly held by the Company and its subsidiaries and are in
full force and effect.  All of the licenses, permits and authorizations required
by the State Telecommunications Agencies for the provision of telecommunications
services by the Company, as we understand those services to be provided
currently based on the attached certificate, have been issued to and, to the
best of our knowledge, are validly held by the Company and its subsidiaries,
where the failure to obtain or hold such license, permit or authority would have
a material adverse effect, as defined in the attached certificate, on the
Company and the subsidiaries, taken as a whole. All such licenses, permits and
authorizations are in full force and effect.

     Neither the Company nor its subsidiaries is the subject of any proceeding
(including a rulemaking proceeding), pending complaint or investigation, or, to
the best of our knowledge, any threatened complaint or investigation, before the
FCC, or, to the best of our knowledge after oral inquiry made in connection with
our opinion to you of July 9, 1997, and supplemented currently as indicated
above, of any proceeding (including a rulemaking proceeding), pending complaint
or investigation, or any threatened complaint or investigation, before State
Telecommunications Agencies based, in each case, on any alleged violation of
Telecommunications Laws by the Company or any subsidiary in connection with
their provision of or failure to provide telecommunications services of a
character required to be disclosed in the Offering Memoranda which is not
disclosed in the Offering Memoranda.
<PAGE>
 
Bear, Stearns & Co.
Salomon Brothers Inc
October 30, 1997
Page 4

     The statements in the Offering Memoranda under the headings of "The Company
- - Recent Developments - Regulatory Changes," "Risk Factors - Regulatory Approval
of the Offering" regarding the Telecommunications Laws of the FCC or any State
Telecommunications Agencies fairly and accurately summarize the matters therein
described.

     Except as discussed below, the Company and its subsidiaries have the
consents, approvals, authorizations, licenses, certificates, permits, or orders
of the FCC or any State Telecommunications Agency, if any is required, for the
consummation of the transactions contemplated in the Offering Memoranda, except
where the failure to obtain the consents, approvals, authorizations, licenses,
certificates, permits or orders would not have a Material Adverse Effect, as
defined in the attached certificate, on the Company and its subsidiaries, taken
as a whole.

     In ten states where the Company holds certificates to provide intrastate
toll service and, in some cases, local exchange service, the applicable statute
or regulations provide for prior notification and/or approval for the issuance
of debt or equity securities by certificate holders.  In some of these states,
approval has been obtained for the issuance of Depositary Shares in an amount
sufficient to cover the proposed transaction.  However, additional approval will
be required from those states for the issuance of the Notes.  Due to time
constraints, the Company will not have received all such approvals prior to the
consummation of the proposed transaction.  Based on our firm's experience in
similar situations involving intrastate interexchange services, we believe that
it is unlikely that these states would take any action against the Company for
issuing the Depositary Shares and the related Series E Preferred Stock or the
Notes prior to approval which would have a Material Adverse Effect, as defined
in the attached certificate, on the Company and its subsidiaries, taken as a
whole.

     Except as discussed above, neither the execution and delivery of the
Purchase Agreements nor the sale of the securities contemplated thereby will
conflict with or result in a violation of any order or regulation of the FCC or
any State Telecommunications Agency applicable to the Company or its
subsidiaries, except where the conflict with or the violation of which would not
have a
<PAGE>
 
Bear, Stearns & Co.
Salomon Brothers Inc
October 30, 1997
Page 5

Material Adverse Effect, as defined in the attached certificate, on the 
Company and its subsidiaries, taken as a whole.

     The opinions stated above are limited to the matters set forth herein. No
opinion may be inferred or implied beyond the matters expressly stated in this
opinion letter, and the opinions stated above must be read in conjunction with
the assumptions, exceptions and qualifications set forth in this opinion letter.
We assume no obligation to advise you of changes of fact or law, whether or not
deemed material which may be brought to our attention after the date hereof.

     This opinion is being delivered for your use in connection with the
transactions contemplated by the Offering Memoranda pursuant to the Agreements
and may not be referred to or used for any other purpose or relied upon or
delivered to any other person without our prior written consent.


                                 Very truly yours,

                                 Kelley Drye & Warren LLP
<PAGE>
 
                                   EXHIBIT D

                Subsidiaries of Intermedia Communications Inc.
                ----------------------------------------------

FiberNet North Carolina, Inc

FiberNet Huntsville, Inc.

FiberNet St. Louis, Inc.

FiberNet Telecommunications Cincinnati, Inc.

Phone One, Inc.

FiberNet USA, Inc.

EMI Telecommunications Inc.

Eastern Message Communications Inc.

Intermedia Licensing Company

DIGEX, Incorporated


                                      D-1

<PAGE>
 
                                                                     Exhibit 4.5
================================================================================






                         REGISTRATION RIGHTS AGREEMENT



     Depositary Shares Representing a One-Hundredth Interest in a Share of
                7% Series E Junior Convertible Preferred Stock



                         Dated as of October 30, 1997


                                 by and among



                        INTERMEDIA COMMUNICATIONS INC.,


                           BEAR, STEARNS & CO. INC.



                                      and



                             SALOMON BROTHERS INC



================================================================================
<PAGE>
 
            This Registration Rights Agreement (this "Agreement") is made and
                                                      ---------
entered into as of October 30, 1997 by and among Intermedia Communications Inc.,
a Delaware corporation (the "Company"), and Bear, Stearns & Co. Inc., and
                             -------
Salomon Brothers Inc (each an "Initial Purchaser" and together, the "Initial
                               -----------------                     -------
Purchasers"), each of whom have agreed to purchase Depositary Shares (the
- ----------
"Depositary Shares"), each representing a one-hundredth interest in a share of
 -----------------
the Company's 7% Series E Junior Convertible Preferred Stock (the "Series E
                                                                   --------
Preferred Stock") pursuant to the Purchase Agreement (as defined below).
- ---------------

            This Agreement is made pursuant to the Depositary Share Purchase
Agreement in respect to the Series E Preferred Stock, dated October 24, 1997
(the "Purchase Agreement"), by and among the Company and the Initial Purchasers.
      ------------------
In order to induce the Initial Purchasers to purchase the Depositary Shares, the
Company has agreed to provide the registration rights set forth in this
Agreement. The execution and delivery of this Agreement is a condition to the
obligations of the Initial Purchasers set forth in Section 8 of the Purchase
Agreement.

            The parties hereby agree as follows:


SECTION 1.  DEFINITIONS

            As used in this Agreement, the following capitalized terms shall
have the following meanings:

       Act:  The Securities Act of 1933, as amended.
       ---                                          

       Average Stock Price: The average of the high and low sales prices of the
       -------------------                                                     
Common Stock (as defined herein) as reported by the Nasdaq National Market or
any national securities exchange upon which the Common Stock is then listed, for
each of the ten consecutive trading days immediately preceding the twentieth
calendar day preceding the Dividend Payment Date.

       Business Day:  Any day except a Saturday, Sunday or other day in the City
       -------------                                                            
of New York, on which banks are authorized to close.

       Certificate of Designation: The Certificate of Designation pursuant to
       --------------------------                                            
which the Depositary Shares, Series E Preferred Stock, and Common Stock are to
be issued, as such Certificate of Designation is amended or supplemented from
time to time in accordance with the terms thereof.

       Closing Date: The date hereof.
       ------------                  

       Commission:  The Securities and Exchange Commission.
       ----------                                          

       Common Dividend Filing Deadline:  As defined in Section 4 hereof.
       -------------------------------                                  

<PAGE>
 
       Common Dividend Registration Statement:  As defined in Section 4 hereof.
       --------------------------------------                                  

       Common Stock: The common stock of the Company to be issued upon
       ------------                                                   
conversion of the Series E Preferred Stock or to be issued as dividends in
respect of the Series E Preferred Stock.

       Common Stock Dividends:  Common Stock to be issued as dividends in
       ----------------------                                            
respect of the Series E Preferred Stock.

       Definitive Securities:  As defined in the Deposit Agreement.
       ----------------------                                      

       Deposit Agreement:  The Deposit Agreement dated the date hereof between
       -----------------                                                      
the Company and Continental Stock Transfer & Trust Company.

       Dividend Payment Date: As defined in the Certificate of Designation.
       ---------------------                                               

       Effectiveness Target Date: As defined in Section 5.
       -------------------------                          

       Exchange Act: The Securities Exchange Act of 1934, as amended.
       ------------                                                  

       Global Certificate Holder: As defined in the Deposit Agreement.
       -------------------------                                      

       Holders:  As defined in Section 2 hereof.
       -------                                  

       Liquidated Damages: As defined in Section 5 hereof.
       ------------------                                 

       Liquidation Preference: As defined in the Certificate of Designation.
       ----------------------                                               

       NASD: National Association of Securities Dealers, Inc.
       ----                                                  

       Offering Memorandum: The final offering memorandum, dated October 24,
       -------------------
1997, relating to the Company, the Depositary Shares, and the Series E Preferred
Stock.

       Person: An individual, partnership, corporation, trust, unincorporated
       ------                                                                
organization, or a government or agency or political subdivision thereof.

       Prospectus:  The prospectus included in a Registration Statement at the
       ----------                                                             
time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.

       Registration Default: As defined in Section 5 hereof.
       --------------------                                 

                                       2
<PAGE>
 
       Registration Statement:  The Shelf Registration Statement and Common
       ----------------------                                              
Dividend Registration Statement.

       Shelf Registration Statement: As defined in Section 4 hereof.
       ----------------------------                                 

       Shelf Filing Deadline: As defined in Section 4 hereof.
       ---------------------                                 

       Shelf Registration Statement:  As defined in Section 4 hereof.
       -----------------------------                                 

       Transfer Agent: The transfer agent with respect to the Depositary Shares
       --------------                                                          
and the Series E Preferred Stock.

       Transfer Restricted Securities: Each Depositary Share, each share of
       ------------------------------                                      
Series E Preferred Stock, and each share of Common Stock until the earliest to
occur of (i) the date on which such Depositary Share, share of Series E
Preferred Stock, or share of Common Stock, as the case may be, is effectively
registered under the Act and disposed of in accordance with the Shelf
Registration Statement or Common Dividend Registration Statement, (ii) the date
on which such Depositary Share, share of Series E Preferred Stock, or share of
Common Stock, as the case may be, is distributed to the public pursuant to Rule
144 under the Act or may be distributed to the public pursuant to Rule 144(k)
under the Securities Act or (iii) in the case of Common Stock Dividends, the
date the Common Stock Dividends are issued by the Company pursuant to an
effective Common Stock Registration Statement.

       Underwritten Registration or Underwritten Offering: A registration in
       -------------------------    ---------------------                   
which securities of the Company are sold to an underwriter for re-offering to
the public.

SECTION 2.  HOLDERS

            A Person is deemed to be a holder of Transfer Restricted Securities
(each, a "Holder") whenever such Transfer Restricted Securities are registered
          ------
in such Person's name.


SECTION 3.  [INTENTIONALLY OMITTED].


SECTION 4.  REGISTRATION

            (a)   Shelf Registration. The Company shall:
                  ------------------                    

                  (x)  cause to be filed on or prior to 60 days after the
consummation of the offering of Series E Preferred Stock (and the related
Depositary Shares) (the "Shelf Filing Deadline"), a shelf registration statement
                         ---------------------
pursuant to Rule 415 under the Act (the "Shelf Registration Statement"),
                                         ----------------------------
relating to resales of all Transfer Restricted Securities 

                                       3
<PAGE>
 
(except Common Stock Dividends) the Holders of which shall have provided the
information required pursuant to Section 4(b) hereof, and

                  (y)  use its reasonable best efforts to cause such Shelf
Registration Statement to become effective on or prior to 120 days after the
Shelf Filing Deadline.

       The Company shall use its best efforts to keep the Shelf Registration
Statement discussed in this Section 4(a) continuously effective, supplemented
and amended as required by the provisions of Sections 6(b) and (c) hereof to the
extent necessary to ensure that it is available for resales of Transfer
Restricted Securities by the Holders thereof entitled to the benefit of this
Section 4(a), and to ensure that it conforms with the requirements of this
Agreement, the Act and the policies, rules and regulations of the Commission as
announced from time to time, for a period expiring on the earlier to occur of:
(i) the date when all Transfer Restricted Securities (except Common Stock
Dividends) have been sold; and (ii) 730 days from the date of the Closing Date,
provided, that the Company will have the option of suspending the effectiveness
of the Shelf Registration Statement for periods of up to an aggregate of 60 days
in any calendar year if the Board of Directors of the Company determines that
compliance with the disclosure obligations necessary to maintain the
effectiveness of the Shelf Registration Statement at such time could reasonably
be expected to have a material adverse effect on the Company or a pending
corporate transaction of the Company (a "Permitted Shelf Suspension").
                                         --------------------------   

            (b)   Provision by Holders of Certain Information in Connection with
                  --------------------------------------------------------------
the Shelf Registration Statement. No Holder of Transfer Restricted Securities
- --------------------------------
may include any of its Transfer Restricted Securities in the Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 20 Business Days after receipt of a request
therefor, such information specified in item 507 of Regulation S-K under the Act
for use in connection with the Shelf Registration Statement or Prospectus or
preliminary Prospectus included therein, including the information set forth in
the questionnaire included as Annex A to the Offering Memorandum. No Holder of
Transfer Restricted Securities shall be entitled to Liquidated Damages pursuant
to Section 5 hereof unless and until such Holder shall have provided all such
information required to be provided by such Holder for inclusion therein. Each
Holder as to which the Shelf Registration Statement is being effected agrees to
furnish promptly to the Company, for so long as the Shelf Registration Statement
is effective, all information required to be disclosed in order to make the
information previously furnished to the Company by such Holder not materially
misleading.

            (c)   Registration of Common Dividends.  The Company shall:
                  --------------------------------                     

                  (x)  cause to be filed on or prior to 60 days after the
consummation of the offering of Series E Preferred Stock (and the related
Depositary Shares) (the "Common Dividend Filing Deadline"), a registration
                         -------------------------------
statement (the "Common Dividend Registration Statement"), relating to the
                --------------------------------------
issuance of dividends on the Series E Preferred Stock to the extent that such
dividends are paid in Common Stock; and

                                       4
<PAGE>


                  (y)  use its reasonable best efforts to cause such Common
Stock Dividend Registration Statement to become effective on or prior to 120
days after the Common Dividend Filing Deadline.

            The Company shall use its best efforts to keep the Common Dividend
Registration Statement discussed in this Section 4(c) continuously effective,
supplemented and amended as required by the provisions of Sections 6(b) and (c)
hereof to the extent necessary to ensure that it is available on each dividend
payment date of the Series E Preferred Stock and to ensure that it conforms with
the requirements of this Agreement, the Act and the policies, rules and
regulations of the Commission as announced from time to time, for a period
expiring on the earlier to occur of: (i) the date when all Series E Preferred
Stock is no longer Transfer Restricted Securities; and (ii) 730 days from the
date of the Closing Date, provided, that the Company will have the option of
suspending the effectiveness of the Common Dividend Registration Statement for
periods of up to an aggregate of 60 days in any calendar year if the Board of
Directors of the Company determines that compliance with the disclosure
obligations necessary to maintain the effectiveness of the Shelf Registration
Statement at such time could reasonably be expected to have a material adverse
effect on the Company or a pending corporate transaction of the Company (a
"Permitted Dividend Suspension," and together with a Permitted Shelf Suspension,
 -----------------------------                                                  
a "Permitted Suspension").
   --------------------   

            If for any reason the Common Dividend Registration Statement is not
filed or is not declared effective (including by reason of any position,
determination, rule or regulation of the Commission or the Staff of the
Commission not permitting such Common Dividend Registration Statement), the
Company shall file the Common Dividend Registration Statement as a registration
statement to permit resales of the Common Stock issued as dividends on the
Series E Preferred Stock and to keep such registration statement effective for
the equivalent periods.
 
SECTION 5.  LIQUIDATED DAMAGES

            If (i) the Company fails to file the Shelf Registration Statement
with the Commission on or prior to the Shelf Filing Deadline, (ii) the Shelf
Registration Statement has not been declared effective by the Commission on or
prior to the 120th day after the Shelf Filing Deadline (the "Effectiveness
                                                             -------------
Target Date"), whether or not the Company has breached any obligation to use its
- -----------
best efforts to cause the Shelf Registration Statement to be declared effective,
or (iii) the Shelf Registration Statement is declared effective but thereafter
ceases to be effective or usable in connection with resales of Transfer
Restricted Securities (except Common Stock Dividends) for any period of ten
consecutive days or for any 20 days in any 180-day period without being
succeeded within the time period provided for herein by a post effective
amendment to such Shelf Registration Statement that cures such failure and that
is itself declared effective within ten Business Days of the filing thereof,
provided, that such effectiveness was not suspended in connection with a
Permitted Suspension (a "Registration Default"), then commencing on the day
                         --------------------
following the date on which such Registration Default occurs, the Company agrees
to pay to each Holder of Transfer Restricted Securities affected by such
Registration Default, liquidated damages ("Liquidated Damages") at a rate of
                                           ------------------
$0.25 per $2,500 Liquidation Preference of Series E Preferred Stock (or $.0025
per $25.00 Liquidation Preference of Depositary Shares) constituting Transfer
Restricted Securities held by such Holder until such Registration Default is
cured. All accrued Liquidated Damages will be paid in shares of Common Stock
valued at the Average Stock Price by the Company on each Dividend Payment Date.

            All accrued Liquidated Damages shall be paid to the Global
Certificate Holder by wire transfer of immediately available funds or by federal
funds check and to Holders of Definitive Securities by mailing checks to their
registered addresses by the Company on each Interest Payment Date. All
obligations of the Company set forth in the preceding paragraph that are
outstanding with respect to any Transfer Restricted Security at the time such
security ceases to be a Transfer Restricted Security shall survive until such
time as all such obligations with respect to such security shall have been
satisfied in full.


SECTION 6.  REGISTRATION PROCEDURES

            (a)   Shelf Registration Statement.  In connection with the Shelf
                  ----------------------------                               
Registration Statement, the Company shall comply with all the provisions of
Section 6(b) below and shall use its best efforts to effect such registration to
permit the sale of the Transfer Restricted Securities being sold in accordance
with the intended method or methods of distribution thereof (as indicated in the
information furnished to the Company pursuant to Section 4(b) hereof), and
pursuant thereto the Company will prepare and file with the Commission a Shelf
Registration Statement relating to the registration on any appropriate form
under the Act, which form shall be available for the sale of the Transfer
Restricted Securities in accordance with the intended method or methods of
distribution thereof within the time periods and otherwise in accordance with
the provisions hereof.


                                       5
<PAGE>

            (b)   General Provisions.  In connection with the Registration
                  ------------------
Statement and any related Prospectus required by this Agreement to permit the
sale or resale of Transfer Restricted Securities, the Company shall:

                  (i)   use its best efforts to keep such Registration Statement
continuously effective, subject to a Permitted Suspension, and provide all
requisite financial statements for the period specified in Section 4 of this
 Agreement. Upon the occurrence of any event that would cause any such
 Registration Statement or the Prospectus contained therein (A) to contain a
 material misstatement or emission or (B) not to be effective and usable for
 resale of Transfer Restricted Securities during the period required by this
 Agreement, the Company shall file promptly an appropriate amendment to such
 Registration Statement (1) in the case of clause (A), correcting any such
 misstatement or omission, and (2) in the case of either clause (A) or (B), use
 its best efforts to cause such amendment to be declared effective and such
 Registration Statement and the related Prospectus to become usable for their
 intended purpose(s) as soon as practicable thereafter;

                  (ii)  except in the event of a Permitted Suspension, prepare
and file with the Commission such amendments and post-effective amendments to
the Registration Statement as may be necessary to keep the Registration
Statement effective for the applicable period set forth in Section 4 hereof, or
such shorter period as will terminate when all Transfer Restricted Securities
covered by such Registration Statement have been sold, cause the Prospectus to
be supplemented by any required Prospectus supplement, and as so supplemented to
be filed pursuant to Rule 424 under the Act, and to comply fully with Rules 424
and 430A, as applicable, under the Act in a timely manner; and comply with the
provisions of the Act with respect to the disposition of all securities covered
by such Registration Statement during the applicable period in accordance with
the intended method or methods of distribution by the sellers thereof set forth
in such Registration Statement or supplement to the Prospectus;

                  (iii) advise the underwriter(s), if any, and selling Holders
promptly and, if requested by such Persons, confirm such advice in writing, (A)
when the Prospectus or any Prospectus supplement or post-effective amendment has
been filed, and, with respect to the Registration Statement or any post-
effective amendment thereto, when the same has become effective, (B) of any
request by the Commission for amendments to the Registration Statement or
amendments or supplements to the Prospectus or for additional information
relating thereto, (C) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement under the Act or of
the suspension by any state securities commission of the qualification of the
Transfer Restricted Securities for offering or sale in any jurisdiction, or the
initiation of any proceeding for any of the preceding purposes, (D) of the
existence of any fact or the happening of any event that makes any statement of
a material fact made in the Registration Statement, the Prospectus, any
amendment or supplement thereto or any document incorporated by reference
therein untrue, or that requires the making of 

                                       6
<PAGE>

any additions to or changes in the Shelf Registration Statement in order to make
the statements therein not misleading, or that requires the making of any
additions to or changes in the Prospectus in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. If at any time the Commission shall issue any stop order suspending
the effectiveness of the Registration Statement, or any state securities
commission or other regulatory authority shall issue an order suspending the
qualification or exemption from qualification of the Transfer Restricted
Securities under state securities or Blue Sky laws, the Company shall use its
best efforts to obtain the withdrawal or lifting of such order at the earliest
possible time;

                  (iv)  make available, if requested, to each selling Holder
named in the Registration Statement or Prospectus and each of the underwriters)
in connection with such sale, if any, before filing with the Commission, copies
of the Registration Statement or any Prospectus included therein or any
amendments or supplements to any such Registration Statement or Prospectus
(including all documents incorporated by reference after the initial filing of
such Registration Statement), substantially in the form to be filed, which
documents will be subject to the review and comment of such Holders and
underwriters, in connection with such sale, if any, for a period of at least
five Business Days, and the Company will not file any such Registration
Statement or Prospectus or any amendment or supplement to any such Registration
Statement or Prospectus (including all such documents incorporated by reference)
to which the selling Holders of the Transfer Restricted Securities covered by
such Registration Statement or the underwriters, in connection with such sale,
if any, shall reasonably object within five Business Days after the receipt
thereof. A selling Holder or underwriter, if any, shall be deemed to have
reasonably objected to such filing if such Registration Statement, amendment,
Prospectus or supplement, as applicable, as proposed to be filed, contains a
material misstatement or omission or fails to comply with the applicable
requirements of the Act;

                  (v)    promptly upon the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus, make
available copies of such document to the selling Holders and to the underwriters
in connection with such sale, if any, make the Company's representatives
available for discussion of such document and other customary due diligence
matters, and include such information in such document prior to the filing
thereof as such selling Holders or underwriters, if any, reasonably may request;

                  (vi)   make available at reasonable times for inspection by
the selling Holders, any underwriter participating in any disposition pursuant
to such Registration Statement and any attorney or accountant retained by such
selling Holders or any of such underwriters, all financial and other records,
pertinent corporate documents and properties of the Company and cause the
Company's officers, directors and employees to supply all information reasonably
requested by any such Holder, underwriter, attorney or accountant in connection
with such Registration Statement or any post-effective amendment thereto
subsequent to the filing thereof and prior to its effectiveness; provided that
any person to whom information is provided under this clause (vi) agrees in
writing to maintain the confidentiality of such information to the extent such
information is not in the public domain;

                  (vii)  if requested by any selling Holders or the underwriters
in connection with such sale, if any, promptly include in the Registration
Statement or Prospectus, pursuant to a supplement or post-effective amendment if
necessary, such information as such selling Holders and underwriters, if any,
may reasonably request to have included therein, including, without limitation,
information relating to the "Plan of Distribution" of the Transfer Restricted
                             --------------------
Securities, information with respect to the principal amount of Transfer
Restricted Securities being sold to such underwriters, the purchase price being
paid therefor and any other terms of the offering of the Transfer Restricted
Securities to be sold in such offering; and make all required filings of such
Prospectus supplement or post-effective amendment as soon as practicable after
the Company is notified of the matters to be included in such Prospectus
supplement or post-effective amendment;

                  (viii) cause the Transfer Restricted Securities covered by the
Shelf Registration Statement to be rated with the appropriate rating agencies,
if so requested by the Holders of a majority in aggregate Liquidation Preference
of Series E Preferred Stock (and the related Depositary Shares) covered thereby,
or by the underwriters, if any;

                                       7
<PAGE>
 
          (ix) furnish to each selling Holder and each of the underwriters, if
any, in connection with such sale, if any, without charge, at least one copy of
the Registration Statement, as first filed with the Commission, and of each
amendment thereto, and make available all documents incorporated by reference
therein and all exhibits (including exhibits incorporated therein by reference);

          (x)  deliver to each selling Holder and each of the underwriters, if
any, without charge, as many copies of the Prospectus (including each
preliminary prospectus) and any amendment or supplement thereto as such Persons
reasonably may request; the Company hereby consents to the use of the Prospectus
and any amendment or supplement thereto by each of the selling Holders and each
of the underwriters, if any, in connection with the offering and the sale of the
Transfer Restricted Securities covered by the Prospectus or any amendment or
supplement thereto;

          (xi) enter into such agreements (including, unless not required
pursuant to Section 10 hereof, an underwriting agreement) and make such
representations and warranties and take all such other actions in connection
therewith in order to expedite or facilitate the disposition of the Transfer
Restricted Securities pursuant to the Registration Statement contemplated by
this Agreement as may be reasonably requested by any Holder of Transfer
Restricted Securities or underwriter in connection with any sale or resale
pursuant to the Registration Statement contemplated by this Agreement, and 

                                       8
<PAGE>
in such connection, whether or not an underwriting agreement is entered into and
whether or not the registration is an Underwritten Registration, the Company
shall:

        (A)  furnish to each selling Holder and each underwriter, if any, upon
the effectiveness of the Registration Statement:

                (1)  a certificate, dated the date of effectiveness of the
        Registration Statement signed by (x) the President or any Vice President
        and (y) a principal financial or accounting officer of the Company,
        confirming with respect to the Prospectus or any purchase or
        underwriting agreement and the Transfer Restricted Securities, as of the
        date thereof, the matters set forth in paragraphs (a), (b), (c) and (d)
        of Section 8 of the Purchase Agreement and such other matters as the
        Holders and/or underwriters may reasonably request;

                (2)  an opinion, dated the date of effectiveness of the
        Registration Statement of counsel for the Company, covering (i) due
        authorization and enforceability of the Depositary Shares, Series E
        Preferred Stock, and Common Stock, (ii) a statement to the effect that
        such counsel has participated in conferences with officers and other
        representatives of the Company and representatives of the independent
        public accountants for the Company and have considered the matters
        required to be stated therein and the statements contained therein,
        although such counsel has not independently verified the accuracy,
        completeness or fairness of such statements; and that such counsel
        advises that, on the basis of the foregoing (relying as to materiality
        to a large extent upon facts provided to such counsel by officers and
        other representatives of the Company and without independent check or
        verification), no facts came to such counsel's attention that caused
        such counsel to believe that the Registration Statement, at the time
        such Registration Statement or any post-effective amendment thereto
        became effective, contained an untrue statement of a material fact or
        omitted to state a material fact required to be stated therein or
        necessary to make the statements therein not misleading, or that the
        Prospectus contained in such Registration Statement as of its date
        contained an untrue statement of a material fact or omitted to state a
        material fact necessary in order to make the statements therein, in the
        light of the circumstances under which they were made, not misleading
        and (iii) such other matters of the type customarily covered in opinions
        of counsel for an issuer in connection with similar securities
        offerings, as may reasonably be requested by such parties. Without
        limiting the foregoing, such counsel may state further that such counsel
        assumes no responsibility for, and has not independently verified, the
        accuracy, completeness or fairness of the financial statements, notes
        and schedules and other financial, statistical and accounting data
        included in the Registration Statement contemplated by this Agreement or
        the related Prospectus; and


                                       9
<PAGE>
 
                (3)     if the registration is a registration in which
          securities of the Company are sold to an underwriter for reoffering to
          the public, obtain a customary comfort letter, dated as of the date of
          effectiveness of the Registration Statement, addressed to the Board of
          Directors of the Company or any underwriter from the Company's
          independent accountants, in the customary form and covering matters of
          the type customarily covered in comfort letters to boards of directors
          in underwritten offerings;

          (B)   set forth in full or incorporated by reference in the
     underwriting agreement, if any, in connection with any sale or resale
     pursuant to the Registration Statement the indemnification provisions and
     procedures of Section 8 hereof with respect to all parties to be
     indemnified pursuant to said Section; and

          (C)   deliver such other documents and certificates as may be
     reasonably requested by such parties to evidence compliance with clause (A)
     above and with any customary conditions contained in the underwriting
     agreement or other agreement entered into by the Company pursuant to this
     clause (xi), if any.

          The above shall be done at each closing under such underwriting or
similar agreement, as and to the extent required thereunder, and if at any time
the representations and warranties of the Company contemplated in (A)(1) above
cease to be true and correct, the Company shall so advise the underwriter(s), if
any, and selling Holders promptly and if requested by such Persons, shall
confirm such advice in writing;

                (xii)   prior to any public offering of Transfer Restricted
     Securities, cooperate with the selling Holders, the underwriters, if any,
     and their respective counsel in connection with the registration and
     qualification of the Transfer Restricted Securities under the securities or
     Blue Sky laws of such jurisdictions as the selling Holders or
     underwriters), if any, may request and do any and all other acts or things
     necessary or advisable to enable the disposition in such jurisdictions of
     the Transfer Restricted Securities covered by the Registration Statement;
     provided, however, that the Company shall not be required to register or
     qualify as a foreign corporation where it is not now so qualified or to
     take any action that would subject it to the service of process in suits or
     to taxation, other than as to matters and transactions relating to the
     Registration Statement, in any jurisdiction where it is not now so subject;

                (xiii)  [Intentionally Omitted];

          (xiv)    in connection with any sale of Transfer Restricted Securities
that will result in such securities no longer being Transfer Restricted
Securities, cooperate with the selling Holders and the underwriters, if any, to
facilitate the timely preparation and delivery of certificates representing
Transfer Restricted Securities to be sold and not bearing any restrictive
legends; and to register such Transfer Restricted Securities in such
denominations and such names as the Holders or the underwriters), if 

                                       10
<PAGE>

any, may request at least two Business Days prior to such sale of Transfer
Restricted Securities;

          (xv)     use its best efforts to cause the Transfer Restricted
Securities covered by the Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be necessary
to enable the seller or sellers thereof or the underwriters, if any, to
consummate the disposition of such Transfer Restricted Securities, subject to
the proviso contained in clause (xii) above;

          (xvi)    if any fact or event contemplated by Section 6(b)(iii)(D)
above shall exist or have occurred, except in the event of a Permitted
Suspension prepare a supplement or post-effective amendment to the Registration
Statement or related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter delivered
to the purchasers of Transfer Restricted Securities, the Prospectus will not
contain an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading;

          (xvii)   provide a CUSIP number for all Transfer Restricted Securities
not later than the effective date of the Shelf Registration Statement covering
such Transfer Restricted Securities and provide the Transfer Agent or the
Trustee, as the case may be, with printed certificates for the Transfer
Restricted Securities which are in a form eligible for deposit with the
Depository Trust Company;

          (xviii)  cooperate and assist in any filings required to be made with
the NASD and in the performance of any due diligence investigation by any
underwriter (including any "qualified independent underwriter") that is required
                            ---------------------------------                   
to be retained in accordance with the rules and regulations of the NASD, and use
its best efforts to cause such Registration Statement to become effective and
approved by such governmental agencies or authorities as may be necessary to
enable the Holders selling Transfer Restricted Securities to consummate the
disposition of such Transfer Restricted Securities;

          (xix)    otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make generally available to its
security holders with regard to the Registration Statement, as soon as
practicable, a consolidated earnings statement meeting the requirements of Rule
158 (which need not be audited) covering a twelve-month period beginning after
the effective date of the Registration Statement (as such term is defined in
paragraph (c) of Rule 158 under the Act);

          (xx)     [Intentionally Omitted];

          (xxi)    [Intentionally Omitted];


                                       11
<PAGE>
 

              (xxii)    cause all Transfer Restricted Securities covered by the
Shelf Registration Statement to be listed on each securities exchange on which
similar securities issued by the Company are then listed if requested by the
Holders of a majority in aggregate Liquidation Preference of Series E Preferred
Stock (and the related Depositary Shares) or the managing underwriters, if any;
and

              (xxiii)   provide promptly to each Holder upon written request
each document filed with the Commission pursuant to the requirements of Section
13 or Section 15(d) of the Exchange Act.

          (c) Restrictions on Holders.  Each Holder agrees by acquisition of a
              -----------------------                                         
Transfer Restricted Security that, upon receipt of any notice from the Company
of the existence of any fact of the kind described in Section 6(b)(iii)(D)
hereof, such Holder will forthwith discontinue disposition of Transfer
Restricted Securities pursuant to the Registration Statement until such Holder's
receipt of the copies of the supplemented or amended Prospectus contemplated by
Section 6(b)(xvi) hereof, or until it is advised in writing (the "Advice") by
                                                                  ------     
the Company that the use of the Prospectus may be resumed, and has received
copies of any additional or supplemental filings that are incorporated by
reference in the Prospectus.  If so directed by the Company, each Holder will
deliver to the Company (at the Company's expense) all copies, other than
permanent file copies then in such Holder's possession, of the Prospectus
covering such Transfer Restricted Securities that was current at the time of
receipt of such notice.  In the event the Company shall give any such notice,
the time period regarding the effectiveness of such Registration Statement set
forth in Section 4 hereof, shall be extended by the number of days during the
period from and including the date of the giving of such notice pursuant to
Section 6(c)(iii)(D) hereof to and including the date when each selling Holder
covered by such Registration Statement shall have received the copies of the
supplemented or amended Prospectus contemplated by Section 6(c)(xvi) hereof or
shall have received the Advice.

SECTION 7.  REGISTRATION EXPENSES

      (a) All expenses incident to the Company's performance of or compliance
with this Agreement will be borne by the Company, regardless of whether the
Registration Statement becomes effective, including without limitation: (i) all
registration and filing fees and expenses (including filings made with the NASD,
including, if applicable, the fees and expenses (excluding underwriting
discounts or commissions, of any "qualified independent underwriter" and its
counsel, as may be required by the rules and regulations of the NASD)); (ii) all
fees and expenses of compliance with federal securities and state Blue Sky or
securities laws; (iii) all expenses of printing (including printing certificates
for the Depositary Shares, Series E Preferred Stock and Common Stock and
printing of Prospectuses), messenger and delivery services and telephone; (iv)
all fees and disbursements of counsel for the Company and, in accordance with
Section 7(b) below, the Holders of Transfer Restricted Securities; (v) all
application and filing fees in connection with listing the Depositary Shares,
Series E Preferred Stock, or Common Stock on a national exchange or automated
quotation system if required hereunder; and (vi) all fees and

                                       12
<PAGE>
 
disbursements of independent certified public accountants of the Company
(including the expenses of any special audit and comfort letters required by or
incident to such performance).

      The Company will, in any event, bear its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expenses of any annual audit and the
fees and expenses of any Person, including special experts, retained by the
Company.

     (b)  In connection with the Registration Statement required by this
Agreement, the Company will reimburse the Initial Purchasers and the Holders of
Transfer Restricted Securities being registered pursuant to the Registration
Statement for the reasonable fees and disbursements of not more than one
counsel, or such other counsel as may be chosen by the Holders of a majority in
number of shares or principal amount, as the case may be, of the Transfer
Restricted Securities for whose benefit the Registration Statement is being
prepared.

 
SECTION 8.  INDEMNIFICATION

          (a) The Company agrees to indemnify and hold harmless (i) each Holder,
(ii) each person, if any, who controls a Holder within the meaning of Section 15
of the Act or Section 20(a) of the Exchange Act and (iii) the respective
officers, directors, partners, employees, representatives and agents of any
Holder or any controlling person to the fullest extent lawful, from and against
any and all losses, liabilities, claims, damages and expenses whatsoever
(including but not limited to attorneys' fees and any and all expenses
whatsoever incurred in investigating, preparing or defending against any
investigation or litigation, commenced or threatened, or any claim whatsoever,
and any and all amounts paid in settlement of any claim or litigation), joint or
several, to which they or any of them may become or are subject under the Act,
the Exchange Act or otherwise, insofar as such losses, liabilities, claims,
damages or expenses (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or the Prospectus, or in any supplement
thereto or amendment thereof, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that the Company
will not be liable in any such case to the extent, but only to the extent, that
(i) any such loss, liability, claim, damage or expense arises out of or is based
upon any such untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such Holder expressly
for use therein and (ii) the foregoing indemnity with respect to any untrue
statement contained in or omitted from a Registration Statement or the
Prospectus shall not inure to the benefit of any Holder (or any person
controlling such Holder), from whom the person asserting any such loss,
liability, claim, damage or expense purchased (or received upon conversion), any
of the Depositary Shares, Series E Preferred Stock or Common Stock which are the
subject thereof if it is finally judicially determined that such loss,
liability, claim, damage or expense resulted solely from the fact that the

                                       13
<PAGE>
 
Holder sold Depositary Shares, Series E Preferred Stock or Common Stock, to a
person to whom there was not sent or given, at or prior to the written
confirmation of such sale, a copy of the Registration Statement and the
Prospectus, as amended or supplemented, and (x) the Company shall have
previously and timely furnished sufficient copies of the Registration Statement
or Prospectus, as so amended or supplemented, to such Holder in accordance with
this Agreement and (y) the Registration Statement or Prospectus, as so amended
or supplemented, would have corrected such untrue statement or omission of a
material fact. This indemnity agreement will be in addition to any liability
which the Company may otherwise have, including, under this Agreement.

          (b) Each Holder, severally and not jointly, agrees to indemnify and
hold harmless the Company and each person, if any, who controls the Company
within the meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act, against any losses, liabilities, claims, damages and expenses whatsoever
(including but not limited to attorneys' fees and any and all expenses
whatsoever incurred in investigating, preparing or defending against any
investigation or litigation, commenced or threatened, or any claim whatsoever
and any and all amounts paid in settlement of any claim or litigation), joint or
several, to which they or any of them may become subject under the Act, the
Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages
or expenses (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement or the Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, in each case to the extent, but only
to the extent, that any such loss, liability, claim, damage or expense arises
out of or is based upon any untrue statement or alleged untrue statement or
omission or alleged omission made therein in reliance upon and in conformity
with written information furnished to the Company by or on behalf of such Holder
expressly for use therein. This indemnity will be in addition to any liability
which a Holder may otherwise have, including under this Agreement. In no event,
however, shall the liability of any selling Holder thereunder be greater in
amount than the dollar amount of the proceeds received by such Holder upon its
sale of the Depositary Shares, Series E Preferred Stock, or Common Stock giving
rise to such indemnification obligation.

          (c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the extent that it
has been prejudiced in any material respect by such failure or from any
liability which it may otherwise have).  In case any such action is brought
against any indemnified party, and it notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel 

                                      14



<PAGE>

reasonably satisfactory to such indemnified party. Notwithstanding the
foregoing, the indemnified party or parties shall have the right to employ its
or their own counsel in any such case, but the fees and expenses of such counsel
shall be at the expense of such indemnified party or parties unless (i) the
employment of such counsel shall have been authorized in writing by the
indemnifying parties in connection with the defense of such action, (ii) the
indemnifying parties shall not have employed counsel to take charge of the
defense of such action within a reasonable time after notice of commencement of
the action, or (iii) such indemnified party or parties shall have reasonably
concluded that there may be defenses available to it or them which are different
from or additional to those available to one or all of the indemnifying parties
(in which case the indemnifying party or parties shall not have the right to
direct the defense of such action on behalf of the indemnified party or
parties), in any of which events such fees and expenses of counsel shall be
borne by the indemnifying parties; provided, however, that the indemnifying
party under subsection (a) or (b) above, shall only be liable for the legal
expenses of one counsel (in addition to any local counsel) for all indemnified
parties in each jurisdiction in which any claim or action is brought. Anything
in this subsection to the contrary notwithstanding, an indemnifying party shall
not be liable for any settlement of any claim or action effected without its
prior written consent, provided, however, that such consent was not unreasonably
withheld.

          (d) In order to provide for contribution in circumstances in which the
indemnification provided for in this Section 8 is for any reason held to be
unavailable from the Company or is insufficient to hold harmless a party
indemnified thereunder, the Company and each Holder shall contribute to the
aggregate losses, claims, damages, liabilities and expenses of the nature
contemplated by such indemnification provision (including any investigation,
legal and other expenses incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claims asserted, but after
deducting in the case of losses, claims, damages, liabilities and expenses
suffered by the Company, any contribution received by the Company from persons,
other than the Holders, who may also be liable for contribution, including
persons who control the Company within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act) to which the Company and any Holder may be
subject, in such proportion as is appropriate to reflect the relative benefits
received by the Company from the offering of the Series E Preferred Stock (and
the related Depositary Shares), and any such Holder from its sale of Depositary
Shares, Series E Preferred Stock, or Common Stock, or, if such allocation is not
permitted by applicable law or indemnification is not available as a result of
the indemnifying party not having received notice as provided in this Section 8,
in such proportion as is appropriate to reflect not only the relative benefits
referred to above but also the relative fault of the Company and the Holders in
connection with the statements or emissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company and any
Holder shall be deemed to be in the same proportion as (x) the total proceeds
from the offering (net of discounts but before deducting expenses) of the Series
E Preferred Stock (and the related Depositary Shares) received by the Company
and (y) the total proceeds received by such Holder upon its sale of Depositary
Shares, Series E Preferred Stock, or Common Stock which would otherwise give
rise to the indemnification obligation. The relative fault of the Company and of
the Holders shall be determined by reference to, among other things, whether the
untrue 

                                      15

<PAGE>

or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
or the Holders and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and each Holder agree that it would not be just and equitable if
contribution pursuant to this Section 8 were determined by pro rata allocation
or by any other method of allocation which does not take into account the
equitable considerations referred to above. Notwithstanding the provisions of
this Section 8, (i) no Holder shall be required to contribute, in the aggregate,
any amount in excess of the amount by which the total received by such Holder
with respect to the sale of its Depositary Shares, Series E Preferred Stock, or
Common Stock, as the case may be, exceeds the sum of (A) the amount paid by such
Holder for such Depositary Shares, Series E Preferred Stock, or Common Stock,
plus (B) the amount of any damages which such Holder has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission and (ii) no person guilty of fraudulent misrepresentation
(within the meaning of Section II (f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 8, (A) each person, if any, who
controls a Holder within the meaning of Section 15 of the Act or Section 20(a)
of the Exchange Act and (B) the respective officers, directors, partners,
employees, representatives and agents of a Holder or any controlling person
shall have the same rights to contribution as such Holder, and each person, if
any, who controls the Company within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act shall have the same rights to contribution as
the Company, subject in each case to clauses (i) and (ii) of this Section 8(d).
Any party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim for contribution may be made against another party or parties
under this Section 8, notify such party or parties from whom contribution may be
sought, but the failure to so notify such party or parties shall not relieve the
party or parties from whom contribution may be sought from any obligation it or
they may have under this Section 8 or otherwise. No party shall be liable for
contribution with respect to any action or claim settled without its prior
written consent; provided, however, that such written consent was not
unreasonably withheld.

                                      16 
<PAGE>

SECTION 9.  RULE 144A

            The Company hereby agrees with each Holder, for so long as any
Transfer Restricted Securities remain outstanding, to make available, upon
request of any Holder of Transfer Restricted Securities, to any Holder or
beneficial owner of Transfer Restricted Securities in connection with any sale
thereof and any prospective purchaser of such Transfer Restricted Securities
designated by such Holder or beneficial owner, the information required by Rule
144A(d)(4) under the Act in order to permit resales of such Transfer Restricted
Securities pursuant to Rule 144A.


SECTION 10. UNDERWRITTEN REGISTRATIONS

            The Holders of Transfer Restricted Securities may elect to sell
their Transfer Restricted Securities pursuant to one or more Underwritten
Registrations; provided, however, that in no event shall any Holder commence any
such Underwritten Registration if a period of less than 180 days has elapsed
since the consummation of the most recent Underwritten Registration hereunder;
and provided further, that in no event shall the Holders effect more than three
such Underwritten Registrations hereunder. No Holder may participate in any
Underwritten Registration hereunder unless such Holder (a) agrees to sell such
Holder's Transfer Restricted Securities on the basis provided in customary
underwriting arrangements entered into in connection therewith and (b) completes
and executes all reasonable questionnaires, powers of attorney, indemnities,
underwriting agreements, lock-up letters and other documents required under the
terms of such underwriting arrangements.


SECTION 11. SELECTION OF UNDERWRITERS

            In any Underwritten Offering, the investment banker or investment
bankers and manager or managers that will administer the offering will be
selected by the Holders of a majority in aggregate Liquidation Preference or
aggregate principal amount of the Transfer Restricted Securities included in
such offering, provided, that such investment bankers and managers must be
reasonably satisfactory to the Company.  Such investment bankers and managers
are referred to herein as the "underwriters."
                               ------------  

                                      17
<PAGE>


SECTION 12. MISCELLANEOUS

            (a) Remedies. Each Holder, in addition to being entitled to exercise
                --------
all rights provided herein, in the Certificate of Designation, the Purchase
Agreement or granted by law, including recovery of liquidated or other damages,
will be entitled to specific performance of its rights under this Agreement. The
Company agrees that monetary damages (including the Liquidated Damages
contemplated hereby) would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Agreement and hereby agrees
to waive the defense in any action for specific performance that a remedy at law
would be adequate.

            (b) No Inconsistent Agreements. The Company will not on or after the
                --------------------------
date of this Agreement enter into any agreement with respect to its securities
that conflicts with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Company's securities under any
agreement in effect on the date hereof, except where a waiver with respect
thereto has been obtained prior to the date of effectiveness of any registration
statement required under this Agreement.

                                      18
 

<PAGE>
 
          (c)  [Intentionally Omitted].

          (d)  Amendments and Waivers.  The provisions of this Agreement may not
               ----------------------                                           
be amended, modified or supplemented, and waivers or consents to or departures
from the provisions hereof may not be given unless the Company has obtained the
written consent of Holders of a majority of the outstanding Liquidation
Preference or principal amount of Transfer Restricted Securities.

          (e)  Notices.  All notices and other communications provided for or
               -------                                                       
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:

          (f)  if to a Holder, at the address set forth on the records of the
Transfer Agent with a copy to the Transfer Agent; and

                        if to the Company:

                        Intermedia Communications Inc.
                        3625 Queen Palm Drive
                        Tampa, Florida 33619
                        Telecopier No.: (813) 829-2470
                        Attention: Chief Financial Officer

                        With a copy to:

                                      19
<PAGE>
 

                        Kronish, Lieb, Weiner & Hellman LLP
                        1114 Avenue of the Americas, 46th Floor
                        New York, New York 10036
                        Telecopier No.: (212) 997-3527
                        Attention: Ralph J. Sutcliffe

          All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if telecopied; and on the
next business day, if timely delivered to an air courier guaranteeing overnight
delivery.

          Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Transfer Agent at
the address specified in the Certificate of Designation.

          (g)  Successors and Assigns. This Agreement shall inure to the benefit
               ----------------------
of and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment,
subsequent Holders of Transfer Restricted Securities; provided, however, that
this Agreement shall not inure to the benefit of or be binding upon a successor
or assign of a Holder unless and to the extent such successor or assign acquired
Transfer Restricted Securities directly from such Holder.

                                      20

<PAGE>
 
 
          (h) Counterparts.  This Agreement may be executed in any number of
              ------------                                                  
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

          (i) Headings.  The headings in this Agreement are for convenience of
              --------                                                        
reference only and shall not limit or otherwise affect the meaning hereof.

          (j) Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
              -------------                                                    
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.

          (k) Severability.  In the event that any one or more of the provisions
              ------------                                                      
contained herein, or the application thereof in any circumstances is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.

          (l) Entire Agreement.  This Agreement together with the other
              ----------------                                         
Operative Documents (as defined in the Purchase Agreement) is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the 

                                      21
<PAGE>
 
agreement and understanding of the parties hereto in respect of the subject
matter contained herein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein with respect to
the registration rights granted by the Company with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understanding between the parties with respect to such subject matter.

          IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.

                                    INTERMEDIA COMMUNICATIONS INC.

                                    By: /s/ Robert M. Manning
                                        ----------------------------------------
                                    Name:  Robert M. Manning
                                    Title: Senior Vice President and Chief 
                                           Financial Officer



BEAR, STEARNS & CO.  INC.

By: /s/ Stephen  M. Parish
    ---------------------------------
    Name:  Stephen M. Parish
    Title: Senior Managing Director


SALOMON BROTHERS INC

By: /s/ Peter Westley
    ---------------------------------
    Name:  Peter Westley
    Title: Vice President

                                      
                                      22

<PAGE>
 
                                                                    EXHIBIT 12.1

Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends
Intermedia Communications Inc.

<TABLE> 
<CAPTION> 
                                                                                                                                    
                                                                                     Pro forma(1)                     Pro forma(1)  
                                                                                        Year      Nine months ended   Nine months   
                                               Years ended December 31,                 Ended       September 30,      Ended        
                                  -------------------------------------------------  December 31,  ------------------ September 30, 
                                   1992       1993      1994       1995       1996        1996         1996     1997        1997
                                 --------------------------------------------------------------------------------------------------
<S>                             <C>         <C>       <C>        <C>        <C>       <C>           <C>       <C>        <C> 
Loss before extraordinary items   (235)      (2,074)   (3,067)    (19,157)   (57,198)  (164,332)     (35,642)  (157,385)  (239,159)
Income tax benefit                   -            -         -         (97)         -        783            -          -        214
                                 --------------------------------------------------------------------------------------------------
Loss before income taxes          (235)      (2,074)   (3,067)    (19,254)   (57,198)  (163,549)     (35,642)  (157,385)  (238,945)
                                 ===================================================================================================
Fixed charges:                   
Interest expensed                1,031          844     1,219      13,355     35,213     94,668       24,179     39,895     81,327
Capitalized interest               120          213       257         677      2,780      2,780        1,940      2,528      2,528
Amortization of deferred                                                                                       
financing costs (3)                 67           78        69         412      1,252          -            -          -          - 
Estimated interest factor on                                                                                          
operating leases (4)               275          313       200         428      1,598      3,940          897      2,422      3,742
Dividends on redeemable                                                                                               
preferred stock                    267            -         -           -          -     71,851            -     27,118     53,135
                                 --------------------------------------------------------------------------------------------------
Total fixed charges              1,760        1,448     1,745      14,872     40,843    173,239       27,016     71,963    140,732
                                 ==================================================================================================
Earnings:                        
Loss before income tax            (235)      (2,074)   (3,067)    (19,157)   (57,198)  (164,332)     (35,642)  (157,385)  (239,159)
Fixed charges excluding          
capitalized interest and 
preferred stock dividends        1,373        1,235     1,488      14,195     38,063     98,608       25,076     42,317     85,069
                                 --------------------------------------------------------------------------------------------------
Total earnings                   1,138         (839)   (1,579)     (4,962)   (19,135)   (65,724)     (10,566)  (115,068)  (154,090)
                                 ==================================================================================================
Ratio of earnings to fixed       
charges and preferred stock 
dividends                         0.65        (0.58)    (0.90)      (0.33)     (0.47)     (0.38)       (0.39)     (1.60)     (1.09)
                                 ==================================================================================================
Insufficiency of earnings to     
cover fixed charges and 
preferred stock dividends          622        2,287     3,324      19,834     59,978    238,963       37,582    187,031    294,822
                                 ==================================================================================================


</TABLE> 


<TABLE> 
<CAPTION> 
                                       Pro Forma as Adjusted(2)
                                --------------------------------------
                                    Year              Nine Months
                                   Ended                 Ended
                                 December 31,         September 30,
                                    1996                  1997
                                --------------------------------------
<S>                             <C>                    <C> 
Loss before extraordinary items    (194,967)             (262,136)
Income tax benefit                      783                   214
                                --------------------------------------
Loss before income taxes           (194,184)             (261,922) 
                                ======================================
                                
Fixed charges:                      
Interest expensed                   125,303               104,304
Capitalized interest                  2,780                 2,528
Amortization of deferred 
financing costs (3)                       -                     -
Estimated interest factor on     
operating leases (4)                  3,940                 3,742
Dividends on redeemable          
preferred stock                      71,851                53,135   
                                --------------------------------------
Total fixed charges                 203,874               163,709
                                ======================================
                                
Earnings:                       
Loss before income tax             (194,967)             (262,136)
Fixed charges excluding         
capitalized interest and 
preferred stock dividends           129,243               108,046
                                --------------------------------------
Total earnings                      (65,724)             (154,090)
                                ======================================
Ratio of earnings to fixed      
charges and preferred stock
dividends                             (0.32)                (0.94)
                                ======================================
Insufficiency of earnings to    
cover fixed charges and 
preferred stock dividends           269,598               317,799
                                ======================================

(1) Gives effect to the pending acquisition of Shared Technologies, the October 1997 Offerings and the application of the net 
    proceeds therefrom.

(2) Gives effect to the December 1997 Offering and the application of the net proceeds therefrom.

(3) Deferred financing costs are included in interest expense for proforma amounts and the 9 months ended September 30, 1997 and 
    1996.

(4) Estimated interest factor on operating leases represents an estimated 1/3 of total operating lease expense for the period.
</TABLE> 

<PAGE>
 
 
                                                                   EXHIBIT 23.2

              Consent of Independent Certified Public Accountants
 
We consent to the reference to our firm under the captions "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Intermedia
Communications Inc. for the registration of 8,000,000 Depositary Shares (each
representing a one-hundredth interest in a share of 7% Series E Junior
Convertible Preferred Stock), 80,000 shares of 7% Series E Junior Convertible
Preferred Stock, 3,307,425 shares of Common Stock issuable upon conversion of
the 7% Series E Junior Convertible Preferred Stock and Common Stock issuable as
dividends on the 7% Series E Junior Convertible Preferred Stock, and to the
incorporation by reference therein of our report dated February 10, 1997, except
for Note 13, as to which the date is March 7, 1997, with respect to the
consolidated financial statements and schedule of Intermedia Communications Inc.
included in its Annual Report (Form 10-K) for the year ended December 31, 1996,
filed with the Securities and Exchange Commission.


 
        /s/ Ernst & Young LLP
 
Tampa, Florida
December 19, 1997
 

<PAGE>
 

 
                                                                   EXHIBIT 23.3
 

              Consent of Independent Certified Public Accountants
 
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Intermedia
Communications Inc. for the registration of 8,000,000 Depositary Shares (each
representing a one-hundredth interest in a share of 7% Series E Junior
Convertible Preferred Stock), 80,000 shares of 7% Series E Junior Convertible
Preferred Stock, 3,307,425 shares of Common Stock issuable upon conversion of
the 7% Series E Junior Convertible Preferred Stock and Common Stock issuable as
dividends on the 7% Series E Junior Convertible Preferred Stock, and to the
incorporation by reference therein of our report dated February 24, 1997, with
respect to the consolidated financial statements of DIGEX, Incorporated included
in its Annual Report (Form 10-KSB) for the year ended December 31, 1996, filed
with the Securities and Exchange Commission.


 
        /s/ Ernst & Young LLP
 
Baltimore, Maryland
December 19, 1997
 

<PAGE>
 
                                                                    Exhibit 23.4


              Consent of Independent Certified Public Accountants

     As independent public accountants, we hereby consent to the incorporation
     by reference in this Form S-3 Registration Statement of our report dated
     March 7, 1997 incorporated by reference in the Shared Technologies
     Fairchild Inc. Form 10-K for the year ended December 31, 1996 and to all
     references to our Firm included in this Form S-3 Registration Statement.

            /s/ Arthur Andersen LLP


     Washington, D.C.
     December 16, 1997

<PAGE>
 
                                                                    Exhibit 23.5


              Consent of Independent Certified Public Accountants

     We consent to the incorporation by reference in this Registration Statement
     on Form S-3 of Intermedia Communications Inc. for the registration of
     8,000,000 Depositary Shares (each representing a one-hundredth interest in
     a share of 7% Series E Junior Convertible Preferred Stock), 80,000 shares
     of 7% Series E Junior Convertible Preferred Stock, 3,307,425 shares of
     Common Stock issuable upon conversion of the 7% Series E Junior Convertible
     Preferred Stock and Common Stock issuable as dividends on the 7% Series E
     Junior Convertible Preferred Stock, of our report, which contains an
     explanatory paragraph relating to the changing of the method of accounting
     for Shared Technologies Fairchild Inc.'s investment in one of its
     subsidiaries, dated March 1, 1996, on our audits of the consolidated
     financial statements and financial statement schedule of Shared
     Technologies Fairchild Inc. as of December 31, 1995 and for the years ended
     December 31, 1995 and 1994. We also consent to the reference to our firm
     under the caption "Experts".

            /s/ Rothstein, Kass & Company, P.C.


     Roseland, New Jersey
     December 16, 1997


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