INTERMEDIA COMMUNICATIONS INC
S-4, 1998-01-23
TELEPHONE COMMUNICATIONS (NO RADIOTELEPHONE)
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<PAGE>
 
    AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY  , 1998
 
                                                         REGISTRATION NO. 33-
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
 
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
 
                               ----------------
 
                                   FORM S-4
                            REGISTRATION STATEMENT
                                     UNDER
                          THE SECURITIES ACT OF 1933
 
                               ----------------
 
                        INTERMEDIA COMMUNICATIONS INC.
            (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 
                               ----------------
 
        DELAWARE                    4813                    59-29-13586
                              (Primary Standard          (I.R.S. Employer
     (State or other             Industrial             Identification No.)
      jurisdiction             Classification
   of incorporation or          Code Number)
      organization)
 
                             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: As soon as
      practicable after theeffective date of this Registration Statement.
 
  If any of the securities being registered on this form are to be offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
 
                               ----------------
 
                        CALCULATION OF REGISTRATION FEE
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                       PROPOSED
                                         MAXIMUM       MAXIMUM
                            AMOUNT    OFFERING PRICE  AGGREGATE    AMOUNT OF
  TITLE OF SECURITIES       TO BE        PROPOSED      OFFERING   REGISTRATION
    TO BE REGISTERED      REGISTERED     PER UNIT       PRICE         FEE
- - ------------------------------------------------------------------------------
<S>                      <C>          <C>            <C>          <C>
8 1/2% Series B Senior
 Notes
 due 2008..............  $400,000,000     $1,000     $400,000,000 $118,000.00
</TABLE>
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
 
                               ----------------
 
  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>
 
                         INTERMEDIA COMMUNICATIONS INC.
 
                             CROSS-REFERENCE SHEET
 
<TABLE>
<CAPTION>
 ITEM             CAPTION IN FORM S-4                         LOCATION IN PROSPECTUS
 ----             -------------------                         ----------------------
 <C>  <S>                                           <C>
  1   Forepart of the Registration Statement and
       Outside Front Cover Page of Prospectus....   Outside Front Cover Page
  2   Inside Front and Outside Back Cover Pages
       of Prospectus.............................   Inside Front Cover Page; Available
                                                    Information; Outside Back Cover Page
  3   Risk Factors, Ratio of Earnings to Fixed
       Charges and Other Information.............   Prospectus Summary; The Company; Risk
                                                    Factors; Selected Financial and Other
                                                    Operating Data
  4   Terms of the Transaction...................   Prospectus Summary; Risk Factors; The
                                                    Exchange Offer; Description of the Senior
                                                    Notes; Plan of Distribution
  5   Pro Forma Financial Statements.............   Selected Financial and Other Operating Data
  6   Material Contracts with the Company Being
       Acquired..................................   *
  7   Additional Information Required for
       Reoffering by Persons and Parties Deemed
       to be Underwriters........................   *
  8   Interests of Named Experts and Counsel.....   Legal Matters; Experts
  9   Disclosure of Commission Position on
       Indemnification For Securities Act
       Liabilities...............................   *
 10   Information With Respect to S-3                Outside and Inside Cover Pages of
      Registrants................................    Prospectus; Prospectus Summary; Risk
                                                     Factors; Use of Proceeds; Capitalization;
                                                     Selected Financial and Other Operating
                                                     Data; Business; Description of the Senior
                                                     Notes
 11   Incorporation of Certain Information by        Incorporation of Certain Documents by
      Reference..................................    Reference
 12   Information With Respect to S-2 or S-3
       Registrants...............................    *
 13   Incorporation of Certain Information by
      Reference..................................    *
 14   Information With Respect to Registrants
       Other Than S-3 or S-2 Registrants.........    *
 15   Information With Respect to S-3 Companies..    *
 16   Information With Respect to S-2 or S-3
       Companies.................................    *
 17   Information With Respect to Companies Other
       Than S-2 or S-3 Companies.................    *
 18   Information if Proxies, Consents or
       Authorizations Are to be Solicited........    *
 19   Information if Proxies, Consents or
       Authorizations Are Not to be Solicited, or
       in an Exchange Offer......................    *
</TABLE>
- - --------
* Omitted because item is inapplicable or answer is in the negative.
 
 
<PAGE>
 
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A         +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE   +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY  +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT        +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR   +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE      +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE    +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF  +
+ANY SUCH STATE.                                                               +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION
 
                 PRELIMINARY PROSPECTUS DATED JANUARY   , 1998
                               OFFER TO EXCHANGE
 
8 1/2% SERIES B SENIOR NOTES DUE 2008 FOR ANY AND ALL OUTSTANDING 8 1/2% SENIOR
                               NOTES DUE 2008 OF
                         INTERMEDIA COMMUNICATIONS INC.
 
                  THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
              NEW YORK CITY TIME, ON       , 1998, UNLESS EXTENDED
 
                                  ----------
 
  Intermedia Communications Inc., a Delaware corporation ("Intermedia" or the
"Company"), hereby offers, upon the terms and subject to the conditions set
forth in this Prospectus and the accompanying Letter of Transmittal (which
together constitute the "Exchange Offer"), to exchange $1,000 principal amount
of 8 1/2% Series B Senior Notes due 2008 (the "Senior Notes") of the Company
for each $1,000 principal amount of the issued and outstanding 8 1/2% Senior
Notes due 2008 (the "Old Notes" and collectively with the Senior Notes, the
"Notes") of the Company. As of the date of this Prospectus, $400,000,000
principal amount of the Old Notes were outstanding. The terms of the Senior
Notes are substantially identical in all material respects (including interest
rate and maturity) to the terms of the Old Notes except for certain transfer
restrictions and registration rights relating to the Old Notes.
 
  The Exchange Offer is being made to satisfy certain obligations of the
Company under the Registration Rights Agreement, dated December 23, 1997, among
the Company and the other signatories thereto (the "Registration Rights
Agreement"). Upon consummation of the Exchange Offer, holders of Old Notes that
were not prohibited from participating in the Exchange Offer and did not tender
their Old Notes will not have any registration rights under the Registration
Rights Agreement covering such Old Notes not tendered and such Old Notes will
continue to be subject to the restrictions on transfer contained in the legend
thereon. If the Exchange Offer is not consummated, or the Shelf Registration
Statement (as defined herein) is not filed or is not declared effective or,
after either this Registration Statement (the "Exchange Registration
Statement") or the Shelf Registration Statement has been declared effective,
such registration statement thereafter ceases to be effective or usable
(subject to certain exceptions) in connection with resales of Old Notes or
Senior Notes in accordance with and during the periods specified in the
Registration Rights Agreement, additional interest will accrue and be payable
on the Notes until so declared effective or consummated. See "The Exchange
Offer," "Description of the Senior Notes--Registration Rights; Liquidated
Damages."
 
  Based on interpretations by the staff of the Securities and Exchange
Commission (the "SEC" or the "Commission") with respect to similar
transactions, the Company believes that Senior Notes issued pursuant to the
Exchange Offer in exchange for Old Notes may be offered for resale, resold and
otherwise transferred by holders thereof (other than any holder which is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act of 1933, as amended (the "Securities Act")) without compliance with the
registration and prospectus delivery requirements of the Securities Act,
provided that the Senior Notes are acquired in the ordinary course of the
holders' business, the holders have no arrangement with any person to
participate in the distribution of the Senior Notes and neither the holder nor
any other person is engaging in or intends to engage in a distribution of the
Senior Notes. Each broker-dealer that receives Senior Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of Senior Notes. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of Senior Notes received in exchange for Old Notes acquired as a
result of market-making activities or other trading activities. The Company has
agreed that, for a period of 365 days after the Exchange Date (as defined
herein), it will make this Prospectus available to any broker-dealer for use in
connection with any such resale. See "Plan of Distribution."
 
  The Senior Notes will evidence the same debt as the Old Notes and will be
entitled to the benefits of the Indenture (as defined herein). For a more
complete description of the terms of the Senior Notes, see "Description of the
Senior Notes." There will be no cash proceeds to the Company from the Exchange
Offer. The Senior Notes will be senior unsecured obligations of the Company
ranking pari passu in right of payment of principal and interest with all other
existing and future senior indebtedness of the Company, including the Company's
12 1/2% Senior Discount Notes due 2006 (the "12 1/2% Notes"), the 11 1/4%
Senior Discount Notes due 2007 (the "11 1/4% Notes") and the 8 7/8% Senior
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 Old Notes, and will rank
senior in right of payment to any future subordinated indebtedness of the
Company. Holders of secured indebtedness of the Company will, however, have
claims that are prior to the claims of the holders of the Senior Notes with
respect to the assets securing such other indebtedness. See "Description of the
Senior Notes." As of September 30, 1997, on a pro forma basis after giving
effect to the issuance of the 8 7/8% Notes, the December 23 Offering (as
defined herein) and the pending acquisition of Shared Technologies (as defined
herein), the Company would have had approximately $1.4 billion of indebtedness
and other liabilities, including trade payables outstanding, which includes
approximately $71.0 million of indebtedness and other liabilities of the
Company's subsidiaries.
                                                        (continued on next page)
 
                                  ----------
 
  SEE "RISK FACTORS" BEGINNING ON PAGE 10 FOR A DESCRIPTION OF CERTAIN FACTORS
        THAT SHOULD BE CONSIDERED BY PARTICIPANTS IN THE EXCHANGE OFFER.
 
                                  ----------
 
THESE SECURITIES  HAVE NOT BEEN APPROVED  OR DISAPPROVED BY THE  SECURITIES AND
 EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
 AND EXCHANGE  COMMISSION OR ANY  STATE SECURITIES COMMISSION PASSED  UPON THE
  ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
  IS A CRIMINAL OFFENSE
 
                                  ----------
 
                  THE DATE OF THIS PROSPECTUS IS       , 1998
<PAGE>
 
(Continuation of front cover page)
 
  The Old Notes were originally issued 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 December 18, 1997
between the Company and the Initial Purchasers (the "December 23 Offering").
The Initial Purchasers, in turn, resold the Old Notes in private sales exempt
from registration under the Securities Act in reliance upon the exemptions
provided by Rule 144A, Regulation S and by Section 4(2) of the Securities Act.
The Old Notes may not be reoffered, resold or otherwise pledged, hypothecated
or transferred in the United States unless registered or unless an exemption
from the registration requirements of the Securities Act and applicable state
securities laws is available.
 
  The Company has not entered into any arrangement or understanding with any
person to distribute the Senior Notes to be received in the Exchange Offer and
to the best of the Company's information and belief, each person participating
in the Exchange Offer is acquiring the Senior Notes in its ordinary course of
business and has no arrangement or understanding with any person to
participate in the distribution of the Senior Notes to be received in the
Exchange Offer.
 
  The Exchange Offer is not conditioned upon any minimum aggregate principal
amount of Old Notes being tendered for exchange. The Exchange Offer will
expire at 5:00 p.m., New York City time, on        , 1998, unless extended
(the "Expiration Date"). The date of acceptance for exchange of the Old Notes
for the Senior Notes (the "Exchange Date") will be the first business day
following the Expiration Date. Old Notes tendered pursuant to the Exchange
Offer may be withdrawn at any time prior to the Expiration Date; otherwise
such tenders are irrevocable.
 
  The Senior Notes will have the same issue date and issue price as the Old
Notes. For a discussion of the tax consequences of the Exchange Offer, see
"Certain Federal Income Tax Considerations."
 
  Prior to this Exchange Offer, there has been no public market for the Notes.
The Company does not currently intend to list the Senior Notes on any
securities exchange or to seek approval for quotation through any automated
quotation system. There can be no assurance that an active public market for
the Senior Notes will develop.
<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 and other information with the Commission. Such
reports, proxy and other information can be inspected and copied without
charge at the Public Reference Room maintained by the Commission at 450 Fifth
Street, N.W., Room 1024, Washington D.C. 20549. In addition, upon request,
such reports, proxy statements and other information will be made available
for inspection and copying at the Commission's public reference facilities at
500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and at Seven
World Trade Center, 13th floor, New York, New York 10048. Copies of such
material can be obtained at prescribed rates upon request from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington D.C.
20549. The Commission also maintains a site on the World Wide Web
(http://www.sec.gov) that contains reports, proxy and information statements
and other information regarding registrants, like the Company, that file
electronically with the Commission. The Company's common stock is listed on
the Nasdaq National Market under the symbol "ICIX". Reports, proxy statements
and other information concerning the Company may be inspected and copied at
the offices of the National Association of Securities Dealers, Inc. 1735 K
Street, N.W., Washington D.C. 20006.
 
  In the event that the Company ceases to be subject to the informational
reporting requirements of the Exchange Act, the Company has agreed that,
whether or not it is required to do so by the rules and regulations of the
Commission, for so long as any of the securities offered hereby remain
outstanding, it will furnish to the holders of the securities and file with
the Commission (unless the Commission will not accept such a filing) (i) all
quarterly and annual financial information that would be required to be
contained in a filing with the Commission on Forms 10-Q and 10-K if the
Company were required to file such forms, including a "Management's Discussion
and Analysis of Results of Operations and Financial Condition" and, with
respect to the annual information only, a report thereon by the Company's
certified independent public accountants and (ii) all reports that would be
required to be filed with the Commission on Form 8-K if the Company were
required to file such reports. In addition, for so long as any of the
securities offered hereby remain outstanding, the Company has agreed to make
available to any prospective purchaser of the securities or beneficial owner
of the securities in connection with any sale thereof the information required
by Rule 144A(d)(4) under the Securities Act.
 
                                      ii
<PAGE>
 
                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 Current Report on Form 8-K filed with the Commission on
  March 14, 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
  June 5, 1997.
 
    The Company's Current Report on Form 8-K filed with the Commission on
  July 9, 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 Company's Current Report on Form 8-K filed with the Commission on
  January 21, 1998.
 
  In addition, the following information that has been filed with the
Commission is incorporated herein by reference:
 
    The consolidated financial statements of DIGEX, Incorporated ("DIGEX")
   appearing in DIGEX's Annual Report on Form 10-KSB for the year ended
   December 31, 1996.
 
    The audited financial statements of Shared Technologies Fairchild Inc.
   ("Shared Technologies") appearing in Shared Technologies' Annual Report on
   Form 10-K for the year ended December 31, 1996.
 
  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 will provide without charge to each person to whom a copy of
this Prospectus has been delivered, including any beneficial owner, 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>
 
                               PROSPECTUS SUMMARY
 
  The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus and in the Consolidated
Financial Statements and the Notes thereto incorporated herein by reference.
References in this Prospectus to the "Company" or "Intermedia" mean Intermedia
Communications Inc. together with its subsidiaries, except where the context
otherwise requires. This Prospectus contains certain "forward-looking
statements" concerning the Company's operations, economic performance and
financial condition, which are subject to inherent uncertainties and risks,
including those identified under "Risk Factors." Actual results could differ
materially from those anticipated in this Prospectus. When used in this
Prospectus, the words "estimate," "project," "anticipate," "expect," "intend,"
"believe" and similar expressions are intended to identify forward-looking
statements.
 
                                  THE COMPANY
 
  Intermedia is a rapidly growing integrated communications services provider
("ICP"), offering a full suite of local, long distance and enhanced data
telecommunications services to business and government end user customers, long
distance carriers, Internet service providers ("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 competitive local exchange carriers
("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 now has
thirteen voice switches in service. The Company provides enhanced data
services, including frame relay, asynchronous transfer mode ("ATM") and
Internet access services, primarily to business and government customers
(including over 100 ISPs), in approximately 3,800 cities nationwide, utilizing
approximately 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
 
  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 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
 
                                       1
<PAGE>
 
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.
 
  On December 31, 1997, a Federal District Court in Texas found
unconstitutional certain provisions of the 1996 Act restricting the regional
Bell operating companies ("RBOCs") from offering long distance service in their
operating regions until they could demonstrate that their networks have been
made available to competitive providers of local exchange services in those
regions. The United States and some long distance companies have requested a
stay of this decision and it is expected that they, and others, will seek its
reversal on appeal. If the District Court's decision is permitted to stand, it
could result in RBOCs' providing interexchange service in their operating
regions sooner than previously expected.
 
  Acquisitions. On July 11, 1997, the Company consummated the final step in the
acquisition of DIGEX, through the merger of Daylight Acquisition Corp.
("Daylight"), a wholly-owned subsidiary of the Company, with DIGEX (the "DIGEX
Acquisition"). The aggregate consideration for the DIGEX Acquisition, which was
funded with the Company's 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. DIGEX's operations are being integrated with those of the Company,
and DIGEX will be operated as a division of the Company. For the nine months
ended September 30, 1997, DIGEX's revenues were approximately $33.5 million.
 
  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 made a tender offer for 4 million additional shares of Shared
Technologies at $15 per share in cash, which expired on December 26, 1997. More
than 16 million shares were tendered pursuant to the tender offer. In order to
avoid the purchase of fractional shares, 4,000,064 shares were accepted.
 
  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 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
 
                                       2
<PAGE>
 
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, 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 shareholders and
receipt of necessary regulatory approvals.
 
  On December 17, 1997 the Company entered into a definitive agreement to
acquire the stock 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 employing over 100
sales and customer service professionals 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.
 
  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 December 23
Offering) and/or the Company's securities. Except as described in this
Prospectus, 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.
 
  Offerings. 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 (the "Series D Preferred Stock"), and $649.0 million
principal amount at maturity of 11 1/4% Senior Discount Notes due 2007 (the "11
1/4% Notes") (including the exercise of the over-allotment option with respect
to such 11 1/4% Notes). The aggregate gross proceeds from the July 1997
Offerings was approximately $547.3 million.
 
  On October 30, 1997, the Company completed private placements (the "October
30 Offerings") of 8,000,000 Depositary Shares (including exercise of the over-
allotment option with respect to such Depositary Shares, the "Depositary
Shares"), each representing a one-hundredth interest in a share of Series E
Preferred Stock (the "Series E Preferred Stock") and $260.3 million principal
amount (including the exercise of the over-allotment option with respect
thereto) of 8 7/8% Notes. The aggregate gross proceeds from the October 30
Offerings was $460.3 million.
 
  On December 23, 1997, the Company completed a private placement of $400.0
million (including the exercise of the over-allotment option with respect
thereto) of the Old Notes. The aggregate gross proceeds from the December 23
Offering was $390.0 million.
 
                                       3
<PAGE>
 
                               THE EXCHANGE OFFER
 
Securities Offered..........
                              Up to $400,000,000 principal amount of 8 1/2%
                              Series B Senior Notes due 2008 of the Company
                              (the "Senior Notes" and collectively with the Old
                              Notes, the "Notes"). The terms of the Senior
                              Notes and the Old Notes are substantially
                              identical in all material respects, except for
                              certain transfer restrictions and registration
                              rights relating to the Old Notes which do not
                              apply to the Senior Notes. See "Description of
                              the Senior Notes."
 
The Exchange Offer..........  The Company is offering to exchange $1,000
                              principal amount of Senior Notes for each $1,000
                              principal amount of Old Notes. See "The Exchange
                              Offer" for a description of the procedures for
                              tendering Old Notes. The Exchange Offer satisfies
                              the registration obligations of the Company under
                              the Registration Rights Agreement. Upon
                              consummation of the Exchange Offer, holders of
                              Old Notes that were not prohibited from
                              participating in the Exchange Offer and did not
                              tender their Old Notes will not have any
                              registration rights under the Registration Rights
                              Agreement with respect to such non-tendered Old
                              Notes and, accordingly, such Old Notes will
                              continue to be subject to the restrictions on
                              transfer contained in the legend thereon.
 
Tenders, Expiration Date;
 Withdrawal.................  The Exchange Offer will expire at 5:00 p.m., New
                              York City time, on       , 1998, or such later
                              date and time to which it is extended. Tenders of
                              Old Notes pursuant to the Exchange Offer may be
                              withdrawn and Old Notes retendered at any time
                              prior to the Expiration Date. Any Old Notes not
                              accepted for exchange for any reason will be
                              returned without expense to the tendering holder
                              as promptly as practicable after the expiration
                              or termination of the Exchange Offer.
 
Federal Income Tax
 Considerations.............  The Exchange Offer will not result in any income,
                              gain or loss to the holders or the Company for
                              federal income tax purposes. See "Certain Federal
                              Income Tax Considerations."
 
Use of Proceeds.............
                              There will be no proceeds to the Company from the
                              exchange of the Old Notes for the Senior Notes
                              pursuant to the Exchange Offer.
 
Exchange Agent..............  SunTrust Bank, Central Florida, National
                              Association, the trustee (the "Trustee") under
                              the Indenture (as defined herein), is serving as
                              Exchange Agent in connection with the Exchange
                              Offer.
 
                                       4
<PAGE>
 
 
      CONSEQUENCES OF EXCHANGING OLD NOTES PURSUANT TO THE EXCHANGE OFFER
 
  Generally, holders of Old Notes (other than any holder who is an "affiliate"
of the Company within the meaning of Rule 405 under the Securities Act) who
exchange their Old Notes for Senior Notes pursuant to the Exchange Offer may
offer their Senior Notes for resale, resell their Senior Notes, and otherwise
transfer their Senior Notes without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided such Senior
Notes are acquired in the ordinary course of the holders' business, such
holders have no arrangement with any person to participate in a distribution of
such Senior Notes and neither the holder nor any other person is engaging in or
intends to engage in a distribution of the Senior Notes. Each broker-dealer
that receives Senior Notes for its own account in exchange for Old Notes must
acknowledge that it will deliver a prospectus in connection with any resale of
its Senior Notes. Broker-dealers may not exchange Old Notes which are part of
an unsold original allotment in the Exchange Offer. See "Plan of Distribution."
To comply with the securities laws of certain jurisdictions, it may be
necessary to qualify for sale or register the Senior Notes prior to offering or
selling such Senior Notes. The Company is required, under the Registration
Rights Agreement, to register the Senior Notes in any jurisdiction reasonably
requested by the holders, subject to certain limitations. Upon consummation of
the Exchange Offer, holders that were not prohibited from participating in the
Exchange Offer and did not tender their Old Notes will not have any
registration rights under the Registration Rights Agreement with respect to
such non-tendered Old Notes and, accordingly, such Old Notes will continue to
be subject to the restrictions on transfer contained in the legend thereon. In
general, the Old Notes may not be offered or sold (except in private
transactions), unless registered under the Securities Act and applicable state
securities laws. See "The Exchange Offer--Consequences of Failure to Exchange".
 
                                       5
<PAGE>
 
 
                    SUMMARY DESCRIPTION OF THE SENIOR NOTES
 
Securities Offered..........  Up to $400,000,000 principal amount of 8 1/2%
                              Series B Senior Notes due January 15, 2008 of the
                              Company. The terms of the Senior Notes and the
                              Old Notes are substantially identical in all
                              material aspects, except for certain transfer
                              restrictions and registration rights relating to
                              the Old Notes which do not apply to the Senior
                              Notes. See "Description of the Senior Notes."
 
Issue Price.................  $1,000 stated principal amount of the Old Notes
                              per $1,000 stated principal amount of the Senior
                              Notes.
 
Maturity Date...............  January 15, 2008.
 
Interest....................  Interest on the Senior Notes will accrue at 8
                              1/2% per annum and will be payable semi-annually
                              in arrears on January 15 and July 15 of each
                              year, commencing on July 15, 1998.
 
Yield.......................  8 1/2% per annum, computed on the basis of a 360
                              day year comprised of twelve 30-day months.
 
Optional Redemption.........  The Senior Notes may be redeemed at the option of
                              the Company, in whole or in part, on or after
                              January 15, 2003, at a premium declining to par
                              in 2006, plus accrued and unpaid interest, if
                              any, through the redemption date.
 
                              In the event of the sale by the Company prior to
                              January 15, 2001 of its capital stock (other than
                              Disqualified Stock (as defined herein)) (i) to a
                              Strategic Investor (as defined herein), in a
                              single transaction or a series of related
                              transactions, for an aggregate purchase price
                              equal to or exceeding $50.0 million or (ii) in
                              one or more Public Offerings (as defined herein)
                              of Common Stock, up to a maximum of 25% of the
                              aggregate principal amount of the Notes
                              originally issued will, at the option of the
                              Company, be redeemable from the net cash proceeds
                              of such sale (but only to the extent such
                              proceeds consist of cash or readily marketable
                              cash equivalents received in respect of the
                              capital stock (other than Disqualified Stock) so
                              sold) at a redemption price equal to 108.50% of
                              the principal amount thereof, with respect to the
                              Notes to be redeemed on the redemption date,
                              provided that at least 75% of the aggregate
                              principal amount of Notes originally issued
                              remains outstanding immediately after the
                              occurrence of such redemption.
 
Change of Control...........  In the event of a Change of Control (as defined
                              herein) the holders of the Senior Notes will have
                              the right to require the Company to purchase
                              their Senior Notes at a price equal to 101% of
                              the aggregate principal amount thereof, plus
                              accrued and unpaid interest and Liquidated
                              Damages, if any, to the date of purchase.
 
Ranking.....................  The Senior Notes will be senior obligations of
                              the Company, will rank pari passu in right of
                              payment with all existing and future senior
                              indebtedness of the Company, including the
                              Existing Senior
 
                                       6
<PAGE>
 
                              Notes and the Old Notes, and will rank senior in
                              right of payment to any future subordinated
                              indebtedness of the Company. Holders of secured
                              indebtedness of the Company will, however, have
                              claims that are prior to the claims of the
                              holders of the Senior Notes with respect to the
                              assets securing such other indebtedness. As of
                              September 30, 1997, on a pro forma basis after
                              giving effect to the issuance of the 8 7/8%
                              Notes, the December 23 Offering and the pending
                              acquisition of Shared Technologies, the Company
                              would have had approximately $1.4 billion of
                              indebtedness and other liabilities, including
                              trade payables outstanding, which includes
                              approximately $71.0 million of indebtedness and
                              other liabilities of the Company's subsidiaries.
 
Certain Covenants...........
                              The indenture governing the Senior Notes (the
                              "Indenture") 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 preferred stock, pay
                              dividends or make other distributions, repurchase
                              equity interests or subordinated indebtedness,
                              engage in sale and leaseback transactions, create
                              certain liens, enter into certain transactions
                              with affiliates, sell assets of the Company or
                              its subsidiaries, conduct certain lines of
                              business, issue or sell equity interests of the
                              Company's subsidiaries or enter into certain
                              mergers and consolidations. In addition, under
                              certain circumstances, the Company will be
                              required to offer to purchase the Senior Notes at
                              a price equal to 100% of the principal amount
                              thereof, plus accrued and unpaid interest, if
                              any, to the date of purchase, with the proceeds
                              of certain asset sales. See "Description of the
                              Senior Notes."
 
 
For additional information regarding the Senior Notes and the definitions of
certain capitalized terms used above, see "Description of the Senior Notes."
 
                                       7
<PAGE>
 
                   SUMMARY FINANCIAL AND OTHER OPERATING DATA
  Statement of operations and balance sheet data presented below as of and for
the five years in the period ended December 31, 1996 have been derived from the
consolidated financial statements of the Company, which financial statements
have been audited by Ernst & Young LLP, independent certified public
accountants. The summary financial data presented below as of and for the
quarters ended September 30, 1996 and 1997 have been derived from unaudited
financial statements of the Company. In the opinion of management, the
unaudited financial statements have been prepared on the same basis as the
audited financial statements and include all adjustments, which consist only of
normal recurring adjustments, necessary for a fair presentation of the
financial position and the results of operations for these periods. Operating
results for the nine months ended September 30, 1997 are not necessarily
indicative of the results that may be expected for the full year.
 
  The operating results of EMI Communications Corp. ("EMI") are included in the
Company's consolidated operating results commencing July 1, 1996. The operating
results of Universal Telecom Inc. ("UTT") and NetSolve Incorporated
("NetSolve") are included in the Company's consolidated operating results
commencing December 1, 1996. The operating results of DIGEX are included in the
Company's consolidated operating results commencing July 1, 1997. The 1996 pro
forma operating information gives effect to the EMI, UTT, NetSolve and DIGEX
acquisitions and the pending acquisition of Shared Technologies as if they
occurred on January 1, 1996. The 1997 pro forma operating information gives
effect to the DIGEX Acquisition and the pending acquisition of Shared
Technologies as if they occurred on January 1, 1997. Both 1996 and 1997 pro
forma operating information give effect to the March 1997 sale of $300 million
of 13 1/2% Series A Redeemable Exchangeable Preferred Stock, the July 1997
Offerings, the October 30 Offerings and the December 23 Offering as if they
occurred at the beginning of the respective periods. The following financial
information should be read in conjunction with "Business" and the Consolidated
Financial Statements of the Company and the Notes thereto which are
incorporated herein by reference.
 
         (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AND STATISTICAL DATA)
<TABLE>
<CAPTION>
                                                                                                         PRO FORMA(2)
                                                                       PRO FORMA(1)    NINE MONTHS        NINE MONTHS
                                                                        YEAR ENDED        ENDED              ENDED
                                 YEAR ENDED DECEMBER 31,               DECEMBER 31,   SEPTEMBER 30,      SEPTEMBER 30,
                         --------------------------------------------  ------------ -------------------  -------------
                          1992    1993     1994      1995      1996        1996       1996      1997         1997
                         ------  -------  -------  --------  --------  ------------ --------  ---------  -------------
<S>                      <C>     <C>      <C>      <C>       <C>       <C>          <C>       <C>        <C>
STATEMENT OF
 OPERATIONS:
 Revenues..............  $7,030  $ 8,292  $14,272  $ 38,631  $103,397   $ 324,885   $ 64,333  $ 165,317    $ 326,742
 Costs and Expenses:
 Facilities
  administration and
  maintenance and line
  costs................   1,760    2,843    5,396    22,989    81,105     210,595     49,044    200,241      269,600
 Selling, general and
  administrative.......   2,607    3,893    6,412    14,993    36,610      99,396     23,884     64,983      134,651
 Depreciation and
  amortization.........   2,190    3,020    5,132    10,196    19,836      79,863     12,069     34,274       79,899
                         ------  -------  -------  --------  --------   ---------   --------  ---------    ---------
                          6,557    9,756   16,940    48,178   137,551     389,854     84,997    299,498      484,150
                         ------  -------  -------  --------  --------   ---------   --------  ---------    ---------
 Income (loss) from
  operations...........     473   (1,464)  (2,668)   (9,547)  (34,154)    (64,969)   (20,664)  (134,181)    (157,408)
 Other income (expense)
  Interest expense.....  (1,031)    (844)  (1,218)  (13,767)  (35,213)   (129,673)   (24,179)   (39,895)    (107,581)
  Interest and other
   income..............     323      234      819     4,060    12,168      (3,912)     9,201     16,691         (210)
  Income tax benefit...     --       --       --         97       --         (783)       --         --          (214)
                         ------  -------  -------  --------  --------   ---------   --------  ---------    ---------
  Loss before
   extraordinary item..    (235)  (2,074)  (3,067)  (19,157)  (57,199)   (199,337)   (35,642)  (157,385)    (265,413)
  Extraordinary loss on
   early extinguishment
   of debt.............     --       --       --     (1,592)      --         (311)       --     (43,834)     (43,834)
                         ------  -------  -------  --------  --------   ---------   --------  ---------    ---------
   Net loss............  $ (235) $(2,074) $(3,067) $(20,749) $(57,199)  $(199,648)  $(35,642) $(201,219)   $(309,247)
 Preferred stock
  dividends and
  accretions...........    (267)     --       --        --        --      (71,851)       --     (27,118)     (53,135)
                         ------  -------  -------  --------  --------   ---------   --------  ---------    ---------
 Net loss attributable
  to common
  stockholders.........  $ (502) $(2,074) $(3,067) $(20,749) $(57,199)  $(271,499)  $(35,642) $(228,337)   $(362,382)
                         ======  =======  =======  ========  ========   =========   ========  =========    =========
 Net loss per common
  share:
  Loss before
   extraordinary item..  $ (.10) $  (.29) $  (.34) $  (1.91) $  (4.08)  $  (18.68)  $  (2.69) $  (11.21)   $  (19.35)
  Extraordinary loss...     --       --       --       (.16)      --        (0.02)       --       (2.66)       (2.66)
                         ------  -------  -------  --------  --------   ---------   --------  ---------    ---------
  Net loss.............  $ (.10) $  (.29) $  (.34) $  (2.07) $  (4.08)  $  (18.70)  $  (2.69) $  (13.87)   $  (22.01)
                         ======  =======  =======  ========  ========   =========   ========  =========    =========
 Weighted average
  number of shares
  outstanding..........   4,797    7,077    8,956    10,036    14,018      14,518     13,243     16,463       16,463
OTHER DATA:
 Book value per common
  share................    3.09     5.18     5.39      3.89      7.01
 Ratio of earnings to
  combined fixed
  charges and preferred
  stock dividends(3)...     --       --       --        --        --          --         --         --           --
 Earnings before
  interest, income
  taxes, depreciation
  and amortization
  ("EBITDA")(4)........  $2,663  $ 1,556  $ 2,464  $    649  $(14,318)  $  14,894   $ (8,596) $ (99,907)   $ (77,509)
 Capital expenditures,
  including
  acquisitions of
  businesses, net of
  cash acquired........  $8,818  $10,486  $13,731  $ 31,915  $143,615   $ 309,391   $ 80,810  $ 328,861    $ 339,469
</TABLE>
 
                                       8
<PAGE>
 
 
<TABLE>
<CAPTION>
                                          DECEMBER 31,            SEPTEMBER 30,
                                --------------------------------- -------------
                                1992   1993   1994   1995   1996   1996   1997
                                ----- ------ ------ ------ ------ ------ ------
<S>                             <C>   <C>    <C>    <C>    <C>    <C>    <C>
NETWORK DATA:(5)
 Buildings connected(6)........   161    234    293    380    487    429  2,703
 Route miles...................   240    335    378    504    655    647    762
 Fiber miles................... 6,184 10,239 11,227 17,128 24,122 23,763 33,801
 Number of city-based networks
  in service...................     4      5      6      9      9      9     10
ENHANCED DATA SERVICES:(5)
 Nodes(7)......................   --     100    900  2,300  9,500  8,462 17,286
 Cities(8).....................   --      37    336    600  2,200  1,134  3,787
 Switches......................   --       4     12     31     89     76    130
EMPLOYEES(5)...................    49     58    146    287    874    724  1,820
</TABLE>
 
<TABLE>
<CAPTION>
                                                                                    PRO FORMA
                                       DECEMBER 31,                SEPTEMBER 30, SEPTEMBER 30,(9)
                         ----------------------------------------- ------------- ----------------
                          1992    1993    1994     1995     1996       1997            1997
                         ------- ------- ------- -------- -------- ------------- ----------------
<S>                      <C>     <C>     <C>     <C>      <C>      <C>           <C>
BALANCE SHEET DATA:
 Cash and cash
  equivalents(10)....... $ 1,775 $27,954 $10,208 $ 50,997 $189,546  $  471,101      $  547,279
 Working capital(11)....   8,999  25,712   9,588   70,353  206,029     449,648         530,654
 Total assets...........  36,174  61,219  74,086  216,018  512,940   1,086,185       1,978,822
 Long-term obligations
  and redeemable
  preferred stock
  (including current
  maturities)...........  11,742  11,614  16,527  165,545  358,508   1,101,372       1,959,033
 Total stockholders'
  equity................  21,257  45,987  52,033   40,254  114,230     (90,771)        (90,771)
</TABLE>
- - --------
 1. The pro forma operating information gives effect to the EMI, UTT and
    NetSolve acquisitions, which occurred effective June 30, 1996, December 1,
    1996 and December 1, 1996, respectively, and the DIGEX Acquisition and the
    pending acquisition of Shared Technologies as if they occurred on January
    1, 1996. The pro forma operating information also gives effect to the March
    1997 sale of $300 million of 13 1/2% Series A Redeemable Exchangeable
    Preferred Stock, the July 1997 Offerings, the October 30 Offerings and the
    December 23 Offering.
 2. The pro forma operating information gives effect to the DIGEX Acquisition
    and the pending acquisition of Shared Technologies as if they occurred on
    January 1, 1997. The pro forma operating information also gives effect to
    the March 1997 sale of $300 million of 13 1/2% Series A Redeemable
    Exchangeable Preferred Stock, the July 1997 Offerings, the October 30
    Offerings and the December 23 Offering.
 3. For purposes of calculating the ratio of earnings to combined fixed charges
    and preferred stock dividends: (i) earnings consist of loss before income
    taxes, plus fixed charges excluding capitalized interest and preferred
    stock dividends and (ii) fixed charges consist of interest expensed and
    capitalized, plus amortization of deferred financing costs, preferred stock
    dividends, plus a portion of rent expense under operating leases deemed by
    the Company to represent an interest factor. For the years ended December
    31, 1992, 1993, 1994, 1995 and 1996 and the quarters ended September 30,
    1996 and 1997 the Company's earnings were insufficient to cover combined
    fixed charges and preferred stock dividends by $622, $2,288, $3,324,
    $19,931, $59,978, $37,582 and $187,031, respectively. For the year ended
    December 31, 1996 and the quarter ended September 30, 1997, the Company's
    pro forma earnings, after giving effect to the acquisitions and the
    offerings described in Notes 1 and 2 above, were insufficient by $273,968
    and $321,076 respectively, to cover pro forma combined fixed charges and
    preferred stock dividends.
 4. EBITDA consists of earnings before interest, income taxes, depreciation,
    and amortization. In addition, 1995 and 1997 EBITDA excludes extraordinary
    charges of $1,592 and $43,834, respectively, related to the early
    extinguishment of debt. EBITDA is provided in the Summary of Financial and
    Other Operating Data since it is a measure commonly used in the
    telecommunications industry to measure operating performance, asset value
    and financial leverage. It is presented to enhance the reader's
    understanding of the Company's operating results and is not intended to
    present cash flow for the periods presented. See the Consolidated
    Statements of Cash Flows included in the Company's Consolidated Financial
    Statements and the Notes thereto included elsewhere in this Prospectus.
 5. Amounts as reflected in the table are based upon information contained in
    the Company's operating records.
 6. Beginning in January 1997, the Company changed its definition of "Buildings
    connected" to include buildings connected to the Company's network via
    leased facilities controlled by the Company in addition to those connected
    to the Company's network via facilities constructed by the Company. The
    Company believes the new definition is consistent with industry practice.
 7. Amount represents an individual point of origin and termination of data
    served by the Company's enhanced data network. In the opinion of management
    of the Company, all node numbers are appropriate.
 8. Represents the number of discrete postal cities to which enhanced data
    services are provided by the Company.
 9. Gives effect to the October 30 Offerings, the December 23 Offering and the
    pending Shared Technologies acquisition.
10. Cash and cash equivalents excludes investments of $20,954, $26,675, and
    $6,351 for the years ended December 31, 1995 and 1996 and the quarter ended
    September 30, 1997, respectively, restricted under the terms of various
    notes and other agreements.
11. Working capital includes the restricted investments referred to in Note 10
    above.
 
                                       9
<PAGE>
 
                                 RISK FACTORS
 
  In addition to other information set forth elsewhere in this Prospectus,
before tendering their Old Notes for Senior Notes, holders should consider
carefully the following factors which (other than "Consequences of Failure to
Exchange") are generally applicable to the Old Notes as well as to the Senior
Notes.
 
  Consequences of Failure to Exchange. Upon consummation of the Exchange
Offer, holders of Old Notes that were not prohibited from participating in the
Exchange Offer and did not tender their Old Notes will not have any
registration rights under the Registration Rights Agreement with respect to
such non-tendered Old Notes and, accordingly, such Old Notes will continue to
be subject to the restrictions on transfer contained in the legend thereon. In
general, the Old Notes may not be offered or sold, unless registered under the
Securities Act and applicable state securities laws, except pursuant to an
exemption from, or in a transaction not subject to, the Securities Act and
applicable state securities laws. The Company does not intend to register the
Old Notes under the Securities Act.
 
  Based on interpretations by the Staff of the SEC with respect to similar
transactions, the Company believes that Senior Notes issued pursuant to the
Exchange Offer in exchange for Old Notes may be offered for resale, resold or
otherwise transferred by holders (other than any holder which is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and prospectus delivery
provisions of the Securities Act provided that the Senior Notes are acquired
in the ordinary course of the holders' business, the holders have no
arrangement with any person to participate in the distribution of the Senior
Notes and neither the holder nor any other person is engaging in or intends to
engage in a distribution of the Senior Notes. Each broker-dealer that receives
Senior Notes for its own account pursuant to the Exchange Offer must
acknowledge that it will deliver a prospectus in connection with any resale of
the Senior Notes. The Letter of Transmittal states that by so acknowledging
and by delivering a prospectus, a broker-dealer will not be deemed to admit
that it is an "underwriter" within the meaning of the Securities Act. This
Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of Senior Notes received in
exchange for Old Notes acquired by the broker-dealer as a result of market-
making activities or other trading activities. Broker-Dealers may not exchange
Old Notes which are part of an unsold original allotment in the Exchange
Offer. The Company has agreed that, for a period of 365 days after the
Exchange Date, it will make this Prospectus available to any broker-dealer for
use in connection with any such resale of the Senior Notes. See "Plan of
Distribution." The Senior Notes may not be offered or sold unless they have
been registered or qualified for sale under applicable state securities laws
or an exemption from registration or qualification is available and is
complied with. The Registration Rights Agreement requires the Company to
register or qualify the Senior Notes for resale in any state as may be
reasonably requested by their holders, subject to certain limitations.
 
  Substantial Indebtedness; Insufficiency of Earnings to Cover Fixed
Charges. The Company is highly leveraged. At September 30, 1997, after giving
pro forma effect to the October 30 Offerings and the December 23 Offering, and
the application of the net proceeds therefrom and the pending acquisition of
Shared Technologies, the Company would have had outstanding approximately $1.4
billion 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 13 1/2% Series B Redeemable Exchangeable Preferred Stock due 2009 (the
"Series B Preferred Stock") and $170.1 and $193.7 million of obligations with
respect to the Series D Preferred Stock and the Series E Preferred Stock,
respectively. The degree to which the Company is leveraged could have
important consequences to holders of the Senior Notes, 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 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.
 
                                      10
<PAGE>
 
  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, and the pending Shared Technologies acquisition, and the March
1997 offerings, July 1997 Offerings, October 30 Offerings and the December 23
Offering, the Company's earnings were insufficient to cover combined fixed
charges and dividends on preferred stock by $274.0 million for the year ended
December 31, 1996 and by $321.1 million 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.
 
  Effective Subordination of the Senior Notes. The Senior Notes are not
secured by any of the assets of the Company. Holders of secured indebtedness
of the Company will have claims that are prior to the claims of the holders of
the Senior Notes to the extent of the assets securing such other indebtedness.
The Indenture, the indenture governing the 8 7/8% Notes (the "8 7/8% Notes
Indenture"), the indenture governing the 12 1/2% Notes (the "12 1/2% Notes
Indenture") and the indenture governing the 11 1/4% Notes (the "11 1/4% Notes
Indenture" and together with the 8 7/8% Notes Indenture and the 12 1/2% Notes
Indenture, the "Existing Senior Note Indentures") permit certain indebtedness
of the Company to be secured. In addition, the Senior Notes will be
effectively subordinated to $71.0 million of indebtedness and other
liabilities and commitments (including trade payables) of the Company's
subsidiaries. The Company has had preliminary discussions with several banks
regarding the establishment of a senior credit facility. Such credit facility
may be secured by a substantial portion of the assets of the Company.
Therefore, the Notes would be effectively subordinated to such senior credit
facility to the extent of such security. There can be no assurance that the
Company will be successful in negotiating such a senior credit facility.
 
  Risks Associated with Acquisitions. The Company intends to use the net
proceeds of the December 23 Offering to expand its networks and service
offerings through internal development and, possibly, acquisitions. 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 will be consummated or that any such other acquisitions
will occur or that any such acquisitions, including the pending 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 December 23 Offering) 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.
 
  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 Indenture, the Existing Note Indentures and the
 
                                      11
<PAGE>
 
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 May 11, 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 Note Indentures,
the Indenture and the Series B Certificate of Designation (as defined herein)
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 each of
the Existing Note Indentures or the Senior Note Indenture or the holders of at
least 25% of the outstanding principal amounts of the Existing Senior Notes or
the Senior Notes, acceleration of the Existing Senior Notes and the Senior
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 and the Senior Notes were accelerated, the Company would
not have sufficient funds available to repay the Existing Senior Notes and the
Senior Notes, unless it could arrange a refinancing of the Existing Senior
Notes and the Senior Notes.
 
  Failure to Obtain Third Party Consents in connection with an Acquisition or
Merger. The Company has consummated a number of acquisitions over the past two
years and expects to consummate additional acquisitions during the current
fiscal year. In connection therewith, the Company may not have obtained, and
in connection with future acquisitions may elect not to seek, all required
consents from third parties with respect to acquired contracts. If an acquired
contract required the consent of a third party and such consent was not
obtained, the third party could assert a breach of the contract. The Company
believes that the failure to obtain any such third party consents should not
result in any material adverse consequences to the Company, although there can
be no assurance that such a consequence will not result.
 
  Effect of Substantial Additional Indebtedness on the Company's Ability to
Repay the Senior Notes. The Indenture, 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. In
addition, the Company may establish a bank credit facility which may be
secured by a substantial portion of the assets of the Company. Additional
indebtedness of the Company, including any indebtedness under a bank credit
facility may rank pari passu with or effectively senior (if secured) to, the
Senior Notes. See "Description of the Senior Notes." The debt service
requirements of any additional indebtedness could make it more difficult for
the Company to make principal and interest payments on the Senior Notes. No
guarantees have been issued with respect to the Senior Notes; thus the
Company's subsidiaries are not directly obligated under the Senior Notes.
Earnings generated by any of the Company's subsidiaries, as well as the
existing assets of such subsidiaries, will have to be used first by such
subsidiaries to fulfill their debt service requirements. See "--Effective
Subordination of the Senior Notes."
 
  Regulatory Approval of the Offering. 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 December 23 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 has filed the
necessary notifications and applications for approval in these states. After
consultation with counsel, the Company believes the approvals will be granted
and that seeking such approvals subsequent to the December 23 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 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
industries 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
 
                                      12
<PAGE>
 
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 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 their 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 Notes. The Senior Notes are a new issue
of securities. The Company does not intend to apply for listing of the Senior
Notes on any securities exchange or on the Nasdaq National Market. Although
the Initial Purchasers have informed the Company that they currently intend to
make a market in the Senior Notes, they are not obligated to do so and any
such market-making 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 Senior Notes. The Senior Notes may trade at prices that may
be higher or lower than their respective 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 Senior Notes has been subject to disruptions that have
caused substantial volatility in the prices of similar securities. There can
be no assurance that the market for the Senior Notes would not be subject to
similar disruptions.
 
  Certain Tax Considerations. For a discussion of certain material federal
income tax considerations which are relevant to the purchase, ownership and
disposition of the Senior Notes, see "Certain Federal Income Tax
Consequences."
 
  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
 
                                      13
<PAGE>
 
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 and $57.2 million for the years ended December 31, 1994, 1995 and 1996
and net losses 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. The
DIGEX 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 December 23 Offering), credit availability and
internally generated funds. The Company expects that continued expansion of
its business will require raising substantial 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 Indenture, the Existing
Senior Note Indentures, the Certificate of Designation setting forth the
rights of the Series B Preferred Stock (the "Series B Certificate of
Designation"), the Certificate of Designation setting forth the rights of the
Series D Preferred Stock, and the Certificate of Designation setting forth the
rights of the Series E Preferred Stock impose certain restrictions upon the
Company's ability to incur additional indebtedness or issue additional
preferred
 
                                      14
<PAGE>
 
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.
 
  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 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 ICPs and ILECs operating fiber optic networks. In
addition, the Company faces competition in its integration services business
from equipment manufacturers, the 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 CLECs,
including the
 
                                      15
<PAGE>
 
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. Recently, a Federal
District Court in Texas found unconstitutional certain provisions of the 1996
Act restricting the RBOCs from offering long distance service in their
operating regions until they could demonstrate that their networks have been
made available to competitive providers of local exchange services in those
regions. If that decision is permitted to stand, it could result in RBOCs
providing interexchange service in their operating regions sooner than
previously expected. See "Business--Recent Developments--Regulatory Changes."
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 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 or registration 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 the terms of 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.
 
                                      16
<PAGE>
 
  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.
 
  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 Indenture and the
Existing Senior Note Indentures provide that a change of control would require
the Company to repay the indebtedness outstanding under such instruments. If a
change of control does occur, there is no assurance that the Company would
have sufficient funds to make such repayments or could obtain any additional
debt or equity financing that could be necessary in order to repay the Senior
Notes and the Existing Senior Notes.
 
  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.
 
                                      17
<PAGE>
 
                              THE EXCHANGE OFFER
 
PURPOSE OF THE EXCHANGE OFFER
 
  The Old Notes were originally issued and sold on December 23, 1997 in
reliance upon the exemptions from registration under Rule 144A, Regulation S
and Section 4(2) of the Securities Act. Pursuant to the Registration Rights
Agreement, the Company agreed to register with the SEC a series of notes with
substantially identical terms as the Old Notes, to be offered in exchange for
the Old Notes. The purpose of the Exchange Offer is to satisfy the Company's
obligations under the Registration Rights Agreement. Holders that are not
prohibited from participating in the Exchange Offer and do not tender all of
their Old Notes will no longer have any registration rights under the
Registration Rights Agreement.
 
TERMS OF THE EXCHANGE
 
  The Company offers to exchange, subject to the conditions set forth in this
Prospectus and in the Letter of Transmittal accompanying this Prospectus, the
same principal amount of Senior Notes for the Old Notes tendered for exchange.
The terms of the Senior Notes are substantially identical to the Old Notes in
all material respects (including interest rate and maturity), except that (i)
the Senior Notes will not be subject to the restrictions on transfer (other
than with respect to holders who are affiliates) and (ii) the Registration
Rights Agreement covenants regarding registration and the related Liquidated
Damages (other than those that have accrued and were not paid) with respect to
Registration Defaults will have been deemed satisfied. The Senior Notes will
evidence the same debt as the Old Notes and will be entitled to the benefits
of the Indenture. See "Description of the Senior Notes." The Exchange Offer is
not conditioned upon any minimum aggregate principal amount of Old Notes being
tendered for exchange.
 
  The Company believes that Senior Notes received in exchange for Old Notes
may be offered for sale, sold and otherwise transferred by any holder (other
than any holder which is an "affiliate" of the Company within the meaning of
Rule 405 under the Securities Act) without compliance with the registration
and prospectus delivery requirements of the Securities Act, provided that the
Senior Notes are acquired in the ordinary course of the holder's business, the
holder has no arrangement or understanding with any person to participate in
the distribution of the Senior Notes and neither the holder nor any other
person is engaging in or intends to engage in a distribution of the Senior
Notes. Any holder who tenders in the Exchange Offer for the purpose of
participating in a public distribution of the Senior Notes must comply with
the registration and prospectus delivery requirements of the Securities Act in
connection with the distribution. Broker-dealers may not exchange Old Notes
which are part of an unsold original allotment in the Exchange Offer.
 
  Tendering holders of the Old Notes will not be required to pay brokerage
commissions or fees or, subject to the instructions in the Letter of
Transmittal, transfer taxes with respect to the Exchange Offer.
 
EXPIRATION DATE; EXTENSIONS, TERMINATION; AMENDMENT
 
  The Exchange Offer will expire on the Expiration Date. The term "Expiration
Date" means 5:00 p.m., New York City time, on       , 1998 or such later date
and time, if any, as extended by the Company, in its sole discretion. The
Company may extend the Exchange Offer at any time and from time to time by
giving oral or written notice to holders of the Old Notes and unless otherwise
required by applicable law or regulation, by timely public announcement, by
making a release to the Dow Jones News Service on or before 9:00 a.m. of the
next business day following the Expiration Date. During any extension of the
Exchange Offer, all Old Notes tendered for exchange will remain subject to the
Exchange Offer. In connection with the Exchange Offer, the Company will comply
with all applicable requirements of the federal securities laws, including,
but not limited to, Rule 14e-1 under the Exchange Act.
 
                                      18
<PAGE>
 
  The Exchange Date will be the first business day following the Expiration
Date. The Company expressly reserves the right to (i) terminate the Exchange
Offer and not accept for exchange any Old Notes if either of the events set
forth under "Conditions to the Exchange Offer" shall have occurred and shall
not have been waived by the Company and (ii) amend the terms of the Exchange
Offer in any manner which, in its good faith judgment,
is advantageous to the holders of the Old Notes, whether before or after any
tender of the Old Notes. Unless the Company terminates the Exchange Offer
prior to 5:00 p.m., New York City time, on the Expiration Date, the Company
will exchange the Senior Notes for the Old Notes on the Exchange Date.
 
PROCEDURES FOR TENDERING OLD NOTES
 
  The Exchange Offer is subject to the terms and conditions set forth in this
Prospectus and the Letter of Transmittal.
 
  Old Notes may be tendered by properly completing and signing the Letter of
Transmittal and delivering the Letter of Transmittal to the Exchange Agent at
its address set forth in this Prospectus on or prior to the Expiration Date,
together with (i) the certificate or certificates representing the Old Notes
being tendered and any required signature guarantees, (ii) a timely
confirmation of a book-entry transfer (a "Book-Entry Confirmation") of the Old
Notes, if such procedure is available, into the Exchange Agent's account at
The Depository Trust Company (the "Book-Entry Transfer Facility" or
"Depository") pursuant to the procedure for book-entry transfer described
below, or (iii) the completion of the procedures for guaranteed delivery set
forth below. See "Guaranteed Delivery Procedures."
 
  If the Senior Notes are to be issued in the name of the registered holder
and the registered holder has signed the Letter of Transmittal the holder's
signature need not be guaranteed. In any other case, the tendered Old Notes
must be endorsed or accompanied by written instruments of transfer in form
satisfactory to the Exchange Agent and duly executed by the registered holder
and the signature on the endorsement or instrument of transfer must be
guaranteed by a commercial bank or trust company located or having an office
or correspondent in the United States, or by a member firm of a national
securities exchange or of the National Association of Securities Dealers, Inc.
(an "Eligible Institution"). If the Senior Notes and/or Old Notes not
exchanged are to be delivered to an address other than that of the registered
holder appearing on the register for the Old Notes, the signature on the
Letter of Transmittal must be guaranteed by an Eligible Institution.
 
  THE METHOD OF DELIVERY OF OLD NOTES, LETTERS OF TRANSMITTAL AND ALL OTHER
DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDER. IF SENT BY MAIL, IT IS
RECOMMENDED THAT REGISTERED MAIL, RETURN RECEIPT REQUESTED, BE USED, PROPER
INSURANCE OBTAINED, AND THE MAILING BE MADE SUFFICIENTLY IN ADVANCE OF THE
EXPIRATION DATE TO PERMIT DELIVERY TO THE EXCHANGE AGENT ON OR BEFORE THE
EXPIRATION DATE. NO LETTERS OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE
COMPANY.
 
  A tender will be deemed to have been received as of the date when the
tendering holder's properly completed and duly signed Letter of Transmittal,
the Old Notes or a Book-Entry Confirmation and all other required documents
are received by the Exchange Agent.
 
  All questions as to the validity, form, eligibility (including time of
receipt) and acceptance for exchange of any tender of Old Notes will be
determined by the Company in its sole discretion, which determination will be
final and binding. The Company reserves the right to reject any or all tenders
not in proper form or the acceptance for exchange of which may, in the opinion
of the Company's counsel, be unlawful. The Company also reserves the right to
waive any of the conditions of the Exchange Offer or any defect, withdrawal,
rejection of tender or irregularity in the tender of any Old Notes. Neither
the Company, the Exchange Agent nor any other person will be under any duty to
give notification of any defects, withdrawals, rejections or irregularities or
incur any liability for failure to give any such notification.
 
                                      19
<PAGE>
 
TERMS AND CONDITIONS OF THE LETTER OF TRANSMITTAL
 
  The Letter of Transmittal contains, among other things, the following terms
and conditions, which are part of the Exchange Offer.
 
  The holder tendering Old Notes exchanges, assigns and transfers the Old
Notes to the Company and irrevocably constitutes and appoints the Exchange
Agent as the holder's agent and attorney-in-fact to cause the Old Notes to be
assigned, transferred and exchanged. The holder represents and warrants that
(i) it has full power and authority to tender, exchange, assign and transfer
the Old Notes and to acquire Senior Notes in exchange for the Old Notes, (ii)
when the Old Notes are accepted for exchange, the Company will acquire good
and unencumbered title to the Old Notes, free and clear of all liens,
restrictions, charges and encumbrances and not subject to any adverse claim
and (iii) it will, upon request, execute and deliver any additional documents
deemed by the Company to be necessary or desirable to complete the exchange,
assignment and transfer of tendered Old Notes. The holder further agrees that
acceptance of any tendered Old Notes by the Company and the issuance of Senior
Notes in exchange therefor shall constitute performance in full by the Company
of its obligations under the Registration Rights Agreement and that the
Company shall have no further obligations or liabilities thereunder (except
with respect to accrued and unpaid Liquidated Damages, if any). All authority
conferred by the holder will survive the death or incapacity of the holder and
every obligation of the holder shall be binding upon the heirs, legal
representatives, successors assigns, executors and administrators of the
holder.
 
  Each holder will also certify that it (i) is not an "affiliate" of the
Company within the meaning of Rule 405 under the Securities Act or that, if it
is an "affiliate," it will comply with the registration and prospectus
delivery requirements of the Securities Act to the extent applicable, (ii) is
acquiring the Senior Notes offered in the ordinary course of its business and
(iii) has no arrangement with any person to participate in the distribution of
the Senior Notes.
 
WITHDRAWAL RIGHTS
 
  Old Notes tendered pursuant to the Exchange Offer may be withdrawn at any
time prior to the Expiration Date.
 
  To be effective, a written notice of withdrawal must be timely received by
the Exchange Agent at its address set forth in this Prospectus by mail,
courier, telegraphic, telex or facsimile transmission. Any notice of
withdrawal must specify the person named in the Letter of Transmittal as
having tendered Old Notes to be withdrawn, the certificate numbers of Old
Notes to be withdrawn, the principal amount of Old Notes to be withdrawn, a
statement that the holder is withdrawing its election to tender the Old Notes
for exchange, and the name of the registered holder of the Old Notes, and must
be signed by the holder in the same manner as the original signature on the
Letter of Transmittal (including any required signature guarantees) or be
accompanied by evidence satisfactory to the Exchange Agent that the person
withdrawing the tender has succeeded to the beneficial ownership of the Old
Notes being withdrawn. The Exchange Agent will return the properly withdrawn
Old Notes promptly following receipt of notice of withdrawal. If Old Notes
have been tendered pursuant to a book-entry transfer, any notice of withdrawal
must specify the name and number of the account at the Book-Entry Transfer
Facility to be credited with the withdrawn Old Notes and otherwise comply with
the procedures of the Book-Entry Transfer Facility. All questions as to the
validity of notices of withdrawals, including time of receipt, will be
determined by the Company, and such determination will be final and binding on
all parties. Any Old Notes which have been tendered for exchange but which are
not exchanged will be returned to the holder thereof without cost to the
holder (or, in the case of Old Notes tendered by book-entry transfer by
crediting an account maintained with the Book-Entry Transfer Facility for the
Old Notes) as soon as practicable after withdrawal, rejection of tender or
termination of the Exchange Offer. Properly withdrawn Old Notes may be re-
tendered at any time on or prior to the Expiration Date. Any Old Notes so
withdrawn and not re-tendered will not be exchanged for Senior Notes under the
Exchange Offer.
 
                                      20
<PAGE>
 
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF SENIOR DISCOUNT NOTES
 
  Upon terms and subject to the conditions of the Exchange Offer, the
acceptance for exchange of Old Notes validly tendered and not withdrawn and
issuance of the Senior Notes will be made on the Exchange Date. For the
purposes of the Exchange Offer, the Company shall be deemed to have accepted
for exchange validly tendered Old Notes when, as and if the Company has given
oral or written notice thereof to the holders.
 
  The Exchange Agent will act as agent for the tendering holders of Old Notes
for the purpose of causing the Old Notes to be assigned, transferred and
exchanged for Senior Notes. Upon the terms and subject to the conditions of
the Exchange Offer, delivery of Senior Notes in exchange for Old Notes will be
made by the Exchange Agent promptly after acceptance of the tendered Old Notes
by the Company. Tendered Old Notes not accepted for exchange by the Company
will be returned without expense to the tendering holders (or, in the case of
Old Notes tendered by book-entry transfer crediting an account maintained with
the Depository) promptly following the Expiration Date or, if the Company
terminates the Exchange Offer prior to the Expiration Date, promptly after the
Exchange Offer is terminated.
 
BOOK-ENTRY TRANSFER
 
  The Exchange Agent will establish an account at the Book-Entry Transfer
Facility for purposes of the Exchange Offer within two business days after the
date of this Prospectus, and any financial institution that is a participant
in the Book-Entry Transfer Facility's systems may make book-entry delivery of
Old Notes by causing the Book-Entry Transfer Facility to transfer the Old
Notes into the Exchange Agent's account at the Book-Entry Transfer Facility in
accordance with the Book-Entry Transfer Facility's procedure for transfer. The
Letter of Transmittal with any required signature guarantees and any other
required documents, must be received by the Exchange Agent on or prior to the
Expiration Date for any book-entry transfers.
 
GUARANTEED DELIVERY PROCEDURES
 
  Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available or (ii) who cannot deliver their Old Notes, the Letter
of Transmittal or any other documents required hereby to the Exchange Agent
prior to the Expiration Date must tender their Old Notes and follow the
guaranteed delivery procedures. Pursuant to such procedures: (i) such tender
must be made by or through an Eligible Institution; (ii) prior to the
Expiration Date, the Exchange Agent must have received from the Eligible
Institution a properly completed and duly executed Notice of Guaranteed
Delivery (by facsimile transmission, mail or hand delivery) setting forth the
name and address of the holder of the Old Notes, the certificate number or
numbers of such Old Notes and the principal amount of Old Notes tendered,
stating that the tender is being made thereby and guaranteeing that, within
five business days after the Expiration Date, the Letter of Transmittal (or
facsimile thereof) together with the certificate(s) representing the Old Notes
(or a confirmation of electronic delivery of book-entry delivery into the
Exchange Agent's account at the Depository) and any of the required documents
will be deposited by the Eligible Institution with the Exchange Agent; and
(iii) such properly completed and executed Letter of Transmittal (or facsimile
hereof), as well as all other documents required by the Letter of Transmittal
and the certificate(s) representing all tendered Old Notes in proper form for
transfer (or a confirmation of electronic mail delivery or book-entry delivery
into the Exchange Agent's account at the Depository) must be received by the
Exchange Agent within five business days after Expiration Date. Any holder of
Old Notes who wishes to tender his Old Notes pursuant to the guaranteed
delivery procedures described above must ensure that the Exchange Agent
receives the Notice of Guaranteed Delivery prior to 5:00 P.M., New York City
time, on the Expiration Date.
 
CONDITIONS TO THE EXCHANGE OFFER
 
  Notwithstanding any other provision of the Exchange Offer, the Company will
not be required to issue Senior Notes in exchange for any properly tendered
Old Notes not previously accepted and may terminate the Exchange Offer (by
oral or written notice to the holders and by timely public announcement
communicated, unless otherwise required by applicable law or regulation, by
making a release to the Dow Jones News Service), or, at its option, modify or
otherwise amend the Exchange Offer, if any of the following events occur:
 
                                      21
<PAGE>
 
    (a) there shall be threatened, instituted or pending any action or
  proceeding before, or any injunction, order or decree shall have been
  issued by, any court or governmental agency or other governmental
  regulatory or administrative agency or commission (i) seeking to restrain
  or prohibit the making or consummation of the Exchange Offer or any other
  transaction contemplated by the Exchange Offer, or assessing or seeking any
  damages as a result thereof, or (ii) resulting in a material delay in the
  ability of the Company to accept for exchange or exchange some or all of
  the Old Notes pursuant to the Exchange Offer, or any statute, rule,
  regulation, order or injunction shall be sought, proposed, introduced,
  enacted, promulgated or deemed applicable to the Exchange Offer or any of
  the transactions contemplated by the Exchange Offer by any government or
  governmental authority, domestic or foreign, or any action shall have been
  taken, proposed or threatened, by any government, governmental authority,
  agency or court, domestic or foreign, that in the sole judgment of the
  Company might directly or indirectly result in any of the consequences
  referred to in clause (i) or (ii) above or, in the sole judgment of the
  Company, might result in the holders of Senior Notes having obligations
  with respect to resales and transfers of Senior Notes which are greater
  than those described in the interpretation of the SEC referred to on the
  cover page of this Prospectus, or would otherwise make it inadvisable to
  proceed with the Exchange Offer; or
 
    (b) any change (or any development involving a prospective change) shall
  have occurred or be threatened in the business, properties, assets,
  liabilities, financial condition, operations, results of operations or
  prospectus of the Company, taken as a whole, that, in the sole judgment of
  the Company is or may be adverse to the Company, or the Company shall have
  become aware of facts that, in the sole judgment of the Company have or may
  have adverse significance with respect to the value of the Old Notes or the
  Senior Notes; which, in the sole judgment of the Company in any case, and
  regardless of the circumstances (including any action by the Company)
  giving rise to any such condition, makes it unlawful to proceed with the
  Exchange Offer and/or with such acceptance for exchange or with such
  exchange.
 
  The Company expressly reserves the right to terminate the Exchange Offer and
not accept for exchange any Old Notes upon the occurrence of any of the
foregoing conditions (which represent all of the material conditions to the
acceptance by the Company of properly tendered Old Notes). In addition, the
Company may amend the Exchange Offer at any time prior to the Expiration Date
if any of the conditions set forth above occur. Moreover, regardless of
whether any of such conditions has occurred, the Company may amend the
Exchange Offer in any manner which, in its good faith judgment, is
advantageous to holders of the Old Notes.
 
  These conditions are for the sole benefit of the Company and may be waived
by the Company, in whole or in part, in its sole discretion. Any determination
made by the Company that any of these conditions has occurred will be final
and binding on all holders, absent manifest error.
 
  In addition, the Company will not accept for exchange any Old Notes
tendered, and no Senior Notes will be issued in exchange for any such Old
Notes, if at such time any stop order shall be threatened or in effect with
respect to the Registration Statement of which this Prospectus constitutes a
part or the qualification of the Indenture under the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act").
 
EXCHANGE AGENT
 
  SunTrust Bank, Central Florida, National Association, the Trustee under the
Indenture, has been appointed as the Exchange Agent for the Exchange Offer.
All executed Letters of Transmittal, questions and requests for assistance and
requests for additional copies of this Prospectus or of the Letter of
Transmittal should be directed to the Exchange Agent, addressed as follows:
 
             SunTrust Bank, Central Florida, National Association
                             225 East Robinson St.
                                   Suite 250
                               Orlando, FL 32801
                           Attention: Alice Springer
                           Facsimile: (407) 237-5299
                     Confirm by telephone: (407) 237-5179
 
 
                                      22
<PAGE>
 
  DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF
INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A
VALID DELIVERY
 
SOLICITATION OF TENDERS; EXPENSES
 
  The Company has not retained any dealer-manager or similar agent in
connection with the Exchange Offer and will not make any payments to brokers,
dealers or others for soliciting acceptances of the Exchange Offer.
 
  No person has been authorized to give any information or to make any
representations in connection with the Exchange Offer other than those
contained in this Prospectus and the Letter of Transmittal. If given or made,
such information or representations should not be relied upon as having been
authorized by the Company. Neither the delivery of this Prospectus nor any
exchange made hereunder shall, under any circumstances, create any implication
that there has been no change in the affairs of the Company since the
respective dates as of which information is given herein. The Exchange Offer
is not being made to (nor will tenders be accepted from or on behalf of)
holders of Old Notes in any jurisdiction in which the making of the Exchange
Offer or the acceptance thereof would not be in compliance with the laws of
such jurisdiction. The Company may, however, at the reasonable request of any
holder, take such action as it may deem necessary to make the Exchange Offer
in any such jurisdiction and extend the Exchange Offer to holders of Old Notes
in such jurisdiction.
 
TRANSFER TAXES
 
  Holders who tender their Old Notes in exchange for Senior Notes will not be
obligated to pay any transfer taxes in connection therewith, except that
holders who instruct the Company to register Senior Notes in the name of, or
request that Old Notes not tendered or not accepted in the Exchange Offer be
returned to, a person other than the registered tendering holder will be
responsible for the payment of any applicable transfer tax thereon.
 
CONSEQUENCES OF FAILURE TO EXCHANGE
 
  Upon consummation of the Exchange Offer, holders of Old Notes that were not
prohibited from participating in the Exchange Offer and did not tender their
Old Notes will not have any registration rights under the Registration Rights
Agreement with respect to such non-tendered Old Notes and, accordingly such
Old Notes will continue to be subject to the restrictions on transfer
contained in the legend thereon. In general, the Old Notes may not be offered
or sold, unless registered under the Securities Act and the applicable state
securities laws, except pursuant to an exemption from, or in a transaction not
subject to, the Securities Act and applicable state securities laws. The
Company does not intend to register the Old Notes under the Securities Act.
Based on interpretations by the staff of the SEC, Senior Notes issued pursuant
to the Exchange Offer in exchange for Old Notes may be offered for resale,
resold or otherwise transferred by holders (other than any holder which is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and prospectus delivery
requirements of Securities Act provided that the Senior Notes are acquired in
the ordinary course of the holders' business, the holders have no arrangement
with any person to participate in the distribution of the Senior Notes and
neither the holder nor any other person is engaging in or intends to engage in
a distribution of the Senior Notes. If any holder has any arrangement or
understanding with respect to the distribution of the Senior Notes to be
acquired pursuant to the Exchange Offer, the holder (i) could not rely on the
applicable interpretations of the staff of the SEC and (ii) must comply with
the registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. Each broker-dealer that receives
Senior Notes for its own account in exchange for Old Notes must acknowledge
that it will deliver a prospectus in connection with any resale of the Senior
Notes. See "Plan of Distribution." In addition, to comply with the securities
laws of certain jurisdictions, if applicable, the Senior Notes may not be
offered or sold unless they have been registered or qualified for sale in such
jurisdiction or an exemption from registration or qualification is available
and is complied with. The Company has agreed under the Registration Rights
Agreement to register or qualify the Senior Notes for resale in any
jurisdictions reasonably requested by any holder, subject to certain
limitations.
 
                                      23
<PAGE>
 
OTHER
 
  Participation in the Exchange Offer is voluntary and holders should
carefully consider whether to accept. Holders of the Old Notes are urged to
consult their financial and tax advisors in making their own decisions on what
action to take.
 
  Upon consummation of the Exchange Offer, holders of Old Notes that were not
prohibited from participating in the Exchange Offer and did not tender their
Old Notes will not have any registration rights under the Registration Rights
Agreement with respect to such non-tendered Old Notes and, accordingly, such
Old Notes will continue to be subject to the restrictions on transfer
contained in the legend thereon.
 
  The Company has not entered into any arrangement or understanding with any
person to distribute the Senior Notes to be received in the Exchange Offer and
to the best of the Company's information and belief, each person participating
in the Exchange Offer is acquiring the Senior Notes in its ordinary course of
business and has no arrangement or understanding with any person to
participate in the distribution of the Senior Notes to be received in the
Exchange Offer. In this regard, the Company will make each person
participating in the Exchange Offer aware (through this Prospectus or
otherwise) that if the Exchange Offer is being registered for the purpose of
secondary resale, any holder using the Exchange Offer to participate in a
distribution of Senior Notes to be acquired in the registered Exchange Offer
(1) may not rely on the staff position enunciated in Morgan Stanley and Co.
Inc. (avail. June 5, 1991) and Exxon Capital Holding Corp. (avail. May 13,
1988) or similar letters and (2) must comply with registration and prospectus
delivery requirements of the Securities Act in connection with a secondary
resale transaction.
 
ACCOUNTING TREATMENT
 
  The Senior Notes will be recorded at the same carrying value as the Old
Notes, as reflected in the Company's accounting records on the Exchange Date.
Accordingly, no gain or loss for accounting purposes will be recognized by the
Company. The expenses of the Exchange Offer will be amortized over the term of
the Senior Notes.
 
                                      24
<PAGE>
 
                                USE OF PROCEEDS
 
  There will be no proceeds to the Company from the Exchange Offer.
 
                                CAPITALIZATION
 
  The following table sets forth the consolidated capitalization of the
Company as of September 30, 1997, the pro forma capitalization which gives
effect to the pending Shared Technologies acquisition, the October 30
Offerings and the December 23 Offering. This table should be read in
conjunction with the Consolidated Financial Statements of the Company and the
Notes thereto and other information included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1996 and the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1997, each of which
are incorporated herein by reference, and, the Unaudited Pro Forma Condensed
Consolidated Financial Statements, included in the Company's Form 8-K dated
December 18, 1997, incorporated herein by reference.
 
<TABLE>
<CAPTION>
                                                      AS OF SEPTEMBER 30,
                                                             1997
                                                     ----------------------
                                                                    PRO
                                                       ACTUAL     FORMA(1)
                                                     ----------  ----------
                                                          (IN THOUSANDS)
<S>                                                  <C>         <C>         <C>
Cash and cash equivalents........................... $  471,101  $  547,279
                                                     ==========  ==========
Long-term debt
  12 1/2% Senior Discount Notes due 2006............    213,001     213,001
  11 1/4% Senior Discount Notes due 2007............    383,666     383,666
  8 7/8% Senior Notes due 2007......................        --      260,250
  8 1/2% Senior Notes due 2008......................        --      400,000
  Other long-term debt..............................      1,363       4,548
  Capital lease obligations.........................     21,232      21,758
                                                     ----------  ----------
    Total long-term debt............................    619,262   1,283,223
Series B Preferred Stock............................    312,001     312,001
Series D Preferred Stock............................    170,109     170,109
Series E Preferred Stock............................        --      193,700
Common stock and additional paid-in capital.........    237,505     237,505
Accumulated deficit.................................   (319,478)   (319,478)
Deferred Compensation...............................     (8,798)     (8,798)
                                                     ----------  ----------
Total stockholders' equity..........................    (90,771)    (90,771)
                                                     ----------  ----------
Total capitalization................................ $1,010,601  $1,868,262
                                                     ==========  ==========
</TABLE>
- - --------
(1) This column gives effect to the Shared Technologies acquisition, the
    October 30 Offerings and the December 23 Offering as if they had occurred
    on September 30, 1997.
 
                                      25
<PAGE>
 
                  SELECTED FINANCIAL AND OTHER OPERATING DATA
 
  The selected financial data and balance sheet data presented below as of and
for the five years in the period ended December 31, 1996 have been derived
from the consolidated financial statements of the Company, which financial
statements have been audited by Ernst & Young LLP, independent certified
public accountants. The selected financial data presented below as of and for
the quarters ended September 30, 1996 and 1997 have been derived from
unaudited financial statements of the Company. In the opinion of management,
the unaudited financial statements have been prepared on the same basis as the
audited financial statements and include all adjustments, which consist only
of normal recurring adjustments, necessary for a fair presentation of the
financial position and the results of operations for these periods. Operating
results for the nine months ended September 30, 1997 are not necessarily
indicative of the results that may be expected for the full year.
 
  The operating results of EMI are included in the Company's consolidated
operating results commencing July 1, 1996. The operating results of UTT and
NetSolve are included in the Company's consolidated operating results
commencing December 1, 1996. The operating results of DIGEX are included in
the Company's consolidated operating results commencing July 1, 1997. The 1996
pro forma operating information gives effect to the EMI, UTT, NetSolve and
DIGEX acquisitions and the pending acquisition of Shared Technologies as if
they occurred on January 1, 1996. The 1997 pro forma operating information
gives effect to the DIGEX Acquisition and the pending acquisition of Shared
Technologies as if they occurred on January 1, 1997. Both 1996 and 1997 pro
forma operating information give effect to the March 1997 sale of $300 million
of 13 1/2% Series A Redeemable Exchangeable Preferred Stock, the July 1997
Offerings, the October 30 Offerings and the December 23 Offering as if they
occurred at the beginning of the respective periods. The following financial
information should be read in conjunction with "Business" and the Consolidated
Financial Statements of the Company and the Notes thereto, which are
incorporated herein by reference.
         (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AND STATISTICAL DATA)
<TABLE>
<CAPTION>
                                                                            PRO-
                                                                          FORMA(1)
                                                                            YEAR                           PRO-FORMA (2)
                                                                            ENDED     NINE MONTHS ENDED     NINE MONTHS
                                  YEAR ENDED DECEMBER 31,               DECEMBER 31,    SEPTEMBER 30,      SEPTEMBER 30,
                         ---------------------------------------------  ------------ --------------------  -------------
                          1992     1993     1994      1995      1996        1996       1996       1997         1997
                         -------  -------  -------  --------  --------  ------------ --------  ----------  -------------
<S>                      <C>      <C>      <C>      <C>       <C>       <C>          <C>       <C>         <C>
STATEMENT OF
 OPERATIONS:
 Revenues..............  $ 7,030  $ 8,292  $14,272  $ 38,631  $103,397   $ 324,885   $ 64,333  $  165,317    $ 326,742
 Costs and Expenses:
 Facilities
  administration and
  maintenance and line
  costs................    1,760    2,843    5,396    22,989    81,105     210,595     49,044     200,241      269,600
 Selling, general and
  administrative.......    2,607    3,893    6,412    14,993    36,610      99,396     23,884      64,983      134,651
 Depreciation and
  amortization.........    2,190    3,020    5,132    10,196    19,836      79,863     12,069      34,274       79,899
                         -------  -------  -------  --------  --------   ---------   --------  ----------    ---------
                           6,557    9,756   16,940    48,178   137,551     389,854     84,997     299,498      484,150
                         -------  -------  -------  --------  --------   ---------   --------  ----------    ---------
 Income (loss) from
  operations...........      473   (1,464)  (2,668)   (9,547)  (34,154)    (64,969)   (20,664)   (134,181)    (157,408)
 Other income (expense)
  Interest expense.....   (1,031)    (844)  (1,218)  (13,767)  (35,213)   (129,673)   (24,179)    (39,895)    (107,581)
  Interest and other
   income..............      323      234      819     4,060    12,168      (3,912)     9,201      16,691         (210)
  Income tax benefit...      --       --       --         97       --         (783)                   --          (214)
                         -------  -------  -------  --------  --------   ---------   --------  ----------    ---------
  Loss before
   extraordinary item..     (235)  (2,074)  (3,067)  (19,157)  (57,199)   (199,337)   (35,642)   (157,385)    (265,413)
  Extraordinary loss on
   early extinguishment
   of debt.............      --       --       --     (1,592)      --         (311)       --      (43,834)     (43,834)
                         -------  -------  -------  --------  --------   ---------   --------  ----------    ---------
 Net loss..............  $  (235) $(2,074) $(3,067) $(20,749) $(57,199)  $(199,648)  $(35,642) $ (201,219)   $(309,247)
 Preferred stock
  dividends and
  accretions...........     (267)     --       --        --        --      (71,851)               (27,118)     (53,135)
                         -------  -------  -------  --------  --------   ---------   --------  ----------    ---------
 Net loss attributable
  to common
  stockholders.........  $  (502) $(2,074) $(3,067) $(20,749) $(57,199)  $(271,499)  $(35,642) $ (228,337)   $(362,382)
                         =======  =======  =======  ========  ========   =========   ========  ==========    =========
 Net loss per common
  share:
  Loss before
   extraordinary item..  $  (.10) $  (.29) $  (.34) $  (1.91) $  (4.08)  $  (18.68)  $  (2.69) $   (11.21)   $  (19.35)
  Extraordinary loss...      --       --       --       (.16)      --        (0.02)       --        (2.66)       (2.66)
                         -------  -------  -------  --------  --------   ---------   --------  ----------    ---------
  Net loss.............  $  (.10) $  (.29) $  (.34) $  (2.07) $  (4.08)  $  (18.70)  $  (2.69)   $ (13.87)   $  (22.01)
                         =======  =======  =======  ========  ========   =========   ========  ==========    =========
 Weighted average
  number of shares
  outstanding..........    4,797    7,077    8,956    10,036    14,018      14,518     13,243      16,463       16,463
OTHER DATA:
 Book value per common
  share ...............     3.09     5.18     5.39      3.89      7.01
 Ratio of earnings to
  combined fixed
  charges and preferred
  stock dividends(3)...      --       --       --        --        --          --         --          --           --
 Earnings before
  interest, income
  taxes, depreciation
  and amortization
  ("EBITDA")(4)........  $ 2,663  $ 1,556  $ 2,464  $    649  $(14,318)  $  14,894   $ (8,596) $  (99,907)   $ (77,509)
 Capital expenditures,
  including
  acquisitions of
  businesses, net of
  cash acquired........  $ 8,818  $10,486  $13,731  $ 31,915  $143,615   $ 309,391   $ 80,810  $  328,861    $ 339,469
</TABLE>
 
 
                                      26
<PAGE>
 
<TABLE>
<CAPTION>
                                        DECEMBER 31,              SEPTEMBER 30,
                            ------------------------------------- -------------
                             1992   1993    1994    1995    1996   1996   1997
                            ------ ------- ------- ------- ------ ------ ------
<S>                         <C>    <C>     <C>     <C>     <C>    <C>    <C>
NETWORK DATA:(5)
 Buildings connected(6)....    161     234     293     380    487    429  2,703
 Route miles...............    240     335     378     504    655    647    762
 Fiber miles...............  6,184  10,239  11,227  17,128 24,122 23,763 33,801
 Number of city-based
  networks in service......      4       5       6       9      9      9     10
ENHANCED DATA SERVICES:(5)
 Nodes(7)..................    --      100     900   2,300  9,500  8,462 17,268
 Cities(8).................    --       37     336     600  2,200  1,134  3,787
 Switches..................    --        4      12      31     89     76    130
EMPLOYEES(5)...............     49      58     146     287    874    724  1,820
</TABLE>
 
<TABLE>
<CAPTION>
                                                                                     PRO FORMA
                                       DECEMBER 31,                SEPTEMBER 30, SEPTEMBER 30, (9)
                         ----------------------------------------- ------------- -----------------
                          1992    1993    1994     1995     1996       1997            1997
                         ------- ------- ------- -------- -------- ------------- -----------------
<S>                      <C>     <C>     <C>     <C>      <C>      <C>           <C>
BALANCE SHEET DATA:
 Cash and cash
  equivalents(10)....... $ 1,775 $27,954 $10,208 $ 50,997 $189,546  $  471,101      $  547,279
 Working capital(11)....   8,999  25,712   9,588   70,353  206,029     449,648         530,654
 Total assets...........  36,174  61,219  74,086  216,018  512,940   1,086,185       1,978,822
 Long-term obligations
  and redeemable
  preferred stock
  (including current
  maturities)...........  11,742  11,614  16,527  165,545  358,508   1,101,372       1,959,033
 Total stockholders'
  equity................  21,257  45,987  52,033   40,254  114,230     (90,771)        (90,771)
</TABLE>
- - --------
 1. The pro forma operating information gives effect to the EMI, UTT and
    NetSolve acquisitions, which occurred effective June 30, 1996, December 1,
    1996 and December 1, 1996, respectively, as if they occurred on January 1,
    1996. The pro forma operating information also gives effect to the DIGEX
    Acquisition, the pending acquisition of Shared Technologies, the March
    1997 sale of $300 million of 13 1/2% Series A Redeemable Exchangeable
    Preferred Stock, the July 1997 Offerings, the October 30 Offerings and the
    December 23 Offering.
 2. The pro forma operating information gives effect to the DIGEX Acquisition
    and the pending acquisitions of Shared Technologies as if they occurred on
    January 1, 1997. The pro forma operating information also gives effect to
    the March 1997 sale of $300 million of 13 1/2% Series A Redeemable
    Exchangeable Preferred Stock, the July 1997 Offerings, the October 30
    Offerings and the December 23 Offering.
 3. For purposes of calculating the ratio of earnings to combined fixed
    charges and preferred stock dividends: (i) earnings consist of loss before
    income taxes, plus fixed charges excluding capitalized interest and
    preferred stock dividends and (ii) fixed charges consist of interest
    expensed and capitalized, plus amortization of deferred financing costs,
    preferred stock dividends, plus a portion of rent expense under operating
    leases deemed by the Company to represent an interest factor. For the
    years ended December 31, 1992, 1993, 1994, 1995, and 1996 and the quarters
    ended September 30, 1996 and 1997 the Company's earnings were insufficient
    to cover combined fixed charges and preferred stock dividends by $622,
    $2,288, $3,324, $19,931, $59,978, $37,582 and $187,031, respectively. For
    the year ended December 31, 1996 and the quarter ended September 30, 1997,
    the Company's pro forma earnings, after giving effect to the acquisitions
    and the offerings described in Notes 1 and 2 above, were insufficient by
    $273,968 and $321,076, respectively, to cover pro forma combined fixed
    charges and preferred stock dividends.
 4. EBITDA consists of earnings before interest, income taxes, depreciation
    and amortization. In addition, 1995 and 1997 EBITDA excludes extraordinary
    charge of $1,592 and $43,834, respectively, related to the early
    extinguishment of debt. EBITDA is provided in the Summary of Financial and
    Other Operating Data since it is a measure commonly used in the
    telecommunications industry to measure operating performance, asset value
    and financial leverage. It is presented to enhance the reader's
    understanding of the Company's operating results and is not intended to
    present cash flow for the periods presented. See the Consolidated
    Statements of Cash Flows included in the Company's Consolidated Financial
    Statements and the Notes thereto included elsewhere in this Prospectus.
 5. Amounts as reflected in the table are based upon information contained in
    the Company's operating records.
 6. Beginning in January 1997, the Company changed its definition of
    "Buildings connected" to include buildings connected to the Company's
    network via leased facilities controlled by the Company in addition to
    those connected to the Company's network via facilities constructed by the
    Company. The Company believes the new definition is consistent with
    industry practice.
 7. Amount represents an individual point of origin and termination of data
    served by the Company's enhanced network. In the opinion of management of
    the Company, all node numbers are appropriate.
 8. Represents the number of discrete postal cities to which enhanced data
    services are provided by the Company.
 9. Gives effect to the October 30 Offerings, the December 23 Offering and the
    pending Shared Technologies acquisition.
10. Cash and cash equivalents excludes investments of $20,954, $26,675, and
    $6,351 for the years ended December 31, 1995 and 1996 and the quarters
    ended September 30, 1996 and 1997, respectively, restricted under the
    terms of various notes and other agreements.
11. Working capital includes the restricted investments referred to in Note 10
    above.
 
 
                                      27
<PAGE>
 
                                   BUSINESS
 
  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 now has thirteen voice switches
in service. The Company provides enhanced data services, including frame
relay, ATM and Internet access services, primarily to business and government
customers (including over 100 ISPs), in approximately 3,800 cities nationwide,
utilizing approximately 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.
 
RECENT DEVELOPMENTS
 
  Regulatory Changes. The 1996 Act and the issuance by the FCC of rules
governing local competition, particularly those requiring the interconnection
of all networks and the exchange of traffic among the 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 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.
 
  On December 31, 1997, a Federal District Court in Texas found
unconstitutional certain provisions of the 1996 Act restricting the RBOCs from
offering long distance service in their operating regions until they could
demonstrate that their networks have been made available to competitive
providers of local exchange services in those regions. The United States and
some long distance companies have requested a stay of this decision and it is
expected that they, and others, will seek its reversal on appeal. If the
District Court's decision is permitted to stand, it could result in RBOCs'
providing interexchange service in their operating regions sooner than
previously expected.
 
                                      28
<PAGE>
 
  Acquisitions. On July 11, 1997, the Company consummated the final step in
the DIGEX Acquisition through the merger of Daylight, a wholly-owned
subsidiary of the Company, with DIGEX. The aggregate consideration for the
DIGEX Acquisition, which was funded with the Company's 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. DIGEX's operations are being integrated
with those of the Company, and DIGEX will be operated as a division of the
Company. For the nine months ended September 30, 1997, DIGEX's revenues were
approximately $33.5 million.
 
  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 made a tender offer for 4 million additional shares of Shared
Technologies at $15 per share in cash, which expired on December 26, 1997.
More than 16 million shares were tendered pursuant to the tender offer. In
order to avoid the purchase of fractional shares, 4,000,064 shares were
accepted.
 
  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 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, 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 shareholders and
receipt of necessary regulatory approvals.
 
  On December 17, 1997 the Company entered into a definitive agreement to
acquire the stock of 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 employing
over 100 sales and customer service professionals 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.
 
                                      29
<PAGE>
 
  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 December
23 Offering) and/or the Company's securities. Except as described in this
Prospectus, 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.
 
  Offerings. In July 1997, the Company completed the July 1997 Offerings of
6,900,000 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 11 1/4% Notes). The aggregate gross
proceeds from the July 1997 Offerings was approximately $547.3 million.
 
  On October 30, 1997, the Company completed private placements of 8,000,000
Depositary Shares, each representing a one-hundredth interest in a share of
Series E Preferred Stock and $260.3 million principal amount of 8 7/8% Notes
(including the exercise of the over-allotment option with respect to such 8
7/8% Notes). The aggregate gross proceeds from the October 30 Offerings was
$460.3 million.
 
  On December 23, 1997, the Company completed a private placement of the Old
Notes. The aggregate gross proceeds from the December 23 Offering (including
the exercise of the over-allotment option with respect to the Old Notes) was
$390.0 million.
 
                                      30
<PAGE>
 
                    DESCRIPTION OF OUTSTANDING INDEBTEDNESS
 
  In addition to the Old Notes, the Company has outstanding the following
indebtedness:
 
12 1/2% NOTES
 
  The Company had outstanding an aggregate principal amount of $330,000,000 of
12 1/2% Senior Discount Notes due 2006, with an aggregate accreted value of
$213,001,000 as of September 30, 1997. The 12 1/2% Notes were issued at a
substantial discount from their principal amount and mature on May 15, 2006.
Cash interest does not accrue on the 12 1/2% Notes prior to May 15, 2001.
Commencing November 15, 2001, cash interest on the 12 1/2% Notes will be
payable semi-annually in arrears on May 15 and November 15 of each year at a
rate of 12 1/2% per annum. The 12 1/2% Notes may be redeemed at the Company's
option at any time, in whole or in part, on or after May 15, 2001 upon payment
of the redemption price plus accrued and unpaid interest, if any, to the date
of redemption. The 12 1/2% Notes are unsecured obligations of the Company
ranking pari passu in right of payment of principal and interest with all
other existing and future senior indebtedness of the Company, including the 11
1/4% Notes, the 8 7/8% Notes and the Senior Notes, and rank senior to any
future subordinated indebtedness. In the event of a change of control of the
Company prior to May 15, 2001, holders of the 12 1/2% Notes have the right to
require the Company to repurchase their 12 1/2% Notes, in whole or in part, at
a price equal to 101% of the accreted value thereof or, in the case of any
such purchase on or after May 15, 2001, at 101% of the principal amount
thereof, plus accrued and unpaid interest, if any, to the date of purchase.
 
  The covenants in the 12 1/2% Notes Indenture are substantially similar to
the covenants in the indentures for the other Existing Senior Notes and are
substantially similar (with modifications to certain definitions and
exceptions) to the covenants in the Indenture governing the Senior Notes. The
12 1/2% Notes Indenture 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 preferred stock,
pay dividends or make other distributions, repurchase equity interests or
subordinated indebtedness, engage in sale and leaseback transactions, create
certain liens, enter into certain transactions with affiliates, sell assets of
the Company or its subsidiaries, conduct certain lines of business, issue or
sell equity interests of the Company's subsidiaries or enter into certain
mergers and consolidations. In addition, under certain circumstances, the
Company is required to offer to purchase 12 1/2% Notes at a price equal to
100% of the accreted value thereof, if such circumstances occur prior to May
15, 2001, or at 100% of the principal amount thereof, if such circumstances
occur on or after May 15, 2001, plus accrued and unpaid interest, if any, to
the date of purchase with the proceeds of certain asset sales. This
description of the 12 1/2% Notes is intended as a summary and is qualified in
its entirety by reference to the 12 1/2% Notes Indenture.
 
11 1/4% NOTES
 
  The Company has outstanding an aggregate principal amount at maturity of
$649,000,000 of 11 1/4% Senior Discount Notes due 2007, with an aggregate
accreted value of $383,666,000 as of September 30, 1997. The 11 1/4% Notes
were issued at a substantial discount from their principal amount and mature
on July 15, 2007. Cash interest does not accrue on the 11 1/4% Notes prior to
July 15, 2002. Commencing January 15, 2003, cash interest on the 11 1/4% Notes
will be payable semi-annually in arrears on July 15 and January 15 of each
year at a rate of 11 1/4% per annum. The 11 1/4% Notes may be redeemed at the
Company's option at any time, in whole or in part, on or after July 15, 2002
upon payment of the redemption price plus accrued and unpaid interest, if any,
to the date of the redemption. The 11 1/4% Notes are unsecured obligations of
the Company ranking pari passu in right of payment of principal and interest
with all other existing and future senior indebtedness of the Company,
including the 12 1/2% Notes, the 8 7/8% Notes and the Senior Notes, and rank
senior to any future subordinated indebtedness. In the event of a change of
control of the Company prior to July 15, 2002, holders of the 11 1/4% Notes
have the right to require the Company to repurchase their 11 1/4% Notes, in
whole or in part, at a price equal to 101% of the accreted value thereof or,
in the case of any such purchase on or after July 15, 2002, at 101% of the
principal amount thereof, plus accrued and unpaid interest, if any, to the
date of purchase.
 
                                      31
<PAGE>
 
  The covenants in the 11 1/4% Notes Indenture are substantially similar to
the covenants in the indentures for the other Existing Senior Notes and are
substantially similar (with modifications to certain definitions and
exceptions) to the covenants in the Indenture governing the Senior Notes. The
11 1/4% Notes Indenture contains covenants that, among other things, limit the
ability of the Company and its subsidiaries to make certain restricted
payments, incur additional indebtedness and issue preferred stock, pay
dividends or make other distributions, repurchase equity interests or
subordinated indebtedness, engage in sale and leaseback transactions, create
certain liens, enter into certain transactions with affiliates, sell assets of
the Company or its subsidiaries, conduct certain lines of business, issue or
sell equity interests in the Company's subsidiaries or enter into certain
mergers and consolidations. In addition, under certain circumstances, the
Company is required to offer to purchase 11 1/4% Notes at a price equal to
100% of the accreted value thereof, if such circumstances occur prior to July
15, 2002, or at 100% of the principal amount thereof, if such circumstances
occur on or after July 15, 2002, plus accrued and unpaid interest, if any, to
the date of purchase with the proceeds of certain asset sales. This
description of the 11 1/4% Notes is intended as a summary and is qualified in
its entirety by reference to the 11 1/4% Notes Indenture.
 
8 7/8% NOTES
 
  The Company has outstanding an aggregate principal amount of $260,250,000 of
8 7/8% Senior Notes due 2007, which will mature on November 1, 2007. Cash
interest on the 8 7/8% Notes is payable semi-annually in arrears on May 1 and
November 1 of each year at a rate of 8 7/8% per annum. The 8 7/8% Notes may be
redeemed at the Company's option at any time, in whole or in part, on or after
November 1, 2002 upon payment of the redemption price plus accrued and unpaid
interest, if any, to the date of redemption. The 8 7/8% Notes are unsecured
obligations of the Company ranking pari passu in right of payment of principal
and interest with all other existing and future senior indebtedness of the
Company, including the 12 1/2% Notes, the 11 1/4% Notes and the Senior Notes,
and rank senior to any future subordinated indebtedness. In the event of a
change of control of the Company, holders of the 8 7/8% Notes have the right
to require the Company to repurchase their 8 7/8% Notes, in whole or in part,
at a price equal to 101% of the principal amount thereof, plus accrued and
unpaid interest, if any, to the date of purchase.
 
  The covenants in the 8 7/8% Notes Indenture are substantially similar to the
covenants in the indentures for the other Existing Senior Notes and are
substantially similar (with modifications to certain definitions and
exceptions) to the covenants in the Indenture governing the Senior Notes. The
8 7/8% Notes Indenture 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 preferred stock,
pay dividends or make other distributions, repurchase equity interests or
subordinated indebtedness, engage in sale and leaseback transactions, create
certain liens, enter into certain transactions with affiliates, sell assets of
the Company or its subsidiaries, conduct certain lines of business, issue or
sell equity interests of the Company's subsidiaries or enter into certain
mergers and consolidations. In addition, under certain circumstances, the
Company is required to offer to purchase 8 7/8% Notes at a price equal to 100%
of the principal amount thereof, plus accrued and unpaid interest, if any, to
the date of purchase with the proceeds of certain asset sales. This
description of the 8 7/8% Notes is intended as a summary and is qualified in
its entirety by reference to the 8 7/8% Notes Indenture.
 
CAPITAL LEASE OBLIGATIONS
 
  As of September 30, 1997, the Company had outstanding approximately $21.2
million aggregate principal amount of capital lease obligations arising
primarily from 19 agreements for leases of fiber optic cable used in various
of the Company's networks. The effective interest rates under these agreements
range from 10.5% to 13.5% and expire, subject to various Intermedia renewal
options, from 2001 to 2016.
 
                                      32
<PAGE>
 
                        DESCRIPTION OF THE SENIOR NOTES
 
GENERAL
 
  Set forth below is a summary of certain provisions of the Senior Notes. The
Senior Notes, like the Old Notes, will be issued pursuant to an Indenture (the
"Indenture"), dated December 23, 1997, between the Company and SunTrust Bank,
Central Florida, National Association, as trustee (the "Trustee"), a copy of
which has been filed as an exhibit to the Registration Statement of which this
prospectus is a part. The terms of the Senior Notes include those stated in
the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). The Senior
Notes are subject to all such terms, and holders of Senior Notes are referred
to the Indenture and the Trust Indenture Act for a statement thereof. The
following summary of certain provisions of the Indenture does not purport to
be complete and is qualified in its entirety by reference to the Indenture,
including the definitions therein of certain terms used below. The definitions
of certain terms used in the following summary are set forth below under "--
Certain Definitions." As of the date hereof, none of the Company's
Subsidiaries are Unrestricted Subsidiaries. However, under certain
circumstances, the Company will be able to designate current or future
Subsidiaries as Unrestricted Subsidiaries. Unrestricted Subsidiaries will not
be subject to many of the restrictive covenants set forth in the Indenture. As
used in this section, the term "Company" refers only to Intermedia
Communications Inc. and not to its Subsidiaries. The terms of the Senior Notes
are substantially identical to the Old Notes in all material respects
(including interest rate and maturity), except that (i) the Senior Notes will
not be subject to the restrictions on transfer (other than with respect to
holders who are affiliates) and (ii) the Registration Rights Agreement
covenants regarding registration and the related Liquidated Damages (other
than those that have accrued and were not paid) with respect to Registration
Defaults will have been deemed satisfied.
 
RANKING
 
  The Senior Notes will rank senior in right of payment to all subordinated
Indebtedness of the Company. The Senior Notes will rank pari passu in right of
payment with all existing and future senior borrowings, including the Existing
Senior Notes and the Old Notes and borrowings under the Credit Facility.
Holders of secured Indebtedness of the Company will, however, have claims that
are prior to the claims of the Holders of the Senior Notes with respect to the
assets securing such other Indebtedness.
 
  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
Senior Notes. The Senior Notes will be effectively subordinated to all
indebtedness and other liabilities and commitments (including trade payables
and lease obligations) of the Company's Subsidiaries. Any right of the Company
to receive assets of any of its Subsidiaries upon the latter's liquidation or
reorganization (and the consequent right of the Holders of the Senior Notes to
participate in those assets) will be effectively subordinated to the claims of
that Subsidiary's creditors, except to the extent that the Company is itself
recognized as a creditor of such Subsidiary, in which case the claims of the
Company would still be subordinate to any security in the assets of such
Subsidiary and any indebtedness of such Subsidiary senior to that held by the
Company. As of September 30, 1997, on a pro forma basis after giving effect to
the pending acquisition of Shared Technologies and the issuance of the 8 7/8%
Notes and the December 23 Offering and the application of the proceeds
therefrom, the Company would have had approximately $1.4 billion of senior
indebtedness outstanding, including trade payables, and the Company's
Subsidiaries would have had approximately $71.0 million of indebtedness and
other liabilities outstanding.
 
PRINCIPAL, MATURITY AND INTEREST
 
  The Senior Notes are limited in aggregate principal amount to $400,000,000
and will mature on January 15, 2008. Interest on the Senior Notes will accrue
at 8 1/2% per annum and will be payable semi-annually in arrears on January 15
and July 15 of each year, commencing on July 15, 1998, to holders of record on
the immediately preceding January 1 and July 1. Interest on the Senior Notes
will accrue from the most recent date to which interest has been paid or, if
no interest has been paid, from the Issue Date. Interest will be computed on
the basis of a 360-day year comprised of twelve 30-day months. The Senior
Notes will be issued in registered form, without coupons, and in denominations
of $1,000 and integral multiples thereof.
 
                                      33
<PAGE>
 
OPTIONAL REDEMPTION
 
  The Senior Notes will not be redeemable at the Company's option prior to
January 15, 2003. Thereafter, the Senior Notes will be subject to redemption
at the option of the Company, in whole or in part, upon not less than 30 nor
more than 60 days' notice, at the redemption prices (expressed as percentages
of principal amount) set forth below plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the applicable redemption date, if
redeemed during the twelve-month period beginning on January 15 of the years
indicated below:
 
<TABLE>
<CAPTION>
   YEAR                                                               PERCENTAGE
   ----                                                               ----------
   <S>                                                                <C>
   2003..............................................................  104.250%
   2004..............................................................  102.833%
   2005..............................................................  101.417%
   2006 and thereafter...............................................  100.000%
</TABLE>
 
  Notwithstanding the foregoing, in the event of the sale by the Company prior
to January 15, 2001 of its Capital Stock (other than Disqualified Stock) (i)
to a Strategic Investor in a single transaction or series of related
transactions for an aggregate purchase price equal to or exceeding $50.0
million or (ii) in one or more Public Offerings, up to a maximum of 25% of the
aggregate principal amount of the Notes originally issued will, at the option
of the Company, be redeemable from the net cash proceeds of such sale or sales
(but only to the extent such proceeds consist of cash or readily marketable
cash equivalents received in respect of the Capital Stock, other than
Disqualified Stock, so sold) at a redemption price equal to 108.50% of the
principal amount thereof plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the redemption date, provided that at least 75% of
the aggregate principal amount of the Notes originally issued remains
outstanding immediately after the occurrence of such redemption and that such
redemption occurs within 90 days of the date of the closing of such sale.
 
MANDATORY REDEMPTION
 
  The Company will not be required to make mandatory redemption or sinking
fund payments with respect to the Senior Notes.
 
OFFER TO PURCHASE UPON CHANGE OF CONTROL
 
  Upon the occurrence of a Change of Control, the Company will be required to
make an offer (the "Change of Control Offer") to each holder of Senior Notes
to repurchase all or any part (equal to $1,000 or an integral multiple
thereof) of such holder's Senior Notes at a purchase price equal to 101% of
the aggregate principal amount thereof plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the date of purchase (the "Change of
Control Payment"). The Change of Control Offer must be commenced within 30
days following a Change of Control, must remain open for at least 30 and not
more than 40 days (unless required by applicable law) and must comply with the
requirements of Rule 14e-1 under the Exchange Act and any other applicable
securities laws and regulations.
 
  Except as described above with respect to a Change of Control, the Indenture
does not contain provisions that permit the holders of the Senior Notes to
require that the Company repurchase or redeem the Senior Notes in the event of
a takeover, recapitalization or similar transaction.
 
  Due to the leveraged structure of the Company and the effective
subordination of the Senior Notes to secured Indebtedness of the Company and
Indebtedness of the Company's Subsidiaries, the Company may not have
sufficient funds available to purchase the Senior Notes tendered in response
to a Change of Control Offer. In addition, the Existing Senior Notes or other
agreements relating to Indebtedness of the Company's Subsidiaries may contain
prohibitions or restrictions on the Company's ability to effect a Change of
Control Payment.
 
                                      34
<PAGE>
 
  The definition of Change of Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"
of the Company's assets. Although there is a developing body of case law
interpreting the phrase "substantially all," there is no precise established
definition of the phrase under applicable law. Accordingly, the ability of a
holder of Senior Notes to require the Company to repurchase such Senior Notes
as a result of a sale, lease, transfer, conveyance or other disposition of
less than all of the assets of the Company to another Person may be uncertain.
 
OFFER TO PURCHASE WITH EXCESS ASSET SALE PROCEEDS
 
  When the cumulative amount of Excess Proceeds (as defined below under
"Certain Covenants--Asset Sales") exceeds $10.0 million, the Company will make
an offer to all holders of Senior Notes and Pari Passu Notes (an "Excess
Proceeds Offer"), to purchase the maximum principal amount of Senior Notes and
Pari Passu Notes that may be purchased out of such Excess Proceeds, at an
offer price in cash in an amount equal to 100% of the outstanding principal
amount of the Senior Notes and 100% of the accreted value or 100% of the
outstanding principal amount, as applicable, of the Pari Passu Notes, plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the
date fixed for the closing of such offer, in accordance with the procedures
specified in the Indenture.
 
  If the aggregate principal amount and/or accreted value, as the case may be,
of Senior Notes and Pari Passu Notes surrendered by holders thereof exceeds
the amount of Excess Proceeds, the Trustee will select the Senior Notes and
Pari Passu Notes to be purchased on a pro rata basis. To the extent that the
aggregate amount of Senior Notes and Pari Passu Notes tendered pursuant to an
Excess Proceeds Offer is less than the amount of Excess Proceeds, the Company
may use such deficiency for general purposes. Upon completion of an Excess
Proceeds Offer, the amount of Excess Proceeds will be reset at zero.
 
SELECTION OF NOTES FOR REDEMPTION OR OFFERS TO PURCHASE
 
  If less than all of the Senior Notes are to be redeemed or to be purchased
pursuant to any purchase offer required under the Indenture at any time,
selection of Senior Notes for redemption or purchase will be made by the
Trustee in compliance with the requirements of the principal national
securities exchange, if any, on which the Senior Notes are listed, or, if the
Senior Notes are not so listed, on a pro rata basis, by lot or by such method
as the Trustee shall deem fair and appropriate, provided that no Senior Notes
with a principal amount of $1,000 or less shall be redeemed or purchased in
part. A new Senior Note in principal amount equal to the unredeemed or
unpurchased portion will be issued in the name of the holder thereof upon
cancellation of the original Senior Note. On and after the redemption or
purchase date, interest will cease to accrue on the Senior Notes or portions
of them called for redemption or purchase.
 
NOTICE OF REDEMPTION
 
  Notice of redemption shall be mailed by first class mail at least 30 but not
more than 60 days before the redemption date to each holder of Senior Notes to
be redeemed at its registered address. If any Senior Note is to be redeemed in
part only, the notice of redemption that relates to such Senior Note shall
state the portion of the principal amount to be redeemed.
 
CERTAIN COVENANTS
 
 Restricted Payments
 
  The Indenture provides that the Company and its Subsidiaries may not,
directly or indirectly:
 
    (i) declare or pay any dividend or make any distribution on account of
  any Equity Interests of the Company or any of its Subsidiaries other than
  dividends or distributions payable (A) in Equity Interests of the Company
  that are not Disqualified Stock or (B) to the Company or any Subsidiary;
 
    (ii) purchase, redeem, defease, retire or otherwise acquire for value
  ("Retire" and correlatively, a "Retirement") any Equity Interests of the
  Company or any of its Subsidiaries or other Affiliate of the Company (other
  than any such Equity Interests owned by the Company or any Subsidiary);
 
                                      35
<PAGE>
 
    (iii) Retire for value any Indebtedness of (A) the Company that is
  subordinate in right of payment to the Senior Notes or (B) any Subsidiary,
  except, with respect to clause (A) or (B) above, at final maturity or in
  accordance with the mandatory redemption or repayment provisions set forth
  in the original documentation governing such Indebtedness; or
 
    (iv) make any Restricted Investment (all such payments and other actions
  set forth in clauses (i) through (iv) above being collectively referred to
  as "Restricted Payments"), unless, at the time of such Restricted Payment:
 
      (a) no Default or Event of Default has occurred and is continuing or
    would occur as a consequence thereof;
 
      (b) after giving effect to such Restricted Payment on a pro forma
    basis as if such Restricted Payment had been made at the beginning of
    the applicable four-quarter period, the Company could incur at least
    $1.00 of additional Indebtedness pursuant to the Consolidated Cash Flow
    Leverage Ratio test described under "--Incurrence of Indebtedness and
    Issuance of Disqualified Stock;" and
 
      (c) such Restricted Payment, together with the aggregate of all other
    Restricted Payments made by the Company and its Subsidiaries after the
    Issue Date (including any Restricted Payments made pursuant to clauses
    (i), (v) and (vi) of the next paragraph), is less than the sum of
 
        (w) 50% of the Consolidated Net Income of the Company for the
      period (taken as one accounting period) from June 30, 1996 to the
      end of the Company's most recently ended fiscal quarter for which
      internal financial statements are available at the time of such
      Restricted Payment (or, if such Consolidated Net Income for such
      period is a deficit, less 100% of such deficit), plus
 
        (x) 100% of the aggregate net cash proceeds received by the
      Company from the issue or sale of Equity Interests of the Company or
      of debt securities or Disqualified Stock of the Company that have
      been converted into such Equity Interests (other than Equity
      Interests (or convertible debt securities) sold to a Subsidiary of
      the Company and other than Disqualified Stock or debt securities
      that have been converted into Disqualified Stock) after June 30,
      1996 (other than any such Equity Interests, the proceeds of which
      were used as set forth in clauses (ii) and (viii) below) plus
 
        (y) 100% of the sum of, without duplication, (1) aggregate
      dividends or distributions received by the Company or any Subsidiary
      from any Joint Venture (other than dividends or distributions to pay
      any obligations of such Joint Venture to Persons other than the
      Company or any Subsidiary, such as income taxes), with non-cash
      distributions to be valued at the lower of book value or fair market
      value as determined by the Board of Directors, (2) the amount of the
      principal and interest payments received since the Issue Date by the
      Company or any Subsidiary from any Joint Venture and (3) the net
      proceeds from the sale of an Investment in a Joint Venture received
      by the Company or any Subsidiary; provided that there is no
      obligation to return any
      such amounts to the Joint Venture, and excluding any such dividend,
      distribution, interest payment or net proceeds that constitutes a
      return of capital invested pursuant to clause (vi) of the next
      succeeding paragraph, plus
 
        (z) $10.0 million.
 
  The foregoing provisions will not prohibit:
 
    (i) the payment of any dividend within 60 days after the date of
  declaration thereof, if at such date of declaration such payment would have
  complied with the provisions of the Indenture;
 
    (ii) the Retirement of (A) any Equity Interests of the Company or any
  Subsidiary of the Company, (B) Indebtedness of the Company that is
  subordinate to the Senior Notes or (C) Indebtedness of a Subsidiary of the
  Company, in exchange for, or out of the proceeds of the substantially
  concurrent sale (other than to a Subsidiary of the Company) of, Equity
  Interests of the Company (other than Disqualified Stock);
 
    (iii) the Retirement of any Indebtedness of the Company subordinated in
  right of payment to the Senior Notes in exchange for, or out of the
  proceeds of the substantially concurrent incurrence of Indebtedness of
 
                                      36
<PAGE>
 
  the Company (other than Indebtedness to a Subsidiary of the Company), but
  only to the extent that such new Indebtedness is permitted under the
  covenant described below under the caption, "Incurrence of Indebtedness and
  Issuance of Disqualified Stock" and (1) is subordinated in right of payment
  to the Senior Notes at least to the same extent as, (2) has a Weighted
  Average Life to Maturity at least as long as, and (3) has no scheduled
  principal payments due in any amount earlier than, any equivalent amount of
  principal under the Indebtedness so Retired;
 
    (iv) the Retirement of any Indebtedness of a Subsidiary of the Company in
  exchange for, or out of the proceeds of the substantially concurrent
  incurrence of Indebtedness of the Company or any Subsidiary but only to the
  extent that such incurrence is permitted under the covenant described below
  under the caption "Incurrence of Indebtedness and Issuance of Disqualified
  Stock" and only to the extent that such Indebtedness (1) is not secured by
  any assets of the Company or any Subsidiary to a greater extent than the
  Retired Indebtedness was so secured, (2) has a Weighted Average Life to
  Maturity at least as long as the Retired Indebtedness and (3) if such
  Retired Indebtedness was an obligation of the Company, is pari passu or
  subordinated in right of payment to the Senior Notes at least to the same
  extent as the Retired Indebtedness;
 
    (v) the Retirement of any Equity Interests of the Company or any
  Subsidiary of the Company held by any member of the Company's (or any of
  its Subsidiaries') management pursuant to any management equity
  subscription agreement or stock option agreement; provided that the
  aggregate price paid for all such repurchased, redeemed, acquired or
  retired Equity Interests shall not exceed $1.0 million in any twelve-month
  period plus the aggregate cash proceeds received by the Company during such
  twelve-month period from any reissuance of Equity Interests by the Company
  to members of management of the Company and its Subsidiaries;
 
    (vi) Investments in any Joint Venture; provided that at the time any such
  Investment is made, such Investment will not cause the aggregate amount of
  Investments at any one time outstanding under this clause (vi) to exceed
  the greater of (x) $25 million and (y) 5% of the Total Common Equity of the
  Company;
 
    (vii) the payment of cash in lieu of fractional shares (a) payable as
  dividends on Equity Interests of the Company or (b) issuable upon
  conversion of or in exchange for securities convertible into or
  exchangeable for Equity Interests of the Company or (c) issuable as a
  result of a corporate reorganization, provided that, in the case of (a) and
  (b), the issuance of such Equity Interests or securities and, in the case
  of (c), such corporate reorganization, was permitted under the terms of the
  Indenture; and
 
    (viii) Investments with the net cash proceeds received by the Company
  from the issue or sale of Equity Interests of the Company (other than
  Disqualified Stock) after December 31, 1997;
 
provided, however, that at the time of, and after giving effect to, any
Restricted Payment permitted under clauses (i), (ii), (iii), (iv), (v), (vi)
and (viii), no Default or Event of Default shall have occurred and be
continuing.
 
  The Indenture also provides that a Permitted Investment that ceases to be a
Permitted Investment pursuant to the definition thereof, shall become a
Restricted Investment, deemed to have been made on the date that it ceases to
be a Permitted Investment.
 
  The Board of Directors may designate any Subsidiary to be an Unrestricted
Subsidiary if such designation would not cause a Default or an Event of
Default. For purposes of making such determination, all outstanding
Investments by the Company and its Subsidiaries (except to the extent repaid
in cash) in such Subsidiary so designated will be deemed to be Restricted
Payments at the time of such designation and will reduce the amount available
for Restricted Payments under the first paragraph of this covenant. All such
outstanding Investments will be deemed to constitute Investments in an amount
equal to the greatest of (x) the net book value of such Investments at the
time of such designation, (y) the fair market value of such Investments at the
time of such designation and (z) the original fair market value of such
Investments at the time they were made. Such designation will only be
permitted if such Restricted Payment would be permitted at such time.
 
  The Board of Directors of the Company may at any time designate any
Unrestricted Subsidiary to be a Subsidiary; provided that such designation
shall be deemed to be an incurrence of Indebtedness by a Subsidiary
 
                                      37
<PAGE>
 
of the Company of any outstanding Indebtedness of such Unrestricted Subsidiary
and such designation shall only be permitted if (i) such Indebtedness is
permitted under the covenant entitled "Incurrence of Indebtedness and Issuance
of Disqualified Stock," and (ii) no Default or Event of Default would be in
existence following such designation.
 
  Not later than the date of making any Restricted Payment, the Company shall
deliver to the Trustee an Officers' Certificate stating that such Restricted
Payment is permitted and setting forth the basis upon which the calculations
required by the covenant "--Restricted Payments" were computed, which
calculations may be based upon the Company's latest available financial
statements.
 
 Incurrence of Indebtedness and Issuance of Disqualified Stock
 
  The Indenture provides that:
 
    (i) the Company and its Subsidiaries may not, directly or indirectly,
  create, incur, issue, assume, guarantee or otherwise become directly or
  indirectly liable for the payment of (collectively, "incur" and,
  correlatively, "incurred" and "incurrence") any Indebtedness (including,
  without limitation, Acquired Debt) and
 
    (ii) the Company and its Subsidiaries may not issue any Disqualified
  Stock,
 
provided, however, that the Company and/or any of its Subsidiaries may incur
Indebtedness (including, without limitation, Acquired Debt) or issue shares of
Disqualified Stock if, after giving effect to the incurrence of such
Indebtedness or the issuance of such Disqualified Stock, the Consolidated Cash
Flow Leverage Ratio for the Company's most recently ended four full fiscal
quarters for which internal financial statements are available immediately
preceding the date of such incurrence or issuance (A) does not exceed 5.5 to 1
if such incurrence or issuance occurs on or prior to June 1, 1999 and (B) does
not exceed 5.0 to 1 if such occurrence or issuance occurs after June 1, 1999,
in each case, determined on a pro forma basis (including a pro forma
application of the net proceeds therefrom), as if the additional Indebtedness
had been incurred, or the Disqualified Stock had been issued, as the case may
be, at the beginning of such four-quarter period. If the Company incurs any
Indebtedness or issues or redeems any Preferred Stock subsequent to the
commencement of the period for which such ratio is being calculated but prior
to the event for which the calculation of the ratio is made, then the ratio
will be calculated giving pro forma effect to any such incurrence of
Indebtedness, or such issuance or redemption of Preferred Stock, as if the
same had occurred at the beginning of the applicable period. In making such
calculation on a pro forma basis, interest attributable to Indebtedness
bearing a floating interest rate shall be computed as if the rate in effect on
the date of computation had been the applicable rate for the entire period.
 
  The foregoing limitation will not apply to (with each exception to be given
independent effect):
 
    (a) the incurrence by the Company and/or any of its Subsidiaries of
  Indebtedness under the Credit Facility in an aggregate principal amount at
  any one time outstanding (with letters of credit being deemed to have a
  principal amount equal to the maximum potential liability of the Company
  and/or any of its Subsidiaries thereunder) not to exceed $150.0 million in
  the aggregate at any one time outstanding, less the aggregate amount of all
  Net Proceeds of Asset Sales applied to permanently reduce the commitments
  with respect to such Indebtedness pursuant to the covenant described above
  under the caption "Asset Sales;"
 
    (b) the incurrence by the Company and/or any of its Subsidiaries of
  Vendor Indebtedness, provided that the aggregate amount of such Vendor
  Indebtedness incurred does not exceed 80% of the total cost of the
  Telecommunications Related Assets financed therewith (or 100% of the total
  cost of the Telecommunications Related Assets financed therewith if such
  Vendor Indebtedness was extended for the purchase of tangible physical
  assets and was so financed by the vendor thereof or an affiliate of such
  vendor);
 
    (c) the incurrence by the Company and/or any of its Subsidiaries of the
  Existing Indebtedness, including the Existing Senior Notes;
 
                                      38
<PAGE>
 
    (d) the incurrence by the Company and/or any of its Subsidiaries of
  Indebtedness in an aggregate amount not to exceed $50.0 million at any one
  time outstanding;
 
    (e) the incurrence by the Company of Indebtedness, but only to the extent
  that such Indebtedness is expressly subordinate to the payment in full of
  all Obligations with respect to the Senior Notes and has a final maturity
  no earlier than, and a Weighted Average Life to Maturity equal to or
  greater than, the final maturity and Weighted Average Life to Maturity,
  respectively, of the Senior Notes, in an aggregate principal amount not to
  exceed 2.0 times the net cash proceeds received by the Company after June
  30, 1996 from the issuance and sale of Equity Interests of the Company
  (that are not Disqualified Stock) plus the fair market value of Equity
  Interests (other than Disqualified Stock) issued after June 30, 1996 in
  connection with any acquisition of any Telecommunications Business;
 
    (f) the incurrence (a "Permitted Refinancing") by the Company and/or any
  of its Subsidiaries of Indebtedness issued in exchange for, or the proceeds
  of which are used to refinance, replace, refund or defease ("Refinance" and
  correlatively, "Refinanced" and "Refinancing") Indebtedness, other than
  Indebtedness incurred pursuant to clause (a) above, but only to the extent
  that:
 
      (1) the net proceeds of such Refinancing Indebtedness do not exceed
    the principal amount of and premium, if any, and accrued interest on
    the Indebtedness so Refinanced (or if such Indebtedness was issued at
    an original issue discount, the original issue price plus amortization
    of the original issue discount at the time of the repayment of such
    Indebtedness) plus the fees, expenses and costs of such Refinancing and
    reasonable prepayment premiums, if any, in connection therewith;
 
      (2) the Refinancing Indebtedness shall have a final maturity no
    earlier than, and a Weighted Average Life to Maturity equal to or
    greater than, the final maturity and Weighted Average Life to Maturity
    of the Indebtedness being Refinanced; and
 
      (3) if the Indebtedness being Refinanced is subordinated in right of
    payment to the Senior Notes, the Refinancing Indebtedness shall be
    subordinated in right of payment to the Senior Notes on terms at least
    as favorable to the holders of Senior Notes as those contained in the
    documentation governing the Indebtedness being so Refinanced;
 
    (g) the incurrence by the Company or any of its Subsidiaries of
  intercompany Indebtedness between or among the Company and any of its
  Subsidiaries; and
 
    (h) the incurrence by the Company or any of its Subsidiaries of Hedging
  Obligations that are incurred for the purpose of fixing or hedging interest
  rate or foreign currency risk with respect to any floating rate
  Indebtedness that is permitted by the terms of the Indenture to be
  outstanding.
 
  For purposes of determining compliance with this covenant, in the event that
an item of Indebtedness, Disqualified Stock or Preferred Stock meets the
criteria of more than one of the categories described in clauses (a) through
(h) above or is entitled to be incurred pursuant to the first paragraph of
this covenant, the Company shall, in its sole discretion, classify such item
in any manner that complies with this covenant and such item will be treated
as having been incurred pursuant to only one of such clauses or pursuant to
the first paragraph herein. Accrual of interest or dividends, the accretion of
accreted value or liquidation preference and the payment of interest or
dividends in the form or additional Indebtedness, Common Stock or Preferred
Stock will not be deemed to be an incurrence of Indebtedness for purposes of
this covenant.
 
 Asset Sales
 
  The Indenture provides that the Company and its Subsidiaries may not,
whether in a single transaction or a series of related transactions occurring
within any twelve-month period,
 
    (i) sell, lease, convey, dispose or otherwise transfer any assets
  (including by way of a Sale and Leaseback Transaction) other than sales,
  leases, conveyances, dispositions or other transfers (A) in the ordinary
  course of business, (B) to the Company by any Subsidiary of the Company or
  from the Company to any Subsidiary of the Company, (C) that constitute a
  Restricted Payment, Investment or dividend or
 
                                      39
<PAGE>
 
  distribution permitted under the covenant described above under the caption
  "Restricted Payments" or (D) that constitute the disposition of all or
  substantially all of the assets of the Company pursuant to the covenant
  described below under the caption "Merger, Consolidation or Sale of Assets"
  or
 
    (ii) issue or sell Equity Interests in any of its Subsidiaries (other
  than an issuance or sale of Equity Interests of any such Subsidiary to the
  Company or a Subsidiary),
 
if, in the case of either (i) or (ii) above, in a single transaction or a
series of related transactions occurring within any twelve-month period, such
assets or securities
 
  (x) have a Fair Market Value in excess of $2.0 million or
 
  (y) are sold or otherwise disposed of for net proceeds in excess of $2.0
million (each of the foregoing, an "Asset Sale"), unless:
 
    (a) no Default or Event of Default exists or would occur as a result
  thereof;
 
    (b) the Company, or such Subsidiary, as the case may be, receives
  consideration at the time of such Asset Sale at least equal to the Fair
  Market Value (evidenced by a resolution of the Board of Directors of the
  Company set forth in an Officers' Certificate delivered to the Trustee), of
  the assets or securities issued or sold or otherwise disposed of; and
 
    (c) at least 75% of the consideration therefor received by the Company or
  such Subsidiary is in the form of cash, provided, however, that (A) the
  amount of (x) any liabilities (as shown on the Company's or such
  Subsidiary's most recent balance sheet or in the notes thereto), of the
  Company or any Subsidiary of the Company (other than liabilities that are
  by their terms subordinated to the Senior Notes) that are assumed by the
  transferee of any such assets and (y) any notes, obligations or other
  securities received by the Company or any such Subsidiary from such
  transferee that are immediately converted by the Company or such Subsidiary
  into cash, shall be deemed to be cash (to the extent of the cash received
  in the case of subclause (y)) for purposes of this clause (c); and (B) an
  amount equal to the Fair Market Value (determined as set forth in clause
  (b) above) of (1) Telecommunications Related Assets received by the Company
  or any such Subsidiary from the transferee that will be used by the Company
  or any such Subsidiary in the operation of a Telecommunications Business in
  the United States and (2) the Voting Stock of any Person engaged in the
  Telecommunications Business in the United States received by the Company or
  any such Subsidiary (provided that such Voting Stock is converted to cash
  within 270 days or such Person concurrently becomes or is a Subsidiary of
  the Company) will be deemed to be cash for purposes of this clause (c).
 
The foregoing provisions will not apply to a sale, lease, conveyance or other
disposition of all or substantially all of the assets of the Company, which
will be governed by the provisions of the Indenture described below under
"Merger, Consolidation, or Sale of Assets."
 
  The Indenture also provides that within 360 days after the receipt of net
proceeds of any Asset Sale, the Company (or such Subsidiary, as the case may
be) may apply the Net Proceeds from such Asset Sale to (i) permanently reduce
the amounts permitted to be borrowed by the Company under the terms of any of
its Senior Indebtedness or (ii) the purchase of Telecommunications Related
Assets or Voting Stock of any Person engaged in the Telecommunications
Business in the United States (provided that such Person concurrently becomes
a Subsidiary of the Company). Any Net Proceeds from any Asset Sales that are
not so applied or invested will constitute "Excess Proceeds." When the
aggregate amount of Excess Proceeds exceeds $10.0 million, the Company will be
required to make an Excess Proceeds Offer in accordance with the terms set
forth under "Offer to Purchase with Excess Asset Sale Proceeds."
 
 Liens
 
  The Indenture provides that the Company and its Subsidiaries may not,
directly or indirectly, create, incur, assume or suffer to exist any Lien on
any asset now owned or hereafter acquired, or any income or profits therefrom
or assign or convey any right to receive income therefrom, except for
Permitted Liens.
 
                                      40
<PAGE>
 
 Dividend and Other Payment Restrictions Affecting Subsidiaries
 
  The Indenture provides that the Company and its Subsidiaries may not,
directly or indirectly, create or otherwise cause to become effective any
consensual encumbrance or restriction on the ability of any Subsidiary to:
 
    (i) pay dividends or make any other distributions to the Company or any
  of its Subsidiaries on its Capital Stock or with respect to any other
  interest or participation in, or measured by, its profits, or pay any
  Indebtedness owed to the Company or any of its Subsidiaries;
 
    (ii) make loans or advances to the Company or any of its Subsidiaries; or
 
    (iii) transfer any of its properties or assets to the Company or any of
  its Subsidiaries;
 
  except for such encumbrances or restrictions existing as of the Issue Date
  or under or by reason of:
 
      (a) Existing Indebtedness;
 
      (b) applicable law;
 
      (c) any instrument governing Acquired Debt as in effect at the time
    of acquisition (except to the extent such Indebtedness was incurred in
    connection with, or in contemplation of, such acquisition), which
    encumbrance or restriction is not applicable to any Person, or the
    properties or assets of any Person, other than the Person, or the
    property or assets of the Person, so acquired;
 
      (d) by reason of customary non-assignment provisions in leases
    entered into in the ordinary course of business and consistent with
    past practices;
 
      (e) Indebtedness in respect of a Permitted Refinancing, provided that
    the restrictions contained in the agreements governing such Refinancing
    Indebtedness are not materially more restrictive than those contained
    in the agreements governing the Indebtedness being refinanced;
 
      (f) with respect to clause (iii) above, purchase money obligations
    for property acquired in the ordinary course of business, Vendor
    Indebtedness incurred in connection with the purchase or lease of
    Telecommunications Related Assets or performance bonds or similar
    security for performance which liens securing such obligations do not
    cover any asset other than the asset acquired or, in the case of
    performance bonds or similar security for performance, the assets
    associated with the Company's performance;
 
      (g) Indebtedness incurred under clause (a) of the covenant entitled
    "Incurrence of Indebtedness and Issuance of Disqualified Stock;"
 
      (h) the Indenture and the Senior Notes or future Indebtedness with
    substantially similar restrictions, if any, to the Senior Notes; or
 
      (i) in the case of clauses (a), (c), (e), (g) and (h) above, any
    amendments, modifications, restatements, renewals, increases,
    supplements, refundings, replacements or refinancings thereof, provided
    that such amendments, modifications, restatements, renewals, increases,
    supplements, refundings, replacements or refinancings are not
    materially more restrictive with respect to such dividend and other
    payment restrictions than those contained in such instruments as in
    effect on the date of their incurrence or, if later, the Issue Date.
 
 Merger, Consolidation or Sale of Assets
 
  The Indenture provides that the Company may not consolidate or merge with or
into (whether or not the Company is the surviving entity), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of
its properties or assets in one or more related transactions to, another
corporation, Person or entity unless:
 
    (i) the Company is the surviving entity or the entity or Person formed by
  or surviving any such consolidation or merger (if other than the Company)
  or to which such sale, assignment, transfer, lease, conveyance or other
  disposition has been made is a corporation organized or existing under the
  laws of the United States, any state thereof or the District of Columbia;
 
                                      41
<PAGE>
 
    (ii) the entity or Person formed by or surviving any such consolidation
  or merger (if other than the Company) or the entity or Person to which such
  sale, assignment, transfer, lease, conveyance or other disposition has been
  made assumes all the obligations of the Company under the Senior Notes and
  the Indenture pursuant to a supplemental indenture in form reasonably
  satisfactory to the Trustee;
 
    (iii) immediately after such transaction no Default or Event of Default
  exists;
 
    (iv) except in connection with a Merger with or into a wholly owned
  Subsidiary of the Company, the Company, or any entity or Person formed by
  or surviving any such consolidation or merger, or to which such sale,
  assignment, transfer, lease, conveyance or other disposition has been made,
  at the time of such transaction after giving pro forma effect thereto as if
  such transaction had occurred at the beginning of the applicable fiscal
  quarter (including any Indebtedness incurred or anticipated to be incurred
  in connection with or in respect of such transaction or series of
  transactions), either (A) could incur at least $ 1.00 of additional
  Indebtedness pursuant to the Consolidated Cash Flow Leverage Ratio test
  described under "--Incurrence of Indebtedness and Issuance of Disqualified
  Stock" or (B) would have (x) Total Market Capitalization of at least $1.0
  billion and (y) total Indebtedness (net of cash and cash equivalents that
  are not restricted cash or restricted cash equivalents as reflected on the
  Company's consolidated balance sheet as of the time of such event) in an
  amount no greater than 40% of its Total Market Capitalization; and
 
    (v) such transaction would not result in the loss, material impairment or
  adverse modification or amendment of any authorization or license of the
  Company or its Subsidiaries that would have a material adverse effect on
  the business or operations of the Company and its Subsidiaries taken as a
  whole.
 
 Transactions with Affiliates
 
  The Indenture provides that the Company and its Subsidiaries may not sell,
lease, transfer or otherwise dispose of any of their respective properties or
assets to, or purchase any property or assets from, or enter into any
contract, agreement, understanding, loan, advance or guarantee with, or for
the benefit of, any Affiliate (each of the foregoing, an "Affiliate
Transaction"), unless:
 
    (i) such Affiliate Transaction is on terms that are no less favorable to
  the Company or the relevant Subsidiary than those that would have been
  obtained in a comparable transaction by the Company or such Subsidiary with
  an unrelated Person;
 
    (ii) such Affiliate Transaction is approved by a majority of the
  disinterested directors on the Board of Directors of the Company; and
 
    (iii) the Company delivers to the Trustee, with respect to any Affiliate
  Transaction involving aggregate payments in excess of $1.0 million, a
  resolution of a committee of independent directors of the Company set forth
  in an Officers' Certificate certifying that such Affiliate Transaction
  complies with clauses (i) and (ii) above;
 
  provided that
 
      (a) transactions pursuant to any employment, stock option or stock
    purchase agreement entered into by the Company or any of its
    Subsidiaries, or any grant of stock, in the ordinary course of business
    that are approved by the Board of Directors of the Company,
 
      (b) transactions between or among the Company and its Subsidiaries,
 
      (c) transactions permitted by the provisions of the Indenture
    described above under the covenant "--Restricted Payments," and
 
      (d) loans and advances to employees and officers of the Company or
    any of its Subsidiaries in the ordinary course of business in an
    aggregate principal amount not to exceed $1.0 million at any one time
    outstanding,
 
  shall not be deemed Affiliate Transactions.
 
                                      42
<PAGE>
 
 Use of Proceeds
 
  The Indenture provides that the Company may use the gross proceeds from the
sale of the Old Notes only for the following purposes:
 
    (i) to pay the fees and expenses of the issuance of the Old Notes
  including any discount or commission to the Initial Purchasers of the Old
  Notes;
 
    (ii) with respect to any funds remaining after application under clause
  (i) above, to fund up to 80% of the cost of the acquisition or construction
  of Telecommunications Related Assets, or to the repayment of the Existing
  Senior Notes.
 
  Pending application of the proceeds in accordance with clause (ii) above,
the Company will deposit such proceeds into a segregated account in the
Company's name. The Company will deliver to the Trustee an Officer's
Certificate with each annual compliance certificate certifying that the
amounts in such account were applied in accordance with this covenant.
 
 Business Activities
 
  The Indenture provides that the Company and its Subsidiaries may not,
directly or indirectly, engage in any business other than the
Telecommunications Business.
 
 Limitations on Sale and Leaseback Transactions
 
  The Indenture provides that the Company and its Subsidiaries may not,
directly or indirectly, enter into, assume, Guarantee or otherwise become
liable with respect to any Sale and Leaseback Transaction, provided that the
Company or any Subsidiary of the Company may enter into any such transaction
if (i) the Company or such Subsidiary would be permitted under the covenants
described above under "--Incurrence of Indebtedness and Issuance of
Disqualified Stock" and "--Liens" to incur secured Indebtedness in an amount
equal to the Attributable Debt with respect to such transaction, (ii) the
consideration received by the Company or such Subsidiary from such transaction
is at least equal to the Fair Market Value of the property being transferred,
and (iii) the Net Proceeds received by the Company or such Subsidiary from
such transaction are applied in accordance with the covenant described above
under the caption "--Asset Sales."
 
 Reports
 
  The Indenture provides that the Company will file with the Trustee within 15
days after it files them with the Commission copies of the 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"). 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) and the
Trustee. Whether or not required by the Exchange Act to file SEC Reports with
the Commission, so long as any Senior Notes are outstanding, the Company will
furnish copies of the SEC Reports to the holders of Senior Notes at the time
the Company is required to file the same with the Trustee and make such
information available to investors who request it in writing. In addition, the
Company has agreed that, for so long as any Senior Notes 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.
 
 Payments for Consents
 
  The Indenture provides that neither the Company nor any of its Affiliates
shall, directly or indirectly, pay or cause to be paid any consideration,
whether by way of interest, fee or otherwise, to any holder of any Notes for
or as an inducement to any consent, waiver or amendment of any of the terms or
provisions of the Indenture or the Senior Notes unless such consideration is
offered to be paid or agreed to be paid to all holders of the Senior Notes
that consent, waive or agree to amend in the time frame set forth in the
solicitation documents relating to such consent, waiver or agreement.
 
                                      43
<PAGE>
 
EVENTS OF DEFAULT AND REMEDIES
 
  The Indenture provides that each of the following constitutes an Event of
Default:
 
    (i) default for 30 days in the payment when due of interest or Liquidated
  Damages, if any, on the Senior Notes;
 
    (ii) default in payment when due of principal or premium, if any, on the
  Senior Notes at maturity, upon redemption or otherwise;
 
    (iii) failure by the Company to perform or comply with the provisions of
  the covenants described above under "--Offer to Purchase Upon Change of
  Control," "--Asset Sales," "--Restricted Payments," "--Incurrence of
  Indebtedness and Issuance of Disqualified Stock" or "--Merger,
  Consolidation or Sale of Assets;"
 
    (iv) failure by the Company for 30 days after notice from the Trustee or
  the holders of at least 25% in principal amount of the Notes then
  outstanding to comply with its other agreements in the Indenture or the
  Senior Notes;
 
    (v) default under any mortgage, indenture or instrument under which there
  may be issued or by which there may be secured or evidenced any
  Indebtedness for money borrowed by the Company or any of its Subsidiaries
  (or the payment of which is guaranteed by the Company or any of its
  Subsidiaries), whether such Indebtedness or Guarantee now exists, or is
  created after the Issue Date, which default (x) is caused by a failure to
  pay when due principal, premium, if any, or interest on such Indebtedness
  within the grace period provided in such Indebtedness (a "Payment
  Default"), and the principal amount of any such Indebtedness, together with
  the principal amount of any other such Indebtedness of the Company or any
  Significant Subsidiary under which there has been a Payment Default or the
  maturity of which has been accelerated as provided in clause (y),
  aggregates $5.0 million or more or (y) results in the acceleration (which
  acceleration has not been rescinded) of such Indebtedness prior to its
  express maturity and the principal amount of any such Indebtedness,
  together with the principal amount of any other such Indebtedness under
  which there has been a Payment Default or the maturity of which has been so
  accelerated, aggregates $5.0 million or more;
 
    (vi) failure by the Company or any of its Significant Subsidiaries to pay
  final judgments (other than any judgment as to which a reputable insurance
  company has accepted full liability in writing) aggregating in excess of
  $5.0 million which judgments are not paid, discharged or stayed within 45
  days after their entry; and
 
    (vii) certain events of bankruptcy or insolvency with respect to the
  Company or any of its Significant Subsidiaries.
 
  If any Event of Default occurs and is continuing under the Indenture, the
Trustee or the holders of at least 25% in principal amount of the then
outstanding Notes may declare all the Notes to be due and payable immediately.
Upon such declaration, the principal of, premium, if any, and accrued and
unpaid interest and Liquidated Damages, if any, on the Senior Notes shall be
due and payable immediately. Notwithstanding the foregoing, in the case of an
Event of Default arising from certain events of bankruptcy or insolvency with
respect to the Company or any of its Significant Subsidiaries, the foregoing
amount shall ipso facto become due and payable without further action or
notice. No premium is payable upon acceleration of the Senior Notes except
that in the case of an Event of Default that is the result of an action or
inaction by the Company or any of its Subsidiaries intended to avoid
restrictions on or premiums related to redemptions of the Senior Notes
contained in the Indenture or the Senior Notes. The amount declared due and
payable will include the premium that would have been applicable on a
voluntary prepayment of the Senior Notes or, if voluntary prepayment is not
then permitted, the premium set forth in the Indenture. Holders of the Senior
Notes may not enforce the Indenture or the Senior Notes except as provided in
the Indenture. Subject to certain limitations, holders of a majority in
principal amount of the then outstanding Notes may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from holders of the
Senior Notes notice of any continuing Default or Event of Default (except a
Default or Event of Default relating to the payments of principal or interest)
if it determines that withholding notice is in such holders' interest.
 
                                      44
<PAGE>
 
  The holders of a majority in aggregate principal amount of the Notes then
outstanding, by notice to the Trustee, may on behalf of the holders of all of
the Notes, waive any existing Default or Event of Default and its consequences
under the Indenture, except a continuing Default or Event of Default in the
payment of interest or Liquidated Damages or premium on, or the principal of,
the Notes.
 
  The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required upon
becoming aware of any Default or Event of Default to deliver to the Trustee a
statement specifying such Default or Event of Default.
 
NO PERSONAL LIABILITY OF PARTNERS, DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS
 
  No director, officer, employee, incorporator or stockholder of the Company,
as such, shall have any liability for any obligations of the Company under the
Senior Notes or the Indenture or for any claim based on, in respect of, or by
reason of such obligations or their creation. Each holder of Senior Notes by
accepting a Senior Note waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Senior Notes. Such
waiver may not be effective to waive liabilities under the federal securities
laws and it is the view of the Commission that such a waiver is against public
policy.
 
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
 
  The Company may, at its option and at any time, elect to have its
obligations discharged with respect to the outstanding Senior Notes ("Legal
Defeasance"). Such Legal Defeasance means that the Company shall be deemed to
have paid and discharged the entire indebtedness represented by the
outstanding Senior Notes, except for:
 
    (a) the rights of holders of outstanding Senior Notes to receive from the
  trust described below payments in respect of the principal of, premium, if
  any, and interest on and Liquidated Damages with respect to such Senior
  Notes when such payments are due, or on the redemption date, as the case
  may be;
 
    (b) the Company's obligations with respect to the Senior Notes concerning
  issuing temporary Senior Notes, registration of Senior Notes, mutilated,
  destroyed, lost or stolen Senior Notes and the maintenance of an office or
  agency for payment and money for security payments held in trust;
 
    (c) the rights, powers, trust, duties and immunities of the Trustee, and
  the Company's obligations in connection therewith; and
 
    (d) the Legal Defeasance provisions of the Indenture.
 
  In addition, the Company may, at its option and at any time, elect to have
the obligations of the Company released with respect to certain covenants that
are described in the Indenture ("Covenant Defeasance") and thereafter any
omission to comply with such obligations shall not constitute a Default or
Event of Default with respect to the Senior Notes. In the event Covenant
Defeasance occurs, certain events (not including non payment, bankruptcy,
receivership, rehabilitation and insolvency events) described under "Events of
Default" will no longer constitute an Event of Default with respect to the
Senior Notes.
 
  In order to exercise either Legal Defeasance or Covenant Defeasance:
 
    (i) the Company must irrevocably deposit with the Trustee, in trust, for
  the benefit of the holders of the Senior Notes, cash in U.S. dollars, non-
  callable U.S. government obligations, or a combination thereof, in such
  amounts as will be sufficient, in the opinion of a nationally recognized
  firm of independent public accountants selected by the Company, to pay the
  principal of, premium, if any, and interest on the outstanding Senior
  Notes, on the stated maturity or on the applicable optional redemption
  date, as the case may be, of such principal or installment of principal of,
  premium, if any, or interest on or Liquidated Damages with respect to the
  outstanding Senior Notes;
 
    (ii) in the case of Legal Defeasance, the Company must deliver to the
  Trustee an opinion of counsel in the United States reasonably acceptable to
  the Trustee confirming that (A) the Company has received from,
 
                                      45
<PAGE>
 
  or there has been published by, the Internal Revenue Service a ruling or
  (B) since the Issue Date, there has been a change in the applicable federal
  income tax law, in either case to the effect that, and based thereon such
  opinion of counsel shall confirm that, the holders of the outstanding
  Senior Notes will not recognize income, gain or loss for federal income tax
  purposes as a result of such Legal Defeasance and will be subject to
  federal income tax on the same amounts, in the same manner and at the same
  times as would have been the case if such Legal Defeasance had not
  occurred;
 
    (iii) in the case of Covenant Defeasance, the Company must deliver to the
  Trustee an opinion of counsel in the United States reasonably acceptable to
  the Trustee confirming that the holders of the outstanding Senior Notes
  will not recognize income, gain or loss for federal income tax purposes as
  a result of such Covenant Defeasance and will be subject to federal income
  tax on the same amounts, in the same manner and at the same times as would
  have been the case if such Covenant Defeasance had not occurred;
 
    (iv) no Default or Event of Default shall have occurred and be continuing
  on the date of such deposit (other than a Default or Event of Default
  resulting from the borrowing of funds to be applied to such deposit) or
  insofar as Events of Default from bankruptcy or insolvency events are
  concerned, at any time in the period ending on the 91st day after the date
  of deposit;
 
    (v) such Legal Defeasance or Covenant Defeasance will not result in a
  breach or violation of, or constitute a default under any material
  agreement or instrument (other than the Indenture) to which the Company or
  any of its Subsidiaries is a party or by which the Company or any of its
  Subsidiaries is bound;
 
    (vi) the Company must have delivered to the Trustee an opinion of counsel
  to the effect that after the 91st day (or such other applicable date)
  following the deposit, the trust funds will not be subject to the effect of
  any applicable bankruptcy, insolvency, reorganization or similar laws
  affecting creditors' rights generally;
 
    (vii) the Company must deliver to the Trustee an Officers' Certificate
  stating that the deposit was not made by the Company with the intent of
  preferring the holders of Senior Notes over the other creditors of the
  Company with the intent of defeating, hindering, delaying or defrauding
  creditors of the Company or others; and
 
    (viii) the Company must deliver to the Trustee an Officers' Certificate
  and an opinion of counsel, each stating that all conditions precedent
  provided for relating to the Legal Defeasance or the Covenant Defeasance
  have been complied with.
 
TRANSFER AND EXCHANGE
 
  A holder may transfer or exchange Senior Notes in accordance with the
Indenture. The Registrar and the Trustee may require a holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company is not required to transfer or
exchange any Senior Note selected for redemption. Also, the Company is not
required to transfer or exchange any Senior Note for a period of 15 days
before a selection of Senior Notes to be redeemed.
 
  The registered holder of a Senior Note will be treated as the owner of it
for all purposes.
 
AMENDMENT, SUPPLEMENT AND WAIVER
 
  Except as provided in the next succeeding paragraph, the Indenture or the
Senior Notes may be amended or supplemented with the consent of the holders of
at least a majority in principal amount of the Notes then outstanding
(including consents obtained in connection with a tender offer or exchange
offer for Notes), and any existing default or compliance with any provision of
the Indenture or the Senior Notes may be waived with the consent of the
holders of a majority in principal amount of the then outstanding Notes
(including consents obtained in connection with a tender offer or exchange
offer for Notes).
 
  Without the consent of each holder affected, however, an amendment or waiver
may not (with respect to any Senior Note held by a non-consenting holder):
 
    (i) reduce the principal amount of Notes whose holders must consent to an
  amendment, supplement or waiver;
 
                                      46
<PAGE>
 
    (ii) reduce the principal or change the fixed maturity of any Senior Note
  or alter the provisions with respect to the redemption of the Senior Notes
  (other than provisions relating to the covenants described under the
  caption "--Offer to Purchase upon Change of Control" and "--Offer to
  Purchase with Excess Asset Sale Proceeds");
 
    (iii) reduce the rate of or change the time for payment of interest on
  any Senior Notes;
 
    (iv) waive a Default or Event of Default in the payment of principal of
  or premium, if any, or interest on the Senior Notes (except a rescission of
  acceleration of the Senior Notes by the holders of at least a majority in
  aggregate principal amount of the Senior Notes and a waiver of the payment
  default that resulted from such acceleration);
 
    (v) make any Senior Note payable in money other than that stated in the
  Senior Notes;
 
    (vi) make any change in the provisions of the Indenture relating to
  waivers of past Defaults or the rights of holders of Senior Notes to
  receive payments of principal of, premium, if any, or interest on the
  Senior Notes;
 
    (vii) waive a redemption payment with respect to any Senior Note (other
  than a payment required by one of the covenants described above under the
  captions "--Offer to Purchase upon Change of Control" and "Offer to
  Purchase with Excess Asset Sale Proceeds"); or
 
    (viii) make any change in the foregoing amendment and waiver provisions.
 
  Notwithstanding the foregoing, without the consent of any holder of Senior
Notes, the Company and the Trustee may amend or supplement the Indenture or
the Senior Notes:
 
    (a) to cure any ambiguity, defect or inconsistency;
 
    (b) to provide for uncertificated Senior Notes in addition to or in place
  of certificated Senior Notes;
 
    (c) to provide for the assumption of the Company's obligations to holders
  of the Senior Notes in the case of a merger or consolidation;
 
    (d) to make any change that would provide any additional rights or
  benefits to the holders of the Senior Notes or that does not adversely
  affect the legal rights under the Indenture of any such holder; or
 
    (e) to comply with requirements of the Commission in order to effect or
  maintain the qualification of the Indenture under the Trust Indenture Act.
 
CONCERNING THE TRUSTEE
 
  The Indenture contains certain limitations on the rights of the Trustee,
should the Trustee become a creditor of the Company, to obtain payment of
claims in certain cases, or to realize on certain property received in respect
of any such claim as security or otherwise. The Trustee is permitted to engage
in other transactions with the Company; however, if the Trustee acquires any
conflicting interest, it must eliminate such conflict within 90 days, apply to
the Commission for permission to continue as Trustee or resign.
 
  The holders of a majority in principal amount of the then outstanding Notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event of Default
shall occur and be continuing, the Trustee will be required, in the exercise
of its powers, to use the degree of care of a prudent man in the conduct of
his own affairs. Subject to such provisions, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request of any holder of Senior Notes, unless such holder shall have offered
to the Trustee security and indemnity satisfactory to it against any loss,
liability or expense. No holder of any Senior Note will have any right to
institute any proceeding with respect to the Indenture or for any remedy
thereunder, unless (i) such holder gives to the Trustee written notice of a
continuing Event of Default, (ii) holders of at least 25% in principal amount
of the then outstanding Notes make a written request to pursue the remedy,
(iii) such holders of the Senior Notes provide to the Trustee satisfactory
indemnity and (iv) the Trustee does not comply within 60 days. Otherwise, no
holder of any Senior Note will have any right to institute any proceeding
 
                                      47
<PAGE>
 
with respect to the Indenture or for any remedy thereunder, except: (i) a
holder of a Senior Note may institute suit for enforcement of payment of the
principal of and premium, if any, or interest on such Senior Note on or after
the respective due dates expressed in such Senior Note (including upon
acceleration thereof) or (ii) the institution of any proceeding with respect
to the Indenture or any remedy thereunder, including without limitation
acceleration, by the Holders of a majority in principal amount of the
outstanding Senior Notes, provided that, upon institution of any proceeding or
exercise of any remedy such Holders provide the Trustee with prompt notice
thereof.
 
REGISTRATION RIGHTS; LIQUIDATED DAMAGES
 
  The Company and the Initial Purchasers entered into the Registration Rights
Agreement on December 23, 1997. Pursuant to the Registration Rights Agreement,
the Company agreed to file with the Commission the Exchange Registration
Statement of which this Prospectus forms a part with respect to the Notes.
Upon the effectiveness of the Exchange Registration Statement, the Company
will offer to the holders of Transfer Restricted Securities pursuant to the
Exchange Offer who are able to make certain representations the opportunity to
exchange their Transfer Restricted Securities for the Senior Notes. If (i) the
Company is not required to file the Exchange Registration Statement or
permitted to consummate the Exchange Offer because the Exchange Offer is not
permitted by applicable law or Commission policy or (ii) any holder of
Transfer Restricted Securities notifies the Company within the specified time
period that (A) it is prohibited by law or Commission policy from
participating in the Exchange Offer, (B) that it may not resell the Senior
Notes acquired by it in the Exchange Offer to the public without delivering a
prospectus and the prospectus contained in the Exchange Registration Statement
is not appropriate or available for such resales or (C) that it is a broker-
dealer and owns Old Notes acquired directly from the Company or an affiliate
of the Company, the Company will file with the Commission a shelf registration
statement (the "Shelf Registration Statement") to cover resales of the Old
Notes by the Holders thereof who satisfy certain conditions relating to the
provision of information in connection with the Shelf Registration Statement.
The Company will use its best efforts to cause the applicable registration
statement to be declared effective as promptly as possible by the Commission.
For purposes of the foregoing, "Transfer Restricted Securities" means each Old
Note until (i) the date on which such Old Note has been exchanged by a Person
other than a broker-dealer for a Senior Note in the Exchange Offer, (ii)
following the exchange by a broker-dealer in the Exchange Offer of a Old Note
for a Senior Note, the date on which such Senior Note is sold to a purchaser
who receives from such broker-dealer on or prior to the date of such sale a
copy of the prospectus contained in the Exchange Registration Statement, (iii)
the date on which such Old Note has been effectively registered under the
Securities Act and disposed of in accordance with the Shelf Registration
Statement or (iv) the date on which such Old Note is distributed to the public
pursuant to Rule 144 under the Act.
 
  The Registration Rights Agreement provides that (i) the Company will file
the Exchange Registration Statement with the Commission on or prior to 60 days
after December 23, 1997 (the "Closing Date"), (ii) the Company will use its
best efforts to have the Exchange Registration Statement declared effective by
the Commission on or prior to 120 days after the Closing Date, (iii) unless
the Exchange Offer would not be permitted by applicable law or Commission
policy, the Company will commence the Exchange Offer and use its best efforts
to issue on or prior to 30 business days after the date on which the Exchange
Registration Statement was declared effective by the Commission, Senior Notes
in exchange for all Old Notes tendered prior thereto in the Exchange Offer and
(iv) if obligated to file the Shelf Registration Statement, the Company will
use its best efforts to file the Shelf Registration Statement with the
Commission on or prior to 60 days after such filing obligation arises (and in
any event within 150 days after the Closing Date) and to cause the Shelf
Registration Statement to be declared effective by the Commission on or prior
to 90 days after such obligation arises (and in any event within 240 days
after the Closing Date). If (a) the Company fails to file any of the
registration statements required by the Registration Rights Agreement on or
before the date specified for such filing, (b) any of such registration
statements is not declared effective by the Commission on or prior to the date
specified for such effectiveness (the "Effectiveness Target Date"), (c) the
Company fails to consummate the Exchange Offer within 30 business days of the
Effectiveness Target Date with respect to the Exchange Registration Statement,
or (d) the Shelf Registration Statement or the Exchange Registration Statement
is declared effective but thereafter
 
                                      48
<PAGE>
 
ceases to be effective or usable in connection with resales of Transfer
Restricted Securities during the periods specified in the Registration Rights
Agreement, provided, that the Company will have the option of suspending the
effectiveness of the Shelf Registration Statement, without becoming obligated
to pay 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, (each such event referred to in clauses (a) through (d)
above a "Registration Default"), then the Company will pay liquidated damages
("Liquidated Damages") to each Holder of Transfer Restricted Securities, with
respect to the first 90-day period immediately following the occurrence of
such Registration Default in an amount equal to $.05 per week per $1,000
principal amount of Old Notes constituting Transfer Restricted Securities held
by such Holder. The amount of the Liquidated Damages will increase by an
additional $.05 per week per $1,000 principal amount of Old Notes constituting
Transfer Restricted Securities with respect to each subsequent 90-day period
until all Registration Defaults have been cured, up to a maximum amount of
Liquidated Damages of $.50 per week per $1,000 principal amount of Old Notes
constituting Transfer Restricted Securities. All accrued Liquidated Damages
will be paid by the Company on each Interest Payment Date to the holder of the
Global Securities by wire transfer of immediately available funds or by
federal funds check and to Holders of Certificated Securities by mailing
checks to their registered addresses. Following the cure of all Registration
Defaults, the accrual of Liquidated Damages will cease.
 
  Holders of Old Notes will be required to make certain representations to the
Company (as described in the Registration Rights Agreement) in order to
participate in the Exchange Offer and will be required to deliver information
to be used in connection with the Shelf Registration Statement and to provide
comments on the Shelf Registration Statement within the time periods set forth
in the Registration Rights Agreement in order to have their Old Notes included
in the Shelf Registration Statement and benefit from the provisions regarding
Liquidated Damages set forth above.
 
BOOK-ENTRY, DELIVERY AND FORM
 
  Except as set forth in the next paragraph, the Senior Notes may be issued in
the form of one or more Global Securities (the "Global Securities"). The
Global Securities will be deposited on the Exchange Date with, or on behalf
of, The Depository Trust Company (the "Depositary") and registered in the name
of the Depository or its nominee.
 
  Senior Notes that are issued as described below under "--Certificated
Securities" will be issued in the form of registered definitive certificates
(the "Certificated Securities"). Upon the transfer of Certificated Securities,
such Certificated Securities may, unless the Global Securities have previously
been exchanged for Certificated Securities, be exchanged for an interest in
the Global Securities representing the principal amount of Senior Notes being
transferred.
 
  The Depositary is a limited-purpose trust company that was created to hold
securities for its participating organizations (collectively, the
"Participants" or the "Depositary's Participants") and to facilitate the
clearance and settlement of transactions in such securities between
Participants through electronic book-entry changes in accounts of its
Participants. The Depositary's Participants include securities brokers and
dealers (including the Initial Purchasers), banks and trust companies,
clearing corporations and certain other organizations. Access to the
Depositary's system is also available to other entities such as banks,
brokers, dealers and trust companies (collectively, the "Indirect
Participants" or the "Depositary's Indirect Participants") that clear through
or maintain a custodial relationship with a Participant, either directly or
indirectly. Persons who are not Participants may beneficially own securities
held by or on behalf of the Depositary only through the Depositary's
Participants or the Depositary's Indirect Participants.
 
  The Company expects that pursuant to procedures established by the
Depositary (i) upon deposit of the Global Securities, the Depositary will
credit the accounts of Participants designated by the Exchange Agent with
 
                                      49
<PAGE>
 
portions of the principal amount of the Global Securities and (ii) ownership
of the Senior Notes evidenced by the Global Securities will be shown on, and
the transfer of ownership thereof will be effected only through, records
maintained by the Depositary (with respect to the interests of the
Depositary's Participants), the Depositary's Participants and the Depositary's
Indirect Participants. Prospective purchasers are advised that the laws of
some states require that certain persons take physical delivery in definitive
form of securities that they own. Consequently, the ability to transfer Senior
Notes evidenced by the Global Securities will be limited to such extent.
 
  So long as the Depository, or its nominee is the registered owner of any
Senior Notes, the Depository or such nominee, as the case may be, will be
considered the sole holder under the Indenture of any Senior Notes evidenced
by the Global Securities. Beneficial owners of Senior Notes evidenced by the
Global Securities will not be considered the owners or holders thereof under
the Indenture for any purpose, including with respect to the giving of any
directions, instructions or approvals to the Trustee thereunder. Neither the
Company nor the Trustee will have any responsibility or liability for any
aspect of the records of the Depositary or for maintaining, supervising or
reviewing any records of the Depositary relating to the Senior Notes.
 
  Payments in respect of the principal of, premium, if any, interest and
Liquidated Damages, if any, on any Senior Notes registered in the name of the
Depository or its nominee on the applicable record date will be payable by the
Trustee to or at the direction of the Depository or such nominee, as the case
may be, in its capacity as the registered holder under the Indenture. Under
the terms of the Indenture, the Company and the Trustee may treat the persons
in whose names Senior Notes, including the Global Securities, are registered
as the owners thereof for the purpose of receiving such payments.
Consequently, neither the Company nor the Trustee has or will have any
responsibility or liability for the payment of such amounts to beneficial
owners of Senior Notes. The Company believes, however, that it is currently
the policy of the Depositary to immediately credit the accounts of the
relevant Participants with such payments, in amounts proportionate to their
respective holdings of beneficial interests in the relevant security as shown
on the records of the Depositary. Payments by the Depositary's Participants
and the Depositary's Indirect Participants to the beneficial owners of Senior
Notes will be governed by standing instructions and customary practice and
will be the responsibility of the Depositary's Participants or the
Depositary's Indirect Participants.
 
CERTIFICATED SECURITIES
 
  Subject to certain conditions, any person having a beneficial interest in
the Global Securities may, upon request to the Trustee, exchange such
beneficial interest for Senior Notes in the form of Certificated Securities.
Upon any such issuance, the Trustee is required to register such Certificated
Securities in the name of, and cause the same to be delivered to, such person
or persons (or the nominee of any thereof). In addition, if (i) the Company
notifies the Trustee in writing that the Depositary is no longer willing or
able to act as a depositary and the Company is unable to locate a qualified
successor within 90 days or (ii) the Company, at its option, notifies the
Trustee in writing that it elects to cause the issuance of Senior Notes in the
form of Certificated Securities under the Indenture, then, upon surrender by
the Depository or its nominee of its Global Security, Senior Notes in such
form will be issued to each person that the Depository or its nominee identify
as being the beneficial owner of the related Senior Notes.
 
  Neither the Company nor the Trustee will be liable for any delay by the
Depository or its nominee in identifying the beneficial owners of Senior Notes
and the Company and the Trustee may conclusively rely on, and will be
protected in relying on, instructions from the Depository or its nominee for
all purposes.
 
SAME DAY SETTLEMENT AND PAYMENT
 
  The Indenture requires that payments in respect of the Senior Notes
represented by the Global Securities (including principal, premium, if any,
interest and Liquidated Damages, if any) be made by wire transfer of immediately
available funds to the accounts specified by the Depository or its nominee. With
respect to Certificated Securities, the Company will make all payments of
principal, premium, if any, interest and
 
                                      50
<PAGE>
 
Liquidated Damages, if any, by wire transfer of immediately available funds to
the accounts specified by the holders thereof or, if no such account is
specified, by mailing a check to each such holder's registered address. The
Senior Notes represented by the Global Securities are expected to be eligible
to trade in the Depositary's Same-Day Funds Settlement System, and any
permitted secondary market trading activity in such Senior Notes will
therefore be required by the Depositary to be settled in immediately available
funds. The Company expects that secondary trading in the Certificated
Securities will also be settled in immediately available funds.
 
CERTAIN DEFINITIONS
 
  Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as
any other capitalized terms used herein for which no definition is provided.
 
  "Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person,
including, without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
 
  "Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled
by" and "under common control with"), as used with respect to any Person,
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of such Person, whether
through the ownership of voting securities, by agreement or otherwise,
provided, however, that beneficial ownership of 25% or more of the voting
securities of a Person shall be deemed to be control.
 
  "Attributable Debt" means, with respect to any Sale and Leaseback
Transaction, the present value at the time of determination (discounted at a
rate consistent with accounting guidelines, as determined in good faith by the
Company) of the payments during the remaining term of the lease (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended) or until the earliest date on which the lessee may
terminate such lease without penalty or upon payment of a penalty (in which
case the rental payments shall include such penalty), after excluding all
amounts required to be paid on account of maintenance and repairs, insurance,
taxes, assessments, water, utilities and similar charges.
 
  "Beneficial Owner" means a beneficial owner as defined in Rules 13d-3 and
13d-5 under the Exchange Act (or any successor rules), including the provision
of such Rules that a Person shall be deemed to have beneficial ownership of
all securities that such Person has a right to acquire within 60 days;
provided that a Person will not be deemed a beneficial owner of, or to own
beneficially, any securities if such beneficial ownership (1) arises solely as
a result of a revocable proxy delivered in response to a proxy or consent
solicitation made pursuant to, and in accordance with, the Exchange Act and
(2) is not also then reportable on Schedule 13D or Schedule 13G (or any
successor schedule) under the Exchange Act.
 
  "Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that
would at such time be so required to be capitalized on the balance sheet in
accordance with GAAP.
 
  "Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock and (iii) in the case of a partnership, partnership interests
(whether general or limited) and any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, such partnership.
 
 
                                      51
<PAGE>
 
  "Change of Control" means the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition, 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, to any Person or group (as such term
is used in Section 13(d)(3) and 14(d)(2) of the Exchange Act), (ii) the
adoption of a plan relating to the liquidation or dissolution of the Company,
(iii) any Person or group (as defined above) is or becomes the Beneficial
Owner, directly or indirectly, of more than 50% of the total Voting Stock or
Total Common Equity of the Company, including by way of merger, consolidation
or otherwise or (iv) the first day on which a majority of the members of the
Board of Directors of the Company are not Continuing Directors.
 
  "Closing Price" on any Trading Day with respect to the per share price of
any shares of Capital Stock means the last reported sale price regular way or,
in case no such reported sale takes place on such day, the average of the
reported closing bid and asked prices regular way, in either case on the New
York Stock Exchange or, if such shares of Capital Stock are not listed or
admitted to trading on such exchange, on the principal national securities
exchange on which such shares are listed or admitted to trading or, if not
listed or admitted to trading on any national securities exchange, on the
Nasdaq National Market or, if such shares are not listed or admitted to
trading on any national securities exchange or quoted on Nasdaq National
Market but the issuer is a Foreign Issuer (as defined in Rule 3b-4(b) under
the Exchange Act) and the principal securities exchange on which such shares
are listed or admitted to trading is a Designated Offshore Securities Market
(as defined in Rule 902(a) under the Securities Act), the average of the
reported closing bid and asked prices regular way on such principal exchange,
or, if such shares are not listed or admitted to trading on any national
securities exchange or quoted on Nasdaq National Market and the issuer and
principal securities exchange do not meet such requirements, the average of
the closing bid and asked prices in the over-the-counter market as furnished
by any New York Stock Exchange member firm that is selected from time to time
by the Company for that purpose and is reasonably acceptable to the Trustee.
 
  "Common Stock" of any Person means Capital Stock of such Person that does
not rank prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding
up of such Person, to shares of Capital Stock of any other class of such
Person.
 
  "Consolidated Cash Flow Leverage Ratio" with respect to any Person means the
ratio of the Consolidated Indebtedness of such Person to the Consolidated
EBITDA of such Person for the relevant period; provided, however, that (1) if
the Company or any Subsidiary of the Company has incurred any Indebtedness
(including Acquired Debt) or if the Company has issued any Disqualified Stock
or if any Subsidiary of the Company has issued any Preferred Stock since the
beginning of such period that remains outstanding on the date of such
determination or if the transaction giving rise to the need to calculate the
Consolidated Cash Flow Leverage Ratio is an incurrence of Indebtedness
(including Acquired Debt) or the issuance of Disqualified Stock by the
Company, Consolidated EBITDA and Consolidated Indebtedness for such period
will be calculated after giving effect on a pro forma basis to (A) such
Indebtedness, Disqualified Stock or Preferred Stock, as applicable, as if such
Indebtedness had been incurred or such stock had been issued on the first day
of such period, (B) the discharge of any other Indebtedness repaid,
repurchased, defeased or otherwise discharged with the proceeds of such new
Indebtedness or sale of stock as if such discharge had occurred on the first
day of such period, and (C) the interest income realized by the Company or its
Subsidiaries on the proceeds of such Indebtedness or of such stock sale, to
the extent not yet applied at the date of determination, assuming such
proceeds earned interest at the rate in effect on the date of determination
from the first day of such period through such date of determination, (2) if
since the beginning of such period the Company or any Subsidiary of the
Company has made any sale of assets (including, without limitation, any Asset
Sales or pursuant to any Sale and Leaseback Transaction), Consolidated EBITDA
for such period will be (A) reduced by an amount equal to Consolidated EBITDA
(if positive) directly attributable to the assets which are the subject of
such sale of assets for such period or (B) increased by an amount equal to
Consolidated EBITDA (if negative) directly attributable thereto for such
period and (3) if since the beginning of such period the Company or any
Subsidiary of the Company (by merger or otherwise) has made an Investment in
any Subsidiary of the Company (or any Person which becomes a
 
                                      52
<PAGE>
 
Subsidiary of the Company) or has made an acquisition of assets, including,
without limitation, any acquisition of assets occurring in connection with a
transaction causing a calculation of Consolidated EBITDA to be made hereunder,
which constitutes all or substantially all of an operating unit of a business,
Consolidated EBITDA for such period will be calculated after giving pro forma
effect thereto (including the incurrence of any Indebtedness (including
Acquired Debt)) as if such Investment or acquisition occurred on the first day
of such period. For purposes of this definition, whenever pro forma effect is
to be given to an acquisition of assets, the pro forma calculations will be
determined in good faith by a responsible financial or accounting Officer of
the Company, provided, however, that such Officer shall assume (i) the
historical sales and gross profit margins associated with such assets for any
consecutive 12-month period ended prior to the date of purchase (provided that
the first month of such 12-month period will be no more than 18 months prior
to such date of purchase) and (ii) other expenses as if such assets had been
owned by the Company since the first day of such period. If any Indebtedness
(including, without limitation, Acquired Debt) bears a floating rate of
interest and is being given pro forma effect, the interest on such
Indebtedness will be calculated as if the rate in effect on the date of
determination had been the applicable rate for the entire period.
 
  "Consolidated EBITDA" as of any date of determination means the Consolidated
Net Income for such period (but without giving effect to adjustments,
accruals, deductions or entries resulting from purchase accounting
extraordinary losses or gains and any gains or losses from any Asset Sales),
plus the following to the extent deducted in calculating such Consolidated Net
Income: (i) provision for taxes based on income or profits of such Person and
its Subsidiaries for such period, (ii) Consolidated Interest Expense, (iii)
depreciation, amortization (including amortization of goodwill and other
intangibles) and other non-cash charges (excluding any such non-cash charge to
the extent that it represents an accrual of or reserve for cash charges in any
future period or amortization of a prepaid cash expense that was paid in a
prior period and excluding non-cash interest and dividend income) of such
Person and its Subsidiaries for such period, in each case, on a consolidated
basis and determined in accordance with GAAP. Notwithstanding the foregoing,
the provision for taxes on the income or profits of, and the depreciation,
amortization, interest expense and other non-cash charges of, a Subsidiary of
the referent Person shall be added to Consolidated Net Income to compute
Consolidated EBITDA only to the extent (and in same proportion) that the Net
Income of such Subsidiary was included in calculating the Consolidated Net
Income of such Person and only if a corresponding amount would be permitted at
the date of determination to be dividended to the Company by such Subsidiary,
or loaned to the Company by any such Subsidiary, without prior approval (that
has not been obtained), pursuant to the terms of its charter and all
agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to that Subsidiary or its stockholders.
 
  "Consolidated Indebtedness" means, with respect to any Person, as of any
date of determination, the aggregate amount of Indebtedness of such Person and
its Subsidiaries as of such date calculated on a consolidated basis in
accordance with GAAP consistently applied.
 
  "Consolidated Interest Expense" means, for any Person, for any period, the
aggregate of the following for such Person for such period determined on a
consolidated basis in accordance with GAAP: (a) the amount of interest in
respect of Indebtedness (including amortization of original issue discount,
amortization of debt issuance costs, and non-cash interest payments on any
Indebtedness, the interest portion of any deferred payment obligation and
after taking into account the effect of elections made under any Interest Rate
Agreement however denominated with respect to such Indebtedness), (b) the
amount of Redeemable Dividends (to the extent not already included in
Indebtedness in determining Consolidated Interest Expense for the relevant
period) and (c) the interest component of rentals in respect of any Capital
Lease Obligation paid, in each case whether accrued or scheduled to be paid or
accrued by such Person during such period to the extent such amounts were
deducted in computing Consolidated Net Income, determined on a consolidated
basis in accordance with GAAP. For purposes of this definition interest on a
Capital Lease Obligation shall be deemed to accrue at an interest rate
reasonably determined by such Person to be the rate of interest implicit in
such Capital Lease Obligation in accordance with GAAP consistently applied.
 
                                      53
<PAGE>
 
  "Consolidated Net Income" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Subsidiaries for such
period, on a consolidated basis, determined in accordance with GAAP; provided
that:
 
    (i) the Net Income of any Person that is not a Subsidiary or that is
  accounted for by the equity method of accounting shall be included only to
  the extent of the amount of dividends or distributions paid in cash to the
  referent Person or a Subsidiary thereof,
 
    (ii) the Net Income of any Subsidiary shall be excluded to the extent
  that the declaration or payment of dividends or other distributions by that
  Subsidiary of that Net Income is not at the date of determination permitted
  without any prior governmental approval (which has not been obtained) or,
  directly or indirectly, by operation of the terms of its charter or any
  agreement, instrument, judgment, decree, order, statute, rule or
  governmental regulation applicable to that Subsidiary or its stockholders,
 
    (iii) the Net Income of any Person acquired in a pooling of interests
  transaction for any period prior to the date of such acquisition shall be
  excluded,
 
    (iv) the cumulative effect of a change in accounting principles shall be
  excluded, and
 
    (v) the Net Income of any Unrestricted Subsidiary shall be excluded,
  whether or not distributed to the Company or one of its Subsidiaries.
 
  "Contingent Investment" means, with respect to any Person, any guarantee by
such Person of the performance of another Person or any commitment by such
Person to invest in another Person. Any Investment that consists of a
Contingent Investment shall be deemed made at the time that the guarantee of
performance or the commitment to invest is given, and the amount of such
Investment shall be the maximum monetary obligation under such guarantee of
performance or commitment to invest. To the extent that a Contingent
Investment is released or lapses without payment under the guarantee of
performance or the commitment to invest, such Investment shall be deemed not
made to the extent of such release or lapse. With respect to any Contingent
Investment, the payment of the guarantee of performance or the payment under
the commitment to invest shall not be deemed to be an additional Investment.
 
  "Continuing Directors" means, as of any date of determination, any member of
the Board of Directors of the Company who (i) was a member of such Board of
Directors on the Issue Date or (ii) was nominated for election or elected to
such Board of Directors with the affirmative vote of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.
 
  "Credit Facility" means any credit facility entered into by and among the
Company and one or more commercial banks or financial institutions, providing
for senior term or revolving credit borrowings of a type similar to credit
facilities typically entered into by commercial banks and financial
institutions, including any related notes, Guarantees, collateral documents,
instruments and agreements executed in connection therewith, as such credit
facility and related agreements may be amended, extended, refinanced, renewed,
restated, replaced or refunded from time to time.
 
  "Default" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
 
  "Disqualified Stock" means any Capital Stock to the extent that, and only to
the extent that, by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the option of the holder thereof,
in whole or in part, on or prior to the date on which the Senior Notes mature,
provided, however, that any Capital Stock which would not constitute
Disqualified Stock but for provisions thereof giving holders thereof the right
to require the Company to repurchase or redeem such Capital Stock upon the
occurrence of a Change of Control occurring prior to the final maturity of the
Senior Notes shall not constitute Disqualified Stock if the change in control
provisions applicable to such Capital Stock are no more favorable to the
holders of such Capital Stock than the provisions applicable
 
                                      54
<PAGE>
 
to the Senior Notes contained in the covenant described under "Offer to
Purchase Upon a Change of Control" and such Capital Stock specifically
provides that the Company will not repurchase or redeem any such stock
pursuant to such provisions prior to the Company's repurchase of such Senior
Notes as are required to be repurchased pursuant to the covenant described
under "Offer to Purchase Upon Change of Control."
 
  "Eligible Institution" means a commercial banking institution that has
combined capital and surplus of not less than $500 million or its equivalent
in foreign currency, whose debt is rated "A" (or higher) according to S&P or
Moody's at the time as of which any investment or rollover therein is made.
 
  "Eligible Receivable" means any Receivable not more than 90 days past due
under its scheduled payment terms.
 
  "Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock or that are measured by the value of Capital
Stock (but excluding any debt security that is convertible into or
exchangeable for Capital Stock).
 
  "Exchange Act" means the Securities Exchange Act of 1934, as amended (or any
successor act), and the rules and regulations thereunder.
 
  "Existing Indebtedness" means the Existing Senior Notes and all other
Indebtedness of the Company and its Subsidiaries in existence on the Issue
Date.
 
  "Existing Senior Notes" means the Company's 12 1/2% Senior Discount Notes
due 2006, the Company's 11 1/4% Senior Discount Notes due 2007 and the
Company's 8 7/8% Senior Notes due 2007.
 
  "Fair Market Value" means with respect to any asset or property, the sale
value that would be obtained in an arm's length transaction between an
informed and willing seller under no compulsion to sell and an informed and
willing buyer under no compulsion to buy.
 
  "GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States, which are in effect on the Issue Date.
 
  "Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States is pledged.
 
  "Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
 
  "Hedging Obligations" means, with respect to any Person, the obligations of
such Person under Interest Rate Agreements.
 
  "Indebtedness" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced
by bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or representing the balance
deferred and unpaid of the purchase price of any property (including pursuant
to capital leases) or representing any Hedging Obligations, except any such
balance that constitutes an accrued expense or trade payable, if and to the
extent any of the foregoing (other than Hedging Obligations or letters of
credit) would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP, all indebtedness of others secured by a Lien
 
                                      55
<PAGE>
 
on any asset of such Person (whether or not such indebtedness is assumed by
such Persons), all obligations to purchase, redeem, retire, defease or
otherwise acquire for value any Disqualified Stock or any warrants, rights or
options to acquire such Disqualified Stock valued, in the case of Disqualified
Stock, at the greatest amount payable in respect thereof on a liquidation
(whether voluntary or involuntary) plus accrued and unpaid dividends, the
liquidation value of any Preferred Stock issued by Subsidiaries of such Person
plus accrued and unpaid dividends, and also includes, to the extent not
otherwise included, the Guarantee of items that would be included within this
definition and any amendment, supplement, modification, deferral, renewal,
extension or refunding of any of the above; notwithstanding the foregoing, in
no event will performance bonds or similar security for performance be deemed
Indebtedness so long as such performance bonds or similar security for
performance would not appear as a liability on a balance sheet of such Person
prepared in accordance with GAAP; and provided further, that the amount of any
Indebtedness in respect of any Guarantee shall be the maximum principal amount
of the Indebtedness so guaranteed.
 
  "Interest Rate Agreements" means (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against
fluctuations in interest rates.
 
  "Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of loans,
Guarantees, Contingent Investments, advances or capital contributions
(excluding commission, travel and similar advances to officers and employees
made in the ordinary course of business), purchases or other acquisitions for
consideration of Indebtedness, Equity Interests or other securities of any
other Person and all other items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP; provided,
however, that any investment to the extent made with Capital Stock of the
Company (other than Disqualified Stock) shall not be deemed an "Investment"
for purposes of the Indenture.
 
  "Issue Date" means December 23, 1997.
 
  "Joint Venture" means a Person in the Telecommunications Business in which
the Company holds less than a majority of the shares of Voting Stock or an
Unrestricted Subsidiary in the Telecommunications Business.
 
  "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset, whether
or not filed, recorded or otherwise perfected under applicable law (including
any conditional sale or other title retention agreement, any lease in the
nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement
under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
 
  "Marketable Securities" means:
 
    (i) Government Securities;
 
    (ii) any certificate of deposit maturing not more than 270 days after the
  date of acquisition issued by, or time deposit of, an Eligible Institution;
 
    (iii) commercial paper maturing not more than 270 days after the date of
  acquisition issued by a corporation (other than an Affiliate of the
  Company) with a rating at the time as of which any investment therein is
  made, of "A-1" (or higher) according to S&P or "P-1" (or higher) according
  to Moody's;
 
    (iv) any banker's acceptances or money market deposit accounts issued or
  offered by an Eligible Institution; and
 
    (v) any fund investing exclusively in investments of the types described
  in clauses (i) through (iv) above.
 
  "Moody's" means Moody's Investors Service, Inc. and its successors.
 
                                      56
<PAGE>
 
  "Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but
not loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to Sale and Leaseback Transactions) or (b)
the disposition of any securities by such Person or any of its Subsidiaries or
the extinguishment of any Indebtedness of such Person or any of its
Subsidiaries and (ii) any extraordinary gain (but not loss), together with any
related provision for taxes on such extraordinary gain (but not loss).
 
  "Net Proceeds" means the aggregate cash proceeds received by the Company or
any of its Subsidiaries in respect of any Asset Sale, net of the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees, and sales commissions) and any relocation
expenses incurred as a result thereof, taxes paid or payable as a result
thereof (after taking into account any available tax credits or deductions and
any tax sharing arrangements), amounts required to be applied to the repayment
of Indebtedness secured by a Lien on the asset or assets that are the subject
of such Asset Sale and any reserve for adjustment in respect of the sale price
of such asset or assets. Net Proceeds shall exclude any non-cash proceeds
received from any Asset Sale, but shall include such proceeds when and as
converted by the Company or any Subsidiary of the Company to cash.
 
  "Note Registration Rights Agreement" means the Registration Rights Agreement
between the Company and the Initial Purchasers in respect of the Notes.
 
  "Pari Passu Notes" means any notes issued by the Company which, by their
terms and the terms of any indenture governing such notes, have an obligation
to be repurchased by the Company upon the occurrence of an Asset Sale.
 
  "Permitted Investment" means (a) any Investments in the Company or any
Subsidiary of the Company; (b) any Investments in Marketable Securities; (c)
Investments by the Company or any Subsidiary of the Company in a Person, if as
a result of such Investment (i) such Person becomes a Subsidiary of the
Company or (ii) such Person is merged, consolidated or amalgamated with or
into, or transfers or conveys substantially all of its assets to, or is
liquidated into, the Company or a Subsidiary of the Company; (d) any
Investments in property or assets to be used in (A) any line of business in
which the Company or any of its Subsidiaries was engaged on the Issue Date or
(B) any Telecommunications Business; (e) Investments in any Person in
connection with the acquisition of such Person or substantially all of the
property or assets of such Person by the Company or any Subsidiary of the
Company; provided that within 180 days from the first date of any such
Investment, either (A) such Person becomes a Subsidiary of the Company or any
of its Subsidiaries or (B) the amount of any such Investment is repaid in full
to the Company or any of its Subsidiaries; (f) Investments pursuant to any
agreement or obligation of the Company or a Subsidiary, in effect on the Issue
Date or on the date a Subsidiary becomes a Subsidiary (provided that any such
agreement was not entered into in contemplation of such Subsidiary becoming a
Subsidiary), to make such Investments; (g) Investments in prepaid expenses,
negotiable instruments held for collection and lease, utility and workers'
compensation, performance and other similar deposits; (h) Hedging Obligations
permitted to be incurred by the covenant entitled "Incurrence of Indebtedness
and Issuance of Preferred Stock;" and (i) bonds, notes, debentures or other
securities received as a result of Asset Sales permitted under the covenant
entitled "Asset Sales."
 
  "Permitted Liens" means (i) Liens securing Indebtedness (including Capital
Lease Obligations) permitted to be incurred pursuant to clauses (a), (b) and
(d) of the second paragraph of the covenant entitled "Incurrence of
Indebtedness and Issuance of Preferred Stock;" (ii) Liens in favor of the
Company; (iii) Liens on property of a Person existing, at the time such Person
is merged into or consolidated with the Company or any Subsidiary of the
Company; provided that such Liens were in existence prior to the contemplation
of such merger or consolidation and do not extend to any assets other than
those of the Person merged into or consolidated with the Company; (iv) Liens
on property existing at the time of acquisition thereof by the Company or any
Subsidiary of the Company, provided that such Liens were in existence prior to
the contemplation of such acquisition; (v) Liens to secure the performance of
statutory obligations, surety or appeal bonds, performance bonds or other
 
                                      57
<PAGE>
 
obligations of a like nature incurred in the ordinary course of business; (vi)
Liens existing, on the Issue Date; (vii) Liens for taxes, assessments or
governmental charges or claims that are not yet delinquent or that are being
contested in good faith by appropriate proceedings timely instituted and
diligently concluded, provided that any reserve or other appropriate provision
as shall be required in conformity with GAAP shall have been made therefor;
(viii) Liens incurred in the ordinary course of business of the Company or any
Subsidiary of the Company with respect to obligations that do not exceed $5.0
million at any one time outstanding and that (a) are not incurred in
connection with the borrowing of money or the obtaining of advances or credit
(other than trade credit in the ordinary course of business) and (b) do not in
the aggregate materially detract from the value of the property or materially
impair the use thereof in the operation of business by the Company or such
Subsidiary; (ix) Liens on Telecommunications Related Assets existing during
the time of the construction thereof; (x) Liens on Receivables to secure
Indebtedness permitted to be incurred by the covenant entitled "Incurrence of
Indebtedness and Issuance of Preferred Stock," but only to the extent that the
outstanding amount of the Indebtedness secured by such Liens would not
represent more than 80% of Eligible Receivables; and (xi) Liens to secure any
Permitted Refinancing of any Indebtedness secured by Liens referred to in the
foregoing clauses (i), (iii), (v) or (x); but only to the extent that such
Liens do not extend to any other property or assets and the principal amount
of the Indebtedness secured by such Liens is not increased.
 
  "Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity.
 
  "Preferred Stock" as applied to the Capital Stock of any Person, means
Capital Stock of such Person of any class or classes (however designated) that
ranks prior, as to payment of dividends or as to the distribution of assets
upon any voluntary or involuntary liquidation, dissolution or winding up of
such Person, to shares of Capital Stock of any other class of such Person.
 
  "Public Offering" means an underwritten offering of Common Stock of the
company registered under the Securities Act.
 
  "Receivables" means, with respect to any Person, all of the following
property and interests in property of such person or entity, whether now
existing or existing in the future or hereafter acquired or arising: (i)
accounts; (ii) accounts receivable, including, without limitation, all rights
to payment created by or arising from sales of goods, leases of goods or the
rendition of services no matter how evidenced, whether or not earned by
performance; (iii) all unpaid seller's or lessor's rights including, without
limitation, rescission, replevin, reclamation and stoppage in transit,
relating to any of the foregoing after creation of the foregoing or arising
therefrom; (iv) all rights to any goods or merchandise represented by any of
the foregoing, including, without limitation, returned or repossessed goods;
(v) all reserves and credit balances with respect to any such accounts
receivable or account debtors; (vi) all letters of credit, security, or
Guarantees for any of the foregoing; (vii) all insurance policies or reports
relating to any of the foregoing; (viii) all collection of deposit accounts
relating to any of the foregoing; (ix) all proceeds of any of the foregoing;
and (x) all books and records relating to any of the foregoing.
 
  "Redeemable Dividend" means, for any dividend with regard to Disqualified
Stock and Preferred Stock, the quotient of the dividend divided by the
difference between one and the maximum statutory federal income tax rate
(expressed as a decimal number between 1 and 0) then applicable to the issuer
of such Disqualified Stock or Preferred Stock.
 
  "Restricted Investment" means an Investment other than a Permitted
Investment.
 
  "Retire" means, with respect to any Indebtedness, to repay, redeem, refund,
purchase or otherwise to acquire for value, such Indebtedness. The terms
"Retired" and "Retirement" shall have correlative meanings.
 
  "S & P" means, Standard and Poor's Corporation and its successors.
 
                                      58
<PAGE>
 
  "Sale and Leaseback Transaction" means, with respect to any Person, any
direct or indirect arrangement pursuant to which any property (other than
Capital Stock) is sold by such Person or a Subsidiary of such Person and is
thereafter leased back from the purchaser or transferee thereof by such Person
or one of its Subsidiaries.
 
  "Senior Indebtedness" means any Indebtedness permitted to be incurred by the
Company under the terms of the Indenture, unless the instrument under which
such Indebtedness is incurred expressly provides that it is subordinated in
right of payment to the Senior Notes. Notwithstanding anything to the contrary
in the foregoing, Senior Indebtedness will not include (i) any liability for
federal, state, local or other taxes owed or owing by the Company, (ii) any
Indebtedness of the Company to any of its Subsidiaries or other Affiliates,
(iii) any trade payables or (iv) any Indebtedness that is incurred in
violation of the Indenture.
 
  "Significant Subsidiary" means any Subsidiary that would be a "Significant
Subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Act, as such Regulation is in effect on the date hereof.
 
  "Strategic Investor" means, with respect to any sale of the Company's
Capital Stock, any Person which, both as of the Trading Day immediately before
the day of such sale and the Trading Day immediately after the day of such
sale, has, or whose parent has, a Total Market Capitalization of at least $1.0
billion on a consolidated basis. In calculating Total Market Capitalization
for the purpose of this definition, the consolidated Indebtedness of such
Person, solely when calculated as of the Trading Day immediately after the day
of such sale, will be calculated after giving effect to such sale (including
any Indebtedness incurred in connection with such sale). For purposes of this
definition, the term parent means any Person of which the referent Strategic
Investor is a Subsidiary.
 
  "Subsidiary" of any Person means (i) any corporation, association or
business entity of which more than 50% of the total voting power of shares of
Capital Stock entitled (without regard to the occurrence of any contingency)
to vote in the election of directors, managers or trustees thereof is at the
time owned or controlled, directly or indirectly, by such Person or one or
more of the other Subsidiaries of such Person or a combination thereof and
(ii) any partnership (a) the sole general partner or the managing general
partner of which is such Person or a Subsidiary of such Person or (b) the only
general partners of which are such Person or one or more Subsidiaries of such
Person or any combination thereof; provided that any Unrestricted Subsidiary
shall be excluded from this definition of "Subsidiary."
 
  "Telecommunications Business" means, when used in reference to any Person,
that such Person is engaged primarily in the business of (i) transmitting, or
providing services relating to the transmission of, voice, video or data
through owned or leased transmission facilities, (ii) creating, developing or
marketing communications related network equipment, software and other devices
for use in a Telecommunications Business or (iii) evaluating, participating or
pursuing any other activity or opportunity that is related to those identified
in (i) or (ii) above; provided that the determination of what constitutes a
Telecommunications Business shall be made in good faith by the Board of
Directors of the Company.
 
  "Telecommunications Related Assets" means all assets, rights (contractual or
otherwise) and properties, whether tangible or intangible, used in connection
with a Telecommunications Business.
 
  "Total Common Equity" of any Person means, as of any date of determination,
the product of (i) the aggregate number of outstanding primary shares of
Common Stock of such Person on such day (which shall not include any options
or warrants on, or securities convertible or exchangeable into, shares of
Common Stock of such Person) and (ii) the average Closing Price of such Common
Stock over the 20 consecutive Trading Days immediately preceding such day. If
no such Closing Price exists with respect to shares of any such class, the
value of such shares for purposes of clause (ii) of the preceding sentence
shall be determined by the Board of Directors of the Company in good faith and
evidenced by a resolution of the Board of Directors filed with the Trustee.
 
                                      59
<PAGE>
 
  "Total Market Capitalization " of any Person means, as of any day of
determination (and as modified for purposes of the definition of "Strategic
Investor"), the sum of (1) the consolidated Indebtedness of such Person and
its Subsidiaries (except in the case of the Company, in which case of the
Company and its Subsidiaries) on such day, plus (2) the product of (i) the
aggregate number of outstanding primary shares of Common Stock of such Person
on such day (which shall not include any options or warrants on, or securities
convertible or exchangeable into, shares of Common Stock of such Person) and
(ii) the average Closing Price of such Common Stock over the 20 consecutive
Trading Days immediately preceding such day, plus (3) the liquidation value of
any outstanding share of Preferred Stock of such Person on such day less (4)
cash and cash equivalents (other than restricted cash and restricted cash
equivalents) as presented on such Person's consolidated balance sheet on such
date. If no such Closing Price exists with respect to shares of any such
class, the value of such shares for purposes of clause (2) of the preceding
sentence shall be determined by the Company's Board of Directors in good faith
and evidenced by a resolution of the Board of Directors filed with the
Trustee.
 
  "Trading Day," with respect to a securities exchange or automated quotation
system, means a day on which such exchange or system is open for a full day of
trading.
 
  "Unrestricted Subsidiary" means any Subsidiary that is designated by the
Board of Directors as an Unrestricted Subsidiary pursuant to a resolution of
the Board of Directors.
 
  "Vendor Indebtedness" means any Indebtedness of the Company or any
Subsidiary incurred in connection with the acquisition or construction of
Telecommunications Related Assets.
 
  "Voting Stock" of any Person means Capital Stock of such Person which
ordinarily has voting power for the election of directors (or Persons
performing similar functions) of such Person, whether at all times or only so
long as no senior class of securities has such voting power by reason of any
contingency.
 
  "Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (a) the then outstanding
principal amount of such Indebtedness into (b) the total of the product
obtained by multiplying (x) the amount of each then remaining installment,
sinking fund, serial maturity or other required payments of principal,
including payment at final maturity, in respect thereof, by (y) the number of
years (calculated to the nearest one-twelfth) that will elapse between such
date and the making of such payment; provided, that with respect to Capital
Lease Obligations, that maturity shall be calculated after giving effect to
all renewal options by the Lessee.
 
 
                                      60
<PAGE>
 
                   CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
 
  The following discussion summarizes the material United States federal
income tax considerations generally applicable to holders acquiring the Senior
Notes but does not purport to be a complete analysis of all potential
consequences. The discussion is based upon the United States 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 Senior Notes.
 
  The discussion assumes that the holders of the Senior Notes 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 Senior Notes or that any such position would
not be sustained.
 
  The tax treatment of a holder of the Senior Notes 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 the Senior Notes 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 Senior Notes 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 SENIOR NOTES 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
 
  The exchange of Old Notes for Senior Notes will not constitute a recognition
event for federal income tax purposes. Consequently, no gain or loss will be
recognized by holders upon receipt of the Senior Notes. The Senior Notes will
have the same issue date and issue price as the Old Notes. A holder's adjusted
tax basis in the Senior Notes will be the same as the holder's adjusted tax
basis in the Old Notes exchanged therefor. A holder will be considered to have
held the Senior Notes from the time the holder originally acquired the Old
Notes.
 
TAX CONSEQUENCES TO U.S. HOLDERS
 
 Interest on the Senior Notes
 
  Interest paid on the Senior Notes will generally be taxable to a U.S. Holder
as ordinary interest income at the time it is accrued or is received in
accordance with the U.S. Holder's method of accounting for federal income tax
purposes.
 
 Sale or Other Taxable Disposition of the Senior Notes
 
  Upon the sale or other taxable disposition of the Senior Notes, 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 Senior
 
                                      61
<PAGE>
 
Notes 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 Senior Notes
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.
 
TAX CONSEQUENCES TO NON-U.S. HOLDERS
 
 Interest on the Senior Notes
 
  Interest paid by the Company to a Non-U.S. Holder will not be subject to
United States federal income or withholding tax if such interest is not
effectively connected with the conduct of a trade or business within the
United States by such Non-U.S. Holder and such Non-U.S. Holder (i) does not
actually or constructively own 10% or more of the total combined voting power
of all classes of stock of the Company entitled to vote; (ii) is not a
controlled foreign corporation with respect to which the Company is a "related
person" within the meaning of the Code; and (iii) certifies, under penalties
of perjury, that such holder is not a United States person and provides such
holder's name and address (the "Portfolio Interest Exemption").
 
  Interest paid to a Non-U.S. Holder of the Senior Notes that is effectively
connected with a United States trade or business conducted by such Non-U.S.
Holder will be taxed at the graduated rates applicable to United States
citizens, resident aliens and domestic corporations (the "Regular Federal
Income Tax") and will not be 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 interest payment. In addition to the Regular Federal Income Tax,
effectively connected interest 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).
 
 Sale or Other Taxable Disposition of the Senior Notes
 
  A Non-U.S. Holder will generally not be subject to United States federal
income tax on gain recognized on a sale or other disposition of a Senior Note
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 or (ii) in the case
of a Non-U.S. Holder who is a nonresident alien individual and holds the
Senior Note as a capital asset, such holder is present in the United States
for 183 or more days in the taxable year and certain other requirements are
met.
 
  If a Non-U.S. Holder falls within clause (i) 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 described above). If an 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
 
  If interest on the Senior Notes is exempt from withholding of United States
federal income tax under the Portfolio Interest Exemption, the Senior Notes
will not be included in the estate of a deceased Non-U.S. Holder for United
States federal estate tax purposes.
 
 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.
 
                                      62
<PAGE>
 
                 INFORMATION REPORTING AND BACKUP WITHHOLDING
 
  The Company will, where required, report to the holders of Senior Notes and
to the IRS the amount of any interest paid on the Senior Notes in each
calendar year and the amounts of tax withheld, if any, with respect to such
payments.
 
  A U.S. Holder of Senior Notes may be subject to backup withholding at the
rate of 31% with respect to interest paid on, or the proceeds of a sale or
other disposition of, the Senior Notes 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 Senior Notes 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 Senior Notes 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.
 
                                      63
<PAGE>
 
                             PLAN OF DISTRIBUTION
 
  Each broker-dealer that receives Senior Notes for its own account pursuant
to the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of the Senior Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of Senior Notes received in exchange for Old Notes
acquired as a result of market-making activities or other trading activities.
The Company has agreed that for a period expiring on the earlier of (i) the
date that all holders of Transfer Restricted Securities have registered such
securities pursuant to the Exchange Offer and (ii) 365 days after the Exchange
Date, it will make this Prospectus, as amended or supplemented, available to
any broker-dealer for use in connection with any such resale.
 
  The Company will not receive any proceeds from any sale of Senior Notes by
broker-dealers. Senior Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions,
through the writing of options of the Senior Notes or a combination of such
methods of resale, at market prices prevailing at the time of resale, at
prices related to such prevailing market prices or negotiated prices. Any such
resale may be made directly to purchasers or to or through brokers or dealers
who may receive compensation in the form of commissions or concessions from
any such broker-dealer and/or the purchasers of any Senior Notes. Any broker-
dealer that resells Senior Notes that were received by it for its own account
pursuant to the Exchange Offer and any broker-dealer that participates in a
distribution of Senior Notes may be deemed to be an "underwriter" within the
meaning of the Securities Act and any profit on any resale of Senior Notes and
any commissions or concessions received by any such persons may be deemed to
be underwriting compensation under the Securities Act. The Letter of
Transmittal states that by acknowledging that it will deliver and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.
 
  The Company has not entered into any arrangement or understanding with any
person to distribute the Senior Notes to be received in the Exchange Offer and
to the best of the Company's information and belief, each person participating
in the Exchange Offer is acquiring the Senior Notes in its ordinary course of
business and has no arrangement or understanding with any person to
participate in the distribution of the Senior Notes to be received in the
Exchange Offer.
 
                                      64
<PAGE>
 
                                 LEGAL MATTERS
 
  The legality of the securities offered hereby will be 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 5,748 shares of the Company's Common
Stock, par value $.01 per share (the "Common Stock"), and a warrant to
purchase 100,000 shares of Common Stock at an exercise price equal to $41.50
per share.
 
                                    EXPERTS
 
  The consolidated financial statements and schedule of the Company appearing
in the Company'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 appearing in DIGEX'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 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.
 
                                      65
<PAGE>
 
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
 
 NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMA-
TION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THE OFFER 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 COMPA-
NY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION
OF AN OFFER TO BUY ANY SECURITY OTHER THAN THOSE TO WHICH IT RELATES, NOR DOES
IT CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION OF AN OFFER TO BUY, TO ANY
PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHO-
RIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALI-
FIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HERE-
UNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.
 
                               ----------------
 
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                                                                         <C>
Available Information......................................................  ii
Incorporation of Certain Documents by
 Reference................................................................. iii
Prospectus Summary.........................................................   1
Risk Factors...............................................................  10
The Exchange Offer.........................................................  18
Use of Proceeds............................................................  25
Capitalization.............................................................  25
Selected Financial and Other Operating Data................................  26
Business...................................................................  28
Description of Outstanding Indebtedness....................................  31
Description of the Notes...................................................  33
Certain Federal Income Tax Considerations..................................  61
Plan of Distribution.......................................................  64
Legal Matters..............................................................  65
Experts....................................................................  65
</TABLE>
 
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
 
                                 $400,000,000
 
                                     LOGO
 
                        INTERMEDIA COMMUNICATIONS INC.
 
                     8 1/2% SERIES BSENIOR NOTES DUE 2008
 
                         ----------------------------
 
                                  PROSPECTUS
 
                         ----------------------------
 
 
 
                                       , 1998
 
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
<PAGE>
 
                                    PART II
 
                  INFORMATION NOT REQUIRED IN THE PROSPECTUS
 
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
 
  The Company's Restated Certificate of Incorporation, as amended, provides
that the Company shall to the fullest extent permitted by the General
Corporation Law of the State of Delaware (the "GCL"), as amended from time to
time, indemnify all persons whom it may indemnify pursuant thereto. The
Company's Bylaws contain a similar provision requiring indemnification of the
Company's directors and officers to the fullest extent authorized by the GCL.
The GCL 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 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 GCL 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 Restated
Certificate of Incorporation, as amended, 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.
 
  Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers or persons controlling the Company pursuant
to the foregoing provisions, the Company has been informed that in the opinion
of the Commission such indemnification is against public policy as expressed
in the Act and is therefore unenforceable.
 
                                     II-1
<PAGE>
 
ITEM 21. EXHIBITS.
 
(A) EXHIBITS
 
<TABLE>
 <C>     <S>
  1.1    --Purchase Agreement, dated as of December 18, 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. 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, 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.
  2.3    --Acquisition Agreement, dated as of December 17, 1997, among the
          Company and the holders of interests in the Long Distance Savers
          companies. Exhibit 2.3 to Amendment No. 1 to the Company's
          Registration Statement on Form S-3 filed with the Commission on
          January 14, 1998 (No. 333-42999) 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% 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    --Indenture, dated as of December 23, 1997, between the Company and
          SunTrust Bank, Central Florida, National Association, as trustee.
  4.6    --Registration Rights Agreement, dated as of December 23, 1997, among
          the Company and the Initial Purchasers.
  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.
</TABLE>
 
                                      II-2
<PAGE>
 
<TABLE>
<S>   <C>
24.1  --Power of Attorney is set forth on the signature page of this Registration Statement.
25.1  --Statement of Eligibility and Qualification under the Trust Indenture Act of 1939 on Form T-1.
99.1  --Form of Letter of Transmittal.
</TABLE>
- - --------
 *To be filed by Amendment.
 
(B) FINANCIAL STATEMENT SCHEDULES
 
  Financial Data Schedules are not required to be filed since all financial
statements have been previously included in filings with the Commission.
 
ITEM 22. UNDERTAKINGS.
 
  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 the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrants will, unless
in the opinion of 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.
 
  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) 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.
 
                                     II-3
<PAGE>
 
    (5) To deliver or cause to be delivered with the prospectus, to each
  person to whom the prospectus is sent or given, the latest annual report,
  to security holders that is incorporated by reference in the prospectus and
  furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule
  14c-3 under the Exchange Act; and where interim financial information
  required to be presented by Article 3 of Regulation S-X is not set forth in
  the prospectus, to deliver or cause to be delivered to each person to whom
  the prospectus is sent or given, the latest quarterly report that is
  specifically incorporated by reference in the prospectus to provide such
  interim financial information.
 
    (6) To file an application for the purpose of determining eligibility of
  the trustee to act under subsection (a) of Section 310 of the Trust
  Indenture Act in accordance with the rules and regulations prescribed by
  the Commission under Section 305(b)(2) of the Trust Indenture Act.
 
    (7) To respond to requests for information that is incorporated by
  reference into the prospectus pursuant to Item 4, 10(b), 11 or 13 of this
  Exchange Registration Statement, within one business day of receipt of such
  request, and to send the incorporated documents by first class mail or
  other equally prompt means. This includes information contained in
  documents filed subsequent to the effective date of this Exchange
  Registration Statement through the date of responding to the request.
 
    (8) To supply be means of a post-effective amendment all information
  concerning a transaction, and the company being acquired involved therein,
  that was not the subject of and included in this Exchange Registration
  Statement when it became effective.
 
 
                                     II-4
<PAGE>
 
                                  SIGNATURES
 
  PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF TAMPA, STATE OF
FLORIDA, ON THIS 23RD DAY OF JANUARY, 1998.
 
                                          INTERMEDIA COMMUNICATIONS INC.
 
                                                   /s/ Robert M. Manning
                                          By___________________________________
                                                    ROBERT M. MANNING,
                                                  CHIEF FINANCIAL OFFICER
                                                 SECRETARY 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.
 
               SIGNATURES                       TITLE                Date
 
 
 
         /s/ David C. Ruberg           Chairman of the           January 23,
_____________________________________   Board, President         1998
           DAVID C. RUBERG              and Chief
                                        Executive Officer
 
Principal Financial and Accounting Officers:
 
        /s/ Robert M. Manning          Chief Financial
_____________________________________   Officer,                 January 23,
          ROBERT M. MANNING             Secretary and            1998
                                        Senior Vice
                                        President
 
 
        /s/ Jeanne M. Walters          Controller and
_____________________________________   Chief Accounting         January 23,
          JEANNE M. WALTERS             Officer                  1998
 
Other Directors:
 
           /s/ John C. Baker           Director                  January 23,
_____________________________________                            1998
             JOHN C. BAKER
 
          /s/ George F. Knapp          Director                  January 23,
_____________________________________                            1998
            GEORGE F. KNAPP
 
                                       Director                  January  ,
_____________________________________                            1998
          PHILIP A. CAMPBELL
 
                                     II-5
<PAGE>
 
                                 EXHIBIT INDEX
 
<TABLE>
<CAPTION>
 NUMBER                              EXHIBIT                               PAGE
 ------                              -------                               ----
 <C>     <S>                                                               <C>
  1.1    --Purchase Agreement, dated as of December 18, 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. 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,
          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.
  2.3    --Acquisition Agreement, dated as of December 17, 1997, among
          the Company and the holders of interests in the Long Distance
          Savers companies. Exhibit 2.3 to Amendment No. 1 to the
          Company's Registration Statement on Form S-3 filed with the
          Commission on January 14, 1998 (No. 333-42999) 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% 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    --Indenture, dated as of December 23, 1997, between the Company
          and SunTrust Bank, Central Florida, National Association, as
          trustee.
  4.6    --Registration Rights Agreement, dated as of December 23, 1997,
          among the Company and the Initial Purchasers.
  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.
 25.1    --Statement of Eligibility and Qualification under the Trust
          Indenture Act of 1939 on Form T-1.
 99.1    --Form of Letter of Transmittal.
</TABLE>
- - --------
 *To be filed by Amendment.

<PAGE>
 
                                                                     EXHIBIT 1.1

                                                                  EXECUTION COPY


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



                         INTERMEDIA COMMUNICATIONS INC.



                                  $350,000,000
                          8 1/2% Senior Notes due 2008



                            Note Purchase Agreement

                               December 18, 1997



                            BEAR, STEARNS & CO. INC.

                              SALOMON BROTHERS INC

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

                                  $350,000,000
                          8 1/2% Senior Notes due 2008


                            NOTE PURCHASE AGREEMENT
                            -----------------------

                                                               December 18, 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") $350,000,000 aggregate principal amount of
8 1/2% Senior Notes due 2008 subject to the terms and conditions set forth
herein, which will be issued pursuant to an indenture (the "Indenture"), to be
dated the Closing Date (as defined below), between the Company and SunTrust
Bank, Central Florida, National Association, as trustee (the "Trustee").


        1.     Issuance of Senior Notes.  The Company proposes to, upon the
               ------------------------                                    
terms and subject to the conditions set forth herein, issue and sell to the
Initial Purchasers $350,000,000 aggregate principal amount of 8 1/2% Senior
Notes due 2008 (the "Firm Notes"). The Company also proposes to sell to the
                     ----------                                            
Initial Purchasers, upon the terms and conditions set forth herein, up to an
additional $50,000,000 principal amount of 81/2% Senior Notes due 2008 (the
                                                                           
"Additional Notes" and together with the "Firm Notes", the "Senior Notes").  The
- - -----------------                         ----------        ------------        
Senior Notes are more fully described in the Offering Memorandum referred to
below. 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 Indenture.
 
        The proceeds to the Company from the sale to the Initial Purchasers of
the Senior Notes will be used to fund up to 80% of the cost of acquisition or
construction of Telecommunications Related Assets (as described in the Offering
Memorandum).
 
        Upon original issuance thereof, and until such time as the same is no
longer required under the applicable requirements of the Act, the Senior Notes
shall bear the following legend:
 
                "THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS
          ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER
          SECTION 5 OF THE UNITED STATES  
<PAGE>
 
          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 Senior Notes 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 December 17, 1997 including
the information in the Exhibits attached thereto, the "Preliminary Offering
                                                       --------------------
Memorandum"), and a final offering memorandum, dated December 18, 1997
- - ----------                                                            
(including the information in the Exhibits attached thereto, the "Offering
                                                                  --------
Memorandum"), relating to the Company and the Senior Notes.
- - ----------                                                 
 
        The Initial Purchasers have advised the Company that the Initial
Purchasers will make offers (the "Exempt Resales") of the Senior Notes on the
                                  --------------
terms set forth in the Offering Memorandum, as amended or supplemented, solely
to persons whom any of the Initial Purchasers reasonably believe to be
"qualified institutional buyers," as defined in Rule 144A under the Act
("QIBs"), and pursuant to offers and sales that occur outside the United
- - ------
States within the meaning 

                                       3
<PAGE>
 
of Regulation S under the Securities Act. Such QIBs and purchasers pursuant to
Regulation S shall be referred to herein as the "Eligible Purchasers." The
                                                 -------------------
Initial Purchasers will offer the Senior Notes to such Eligible Purchasers
initially at a purchase price of 100% of the principal amount of such Senior
Notes. Such price may be changed at any time without notice.
 
        Holders (including subsequent transferees) of the Senior Notes will have
the registration rights set forth in the registration rights agreement relating
thereto (the "Registration Rights Agreement") hereto, to be dated the Closing
              -----------------------------
Date for so long as such Senior Notes constitute "Transfer Restricted
Securities" (as defined in such 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
                 ----------
registration statement under the Act (the "Exchange Offer Registration
                                           ---------------------------
Statement") with respect to an offer to exchange (the "Exchange Offer") the
- - ---------                                              --------------
Senior Notes for a new issue of 8 1/2% Senior Notes due 2008 (the "Exchange
                                                                   --------
Notes") to be offered in exchange for the Senior Notes and (ii) a shelf
- - -----
registration statement pursuant to Rule 415 under the Act (the "Shelf
                                                                -----
Registration Statement") relating to the resale by certain holders of the Senior
- - ----------------------
Notes, and to use its best efforts to cause such Registration Statements to be
declared effective and consummate the Exchange Offer. This Agreement, the Senior
Notes, the Indenture, 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, that amount of Firm Notes set forth
opposite its name on Schedule I hereto. The purchase price for the Firm Notes
shall be 97.6% of the principal amount thereof.
 
        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 Notes, at the
purchase price per note of 97.6% of the principal amount thereof plus accrued
interest from the date of issuance of the Firm Notes to the date of closing of
the Additional Notes, pursuant to an option (the "over-allotment option") which
                                                  ---------------------
may be exercised at any time and from time to time prior to 10:00 a.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 principal amount of $50,000,000 Additional Notes. 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 Notes (subject to
such adjustments as the Initial Purchasers may determine in order to avoid
fractional Notes) that bears the same proportion to the aggregate number of
Additional Notes to be purchased by the Initial Purchasers as the number of Firm
Notes set forth opposite the name of such Initial Purchaser on Schedule I hereto
bears to the aggregate number of Firm Notes.
 
        (b)  Delivery of, and payment of the purchase price for, the Senior
Notes 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 December 23, 1997 or at 

                                       4
<PAGE>
 
such other time as shall be agreed upon by the Initial Purchasers and the
Company. The time and date of such delivery and payment are herein called the
"Closing Date."
- - ------------  

        Delivery to the Initial Purchasers of any payment for any Additional
Notes to be purchased by the Initial Purchasers shall be made at the office of
Latham & Watkins, 885 Third Avenue, New York, NY 10022, or such other location
as may be mutually acceptable at such time 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 Notes.

        (c) One or more Senior Notes in global form, (the "Global Securities"),
registered in the name of Cede & Co. (such nominee the "Global Security
                                                        ---------------
Holder"), as nominee of the Depository Trust Company ("DTC"), having an
- - ------
aggregate principal amount corresponding to the aggregate principal amount of
the Senior Notes sold shall be delivered by the Company to the Initial
Purchasers (or as the Initial Purchasers direct), against payment by the Initial
Purchasers of the purchase price therefor, by wire transfer of immediately
available funds to an account specified by the Company or as the Company may
direct in writing, provided that the Company shall give at least two business
days' prior written notice to the Initial Purchasers of the information required
to effect such wire transfers. 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 Senior Notes 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 Senior Notes 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 Senior Notes 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.
 
        (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.

                                       5
<PAGE>
 
        (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) 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 Senior
Notes 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 by this Agreement 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 Senior Notes to the Initial Purchasers, (iv)
the qualification or registration of the Senior Notes for offer and sale under
the securities or Blue Sky laws of the several states (including, without
limitation, the cost of printing and mailing a preliminary and final Blue Sky
Memorandum and the reasonable fees and disbursements of 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 Senior Notes (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 Senior Notes in the National Association of Securities Dealers, Inc.
("NASD") Automated Quotation System
  ----                             

                                       6
<PAGE>
 
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
Senior Notes by DTC for "book-entry" transfer, (x) rating the Senior Notes by
rating agencies, (xi) the reasonable fees and expenses of the Trustee and its
counsel in connection with the Indenture and the Senior Notes, (xii) the
performance by the Company of its other obligations under this Agreement and the
other Operative Documents and (ix) "roadshow" travel and other expenses incurred
in connection with the marketing and sale of the Senior Notes (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 Senior Notes in the manner
described in the Offering Memorandum under the caption "Use of Proceeds."
 
        (h)  Not to voluntarily claim, and to resist actively any attempts to
claim, the benefit of any usury laws against the holders of any Senior Notes.
 
        (i)  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 Senior Notes.
 
        (j)  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 Senior Notes in a manner that would require the
registration under the Act of the sale to the Initial Purchasers or the Eligible
Purchasers of the Senior Notes or to take any other action that would result in
the Exempt Resales not being exempt from registration under the Act .
 
        (k)  For so long as any of the Senior Notes 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 QIB or beneficial owner of Senior Notes in connection with any
sale thereof and any prospective purchaser of such Senior Notes from such QIB or
beneficial owner, the information required by Rule 144A(d)(4) under the Act.
 
        (l)  To cause the Exchange Offer to be made in the appropriate form to
permit registered Senior Notes to be offered in exchange for the Senior Notes
and to comply with all applicable federal and state securities laws in
connection with the Exchange Offer.
 
        (m)  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 Senior Notes by DTC for 
"book-entry" transfer.
 
        (n)  To use its best efforts to effect the inclusion of the Senior Notes
in PORTAL and to obtain approval of the Senior Notes by DTC for "book-entry"
transfer.
 
        (o)  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.

                                       7
<PAGE>
 
        (p)  Prior to the Closing Date, to furnish to each of the Initial
Purchasers, as soon as they have been prepared in the ordinary course by the
Company, copies of any consolidated financial statements or any unaudited
interim financial statements of the Company for any period subsequent to the
periods covered by the financial statements appearing in the Offering
Memorandum.
 
        (q)  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 Senior Notes. 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 Senior Notes.
 
        (r)  To comply with the agreements in the Indenture, the Registration
Rights Agreement, and any other Operative Document.

        (s)  Not to engage in any directed selling efforts with respect to the
Senior Notes 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.
 
           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 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 Senior Notes are issued and delivered pursuant to this
Agreement, no Senior Notes 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) Each of the Company and the 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 

                                       8
<PAGE>
 
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 Senior
Notes 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"). The Company
                                         -----------------------
has no direct or indirect subsidiaries as of the Closing Date other than the
Subsidiaries.
 
        (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 September
30, 1997, on a combined basis, after giving effect to the issuance and sale of
the Senior Notes pursuant hereto and to 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)  All of the outstanding capital stock of the Subsidiaries is owned
by the Company, free and clear of any security interest, claim, lien, limitation
on voting rights or encumbrance. Except as disclosed 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 (other than options issued pursuant to the Company's stock
option plans, the 160,000 warrants each to purchase 2.19 shares of Common Stock,
the 7% Series D Junior Convertible Preferred Stock and the Series E Preferred
Stock, and noting that at present rights trade with the Common Stock), 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, the
Indenture, the Registration Rights Agreement, and the other Operative Documents
and to consummate the transactions contemplated hereby and thereby, including,
without limitation, the corporate power and authority to issue, sell and deliver
the Senior Notes 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 Indenture 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. The Offering
Memorandum contains a fair summary of the terms of the Indenture.
 

                                       9
<PAGE>
 
        (ix) The Senior Notes have been duly and validly authorized by the
Company, and have been duly and validly authorized for issuance and sale to the
Initial Purchasers by the Company pursuant to this Agreement and, when issued
and authenticated in accordance with the terms of the Indenture and delivered
against payment therefor in accordance with the terms hereof and thereof, will
be the legal, valid and binding obligations of the Company, enforceable against
the Company in accordance with their terms and entitled to the benefits of the
Indenture, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization or similar laws affecting the rights of creditors generally and
subject to general principles of equity. The Offering Memorandum contains a fair
summary of the terms of the Senior Notes.
 
        (x)  The Exchange Notes have been duly and validly authorized for
issuance by the Company and, when issued and authenticated in accordance with
the terms of the Exchange Offer and the Indenture, will be the legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms and entitled to the benefits of the Indenture,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization or similar laws affecting the rights of creditors generally and
subject to general principles of equity. The Offering Memorandum contains a fair
summary of the terms of the Exchange Notes.
 
        (xi) The Registration Rights 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. The Offering Memorandum contains a fair summary of the terms of the
Registration Rights Agreement.
 
        (xii) None of the Company or any of the Subsidiaries 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 (i) could not reasonably be expected to have
a Material Adverse Effect or (2) which is disclosed in the Offering Memorandum.
There exists no condition that, with notice, the passage of time or otherwise,
would constitute a default under any such document or instrument, except as
disclosed in the Offering Memorandum.
 
        (xiii)  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 Senior Notes and (C) consummation by the Company and the
Subsidiaries of the transactions described in the Offering Memorandum under the
caption "Use of Proceeds" 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,

                                       10
<PAGE>
 
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 (x) would not singly, or in the aggregate, have a Material
Adverse Effect or (y) which are 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, (2) the issuance and sale of the Senior Notes 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.
 
        (xiv)  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 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, (w) is required
to be disclosed in the Preliminary Offering Memorandum and the Offering
Memorandum and that is not so disclosed, or (x) could reasonably be expected to
individually or in the aggregate, result in a Material Adverse Effect.
 
        (xv) 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 Senior Notes 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 Senior Notes or prevents or suspends the sale of the Senior
Notes 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.
 
        (xvi) 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 to the best knowledge 

                                       11
<PAGE>
 
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 or the Subsidiaries. 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.
 
        (xvii)  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.
 
        (xviii)  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, except such as are described in the Offering Memorandum or as
would not have a Material Adverse Effect, (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, except as described in the
Offering Memorandum or where failure to hold such Authorizations would not,
individually or in the aggregate, have a Material Adverse Effect and (iv) no
reason to believe that any governmental body or agency is considering limiting,
suspending or revoking any such Authorization.  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.  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 that could reasonably be expected to result in a Material Adverse Effect.
 
        (xix)  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 
- - --------

                                       12
<PAGE>
 
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
except as could not reasonably be expected to have a Material Adverse Effect.
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.
 
        (xx) 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 and 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.
 
        (xxi)  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 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.
 
        (xxii) 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 (the "Investment Company
                                                        ------------------
Act"), 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.
 
        (xxiii) Except as disclosed in the Offering Memorandum, 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.
 
        (xxiv) 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

                                       13
<PAGE>
 
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.
 
        (xxv)  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.
 
        (xxvi) 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 Senior Notes or (ii) since
the date of the Preliminary Offering Memorandum (A) sold, bid for, purchased or
paid any person any compensation for soliciting purchases of, the Senior Notes
or (B) paid or agreed to pay to any person any compensation for soliciting
another to purchase any other securities of the Company.
 
        (xxvii) No registration under the Act of the Senior Notes is required
for the sale thereof to the Initial Purchasers as contemplated hereby or for the
Exempt Resales assuming (i) that the purchasers who buy the Senior Notes 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 Senior Notes 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 Senior Notes 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.
 
        (xxviii)  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 (an "ERISA Affiliate") is a party in interest or disqualified person.
              ---------------
The execution and delivery of this Agreement, the other Operative Documents and
the sale of the Senior Notes 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."
 
        (xxix) 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.

                                       14
<PAGE>
 
        (xxx)  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) none of the Company or any Subsidiary has incurred any
liabilities or obligations, direct or contingent, which will be material to the
Company and the Subsidiaries taken as a whole, (iii) 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 (iv) there has been no
dividend or distribution of any kind declared, paid or made by the Company or
any of its Subsidiaries on any class of its capital stock, except for dividends
paid in respect of the Series B Redeemable Exchangeable Preferred Stock due 2009
(the "Series B Preferred Stock") the Series D Junior Convertible Preferred Stock
      ------------------------
(the "Series D Preferred Stock") or the Series E Junior Convertible Preferred
      ------------------------
Stock (the "Series E Preferred Stock").
            ------------------------   
 
        (xxxi) None of the execution, delivery and performance of this
Agreement, the issuance and sale of the Senior Notes, the application of the
proceeds from the issuance and sale of the Senior Notes 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 or analogous foreign laws and regulations.
 
        (xxxii) To the best knowledge of the Company, each of 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
historical financial statements of the Company and its Subsidiaries 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 its
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, 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 its
Subsidiaries, as applicable.
 
        (xxxiii) 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
Senior Notes, the present fair saleable value of the assets 

                                       15
<PAGE>
 
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 Senior Notes, 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.
 
        (xxxiv) Except pursuant to this Agreement, there are no contracts,
agreements or understandings between the Company and its Subsidiaries 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 Senior Notes.

        (xxxv)  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.

        (xxxvi) 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 Senior Notes, 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 the Senior Notes outside the United States.

        (xxxvii)  All of the representations and warranties of Shared
Technologies in the Agreement and Plan of Merger among the Company, Moonlight
Acquisition Corporation and Shared Technologies, dated November 20, 1997, are
true and correct as of the respective dates given. Such representations and
warranties were made in such Agreement and Plan of Merger.

 
                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 Senior Notes.
 
        (ii)  Such Initial Purchaser (A) is not acquiring the Senior Notes 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 Senior Notes only to QIBs in reliance
on the exemption from the registration requirements of the Act provided by Rule
144A 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 RegulationS.
 
        (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 

                                       16
<PAGE>
 
of any of the Senior Notes, 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 Senior Notes only from, and
will offer to sell the Senior Notes only to, Eligible Purchasers. The Initial
Purchasers further agree (A) that they will offer to sell the Senior Notes only
to, and will solicit offers to buy the Senior Notes only (1) from QIBs who in
purchasing such Senior Notes will be deemed to have represented and agreed that
they are purchasing the Senior Notes for their own accounts or accounts with
respect to which they exercise sole investment discretion and that they or such
accounts are QIBs and (2) 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 shall acknowledge and agree that such Senior
Notes 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 Senior Notes (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 Senior Notes 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 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.

           (vi)  Each of the Initial Purchasers represents and agrees that the
Senior Notes offered and sold in reliance on Regulation S have been and will be
offered and sold only in offshore transactions.

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 either of the Initial
Purchasers within the 

                                       17
<PAGE>
 
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 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 Senior Notes 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 Senior Notes 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 

                                       18
<PAGE>
 
behalf of either Initial Purchaser expressly for use therein; provided, however,
that in no case shall either 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 the Offering Memorandum. This
indemnity will be in addition to any liability which either 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 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.
 
        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 both 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 Senior Notes 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, 

                                       19
<PAGE>
 
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
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 Senior Notes (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 either of
the Initial Purchasers be required to contribute any amount in excess of the
amount by which the discount applicable to the Senior Notes 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 either 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 Notes and
the Additional Notes, as provided herein, shall be subject to the satisfaction
of the following conditions, except that with respect to the Additional Notes,
references to the term 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 with all of the agreements herein contained and required to be
performed or complied with by it at or prior to the Closing Date.

                                       20
<PAGE>
 
        (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 Senior Notes 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 Closing Date, prevent the issuance of the Senior Notes;
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, the Subsidiaries or Shared Technologies Fairchild Inc. ("Shared
                                                                  ------
Technologies") 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, the Subsidiaries or Shared Technologies 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 on any class of its
capital stock, except for dividends paid in respect of the Series B Preferred
Stock, the Series D Preferred Stock or the Series E Preferred Stock, (iii)
neither the Company nor or any Subsidiary nor Shared Technologies shall have
incurred any liabilities or obligations, direct or contingent, that are
material, individually or in the aggregate, to the Company, the Subsidiaries and
Shared Technologies, 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 Effect.
 
        (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 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

                                       21
<PAGE>
 
Purchasers, of Kelley, Drye & Warren, 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.
 
        (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 and its Subsidiaries, Arthur Andersen LLP and
Rothstein, Kass and Company, P.C., independent public accountants for Shared
Technologies, and Little and Company, independent public accountants for the
Long Distance Savers group of companies ("LDS") 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, the Subsidiaries,
LDS and Shared Technologies 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 and the Trustee shall have entered into the Indenture
and the Initial Purchasers shall have received counterparts, conformed as
executed, thereof.
 
        (m)  The Company shall have entered into the Registration Rights
Agreement and the Initial Purchasers shall have received counterparts, conformed
as executed, thereof.
 
        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.
 
        9.     Initial Purchasers' Information.  The Company and the Initial
               -------------------------------                              
Purchasers severally acknowledge that the statements with respect to the
offering of the Senior Notes set forth in the last paragraph of the cover page,
and the third, fifth and seventh 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 

                                       22
<PAGE>
 
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 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 Senior Notes 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 Senior Notes 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 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 Senior Notes 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 Senior Notes provided for herein is not
consummated because any condition to the obligations of the Initial Purchasers
set forth herein

                                       23
<PAGE>
 
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: 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; 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 Senior Notes from the Initial Purchasers.
 
        14.     Construction.  This Agreement shall be construed in accordance
                ------------                                                  
with the internal laws of 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.
 
                          [Signature page to follow]

                                       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:_____________________________________
                                       Name:
                                       Title:
 
 
Accepted and agreed to as of
the date first above written:
 
 
Bear, Stearns & Co. Inc.
 
 
 
By:_________________________________
   Name:
   Title:
 
 
 
Salomon Brothers inc
 
 
 
By:_________________________________
   Name:
   Title:

                                       25
<PAGE>
 
                                  Schedule I


                                                       Amount of
                                                          Senior
                                                        Notes to
Initial Purchaser                                   be Purchased
- - -----------------                                   ------------
 
Bear, Stearns & Co. Inc.                            $245,000,000
Salomon Brothers Inc                                 105,000,000
                                                    ------------
   Total                                            $350,000,000





                                    Sched-1

<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.
 
             2.   All of the outstanding shares of capital stock of the Company
     has been duly authorized, validly issued, and are fully paid and
     nonassessable and were not issued in violation of any preemptive or similar
     rights under the Delaware General Corporation Law. The authorized, issued
     and outstanding capital stock of the Company conforms in all respects to
     the description thereof set forth in the Offering Memorandum.
 
             3.   To our knowledge, after reasonable inquiry, all of the issued
     and outstanding capital stock of the Company's Subsidiaries 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 us, after reasonable
     inquiry, and, is owned by the Company of record, free and clear of any
     security interest, claim, lien, limitation on voting rights or encumbrance.
     Except as set forth on Schedule A hereto, there are not, to our knowledge,
     currently, and will not be following the Offering, any outstanding
     subscriptions, rights, warrants, calls, commitments of sale or options to
     acquire (other than options issued pursuant to the Company's stock option
     plans, the 160,000 warrants each to purchase 2.19 shares of Common Stock,
     the 7% Series D Junior Convertible Preferred Stock and the Series E
     Preferred Stock, and noting that at present rights trade with the Common
     Stock), or instruments convertible into or exchangeable for, any capital
     stock or other equity interest of the Company or any Subsidiary.
 
             4.   When the Senior Notes are issued and delivered pursuant to
     this Agreement, no Senior Notes 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.
 
             5.   The Company has all requisite corporate power and authority to
     execute, deliver and perform its obligations under this Agreement, the
     Indenture, 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 Senior Notes as provided herein and therein.
 
             6.   This Agreement has been duly and validly authorized, executed
     and delivered by the Company and, assuming due execution by the other
     parties hereto, is the legally valid and binding agreement of the Company.
 
                                      B-1
<PAGE>
 
             7.   Each of the Indenture 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 Senior Notes have been duly and validly authorized for
     issuance and sale to the Initial Purchasers by the Company pursuant to this
     Agreement and, when issued and authenticated in accordance with the terms
     of the Indenture and delivered against payment therefor in accordance with
     the terms of this Agreement and the Indenture, assuming due execution by
     the other parties thereto, will be the legal, valid and binding obligations
     of the Company, enforceable against the Company in accordance with their
     terms and entitled to the benefits of the Indenture, 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.
 
             9.   The Exchange Notes have been duly and validly authorized for
     issuance by the Company and, when issued and authenticated in accordance
     with the terms of the Indenture, assuming due execution by the other
     parties thereto, will be the legal, valid and binding obligations of the
     Company, enforceable against the Company in accordance with their terms and
     entitled to the benefits of the Indenture, 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.
 
             10.  The Offering Memorandum contains a fair summary of each of the
     Senior Notes, the Indenture, and the Registration Rights Agreement.
 
             11.  No registration under the Act of the Senior Notes is required
     for the sale of the Senior Notes 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 Senior Notes in
     the Exempt Resales are Eligible Purchasers, (iii) the accuracy of the
     Initial Purchasers' representations regarding the absence of general
     solicitation in connection with the sale of Senior Notes to the Initial
     Purchasers and the Exempt Resales contained in this Agreement and (iv) the
     accuracy of the Company's representations in Sections 5(a)(ii), (xxvi),
     (xxvii) (other than with respect to the first sentence) and (xxix) of this
     Agreement.
 
             12.  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>
 
             13.  Prior to the effectiveness of the Exchange Offer Registration
     Statement or the Shelf Registration Statement, the Indenture is not
     required to be qualified under the Trust Indenture Act.
 
             14.  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 Senior Notes or (C) consummation by the Company
     and the Subsidiaries of the transactions described in the Offering
     Memorandum under the caption "Use of Proceeds" will 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 identified to such counsel as material (assuming all of such
     agreements are governed by New York law), (iii) 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 that we express no opinion as to the matters
     addressed by the opinion of Kelley, Drye & Warren LLP, and except in the
     case of clauses (ii) and (iii) 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 Senior Notes 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) we express no opinion as to the matters addressed by the
     opinion of Kelley, Drye & Warren LLP. To the best of 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, the issuance
     and sale of the Senior Notes, other than such consents and waivers as have
     been obtained or are being applied for.
 
             15.  None of the Company and any of its 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.
 
             16.  Except as set forth in this Agreement or in the Registration
     Rights Agreement, 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

                                      B-3
<PAGE>
 
     transactions contemplated thereby, have the right to request or demand that
     the Company register under the Act securities held by them.
 
             17.  None of the execution, delivery and performance of this
     Agreement, the issuance and sale of the Senior Notes, the application of
     the proceeds from the issuance and sale of the Senior Notes 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.
 
             18.  To the knowledge of such counsel, after reasonable inquiry, no
     search of courts 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 any 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 has been issued that, in the case of
     clauses (i), (ii) and (iii) above, (w) is required to be disclosed in the
     Preliminary Offering Memorandum and the Offering Memorandum and that is not
     so disclosed or, (x) could reasonably be expected to have, either
     individually or in the aggregate, a Material Adverse Effect, except as
     disclosed in the Offering Memorandum; or (y) might interfere with,
     adversely affect or in any manner question the validity of the issuance and
     sale of the Senior Notes 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.
 
             19.  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 herein.
 
             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 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 as to
     financial statements and related notes, the financial statement schedules
     and other financial and statistical data included therein).

                                      B-4
<PAGE>
 
                                 Exhibit C
 
                     Form of Opinion of Kelley, Drye & Warren



                                      C-1



<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

     Moonlight Acquisition Corp.




                                      D-1


<PAGE>
 
                                                                     EXHIBIT 4.5

                                                                  EXECUTION COPY



                         INTERMEDIA COMMUNICATIONS INC.

                               Up to $400,000,000

                          8 1/2% SENIOR NOTES DUE 2008



                               _________________

                                   INDENTURE

                         Dated as of December 23, 1997
                               _________________



                               _________________

              SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION
                               _________________

                                    Trustee
<PAGE>
 
                             CROSS-REFERENCE TABLE*
Trust Indenture
 Act Section                                            Indenture Section
 
310 (a)(1).................................................         7.10
  (a)(2)...................................................         7.10
  (a)(3)...................................................         N.A.
  (a)(4)...................................................         N.A.
  (a)(5)...................................................         7.10
  (b)......................................................         7.10
  (c)......................................................         N.A.
311 (a)....................................................         7.11
  (b)......................................................         7.11
  (c)......................................................         N.A.
312 (a)....................................................         2.05
  (b)......................................................        10.03
  (c)......................................................        10.03
313 (a)....................................................         7.06
  (b)(1)...................................................         N.A.
  (b)(2)...................................................         7.06
  (c)......................................................  7.06; 10.02
  (d)......................................................         7.06
314 (a)....................................................  4.03; 10.05
  (b)......................................................         4.17
  (c)(1)...................................................        10.04
  (c)(2)...................................................        10.04
  (c)(3)...................................................         N.A.
  (d)......................................................         4.17
  (e)......................................................         N.A.
  (f)......................................................         N.A.
315 (a)....................................................         N.A.
  (b)......................................................         7.05
  (c)......................................................         N.A.
  (d)......................................................         N.A.
  (e)......................................................         N.A.
316 (a)(last sentence).....................................         N.A.
  (a)(1)(A)................................................         N.A.
  (a)(2)...................................................         N.A.
  (b)......................................................         N.A.
  (c)......................................................         2.13
317 (a)(1).................................................         N.A.
  (a)(2)...................................................         N.A.
  (b)......................................................         N.A.
318 (a)....................................................         N.A.
  (b)......................................................         N.A.
  (c)......................................................         10.01

N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
<PAGE>
 
                               TABLE OF CONTENTS

                                                                        Page

                                   ARTICLE 1
                         DEFINITIONS AND INCORPORATION
                                  BY REFERENCE

     Section 1.01.    Definitions......................................   1
     Section 1.02.    Other Definitions................................  16
     Section 1.03.    Incorporation by Reference of Trust Indenture Act  16
     Section 1.04.    Rules of Construction............................  17

                                   ARTICLE 2
                                THE SENIOR NOTES

     Section 2.01.    Form and Dating..................................  17
 
 
     Section 2.02.    Execution and Authentication.....................  18
     Section 2.03.    Registrar and Paying Agent.......................  18
     Section 2.04.    Paying Agent to Hold Money in Trust..............  19
     Section 2.05.    Holder Lists.....................................  19
     Section 2.06.    Transfer and Exchange............................  20
     Section 2.07.    Replacement Notes................................  31
     Section 2.08.    Outstanding Notes................................  31
     Section 2.09.    Treasury Notes...................................  32
     Section 2.10.    Temporary Notes..................................  32
     Section 2.11.    Cancellation.....................................  32
     Section 2.12.    Defaulted Interest...............................  33
     Section 2.13.    Record Date......................................  33
     Section 2.14.    CUSIP Number.....................................  33

                                   ARTICLE 3
                       REDEMPTION AND CERTAIN REPURCHASES

     Section 3.01.    Notices to Trustee...............................  33
     Section 3.02.    Selection of Notes to Be Redeemed................  34
     Section 3.03.    Notice of Redemption.............................  34
     Section 3.04.    Effect of Notice of Redemption...................  35
     Section 3.05.    Deposit of Redemption Price......................  35
     Section 3.06.    Senior Notes Redeemed in Part....................  35
     Section 3.07.    Optional Redemption..............................  36
     Section 3.08.    Mandatory Redemption.............................  36
     Section 3.09.    Offer to Purchase With Excess Asset Sale Proceeds  37
 
                                   ARTICLE 4
                                   COVENANTS

     Section 4.01.    Payment of Notes.................................  39
     Section 4.02.    Maintenance of Office or Agency..................  39
     Section 4.03.    Reports..........................................  40
     Section 4.04.    Compliance Certificate...........................  40
     Section 4.05.    Taxes............................................  41
     Section 4.06.    Stay, Extension and Usury Laws...................  41
 

                                       i
<PAGE>
 
     Section 4.07.    Restricted Payments..............................  41
     Section 4.08.    Dividend and Other Payment Restrictions Affecting
                      Subsidiaries.....................................  45
     Section 4.09.    Incurrence of Indebtedness and Issuance of
                      Disqualified Stock...............................  46
     Section 4.10.    Asset Sales......................................  48
     Section 4.11.    Transactions with Affiliates.....................  49
     Section 4.12.    Liens                                              50
     Section 4.13.    Limitations on Sale and Leaseback Transactions...  50
     Section 4.14.    Corporate Existence..............................  50
     Section 4.15.    Offer to Purchase Upon Change of Control.........  50
     Section 4.16.    Business Activities..............................  51
     Section 4.17.    Payments for Consent.............................  51

                                   ARTICLE 5
                                   SUCCESSORS

     Section 5.01.  Merger, Consolidation or Sale of Assets............  53
     Section 5.02.  Successor Corporation Substituted..................  53

                                   ARTICLE 6
                             DEFAULTS AND REMEDIES

     Section 6.01.    Events of Default................................  54
     Section 6.02.    Acceleration.....................................  55
     Section 6.03.    Other Remedies...................................  56
     Section 6.04.    Waiver of Past Defaults..........................  56
     Section 6.05.    Control by Majority..............................  57
     Section 6.06.    Limitation on Suits..............................  57
     Section 6.07.    Rights of Holders of Notes to Receive Payment....  58
     Section 6.08.    Collection Suit by Trustee.......................  58
     Section 6.09.    Trustee May File Proofs of Claim.................  58
     Section 6.10.    Priorities.......................................  58
     Section 6.11.    Undertaking for Costs............................  59

                                   ARTICLE 7
                                    TRUSTEE

     Section 7.01.    Duties of Trustee................................  59
     Section 7.02.    Rights of Trustee................................  60
     Section 7.03.    Individual Rights of Trustee.....................  61
     Section 7.04.    Trustee's Disclaimer.............................  61
     Section 7.05.    Notice of Defaults...............................  61
     Section 7.06.    Reports by Trustee to Holders of the Senior Notes  61
     Section 7.07.    Compensation and Indemnity.......................  62
     Section 7.08.    Replacement of Trustee...........................  62
     Section 7.09.    Successor Trustee by Merger, etc.................  63
     Section 7.10.    Eligibility; Disqualification....................  64
     Section 7.11.    Preferential Collection of Claims Against Company  64

                                   ARTICLE 8
                    LEGAL DEFEASANCE AND COVENANT DEFEASANCE
 
     Section 8.01.    Option to Effect Legal Defeasance or Covenant
                      Defeasance.......................................  64
 

                                       ii
<PAGE>
 
     Section 8.02.    Legal Defeasance and Discharge.................  64
     Section 8.03.    Covenant Defeasance............................  65
     Section 8.04.    Conditions to Legal or Covenant Defeasance.....  65
     Section 8.05.    Deposited Money and Government Securities to be
                      Held in Trust; Other Miscellaneous Provisions..  66
     Section 8.06.    Repayment to Company...........................  67
     Section 8.07.    Reinstatement..................................  67

                                   ARTICLE 9
                        AMENDMENT, SUPPLEMENT AND WAIVER

     Section 9.01.    Without Consent of Holders of Senior Notes.....  68
     Section 9.02.    With Consent of Holders of Senior Notes........  68
     Section 9.03.    Compliance with Trust Indenture Act............  69
     Section 9.04.    Revocation and Effect of Consents..............  70
     Section 9.05.    Notation on or Exchange of Senior Notes........  70
     Section 9.06.    Trustee to Sign Amendments, etc................  70
     Section 9.07.    Payment for Consents...........................  70

                                   ARTICLE 10


                                 MISCELLANEOUS

     Section 10.01.   Trust Indenture Act Controls...................  71
     Section 10.02.   Notices........................................  71
     Section 10.03.   Communication by Holders of Senior Notes with
                      Other Holders of Senior Notes..................  72
     Section 10.04.   Certificate and Opinion as to Conditions 
                      Precedent......................................  72
     Section 10.05.   Statements Required in Certificate or Opinion..  72
     Section 10.06.   Rules by Trustee and Agents....................  73
     Section 10.07.   No Personal Liability of Partners, Directors, 
                      Officers, Employees and Stockholders...........  73
     Section 10.08.   Governing Law..................................  73
     Section 10.09.   No Adverse Interpretation of Other Agreements..  73
     Section 10.10.   Successors.....................................  73
     Section 10.11.   Severability...................................  73
     Section 10.12.   Counterpart Originals..........................  73
     Section 10.13.   Table of Contents, Headings, etc...............  74
 
                                    EXHIBITS

     Exhibit A          FORM OF NOTE
     Exhibit B          FORM OF CERTIFICATE OF TRANSFER
     Exhibit C          FORM OF CERTIFICATE OF EXCHANGE
     Exhibit D          FORM OF CERTIFICATE OF ACQUIRING 
                        INSTITUTIONAL ACCREDITED INVESTOR

                                      iii
<PAGE>
 
      INDENTURE dated as of December 23, 1997 between Intermedia Communications
Inc. (the "Company"), and SunTrust Bank, Central Florida, National Association,
as trustee (the "Trustee").

      The Company and the Trustee agree as follows for the benefit of each other
and for the equal and ratable benefit of the holders of the 8 1/2% Senior Notes
due 2008 (the "Senior Notes"):


                                   ARTICLE 1
                         DEFINITIONS AND INCORPORATION
                                  BY REFERENCE

Section 1.01.  Definitions.

      "144A Global Security" means the global security in the form of Exhibit A
hereto bearing the Global Security Legend and the Private Placement Legend and
deposited with and registered in the name of the Depositary or its nominee that
will be issued in a denomination equal to the outstanding principal amount of
the Senior Notes sold in reliance on Rule 144A.

      "Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.

      "Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person.  For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise, provided, however,
that beneficial ownership of 25% or more of the voting securities of a Person
shall be deemed to be control.

      "Agent" means any Registrar, Paying Agent or co-registrar.

      "Applicable Procedures" means, with respect to any transfer or exchange of
or for beneficial interests in any Global Note, the rules and procedures of the
Depositary, Euroclear and Cedel that apply to such transfer or exchange.

      "Attributable Debt" means, with respect to any Sale and Leaseback
Transaction, the present value at the time of determination (discounted at a
rate consistent with accounting guidelines, as determined in good faith by the
Company) of the payments during the remaining term of the lease (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended) or until the earliest date on which the lessee may
terminate such lease without penalty or upon payment of a penalty (in which case
the rental payments shall include such penalty), after excluding all amounts
required to be paid on account of maintenance and repairs, insurance, taxes,
assessments, water, utilities and similar charges.

                                       1
<PAGE>
 
      "Beneficial Owner" means a beneficial owner as defined in Rules 13d-3 and
13d-5 under the Exchange Act (or any successor rules), including the provision
of such Rules that a Person shall be deemed to have beneficial ownership of all
securities that such Person has a right to acquire within 60 days; provided that
a Person will not be deemed a beneficial owner of, or to own beneficially, any
securities if such beneficial ownership (1) arises solely as a result of a
revocable proxy delivered in response to a proxy or consent solicitation made
pursuant to, and in accordance with, the Exchange Act and (2) is not also then
reportable on Schedule 13D or Schedule 13G (or any successor schedule) under the
Exchange Act.

      "Board of Directors" means, unless otherwise specified, the Board of
Directors of the Company or any authorized committee thereof.

      "Board Resolution" means a resolution authorized by the Board of
Directors.

      "Business Day" means any day other than a Legal Holiday.
 
      "Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be so required to be capitalized on the balance sheet in accordance
with GAAP.

      "Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock and (iii) in the case of a partnership, partnership interests
(whether general or limited) and any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, such partnership.

      "Cedel" means Cedel Bank, SA.

      "Certificated Security" means a certificated Senior Note registered in the
name of the holder thereof and issued in accordance with Section 2.06 hereof,
substantially in the form of Exhibit A hereto, except that such Senior Note
shall not bear the Global Security Legend and shall not have the "Schedule of
Exchanges of Interests in the Global Security" attached thereto.

      "Change of Control" means the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition, 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, to any Person or group (as such term is
used in Section 13(d)(3) and 14(d)(2) of the Exchange Act), (ii) the adoption of
a plan relating to the liquidation or dissolution of the Company, (iii) any
Person or group (as defined above) is or becomes the Beneficial Owner, directly
or indirectly, of more than 50% of the total Voting Stock or Total Common Equity
of the Company, including by way of merger, consolidation or otherwise or (iv)
the first day on which a majority of the members of the Board of Directors of
the Company are not Continuing Directors.

      "Closing Price" on any Trading Day with respect to the per share price of
any shares of Capital Stock means the last reported sale price regular way or,
in case no such reported sale takes place on such day, the average of the
reported closing bid and asked prices regular way, in either case on the New
York Stock Exchange or, if such shares of Capital Stock are not listed or
admitted to trading on such exchange, on the principal national securities
exchange on which such shares are listed or admitted to trading or, if not
listed or admitted to trading on any national securities exchange, on the Nasdaq
National Market or, if such shares are not listed or admitted to trading on any
national securities exchange or quoted on Nasdaq

                                       2
<PAGE>
 
National Market but the issuer is a Foreign Issuer (as defined in Rule 3b-4(b)
under the Exchange Act) and the principal securities exchange on which such
shares are listed or admitted to trading is a Designated Offshore Securities
Market (as defined in Rule 902(a) under the Securities Act), the average of the
reported closing bid and asked prices regular way on such principal exchange,
or, if such shares are not listed or admitted to trading on any national
securities exchange or quoted on Nasdaq National Market and the issuer and
principal securities exchange do not meet such requirements, the average of the
closing bid and asked prices in the over-the-counter market as furnished by any
New York Stock Exchange member firm that is selected from time to time by the
Company for that purpose and is reasonably acceptable to the Trustee.

      "Common Stock" of any Person means Capital Stock of such Person that does
not rank prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding up
of such Person, to shares of Capital Stock of any other class of such Person.

      "Consolidated Cash Flow Leverage Ratio" with respect to any Person means
the ratio of the Consolidated Indebtedness of such Person to the Consolidated
EBITDA of such Person for the relevant period; provided, however, that (1) if
the Company or any Subsidiary of the Company has incurred any Indebtedness
(including Acquired Debt) or if the Company has issued any Disqualified Stock or
if any Subsidiary of the Company has issued any Preferred Stock since the
beginning of such period that remains outstanding on the date of such
determination or if the transaction giving rise to the need to calculate the
Consolidated Cash Flow Leverage Ratio is an incurrence of Indebtedness
(including Acquired Debt) or the issuance of Disqualified Stock by the Company,
Consolidated EBITDA and Consolidated Indebtedness for such period will be
calculated after giving effect on a pro forma basis to (A) such Indebtedness,
Disqualified Stock or Preferred Stock, as applicable, as if such Indebtedness
had been incurred or such stock had been issued on the first day of such period,
(B) the discharge of any other Indebtedness repaid, repurchased, defeased or
otherwise discharged with the proceeds of such new Indebtedness or sale of stock
as if such discharge had occurred on the first day of such period, and (C) the
interest income realized by the Company or its Subsidiaries on the proceeds of
such Indebtedness or of such stock sale, to the extent not yet applied at the
date of determination, assuming such proceeds earned interest at the rate in
effect on the date of determination from the first day of such period through
such date of determination, (2) if since the beginning of such period the
Company or any Subsidiary of the Company has made any sale of assets (including,
without limitation, any Asset Sales or pursuant to any Sale and Leaseback
Transaction), Consolidated EBITDA for such period will be (A) reduced by an
amount equal to Consolidated EBITDA (if positive) directly attributable to the
assets which are the subject of such sale of assets for such period or (B)
increased by an amount equal to Consolidated EBITDA (if negative) directly
attributable thereto for such period and (3) if since the beginning of such
period the Company or any Subsidiary of the Company (by merger or otherwise) has
made an Investment in any Subsidiary of the Company (or any Person which becomes
a Subsidiary of the Company) or has made an acquisition of assets, including,
without limitation, any acquisition of assets occurring in connection with a
transaction causing a calculation of Consolidated EBITDA to be made hereunder,
which constitutes all or substantially all of an operating unit of a business,
Consolidated EBITDA for such period will be calculated after giving pro forma
effect thereto (including the incurrence of any Indebtedness (including Acquired
Debt)) as if such Investment or acquisition occurred on the first day of such
period.  For purposes of this definition, whenever pro forma effect is to be
given to an acquisition of assets, the pro forma calculations will be determined
in good faith by a responsible financial or accounting Officer of the Company,
provided, however, that such Officer shall assume (i) the historical sales and
gross profit margins associated with such assets for any consecutive 12-month
period ended prior to the date of purchase (provided that the first month of
such 12-month period

                                       3
<PAGE>
 
will be no more than 18 months prior to such date of purchase) and (ii) other
expenses as if such assets had been owned by the Company since the first day of
such period. If any Indebtedness (including, without limitation, Acquired Debt)
bears a floating rate of interest and is being given pro forma effect, the
interest on such Indebtedness will be calculated as if the rate in effect on the
date of determination had been the applicable rate for the entire period.

      "Consolidated EBITDA" as of any date of determination means the
Consolidated Net Income for such period (but without giving effect to
adjustments, accruals, deductions or entries resulting from purchase accounting,
extraordinary losses or gains and any gains or losses from any Asset Sales),
plus the following to the extent deducted in calculating such Consolidated Net
Income: (i) provision for taxes based on income or profits of such Person and
its Subsidiaries for such period, (ii) Consolidated Interest Expense, (iii)
depreciation, amortization (including amortization of goodwill and other
intangibles) and other non-cash charges (excluding any such non-cash charge to
the extent that it represents an accrual of or reserve for cash charges in any
future period or amortization of a prepaid cash expense that was paid in a prior
period and excluding non-cash interest and dividend income) of such Person and
its Subsidiaries for such period, in each case, on a consolidated basis and
determined in accordance with GAAP.  Notwithstanding the foregoing, the
provision for taxes on the income or profits of, and the depreciation,
amortization, interest expense and other non-cash charges of, a Subsidiary of
the referent Person shall be added to Consolidated Net Income to compute
Consolidated EBITDA only to the extent (and in same proportion) that the Net
Income of such Subsidiary was included in calculating the Consolidated Net
Income of such Person and only if a corresponding amount would be permitted at
the date of determination to be dividended to the Company by such Subsidiary, or
loaned to the Company by any such Subsidiary, without prior approval (that has
not been obtained), pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to that Subsidiary or its stockholders.

      "Consolidated Indebtedness" means, with respect to any Person, as of any
date of determination, the aggregate amount of Indebtedness of such Person and
its Subsidiaries as of such date calculated on a consolidated basis in
accordance with GAAP consistently applied.

      "Consolidated Interest Expense" means, for any Person, for any period, the
aggregate of the following for such Person for such period determined on a
consolidated basis in accordance with GAAP: (a) the amount of interest in
respect of Indebtedness (including amortization of original issue discount,
amortization of debt issuance costs, and non-cash interest payments on any
Indebtedness, the interest portion of any deferred payment obligation and after
taking into account the effect of elections made under any Interest Rate
Agreement, however denominated, with respect to such Indebtedness), (b) the
amount of Redeemable Dividends (to the extent not already included in
Indebtedness in determining Consolidated Interest Expense for the relevant
period) and (c) the interest component of rentals in respect of any Capital
Lease Obligation paid, in each case whether accrued or scheduled to be paid or
accrued by such Person during such period to the extent such amounts were
deducted in computing Consolidated Net Income, determined on a consolidated
basis in accordance with GAAP.  For purposes of this definition, interest on a
Capital Lease Obligation shall be deemed to accrue at an interest rate
reasonably determined by such Person to be the rate of interest implicit in such
Capital Lease Obligation in accordance with GAAP consistently applied.

      "Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Subsidiaries for
such period, on a consolidated basis, determined in accordance with GAAP;
provided that:

                                       4
<PAGE>
 
      (i) the Net Income of any Person that is not a Subsidiary or that is
   accounted for by the equity method of accounting shall be included only to
   the extent of the amount of dividends or distributions paid in cash to the
   referent Person or a Subsidiary thereof,

      (ii) the Net Income of any Subsidiary shall be excluded to the extent that
   the declaration or payment of dividends or other distributions by that
   Subsidiary of that Net Income is not at the date of determination permitted
   without any prior governmental approval (which has not been obtained) or,
   directly or indirectly, by operation of the terms of its charter or any
   agreement, instrument, judgment, decree, order, statute, rule or governmental
   regulation applicable to that Subsidiary or its stockholders,

      (iii)  the Net Income of any Person acquired in a pooling of interests
   transaction for any period prior to the date of such acquisition shall be
   excluded,

      (iv) the cumulative effect of a change in accounting principles shall be
   excluded, and

      (v) the Net Income of any Unrestricted Subsidiary shall be excluded,
   whether or not distributed to the Company or one of its Subsidiaries.

      "Contingent Investment" means, with respect to any Person, any guarantee
by such Person of the performance of another Person or any commitment by such
Person to invest in another Person.  Any Investment that consists of a
Contingent Investment shall be deemed made at the time that the guarantee of
performance or the commitment to invest is given, and the amount of such
Investment shall be the maximum monetary obligation under such guarantee of
performance or commitment to invest.  To the extent that a Contingent Investment
is released or lapses without payment under the guarantee of performance or the
commitment to invest, such Investment shall be deemed not made to the extent of
such release or lapse.  With respect to any Contingent Investment, the payment
of the guarantee of performance or the payment under the commitment to invest
shall not be deemed to be an additional Investment.

      "Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of the Company who (i) was a member of such Board of
Directors on the Issue Date or (ii) was nominated for election or elected to
such Board of Directors with the affirmative vote of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.

      "Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 10.02 hereof or such other address as to which the
Trustee may give notice to the Company.

      "Credit Facility" means any credit facility entered into by and among the
Company and one or more commercial banks or financial institutions, providing
for senior term or revolving credit borrowings of a type similar to credit
facilities typically entered into by commercial banks and financial
institutions, including any related notes, Guarantees, collateral documents,
instruments and agreements executed in connection therewith, as such credit
facility and related agreements may be amended, extended, refinanced, renewed,
restated, replaced or refunded from time to time.

      "Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.

                                       5
<PAGE>
 
      "Depositary" means, with respect to the Senior Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.03 hereof as
the Depositary with respect to the Senior Notes, until a successor shall have
been appointed and become such pursuant to the applicable provision of this
Indenture, and, thereafter, "Depositary" shall mean or include such successor.

      "Disqualified Stock" means any Capital Stock to the extent that, and only
to the extent that, by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the option of the holder thereof,
in whole or in part, on or prior to the date on which the Senior Notes mature,
provided, however, that any Capital Stock which would not constitute
Disqualified Stock but for provisions thereof giving holders thereof the right
to require the Company to repurchase or redeem such Capital Stock upon the
occurrence of a Change of Control occurring prior to the final maturity of the
Senior Notes shall not constitute Disqualified Stock if the change in control
provisions applicable to such Capital Stock are no more favorable to the holders
of such Capital Stock than the provisions applicable to the Senior Notes
contained in Section 4.15 hereof and such Capital Stock specifically provides
that the Company will not repurchase or redeem any such stock pursuant to such
provisions prior to the Company's repurchase of such Senior Notes as are
required to be repurchased pursuant to Section 4.15 hereof.

      "Eligible Institution" means a commercial banking institution that has
combined capital and surplus of not less than $500 million or its equivalent in
foreign currency, whose debt is rated "A" (or higher) according to S&P or
Moody's at the time as of which any investment or rollover therein is made.

      "Eligible Receivable" means any Receivable not more than 90 days past due
under its scheduled payment terms.

      "Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock or that are measured by the value of Capital
Stock (but excluding any debt security that is convertible into or exchangeable
for Capital Stock).

      "Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office as operator of the Euroclear system.

      "Exchange Act" means the Securities Exchange Act of 1934, as amended (or
any successor act), and the rules and regulations thereunder.

      "Exchange Notes" means the Notes issued in Exchange Offer pursuant to
Section 2.06(f) hereof.

      "Exchange Offer" has the meaning set forth in the Note Registration Rights
Agreement.

      "Exchange Offer Registration Statement" has the meaning set forth in the
Note Registration Rights Agreement.

      "Existing Indebtedness" means the Existing Senior Notes and all other
Indebtedness of the Company and its Subsidiaries in existence on the Issue Date.

      "Existing Senior Notes" means the Company's 12 1/2% Senior Discount Notes
due 2006, the Company's 11 1/4% Senior Discount Notes due 2007 and the Company's
8 7/8% Senior Notes due 2007.

                                       6
<PAGE>
 
      "Fair Market Value" means with respect to any asset or property, the sale
value that would be obtained in an arm's length transaction between an informed
and willing seller under no compulsion to sell and an informed and willing buyer
under no compulsion to buy.

      "GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States, which are in effect on the Issue Date.

      "Global Security" means, individually and collectively, each of the
Restricted Global Securities and the Unrestricted Global Security, substantially
in the form of Exhibit A.

      "Global Security Legend" means the legend set forth in Section 2.07(g)(ii)
to be placed on all Global Securities issued under this Indenture.

      "Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States is pledged.

      "Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.

      "Hedging Obligations" means, with respect to any Person, the obligations
of such Person under Interest Rate Agreements.

      "Holder" and "holder" shall mean a Person in whose name a Senior Note is
registered.

      "IAI Global Security" means the Global Security in the form of Exhibit A
hereto bearing the Global Security Legend and the Private Placement Legend and
deposited with and registered in the name of the Depositary or its nominee that
will be issued in a denomination equal to the outstanding principal amount of
the Senior Notes sold to Institutional Accredited Investors.

      "Indebtedness" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or representing the balance
deferred and unpaid of the purchase price of any property (including pursuant to
capital leases) or representing any Hedging Obligations, except any such balance
that constitutes an accrued expense or trade payable, if and to the extent any
of the foregoing (other than Hedging Obligations or letters of
credit) would appear as a liability upon a balance sheet of such Person prepared
in accordance with GAAP, all indebtedness of others secured by a Lien on any
asset of such Person (whether or not such indebtedness is assumed by such
Persons), all obligations to purchase, redeem, retire, defease or otherwise
acquire for value any Disqualified Stock or any warrants, rights or options to
acquire such Disqualified Stock valued, in the case of Disqualified Stock, at
the greatest amount payable in respect thereof on a liquidation (whether
voluntary or involuntary) plus accrued and unpaid dividends, the liquidation
value of any Preferred Stock issued by Subsidiaries of such Person plus accrued
and unpaid dividends, and also 

                                       7
<PAGE>
 
includes, to the extent not otherwise included, the Guarantee of items that
would be included within this definition and any amendment, supplement,
modification, deferral, renewal, extension or refunding of any of the above;
notwithstanding the foregoing, in no event will performance bonds or similar
security for performance be deemed Indebtedness so long as such performance
bonds or similar security for performance would not appear as a liability on a
balance sheet of such Person prepared in accordance with GAAP; and provided,
further that the amount of any Indebtedness in respect of any Guarantee shall be
the maximum principal amount of the Indebtedness so guaranteed.

      "Indenture" means this Indenture, as amended or supplemented from time to
time.

      "Indirect Participant" means a Person who holds a beneficial interest in a
Global Security through a Participant.

      "Initial Purchasers" means Bear, Stearns & Co. Inc. and Salomon Brothers
Inc, as initial purchasers in the Offering.

      "Interest Rate Agreements" means (i) interest rate swap agreements,
interest rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates.

      "Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act.

      "Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of loans,
Guarantees, Contingent Investments, advances or capital contributions (excluding
commission, travel and similar advances to officers and employees made in the
ordinary course of business), purchases or other acquisitions for consideration
of Indebtedness, Equity Interests or other securities of any other Person and
all other items that are or would be classified as investments on a balance
sheet prepared in accordance with GAAP; provided, however, that any investment
to the extent made with Capital Stock of the Company (other than Disqualified
Stock) shall not be deemed an "Investment" for purposes of this Indenture.

      "Issue Date" means December 23, 1997.

      "Joint Venture" means a Person in the Telecommunications Business in which
the Company holds less than a majority of the shares of Voting Stock or an
Unrestricted Subsidiary in the Telecommunications Business.

      "Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue
for the intervening period.

      "Letter of Transmittal" means the letter of transmittal to be prepared by
the Company and sent to all holders of the Senior Notes for use by such holders
in connection with the Exchange Offer.

                                       8
<PAGE>
 
      "Liquidated Damages" means all liquidated damages then owing pursuant to
Section 5 of the Note Registration Rights Agreement.

      "Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).

      "Marketable Securities" means:

      (i)  Government Securities;

      (ii) any certificate of deposit maturing not more than 270 days after the
   date of acquisition issued by, or time deposit of, an Eligible Institution;

      (iii) commercial paper maturing not more than 270 days after the date of
   acquisition issued by a corporation (other than an Affiliate of the Company)
   with a rating, at the time as of which any investment therein is made, of "A-
   1" (or higher) according to S&P or "P-1" (or higher) according to Moody's;

      (iv) any banker's acceptances or money market deposit accounts issued or
   offered by an Eligible Institution; and

      (v) any fund investing exclusively in investments of the types described
   in clauses (i) through (iv) above.

      "Moody's" means Moody's Investors Service, Inc. and its successors.

      "Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to Sale and Leaseback Transactions) or (b) the
disposition of any securities by such Person or any of its Subsidiaries or the
extinguishment of any Indebtedness of such Person or any of its Subsidiaries and
(ii) any extraordinary gain (but not loss), together with any related provision
for taxes on such extraordinary gain (but not loss).

      "Net Proceeds" means the aggregate cash proceeds received by the Company
or any of its Subsidiaries in respect of any Asset Sale, net of the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements), amounts required to be applied to the repayment of Indebtedness
secured by a Lien on the asset or assets that are the subject of such Asset Sale
and any reserve for adjustment in respect of the sale price of such asset or
assets. Net Proceeds shall exclude any non-cash proceeds received from any Asset
Sale, but shall include such proceeds when and as converted by the Company or
any Subsidiary of the Company to cash.

                                       9
<PAGE>
 
      "Note Custodian" means the Trustee, as custodian with respect to the
Senior Notes in global form, or any successor entity thereto.

      "Note Registration Rights Agreement" means the Registration Rights
Agreement dated as of the date hereof between the Company and the Initial
Purchasers.

      "Offering" means the offering of the Senior Notes pursuant to the Offering
Memorandum.

      "Offering Memorandum" means the offering memorandum of the Company, dated
December 18, 1997, relating to the Offering.

      "Officer" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operating Officer, the
Chief Financial Officer, the Treasurer, any Assistant Treasurer, Controller,
Secretary or any Vice-President of such Person.

      "Officers' Certificate" means a certificate signed by two Officers of the
Company, one of whom must be the principal executive officer, principal
financial officer, treasurer or principal accounting officer of the Company.

      "Opinion of Counsel" means an opinion from legal counsel, who may be an
employee of or counsel to the Company, any Subsidiary of the Company or the
Trustee.

      "Pari Passu Notes" means any notes issued by the Company which, by their
terms and the terms of any indenture governing such notes, have an obligation to
be repurchased by the Company upon the occurrence of an Asset Sale.

      "Participant" means, with respect to the Depositary, Euroclear or Cedel, a
Person who has an account with the Depositary, Euroclear or Cedel, respectively
(and, with respect to The Depository Trust Company, shall include Euroclear and
Cedel).

      "Participating Broker-Dealer" means any broker-dealer that is the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act of Exchange
Notes received by such broker-dealer in the Exchange Offer.

      "Permitted Investment" means (a) any Investments in the Company or any
Subsidiary of the Company; (b) any Investments in Marketable Securities; (c)
Investments by the Company or any Subsidiary of the Company in a Person, if as a
result of such Investment (i) such Person becomes a Subsidiary of the Company or
(ii) such Person is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is liquidated into,
the Company or a Subsidiary of the Company; (d) any Investments in property or
assets to be used in (A) any line of business in which the Company or any of its
Subsidiaries was engaged on the Issue Date or (B) any Telecommunications
Business; (e) Investments in any Person in connection with the acquisition of
such Person or substantially all of the property or assets of such Person by the
Company or any Subsidiary of the Company; provided that within 180 days from the
first date of any such Investment, either (A) such Person becomes a Subsidiary
of the Company or any of its Subsidiaries or (B) the amount of any such
Investment is repaid in full to the Company or any of its Subsidiaries; (f)
Investments pursuant to any agreement or obligation of the Company or a
Subsidiary, in effect on the Issue Date or on the date a subsidiary becomes a
Subsidiary (provided that any such agreement was not entered into in
contemplation of such subsidiary

                                       10
<PAGE>
 
becoming a Subsidiary), to make such Investments; (g) Investments in prepaid
expenses, negotiable instruments held for collection and lease, utility and
workers' compensation, performance and other similar deposits; (h) Hedging
Obligations permitted to be incurred pursuant to Section 4.09(b) hereof; and (i)
bonds, notes, debentures or other securities received as a result of Asset Sales
permitted under Section 4.10 hereof.

      "Permitted Liens" means (i) Liens securing Indebtedness (including Capital
Lease Obligations) permitted to be incurred pursuant to Sections 4.09(b)(i),
4.09(b)(ii) and 4.09(b)(iv) hereof; (ii) Liens in favor of the Company; (iii)
Liens on property of a Person existing at the time such Person is merged into or
consolidated with the Company or any Subsidiary of the Company; provided that
such Liens were in existence prior to the contemplation of such merger or
consolidation and do not extend to any assets other than those of the Person
merged into or consolidated with the Company; (iv) Liens on property existing at
the time of acquisition thereof by the Company or any Subsidiary of the Company,
provided that such Liens were in existence prior to the contemplation of such
acquisition; (v) Liens to secure the performance of statutory obligations,
surety or appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business; (vi) Liens existing on the Issue
Date; (vii) Liens for taxes, assessments or governmental charges or claims that
are not yet delinquent or that are being contested in good faith by appropriate
proceedings timely instituted and diligently concluded, provided that any
reserve or other appropriate provision as shall be required in conformity with
GAAP shall have been made therefor; (viii) Liens incurred in the ordinary course
of business of the Company or any Subsidiary of the Company with respect to
obligations that do not exceed $5.0 million at any one time outstanding and that
(a) are not incurred in connection with the borrowing of money or the obtaining
of advances or credit (other than trade credit in the ordinary course of
business) and (b) do not in the aggregate materially detract from the value of
the property or materially impair the use thereof in the operation of business
by the Company or such Subsidiary; (ix) Liens on Telecommunications Related
Assets existing during the time of the construction thereof; (x) Liens on
Receivables to secure Indebtedness permitted to be incurred pursuant to Section
4.09(b) hereof, but only to the extent that the outstanding amount of the
Indebtedness secured by such Liens would not represent more than 80% of Eligible
Receivables; and (xi) Liens to secure any Permitted Refinancing of any
Indebtedness secured by Liens referred to in the foregoing clauses (i), (iii),
(v) or (x); but only to the extent that such Liens do not extend to any other
property or assets and the principal amount of the Indebtedness secured by such
Liens is not increased.

      "Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof or any other entity.

      "Preferred Stock" as applied to the Capital Stock of any Person, means
Capital Stock of such Person of any class or classes (however designated) that
ranks prior, as to payment of dividends or as to the distribution of assets upon
any voluntary or involuntary liquidation, dissolution or winding up of such
Person, to shares of Capital Stock of any other class of such Person.

      "Private Placement Legend" means the legend set forth in Section
2.06(g)(i) to be placed on all Notes issued under this Indenture except where
otherwise permitted by the provisions of this Indenture.

      "Public Offering" means an underwritten offering of Common Stock of the
Company registered under the Securities Act.

      "QIB" means a "qualified institutional buyer" as defined in Rule 144A.

                                       11
<PAGE>
 
      "Receivables" means, with respect to any Person, all of the following
property and interests in property of such person or entity, whether now
existing or existing in the future or hereafter acquired or arising: (i)
accounts; (ii) accounts receivable, including, without limitation, all rights to
payment created by or arising from sales of goods, leases of goods or the
rendition of services no matter how evidenced, whether or not earned by
performance; (iii) all unpaid seller's or lessor's rights including, without
limitation, rescission, replevin, reclamation and stoppage in transit, relating
to any of the foregoing after creation of the foregoing or arising therefrom;
(iv) all rights to any goods or merchandise represented by any of the foregoing,
including, without limitation, returned or repossessed goods; (v) all reserves
and credit balances with respect to any such accounts receivable or account
debtors; (vi) all letters of credit, security, or Guarantees for any of the
foregoing; (vii) all insurance policies or reports relating to any of the
foregoing; (viii) all collection of deposit accounts relating to any of the
foregoing; (ix) all proceeds of any of the foregoing; and (x) all books and
records relating to any of the foregoing.

      "Redeemable Dividend" means, for any dividend with regard to Disqualified
Stock and Preferred Stock, the quotient of the dividend divided by the
difference between one and the maximum statutory federal income tax rate
(expressed as a decimal number between 1 and 0) then applicable to the issuer of
such Disqualified Stock or Preferred Stock.

      "Regulation S" means Regulation S promulgated under the Securities Act.

      "Regulation S Global Security" means a global Note bearing the Private
Placement Legend and deposited with or on behalf of the Depositary and
registered in the name of the Depositary or its nominee, issued in a
denomination equal to the outstanding principal amount of the Notes initially
sold in reliance on Rule 903 of Regulation S.

      "Representative" means the indenture trustee or other trustee, agent or
representative for any Senior Indebtedness.

      "Responsible Officer" when used with respect to the Trustee, means any
officer within the Corporate Trust Department of the Trustee (or any successor
group of the Trustee) or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.

      "Restricted Certificated Security" means a Certificated Security bearing
the Private Placement Legend.

      "Restricted Global Security" means the 144A Global Security, the IAI
Global Security and the Regulation S Global Security, which shall bear the
Private Placement Legend.

      "Restricted Investment" means an Investment other than a Permitted
Investment.

      "Restricted Period" means the 40-day restricted period as defined in
Regulation S.

      "Rule 144" means Rule 144 under the Securities Act.

      "Rule 144A" means Rule 144A under the Securities Act.

                                       12
<PAGE>
 
      "Rule 903" means Rule 903 under the Securities Act.

      "Rule 904" means Rule 904 under the Securities Act.

      "S&P" means Standard and Poor's Corporation and its successors.

      "Sale and Leaseback Transaction" means, with respect to any Person, any
direct or indirect arrangement pursuant to which any property (other than
Capital Stock) is sold by such Person or a Subsidiary of such Person and is
thereafter leased back from the purchaser or transferee thereof by such Person
or one of its Subsidiaries.

      "Securities Act" means the Securities Act of 1933, as amended (or any
successor act), and the rules and regulations thereunder.

      "Senior Indebtedness" means any Indebtedness permitted to be incurred by
the Company under the terms of this Indenture, unless the instrument under which
such Indebtedness is incurred expressly provides that it is subordinated in
right of payment to the Senior Notes.  Notwithstanding anything to the contrary
in the foregoing, Senior Indebtedness will not include (i) any liability for
federal, state, local or other taxes owed or owing by the Company, (ii) any
Indebtedness of the Company to any of its Subsidiaries or other Affiliates,
(iii) any trade payables or (iv) any Indebtedness that is incurred in violation
of this Indenture.

      "Shelf Registration Statement" means the Shelf Registration Statement as
defined in the Note Registration Rights Agreement.

      "Significant Subsidiary" means any Subsidiary that would be a "Significant
Subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act, as such Regulation is in effect on the date
hereof.

      "Strategic Investor" means, with respect to any sale of the Company's
Capital Stock, any Person which, both as of the Trading Day immediately before
the day of such sale and the Trading Day immediately after the day of such sale,
has, or whose parent has, a Total Market Capitalization of at least $1.0 billion
on a consolidated basis.  In calculating Total Market Capitalization for the
purpose of this definition, the consolidated Indebtedness of such Person, solely
when calculated as of the Trading Day immediately after the day of such sale,
will be calculated after giving effect to such sale (including any Indebtedness
incurred in connection with such sale). For purposes of this definition, the
term "parent" means any Person of which the referent Strategic Investor is a
Subsidiary.

      "Subsidiary" of any Person means (i) any corporation, association or
business entity of which more than 50% of the total voting power of shares of
Capital Stock entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by such Person or one or more of
the other Subsidiaries of such Person or a combination thereof and (ii) any
partnership (a) the sole general partner or the managing general partner of
which is such Person or a Subsidiary of such Person or (b) the only general
partners of which are such Person or one or more Subsidiaries of such Person or
any combination thereof; provided that any Unrestricted Subsidiary shall be
excluded from this definition of "Subsidiary."

                                       13
<PAGE>
 
      "Telecommunications Business" means, when used in reference to any Person,
that such Person is engaged primarily in the business of (i) transmitting, or
providing services relating to the transmission of, voice, video or data through
owned or leased transmission facilities, (ii) creating, developing or marketing
communications related network equipment, software and other devices for use in
a Telecommunications Business or (iii) evaluating, participating or pursuing any
other activity or opportunity that is related to those identified in (i) or (ii)
above; provided that the determination of what constitutes a Telecommunications
Business shall be made in good faith by the Board of Directors of the Company.

      "Telecommunications Related Assets" means all assets, rights (contractual
or otherwise) and properties, whether tangible or intangible, used in connection
with a Telecommunications Business.

      "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-
77bbbb) as in effect on the date on which this Indenture is qualified under the
TIA, except as provided in Section 9.03 hereof.

      "Total Common Equity" of any Person means, as of any date of
determination, the product of (i) the aggregate number of outstanding primary
shares of Common Stock of such Person on such day (which shall not include any
options or warrants on, or securities convertible or exchangeable into, shares
of Common Stock of such Person) and (ii) the average Closing Price of such
Common Stock over the 20 consecutive Trading Days immediately preceding such
day.  If no such Closing Price exists with respect to shares of any such class,
the value of such shares for purposes of clause (ii) of the preceding sentence
shall be determined by the Board of Directors of the Company in good faith and
evidenced by a resolution of the Board of Directors filed with the Trustee.

      "Total Market Capitalization" of any Person means, as of any day of
determination (and as modified for purposes of the definition of "Strategic
Investor"), the sum of (1) the consolidated Indebtedness of such Person and its
Subsidiaries (except in the case of the Company, in which case of the Company
and its Subsidiaries) on such day, plus (2) the product of (i) the aggregate
number of outstanding primary shares of Common Stock of such Person on such day
(which shall not include any options or warrants on, or securities convertible
or exchangeable into, shares of Common Stock of such Person) and (ii) the
average Closing Price of such Common Stock over the 20 consecutive Trading Days
immediately preceding such day, plus (3) the liquidation value of any
outstanding shares of Preferred Stock of such Person on such day less cash and
cash equivalents (other than restricted cash and restricted cash equivalents) as
presented on such Person's consolidated balance sheet on such day.  If no such
Closing Price exists with respect to shares of any such class, the value of such
shares for purposes of clause (2) of the preceding sentence shall be determined
by the Company's Board of Directors in good faith and evidenced by a resolution
of the Board of Directors filed with the Trustee.

      "Trading Day," with respect to a securities exchange or automated
quotation system, means a day on which such exchange or system is open for a
full day of trading.

      "Trustee" means the party named as such above until a successor replaces
it in accordance with the applicable provisions of this Indenture and thereafter
means the successor serving hereunder.

      "Unrestricted Certificated Security" means one or more Certificated
Securities that do not and are not required to bear the Private Placement
Legend.

      "Unrestricted Global Security" means a permanent global security in the
form of Exhibit A attached hereto that bears the Global Security Legend and the
"Schedule of Exchanges of Interests in the 

                                       14
<PAGE>
 
Global Security" attached thereto, and that is deposited with and registered in
the name of the Depositary, representing a series of Senior Notes that do not
bear the Private Placement Legend.

      "Unrestricted Subsidiary" means any Subsidiary that is designated by the
Board of Directors as an Unrestricted Subsidiary pursuant to a Board Resolution.

      "U.S. Person" means a U.S. person as defined in Rule 902(o) under the
Securities Act.

      "Vendor Indebtedness" means any Indebtedness of the Company or any
Subsidiary incurred in connection with the acquisition or construction of
Telecommunications Related Assets.

      "Voting Stock" of any Person means Capital Stock of such Person which
ordinarily has voting power for the election of directors (or Persons performing
similar functions) of such Person, whether at all times or only so long as no
senior class of securities has such voting power by reason of any contingency.

      "Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding principal amount of such Indebtedness into (b) the total of the
product obtained by multiplying (x) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (y) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment; provided, that with respect to Capital
Lease Obligations, that maturity shall be calculated after giving effect to all
renewal options by the Lessee.

Section 1.02.     Other Definitions.
                                              Defined in
           Term                                Section
 
      "Affiliate Transaction"...........        4.11
      "Asset Sale"......................        4.10
      "Bankruptcy Custodian"............        6.01
      "Bankruptcy Law"..................        4.01
      "Change of Control Offer".........        4.15
      "Change of Control Payment".......        4.15
      "Change of Control Payment Date"..        4.15
      "Commission"......................        4.03
      "Covenant Defeasance".............        8.03
      "Event of Default"................        6.01
      "Excess Proceeds".................        4.10
      "Excess Proceeds Offer"...........        3.09
      "incur"...........................        4.09
      "Legal Defeasance"................        8.02
      "Offer Amount"....................        3.09
      "Offer Period"....................        3.09
      "Paying Agent"....................        2.03
      "Payment Default".................        6.01
      "Permitted Refinancing"...........        4.09

                                       15
<PAGE>
 
      "Purchase Date"...................        3.09
      "Refinance".......................        4.09
      "Registrar".......................        2.03
      "Restricted Payments".............        4.07
      "Retire"..........................        4.07
      "SEC Reports".....................        4.03
 

Section 1.03.  Incorporation by Reference of Trust Indenture Act.

      Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.

      The following TIA terms used in this Indenture have the following
meanings:

      "indenture securities" means the Senior Notes;

      "indenture security holder" means a holder of a Note;

      "indenture to be qualified" means this Indenture;

      "indenture trustee" or "institutional trustee" means the Trustee;

      "obligor" on the Senior Notes means the Company and any successor obligor
upon the Senior Notes.

      All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.


Section 1.04.  Rules of Construction.

      Unless the context otherwise requires:

      (1) a capitalized term has the meaning assigned to it under this 
          Article 1;

      (2) an accounting term not otherwise defined has the meaning assigned to
          it in accordance with GAAP;

      (3) "or" is not exclusive;

      (4) "including" means including without limitation; and

      (5) words in the singular include the plural, and in the plural include
          the singular.


                                   ARTICLE 2
                                THE SENIOR NOTES

                                       16
<PAGE>
 
Section 2.01.  Form and Dating.

      The Senior Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A hereto, the terms of which are
incorporated in and made a part of this Indenture.  The Senior Notes may have
notations, legends or endorsements required by law, stock exchange rule or
usage.  Each Senior Note shall be dated the date of its authentication.  The
Senior Notes shall be in denominations of $1,000 and integral multiples thereof.

      The terms and provisions contained in the Senior Notes shall constitute,
and are hereby expressly made, a part of this Indenture and the Company and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby.  However, to the extent any
provision of any Senior Note conflicts with the express provisions of this
Indenture, the provisions of this Indenture shall govern and be controlling.

      Senior Notes issued in global form shall be substantially in the form of
Exhibit A attached hereto (including the Global Security Legend and the
"Schedule of Exchanges in the Global Security" attached thereto).  Senior Notes
issued in definitive form shall be substantially in the form of Exhibit A
attached hereto (but without the Global Security Legend and without the
"Schedule of Exchanges of Interests in the Global Security" attached thereto).
Each Global Security shall represent such of the outstanding Senior Notes as
shall be specified therein and each shall provide that it shall represent the
aggregate principal amount of outstanding Senior Notes from time to time
endorsed thereon and that the aggregate principal amount of outstanding Senior
Notes represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges and redemptions.  Any endorsement of a Global
Security to reflect the amount of any increase or decrease in the aggregate
principal amount of outstanding Senior Notes represented thereby shall be made
by the Trustee or the Note Custodian, at the direction of the Trustee, in
accordance with instructions given by the holder thereof as required by
Section 2.06 hereof.

      The provisions of the "Operating Procedures of the Euroclear System" and
"Terms and Conditions Governing Use of Euroclear" and the "General Terms and
Conditions of Cedel Bank" and "Customer Handbook" of Cedel Bank shall be
applicable to transfers of beneficial interests in the Regulation S Global Notes
that are held by Participants through Euroclear or Cedel Bank.


Section 2.02.  Execution and Authentication.

      One Officer of the Company shall sign the Senior Notes for the Company by
manual or facsimile signature.

      If an Officer whose signature is on a Senior Note no longer holds that
office at the time a Senior Note is authenticated, the Senior Note shall
nevertheless be valid.  In addition, if a Person is not an Officer at the time a
Senior Note is authenticated, but becomes an Officer on or prior to the delivery
of the Senior Note, the Senior Note shall nevertheless be valid.

      A Senior Note shall not be valid until authenticated by the manual
signature of an authorized signatory of the Trustee.  The signature of the
Trustee shall be conclusive evidence that the Senior Note has been authenticated
under this Indenture.

                                       17
<PAGE>
 
      The Trustee shall, upon a written order of the Company signed by an
Officer of the Company, authenticate Senior Notes for original issue up to the
aggregate principal amount stated in paragraph 4 of the Senior Notes.  The
aggregate principal amount of Senior Notes outstanding at any time may not
exceed such amount except as provided in Section 2.07 hereof.

      The Trustee may appoint an authenticating agent acceptable to the Company
to authenticate Senior Notes.  Unless limited by the terms of such appointment,
an authenticating agent may authenticate Senior Notes whenever the Trustee may
do so.  Each reference in this Indenture to authentication by the Trustee
includes authentication by such agent.  An authenticating agent has the same
rights as an Agent to deal with the Company or an Affiliate of the Company.


Section 2.03.  Registrar and Paying Agent.

      The Company shall maintain an office or agency where Senior Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Senior Notes may be presented for payment ("Paying
Agent").  The Registrar shall keep a register of the Senior Notes a nd of their
transfer and exchange.  The Company may appoint one or more co-registrars and
one or more additional paying agents.  The term "Registrar" includes any co-
registrar and the term "Paying Agent" includes any additional paying agent.  The
Company may change any Paying Agent or Registrar without notice to any holder.
The Company shall notify the Trustee and the Trustee shall notify the holders of
the Senior Notes in writing of the name and address of any Agent not a party to
this Indenture.  If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such.  The Company or any of
its Subsidiaries may act as Paying Agent or Registrar. The Company shall enter
into an appropriate agency agreement with any Agent not a party to this
Indenture, which shall incorporate the provisions of the TIA. The agreement
shall implement the provisions of this Indenture that relate to such Agent. The
Company shall notify the Trustee of the name and address of any such Agent. If
the Company fails to maintain a Registrar or Paying Agent, or fails to give the
foregoing notice, the Trustee shall act as such, and shall be entitled to
appropriate compensation in accordance with Section 7.07 hereof.

      The Company initially appoints The Depository Trust Company ("DTC") to act
as Depositary with respect to the Global Securities.

      The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Note Custodian with respect to the Global Securities.
Except as otherwise specifically provided herein, (i) all references in this
Indenture to the Trustee shall be deemed to refer to the Trustee in its capacity
as Trustee and in its capacities as Registrar and Paying Agent and (ii) every
provision of this Indenture relating to the conduct of or affecting the
liability of or offering protection, immunity or indemnity to the Trustee shall
be deemed to apply with the same force and effect to the Trustee acting in its
capacities as Paying Agent and Registrar.


Section 2.04.  Paying Agent to Hold Money in Trust.

      The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent shall hold in trust for the benefit of
holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Liquidated Damages, if any, or interest on the Senior

                                       18
<PAGE>
 
Notes, and will notify the Trustee of any default by the Company in making any
such payment.  While any such default continues, the Trustee may require a
Paying Agent to pay all money held by it to the Trustee.  The Company at any
time may require a Paying Agent to pay all money held by it to the Trustee.
Upon payment over to the Trustee, the Paying Agent (if other than the Company or
a Subsidiary) shall have no further liability for the money.  If the Company or
a Subsidiary acts as Paying Agent, it shall segregate and hold in a separate
trust fund for the benefit of the holders all money held by it as Paying Agent.
Upon any bankruptcy or reorganization proceedings relating to the Company, the
Trustee shall serve as Paying Agent and Registrar for the Senior Notes.


Section 2.05.  Holder Lists.

      If it is the Registrar, the Trustee shall preserve in as current a form as
is reasonably practicable the most recent list available to it of the names and
addresses of all holders and shall otherwise comply with TIA (S) 312(a).  If the
Trustee is not the Registrar, the Company shall furnish to the Trustee at least
five Business Days before each interest payment date and at such other times as
the Trustee may request in writing, a list in such form and as of such date as
the Trustee may reasonably require of the names and addresses of the holders of
the Senior Notes and the Company shall otherwise comply with TIA (S) 312(a).


Section 2.06.  Transfer and Exchange.

      (a) Transfer and Exchange of Global Securities.  A Global Security may not
be transferred as a whole except by the Depositary to a nominee of the
Depositary, by a nominee of the Depositary to the Depositary or to another
nominee of the Depositary, or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.  All Global
Securities will be exchanged by the Company for Certificated Securities if (i)
the Company delivers to the Trustee notice from the Depositary that it is
unwilling or unable to continue to act as Depositary or that it is no longer a
clearing agency registered under the Exchange Act and, in either case, a
successor Depositary is not appointed by the Company within 120 days after the
date of such notice from the Depositary or (ii) the Company in its sole
discretion determines that the Global Securities (in whole but not in part)
should be exchanged for Certificated Securities and delivers a written notice to
such effect to the Trustee.  Upon the occurrence of either of the preceding
events in (i) or (ii) above, Certificated Securities shall be issued in such
names as the Depositary shall instruct the Trustee.  Global Securities also may
be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and
2.10 hereof.  Every Senior Note authenticated and delivered in exchange for, or
in lieu of, a Global Security or any portion thereof, pursuant to this Section
2.06 or Section 2.07 or 2.10 hereof, shall be authenticated and delivered in the
form of, and shall be, a Global Security.  A Global Security may not be
exchanged for another Senior Note other than as provided in this Section
2.06(a), however beneficial interests in a Global Security may be transferred
and exchanged as provided in Section 2.06(b), (c) or (f) hereof.

      (b) Transfer and Exchange of Beneficial Interests in the Global
Securities.  The transfer and exchange of beneficial interests in the Global
Securities shall be effected through the Depositary, in accordance with the
provisions of this Indenture and the Applicable Procedures.  Beneficial
interests in the Restricted Global Securities shall be subject to restrictions
on transfer comparable to those set forth herein to the extent required by the
Securities Act.  The Trustee shall have no obligation to ascertain the
Depositary's compliance with any such restrictions on transfer.  Transfers of
beneficial interests in the 

                                       19
<PAGE>
 
Global Securities also shall require compliance with either subparagraph (i) or
(ii) below, as applicable, as well as one or more of the other following
subparagraphs as applicable:

      (i) Transfer of Beneficial Interests in the Same Global Security.
   Beneficial interests in any Restricted Global Security may be transferred to
   Persons who take delivery thereof in the form of a beneficial interest in the
   same Restricted Global Security in accordance with the transfer restrictions
   set forth in the Private Placement Legend; provided, however, that prior to
   the expiration of the Restricted Period, transfers of beneficial interests in
   the Regulation S Global Security may not be made to a U.S. Person or for the
   account or benefit of a U.S. Person (other than an Initial Purchaser).
   Beneficial interests in any Unrestricted Global Security may be transferred
   only to Persons who take delivery thereof in the form of a beneficial
   interest in an Unrestricted Global Security.  No written orders or
   instructions shall be required to be delivered to the Registrar to effect the
   transfers described in this Section 2.06(b)(i).

      (ii) All Other Transfers and Exchanges of Beneficial Interests in Global
   Securities.  In connection with all transfers and exchanges of beneficial
   interests (other than transfers of beneficial interests in a Global Security
   to Persons who take delivery thereof in the form of a beneficial interest in
   the same Global Security), the transferor of such beneficial interest must
   deliver to the Registrar either (A) (1) a written order from a Participant or
   an Indirect Participant given to the Depositary in accordance with the
   Applicable Procedures directing the Depositary to credit or cause to be
   credited a beneficial interest in the specified Global Security in an amount
   equal to the beneficial interest to be transferred or exchanged and (2)
   instructions given in accordance with the Applicable Procedures containing
   information regarding the Participant account to be credited with such
   increase or (B) (1) a written order from a Participant or an Indirect
   Participant given to the Depositary in accordance with the Applicable
   Procedures directing the Depositary to cause to be issued a Certificated
   Security in an amount equal to the beneficial interest to be transferred or
   exchanged and (2) instructions given by the Depositary to the Registrar
   containing information regarding the Person in whose name such Certificated
   Security shall be registered to effect the transfer or exchange referred to
   in (1) above. Upon an Exchange Offer by the Company in accordance with
   Section 2.06(f) hereof, the requirements of this Section 2.06(b)(ii) shall be
   deemed to have been satisfied upon receipt by the Registrar of the
   instructions contained in the Letter of Transmittal delivered by the holder
   of such beneficial interests in the Restricted Global Securities. Upon
   satisfaction of all of the requirements for transfer or exchange of
   beneficial interests in Global Securities contained in this Indenture, the
   Notes and otherwise applicable under the Securities Act, the Trustee shall
   adjust the principal amount of the relevant Global Security pursuant to
   Section 2.06(h) hereof.

      (iii)  Transfer of Beneficial Interests to Another Restricted Global
   Security.  Beneficial interests in any Restricted Global Security may be
   transferred to Persons who take delivery thereof in the form of a beneficial
   interest in another Restricted Global Security if the transfer complies with
   the requirements of Section 2.06(b)(ii) above and the Registrar receives the
   following:

         (A) if the transferee will take delivery in the form of a beneficial
      interest in the 144A Global Security, then the transferor must deliver a
      certificate in the form of Exhibit B hereto, including the certifications
      in item (1) thereof;

         (B) if the transferee will take delivery in the form of a beneficial
      interest in the IAI Global Security, then the transferor must deliver (x)
      a certificate in the form of Exhibit B hereto, including the
      certifications in item (2) thereof, (y) to the extent required by item
      2(d) of Exhibit 

                                       20
<PAGE>
 
      B hereto, an Opinion of Counsel in form reasonably acceptable to the
      Company to the effect that such transfer is in compliance with the
      Securities Act and such beneficial interest is being transferred in
      compliance with any applicable blue sky securities laws of any State of
      the United States and (z) if the transfer is being made to an
      Institutional Accredited Investor and effected pursuant to an exemption
      from the registration requirements of the Securities Act other than Rule
      144A under the Securities Act, Rule 144 under the Securities Act or Rule
      904 under the Securities Act, a certificate from the transferee in the
      form of Exhibit D hereto; and

         (C) if the transferee will take delivery in the form of a beneficial
      interest in the Regulation S Global Security, then the transferor must
      deliver a certificate in the form of Exhibit B hereto, including the
      certifications in item (3) thereof.

      (iv) Transfer and Exchange of Beneficial Interests in a Restricted Global
   Security for Beneficial Interests in the Unrestricted Global Security.
   Beneficial interests in any Restricted Global Security may be exchanged by
   any holder thereof for a beneficial interest in the Unrestricted Global
   Security or transferred to Persons who take delivery thereof in the form of a
   beneficial interest in the Unrestricted Global Security if the exchange or
   transfer complies with the requirements of Section 2.06(b)(ii) above and:

         (A) such exchange or transfer is effected pursuant to the Exchange
      Offer in accordance with the Note Registration Rights Agreement and the
      holder, in the case of an exchange, or the transferee, in the case of a
      transfer, certifies in the applicable Letter of Transmittal that it is not
      (1) a broker-dealer, (2) a Person participating in the distribution of the
      Exchange Notes or (3) a Person who is an affiliate (as defined in Rule
      144) of the Company;

         (B) any such transfer is effected pursuant to the Shelf Registration
      Statement in accordance with the Note Registration Rights Agreement;

         (C) any such transfer is effected by a Participating Broker-Dealer
      pursuant to the Exchange Offer Registration Statement in accordance with
      the Note Registration Rights Agreement; or

         (D) the Registrar receives the following:

            (1) if the holder of such beneficial interest in a Restricted Global
      Security proposes to exchange such beneficial interest for a beneficial
      interest in the Unrestricted Global Security, a certificate from such
      holder in the form of Exhibit C hereto, including the certifications in
      item (1)(a) thereof;

            (2) if the holder of such beneficial interest in a Restricted Global
      Security proposes to transfer such beneficial interest to a Person who
      shall take delivery thereof in the form of a beneficial interest in the
      Unrestricted Global Security, a certificate from such holder in the form
      of Exhibit B hereto, including the certifications in item (4) thereof;

            (3) in each such case set forth in this subparagraph (D), an Opinion
      of Counsel in form reasonably acceptable to the Registrar to the effect
      that such exchange or transfer is in compliance with the Securities Act,
      that the restrictions on transfer contained herein and in the Private
      Placement Legend are not required in order to maintain compliance with the
      Securities 

                                       21
<PAGE>
 
      Act, and such beneficial interest is being exchanged or transferred in
      compliance with any applicable blue sky securities laws of any State of
      the United States.

         If any such transfer is effected pursuant to subparagraph (B) or (D)
   above at a time when an Unrestricted Global Security has not yet been issued,
   the Company shall issue and, upon receipt of an authentication order in
   accordance with Section 2.02 hereof, the Trustee shall authenticate one or
   more Unrestricted Global Securities in an aggregate principal amount equal to
   the principal amount of beneficial interests transferred pursuant to
   subparagraph (B) or (D) above.

         Beneficial interests in an Unrestricted Global Security cannot be
   exchanged for, or transferred to Persons who take delivery thereof in the
   form of, a beneficial interest in any Restricted Global Security.

      (c) Transfer or Exchange of Beneficial Interests for Certificated
Securities.

      (i) If any holder of a beneficial interest in a Restricted Global Security
   proposes to exchange such beneficial interest for a Certificated Security or
   to transfer such beneficial interest to a Person who takes delivery thereof
   in the form of a Certificated Security, then, upon receipt by the Registrar
   of the following documentation (all of which may be submitted by facsimile):

         (A) if the holder of such beneficial interest in a Restricted Global
      Security proposes to exchange such beneficial interest for a Certificated
      Security, a certificate from such holder in the form of Exhibit C hereto,
      including the certifications in item (2)(a) thereof;

         (B) if such beneficial interest is being transferred to a QIB in
      accordance with Rule 144A under the Securities Act, a certificate to the
      effect set forth in Exhibit B hereto, including the certifications in item
      (1) thereof;

         (C) if such beneficial interest is being transferred to a Non-U.S.
      Person in an offshore transaction in accordance with Rule 903 or 904 under
      the Securities Act, a certificate to the effect set forth in Exhibit B
      hereto, including the certifications in item (3) thereof;

         (D) if such beneficial interest is being transferred pursuant to an
      exemption from the registration requirements of the Securities Act in
      accordance with Rule 144 under the Securities Act, a certificate to the
      effect set forth in Exhibit B hereto, including the certifications in item
      (2)(a) thereof;

         (E) if such beneficial interest is being transferred to an
      Institutional Accredited Investor in reliance on an exemption from the
      registration requirements of the Securities Act other than those listed in
      subparagraphs (B) through (D) above, a certificate to the effect set forth
      in Exhibit B hereto, including the certifications in item (2)(d) thereof,
      a certificate from the transferee to the effect set forth in Exhibit D
      hereof and, to the extent required by item 3(d) of Exhibit B, an Opinion
      of Counsel from the transferee or the transferor reasonably acceptable to
      the Company to the effect that such transfer is in compliance with the
      Securities Act and such beneficial interest is being transferred in
      compliance with any applicable blue sky securities laws of any State of
      the United States;

                                       22
<PAGE>
 
         (F) if such beneficial interest is being transferred to the Company or
      any of its Subsidiaries, a certificate to the effect set forth in Exhibit
      B hereto, including the certifications in item (2)(b) thereof; or

         (G) if such beneficial interest is being transferred pursuant to an
      effective registration statement under the Securities Act, a certificate
      to the effect set forth in Exhibit B hereto, including the certifications
      in item (2)(c) thereof,

   the Trustee shall cause the aggregate principal amount of the applicable
   Global Security to be reduced accordingly pursuant to Section 2.06(h) hereof,
   and the Company shall execute and the Trustee shall authenticate and deliver
   to the Person designated in the instructions a Certificated Security in the
   appropriate principal amount.  Certificated Securities issued in exchange for
   beneficial interests in a Restricted Global Security pursuant to this Section
   2.06(c) shall be registered in such names and in such authorized
   denominations as the holder shall instruct the Registrar through instructions
   from the Depositary and the Participant or Indirect Participant.  The Trustee
   shall deliver such Certificated Securities to the Persons in whose names such
   Notes are so registered.  Certificated Securities issued in exchange for a
   beneficial interest in a Restricted Global Security pursuant to this Section
   2.06(c)(i) shall bear the Private Placement Legend and shall be subject to
   all restrictions on transfer contained therein.

      (ii) Notwithstanding 2.06(c)(i), a holder of a beneficial interest in a
   Restricted Global Security may exchange such beneficial interest for an
   Unrestricted Certificated Security or may transfer such beneficial interest
   to a Person who takes delivery thereof in the form of an Unrestricted
   Certificated Security only if:

         (A) such exchange or transfer is effected pursuant to the Exchange
      Offer in accordance with the Note Registration Rights Agreement and the
      holder, in the case of an exchange, or the transferee, in the case of a
      transfer, certifies in the applicable Letter of Transmittal that it is not
      (1) a broker-dealer, (2) a Person participating in the distribution of the
      Exchange Notes or (3) a Person who is an affiliate (as defined in Rule
      144) of the Company;

         (B) any such transfer is effected pursuant to the Shelf Registration
      Statement in accordance with the Note Registration Rights Agreement;

         (C) any such transfer is effected by a Participating Broker-Dealer
      pursuant to the Exchange Offer Registration Statement in accordance with
      the Note Registration Rights Agreement; or

         (D) the Registrar receives the following:

            (1) if the holder of such beneficial interest in a Restricted Global
      Security proposes to exchange such beneficial interest for a Certificated
      Security that does not bear the Private Placement Legend, a certificate
      from such holder in the form of Exhibit C hereto, including the
      certifications in item (1)(b) thereof;

            (2) if the holder of such beneficial interest in a Restricted Global
      Security proposes to transfer such beneficial interest to a Person who
      shall take delivery thereof in the form of a Certificated Security that
      does not bear the Private Placement Legend, a certificate from such holder
      in the form of Exhibit B hereto, including the certifications in item (4)
      thereof; and

                                       23
<PAGE>
 
            (3) in each such case set forth in this subparagraph (D), an Opinion
      of Counsel in form reasonably acceptable to the Company, to the effect
      that such exchange or transfer is in compliance with the Securities Act,
      that the restrictions on transfer contained herein and in the Private
      Placement Legend are not required in order to maintain compliance with the
      Securities Act, and such beneficial interest in a Restricted Global
      Security is being exchanged or transferred in compliance with any
      applicable blue sky securities laws of any State of the United States.

      (iii)  If any holder of a beneficial interest in an Unrestricted Global
   Security proposes to exchange such beneficial interest for a Certificated
   Security or to transfer such beneficial interest to a Person who takes
   delivery thereof in the form of a Certificated Security, then, upon
   satisfaction of the conditions set forth in Section 2.06(b)(ii), the Trustee
   shall cause the aggregate principal amount of the applicable Global Security
   to be reduced accordingly pursuant to Section 2.06(h) hereof, and the Company
   shall execute and the Trustee shall authenticate and deliver to the Person
   designated in the instructions a Certificated Security in the appropriate
   principal amount.  Certificated Securities issued in exchange for a
   beneficial interest pursuant to this Section 2.06(c)(iii) shall be registered
   in such names and in such authorized denominations as the holder shall
   instruct the Registrar through instructions from the Depositary and the
   Participant or Indirect Participant.  The Trustee shall deliver such
   Certificated Securities to the Persons in whose names such Notes are
   so registered.  Certificated Securities issued in exchange for a beneficial
   interest pursuant to this section 2.06(c)(iii) shall not bear the Private
   Placement Legend.  Beneficial interests in an Unrestricted Global Security
   cannot be exchanged for a Certificated Security bearing the Private Placement
   Legend or transferred to a Person who takes delivery thereof in the form of a
   Certificated Security bearing the Private Placement Legend.

      (d) Transfer or Exchange of Certificated Securities for Beneficial
Interests.

      (i) If any holder of Restricted Certificated Securities proposes to
   exchange such Notes for a beneficial interest in a Restricted Global Security
   or to transfer such Certificated Securities to a Person who takes delivery
   thereof in the form of a beneficial interest in a Restricted Global Security,
   then, upon receipt by the Registrar of the following documentation (all of
   which may be submitted by facsimile):

         (A) if the holder of such Restricted Certificated Securities proposes
      to exchange such Notes for a beneficial interest in a Restricted Global
      Security, a certificate from such holder in the form of Exhibit C hereto,
      including the certifications in item (2)(b) thereof;

         (B) if such Certificated Securities are being transferred to a QIB in
      accordance with Rule 144A under the Securities Act, a certificate to the
      effect set forth in Exhibit B hereto, including the certifications in item
      (1) thereof;

         (C) if such Certificated Securities are being transferred to a Non-U.S.
      Person in an offshore transaction in accordance with Rule 904 under the
      Securities Act, a certificate to the effect set forth in Exhibit B hereto,
      including the certifications in item (3) thereof;

         (D) if such Certificated Securities are being transferred pursuant to
      an exemption from the registration requirements of the Securities Act in
      accordance with Rule 144 under the Securities Act, a certificate to the
      effect set forth in Exhibit B hereto, including the certifications in item
      (2)(a) thereof;

                                       24
<PAGE>
 
         (E) if such Certificated Securities are being transferred to an
      Institutional Accredited Investor in reliance on an exemption from the
      registration requirements of the Securities Act other than those listed in
      subparagraphs (B) through (D) above, a certificate to the effect set forth
      in Exhibit B hereto, including the certifications in item (2)(d) thereof,
      a certificate from the transferee to the effect set forth in Exhibit D
      hereof and, to the extent required by item 2(d) of Exhibit B, an Opinion
      of Counsel from the transferee or the transferor reasonably acceptable to
      the Company to the effect that such transfer is in compliance with the
      Securities Act and such Certificated Securities are being transferred in
      compliance with any applicable blue sky securities laws of any State of
      the United States;

         (F) if such Certificated Securities are being transferred to the
      Company or any of its Subsidiaries, a certificate to the effect set forth
      in Exhibit B hereto, including the certifications in item (2)(b) thereof;
      or

         (G) if such Certificated Securities are being transferred pursuant to
      an effective registration statement under the Securities Act, a
      certificate to the effect set forth in Exhibit B hereto, including the
      certifications in item (2)(c) thereof, 

   the Trustee shall cancel the Certificated Securities, increase or cause to be
   increased the aggregate principal amount of, in the case of clause (A) above,
   the appropriate Restricted Global Security, in the case of clause (B) above,
   the 144A Global Security, in the case of clause (C) above, the Regulation S
   Global Security, and in all other cases, the IAI Global Security.

      (ii) A holder of Restricted Certificated Securities may exchange such
   Notes for a beneficial interest in the Unrestricted Global Security or
   transfer such Restricted Certificated Securities to a Person who takes
   delivery thereof in the form of a beneficial interest in the Unrestricted
   Global Security only if:

         (A) such exchange or transfer is effected pursuant to the Exchange
      Offer in accordance with the Note Registration Rights Agreement and the
      holder, in the case of an exchange, or the transferee, in the case of a
      transfer, certifies in the applicable Letter of Transmittal that it is not
      (1) a broker-dealer, (2) a Person participating in the distribution of the
      Exchange Notes or (3) a Person who is an affiliate (as defined in Rule
      144) of the Company;

         (B) any such transfer is effected pursuant to the Shelf Registration
      Statement in accordance with the Note Registration Rights Agreement;

         (C) any such transfer is effected by a Participating Broker-Dealer
      pursuant to the Exchange Offer Registration Statement in accordance with
      the Note Registration Rights Agreement; or

         (D) the Registrar receives the following:

            (1) if the holder of such Certificated Securities proposes to
      exchange such Notes for a beneficial interest in the Unrestricted Global
      Security, a certificate from such holder in the form of Exhibit C hereto,
      including the certifications in item (1)(c) thereof;

            (2) if the holder of such Certificated Securities proposes to
      transfer such Notes to a Person who shall take delivery thereof in the
      form of a beneficial interest in the Unrestricted 

                                       25
<PAGE>
 
      Global Security, a certificate from such holder in the form of Exhibit B
      hereto, including the certifications in item (4) thereof; and

            (3) in each such case set forth in this subparagraph (D), an Opinion
      of Counsel in form reasonably acceptable to the Company to the effect that
      such exchange or transfer is in compliance with the Securities Act, that
      the restrictions on transfer contained herein and in the Private Placement
      Legend are not required in order to maintain compliance with the
      Securities Act, and such Certificated Securities are being exchanged or
      transferred in compliance with any applicable blue sky securities laws of
      any State of the United States.

   Upon satisfaction of the conditions of any of the subparagraphs in this
   Section 2.06(d)(ii), the Trustee shall cancel the Certificated Securities and
   increase or cause to be increased the aggregate principal amount of the
   Unrestricted Global Security.

      (iii)  A holder of Unrestricted Certificated Securities may exchange such
   Notes for a beneficial interest in the Unrestricted Global Security or
   transfer such Certificated Securities to a Person who takes delivery thereof
   in the form of a beneficial interest in the Unrestricted Global Security.
   Upon receipt of a request for such an exchange or transfer, the Trustee shall
   cancel the Unrestricted Certificated Securities and increase or cause to be
   increased the aggregate principal amount of the Unrestricted Global Security.

      If any such exchange or transfer from a Certificated Security to a
beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or
(iii) above at a time when an Unrestricted Global Security has not yet been
issued, the Company shall issue and, upon receipt of an authentication order in
accordance with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Securities in an aggregate principal amount equal to the
principal amount of beneficial interests transferred pursuant to subparagraphs
(ii)(B), (ii)(D) or (iii) above.

      (e) Transfer and Exchange of Certificated Securities.  Upon request by a
holder of Certificated Securities and such holder's compliance with the
provisions of this Section 2.06(e), the Registrar shall register the transfer or
exchange of Certificated Securities.  Prior to such registration of transfer or
exchange, the requesting holder shall present or surrender to the Registrar the
Certificated Securities duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such holder or
by his attorney, duly authorized in writing.  In addition, the requesting holder
shall provide any additional certifications, documents and information, as
applicable, pursuant to the provisions of this Section 2.06(e).

      (i) Restricted Certificated Securities may be transferred to and
   registered in the name of Persons who take delivery thereof in the form of
   Restricted Certificated Securities if the Registrar receives the following:

         (A) if the transfer will be made pursuant to Rule 144A under the
      Securities Act, then the transferor must deliver a certificate in the form
      of Exhibit B hereto, including the certifications in item (1) thereof;

         (B) if the transfer will be made pursuant to Rule 903 or 904, then the
      transferor must deliver a certificate in the form of Exhibit B hereto,
      including the certifications in item (2) thereof; and

                                       26
<PAGE>
 
         (C) if the transfer will be made pursuant to any other exemption from
      the registration requirements of the Securities Act, then the transferor
      must deliver (x) a certificate in the form of Exhibit B hereto, including
      the certifications in item (2) thereof, (y) to the extent required by item
      2(d) of Exhibit B hereto, an Opinion of Counsel in form reasonably
      acceptable to the Company to the effect that such transfer is in
      compliance with the Securities Act and such beneficial interest is being
      transferred in compliance with any applicable blue sky securities laws of
      any State of the United States and (z) if the transfer is being made to an
      Institutional Accredited Investor and effected pursuant to an exemption
      from the registration requirements of the Securities Act other than Rule
      144A under the Securities Act, Rule 144 under the Securities Act or Rule
      903 or 904 under the Securities Act, a certificate from the transferee in
      the form of Exhibit D hereto.

      (ii) Restricted Certificated Securities may be exchanged by any holder
   thereof for an Unrestricted Certificated Security or transferred to Persons
   who take delivery thereof in the form of an Unrestricted Certificated
   Security if:

         (A) such exchange or transfer is effected pursuant to the Exchange
      Offer in accordance with the Note Registration Rights Agreement and the
      holder, in the case of an exchange, or the transferee, in the case of a
      transfer, certifies in the applicable Letter of Transmittal that it is not
      (1) a broker-dealer, (2) a Person participating in the distribution of the
      Exchange Notes or (3) a Person who is an affiliate (as defined in Rule
      144) of the Company;

         (B) any such transfer is effected pursuant to the Shelf Registration
      Statement in accordance with the Note Registration Rights Agreement;

         (C) any such transfer is effected by a Participating Broker-Dealer
      pursuant to the Exchange Offer Registration Statement in accordance with
      the Note Registration Rights Agreement; or

         (D) the Registrar receives the following:

            (1) if the holder of such Restricted Certificated Securities
      proposes to exchange such Notes for an Unrestricted Certificated Security,
      a certificate from such holder in the form of Exhibit C hereto, including
      the certifications in item (1)(a) thereof;

            (2) if the holder of such Restricted Certificated Securities
      proposes to transfer such Notes to a Person who shall take delivery
      thereof in the form of an Unrestricted Certificated Security, a
      certificate from such holder in the form of Exhibit B hereto, including
      the certifications in item (4) thereof; and

            (3) in each such case set forth in this subparagraph (D), an Opinion
      of Counsel in form reasonably acceptable to the Company to the effect that
      such exchange or transfer is in compliance with the Securities Act, that
      the restrictions on transfer contained herein and in the Private Placement
      Legend are not required in order to maintain compliance with the
      Securities Act, and such Restricted Certificated Security is being
      exchanged or transferred in compliance with any applicable blue sky
      securities laws of any State of the United States.

      (iii)  A holder of Unrestricted Certificated Securities may transfer such
   Notes to a Person who takes delivery thereof in the form of an Unrestricted
   Certificated Security.  Upon receipt of a request 

                                       27
<PAGE>
 
   for such a transfer, the Registrar shall register the Unrestricted
   Certificated Securities pursuant to the instructions from the holder thereof.
   Unrestricted Certificated Securities cannot be exchanged for or transferred
   to Persons who take delivery thereof in the form of a Restricted Certificated
   Security.

      (f) Exchange Offer.  Upon the occurrence of the Exchange Offer in
accordance with the Note Registration Rights Agreement, the Company shall issue
and, upon receipt of an authentication order in accordance with Section 2.02,
the Trustee shall authenticate (i) one or more Unrestricted Global Securities in
an aggregate principal amount equal to the principal amount of the beneficial
interests in the Restricted Global Securities tendered for acceptance by persons
that are not (x) broker-dealers, (y) Persons participating in the distribution
of the Exchange Notes or (z) Persons who are affiliates (as defined in Rule 144)
of the Company and accepted for exchange in the exchange Offer and (ii)
Certificated Securities in an aggregate principal amount equal to the principal
amount of the Restricted Certificated Securities accepted for exchange in the
Exchange Offer.  Concurrent with the issuance of such Notes, the Trustee shall
cause the aggregate principal amount of the applicable Restricted Global
Securities to be reduced accordingly, and the Company shall execute and the
Trustee shall authenticate and deliver to the Persons designated by the holders
of Certificated Securities so accepted Certificated Securities in the
appropriate principal amount.

      (g) Legends.  The following legends shall appear on the face of all Global
Securities and Certificated Securities issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.

      (i)  Private Placement Legend.

         (A) Except as permitted by subparagraph (b) below, each Global Security
      and each Certificated Security (and all Notes issued in exchange therefor
      or substitution thereof) shall bear the legend in substantially the
      following form:

         "THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
         ISSUED IN A TRANSACTION EXEMPT FORM 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 

                                       28
<PAGE>
 
         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
         TRANSFER AGENT) 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 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.

         (B) Notwithstanding the foregoing, any Global Security or Certificated
      Security issued pursuant to subparagraphs (b)(iv), (c)(ii), (c)(iii),
      (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to this Section 2.06 (and all
      Senior Notes issued in exchange therefor or substitution thereof) shall
      not bear the Private Placement Legend.

      (ii) Global Security Legend.  Each Global Security shall bear a legend in
   substantially the following form:

         "THIS GLOBAL SECURITY IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
         INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE
         BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY
         PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE
         SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF
         THE INDENTURE, (II) THIS GLOBAL SECURITY MAY BE EXCHANGED IN WHOLE BUT
         NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS
         GLOBAL SECURITY MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION
         PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL SECURITY
         MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN
         CONSENT OF THE COMPANY."

      (h) Cancellation and/or Adjustment of Global Securities.  At such time as
all beneficial interests in a particular Global Security have been exchanged for
Certificated Securities or a particular Global Security has been redeemed,
repurchased or cancelled in whole and not in part, each such Global Security
shall be returned to or retained and cancelled by the Trustee in accordance with
Section 2.11 hereof.  At any time prior to such cancellation, if any beneficial
interest in a Global Security is exchanged for or transferred to a Person who
will take delivery thereof in the form of a beneficial interest in another
Global Security or Certificated Securities, the principal amount of Senior Notes
represented by such Global Security shall be reduced accordingly and an
endorsement shall be made on such Global Security, by the Trustee or by the
Depositary at the direction of the Trustee, to reflect such reduction; and if
the beneficial interest is being exchanged for or transferred to a Person who
will take delivery thereof in the form of a beneficial interest in another
Global Security, such other Global Security shall be increased accordingly 

                                       29
<PAGE>
 
and an endorsement shall be made on such Global Security, by the Trustee or by
the Depositary at the direction of the Trustee, to reflect such increase.

      (i)  General Provisions Relating to Transfers and Exchanges.

      (i) To permit registrations of transfers and exchanges, the Company shall
   execute and the Trustee shall authenticate Global Securities and Certificated
   Securities upon the Company's order or at the Registrar's request.

      (ii) No service charge shall be made to a holder of a beneficial interest
   in a Global Security or to a holder of a Certificated Security for any
   registration of transfer or exchange, but the Company may require payment of
   a sum sufficient to cover any transfer tax or similar governmental charge
   payable in connection therewith (other than any such transfer taxes or
   similar governmental charge payable upon exchange or transfer pursuant to
   Sections 2.10, 3.06, 4.10, 4.15 and 9.05 hereof).

      (iii)  The Registrar shall not be required to register the transfer of or
   exchange any Senior Note selected for redemption in whole or in part, except
   the unredeemed portion of any Senior Note being redeemed in part.

      (iv) All Global Securities and Certificated Securities issued upon any
   registration of transfer or exchange of Global Securities or Certificated
   Securities shall be the valid obligations of the Company, evidencing the same
   debt, and entitled to the same benefits under this Indenture, as the Global
   Securities or Certificated Securities surrendered upon such registration of
   transfer or exchange.

      (v) The Company shall not be required (A) to issue, to register the
   transfer of or to exchange Senior Notes during a period beginning at the
   opening of business 15 days before the day of any selection of Senior Notes
   for redemption under Section 3.02 hereof and ending at the close of business
   on the day of selection, (B) to register the transfer of or to exchange any
   Senior Note so selected for redemption in whole or in part, except the
   unredeemed portion of any Senior Note being redeemed in part or (C) to
   register the transfer of or to exchange a Senior Note between a record date
   and the next succeeding Interest Payment Date.

      (vi) Prior to due presentment for the registration of a transfer of any
   Senior Note, the Trustee, any Agent and the Company may deem and treat the
   Person in whose name any Note is registered as the absolute owner of such
   Senior Note for the purpose of receiving payment of principal of and interest
   on such Senior Notes and for all other purposes, and none of the Trustee, any
   Agent or the Company shall be affected by notice to the contrary.

      (vii)  The Trustee shall authenticate Global Securities and Certificated
   Securities in accordance with the provisions of Section 2.02 hereof.


Section 2.07.  Replacement Notes.

      If any mutilated Note is surrendered to the Trustee, or the Company and
the Trustee receives evidence to their satisfaction of the destruction, loss or
theft of any Note, the Company shall issue and the Trustee, upon the written
order of the Company signed by two Officers of the Company, shall authenticate a
replacement Senior Note if the Trustee's requirements are met.  If required by
the Trustee or the 

                                       30
<PAGE>
 
Company, an indemnity bond must be supplied by the holder that is sufficient in
the judgment of the Trustee and the Company to protect the Company, the Trustee,
any Agent and any authenticating agent from any loss that any of them may suffer
if a Note is replaced. The Company may charge for its expenses in replacing a
Note.

      Every replacement Note is an additional obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.


Section 2.08.  Outstanding Notes.

      The Senior Notes outstanding at any time are all the Senior Notes
authenticated by the Trustee except for those cancelled by it, those delivered
to it for cancellation and those described in this Section 2.08 as not
outstanding. Except as set forth in Section 2.09 hereof, a Note does not cease
to be outstanding because the Company or an Affiliate of the Company holds the
Note.

      If a Senior Note is replaced pursuant to Section 2.07 hereof, it ceases to
be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Senior Note is held by a bona fide purchaser.

      If the principal amount of any Senior Note is considered paid under
Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to
accrue.

      If the Paying Agent (other than the Company, a Subsidiary or an Affiliate
of any thereof) segregates and holds in trust, in accordance with this
Indenture, on a redemption date or maturity date, money sufficient to pay all
principal and interest, if any, payable on that date with respect to the Senior
Notes (or the portion thereof to be redeemed or maturing, as the case may be),
then on and after that date such Senior Notes (or portions thereof) shall be
deemed to be no longer outstanding and shall cease to accrue interest.


Section 2.09.  Treasury Notes.

      In determining whether the holders of the required principal amount of
Senior Notes have concurred in any direction, waiver or consent, Senior Notes
owned by the Company, or an Affiliate of the Company, shall be considered as
though not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Senior Notes that a Trustee knows are so owned shall be so disregarded.


Section 2.10.  Temporary Notes.

      Until definitive Senior Notes are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Senior Notes upon a written
order of the Company signed by two Officers of the Company.  Temporary Senior
Notes shall be substantially in the form of definitive Senior Notes but may have
variations that the Company considers appropriate for temporary Senior Notes and
as shall be reasonably acceptable to the Trustee.  Without unreasonable delay,
the Company shall prepare and the Trustee shall authenticate definitive Senior
Notes and deliver them in exchange for temporary Senior Notes.

                                       31
<PAGE>
 
      Holders of temporary Senior Notes shall be entitled to all of the benefits
of this Indenture.

Section 2.11.  Cancellation.

      The Company at any time may deliver Senior Notes to the Trustee for
cancellation.  The Registrar and Paying Agent shall forward to the Trustee any
Senior Notes surrendered to them for registration of transfer, exchange or
payment.  The Trustee and no one else shall cancel all Senior Notes surrendered
for registration of transfer, exchange, payment, replacement or cancellation and
shall destroy cancelled Senior Notes (subject to the record retention
requirement of the Exchange Act), unless the Company directs cancelled Senior
Notes to be returned to it.  Certification of the destruction of all cancelled
Senior Notes shall be delivered to the Company for all certificates so
destroyed. The Company may not issue new Senior Notes to replace Senior Notes
that it has redeemed, paid or delivered to the Trustee for cancellation.


Section 2.12.  Defaulted Interest.

      If the Company defaults in a payment of interest on the Senior Notes, it
shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
holders on a subsequent special record date, which date shall be at the earliest
practicable date but in all events at least five Business Days prior to the
payment date, in each case at the rate provided in the Senior Notes and in
Section 4.01 hereof.  The Company shall fix or cause to be fixed each such
special record date and payment date, provided that the Company shall fix or
cause to be fixed each such special record date as early as practicable prior to
the payment date, and the Company shall mail or cause to be mailed as early as
practicable to each holder a notice that states the special record date, the
related payment date and the amount of defaulted interest to be paid.


Section 2.13.  Record Date.

      The record date for purposes of determining the identity of holders of the
Senior Notes entitled to vote or consent to any action by vote or consent
authorized or permitted under this Indenture shall be determined as provided for
in TIA (S) 316(c).


Section 2.14.  CUSIP Number.

      The Company in issuing the Senior Notes may use a "CUSIP" number and, if
it does so, the Trustee shall use the CUSIP number in notices of redemption or
exchange as a convenience to holders; provided that any such notice may state
that no representation is made as to the correctness or accuracy of the CUSIP
number printed in the notice or on the Senior Notes and that reliance may be
placed only on the other identification numbers printed on the Senior Notes.
The Company will promptly notify the Trustee of any change in the CUSIP number.


                                   ARTICLE 3
                       REDEMPTION AND CERTAIN REPURCHASES

                                       32
<PAGE>
 
Section 3.01.  Notices to Trustee.

      If the Company elects to redeem Senior Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 45 days (unless a shorter period is acceptable to the Trustee) but not
more than 60 days before a redemption date, an Officers' Certificate setting
forth (i) the clause of this Indenture pursuant to which the redemption shall
occur, (ii) the redemption date, (iii) the principal amount of Senior Notes to
be redeemed and (iv) the redemption price.


Section 3.02.  Selection of Notes to Be Redeemed.

      If less than all of the Senior Notes are to be redeemed at any time,
except as provided in Section 3.09, the Trustee shall select the Senior Notes to
be redeemed or purchased in compliance with the requirements of the principal
national securities exchange, if any, on which the Senior Notes are listed, or,
if the Senior Notes are not so listed, on a pro rata basis, by lot or in
accordance with any other method the Trustee considers fair and appropriate (and
in such manner as complies with applicable legal and stock exchange
requirements, if any), provided that no Senior Notes with a principal amount of
$1,000 or less shall be redeemed or purchased in part.  A new Senior Note in
principal amount equal to the unredeemed or unpurchased portion shall be issued
in the name of the holder thereof upon cancellation of the original Note.  On
and after the redemption or purchase date, interest shall cease to accrue on the
Senior Notes or portions of them called for redemption or purchase.  In the
event of partial redemption by lot, the particular Senior Notes to be redeemed
shall be selected, unless otherwise provided herein, not less than 30 nor more
than 60 days prior to the redemption date by the Trustee from the outstanding
Senior Notes not previously called for redemption.

      The Trustee shall promptly notify the Company in writing of the Senior
Notes selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed.  Senior Notes and
portions of them selected shall be in amounts of $1,000 or whole multiples of
$1,000; except that if all of the Senior Notes of a holder are to be redeemed,
the entire outstanding amount of Senior Notes held by such holder, even if not a
multiple of $1,000, shall be redeemed.  Except as provided in the preceding
sentence, provisions of this Indenture that apply to Senior Notes called for
redemption also apply to portions of Senior Notes called for redemption.


Section 3.03.  Notice of Redemption.

      Subject to the provisions of Section 3.09 hereof, at least 30 days but not
more than 60 days before a redemption date, the Company shall mail or cause to
be mailed, by first class mail, a notice of redemption to each holder whose
Senior Notes are to be redeemed at its registered address (provided that in the
event of a redemption pursuant to Section 3.07(b) hereof arising out of a sale
of the Company's Capital Stock (other than Disqualified Stock) to a Strategic
Equity Investor, such notice shall not be mailed prior to the consummation of
such sale).

      The notice shall identify the Senior Notes to be redeemed and shall state:

      (a)  the redemption date;

                                       33
<PAGE>
 
      (b)  the redemption price;

      (c) if any Note is being redeemed in part, the portion of the principal
   amount of such Note to be redeemed and that, after the redemption date upon
   surrender of such Note, a new Note or Senior Notes in principal amount equal
   to the unredeemed portion shall be issued;

      (d) the name and address of the Paying Agent;

      (e) that Senior Notes called for redemption must be surrendered to the
   Paying Agent to collect the redemption price;

      (f) that, unless the Company defaults in making such redemption payment,
   interest on Senior Notes (or portions thereof) called for redemption ceases
   to accrue on and after the redemption date;

      (g) the paragraph of the Senior Notes and/or section of this Indenture
   pursuant to which the Senior Notes called for redemption are being redeemed;
   and

      (h) that no representation is made as to the correctness or accuracy of
   the CUSIP number, if any, listed in such notice or printed on the Senior
   Notes.

      At the Company's request, the Trustee shall give the notice of redemption
in the Company's name and at its expense; provided, however, that the Company
shall have delivered to the Trustee, at least 45 days (unless, except as set
forth above, a shorter period is acceptable to the Trustee) prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.


Section 3.04.  Effect of Notice of Redemption.

      Once notice of redemption is mailed in accordance with Section 3.03
hereof, Senior Notes called for redemption become due and payable on the
redemption date at the redemption price stated in such notice.  A notice of
redemption may not be conditional.


Section 3.05.  Deposit of Redemption Price.

      On or prior to the redemption date, the Company shall deposit with the
Trustee or with the Paying Agent (or, if the Company or a Subsidiary is the
Paying Agent, shall segregate and hold in trust) immediately available funds
sufficient to pay the redemption price of and accrued interest, if any, on all
Senior Notes to be redeemed on that date.  The Trustee or the Paying Agent shall
promptly return to the Company any funds deposited with the Trustee or the
Paying Agent by the Company in excess of the amounts necessary to pay the
redemption price of, and accrued interest, if any, on, all Senior Notes to be
redeemed.

      If the Company complies with the provisions of the preceding paragraph, on
and after the redemption date, interest shall cease to accrue on the Senior
Notes or the portions of Senior Notes called for redemption.  If a Note is
redeemed on or after an interest record date but on or prior to the related
interest payment date, then any accrued and unpaid interest shall be paid to the
Person in whose name such 

                                       34
<PAGE>
 
Note was registered at the close of business on such record date. If any Note
called for redemption shall not be so paid upon surrender for redemption because
of the failure of the Company to comply with the preceding paragraph, interest
shall be paid on the unpaid redemption price, from the redemption date until
such redemption price is paid, and to the extent lawful on any interest not paid
on such unpaid principal, in each case at the rate provided in the Senior Notes
and in Section 4.01 hereof.


Section 3.06.  Senior Notes Redeemed in Part.

      Upon surrender of a Senior Note that is redeemed in part, the Company
shall issue and the Trustee shall authenticate for the holder of the Senior
Notes at the expense of the Company a new Senior Note equal in principal amount
to the unredeemed portion of the Senior Note surrendered.


Section 3.07.  Optional Redemption.

          (a) Except as set forth in Section 3.07(b) below, the Senior Notes
will not be redeemable at the Company's option prior to January 15, 2003.
Thereafter, the Senior Notes will be subject to redemption at the option of the
Company, in whole or in part, upon not less than 30 nor more than 60 days'
notice to the holders, at the redemption prices (expressed as percentages of
principal amount) set forth below plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the applicable redemption date, if
redeemed during the twelve-month period beginning on January 15 of the years
indicated below:

          YEAR                                          PERCENTAGE
          ----                                          ----------
          2003 ........................................  104.250%
          2004 ........................................  102.833%
          2005 ........................................  101.417%
          2006 and thereafter .........................  100.000%

     (b) Notwithstanding the provisions of Section 3.07(a) above, in the event
of the sale by the Company prior to January 15, 2001 of its Capital Stock (other
than Disqualified Stock) (i) to a Strategic Investor in a single transaction or
series of related transactions for an aggregate purchase price equal to or
exceeding $50.0 million or (ii) in one or more Public Offerings, up to a maximum
of 25% of the aggregate principal amount of the Senior Notes originally issued
shall, at the option of the Company, be redeemable from the net cash proceeds of
such sale or sales to such Strategic Investor (but only to the extent such
proceeds consist of cash or readily marketable cash equivalents received in
respect of the Capital Stock, other than Disqualified Stock, so sold) at a
redemption price equal to 108.50% of the principal amount thereof plus accrued
and unpaid interest and Liquidated Damages, if any, thereon to the redemption
date, provided that at least 75% of the aggregate principal amount of the Senior
Notes originally issued remains outstanding immediately after the occurrence of
such redemption and that such redemption occurs within 90 days of the date of
the closing of such sale.

     (c) Any redemption pursuant to this Section 3.07 shall be made pursuant to
the provisions of Sections 3.01 through 3.06 hereof.


Section 3.08.  Mandatory Redemption.

                                       35
<PAGE>
 
      Except as set forth under Sections 3.09 and 4.15 hereof, the Company shall
not be required to make mandatory redemption or sinking fund payments with
respect to the Senior Notes.


Section 3.09.  Offer to Purchase With Excess Asset Sale Proceeds.

      If at any time the cumulative amount of Excess Proceeds that have not been
applied in accordance with this Section 3.09 exceeds $10.0 million, the Company
shall, within 30 days thereafter, make an offer to all holders of Senior Notes
and Pari Passu Notes (an "Excess Proceeds Offer"), to purchase the maximum
principal amount of Senior Notes and Pari Passu Notes that may be purchased out
of such Excess Proceeds, at an offer price in cash in an amount equal to 100% of
the outstanding principal amount of the Senior Notes and 100% of the outstanding
principal amount or accreted value, as applicable, of the Pari Passu Notes, plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the date
fixed for the closing of such offer, in accordance with the procedures specified
below.

      The Excess Proceeds Offer shall remain open for a period of 20 Business
Days following its commencement and no longer, except to the extent that a
longer period is required by applicable law (the "Offer Period").  No later than
five Business Days after the termination of the Offer Period (the "Purchase
Date"), the Company shall purchase the maximum accreted value or principal
amount, as the case may be, of Senior Notes and Pari Passu Notes that may be
purchased with such Excess Proceeds (on a pro rata basis if Senior Notes and
Pari Passu Notes tendered is in excess of the Excess Proceeds) (which maximum
principal amount of Senior Notes shall be the "Offer Amount") or, if less than
the Offer Amount has been tendered, all Senior Notes and Pari Passu Notes
tendered in response to the Excess Proceeds Offer, subject to the provisions of
Section 4.10 hereof.

      If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued interest on the Senior
Notes shall be paid to the Person in whose name a Senior Note is registered at
the close of business on such record date, and no additional interest shall be
payable to holders who tender Senior Notes pursuant to the Excess Proceeds Offer
on the portion of the tendered Senior Notes purchased pursuant to the Excess
Proceeds Offer.

      Upon the commencement of any Excess Proceeds Offer, the Company shall
send, by first class mail, a notice to the Trustee and each of the holders of
the Senior Notes, with a copy to the Trustee.  The notice shall contain all
instructions and materials necessary to enable such holders to tender Senior
Notes pursuant to the Excess Proceeds Offer.  The Excess Proceeds Offer shall be
made to all holders.  The notice, which shall govern the terms of the Excess
Proceeds Offer, shall state:

         (a) that the Excess Proceeds Offer is being made pursuant to Sections
   3.09 and 4.10 hereof and the length of time the Excess Proceeds Offer shall
   remain open;

         (b) the Offer Amount, the purchase price and the Purchase Date;

         (c) that any Senior Note or portion thereof not tendered or accepted
   for payment shall continue to accrue interest;

         (d) that any Senior Note or portion thereof accepted for payment
   pursuant to the Excess Proceeds Offer shall cease to accrue interest after
   the Purchase Date;

                                       36
<PAGE>
 
         (e) that holders electing to have a Senior Note or portion thereof
   purchased pursuant to any Excess Proceeds Offer shall be required to
   surrender the Senior Note, with the form entitled "Option of Holder to Elect
   Purchase" on the reverse of the Senior Note completed, to the Company,
   a depositary, if appointed by the Company, or a Paying Agent at the address
   specified in the notice at least three Business Days before the Purchase
   Date;

         (f) that holders shall be entitled to withdraw their election if the
   Company, depositary or Paying Agent, as the case may be, receives, not later
   than the expiration of the Offer Period, a telegram, telex, facsimile
   transmission or letter setting forth the name of the holder, the principal
   amount of the Senior Note or portion thereof the holder delivered for
   purchase and a statement that such holder is withdrawing his election to have
   the Senior Note or portion thereof purchased;

         (g) that, if the aggregate principal amount, and/or the aggregate
   accreted value as the case may be, of Senior Notes and Pari Passu Notes
   tendered by holders of such notes exceeds the Offer Amount, the Trustee shall
   select the Senior Notes to be purchased on a pro rata basis above (with such
   adjustments as may be deemed appropriate by the Trustee so that only Senior
   Notes in denominations of $1,000, or integral multiples thereof, shall be
   purchased); and

         (h) that holders whose Senior Notes were purchased only in part shall
   be issued new Senior Notes equal in principal amount to the unpurchased
   portion of the Senior Notes surrendered (or transferred by book-entry
   transfer).

      On or before the Purchase Date, the Company shall, to the extent lawful,
accept for payment, on a pro rata basis (as described above) to the extent
necessary, the Offer Amount of Senior Notes, Parri Passu Notes or portions
thereof tendered pursuant to the Excess Proceeds Offer, or if less than the
Offer Amount has been tendered, all Senior Notes, Parri Passu Notes or portions
thereof tendered, and deliver to the Trustee an Officers' Certificate stating
that such Senior Notes, Parri Passu Notes or portions thereof were accepted for
payment by the Company in accordance with the terms of this Section 3.09.  The
Company or Paying Agent, as the case may be, shall promptly (but in any case not
later than five days after the Purchase Date) mail or deliver to each tendering
holder an amount equal to the purchase price of the Senior Note or portion
thereof tendered by such holder and accepted by the Company for purchase, and
the Company shall promptly issue a new Senior Note, and the Trustee shall
authenticate and mail or deliver such new Senior Note to such holder equal in
principal amount to any unpurchased portion of the Senior Note surrendered.  Any
Senior Note not so accepted shall be promptly mailed or delivered by the Company
to the holder thereof.  The Company shall publicly announce the results of the
Excess Proceeds Offer on the Purchase Date.  In the event that the aggregate
amount of Excess Proceeds exceeds the aggregate principal amount or accreted
value, as the case may be, of Senior Notes, Pari Passu Notes or portions thereof
surrendered by holders of such notes pursuant to an Excess Proceeds Offer, the
Company may use the remaining Excess Proceeds for general purposes.  Upon
completion of an Excess Proceeds Offer, the amount of Excess Proceeds shall be
deemed to be reset at zero.

      Other than as specifically provided in this Section 3.09, any purchase
pursuant to this Section 3.09 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof.  No repurchase of Senior Notes under this
Section 3.9 shall be deemed to be a redemption of Senior Notes.

                                       37
<PAGE>
 
                                   ARTICLE 4
                                   COVENANTS


Section 4.01.  Payment of Notes.

      The Company shall pay or cause to be paid the principal of, premium, if
any, and interest, on the Senior Notes on the dates and in the manner provided
in the Senior Notes and this Indenture.  Principal, premium, if any, and
interest shall be considered paid on the date due if the Paying Agent, if other
than the Company, holds as of the due date money deposited by, or on behalf of,
the Company in immediately available funds and designated for and sufficient to
pay all principal, premium, if any, and interest then due.  The Company shall
pay all Liquidated Damages, if any, in the same manner on the dates and in the
amounts set forth in the Note Registration Rights Agreement.

      The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate equal to
the then applicable interest rate on the Senior Notes to the extent lawful until
such overdue principal is paid; it shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue installments of
interest (without regard to any applicable grace period) at the same rate to the
extent lawful until such overdue installments of interest are paid.

      The term "Bankruptcy Law" means title 11, U.S. Code or any similar federal
or state law for the relief of debtors.


Section 4.02.  Maintenance of Office or Agency.

      The Company shall maintain an office or agency (which may be an office of
the Trustee or an affiliate of the Trustee, Registrar or co-registrar) where
Senior Notes may be surrendered for registration of transfer or exchange and
where notices and demands to or upon the Company in respect of the Senior Notes
and this Indenture may be served.  The Company shall give prompt written notice
to the Trustee of the location, and any change in the location, of such office
or agency.  If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee.

      The Company may also from time to time designate one or more other offices
or agencies where the Senior Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency for such purposes.
The Company shall give prompt written notice to the Trustee of any such
designation or rescission and of any change in the location of any such other
office or agency.

      The Company hereby designates the Corporate Trust Office of the Trustee as
one such office or agency of the Company in accordance with Section 2.03 hereof.

                                       38
<PAGE>
 
Section 4.03.  Reports.

      (a) So long as any of the Senior Notes remain outstanding, the Company
shall cause copies of all quarterly and annual financial reports and of the
information, documents, and other reports (or copies of such portions of any of
the foregoing as the Securities and Exchange Commission (the "Commission") may
by rules and regulations prescribe) which the Company is required to file with
the Commission pursuant to Section 13(a) or 15(d) of the Exchange Act ("SEC
Reports") to be filed with the Trustee within 15 days of filing with the
Commission.  If the Company is not subject to the requirements of Section 13(a)
or 15(d) of the Exchange Act or shall cease to be required by the Commission to
file SEC Reports pursuant to the Exchange Act, the Company shall nevertheless
continue to cause SEC Reports, comparable to those which it would be required to
file pursuant to Section 13(a) or 15(d) of the Exchange Act if it were subject
to the requirements of either such section, to be so filed with the Commission
(unless the Commission will not accept such a filing) and with the Trustee
within the same time periods as would have applied (including under the
preceding sentence) had the Company been subject to the requirements of Section
13(a) or 15(d) of the Exchange Act.  Whether or not required by the Exchange Act
to file SEC Reports with the Commission, so long as any Senior Notes are
outstanding, the Company shall furnish copies of the SEC Reports to the holders
of Senior Notes at the time the Company is required to file the same with the
Trustee and make such information available to investors who request it in
writing.  In addition, the Company shall, for so long as any Senior Notes remain
outstanding, furnish to the holders and to securities analysts and prospective
investors, upon their request, the information required to be delivered pursuant
to Rule 144(d)(4) under the Securities Act.  The Company shall also comply with
the provisions of TIA (S) 314(a).

      (b)  The Company shall provide the Trustee with a sufficient number of
copies of all SEC Reports that the Trustee may be required to deliver to the
holders of the Senior Notes under this Section 4.03.


Section 4.04.  Compliance Certificate.

      (a) The Company shall deliver to the Trustee, within 90 days after the end
of each fiscal year of the Company, an Officers' Certificate stating that (i) a
review of the activities of the Company and its Subsidiaries during the
preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether the Company has (x) kept, observed,
performed and fulfilled, and (y) caused each of its Subsidiaries to keep,
observe, perform and fulfill, its obligations under this Indenture, and (ii) as
to each such Officer signing such certificate, that to the best of his or her
knowledge (A) the Company has kept, observed, performed and fulfilled, and has
caused each of its Subsidiaries to keep, observe, perform and fulfill, each and
every covenant contained in this Indenture and is not in default in the
performance or observance of any of the terms, provisions and conditions of this
Indenture to be performed or observed by it (or, if a Default or Event of
Default shall have occurred, describing all such Defaults or Events of Default
of which he or she may have knowledge and what action each is taking or proposes
to take with respect thereto) and (B) no event has occurred and remains in
existence by reason of which payments on account of the principal of or
interest, if any, on the Senior Notes is prohibited or if such event has
occurred, a description of the event and what action each is taking or proposes
to take with respect thereto.

                                       39
<PAGE>
 
      (b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03 above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention which would lead them to believe that the Company has violated
any provisions of Article 4 or Article 5 of this Indenture or, if any such
violation has occurred, specifying the nature and period of existence thereof,
it being understood that such accountants shall not be liable directly or
indirectly to any Person for any failure to obtain knowledge of any such
violation.

      (c) The Company shall, so long as any of the Senior Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default, Event of
Default or default and what action the Company is taking or proposes to take
with respect thereto.

      (d) The Company shall deliver to the Trustee an Officers' Certificate as
required by, and in accordance with, Section 4.07(f) hereof.


Section 4.05.  Taxes.

      The Company shall pay, and shall cause each of its Subsidiaries to pay,
prior to delinquency, all material taxes, assessments, and governmental levies,
except as contested in good faith and by appropriate proceedings or where the
failure to effect such payment is not adverse in any material respect to the
holders of the Senior Notes.


Section 4.06.  Stay, Extension and Usury Laws.

      The Company covenants (to the extent that it may lawfully do so) that it
shall not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, that may affect the covenants or
the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it shall not, by resort to any such law, hinder, delay
or impede the execution of any power herein granted to the Trustee, but shall
suffer and permit the execution of every such power as though no such law has
been enacted.


Section 4.07.  Restricted Payments.

      (a) The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly:

            (i)   declare or pay any dividend or make any distribution on
      account of any Equity Interests of the Company or any of its Subsidiaries
      other than dividends or distributions payable (A) in Equity Interests of
      the Company that are not Disqualified Stock or (B) to the Company or any
      Subsidiary;

            (ii)   purchase, redeem, defease, retire or otherwise acquire for
      value ("Retire" and correlatively, a "Retirement") any Equity Interests of
      the Company or any of its Subsidiaries or 

                                       40
<PAGE>
 
      other Affiliate of the Company (other than any such Equity Interests
      owned by the Company or any Subsidiary);

            (iii)    Retire for value any Indebtedness of (A) the Company that
      is subordinate in right of payment to the Senior Notes or (B) any
      Subsidiary, except, with respect to clause (i)(A) or (i)(B) above, at
      final maturity or in accordance with the mandatory redemption or repayment
      provisions set forth in the original documentation governing such
      Indebtedness; or

            (iv)   make any Restricted Investment (all such payments and other
      actions set forth in clauses (i) through (iv) above being collectively
      referred to as "Restricted Payments"), unless, at the time of such
      Restricted Payment:

            (1) no Default or Event of Default has occurred and is continuing or
         would occur as a consequence thereof;

            (2) after giving effect to such Restricted Payment on a pro forma
         basis as if such Restricted Payment had been made at the beginning of
         the applicable four-quarter period, the Company could incur at least
         $1.00 of additional Indebtedness pursuant to the Consolidated Cash Flow
         Leverage Ratio test set forth in Section 4.09(a) hereof; and

            (3) such Restricted Payment, together with the aggregate of all
         other Restricted Payments made by the Company and its Subsidiaries
         after the Issue Date (including any Restricted Payments made pursuant
         to clauses (i), (v) and (vi) of Section 4.07(b)), is less than the sum
         of

                  (w) 50% of the Consolidated Net Income of the Company for the
               period (taken as one accounting period) from June 30, 1996 to the
               end of the Company's most recently ended fiscal quarter for which
               internal financial statements are available at the time of such
               Restricted Payment (or, if such Consolidated Net Income for such
               period is a deficit, less 100% of such deficit), plus

                  (x) 100% of the aggregate net cash proceeds received by the
               Company from the issue or sale of Equity Interests of the Company
               or of debt securities or Disqualified Stock of the Company that
               have been converted into such Equity Interests (other than Equity
               Interests (or convertible debt securities) sold to a Subsidiary
               of the Company and other than Disqualified Stock or debt
               securities that have been converted into Disqualified Stock)
               after June 30, 1996 (other than any such Equity Interests, the
               proceeds of which were used as set forth in clauses (b)(ii) and
               (b)(viii) below), plus

                  (y) 100% of the sum of, without duplication, (1) aggregate
               dividends or distributions received by the Company or any
               Subsidiary from any Joint Venture (other than dividends or
               distributions to pay any obligations of such Joint Venture to
               Persons other than the Company or any Subsidiary, such as income
               taxes), with non-cash distributions to be valued at the lower of
               book value or fair market value as determined by the Board of
               Directors, (2) the amount of the principal and interest payments
               received since the Issue Date by the Company or any Subsidiary 
               from any Joint Venture and (3) the net proceeds from
               the sale of an Investment 

                                       41
<PAGE>
 
               in a Joint Venture received by the Company or any Subsidiary;
               provided that there is no obligation to return any such amounts
               to the Joint Venture, and excluding any such dividend,
               distribution, interest payment or net proceeds that constitutes a
               return of capital invested pursuant to clause (b)(vi) of this
               Section 4.07, plus

                  (z)  $10.0 million.

      (b) The foregoing provisions in Section 4.07(a) shall not prohibit:

            (i)   the payment of any dividend within 60 days after the date of
      declaration thereof, if at such date of declaration such payment would
      have complied with the provisions of this Indenture;

            (ii)   the Retirement of (A) any Equity Interests of the Company or
      any Subsidiary of the Company, (B) Indebtedness of the Company that is
      subordinate to the Senior Notes or (C) Indebtedness of a Subsidiary of the
      Company, in exchange for, or out of the proceeds of the substantially
      concurrent sale (other than to a Subsidiary of the Company) of, Equity
      Interests of the Company (other than Disqualified Stock);

            (iii)    the Retirement of any Indebtedness of the Company
      subordinated in right of payment to the Senior Notes in exchange for, or
      out of the proceeds of the substantially concurrent incurrence of
      Indebtedness of the Company (other than Indebtedness to a Subsidiary of
      the Company), but only to the extent that such new Indebtedness is
      permitted under Section 4.09 hereof and (1) is subordinated in right of
      payment to the Senior Notes at least to the same extent as, (2) has a
      Weighted Average Life to Maturity at least as long as, and (3) has no
      scheduled principal payments due in any amount earlier than, any
      equivalent amount of principal under the Indebtedness so Retired;

            (iv)   the Retirement of any Indebtedness of a Subsidiary of the
      Company in exchange for, or out of the proceeds of the substantially
      concurrent incurrence of Indebtedness of the Company or any Subsidiary but
      only to the extent that such incurrence is permitted under Section 4.09
      hereof and only to the extent that such Indebtedness (1) is not secured by
      any assets of the Company or any Subsidiary to a greater extent than the
      Retired Indebtedness was so secured, (2) has a Weighted Average Life to
      Maturity at least as long as the Retired Indebtedness and (3) if such
      Retired Indebtedness was an obligation of the Company, is pari passu or
      subordinated in right of payment to the Senior Notes at least to the same
      extent as the Retired Indebtedness;

            (v)   the Retirement of any Equity Interests of the Company or any
      Subsidiary of the Company held by any member of the Company's (or any of
      its Subsidiaries') management pursuant to any management equity
      subscription agreement or stock option agreement; provided that the
      aggregate price paid for all such repurchased, redeemed, acquired or
      retired Equity Interests shall not exceed $1.0 million in any twelve-month
      period plus the aggregate cash proceeds received by the Company during
      such twelve-month period from any reissuance of Equity Interests by the
      Company to members of management of the Company and its Subsidiaries;


           (vi)  Investments in any Joint Venture; provided that at the time any
      such Investment is made, such Investment shall not cause the aggregate
      amount of Investments at any one time 

        

                                       42
<PAGE>
 
      outstanding under this clause (vi) to exceed the greater of (x) $25.0
      million and (y) 5% of the Total Common Equity of the Company;

         (vii)  the payment of cash in lieu of fractional shares (a) payable as
      dividends on Equity Interests of the Company or (b) issuable upon
      conversion of or in exchange for securities convertible into or
      exchangeable for Equity Interests of the Company or (c) issuable as a
      result of a corporate reorganization, provided that, in the case of (a)
      and (b), the issuance of such Equity Interests or securities and, in the
      case of (c), such corporate reorganization, is permitted under the terms
      of this Indenture; and

         (viii)  Investments with the net cash proceeds received by the Company
      from the issue or sale of Equity Interests of the Company (other than
      Disqualified Stock) after December 31, 1997;

provided, however, that at the time of, and after giving effect to, any
Restricted Payment permitted under clauses (i), (ii), (iii), (iv), (v), (vi) and
(viii), no Default or Event of Default shall have occurred and be continuing.

      (c) A Permitted Investment that ceases to be a Permitted Investment
pursuant to the definition thereof set forth in Section 1.01 hereof, shall
become a Restricted Investment, deemed to have been made on the date that it
ceases to be a Permitted Investment.

      (d) The Board of Directors may designate any Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Default or an
Event of Default pursuant to Article 6 hereof.  For purposes of making such
determination, all outstanding Investments by the Company and its Subsidiaries
(except to the extent repaid in cash) in such Subsidiary so designated shall be
deemed to be Restricted Payments at the time of such designation and shall
reduce the amount available for Restricted Payments under paragraph (a) of this
Section 4.07.  All such outstanding Investments will be deemed to constitute
Investments in an amount equal to the greatest of (x) the net book value of such
Investments at the time of such designation, (y) the fair market value of such
Investments at the time of such designation and (z) the original fair market
value of such Investments at the time they were made.  Such designation will
only be permitted if such Restricted Payment would be permitted at such time.

      (e) The Board of Directors of the Company may at any time designate any
Unrestricted Subsidiary to be a Subsidiary; provided that such designation shall
be deemed to be an incurrence of Indebtedness by a Subsidiary of the Company of
any outstanding Indebtedness of such Unrestricted Subsidiary and such
designation shall only be permitted if (i) such Indebtedness is permitted under
Section 4.09 hereof and (ii) no Default or Event of Default pursuant to Article
6 hereof would be in existence following such designation.

      (f) Not later than the date of making any Restricted Payment, the Company
shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 4.07 were computed, which calculations may
be based upon the Company's latest available financial statements.

                                       43
<PAGE>
 
Section 4.08.  Dividend and Other Payment Restrictions Affecting Subsidiaries.

      The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create or otherwise cause to become effective any
consensual encumbrance or restriction on the ability of any Subsidiary to:

            (i)   pay dividends or make any other distributions to the Company
      or any of its Subsidiaries on its Capital Stock or with respect to any
      other interest or participation in, or measured by, its profits, or pay
      any Indebtedness owed to the Company or any of its Subsidiaries;

            (ii)   make loans or advances to the Company or any of its
      Subsidiaries; or

            (iii)    transfer any of its properties or assets to the Company or
      any of its Subsidiaries;

except for such encumbrances or restrictions existing as of the Issue Date or
under or by reason of:

         (a)  Existing Indebtedness;

         (b)  applicable law;

         (c) any instrument governing Acquired Debt as in effect at the time of
      acquisition (except to the extent such Indebtedness was incurred in
      connection with, or in contemplation of, such acquisition), which
      encumbrance or restriction is not applicable to any Person, or the
      properties or assets of any Person, other than the Person, or the property
      or assets of the Person, so acquired;

         (d) by reason of customary non-assignment provisions in leases entered
      into in the ordinary course of business and consistent with past
      practices;

         (e) Indebtedness in respect of a Permitted Refinancing, provided that
      the restrictions contained in the agreements governing such Refinancing
      Indebtedness are not materially more restrictive than those contained in
      the agreements governing the Indebtedness being refinanced;

         (f) with respect to clause (iii) above, purchase money obligations for
      property acquired in the ordinary course of business, Vendor Indebtedness
      incurred in connection with the purchase or lease of Telecommunications
      Related Assets or performance bonds or similar security for performance
      which liens securing such obligations do not cover any asset other than
      the asset acquired or, in the case of performance bonds or similar
      security for performance, the assets associated with the Company's
      performance;

         (g) Indebtedness incurred under Section 4.09(b)(i) hereof;

         (h) this Indenture and the Senior Notes or future Indebtedness with
      substantially similar restrictions, if any, to the Senior Notes; or

         (i) in the case of clauses (a), (c), (e), (g) and (h) above, any
         amendments, modifications, restatements, renewals, increases,
         supplements, refundings, replacements or refinancings thereof; provided
         that such amendments, modifications, restatements, renewals, increases,

                                       44
<PAGE>
 
         supplements, refundings, replacements or refinancings are not
         materially more restrictive with respect to such dividend and other
         payment restrictions than those contained in such instruments as in
         effect on the date of their incurrence or, if later, the Issue Date.


Section 4.09.  Incurrence of Indebtedness and Issuance of Disqualified Stock.

   (a) The Company and its Subsidiaries shall not, directly or indirectly, (i)
create, incur, issue, assume, guarantee or otherwise become directly or
indirectly liable for the payment of (collectively, "in cur" and, correlatively,
"incurred" and "incurrence") any Indebtedness (including, without limitation,
Acquired Debt) or (ii) issue any Disqualified Stock;  provided, however, that
the Company and/or any of its Subsidiaries may incur Indebtedness (including,
without limitation, Acquired Debt) or issue shares of Disqualified Stock if,
after giving effect to the incurrence of such Indebtedness or the issuance of
such Disqualified Stock, the Consolidated Cash Flow Leverage Ratio for the
Company's most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date of such
incurrence or issuance (x) does not exceed 5.5 to 1 if such incurrence or
issuance occurs on or prior to June 1, 1999 and (y) does not exceed 5.0 to 1 if
such occurrence or issuance occurs after June 1, 1999, in each case, determined
on a pro forma basis (including a pro forma application of the net proceeds
therefrom), as if the additional Indebtedness had been incurred, or the
Disqualified Stock had been issued, as the case may be, at the beginning of such
four-quarter period.  If the Company incurs any Indebtedness or issues or
redeems any Preferred Stock subsequent to the commencement of the period for
which such ratio is being calculated but prior to the event for which the
calculation of the ratio is made, then the ratio will be calculated giving pro
forma effect to any such incurrence of Indebtedness, or such issuance or
redemption of Preferred Stock, as if the same had occurred at the beginning of
the applicable period.  In making such calculation on a pro forma basis,
interest attributable to Indebtedness bearing a floating interest rate shall be
computed as if the rate in effect on the date of computation had been the
applicable rate for the entire period.

   (b) The foregoing limitation in Section 4.09(a) shall not apply to (with each
exception to be given independent effect):

      (i) the incurrence by the Company and/or any of its Subsidiaries of
      Indebtedness under the Credit Facility in an aggregate principal amount at
      any one time outstanding (with letters of credit being deemed to have a
      principal amount equal to the maximum potential liability of the Company
      and/or any of its Subsidiaries thereunder) not to exceed $150.0 million in
      the aggregate at any one time outstanding, less the aggregate amount of
      all Net Proceeds of Asset Sales applied to permanently reduce the
      commitments with respect to such Indebtedness pursuant to Section 4.10
      hereof;

      (ii) the incurrence by the Company and/or any of its Subsidiaries of
      Vendor Indebtedness, provided that the aggregate amount of such Vendor
      Indebtedness incurred does not exceed 80% of the total cost of the
      Telecommunications Related Assets financed therewith (or 100% of the total
      cost of the Telecommunications Related Assets financed therewith if such
      Vendor Indebtedness was extended for the purchase of tangible physical
      assets and was so financed by the vendor thereof or an affiliate of such
      vendor);

      (iii)  the incurrence by the Company and/or any of its Subsidiaries of the
      Existing Indebtedness, including the Existing Senior Notes;

                                       45
<PAGE>
 
      (iv) the incurrence by the Company and/or any of its Subsidiaries of
      Indebtedness in an aggregate amount not to exceed $50.0 million at any one
      time outstanding;

      (v) the incurrence by the Company of Indebtedness, but only to the extent
      that such Indebtedness is expressly subordinate to the payment in full of
      all Obligations with respect to the Senior Notes and has a final maturity
      no earlier than, and a Weighted Average Life to Maturity equal to or
      greater than, the final maturity and Weighted Average Life to Maturity,
      respectively, of the Senior Notes, in an aggregate principal amount not to
      exceed 2.0 times the net cash proceeds received by the Company after June
      30, 1996 from the issuance and sale of Equity Interests of the Company
      (that are not Disqualified Stock) plus the fair market value of Equity
      Interests (other than Disqualified Stock) issued after June 30, 1996 in
      connection with any acquisition of any Telecommunications Business;

      (vi) the incurrence (a "Permitted Refinancing") by the Company and/or any
      of its Subsidiaries of Indebtedness issued in exchange for, or the
      proceeds of which are used to refinance, replace, refund or defease
      ("Refinance" and correlatively, "Refinanced" and "Refinancing")
      Indebtedness, other than Indebtedness incurred pursuant to clause (i)
      above, but only to the extent that:

               (1) the net proceeds of such Refinancing Indebtedness shall not
         exceed the principal amount of and premium, if any, and accrued
         interest on the Indebtedness so Refinanced (or if such Indebtedness was
         issued at an original issue discount, the original issue price plus
         amortization of the original issue discount at the time of the
         repayment of such Indebtedness) plus the fees, expenses and costs of
         such Refinancing and reasonable prepayment premiums, if any, in
         connection therewith;

               (2) the Refinancing Indebtedness shall have a final maturity no
         earlier than, and a Weighted Average Life to Maturity equal to or
         greater than, the final maturity and Weighted Average Life to Maturity
         of the Indebtedness being Refinanced; and

               (3) if the Indebtedness being Refinanced is subordinated in right
         of payment to the Senior Notes, the Refinancing Indebtedness shall be
         subordinated in right of payment to the Senior Notes on terms at least
         as favorable to the holders of Senior Notes as those contained in the
         documentation governing the Indebtedness being so Refinanced;

      (vii)   the incurrence by the Company or any of its Subsidiaries of
      intercompany Indebtedness between or among the Company and any of its
      Subsidiaries; and

      (viii)  the incurrence by the Company or any of its Subsidiaries of
      Hedging Obligations that are incurred for the purpose of fixing or hedging
      interest rate or foreign currency risk with respect to any floating rate
      Indebtedness that is permitted by the terms of this Indenture to be
      outstanding.

      For purposes of determining compliance with this Section 4.09, in the
event that an item of Indebtedness, Disqualified Stock or Preferred Stock meets
the criteria of more than one of the categories described in clauses (i) through
(viii) above or is entitled to be incurred pursuant to Section 4.09(a), the
Company shall, in its sole discretion, classify such item in any manner that
complies with this Section and such item shall be treated as having been
incurred pursuant to only one of such clauses or pursuant to Section 4.09(a).
Accrual of interest or dividends, the accretion of accreted value or liquidation
preference 

                                       46
<PAGE>
 
and the payment of interest or dividends in the form of additional Indebtedness,
Common Stock or Preferred Stock shall not be deemed to be an incurrence of
Indebtedness for purposes of this Section.


Section 4.10.  Asset Sales.

      (a) The Company shall not, and shall not permit any of its Subsidiaries
to, whether in a single transaction or a series of related transactions
occurring within any twelve-month period,

            (i)   sell, lease, convey, dispose or otherwise transfer any assets
      (including by way of a Sale and Leaseback Transaction) other than sales,
      leases, conveyances, dispositions or other transfers (A) in the ordinary
      course of business, (B) to the Company by any Subsidiary of the Company or
      from the Company to any Subsidiary of the Company, (C) that constitute a
      Restricted Payment, Investment or dividend or distribution permitted under
      Section 4.07 hereof or (D) that constitute the disposition of all or
      substantially all of the assets of the Company pursuant to Section 5.01
      hereof or

         (ii) issue or sell Equity Interests in any of its Subsidiaries (other
      than an issuance or sale of Equity Interests of any such Subsidiary to the
      Company or a Subsidiary),

if, in the case of either (i) or (ii) above, in a single transaction or a series
of related transactions occurring within any twelve-month period, such assets or
securities

      (x) have a Fair Market Value in excess of $2.0 million or

      (y) are sold or otherwise disposed of for net proceeds in excess of $2.0
      million (each of the foregoing, an "Asset Sale"), unless:

         (a) no Default or Event of Default exists or would occur as a result
      thereof;

         (b) the Company, or such Subsidiary, as the case may be, receives
      consideration at the time of such Asset Sale at least equal to the Fair
      Market Value (evidenced by a resolution of the Board of Directors of the
      Company set forth in an Officers' Certificate delivered to the Trustee),
      of the assets or securities issued or sold or otherwise disposed of; and

         (c) at least 75% of the consideration therefor received by the Company
      or such Subsidiary is in the form of cash, provided, however, that (A) the
      amount of (x) any liabilities (as shown on the Company's or such
      Subsidiary's most recent balance sheet or in the notes thereto), of the
      Company or any Subsidiary of the Company (other than liabilities that are
      by their terms subordinated to the Senior Notes) that are assumed by the
      transferee of any such assets and (y) any notes, obligations or other
      securities received by the Company or any such Subsidiary from such
      transferee that are immediately converted by the Company or such
      Subsidiary into cash, shall be deemed to be cash (to the extent of the
      cash received in the case of subclause (y)) for purposes of this clause 
      (c); and (B) an amount equal to the Fair Market
      Value (determined as set forth in clause (b) above) of (1)
      Telecommunications Related Assets received by the Company or any such
      Subsidiary from the transferee that will be used by the Company or any
      such Subsidiary in the operation of a Telecommunications Business in the
      United States and (2) the Voting Stock of any Person engaged in the
      Telecommunications Business in the United States 

                                       47
<PAGE>
 
      received by the Company or any such Subsidiary (provided that such Voting
      Stock is converted to cash within 270 days or such Person concurrently
      becomes or is a Subsidiary of the Company) shall be deemed to be cash for
      purposes of this clause (c).

      The foregoing provisions shall not apply to a sale, lease, conveyance or
other disposition of all or substantially all of the assets of the Company,
which shall be governed by Article 5 hereof.

      (b)  Within 360 days after the receipt of net proceeds of any Asset Sale,
the Company (or such Subsidiary, as the case may be) may apply the Net Proceeds
from such Asset Sale to (i) permanently reduce the amounts permitted to be
borrowed by the Company under the terms of any of its Senior Indebtedness or
(ii) the purchase of Telecommunications Related Assets or Voting Stock of any
Person engaged in the Telecommunications Business in the United States (provided
that such Person concurrently becomes a Subsidiary of the Company).  Any Net
Proceeds from any Asset Sales that are not so applied or invested as provided in
the preceding sentence, shall constitute "Excess Proceeds."  When the aggregate
amount of Excess Proceeds exceeds $10.0 million, the Company shall be required
to make an Excess Proceeds Offer in accordance with the terms of Section 3.09
hereof.


Section 4.11.  Transactions with Affiliates.

      The Company shall not, and shall not permit any of its Subsidiaries to,
sell, lease, transfer or otherwise dispose of any of their respective properties
or assets to, or purchase any property or assets from, or enter into any
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction"),
unless: (i) such Affiliate Transaction is on terms that are no less favorable to
the Company or the relevant Subsidiary than those that would have been obtained
in a comparable transaction by the Company or such Subsidiary with an unrelated
Person; (ii) such Affiliate Transaction is approved by a majority of the
disinterested directors on the Board of Directors of the Company; and (iii) the
Company delivers to the Trustee, with respect to any Affiliate Transaction
involving aggregate payments in excess of $1.0 million, a resolution of a
committee of independent directors of the Company set forth in an Officers'
Certificate certifying that such Affiliate Transaction complies with clauses (i)
and (ii) above; provided that (a) transactions pursuant to any employment, stock
option or stock purchase agreement entered into by the Company or any of its
Subsidiaries, or any grant of stock, in the ordinary course of business that are
approved by the Board of Directors of the Company, (b) transactions between or
among the Company and its Subsidiaries, (c) transactions permitted by Section
4.07 hereof, and (d) loans and advances to employees and officers of the Company
or any of its Subsidiaries in the ordinary course of business in an aggregate
principal amount not to exceed $1.0 million at any one time outstanding, shall
not be deemed Affiliate Transactions.


Section 4.12.  Liens.

      The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, assume or suffer to exist any Lien on any
asset now owned or hereafter acquired, or any income or profits therefrom or
assign or convey any right to receive income therefrom, except for Permitted
Liens.

                                       48
<PAGE>
 
Section 4.13.  Limitations on Sale and Leaseback Transactions.

      The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, enter into, assume, Guarantee or otherwise become liable
with respect to any Sale and Leaseback Transaction, provided that the Company or
any Subsidiary of the Company may enter into any such transaction if (i) the
Company or such Subsidiary would be permitted under Sections 4.09 and 4.12
hereof to incur secured Indebtedness in an amount equal to the Attributable Debt
with respect to such transaction, (ii) the consideration received by the Company
or such Subsidiary from such transaction is at least equal to the Fair Market
Value of the property being transferred, and (iii) the Net Proceeds received by
the Company or such Subsidiary from such transaction are applied in accordance
with Section 4.10 hereof.


Section 4.14.  Corporate Existence.

      Subject to Article 5 hereof, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect (i) its existence
as a corporation, and the corporate, partnership or other existence of any
Subsidiary, in accordance with the respective organizational documents (as the
same may be amended from time to time) of the Company or any such Subsidiary and
(ii) the rights (charter and statutory), licenses and franchises of the Company
and its Subsidiaries; provided, however, that the Company shall not be required
to preserve any such right, license or franchise, or the corporate, partnership
or other existence of any of its Subsidiaries if the Board of Directors of the
Company shall determine that the preservation thereof is no longer desirable in
the conduct of the business of the Company and its Subsidiaries, taken as a
whole, and that the loss thereof is not adverse in any material respect to the
holders of the Senior Notes.


Section 4.15.  Offer to Purchase Upon Change of Control.

      (a) Upon the occurrence of a Change of Control, the Company shall make an
offer (the "Change of Control Offer") to each holder of Senior Notes to
repurchase all or any part (equal to $1,000 or an integral multiple thereof) of
such holder's Senior Notes at a purchase price equal to 101% of the aggregate
principal amount thereof plus accrued and unpaid interest and Liquidated
Damages, if any, thereon, to the date of purchase (the "Change of Control
Payment"), provided that if the date of purchase is on or after an interest
record date and on or before the related interest payment date, any accrued
interest shall be paid to the Person in whose name a Senior Note is registered
at the close of business on such record date, and no additional interest shall
be paid or payable to holders who tender Senior Notes pursuant to the Change of
Control Offer.  Within thirty (30) days following any Change of Control, the
Company shall mail a notice to the Trustee and each holder stating:  (1) that
the Change of Control Offer is being made pursuant to this Section 4.15 and that
all Senior Notes or portions thereof tendered will be accepted for payment; 
(2) the purchase price and the purchase date, which shall be no earlier than 30
days nor later than 40 days (unless required by applicable law) from the date
such notice is mailed (the "Change of Control Payment Date"); (3) that any
Senior Note or portion thereof not tendered will continue to accrue interest in
accordance with its terms; (4) that, unless the Company defaults in the payment
of the Change of Control Payment, all Senior Notes or portions thereof accepted
for payment pursuant to the Change of Control Offer shall cease to accrue
interest after the Change of Control Payment Date; (5) that holders electing to
have any Senior Notes or portions thereof purchased pursuant to a Change of
Control Offer will be required to surrender the Senior Notes, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Senior Notes
completed, to the Paying Agent at the address specified in the notice prior to

                                       49
<PAGE>
 
the close of business on the third Business Day preceding the Change of Control
Payment Date; (6) that holders will be entitled to withdraw their election if
the Paying Agent receives, not later than the close of business on the second
Business Day preceding the Change of Control Payment Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the holder, the
principal amount of Senior Notes or portions thereof delivered for purchase, and
a statement that such holder is withdrawing his election to have such Senior
Notes or portions thereof purchased; and (7) that holders whose Senior Notes are
being purchased only in part will be issued new Senior Notes equal in principal
amount to the unpurchased portion of the Senior Notes surrendered, which
unpurchased portion must be equal to $1,000 in principal amount or an integral
multiple thereof. The Company shall comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
repurchase of the Senior Notes or portions thereof in connection with a Change
of Control.

      (b) On the Change of Control Payment Date, the Company shall, to the
extent lawful, (i) accept for payment Senior Notes or portions thereof tendered
pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Senior Notes or
portions thereof so tendered and (iii) deliver or cause to be delivered to the
Trustee the Senior Notes so accepted together with an Officers' Certificate
stating the Senior Notes or portions thereof tendered to the Company.  The
Paying Agent shall promptly mail to each holder of Senior Notes so accepted
payment in an amount equal to the purchase price for such Senior Notes or
portions thereof, and the Trustee shall promptly authenticate and mail to each
holder a new Senior Note equal in principal amount to any unpurchased portion of
the Senior Notes surrendered, if any; provided, that each such new Senior Note
shall be in a principal amount of $1,000 or an integral multiple thereof.  The
Company shall publicly announce the results of the Change of Control Offer on or
as soon as practicable after the Change of Control Payment Date.

Section 4.16.  Business Activities.

      The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, engage in any business other than the Telecommunications
Business.

Section 4.17.  Payments for Consent.

      The Company shall not, and shall not permit any of its Affiliates to,
directly or indirectly, pay or cause to be paid any consideration, whether by
way of interest, fee or otherwise, to any holder of any Senior Notes for or as
an inducement to any consent, waiver or amendment of any of the terms or
provisions of this Indenture or the Senior Notes unless such consideration is
offered to be paid or agreed to be paid to all holders of the Senior Notes that
consent, waive or agree to amend in the time frame set forth in the solicitation
documents relating to such consent, waiver or agreement.

Section 4.18.  Use of Proceeds.

      The Company shall use the gross proceeds from the sale of the Senior Notes
only for the following purposes:

   (i) to pay the fees and expenses of the issuance of the Senior Notes
including any discount or commission to the Initial Purchasers of the Senior
Notes; and

                                       50
<PAGE>
 
   (ii) with respect to any funds remaining after application under clause (i)
above, to fund up to 80% of the cost of the acquisition or construction of
Telecommunications Related Assets, or to the repayment of the Existing Senior
Notes.

          Pending application of the proceeds in accordance with clause (ii)
above, the Company shall deposit such proceeds into a segregated account in the
Company's name.  The Company shall deliver to the Trustee an Officer's
Certificate with each annual compliance certificate certifying that the amounts
in such account were applied in accordance with this Section 4.18.

                                       51
<PAGE>
 
                                   ARTICLE 5
                                   SUCCESSORS

Section 5.01.  Merger, Consolidation or Sale of Assets.

      The Company shall not consolidate or merge with or into (whether or not
the Company is the surviving entity), or sell, assign, transfer, lease, convey
or otherwise dispose of all or substantially all of its properties or assets in
one or more related transactions to another corporation, Person or entity
unless:

            (i)   the Company is the surviving entity or the entity or Person
      formed by or surviving any such consolidation or merger (if other than the
      Company) or to which such sale, assignment, transfer, lease, conveyance or
      other disposition has been made is a corporation organized or existing
      under the laws of the United States, any state thereof or the District of
      Columbia;

            (ii)  the entity or Person formed by or surviving any such
      consolidation or merger (if other than the Company) or the entity or
      Person to which such sale, assignment, transfer, lease, conveyance or
      other disposition has been made assumes all the obligations of the Company
      under the Senior Notes and this Indenture pursuant to a supplemental
      indenture in form reasonably satisfactory to the Trustee;

            (iii) immediately after such transaction no Default or Event of
      Default exists;

            (iv)  except in connection with a Merger with or into a wholly-owned
      Subsidiary of the Company, the Company, or any entity or Person formed by
      or surviving any such consolidation or merger, or to which such sale,
      assignment, transfer, lease, conveyance or other disposition has been
      made, at the time of such transaction after giving pro forma effect
      thereto as if such transaction had occurred at the beginning of the
      applicable fiscal quarter (including any Indebtedness incurred or
      anticipated to be incurred in connection with or in respect of such
      transaction or series of transactions), either (A) could incur at least
      $1.00 of additional Indebtedness pursuant to the Consolidated Cash Flow
      Leverage Ratio test described under Section 4.09 hereof or (B) would have
      (x) Total Market Capitalization of at least $1.0 billion and (y) total
      Indebtedness (net of cash and cash equivalents that are not restricted
      cash or restricted cash equivalents as reflected on the Company's
      consolidated balance sheet as at the time of such event) in an amount no
      greater than 40% of its Total Market Capitalization; and

            (v)   such transaction would not result in the loss, material
      impairment or adverse modification or amendment of any authorization or
      license of the Company or its Subsidiaries that would have a material
      adverse effect on the business or operations of the Company and its
      Subsidiaries taken as a whole.


Section 5.02.  Successor Corporation Substituted.

      Upon any consolidation or merger, or any sale, lease, conveyance or other
disposition of all or substantially all of the assets of the Company in
accordance with Section 5.01 hereof, the successor corporation formed by such
consolidation or into or with which the Company is merged or to which such
sale, lease, conveyance or other disposition is made shall succeed to, and be
substituted for (so that from and after the date of such consolidation, merger,
sale, lease, conveyance or other disposition, the 

                                       52
<PAGE>
 
provisions of this Indenture referring to the Company shall refer instead to the
successor corporation and not to the Company), and may exercise every right and
power of the Company under this Indenture with the same effect as if such
successor Person had been named as the Company, herein; provided, however, that
the predecessor Company shall not be relieved from the obligations to pay the
principal of, premium, if any, and interest on the Senior Notes, except in the
case of a sale of all of the Company's assets that meets the requirements of
Section 5.01 hereof.


                                   ARTICLE 6
                             DEFAULTS AND REMEDIES

Section 6.01.  Events of Default.

      Each of the following constitutes an "Event of Default":

      (a) default for 30 days in the payment when due of interest or Liquidated
          Damages, if any, on the Senior Notes;

      (b) default in payment when due of principal or premium, if any, on the
          Senior Notes at maturity, upon redemption or otherwise;

      (c) failure by the Company to perform or comply with the provisions of
          Sections 4.07, 4.09, 4.10, 4.15 or 5.01 hereof;

      (d) failure by the Company for 30 days after notice from the Trustee or
          the holders of at least 25% in principal amount of the Senior Notes
          then outstanding to comply with its other agreements in this Indenture
          or the Senior Notes;

      (e) default under any mortgage, indenture or instrument under which there
          may be issued or by which there may be secured or evidenced any
          Indebtedness for money borrowed by the Company or any of its
          Subsidiaries (or the payment of which is guaranteed by the Company or
          any of its Subsidiaries), whether such Indebtedness or Guarantee now
          exists, or is created after the Issue Date, which default (x) is
          caused by a failure to pay when due principal, premium, if any, or
          interest on such Indebtedness within the grace period provided in such
          Indebtedness (a "Payment Default"), and the principal amount of any
          such Indebtedness, together with the principal amount of any other
          such Indebtedness of the Company or any Significant Subsidiary under
          which there has been a Payment Default or the maturity of which has
          been accelerated as provided in clause (y), aggregates $5.0 million or
          more or (y) results in the acceleration (which acceleration has not
          been rescinded) of such Indebtedness prior to its express maturity and
          the principal amount of any such Indebtedness, together with the
          principal amount of any other such Indebtedness under which there has
          been a Payment Default or the maturity of which has been so
          accelerated, aggregates $5.0 million or more;

      (f) failure by the Company or any of its Significant Subsidiaries to pay
          final judgments (other than any judgment as to which a reputable
          insurance company has accepted full liability in writing) aggregating
          in excess of $5.0 million which judgments are not paid, discharged or
          stayed within 45 days after their entry; and

                                       53
<PAGE>
 
      (g) the Company or any of its Significant Subsidiaries pursuant to or
          within the meaning of Bankruptcy Law:

            (A)  commences a voluntary case,

            (B) consents to the entry of an order for relief against it in an
            involuntary case,

            (C) consents to the appointment of a Bankruptcy Custodian of it or
          for all or substantially all of its property,

            (D) makes a general assignment for the benefit of its creditors, or

            (E) admits in writing that it is generally not paying its debts
          (other than debts which are the subject of a bona fide dispute) as 
          they become due; or

      (h) a court of competent jurisdiction enters an order or decree under any
          Bankruptcy Law that;

            (A) is for relief against the Company or any of its Significant
          Subsidiaries in an involuntary case;

            (B) appoints a Bankruptcy Custodian of the Company or any of its
          Significant Subsidiaries or for all or substantially all of the
          property of the Company or any of its Significant Subsidiaries; or

            (C) orders the liquidation of the Company or any of its Significant
          Subsidiaries;

      and the order or decree remains unstayed and in effect for 60 consecutive
      days; provided, however; that if the entry of such order or decree is
      appealed and dismissed on appeal or otherwise has ceased to be in effect,
      then the Event of Default hereunder by reason of the entry of such order
      or decree shall be deemed to have been cured and the related acceleration,
      provided that no other Event of Default has occurred and is continuing,
      shall be deemed rescinded.

      The term "Bankruptcy Custodian" means any receiver, trustee, assignee,
liquidator or similar official under any Bankruptcy Law.


Section 6.02.  Acceleration.

      If any Event of Default occurs and is continuing under this Indenture, the
Trustee or the holders of at least 25% in principal amount of the then
outstanding Senior Notes may declare all the Senior Notes to be due and payable
immediately.  Upon such declaration, the principal of, premium, if any, and
accrued and unpaid interest and Liquidated Damages, if any, on the Senior Notes
shall be due and payable immediately.  Notwithstanding the foregoing, in the
case of an Event of Default arising under Sections 6.01(g) or (h) hereof with
respect to the Company or any of its Significant Subsidiaries, the foregoing
amount shall ipso facto become due and payable without further action or notice.
No premium is payable upon acceleration of the Senior Notes except that in the
case of an Event of Default that is the result of an action or inaction by the
Company or any of its Subsidiaries intended to avoid restrictions on or premiums
related to redemptions of the Senior Notes contained in this Indenture or the
Senior Notes, the amount

                                       54
<PAGE>
 
declared due and payable shall include the premium that would have been
applicable on a voluntary prepayment of the Senior Notes or, if voluntary
prepayment is not then permitted, the premium set forth in this Indenture.
Holders of the Senior Notes may not enforce this Indenture or the Senior Notes
except as provided herein.

      In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have had
to pay if the Company then had elected to redeem the Senior Notes pursuant to
Section 3.07 hereof, an equivalent premium shall also become and be immediately
due and payable to the extent permitted by law.  If an Event of Default occurs
prior to January 15, 2003 by reason of any willful action (or inaction) taken
(or not taken) by or on behalf of the Company with the intention of avoiding the
prohibition on redemption of the Senior Notes prior to such date pursuant to
Section 3.07 hereof, then the premium payable for purposes of this paragraph for
each of the years beginning on January 15th of the years set forth below shall
be as set forth in the following table, expressed as a percentage of the amount
that would otherwise be due but for the provisions of this paragraph, plus
accrued interest, if any, to the date of payment:

          YEAR                                     PERCENTAGE
          ----                                     ----------

          1997 ...................................   8.500%
          1998 ...................................   7.650%
          1999 ...................................   6.880%
          2000 ...................................   5.950%
          2001 ...................................   5.100%
          2002 ...................................   4.250%

Section 6.03.  Other Remedies.

          If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal, premium, if
any, interest and Liquidated Damages, if any, on the Senior Notes or to enforce
the performance of any provision of the Senior Notes or this Indenture.

          The Trustee may maintain a proceeding even if it does not possess any
of the Senior Notes or does not produce any of them in the proceeding.  A delay
or omission by the Trustee or any holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default.  All remedies
are cumulative to the extent permitted by law.


Section 6.04.  Waiver of Past Defaults.

          Holders of not less than a majority in aggregate principal amount of
the Senior Notes then outstanding, by notice to the Trustee, may on behalf of
the holders of all of the Senior Notes, waive any existing Default or Event of
Default and its consequences, except a continuing Default or Event of
Default in the payment of interest or Liquidated Damages or premium on, or the
principal of, the Senior Notes.  Upon any such waiver, such Default shall cease
to exist, and any Event of Default arising therefrom shall be deemed to have
been cured for every purpose of this Indenture; but no such waiver shall extend
to any subsequent or other Default or impair any right consequent thereon.

                                       55
<PAGE>
 
Section 6.05.  Control by Majority.

     Holders of a majority in principal amount of the then outstanding Senior
Notes may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it.  However, the Trustee may refuse to follow any direction that
conflicts with the law or this Indenture that the Trustee, in its sole
discretion, determines may be unduly prejudicial to the rights of other holders
of Senior Notes or that may involve the Trustee in personal liability.

Section 6.06.  Limitation on Suits.

          No holder of any Senior Note shall have any right to institute any
proceeding with respect to this Indenture or the Senior Notes or for any remedy
thereunder, unless:

          (i)  the holder of a Note gives to the Trustee written notice of a
     continuing Event of Default;

          (ii)  the holders of at least 25% in principal amount of the then
     outstanding Senior Notes make a written request to the Trustee to pursue
     the remedy;

          (iii)  such holder of a Senior Note or holders of the Senior Notes
     offer and, if requested, provide to the Trustee indemnity satisfactory to
     the Trustee against any loss, liability or expense; and

          (iv)  the Trustee does not comply with the request within 60 days
     after receipt of the request and the offer and, if requested, the provision
     of indemnity.

          Otherwise, no holder of any Senior Note shall have any right to
institute any proceeding with respect to this Indenture or the Senior Notes or
for any remedy thereunder, except:

          (x)  a holder of a Senior Note may institute suit for enforcement of
payment of the principal of and premium, if any, or interest on such Senior Note
on or after the respective due dates expressed in such Senior Note (including
upon acceleration thereof) or

          (y)  the institution of any proceeding with respect to this Indenture
or the Senior Notes or any remedy thereunder, including without limitation
acceleration, by the holders of a majority in principal amount of the
outstanding Senior Notes; provided that, upon institution of any proceeding or
exercise of any remedy such holders provide the Trustee with prompt written
notice thereof.

          A holder of a Senior Note may not use this Indenture to prejudice the
rights of another holder of a Senior Note or to obtain a preference or priority
over another holder of a Senior Note.


Section 6.07.  Rights of Holders of Notes to Receive Payment.

          Notwithstanding any other provision of this Indenture, the right of
any holder of a Senior Note to receive payment of principal, premium and
Liquidated Damages, if any, and interest on the Senior 

                                       56
<PAGE>
 
Note, on or after the respective due dates expressed in the Senior Note, or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of the holder of
the Senior Note.


Section 6.08.  Collection Suit by Trustee.

          If an Event of Default specified in Section 6.01(a) or (b) hereof
occurs and is continuing, the Trustee is authorized to recover judgment in its
own name and as trustee of an express trust against the Company for the whole
amount of principal of, premium and Liquidated Damages, if any, and interest
remaining unpaid on the Senior Notes and interest on overdue principal and, to
the extent lawful, interest and such further amount as shall be sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.


Section 6.09.  Trustee May File Proofs of Claim.

          The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
holders of the Senior Notes allowed in any judicial proceedings relative to the
Company (or any other obligor upon the Senior Notes), the Company's creditors or
the Company's property and shall be entitled and empowered to collect, receive
and distribute any money or other property payable or deliverable on any such
claims and any custodian in any such judicial proceeding is hereby authorized by
each holder of a Note to make such payments to the Trustee, and in the event
that the Trustee shall consent to the making of such payments directly to the
holders of the Senior Notes, to pay to the Trustee any amount due to it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, and any other amounts due the Trustee under Section 7.07
hereof.  To the extent that the payment of any such compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07 hereof out of the estate in any such
proceeding, shall be denied for any reason, payment of the same shall be secured
by a Lien on, and shall be paid out of, any and all distributions, dividends,
money, securities and other properties which the holders of the Senior Notes may
be entitled to receive in such proceeding whether in liquidation or under any
plan of reorganization or arrangement or otherwise.  Nothing contained herein
shall be deemed to authorize the Trustee to authorize or consent to or accept or
adopt on behalf of any holder of a Note any plan of reorganization, arrangement,
adjustment or composition affecting the Senior Notes or the rights of any holder
of a Note thereof, or to authorize the Trustee to vote in respect of the claim
of any holder of a Note in any such proceeding.


Section 6.10.  Priorities.

          If the Trustee collects any money pursuant to this Article 6, it shall
pay out the money in the following order:

          First:  to the Trustee, its agents and attorneys for amounts due under
Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;

                                       57
<PAGE>
 
          Second:  (i) first to holders of Senior Notes, for amounts due and
unpaid on such Senior Notes for interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the Senior
Notes for interest, and (ii) second, to the extent any other monies are
available, to holders of all Senior Notes for amounts due and unpaid on all such
Senior Notes for principal and premium and Liquidated Damages, if any, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Senior Notes for principal and premium and Liquidated Damages, if
any; and

          Third:  to the Company or to such party as a court of competent
jurisdiction shall direct.

          The Trustee may fix a record date and payment date for any such
payment to holders of Senior Notes.

Section 6.11.  Undertaking for Costs.

          In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to a suit by the Trustee, a suit by a holder of
a Senior Note pursuant to Section 6.07 hereof, or a suit by holders of more than
10% in principal amount of the then outstanding Senior Notes.


                                   ARTICLE 7
                                    TRUSTEE

Section 7.01.  Duties of Trustee.

          (a)  If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and shall use the same degree of care and skill in their exercise as
a prudent man would exercise or use under the circumstances in the conduct of
his own affairs.

          (b)  Except during the continuance of an Event of Default:

          (i)  the duties of the Trustee shall be determined solely by the
     express provisions of this Indenture and the Trustee need perform only
     those duties that are specifically set forth in this Indenture and no
     others, and no implied covenants or obligations shall be read into this
     Indenture against the Trustee, and

          (ii)  in the absence of bad faith on its part, the Trustee may
     conclusively rely, as to the truth of the statements and the correctness of
     the opinions expressed therein, upon certificates or opinions furnished to
     the Trustee and conforming to the requirements of this Indenture. However,
     the Trustee shall examine the certificates and opinions to determine
     whether or not they conform to the requirements of this Indenture.

                                       58
<PAGE>
 
          (c)  The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:

          (i)  this paragraph does not limit the effect of paragraph (b) of this
     Section 7.01;

          (ii)  the Trustee shall not be liable for any error of judgment made
     in good faith by a Responsible Officer, unless it is proved that the
     Trustee was negligent in ascertaining the pertinent facts; and

          (iii)  the Trustee shall not be liable with respect to any action it
     takes or omits to take in good faith in accordance with a direction
     received by it pursuant to Section 6.05 hereof.

          (d)  Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), and (c) of this Section 7.01.

          (e)  No provision of this Indenture shall require the Trustee to
expend or risk its own funds or incur any liability.  The Trustee shall be under
no obligation to exercise any of its rights and powers under this Indenture at
the request of any holders of Senior Notes, unless such holder shall have
provided to the Trustee security and indemnity satisfactory to the Trustee
against any loss, liability or expense.

          (f)  The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.


Section 7.02.  Rights of Trustee.

          (a)  The Trustee may conclusively rely upon any document believed by
it to be genuine and to have been signed or presented by the proper Person.  The
Trustee need not investigate any fact or matter stated in the document.

          (b)  Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel or both.  The Trustee shall
not be liable for any action it takes or omits to take in good faith in reliance
on such Officers' Certificate or Opinion of Counsel.  The Trustee may consult
with counsel and the advice of such counsel or any Opinion of Counsel shall be
full and complete authorization and protection from liability in respect of any
action taken, suffered or omitted by it hereunder in good faith and in reliance
thereon.

          (c)  The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent appointed with
due care.

          (d)  The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights or
powers conferred upon it by this Indenture.

          (e)  Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.

                                       59
<PAGE>
 
          (f)  The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the holders unless such holders shall have provided to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that might be incurred by it in compliance with such request or direction.


Section 7.03.  Individual Rights of Trustee.

          The Trustee in its individual or any other capacity may become the
owner or pledgee of Senior Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee.  However, in the event that the Trustee acquires any conflicting
interest, it must eliminate such conflict within 90 days, apply to the
Commission for permission to continue as Trustee or resign.  Any Agent may do
the same with like rights and duties.  The Trustee is also subject to Sections
7.10 and 7.11 hereof.


Section 7.04.  Trustee's Disclaimer.

          The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Senior Notes, it shall
not be accountable for the Company's use of the proceeds from the Senior Notes
or any money paid to the Company or upon the Company's direction under any
provision of this Indenture, it shall not be responsible for the use or
application of any money received by any Paying Agent other than the Trustee,
and it shall not be responsible for any statement or recital herein or any
statement in the Senior Notes or any other document in connection with the sale
of the Senior Notes or pursuant to this Indenture other than its certificate of
authentication.


Section 7.05.  Notice of Defaults.

          If a Default or Event of Default occurs and is continuing and if it is
known to a Responsible Officer of the Trustee, the Trustee shall mail to holders
of Senior Notes a notice of the Default or Event of Default within 90 days after
it occurs.  Except in the case of a Default or Event of Default in payment of
principal of, premium, if any, or interest on any Note, the Trustee may withhold
the notice if and so long as a committee of its Responsible Officers in good
faith determines that withholding the notice is in the interests of the holders
of the Senior Notes.


Section 7.06.  Reports by Trustee to Holders of the Senior Notes.

          Within 60 days after each May 15th beginning with the May 15th
following the date of this Indenture, the Trustee shall mail to the holders of
the Senior Notes a brief report dated as of such reporting date that complies
with TIA (S) 313(a) (but if no event described in TIA (S) 313(a) has occurred
within the twelve months preceding the reporting date, no report need be
transmitted).  The Trustee also shall comply with TIA (S) 313(b)(2).  The
Trustee shall also transmit by mail all reports as required by TIA (S) 313(c).

          A copy of each report at the time of its mailing to the holders of
Senior Notes shall be mailed to the Company and filed with the Commission and
each stock exchange on which the Senior Notes 

                                       60
<PAGE>
 
are listed. The Company shall promptly notify the Trustee when the Senior Notes
are listed on any stock exchange.


Section 7.07.  Compensation and Indemnity.

          The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder.  The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust.  The Company shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred or
made by it in addition to the compensation for its services.  Such expenses
shall include the reasonable compensation, disbursements and expenses of the
Trustee's agents and counsel.

          The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, except any such
loss, liability or expense as may be attributable to the negligence or bad faith
of the Trustee.  The Trustee shall notify the Company promptly of any claim for
which it may seek indemnity.  Failure by the Trustee to so notify the Company
shall not relieve the Company of its obligations hereunder.  The Company shall
defend the claim and the Trustee shall cooperate in the defense.  The Trustee,
in its sole discretion, may elect to have separate counsel selected by it and
the Company shall pay the reasonable fees and expenses of such counsel.  The
Company need not pay for any settlement made without its consent, which consent
shall not be unreasonably withheld.

          The obligations of the Company under this Section 7.07 shall survive
the satisfaction and discharge of this Indenture.

          To secure the Company' payment obligations in this Section 7.07, the
Trustee shall have a Lien prior to the Senior Notes on all money or property
held or collected by the Trustee, except that held in trust to pay principal,
premium, if any, interest and Liquidated Damages, if any, on particular Senior
Notes.  Such Lien shall survive the satisfaction and discharge of this
Indenture.

          When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(g) or (h) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.


Section 7.08.  Replacement of Trustee.

          A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section 7.08.

          The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company.  The holders of a majority
in principal amount of the then outstanding Senior Notes may remove the 
Trustee by so notifying the Trustee and the Company in writing. The Company may
remove the Trustee if:

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<PAGE>
 
          (a)  the Trustee fails to comply with Section 7.10 hereof;

          (b)  the Trustee is adjudged a bankrupt or an insolvent or an order
     for relief is entered with respect to the Trustee under any Bankruptcy Law;

          (c)  a Bankruptcy Custodian or public officer takes charge of the
     Trustee or its property; or

          (d)  the Trustee becomes incapable of acting.

          If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee.  Within one year after the successor Trustee takes office, the holders
of a majority in principal amount of the then outstanding Senior Notes may
appoint a successor Trustee to replace the successor Trustee appointed by the
Company.

          If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the holders of Senior Notes of at least 10% in principal amount of the then
outstanding Senior Notes may petition any court of competent jurisdiction for
the appointment of a successor Trustee.

          If the Trustee after written request by any holder of a Senior Note
who has been a holder of a Senior Note for at least six months fails to comply
with Section 7.10 hereof, such holder of a Senior Note may petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee.

          A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company.  Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture.  The successor Trustee shall mail a notice of its
succession to holders of the Senior Notes.  The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee, provided
all sums owing to the Trustee hereunder have been paid and subject to the Lien
provided for in Section 7.07 hereof.  Notwithstanding replacement of the Trustee
pursuant to this Section 7.08, the Company's obligations under Section 7.07
hereof shall continue for the benefit of the retiring Trustee.


Section 7.09.  Successor Trustee by Merger, etc.

          If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee.

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<PAGE>
 
Section 7.10.  Eligibility; Disqualification.

          There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the laws of the United States of
America or of any state thereof authorized under such laws to exercise corporate
trustee power, shall be subject to supervision or examination by federal or
state authority and shall have a combined capital and surplus of at least $25.0
million as set forth in its most recent published annual report of condition.

          This Indenture shall always have a Trustee who satisfies the
requirements of TIA (S) 310(a)(1), (2) and (5).  The Trustee is subject to TIA
(S) 310(b).


Section 7.11.  Preferential Collection of Claims Against Company.

          The Trustee is subject to TIA (S) 311(a), excluding any creditor
relationship listed in TIA (S) 311(b).  A Trustee who has resigned or been
removed shall be subject to TIA (S) 311(a) to the extent indicated therein.


                                   ARTICLE 8
                    LEGAL DEFEASANCE AND COVENANT DEFEASANCE

Section 8.01.  Option to Effect Legal Defeasance or Covenant Defeasance.

          The Company may, at the option of its Board of Directors evidenced by
a resolution set forth in an Officers' Certificate and at any time, with respect
to the Senior Notes, elect to have either Section 8.02 or 8.03 hereof be applied
to all outstanding Senior Notes upon compliance with the conditions set forth
below in this Article 8.


Section 8.02.  Legal Defeasance and Discharge.

          Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company shall be deemed to have been
discharged from its obligations with respect to all outstanding Senior Notes on
the date the conditions set forth in Section 8.04 are satisfied (hereinafter,
"Legal Defeasance").  For this purpose, such Legal Defeasance means that the
Company shall be deemed to have paid and discharged the entire Indebtedness
represented by the outstanding Senior Notes, which shall thereafter be deemed to
be "outstanding" only for the purposes of Section 8.05 hereof and the other
sections of this Indenture referred to in (a) and (b) below, and to have
satisfied all of its other obligations under such Senior Notes and this
Indenture (and the Trustee, on demand of and at the expense of the Company,
shall execute proper instruments acknowledging the same), except for the
following which shall survive until otherwise terminated or discharged
hereunder: (a) the rights of holders of outstanding Senior Notes to receive from
the trust described below payments in respect of the principal of, premium, if
any, and interest on and Liquidated Damages with respect to such Senior Notes
when such payments are due, or on the redemption date, as the case may be; (b)
the Company's obligations with respect to the Senior Notes concerning issuing
temporary Senior Notes, registration of Senior Notes, mutilated, destroyed, lost
or stolen Senior Notes and the maintenance of an office or agency for payment
and money for security 

                                       63
<PAGE>
 
payments held in trust; (c) the rights, powers, trust, duties and immunities of
the Trustee, and the Company's obligations in connection therewith; and (d) the
Legal Defeasance provisions of this Indenture.


Section 8.03.  Covenant Defeasance.

          Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company shall be released from its
obligations under the covenants contained in Sections 4.03, 4.04, 4.05, 4.07,
4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16, 4.17 and 4.18 hereof and Article
5 hereof with respect to the outstanding Senior Notes on and after the date the
conditions set forth in Section 8.04 are satisfied (hereinafter, "Covenant
Defeasance"), and the Senior Notes shall thereafter be deemed not "outstanding"
for the purposes of any direction, waiver, consent or declaration or act of
holders (and the consequences of any thereof) in connection with such covenants,
but shall continue to be deemed "outstanding" for all other purposes hereunder
(it being understood that such Senior Notes shall not be deemed outstanding for
accounting purposes).  For this purpose, such Covenant Defeasance means that,
with respect to the outstanding Senior Notes, the Company may omit to comply
with and shall have no liability in respect of any term, condition or limitation
set forth in any such covenant, whether directly or indirectly, by reason of any
reference elsewhere herein to any such covenant or by reason of any reference in
any such covenant to any other provision herein or in any other document and
such omission to comply shall not constitute a Default or an Event of Default
under Section 6.01 hereof but, except as specified above, the remainder of this
Indenture and such Senior Notes shall be unaffected thereby.  In addition, upon
the Company's exercise under Section 8.01 hereof of the option applicable to
this Section 8.03, subject to the satisfaction of the conditions set forth in
Section 8.04 hereof, Sections 6.01(d) through 6.01(f) hereof shall not
constitute Events of Default.


Section 8.04.  Conditions to Legal or Covenant Defeasance.

     The following shall be the conditions to the application of either Section
8.02 or Section 8.03 hereof to the outstanding Senior Notes:

          (a)  The Company shall irrevocably have deposited or caused to be
     deposited with the Trustee (or another trustee satisfying the requirements
     of Section 7.10 hereof who shall agree to comply with the provisions of
     this Article 8 applicable to it), in trust, for purpose of making the
     following payments, specifically pledged as security for, and dedicated
     solely to, the benefit of the holders of the Senior Notes, (i) cash in U.S.
     dollars, (ii) non-callable Government Securities, or (iii) a combination
     thereof, in such amounts as will be sufficient, in the opinion of a
     nationally recognized firm of independent public accountants selected by
     the Company, to pay the principal of, premium and Liquidated Damages, if
     any, and interest on the outstanding Senior Notes, on the stated maturity
     or on the applicable optional redemption date, as the case may be, of such
     principal or installment of principal of, premium, if any, or interest on
     or Liquidated Damages with respect to the outstanding Senior Notes;

          (b)  In the case of Legal Defeasance, the Company shall have delivered
     to the Trustee an opinion of counsel in the United States reasonably
     acceptable to the Trustee confirming that (i) the Company has received
     from, or there has been published by, the Internal Revenue Service a ruling
     or (ii) since the Issue Date, there has been a change in the applicable
     federal income tax law, in either case to the effect that, and based
     thereon such opinion of counsel shall confirm that, the holders of the
     outstanding Senior Notes will not recognize income, gain or loss for
     federal income 

                                       64
<PAGE>
 
     tax purposes as a result of such Legal Defeasance and will be subject to
     federal income tax on the same amounts, in the same manner and at the same
     times as would have been the case if such Legal Defeasance had not
     occurred;

          (c)  In the case of Covenant Defeasance, the Company shall have
     delivered to the Trustee an opinion of counsel in the United States
     reasonably acceptable to the Trustee confirming that the holders of the
     outstanding Senior Notes will not recognize income, gain or loss for
     federal income tax purposes as a result of such Covenant Defeasance and
     will be subject to federal income tax on the same amounts, in the same
     manner and at the same times as would have been the case if such Covenant
     Defeasance had not occurred;

          (d)  No Default or Event of Default shall have occurred and be
     continuing on the date of such deposit (other than a Default or Event of
     Default resulting from the borrowing of funds to be applied to such
     deposit) or insofar as Events of Default from bankruptcy or insolvency
     events are concerned, at any time in the period ending on the 91st day
     after the date of deposit;

          (e)  Such Legal Defeasance or Covenant Defeasance shall not result in
     a breach or violation of, or constitute a default under any material
     agreement or instrument (other than this Indenture) to which the Company or
     any of its Subsidiaries is a party or by which the Company or any of its
     Subsidiaries is bound;

          (f)  The Company shall have delivered to the Trustee an opinion of
     counsel to the effect that after the 91st day (or such other applicable
     date) following the deposit, the trust funds will not be subject to the
     effect of any applicable bankruptcy, insolvency, reorganization or similar
     laws affecting creditors' rights generally;

          (g)  The Company shall have delivered to the Trustee an Officers'
     Certificate stating that the deposit was not made by the Company with the
     intent of preferring the holders of Senior Notes over the other creditors
     of the Company with the intent of defeating, hindering, delaying or
     defrauding creditors of the Company or others; and

          (h)  The Company shall have delivered to the Trustee an Officers'
     Certificate and an opinion of counsel, each stating that all conditions
     precedent provided for relating to the Legal Defeasance or the Covenant
     Defeasance have been complied with.


Section 8.05.  Deposited Money and Government Securities to be Held in Trust;
               Other Miscellaneous Provisions.

      Subject to Section 8.06 hereof, all money and Government Securities
(including the proceeds thereof) deposited with the Trustee (or other qualifying
trustee, collectively for purposes of this Section 8.05, the "Trustee") pursuant
to Section 8.04 hereof in respect of the outstanding Senior Notes shall be held
in trust and applied by the Trustee, in accordance with the provisions of such
Senior Notes and this Indenture, to the payment, either directly or through any
Paying Agent (including the Company acting as Paying Agent) as the Trustee may
determine, to the holders of such Senior Notes of all sums due and to become due
thereon in respect of principal, premium, if any, and interest, but such money
and Government Securities (including any proceeds thereof) need not be
segregated from other funds except to the extent required by law.

                                       65
<PAGE>
 
      The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or Government Securities
deposited pursuant to Section 8.04 hereof or the principal and interest received
in respect thereof other than any such tax, fee or other charge which by law is
for the account of the holders of the outstanding Senior Notes.

      Anything in this Article 8 to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon the request of the
Company any money or Government Securities held by it as provided in Section
8.04 hereof which, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered to the
Trustee (which may be the opinion delivered under Section 8.04(a) hereof), are
in excess of the amount thereof which would then be required to be deposited to
effect an equivalent Legal Defeasance or Covenant Defeasance.


Section 8.06.  Repayment to Company.

      Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of, premium, or interest
on any Senior Note and remaining unclaimed for two years after such principal,
and premium, if any, or interest has become due and payable shall be paid to the
Company on its written request or (if then held by the Company) shall be
discharged from such trust; and the holder of such Senior Note shall thereafter,
as a creditor, look only to the Company for payment thereof, and all liability
of the Trustee or such Paying Agent with respect to such trust money, and all
liability of the Company as trustee thereof, shall thereupon cease; provided,
however, that the Trustee or such Paying Agent, before being required to make
any such repayment, may at the expense of the Company cause to be published
once, in the New York Times and The Wall Street Journal (national edition),
notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such notification
or publication, any unclaimed balance of such money then remaining will be
repaid to the Company.


Section 8.07.  Reinstatement.

      If the Trustee or Paying Agent is unable to apply any United States
Dollars or Government Securities in accordance with Section 8.02 or 8.03 hereof,
as the case may be, by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the Senior
Notes shall be revived and reinstated as though no deposit had occurred pursuant
to Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.02 or 8.03
hereof, as the case may be; provided, however, that, if the Company makes any
payment of principal of, premium, if any, or interest on any Senior Note
following the reinstatement of its obligations, the Company shall be subrogated
to the rights of the holders of such Senior Notes to receive such payment from
the money held by the Trustee or Paying Agent.

                                       66
<PAGE>
 
                                   ARTICLE 9
                        AMENDMENT, SUPPLEMENT AND WAIVER

Section 9.01.  Without Consent of Holders of Senior Notes.

      Notwithstanding Section 9.02 hereof, the Company and the Trustee may amend
or supplement this Indenture or the Senior Notes without the consent of any
holder of Senior Notes:

      (a) to cure any ambiguity, defect or inconsistency;

      (b) to provide for uncertificated Senior Notes in addition to or in place
          of certificated Senior Notes;

      (c) to provide for the assumption of the Company's obligations to holders
          of the Senior Notes in the case of a merger or consolidation;

      (d) to make any change that would provide any additional rights or
          benefits to the holders of the Senior Notes or that does not adversely
          affect the legal rights under this Indenture of any such holder; or

      (e) to comply with requirements of the Commission in order to effect or
          maintain the qualification of this Indenture under the Trust Indenture
          Act.

      Upon the request of the Company accompanied by a resolution of the Board
of Directors of the Company authorizing the execution of any such amended or
supplemental Indenture, and upon receipt by the Trustee of the documents
described in Section 9.06 hereof, the Trustee shall join with the Company in the
execution of any amended or supplemental Indenture authorized or permitted by
the terms of this Indenture and to make any further appropriate agreements and
stipulations which may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supplemental Indenture which affects its
own rights, duties or immunities under this Indenture or otherwise.


Section 9.02.  With Consent of Holders of Senior Notes.

      The Company and the Trustee may amend or supplement this Indenture or the
Senior Notes or any amended or supplemental Indenture with the written consent
of the holders of Senior Notes of at least a majority in aggregate principal
amount of the Senior Notes then outstanding (including consents obtained in
connection with a tender offer or exchange offer for the Senior Notes), and any
existing Default and its consequences or compliance with any provision of this
Indenture or the Senior Notes may be waived with the consent of the holders of a
majority in principal amount of the then outstanding Senior Notes (including
consents obtained in connection with a tender offer or exchange offer for the
Senior Notes).

      Upon the request of the Company accompanied by a resolution of the Board
of Directors of the Company authorizing the execution of any such amended or
supplemental Indenture, and upon the filing with the Trustee of evidence
satisfactory to the Trustee of the consent of the holders of Senior Notes as
aforesaid, and upon receipt by the Trustee of the documents described in Section
9.06 hereof, the Trustee shall join with the Company in the execution of such
amended or supplemental Indenture unless such amended or supplemental Indenture 
affects the Trustee's own rights, duties or immunities under this 

                                       67
<PAGE>
 
Indenture or otherwise, in which case the Trustee may in its discretion, but
shall not be obligated to, enter into such amended or supplemental Indenture.

      It shall not be necessary for the consent of the holders of Senior Notes
under this Section 9.02 to approve the particular form of any proposed amendment
or waiver, but it shall be sufficient if such consent approves the substance
thereof.

      After an amendment, supplement or waiver under this Section 9.02 becomes
effective, the Company shall mail to the holders of Senior Notes affected
thereby a notice briefly describing the amendment, supplement or waiver.  Any
failure of the Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such amended or
supplemental Indenture or waiver.  Subject to Sections 6.04 and 6.07 hereof, the
holders of a majority in aggregate principal amount of the Senior Notes then
outstanding may waive compliance in a particular instance by the Company with
any provision of this Indenture or the Senior Notes.  However, without the
consent of each holder affected, an amendment or waiver may not (with respect to
any Senior Notes held by a non-consenting holder of Senior Notes):

       (i) reduce the principal amount of Senior Notes whose holders must 
           consent to an amendment, supplement or waiver;

      (ii) reduce the principal of or change the fixed maturity of any Note or
           alter the provisions with respect to the redemption of the Senior 
           Notes (other than Sections 3.09 and 4.15 hereof);

     (iii) reduce the rate of or change the time for payment of interest on
           any Senior Notes;

      (iv) waive a Default or Event of Default in the payment of principal of or
           premium, if any, or interest on the Senior Notes (except a rescission
           of acceleration of the Senior Notes by the holders of at least a
           majority in aggregate principal amount of the Senior Notes and a 
           waiver of the payment default that resulted from such acceleration);

       (v) make any Note payable in money other than that stated in the Senior
           Notes;

      (vi) make any change in the provisions of this Indenture relating to
           waivers of past Defaults or the rights of holders of Senior Notes to
           receive payments of principal of, premium, if any, or interest on the
           Senior Notes;

     (vii) waive a redemption payment with respect to any Senior Note (other
           than a payment required by Sections 3.09 or 4.15 hereof); or

    (viii) make any change in the foregoing amendment and waiver provisions.


Section 9.03.  Compliance with Trust Indenture Act.

      Every amendment or supplement to this Indenture or the Senior Notes shall
be set forth in a amended or supplemental Indenture that complies with the TIA
as then in effect.

                                       68
<PAGE>
 
Section 9.04.  Revocation and Effect of Consents.

      Until an amendment, supplement or waiver becomes effective, a consent to
it by a holder of a Senior Note is a continuing consent by the holder of a
Senior Note and every subsequent holder of a Senior Note or portion of a Note
that evidences the same debt as the consenting holder's Senior Note, even if
notation of the consent is not made on any Senior Note.  However, any such
holder of a Senior Note or subsequent holder of a Note may revoke the consent as
to its Senior Note if the Trustee receives written notice of revocation before
the date the waiver, supplement or amendment becomes effective.  An amendment,
supplement or waiver becomes effective in accordance with its terms and
thereafter binds every holder of a Senior Note.

      The Company may fix a record date for determining which holders of the
Senior Notes must consent to such amendment, supplement or waiver.  If the
Company fixes a record date, the record date shall be fixed at (i) the later of
30 days prior to the first solicitation of such consent or the date of the most
recent list of holders of Senior Notes furnished to the Trustee prior to such
solicitation pursuant to Section 2.05 hereof or (ii) such other date as the
Company shall designate.


Section 9.05.  Notation on or Exchange of Senior Notes.

      The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Senior Note thereafter authenticated.  The Company
in exchange for all Senior Notes may issue and the Trustee shall authenticate
new Senior Notes that reflect the amendment, supplement or waiver.

      Failure to make the appropriate notation or issue a new Senior Note shall
not affect the validity and effect of such amendment, supplement or waiver.


Section 9.06.  Trustee to Sign Amendments, etc.

      The Trustee shall sign any amended or supplemental Indenture authorized
pursuant to this Article 9 if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee.  The
Company may not sign an amendment or supplemental Indenture until the Board of
Directors approves it.


Section 9.07.  Payment for Consents.

      The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, pay or cause to be paid any consideration, whether by
way of interest, fee or otherwise, to any holder of Senior Notes for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of this Indenture or the Senior Notes, unless such consideration is offered to
be paid or agreed to be paid to all holders of the Senior Notes that consent,
waive or agree to amend in the time frame set forth in the solicitation
documents relating to such consent, waiver or agreement.

                                       69
<PAGE>
 
                                   ARTICLE 10
                                 MISCELLANEOUS


Section 10.01.  Trust Indenture Act Controls.

      If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by TIA (S) 318(c), the imposed duties shall control.


Section 10.02.  Notices.

      Any notice or communication by the Company or the Trustee to the other is
duly given if in writing and delivered in Person or mailed by first class mail
(registered or certified, return receipt requested), telex, telecopier or
overnight air courier guaranteeing next day delivery, to the other's address:

      If to the Company:

         Intermedia Telecommunications Inc.
         3625 Queen Palm Drive
         Tampa, Florida  33619
         Telecopier No.:  (813) 829-2390
         Attention:  Chief Financial Officer

      If to the Trustee:

         SunTrust Bank, Central Florida, National Association
         225 East Robinson Street, Suite 250
         Orlando, Florida  32801
         Telephone No.:  (407) 237-5179
         Telecopier No.: (407) 237-5299
         Attention: Corporate Trust Department

      The Company or the Trustee, by notice to the other may designate
additional or different addresses for subsequent notices or communications.

      All notices and communications (other than those sent to holders of Senior
Notes) 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 the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.

      Any notice or communication to a holder of a Senior Note shall be mailed
by first class mail to its address shown on the register kept by the Registrar.
Any notice or communication shall also be so mailed to any Person described in
TIA (S) 313(c), to the extent required by the TIA.  Failure to mail a notice or
communication to a holder of a Senior Note or any defect in it shall not affect
its sufficiency with respect to other holders of Senior Notes.

      If a notice or communication is mailed in the manner provided above within
the time prescribed, it is duly given, whether or not the addressee receives it.

                                       70
<PAGE>
 
      If the Company mails a notice or communication to holders of Senior Notes,
it shall mail a copy to the Trustee and each Agent at the same time.


Section 10.03.  Communication by Holders of Senior Notes with Other Holders of
                Senior Notes.

      Holders of the Senior Notes may communicate pursuant to TIA (S) 312(b)
with other holders of Senior Notes with respect to their rights under this
Indenture or the Senior Notes.  The Company, the Trustee, the Registrar and
anyone else shall have the protection of TIA (S) 312(c).


Section 10.04.  Certificate and Opinion as to Conditions Precedent.

      Upon any request or application by the Company to the Trustee to take any
action under this Indenture, the Company shall furnish to the Trustee:

      (a) an Officers' Certificate in form and substance reasonably satisfactory
   to the Trustee (which shall include the statements set forth in Section 10.05
   hereof) stating that, in the opinion of the signers, all conditions precedent
   and covenants, if any, provided for in this Indenture relating to the
   proposed action have been satisfied; and

      (b) an Opinion of Counsel in form and substance reasonably satisfactory to
   the Trustee (which shall include the statements set forth in Section 10.05
   hereof) stating that, in the opinion of such counsel, all such conditions
   precedent and covenants have been satisfied.


Section 10.05.  Statements Required in Certificate or Opinion.

      Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA (S) 314(a)(4)) shall include:

      (a) a statement that the Person making such certificate or opinion has
   read such covenant or condition;

      (b) a brief statement as to the nature and scope of the examination or
   investigation upon which the statements or opinions contained in such
   certificate or opinion are based;

      (c) a statement that, in the opinion of such Person, he has made such
   examination or investigation as is necessary to enable him to express an
   informed opinion as to whether or not such covenant or condition has been
   satisfied; and

      (d) a statement as to whether or not, in the opinion of such Person, such
   condition or covenant has been satisfied.


Section 10.06.  Rules by Trustee and Agents.

                                       71
<PAGE>
 
      The Trustee may make reasonable rules for action by or at a meeting of
holders of Senior Notes.  The Registrar or Paying Agent may make reasonable
rules and set reasonable requirements for its functions.


Section 10.07.  No Personal Liability of Partners, Directors, Officers,
                Employees and Stockholders.

      No director, officer, employee, incorporator or stockholder of the
Company, as such, shall have any liability for any obligations of the Company
under the Senior Notes or this Indenture or for any claim based on, in respect
of, or by reason of, such obligations or their creation.  Each holder of the
Senior Notes by accepting a Senior Note waives and releases all such liability.
The waiver and release are part of the consideration for issuance of the Senior
Notes.  Such waiver may not be effective to waive liabilities under the federal
securities laws and it is the view of the Commission that such a waiver is
against public policy.


Section 10.08.  Governing Law.

      The internal law of the State of New York shall govern and be used to
construe this Indenture and the Senior Notes.


Section 10.09.  No Adverse Interpretation of Other Agreements.

      This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or its Subsidiaries.  Any such indenture, loan or
debt agreement may not be used to interpret this Indenture.


Section 10.10.  Successors.

      All agreements of the Company in this Indenture and the Senior Notes shall
bind its successors.  All agreements of the Trustee in this Indenture shall bind
its successor.

Section 10.11.  Severability.

      In case any provision in this Indenture or in the Senior Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.


Section 10.12.  Counterpart Originals.

      The parties may sign any number of copies of this Indenture.  Each signed
copy shall be an original, but all of them together represent the same
agreement.

                                       72
<PAGE>
 
Section 10.13.  Table of Contents, Headings, etc.

      The Table of Contents, Cross-Reference Table and Headings of the articles
and sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part of this Indenture and shall in no way
modify or restrict any of the terms or provisions hereof.

                         [Signatures on following page]

                                       73
<PAGE>
 
                                  SIGNATURES

Dated as of December 23, 1997         Intermedia Communications Inc.

 


                                 By:  __________________________________
                                      Name:
                                      Title:

Attest:


______________________________ 
Name:
Title:



Dated as of December 23, 1997         SunTrust Bank, Central Florida,
                                 National Association
                                 Trustee



                                 By:  __________________________________
                                      Name:
                                      Title:

Attest:


______________________________  
Name:
Title:

                                       74
<PAGE>
 
                                                                       EXHIBIT A
                                 (Face of Note)


                          8 1/2% Senior Note due 2008

No.                                                             $_______________

CUSIP No.

                         INTERMEDIA COMMUNICATIONS INC.

promises to pay to Cede & Co.

or its registered assigns,

the principal sum of $____________

on July 15, 2008.

Interest Payment Dates: January 15 and July 15, commencing July 15, 1998.

Record Dates: January 1 and July 1 (whether or not a Business Day).

Dated: December 23, 1997      INTERMEDIA COMMUNICATIONS INC.


                         By: ____________________________________________
                                   Title:

Trustee's Certification of Authentication
Dated:  December 23, 1997


This is one of the Senior Notes
referred to in the within-
mentioned Indenture:

SunTrust Bank, Central Florida, National Association,
as Trustee

By:  ______________________________________
     (Authorized Signatory)


          Additional provisions of this Senior Note are set forth on the other
          side of this Senior Note.

                                      A-1
<PAGE>
 
                                 (Back of Note)

                          8 1/2% Senior Note due 2008


          THIS GLOBAL SECURITY IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
     INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF
     THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER
     ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS
     HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II)
     THIS GLOBAL SECURITY MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO
     SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL SECURITY MAY BE
     DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE
     INDENTURE AND (IV) THIS GLOBAL SECURITY MAY BE TRANSFERRED TO A SUCCESSOR
     DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.

          THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
     ISSUED IN A TRANSACTION EXEMPT FORM 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
     TRANSFER AGENT) 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.

                                      A-2
<PAGE>
 
      Capitalized terms used herein have the meanings assigned to them in the
Indenture (as defined below) unless otherwise indicated.

      1.  Interest.  Intermedia Communications Inc., a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Senior Note
at the rate and in the manner specified below.  Interest will accrue at a rate
of 8 1/2% and will be payable semi-annually, in arrears, on January 15 and July
15 of each year, commencing on July 15, 1998 or if any such day is not a
Business Day on the next succeeding Business Day (each an "Interest Payment
Date") to holders of record of the Senior Notes at the close of business on the
immediately preceding January 1 and July 1, whether or not a Business Day.
Interest on the Senior Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the Issue Date.
Interest will be computed on the basis of a 360-day year comprised of twelve 30-
day months.  To the extent lawful, the Company shall pay interest on overdue
principal at the then applicable interest rate on the Senior Notes; it shall pay
interest on overdue installments of interest (without regard to any applicable
grace periods) at the same rate to the extent lawful.

      2.  Method of Payment.  The Company will pay interest on the Senior Notes
(except defaulted interest) to the Persons who are registered holders of Senior
Notes at the close of business on the record date next preceding the Interest
Payment Date, even if such Senior Notes are cancelled after such record date and
on or before such Interest Payment Date.  The holder hereof must surrender this
Senior Note to a Paying Agent to collect principal payments.  Principal,
premium, Liquidated Damages, if any, and interest on the Senior Notes will be
payable by wire transfer of immediately available funds to the accounts
specified by the holders thereof or if no such account(s) is specified, by
mailing a check to the address set forth for such holder in the register of the
holders of Senior Notes.  Unless otherwise designated by the Company, the
Company's office or agency in New York will be the office of the Trustee
maintained for such purpose.

      3.  Paying Agent and Registrar.  Initially, the Trustee will act as Paying
Agent and Registrar.  The Company may change any Paying Agent, Registrar or co-
registrar without prior notice to any holder of a Note.  The Company may act in
any such capacity.

      4.  Indenture.  The Company issued the Senior Notes under an Indenture,
dated as of December 23, 1997 (the "Indenture"), between the Company and the
Trustee.  The terms of the Senior Notes include those stated in the Indenture
and those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (15 U.S. Code (S)(S) 77aaa-77bbbb), as in effect on the date of
the Indenture.  The Senior Notes are subject to all such terms, and holders of
Senior Notes are referred to the Indenture and such act for a statement of such
terms.  The terms of the Indenture shall govern any inconsistencies between the
Indenture and the Senior Notes.  The Senior Notes are obligations of the Company
limited to the sum of $350,000,000 in aggregate principal amount of Senior Notes
($400,000,000 in aggregate principal amount if the Initial Purchasers exercise
their over-allotment option as described in the Offering Memorandum).

      5.  Optional Redemption.  The Senior Notes will not be redeemable at the
Company's option prior to January 15, 2003.  Thereafter, the Senior Notes will
be subject to redemption at the option of the Company, in whole or in part, upon
not less than 30 nor more than 60 days' notice to the holders thereof, at the
redemption prices (expressed as percentages of principal amount) set forth below
plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the
applicable redemption date, if redeemed during the twelve-month period beginning
on January 15 of the years indicated below:

                                      A-3
<PAGE>
 
          YEAR                                            PERCENTAGE
          ----                                            ----------
          2003............................................. 104.250%
          2004............................................. 102.833%
          2005............................................. 101.417%
          2006............................................. 100.000%


     Notwithstanding the provisions of Section 3.07(a) of the Indenture, in the
event of the sale by the Company prior to January 15, 2001 of its Capital Stock
(other than Disqualified Stock) (i) to a Strategic Investor in a single
transaction or series of related transactions for an aggregate purchase price
equal to or exceeding $50.0 million or (ii) in one or more Public Offerings,  up
to a maximum of 25% of the aggregate principal amount of the Senior Notes
originally issued shall, at the option of the Company, be redeemable from the
net cash proceeds of such sale or sales to such Strategic Investor (but only to
the extent such proceeds consist of cash or readily marketable cash equivalents
received in respect of the Capital Stock, other than Disqualified Stock, so
sold) at a redemption price equal to 108.500% of the principal amount thereof
plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the
redemption date; provided that at least 75% of the aggregate principal amount of
the Senior Notes originally issued remains outstanding immediately after the
occurrence of such redemption and that such redemption occurs within 90 days of
the date of the closing of such sale.

      6.  Mandatory Redemption.  Except as set forth in Sections 3.09 and 4.15
of the Indenture, the Company will not be required to make mandatory redemption
or sinking fund payments with respect to the Senior Notes.

      7.  Repurchase at Option of holder.  (a)  Upon the occurrence of a Change
of Control, the Company shall be required to make an offer to repurchase on the
Change of Control Payment Date all or any part (equal to $1,000 or an integral
multiple thereof) of the outstanding Senior Notes at a purchase price equal to
101% of the aggregate principal amount thereof plus accrued and unpaid interest,
and Liquidated Damages, if any thereon to the Change of Control Payment Date.
Holders of Senior Notes that are subject to an offer to purchase will receive a
Change of Control Offer from the Company prior to any related Change of Control
Payment Date and may elect to have such Senior Notes purchased by completing the
form entitled "Option of Holder to Elect Purchase" appearing below.

      (b)  The Company shall be required when the cumulative amount of Excess
Proceeds from Asset Sales exceeds $10.0 million to offer to purchase the maximum
principal amount of Senior Notes and Pari Passu Notes that may be purchased out
of the Excess Proceeds, at an offer price in cash in an amount equal to 100% of
the outstanding principal amount of the Senior Notes and 100% of the accreted
value or 100% of the outstanding principal amount, as applicable, of the Pari
Passu Notes, plus accrued and unpaid interest and Liquidated Damages thereon, if
any, to the date fixed for the closing of such accordance with the procedures
set forth in Section 3.09 of the Indenture.  If the principal amount and/or
aggregate accreted value, as the case may be, of Senior Notes and Pari Passu
Notes surrendered by holders thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the Senior Notes and Pari Passu Notes to be purchased on a
pro rata basis (with such adjustments as may be deemed appropriate by the
Company so that only Senior Notes and Pari Passu Notes in denominations of
$1,000, or integral multiples thereof shall be purchased).  Holders of Senior
Notes that are the subject of an offer to purchase will receive an Excess
Proceeds Offer from the Company prior to any related purchase date and may elect
to have such Senior Notes purchased by completing the form entitled "Option of
Holder to Elect Purchase" appearing below.


      8.  Notice of Redemption.  Notice of redemption shall be mailed by first
class mail at least 30 days but not more than 60 days before the redemption date
to each holder of Senior Notes to be redeemed 

                                      A-4
<PAGE>
 
at its registered address. Senior Notes may be redeemed in part but only in
whole multiples of $1,000, unless all of the Senior Notes held by a holder of
Senior Notes are to be redeemed. If any Senior Note is to be redeemed in part
only, the notice of redemption that relates to such Senior Note shall state the
portion of the principal amount to be redeemed. On and after the redemption
date, interest ceases to accrue on Senior Notes or portions of them called for
redemption.

      9.  Denominations, Transfer, Exchange.  The Senior Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000.  The transfer of Senior Notes may be registered and Senior Notes may be
exchanged as provided in the Indenture.  The Registrar and the Trustee may
require a holder of a Senior Note, among other things, to furnish appropriate
endorsements and transfer documents and the Company may require a holder of a
Senior Note to pay any taxes and fees required by law or permitted by the
Indenture.  Neither the Company nor the Registrar need exchange or register the
transfer of any Senior Note or portion of a Senior Note selected for redemption.
Also, neither the Company nor the Registrar need exchange or register the
transfer of any Senior Notes for a period of 15 days before a selection of
Senior Notes to be redeemed.

      10.  Persons Deemed Owners.  Prior to due presentment to the Trustee for
registration of the transfer of this Senior Note, the Trustee, any Agent and the
Company shall deem and treat the Person in whose name this Senior Note is
registered as its absolute owner for the purpose of receiving payment of
principal of, premium, Liquidated Damages, if any, and interest on this Senior
Note and for all other purposes whatsoever, whether or not this Senior Note is
overdue, and neither the Trustee, any Agent nor the Company shall be affected by
notice to the contrary.  The registered holder of a Senior Note shall be treated
as its owner for all purposes.

      11.  Amendments, Supplement and Waivers.  Subject to certain exceptions,
the Indenture or the Senior Notes may be amended or supplemented with the
consent of the holders of at least a majority in principal amount of the Senior
Notes then outstanding (including consents obtained in connection with a tender
offer or exchange offer for Senior Notes), and any existing default or
compliance with any provision of the Indenture or the Senior Notes may be waived
with the consent of the holders of a majority in principal amount of the then
outstanding Senior Notes (including consents obtained in connection with a
tender offer or exchange offer for Senior Notes).  Without the consent of any
holder of a Senior Note, the Indenture or the Senior Notes may be amended or
supplemented to cure any ambiguity, defect or inconsistency; to provide for
uncertificated Senior Notes in addition to or in place of certificated Senior
Notes; to provide for the assumption of the Company's obligations to holders of
the Senior Notes in case of a merger or consolidation; to make any change that
would provide any additional rights or benefits to the holders of the Senior
Notes or that does not adversely affect the legal rights under the Indenture of
any such holder; or to comply with the requirements of the Commission in order
to effect or maintain the qualification of the Indenture under the Trust
Indenture Act.  However, without the consent of each holder affected, an
amendment or waiver may not (with respect to any Senior Notes held by a non-
consenting holder of Senior Notes) reduce the principal amount of Senior Notes
whose holders must consent to an amendment, supplement or waiver; reduce the
principal of or change the fixed maturity of any Senior Note or alter the
provisions with respect to the redemption of the Senior Notes (other than a
payment required by Section 3.09 or Section 4.15 of the Indenture); reduce the
rate of or change the time for payment of interest on any Senior Notes; waive a
Default or Event of Default in the payment of principal of or premium, if any,
or interest on the Senior Notes (except a rescission of acceleration of the
Senior Notes by the holders of at least a majority in aggregate principal amount
of the Senior Notes and a waiver of the payment default that resulted from such
acceleration); make any Senior Note payable in money other than that stated in
the Senior Notes; make any change in the provisions of the Indenture relating to
waivers of past Defaults or the rights of holders of Senior Notes to receive
payments of principal of, premium, if any, or interest on the Senior Notes;
waive a redemption payment with respect to any Senior Note (other than 

                                      A-5
<PAGE>
 
a payment required by Section 3.09 or Section 4.15 of the Indenture) or make any
change in the foregoing amendment and waiver provisions.

      12.  Defaults and Remedies.  Events of Default include:  default for 30
days in the payment when due of interest on the Senior Notes; default in payment
when due of principal or premium, if any, on the Senior Notes at maturity, upon
redemption or otherwise; failure by the Company to perform or comply with the
provisions described under Sections 4.07, 4.09, 4.10, 4.15 or 5.01 of the
Indenture; failure by the Company for 30 days after notice from the Trustee or
the holders of at least 25% in principal amount of the Senior Notes then
outstanding to comply with its other agreements in the Indenture or the Senior
Notes; default under any mortgage, indenture or instrument under which there may
be issued or by which there may be secured or evidenced any Indebtedness for
money borrowed by the Company or any of its Subsidiaries (or the payment of
which is guaranteed by the Company or any of its Subsidiaries), whether such
Indebtedness or Guarantee now exists, or is created after the Issue Date, which
default (x) is caused by a Payment Default, and the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
of the Company or any Significant Subsidiary under which there has been a
Payment Default or the maturity of which has been accelerated as provided in
clause (y), aggregates $5.0 million or more or (y) results in the acceleration
(which acceleration has not been rescinded) of such Indebtedness prior to its
express maturity and the principal amount of any such Indebtedness, together
with the principal amount of any other such Indebtedness under which there has
been a Payment Default or the maturity of which has been so accelerated,
aggregates $5.0 million or more; failure by the Company or any of its
Subsidiaries to pay final judgments (other than any judgment as to which a
reputable insurance company has accepted full liability in writing) aggregating
in excess of $5.0 million which judgments are not paid, discharged or stayed
within 45 days after their entry; and certain events of bankruptcy or insolvency
with respect to the Company or any of its Significant Subsidiaries.  If any
Event of Default occurs and is continuing, the Trustee or the holders of at
least 25% in principal amount of the then outstanding Senior Notes may declare
all the Senior Notes to be due and payable immediately.  Upon such declaration,
the principal of, premium, if any, and accrued and unpaid interest and
Liquidated Damages, if any, on the Senior Notes shall be due and payable
immediately. Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency with respect to the
Company or any of its Significant Subsidiaries, the foregoing amount shall ipso
facto become due and payable without further action or notice.  Holders of the
Senior Notes may not enforce the Indenture or the Senior Notes except as
provided in the Indenture.  The holders of a majority in aggregate principal
amount of the Senior Notes then outstanding, by notice to the Trustee, may on
behalf of the holders of all of the Senior Notes, waive any existing Default or
Event of Default and its consequences under the Indenture, except a continuing
Default or Event of Default in the payment of interest or Liquidated Damages or
premium on, or the principal of, the Senior Notes.

      13.  Trustee Dealings with Company.  The Trustee under the Indenture, in
its individual or any other capacity, may make loans to, accept deposits from,
and perform services for the Company or its Affiliates, and may otherwise deal
with the Company or its Affiliates, as if it were not Trustee; however, if the
Trustee acquires any conflicting interest,  it must eliminate such conflict
within 90 days, apply to the Commission for permission to continue as Trustee or
resign.

      14.  No Personal Liabilities of Directors, Officers, Employees and
Stockholders.  No director, officer, employee, incorporator or stockholder of
the Company, as such, shall have any liability for any obligations of the
Company under the Senior Notes or the Indenture or for any claim based on, in
respect of, or by reason of, such obligations or their creation.  Each holder of
the Senior Notes by accepting a Senior Note waives and releases all such
liability. The waiver and release are part of the consideration for issuance of
the Senior Notes.

                                      A-6
<PAGE>
 
      15.  Authentication.  This Senior Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
 
      16.  Abbreviations.  Customary abbreviations may be used in the name of a
holder of a Senior Note or an assignee, such as:  TEN COM (= tenants in common),
TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).

      17.  Additional Rights of Holders of Transfer Restricted Securities.  In
addition to the rights provided to holders of Senior Notes under the Indenture,
holders of Transfer Restricted Securities shall have all the rights set forth in
the Note Registration Rights Agreement.

      18.  CUSIP Numbers.  Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Senior Notes and has directed the Trustee to
use CUSIP numbers in notices of redemption as a convenience to holders of Senior
Notes.  No representation is made as to the accuracy of such numbers either as
printed on the Senior Notes or as contained in any notice of redemption and
reliance may be placed only on the other identification numbers placed thereon.

      The Company will furnish to any holder of a Senior Note upon written
request and without charge a copy of the Indenture.  Request may be made to:

                         Intermedia Communications Inc.
                             3625 Queen Palm Drive
                             Tampa, Florida  33619
                      Attention:  Chief Financial Officer


                                      A-7
<PAGE>
 
                                ASSIGNMENT FORM


     To assign this Senior Note, fill in the form below: (I) or (we) assign and
transfer this Senior Note to

- - --------------------------------------------------------------------------------
                 (Insert assignee's soc. sec. or tax I.D. no.)

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

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

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

- - --------------------------------------------------------------------------------
             (Print or type assignee's name, address and zip code)

and irrevocably appoint ______________________________________________________
agent to transfer this Senior Note on the books of the Company.  The agent may
substitute another to act for him.



Date: ______________

                              Your Signature: _________________________________
                              (Sign exactly as your name appears on the face of
                               this Note)

Signature Guarantee.
<PAGE>
 
                       OPTION OF HOLDER TO ELECT PURCHASE


     If you want to elect to have all or any part of this Senior Note purchased
by the Company pursuant to Section 3.09 or Section 4.15 of the Indenture check
the appropriate box:

                 Section 3.09           Section 4.15



     If you want to have only part of the Senior Note purchased by the Company
pursuant to Section 3.09 or Section 4.15 of the Indenture, state the amount you
elect to have purchased:

$ _______________


Date:____________


                              Your Signature: _________________________________
                              (Sign exactly as your name appears on the face of
                               this Note)

Signature Guarantee.
<PAGE>
 
           SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL SECURITY

          The following exchanges of a part of this Global Security for an
interest in another Global Security or for a Certificated Security, or exchanges
of a part of another Global Security or Certificated Security for an interest in
this Global Security, have been made:

<TABLE>
<CAPTION>
                                                                      Principal Amount                           
                    Amount of decrease in  Amount of increase in             of                 Signature of     
                      Principal Amount       Principal Amount       this Global Security    authorized officer of
                             of                     of            following such decrease      Trustee or Note   
 Date of Exchange   this Global Security   this Global Security        (or increase)              Custodian      
- - ------------------  ---------------------  ---------------------  ------------------------  ---------------------
<S>                 <C>                    <C>                    <C>                       <C> 
</TABLE>
<PAGE>
 
                                                                       EXHIBIT B

                        FORM OF CERTIFICATE OF TRANSFER

Intermedia Communications Inc.
3625 Queen Palm Drive
Tampa, Florida  33619
Attention:  Chief Financial Officer

SunTrust Bank, Central Florida, National Association
225 East Robinson Street, Suite 250
Orlando, Florida  32801
Attention: Corporate Trust Department


      Re: 8 1/2% Senior Notes due 2008
          ----------------------------

      Reference is hereby made to the Indenture, dated as of December 23, 1997
(the "Indenture"), between Intermedia Communications Inc., as issuer (the
      ---------                                                          
"Company"), and SunTrust Bank, Central Florida, National Association, as
- - --------                                                                
trustee.  Capitalized terms used but not defined herein shall have the meanings
given to them in the Indenture.

      ______________, (the "Transferor") owns and proposes to transfer the
                            ----------                                    
Senior Note[s] or interest in such Senior Note[s] specified in Annex A hereto,
in the principal amount of $___________ in such Senior Note[s] or interests (the
"Transfer"), to  __________ (the "Transferee"), as further specified in Annex A
 --------                         ----------                                   
hereto.  In connection with the Transfer, the Transferor hereby certifies that:

                             [CHECK ALL THAT APPLY]

1.  [_] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF BOOK-ENTRY INTERESTS IN THE
        ---------------------------------------------------------------------
GLOBAL SECURITY OR CERTIFICATED SECURITIES PURSUANT TO RULE 144A.  The Transfer
- - ----------------------------------------------------------------               
is being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the "Securities Act"), and,
                                                --------------        
accordingly, the Transferor hereby further certifies that the Book-Entry
Interests or Certificated Securities are being transferred to a Person that the
Transferor reasonably believes is purchasing the Book-Entry Interests or
Certificated Securities for its own account, or for one or more accounts with
respect to which such Person exercises sole investment discretion, and such
Person and each such account is a "qualified institutional buyer" within the
meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and
such Transfer is in compliance with any applicable blue sky securities laws of
any state of the United States.  Upon consummation of the proposed Transfer in
accordance with the terms of the Indenture, the transferred Book-Entry Interest
or Certificated Security will be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Global Security and/or
the Certificated Security and in the Indenture and the Securities Act.

2. [_] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF BOOK-ENTRY
       -----------------------------------------------------------------
INTERESTS IN THE GLOBAL SECURITY OR CERTIFICATED SECURITIES PURSUANT TO ANY
- - ---------------------------------------------------------------------------
PROVISION OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The
- - --------------------------------------------------------------------     
Transfer is being effected in compliance with the transfer restrictions
applicable to Book-Entry Interests in the Restricted Global Security and
Certificated Securities bearing the Private Placement Legend and pursuant to and
in accordance with the Securities Act and any applicable blue sky securities
laws of any State of the United States, and accordingly the Transferor hereby
further certifies that (check one):
<PAGE>
 
   (a)  [_] such Transfer is being effected pursuant to and in accordance with
Rule 144 under the Securities Act;

                                       or

   (b)  [_] such Transfer is being effected to the Company or a subsidiary
thereof;

                                       or

   (c)  [_] such Transfer is being effected pursuant to an effective
registration statement under the Securities Act;

                                       or

   (d)  [_] such Transfer is being effected to an Institutional Accredited
Investor and pursuant to an exemption from the registration requirements of the
Securities Act other than Rule 144A, Rule 144 or Rule 904, and the Transferor
hereby further certifies that the Transfer complies with the transfer
restrictions applicable to Book-Entry Interests in a Restricted Global Security
or Certificated Securities bearing the Private Placement Legend and the
requirements of the exemption claimed, which certification is supported by (1) a
certificate executed by the Transferee in the form of Exhibit D to the Indenture
and (2) an Opinion of Counsel provided by the Transferor or the Transferee (a
copy of which the Transferor has attached to this certification), to the effect
that (1) such Transfer is in compliance with the Securities Act and (2) such
Transfer complies with any applicable blue sky securities laws of any state of
the United States.  Upon consummation of the proposed transfer in accordance
with the terms of the Indenture, the transferred Book-Entry Interest or
Certificated Security will be subject to the restrictions on transfer enumerated
in the Private Placement Legend printed on the Global Security and/or the
Certificated Securities and in the Indenture and the Securities Act.

3. [_] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE
       ----------------------------------------------------------------------
REGULATION S GLOBAL SECURITY OR A DEFINITIVE NOTE PURSUANT TO REGULATION S.  The
- - --------------------------------------------------------------------------      
Transfer is being effected pursuant to and in accordance with Rule 903 or Rule
904 under the Securities Act and, accordingly, the Transferor hereby further
certifies that (i) the Transfer is not being made to a person in the United
States and (x) at the time the buy order was originated, the Transferee was
outside the United States or such Transferor and any Person acting on its behalf
reasonably believed and believes that the Transferee was outside the United
States or (y) the transaction was executed in, on or through the facilities of a
designated offshore securities market and neither such Transferor nor any Person
acting on its behalf knows that the transaction was prearranged with a buyer in
the United States, (ii) no directed selling efforts have been made in
contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S
under the Securities Act, (iii) the transaction is not part of a plan or scheme
to evade the registration requirements of the Securities Act and (iv) if the
proposed transfer is being made prior to the expiration of the Restricted
Period, the transfer is not being made to a U.S. Person or for the account or
benefit of a U.S. Person (other than an Initial Purchaser).  Upon consummation
of the proposed transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will be subject to the
restrictions on Transfer enumerated in the Private Placement Legend printed on
the Regulation S Global Security and/or the Definitive Note and in the Indenture
and the Securities Act.

4. [_] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF BOOK-ENTRY INTERESTS IN THE
       ---------------------------------------------------------------------
UNRESTRICTED GLOBAL SECURITY OR IN CERTIFICATED SECURITIES THAT DO NOT BEAR THE
- - -------------------------------------------------------------------------------
PRIVATE PLACEMENT LEGEND.
- - ------------------------ 

   (a)  [_] CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is being
effected pursuant to and in accordance with Rule 144 under the Securities Act
and in compliance with the transfer restrictions

                                      B-2
<PAGE>
 
contained in the Indenture and any applicable blue sky securities laws of any
state of the United States and (ii) the restrictions on transfer contained in
the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. Upon consummation of the proposed
Transfer in accordance with the terms of the Indenture, the transferred Book-
Entry Interests or Certificated Securities will no longer be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the Restricted Global Security, on Certificated Securities bearing the Private
Placement Legend and in the Indenture.

   (b)  [_] CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION.  (i) The Transfer
is being effected pursuant to and in compliance with an exemption from the
registration requirements of the Securities Act other than Rule 144, Rule 903 or
Rule 904 and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any State of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act.  Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred Book-Entry Interests or
Certificated Securities will not be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Security or Certificated Securities bearing the Private Placement Legend and in
the Indenture.

      This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.


                        ---------------------------
                        [NAME OF TRANSFEROR]


                        By: ______________________
                         Name:
                         Title:

Dated: _________________, ______


                                      B-3
<PAGE>
 
                       ANNEX A TO CERTIFICATE OF TRANSFER


1. The Transferor owns and proposes to transfer the following:

                           [CHECK ONE OF (a) OR (b)]

   (a)  [_]    Book-Entry Interests in the Global Security:

        (i)    [_] 144A Global Security (CUSIP _________), or
 
        (ii)   [_] IAI Global Security (CUSIP ________); or
 
        (iii)  [_] Regulation S Global Security (CUSIP ____); or

   (b)  [_]    Restricted Certificated Securities.


2. After the Transfer the Transferee will hold:
                                  [CHECK ONE]

   (a)  [_]    Book-Entry Interests in the:

        (i)    [_] 144A Global Security (CUSIP ________), or

        (ii)   [_] IAI Global Security (CUSIP ________); or
 
        (iii)  [_] Unrestricted Global Security (CUSIP    ); or

        (iv)   [_] Regulation S Global Security (CUSIP ______); or
 
   (b)  [_]    Restricted Certificated Securities; or
 
   (c)  [_]    Certificated Securities that do not bear the Private Placement 
               Legend, 

     in accordance with the terms of the Indenture.

                                      B-4
<PAGE>
 
                                                                       EXHIBIT C

                        FORM OF CERTIFICATE OF EXCHANGE


Intermedia Communications Inc.
3625 Queen Palm Drive
Tampa, Florida  33619
Attention:  Chief Financial Officer

SunTrust Bank, Central Florida, National Association
225 East Robinson Street, Suite 250
Orlando, Florida  32801
Attention: Corporate Trust Department


          Re: 8 1/2% Senior Notes due 2008
              ----------------------------

                         (CUSIP _____________________)

          Reference is hereby made to the Indenture, dated as of December 23,
1997 (the "Indenture"), between Intermedia Communications Inc., as issuer (the
           ---------                                                          
"Company") and SunTrust Bank, Central Florida, National Association, as trustee.
- - --------
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.

          ______________, (the "Holder") owns and proposes to exchange the
                                ------                                    
Senior Note[s] or interest in such Senior Note[s] specified herein, in the
principal amount of $____________ in such Senior Note[s] or interests (the
"Exchange").  In connection with the Exchange, the Holder hereby certifies that:
- - ---------                                                                       

1.   EXCHANGE OF RESTRICTED CERTIFICATED SECURITIES OR RESTRICTED BOOK-ENTRY
INTERESTS FOR CERTIFICATED SECURITIES THAT DO NOT BEAR THE PRIVATE PLACEMENT
LEGEND OR UNRESTRICTED BOOK-ENTRY INTERESTS

     (a)  [_]    CHECK IF EXCHANGE IS FROM RESTRICTED BOOK-ENTRY INTEREST TO
                 -----------------------------------------------------------
UNRESTRICTED BOOK-ENTRY INTEREST.  In connection with the Exchange of the
- - --------------------------------                                         
Holder's Restricted Book-Entry Interest for Unrestricted Book-Entry Interests in
an equal principal amount, the Holder hereby certifies (i) the Unrestricted
Book-Entry Interests are being acquired for the Holder's own account without
transfer, (ii) such Exchange has been effected in compliance with the transfer
restrictions applicable to the Global Security and pursuant to and in accordance
with the United States Securities Act of 1933, as amended (the "Securities
                                                                ----------
Act"), (iii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act and (iv) the Unrestricted Book-Entry Interests are being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.

     (b)  [_]    CHECK IF EXCHANGE IS FROM RESTRICTED BOOK-ENTRY INTEREST TO
                 -----------------------------------------------------------
CERTIFICATED SECURITIES THAT DO NOT BEAR THE PRIVATE PLACEMENT LEGEND.  In
- - ---------------------------------------------------------------------     
connection with the Exchange of the Holder's Restricted Book-Entry Interests for
Certificated Securities that do not bear the Private Placement Legend, the
Holder hereby certifies (i) the Certificated Securities are being acquired for
the Holder's own account without transfer, (ii) such Exchange has been effected
in compliance with the transfer restrictions applicable to the Restricted Global
Security and pursuant to and in accordance with the Securities Act, (iii) the
restrictions on transfer contained in the Indenture and the Private Placement
Legend are not required 

                                      C-1
<PAGE>
 
in order to maintain compliance with the Securities Act and (iv) the
Certificated Securities are being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.

     (c)  [_]    CHECK IF EXCHANGE IS FROM RESTRICTED CERTIFICATED SECURITIES TO
                 ---------------------------------------------------------------
UNRESTRICTED BOOK-ENTRY INTERESTS.  In connection with the Holder's Exchange of
- - ---------------------------------                                              
Restricted Certificated Securities for Unrestricted Book-Entry Interests, (i)
the Unrestricted Book-Entry Interests are being acquired for the Holder's own
account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Certificated Securities
and pursuant to and in accordance with the Securities Act, (iii) the
restrictions on transfer contained in the Indenture and the Private Placement
Legend are not required in order to maintain compliance with the Securities Act
and (iv) the Unrestricted Book-Entry Interests are being acquired in compliance
with any applicable blue sky securities laws of any state of the United States.

     (d)  [_]    CHECK IF EXCHANGE IS FROM RESTRICTED CERTIFICATED SECURITIES TO
                 ---------------------------------------------------------------
CERTIFICATED SECURITIES THAT DO NOT BEAR THE PRIVATE PLACEMENT LEGEND.  In
- - ---------------------------------------------------------------------     
connection with the Holder's Exchange of a Restricted Certificated Security for
Certificated Securities that do not bear the Private Placement Legend, the
Holder hereby certifies (i) the Certificated Securities that do not bear the
Private Placement Legend are being acquired for the Holder's own account without
transfer, (ii) such Exchange has been effected in compliance with the transfer
restrictions applicable to Restricted Certificated Securities and pursuant to
and in accordance with the Securities Act , (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act and (iv) the Senior Notes
are being acquired in compliance with any applicable blue sky securities laws of
any state of the United States.

2.   EXCHANGE OF RESTRICTED CERTIFICATED SECURITIES OR RESTRICTED BOOK-ENTRY
INTERESTS FOR RESTRICTED CERTIFICATED SECURITIES OR RESTRICTED BOOK-ENTRY
INTERESTS

     (a)  [_]    CHECK IF EXCHANGE IS FROM RESTRICTED BOOK-ENTRY INTERESTS TO
                 ------------------------------------------------------------
RESTRICTED CERTIFICATED SECURITY.  In connection with the Exchange of the
- - --------------------------------                                         
Holder's Restricted Book-Entry Interest for Restricted Certificated Securities
with an equal principal amount, (i) the Restricted Certificated Securities are
being acquired for the Holder's own account without transfer and (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Security and pursuant to and in accordance
with the Securities Act, and in compliance with any applicable blue sky
securities laws of any state of the United States.  Upon consummation of the
proposed Exchange in accordance with the terms of the Indenture, the Restricted
Certificated Securities issued will be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted
Certificated Securities and in the Indenture and the Securities Act.

     (b)  [_]    CHECK IF EXCHANGE IS FROM RESTRICTED CERTIFICATED SECURITIES TO
                 ---------------------------------------------------------------
RESTRICTED BOOK-ENTRY INTERESTS.  In connection with the Exchange of the
- - -------------------------------                                         
Holder's Restricted Certificated Security for Restricted Book-Entry Interests in
the [CHECK ONE] [_] 144A Global Security, [_] IAI Global Security 
[_] Regulation S Global Security with an equal principal amount, (i) the 
Certificated Securities are being acquired for the Holder's own account without
transfer and (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to the Restricted Certificated Security and
pursuant to and in accordance with the Securities Act, and in compliance with
any applicable blue sky securities laws of any state of the United States. Upon
consummation of the proposed Exchange in accordance with the terms of the
Indenture, the Book-Entry Interests issued will be subject to the restrictions
on transfer enumerated in the Private Placement Legend printed on the relevant
Restricted Global Security and in the Indenture and the Securities Act.

                                      C-2
<PAGE>
 
          This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.


                                         --------------------------------- 
                                         [Insert Name of Holder]


                                         By:______________________________
                                          Name:
                                          Title:

Dated: _________________, _____


                                      C-3
<PAGE>
 
                                                                       EXHIBIT D

                            FORM OF CERTIFICATE FROM
                  ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR


Intermedia Communications Inc.
3625 Queen Palm Drive
Tampa, Florida  33619
Attention:  Chief Financial Officer

SunTrust Bank, Central Florida, National Association
225 East Robinson Street, Suite 250
Orlando, Florida  32801
Attention: Corporate Trust Department


          Re: 8 1/2% Senior Notes due 2008
              ----------------------------

          Reference is hereby made to the Indenture, dated as of December 23,
1997 (the "Indenture"), between Intermedia Communications Inc., as issuer (the
           ---------                                                          
"Company") and SunTrust Bank, Central Florida, National Association, as trustee.
- - --------
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.

          In connection with our proposed purchase of $____________ aggregate
principal amount of:

     (a)   [_]  Book-Entry Interests, or
     (b)   [_]  Certificated Securities,

     we confirm that:

          1.   We understand that any subsequent transfer of the Senior Notes or
any interest therein is subject to certain restrictions and conditions set forth
in the Indenture and the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Senior Notes or any interest therein except in
compliance with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "Securities Act").
                                         --------------   

          2.   We understand that the offer and sale of the Senior Notes have
not been registered under the Securities Act, and that the Senior Notes and any
interest therein may not be offered or sold except as permitted in the following
sentence.  We agree, on our own behalf and on behalf of any accounts for which
we are acting as hereinafter stated, that if we should sell the Senior Notes or
any interest therein, we will do so only (A) to the Company or any subsidiary
thereof, (B) in accordance with Rule 144A under the Securities Act to a
"qualified institutional buyer" (as defined therein), (C) to an institutional
"accredited investor" (as defined below) that, prior to such transfer, furnishes
(or has furnished on its behalf by a U.S. broker-dealer) to you and to the
Company a signed letter substantially in the form of this letter and an Opinion
of Counsel in form reasonably acceptable to the Company to the effect that such
transfer is in compliance with the Securities Act, (D) pursuant to the
provisions of Rule 144 under the Securities Act, (E) outside the United States
in accordance with Rule 904 of Regulation S under the Securities Act or (F)
pursuant to an effective registration statement under the Securities Act,
and we further agree to provide 

                                      D-1
<PAGE>
 
to any person purchasing the Certificated Securities or Book-Entry Interests
from us in a transaction meeting the requirements of clauses (A) through (E) of
this paragraph a notice advising such purchaser that resales thereof are
restricted as stated herein.

          3.   We understand that, on any proposed resale of the Senior Notes or
Book-Entry Interests, we will be required to furnish to you and the Company such
certifications, legal opinions and other information as you and the Company may
reasonably require to confirm that the proposed sale complies with the foregoing
restrictions.  We further understand that the Senior Notes purchased by us will
bear a legend to the foregoing effect.  We further understand that any
subsequent transfer by us of the Senior Notes or Book-Entry Interests therein
acquired by us must be effected through one of the Placement Agents.

          4.   We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Senior Notes, and we
and any accounts for which we are acting are each able to bear the economic risk
of our or its investment.

          5.   We are acquiring the Senior Notes or Book-Entry Interests
purchased by us for our own account or for one or more accounts (each of which
is an institutional "accredited investor") as to each of which we exercise sole
investment discretion.

          You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.



                                         ------------------------------------- 
                                         [Insert Name of Accredited Investor]


                                         By: _________________________________
                                          Name:
                                          Title:

Dated: _________________, ______

                                      D-2

<PAGE>
 
                                                                     EXHIBIT 4.6

                                                                  EXECUTION COPY
  ===========================================================================


                         REGISTRATION RIGHTS AGREEMENT
                                        
                                  $350,000,000
                          8 1/2% Senior Notes due 2008



                         Dated as of December 23, 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 December 23, 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 the Company's 8 1/2% Senior
- - ----------                                                                    
Notes due 2008 (the "Senior Notes") pursuant to the Purchase Agreement (as
                     ------------                                         
defined below).

          This Agreement is made pursuant to the Purchase Agreement in respect
to the Senior Notes, dated December 18, 1997 (the "Purchase Agreement"), by and
                                                   ------------------          
among the Company and the Initial Purchasers.  In order to induce the Initial
Purchasers to purchase the Senior Notes, 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.
          ---                                          

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

          Broker-Dealer:  Any broker or dealer registered under the Exchange
          -------------                                                     
Act.

          Broker-Dealer Transfer Restricted Securities:  New Senior Notes that
          --------------------------------------------                        
are acquired by a Broker-Dealer in the Exchange Offer in exchange for Senior
Notes that such Broker-Dealer acquired for its own account as a result of market
making activities or other trading activities (other than Senior Notes acquired
directly from the Company or any of its affiliates).

          Certificated Securities: As defined in the Indenture.
          -----------------------                              

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

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

          Consummate:  An Exchange Offer shall be deemed "Consummated" for
          ----------                                                      
purposes of this Agreement upon the occurrence of (a) the filing and
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the New Senior Notes to be issued in the Exchange Offer, (b) the
maintenance of such Registration Statement continuously effective and the
keeping of the Exchange Offer open for a period not less than the minimum period
required pursuant to Section 3(b) hereof and (c) the delivery by the Company to
the Registrar under the Indenture of New Senior Notes in the same aggregate
principal amount as the aggregate principal amount of Senior Notes tendered by
Holders thereof pursuant to the Exchange Offer.

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

          Exchange Act:  The Securities Exchange Act of 1934, as amended.
          ------------                                                   
<PAGE>
 
          Exchange Offer:  The registration by the Company under the Act of the
          --------------                                                       
New Senior Notes pursuant to the Exchange Offer Registration Statement pursuant
to which the Company shall offer the Holders of all outstanding Transfer
Restricted Securities the opportunity to exchange all such outstanding Transfer
Restricted Securities for New Senior Notes in an aggregate principal amount
equal to the aggregate principal amount of the Transfer Restricted Securities
tendered in such exchange offer by such Holders.

          Exchange Offer Registration Statement:  The Registration Statement
          -------------------------------------                             
relating to the Exchange Offer, including the related Prospectus.

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

          Indenture:  The Indenture, dated the Closing Date, between the Company
          ---------                                                             
and SunTrust Bank, Central Florida, National Association, as trustee (the
"Trustee"), pursuant to which the Senior Notes are to be issued, as such
Indenture is amended or supplemented from time to time in accordance with the
terms thereof.

          Interest Payment Date:  As defined in the Indenture and the Senior
          ---------------------                                             
Notes.

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

          New Senior Notes:  The Company's 8 1/2% New Senior Notes due 2008 to
          ----------------                                                    
be issued pursuant to the Indenture (i) in the Exchange Offer or (ii) upon the
request of any Holder of Senior Notes covered by a Shelf Registration Statement,
in exchange for such Senior Notes.

          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.
          --------------------                                  

          Registration Statement:  Any registration statement of the Company
          ----------------------                                            
relating to (a) an offering of New Senior Notes pursuant to an Exchange Offer or
(b) the registration for resale of Transfer Restricted Securities pursuant to
the Shelf Registration Statement, in each case, (i) which is filed pursuant to
the provisions of this Agreement and (ii) including the Prospectus included
therein, all amendments and supplements thereto (including post-effective
amendments) and all exhibits and material incorporated by reference therein.

          Restricted Broker-Dealer:  Any Broker-Dealer which holds Broker-Dealer
          ------------------------                                              
Transfer Restricted Securities.

          Senior Notes:  The Senior Notes and the New Senior Notes.
          ------------                                             

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

          TIA:  The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb)
          ---                                                                   
as in effect on the date of the Indenture.

                                       2
<PAGE>
 
          Transfer Restricted Securities:  Each Senior Note until the earliest
          ------------------------------                                      
to occur of (i) the date on which such Senior Note is exchanged by a person
other than a broker-dealer for a New Senior Note in the Exchange Offer, (ii)
following the exchange by a broker-dealer in the Exchange Offer of a Senior Note
for a New Senior Note, the date on which such New Senior Note is sold to a
purchaser who receives from such broker-dealer on or prior to the date of such
sale a copy of the prospectus contained in the Exchange Offer Registration
Statement, (iii) the date on which such Senior Note is effectively registered
under the Securities Act and disposed of in accordance with the Shelf
Registration Statement or (iv) the date on which such Senior Note is distributed
to the public pursuant to Rule 144 under the Act.

          Underwritten Registration or Underwritten Offering:  A registration in
          -------------------------    ---------------------                    
which securities of the Company are sold to an underwriter for reoffering 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.  REGISTERED EXCHANGE OFFER

        (a) Unless the Exchange Offer shall not be permitted by applicable
federal law (after the procedures set forth in Section 6(a)(i) below have been
complied with), the Company shall (i) cause to be filed with the Commission as
soon as practicable after the Closing Date, but in no event later than 60 days
after the Closing Date, the Exchange Offer Registration Statement, (ii) use its
best efforts to cause such Exchange Offer Registration Statement to become
effective at the earliest possible time, but in no event later than 120 days
after the Closing Date, (iii) in connection with the foregoing, (A) file all 
pre-effective amendments to such Exchange Offer Registration Statement as may be
necessary in order to cause such Exchange Offer Registration Statement to become
effective, (B) file, if applicable, a post-effective amendment to such Exchange
Offer Registration Statement pursuant to Rule 430A under the Act and (C) cause
all necessary filings, if any, in connection with the registration and
qualification of the New Senior Notes to be made under the Blue Sky laws of such
jurisdictions as are necessary to permit Consummation of the Exchange Offer and
(iv) upon the effectiveness of such Exchange Offer Registration Statement,
commence and Consummate the Exchange Offer. The Exchange Offer shall be on the
appropriate form permitting registration of the New Senior Notes to be offered
in exchange for the Senior Notes that are Transfer Restricted Securities and to
permit sales of Broker-Dealer Transfer-Restricted Securities by Restricted
Broker-Dealers as contemplated by Section 3(c) below.

        (b)  The Company shall cause the Exchange Offer Registration Statement
to be effective continuously, and shall keep the Exchange Offer open, for a
period of not less than the minimum period required under applicable federal and
state securities laws to Consummate the Exchange Offer; provided, however, that
in no event shall such period be less than 20 Business Days. The Company shall
cause the Exchange Offer to comply with all applicable federal and state
securities laws. No securities other than the Senior Notes shall be included in
the Exchange Offer Registration Statement. The Company shall use its best
efforts to cause the Exchange Offer to be Consummated on the earliest
practicable date after the Exchange Offer Registration Statement has become
effective, but in no event later than 30 Business Days thereafter.

        (c)  The Company shall include a "Plan of Distribution" section in the
                                          --------------------
Prospectus contained in the Exchange Offer Registration Statement and indicate
therein that any Restricted Broker-Dealer who holds Senior Notes that are
Transfer Restricted Securities and that were acquired for the account of such
Broker-Dealer as a result of market-making activities or other trading
activities, may

                                       3
<PAGE>
 
exchange such Senior Notes (other than Transfer Restricted Securities acquired
directly from the Company) pursuant to the Exchange Offer; however, such Broker-
Dealer may be deemed to be an "underwriter" within the meaning of the Act and
                               -----------
must, therefore, deliver a prospectus meeting the requirements of the Act in
connection with its initial sale of each New Senior Note received by such 
Broker-Dealer in the Exchange Offer, which prospectus delivery requirement may
be satisfied by the delivery by such Broker-Dealer of the Prospectus contained
in the Exchange Offer Registration Statement. Such "Plan of Distribution"
                                                    --------------------
section shall also contain all other information with respect to such sales of
Broker-Dealer Transfer Restricted Securities by Restricted Broker-Dealers that
the Commission may require in order to permit such sales pursuant thereto, but
such "Plan of Distribution" shall not name any such Broker-Dealer or disclose
      --------------------
the amount of Senior Notes held by any such Broker-Dealer except to the extent
required by the Commission as a result of a change in policy after the date of
this Agreement.

          The Company shall use its best efforts to keep the Exchange Offer
Registration Statement continuously effective, supplemented and amended as
required by the provisions of Section 6(c) below to the extent necessary to
ensure that it is available for sales of Broker-Dealer Transfer Restricted
Securities by Restricted Broker-Dealers, and to ensure that such Registration
Statement 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 of (i) the date that all Holders of
Transfer Restricted Securities have exchanged such securities pursuant to the
Exchange Offer and (ii) 365 days from the date on which the Exchange Offer
Registration Statement is declared effective.

          The Company shall promptly provide sufficient copies of the latest
version of such Prospectus to such Restricted Broker-Dealers upon request at any
time during such 365-day period in order to facilitate such sales.

     SECTION 4.  SHELF REGISTRATION

        (a)  Shelf Registration. If (i) the Company is not required to file the
             ------------------
Exchange Offer Registration Statement with respect to the Senior Notes or not
permitted to consummate the Exchange Offer because the Exchange Offer is not
permitted by applicable law or Commission policy (after the procedures set forth
in Section 6(a)(i) below have been complied with) or (ii) any Holder of Transfer
Restricted Securities notifies the Company within 20 Business Days following the
Consummation of the Exchange Offer that (A) such Holder is prohibited by law or
Commission policy from participating in the Exchange Offer or (B) such Holder
may not resell the New Senior Notes acquired by it in the Exchange Offer to the
public without delivering a prospectus and the Prospectus contained in the
Exchange Offer Registration Statement is not appropriate or available for such
resales by such Holder or (C) such Holder is a Broker-Dealer and holds Senior
Notes acquired directly from the Company or an affiliate of the Company, then
the Company shall:

               (x) cause to be filed on or prior to (1) in the case of a
     Registration Statement filed pursuant to clause (i) above, 60 days after
     the date on which the Company determines that it is not required to file
     the Exchange Offer Registration Statement and in any event, within 150 days
     after the Closing Date and (2) in the case of a Registration Statement
     filed pursuant to clause (ii) above, 60 days after the date on which the
     Company receives the notice specified in clause (ii) above, a shelf
     registration statement pursuant to Rule 415 under the Act, (which may be an
     amendment to the Exchange Offer Registration Statement (in either event,
     the "Shelf Registration Statement")), relating to all Transfer Restricted
          ----------------------------                                        
     Securities the Holders of which shall have provided the information
     required pursuant to Section 4(b) hereof, and

                                       4
<PAGE>
 
               (y) use its best efforts to cause such Shelf Registration
     Statement to become effective on or prior to (1) in the case of a
     Registration Statement filed pursuant to clause (i) above, 90 days after
     the date on which the Company becomes obligated to file such Shelf
     Registration Statement (and in any event, within 240 days after the Closing
     Date), and (2) in the case of a Registration Statement filed pursuant to
     clause (ii) above, 90 days after the date on which the Company receives the
     notice specified in clause (ii) above.  If, after the Company has filed an
     Exchange Offer Registration Statement which satisfies the requirements of
     Section 3(a) above, the Company is required to file and make effective a
     Shelf Registration Statement solely because the Exchange Offer is not
     permitted under applicable federal law, then the filing of the Exchange
     Offer Registration Statement shall be deemed to satisfy the requirements of
     clause (x) above.  Such an event shall have no effect on the requirements
     of this clause (y), or on the Effectiveness Target Date as defined in
     Section 5 below.

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 sales 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 of (i) the date that all Holders
of Transfer Restricted Securities have registered such securities pursuant to
the Exchange Offer and (ii) 365 days from the date on which the Exchange Offer
Registration Statement is declared effective 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 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 any 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 any Shelf Registration Statement or Prospectus or
preliminary Prospectus included therein.  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
any Shelf Registration Statement is being effected agrees to furnish promptly to
the Company, for so long as the 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.

     SECTION 5.  LIQUIDATED DAMAGES

          If (i) the Company fails to file any of the Registration Statements
required by this Agreement on or before the date specified for such filing in
this Agreement, (ii) any of such Registration Statements is not declared
effective by the Commission on or prior to the date specified for such
effectiveness (the "Effectiveness Target Date"), (iii) the Company fails to
                    -------------------------                              
Consummate the Exchange Offer within 30 business days of the Effectiveness
Target Date with respect to the Exchange Offer Registration Statement or (iv)
the Shelf Registration Statement or the Exchange Offer Registration Statement is
declared effective but thereafter ceases to be effective or usable in connection
with resales

                                       5
<PAGE>
 
of Transfer Restricted Securities during the periods specified in this Agreement
without being succeeded immediately by a post effective amendment to such
Registration Statement that cures such failure and that is itself declared
effective within such five Business Day period, provided that such effectiveness
was not suspended in connection with a Permitted Suspension (each such event
referred to in clauses (i) through (iv) above, 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, for the first 90-day period immediately following the occurrence of
such Registration Default, liquidated damages in an amount equal to $.05 per
week per $1,000 principal amount of Senior Notes constituting Transfer
Restricted Securities held by such Holder for each week or pro rata for a
portion of each week thereof that the Registration Default continues.  The
amount of liquidated damages payable to each Holder shall increase by an
additional $.05 per week per $1,000 principal amount of Senior Notes
constituting Transfer Restricted Securities held by such Holder for each
subsequent 90-day period until all Registration Defaults have been cured, up to
a maximum of $.50 per week per $1,000 principal amount of Senior Notes
constituting Transfer Restricted Securities held by such Holder.

          All accrued liquidated damages shall be paid to Cede & Co., as nominee
of the Depository Trust Company (the "Global Security Holder") by wire transfer
                                      ----------------------                   
of immediately available funds or by federal funds check and to Holders of
Certificated 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)  Exchange Offer Registration Statement. In connection with the
Exchange Offer, the Company shall comply with all applicable provisions of
Section 6(c) below, shall use its best efforts to effect such exchange and to
permit the sale of Broker-Dealer Transfer Restricted Securities being sold in
accordance with the intended method or methods of distribution thereof, and
shall comply with all of the following provisions: 


                (i) If, following the date hereof there has been published a
         change in Commission policy with respect to exchange offers such as the
         Exchange Offer, such that in the reasonable opinion of counsel to the
         Company there is a substantial question as to whether the Exchange
         Offer is permitted by applicable federal law, the Company hereby agrees
         to seek a no-action letter or other favorable decision from the
         Commission allowing the Company to Consummate an Exchange Offer for
         such Senior Notes. The Company hereby agrees to pursue the issuance of
         such a decision to the Commission staff level. In connection with the
         foregoing, the Company hereby agrees to take such other actions as are
         requested by the Commission or otherwise required in connection with
         the issuance of such decision, including without limitation (A)
         participating in telephonic conferences with the Commission, (B)
         delivering to the Commission staff an analysis prepared by counsel to
         the Company setting forth the legal bases, if any, upon which such
         counsel has concluded that such an Exchange Offer should be permitted
         and (C) diligently pursuing a resolution by the Commission staff of
         such submission.

                (ii) As a condition to its participation in the Exchange Offer
         pursuant to the terms of this Agreement, each Holder of Transfer
         Restricted Securities shall furnish, upon the request of the Company,
         prior to the Consummation of the Exchange Offer, a written
         representation to the Company (which may be contained in the letter of
         transmittal contemplated by the Exchange Offer Registration Statement)
         to the effect that (A) it is not an affiliate of the

                                       6
<PAGE>
 
     Company, (B) it is not engaged in, and does not intend to engage in, and
     has no arrangement or understanding with any person to participate in, a
     distribution of the New Senior Notes to be issued in the Exchange Offer and
     (C) it is acquiring the New Senior Notes in its ordinary course of
     business.  Each Holder hereby acknowledges and agrees that any Broker-
     Dealer and any such Holder using the Exchange Offer to participate in a
     distribution of the securities to be acquired in the Exchange Offer (1)
     could not under Commission policy as in effect on the date of this
     Agreement rely on the position of the Commission enunciated in Morgan
                                                                    ------
     Stanley and Co., Inc. (available June 5, 1991) and Exxon Capital Holdings
     --------------------                               ----------------------
     Corporation (available May 13, 1988), as interpreted in the Commission's
     -----------                                                             
     letter to Shearman & Sterling dated July 2, 1993, and similar no-action
     letters (including, if applicable, any no-action letter obtained pursuant
     to clause (1) above), and (2) must comply with the registration and
     prospectus delivery requirements of the Act in connection with a secondary
     resale transaction and that such a secondary resale transaction must be
     covered by an effective registration statement containing the selling
     security holder information required by Item 507 or 508, as applicable, of
     Regulation S-K if the resales are of New Senior Notes obtained by such
     Holder in exchange for Senior Notes acquired by such Holder directly from
     the Company.

     (iii)  Prior to effectiveness of the Exchange Offer Registration Statement,
     the Company shall provide a supplemental letter to the Commission (A)
     stating that the Company is registering the Exchange Offer in reliance on
     the position of the Commission enunciated in Exxon Capital Holdings
                                                  ----------------------
     Corporation (available May 13, 1988), Morgan Stanley and Co., Inc.
     -----------                           ----------------------------
     (available June 5, 1991) and, if applicable, any no-action letter obtained
     pursuant to clause (i) above, (B) including a representation that the
     Company has not entered into any arrangement or understanding with any
     Person to distribute the New Senior Notes to be received in the Exchange
     Offer and that, to the best of the Company's information and belief, each
     Holder participating in the Exchange Offer is acquiring the New Senior
     Notes in its ordinary course of business and has no arrangement or
     understanding with any Person to participate in the distribution of the New
     Senior Notes received in the Exchange Offer and (C) any other undertaking
     or representation required by the Commission as set forth in any no-action
     letter obtained pursuant to clause (i) above.

          (b) Shelf Registration Statement.  In connection with the Shelf
              ----------------------------                               
Registration Statement the Company shall comply with all the provisions of
Section 6(c) 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
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.

          (c) General Provisions.  In connection with any Registration Statement
              ------------------                                                
and any related Prospectus required by this Agreement to permit the sale or
resale of Transfer Restricted Securities (including, without limitation, any
Exchange Offer Registration Statement and the related Prospectus, to the extent
that the same are required to be available to permit sales of Broker-Dealer
Transfer Restricted Securities by Restricted Broker-Dealers), 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 3 or 4
     of this Agreement, as applicable. Upon the occurrence of any

                                       7
<PAGE>
 
event that would cause any such Registration Statement or the Prospectus
contained therein (A) to contain a material misstatement or omission 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 3 or 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 underwriters, 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 any 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 any additions to or changes in
the 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 any
Registration Statement or Prospectus and each of the underwriters in connection
with such sale, if any, before filing with the Commission, copies of any
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

                                       8
<PAGE>
 
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 falls 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 underwriter(s) 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 underwriter(s), 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 any Registration
Statement or Prospectus, pursuant to a supplement or post-effective amendment if
necessary, such information as such selling Holders and underwriter(s), 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
Registration Statement to be rated with the appropriate rating agencies, if so
requested by the Holders of a majority in aggregate principal amount of Senior
Notes covered thereby or the underwriters, if any;

        (ix) furnish to each selling Holder and each of the underwriters 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);

                                       9
<PAGE>
 
        (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 any 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 any Registration
Statement contemplated by this Agreement, and 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 Shelf Registration Statement and to
          each Restricted Broker-Dealer upon consummation of the Exchange Offer:

               (1) a certificate, dated the date of effectiveness of the Shelf
               Registration Statement or the date of Consummation of the
               Exchange Offer, as the case may be, 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
               underwriter(s) may reasonably request;

               (2) an opinion, dated the date of effectiveness of the Shelf
               Registration Statement or the date of Consummation of the
               Exchange Offer, as the case may be, of counsel for the Company,
               covering (i) due authorization and enforceability of the Senior
               Notes and the New Senior Notes, (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 applicable Registration
               Statement, at the time such Registration Statement or any post-
               effective amendment thereto became effective, and, in the case of
               the Exchange Offer Registration Statement, as of the date of
               Consummation, 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

                                       10
<PAGE>
 
               Registration Statement as of its date and, in the case of the
               opinion dated the date of Consummation of the Exchange Offer, as
               of the date of Consummation, 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 any
               Registration Statement contemplated by this Agreement or the
               related Prospectus; and

               (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 Shelf 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 incorporate by reference in the
          underwriting agreement, if any, in connection with any sale or resale
          pursuant to any Shelf 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 underwriters), 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 applicable 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)  issue, upon the request of any Holder of Senior Notes
     covered by any Shelf Registration Statement contemplated by this Agreement,
     New Senior Notes having an

                                       11
<PAGE>
 
aggregate principal amount equal to the aggregate principal amount of Senior
Notes surrendered to the Company by such Holder in exchange therefor or being
sold by such Holder; such New Senior Notes to be registered in the name of such
Holder or in the name of the purchasers of such New Senior Notes; in return, the
Senior Notes held by such Holder shall be surrendered to the Company for
cancellation;

        (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 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(c)(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 a Registration Statement covering such
Transfer Restricted Securities and provide the Trustee under the Indenture 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 any applicable 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)  cause the Indenture to be qualified under the TIA not later than
the effective date of the first Registration Statement required by this
Agreement, and, in connection

                                       12
<PAGE>
 
     therewith cooperate with the Trustee and the Holders of Senior Notes to
     effect such changes to the Indenture as may be required for such Indenture
     to be so qualified in accordance with the terms of the TIA; and execute and
     use its best efforts to cause the Trustee to execute, all documents that
     may be required to effect such changes and all other forms and documents
     required to be filed with the Commission to enable such Indenture to be so
     qualified in a timely manner;

        (xxi)  cause all Transfer Restricted Securities covered by the
     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 principal amount of Senior Notes or
     the managing underwriters, if any;

        (xxii) 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, and

          (d) 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(c)(iii)(D)
hereof, such Holder will forthwith discontinue disposition of Transfer
Restricted Securities pursuant to the applicable Registration Statement until
such Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 6(c)(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 3 or 4 hereof, as applicable, 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 a 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 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 Senior Notes 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 Senior Notes on a
national exchange or automated quotation system if required hereunder; and (vi)
all fees and 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).

                                       13
<PAGE>
 
          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 any Registration Statement required by this
Agreement, the Company will reimburse the Holders of Transfer Restricted
Securities being tendered in the Exchange Offer and/or resold pursuant to the
"Plan of Distribution" contained in the Exchange Offer Registration Statement or
- - ---------------------                                                           
registered pursuant to the Shelf Registration Statement, as applicable, for the
reasonable fees and disbursements of not more than one counsel chosen by the
Holders of a majority in principal amount of the Transfer Restricted Securities
for whose benefit such 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 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 any of the Senior Notes 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
Holder sold Senior Notes 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

                                       14
<PAGE>
 
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 hereunder be greater in amount than the dollar amount of
the proceeds received by such Holder upon its sale of the Senior Notes 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 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

                                       15
<PAGE>
 
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 Senior Notes
and any such Holder from its sale of Senior Notes 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 omissions 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 of the Senior Notes (net of discounts but before deducting
expenses) received by the Company and (y) the total proceeds received by such
Holder upon its sale of Senior Notes which would otherwise give rise to the
indemnification obligation, respectively.  The relative fault of the Company and
of the Holders 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 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 Senior Notes exceeds the sum of (A) the paid by
such Holder for such Senior Notes 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 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 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.

     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.

                                       16
<PAGE>
 
          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.

                                       17
<PAGE>
 
     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 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."
 ------------  

     SECTION 12.  MISCELLANEOUS

          (a) Remedies.  Each Holder, in addition to being entitled to exercise
              --------                                                         
all rights provided herein, in the Indenture, 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.

          (c) Adjustments Affecting the Senior Notes.  The Company will not take
              --------------------------------------                            
any action, or permit any change to occur, with respect to the Senior Notes that
would materially adversely affect the ability of the Holders to Consummate any
Exchange Offer.

          (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 principal amount of
Transfer Restricted Securities.  Notwithstanding the foregoing, a waiver or
consent to departure from the provisions hereof that relates exclusively to the
rights of Holders whose securities are being tendered pursuant to the Exchange
Offer and that does not affect directly or indirectly the rights of other
Holders whose securities are not being tendered pursuant to such Exchange Offer
may be given by the Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities that are subject to such Exchange Offer.

          (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:

              (i) if to a Holder, at the address set forth on the records of the
     Registrar under the Indenture, with a copy to the Registrar under the
     Indenture; and

              (ii)  if to the Company:

                                       18
<PAGE>
 
                    Intermedia Communications Inc.
                    3625 Queen Palm Drive
                    Tampa, Florida 33619
                    Telecopier No.: (813) 829-2470
                    Attention: Chief Financial Officer

                    With a copy to:

                    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 Trustee at the
address specified in the Indenture.

          (f) 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.

          (g) 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.

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

          (i) 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.

          (j) Severability.  In the event that any one or more of the provisions
              ------------                                                      
contained herein, or the application thereof in any circumstance, 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.

          (k) 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 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

                                       19
<PAGE>
 
respect to the registration rights granted by the Company with respect to the
Transfer Restricted Securities.  This Agreement supersedes all prior agreements
and understandings between the parties with respect to such subject matter.

                                       20
<PAGE>
 
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.

                         INTERMEDIA COMMUNICATIONS INC.

                         By:  ____________________________________
                         Name:
                         Title:



BEAR, STEARNS & CO.  INC.

By:  BEAR, STEARNS & CO.  INC.


     _____________________________
     Name:
     Title:


SALOMON BROTHERS INC

By:  SALOMON BROTHERS INC


     _____________________________
     Name:
     Title:

                                       21

<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)  (199,337)     (35,642)  (157,385)  (265,413)
Income tax benefit                   -            -         -         (97)         -        783            -          -        214
                                 --------------------------------------------------------------------------------------------------
Loss before income taxes          (235)      (2,074)   (3,067)    (19,254)   (57,198)  (198,564)     (35,642)  (157,385)  (265,199)
                                 ===================================================================================================
Fixed charges:                   
Interest expensed                1,031          844     1,219      13,355     35,213    129,673       24,179     39,895    107,581
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    208,244       27,016     71,963    166,986
                                 ==================================================================================================
Earnings:                        
Loss before income tax            (235)      (2,074)   (3,067)    (19,157)   (57,198)  (199,337)     (35,642)  (157,385)  (265,413)
Fixed charges excluding          
capitalized interest and 
preferred stock dividends        1,373        1,235     1,488      14,195     38,063    133,613       25,076     42,317    111,323
                                 --------------------------------------------------------------------------------------------------
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)     (0.32)       (0.39)     (1.60)     (0.94)
                                 ==================================================================================================
Insufficiency of earnings to     
cover fixed charges and 
preferred stock dividends          622        2,287     3,324      19,834     59,978    273,968       37,582    187,031    321,076
                                 ==================================================================================================

</TABLE> 


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

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

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




<PAGE>
 
                                                                   EXHIBIT 23.2
              CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
 
  We consent to the reference to our firm under the captions "Experts",
"Summary Financial and Other Operating Data" and "Selected Financial and Other
Operating Data" in the Registration Statement (Form S-4) and related
Prospectus of Intermedia Communications Inc. for the registration of
$400,000,000 8 1/2% Series B Senior Notes due 2008 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
January 21, 1998

<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-4) and related Prospectus of Intermedia
Communications Inc. for the registration of $400,000,000 8 1/2% Series B
Senior Notes due 2008 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
January 21, 1998

<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-4 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-4 Registration Statement.
 
                                          /s/ Arthur Andersen LLP
 
Washington, D.C.
January 19, 1998

<PAGE>
 
                                                                   EXHIBIT 23.5
 
              CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
 
  We consent to the incorporation by reference in this Registration Statement
on Form S-4 of Intermedia Communications Inc. for the registration of
$400,000,000 8 1/2% Series B Senior Notes due 2008 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
January 19, 1998

<PAGE>

                                                               EXHIBIT 25.1
 
================================================================================

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D. C. 20549

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

                                   FORM T-1

                           STATEMENT OF ELIGIBILITY
                  UNDER THE TRUST INDENTURE ACT OF 1939 OF A
                   CORPORATION DESIGNATED TO ACT AS TRUSTEE

               CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
              OF A TRUSTEE PURSUANT TO SECTION 305(B)(2)_________

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

             SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION
              (Exact name of trustee as specified in its charter)

Not Applicable                                          59-1424500
(State of incorporation if                              (I.R.S. Employer
not a U.S. national bank)                               Identification Number)

200 South Orange Avenue
Post Office Box 3631
Orlando, Florida                                        32802
(Address of trustee's principal                         (Zip Code)
  executive offices)

                            Jonathan D. Rich, Esq.
                        Maguire, Voorhis & Wells, P.A.
            200 South Orange Avenue, Suite 3000, Orlando, FL  32801
                                (407) 244-1105
           (Name, address and telephone number of agent for service)

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

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

DELAWARE                                                59-2913586
(State of incorporation)                                (I.R.S. Employer
                                                        Identification No.)

3625 Queen Palm Drive                                   33619
Tampa, Florida                                          (Zip Code)
(Address of principal executive offices)

                            -----------------------
                     8 1/2% SERIES B SENIOR NOTES DUE 2008
                        INTERMEDIA COMMUNICATIONS INC.
                        (Title of indenture securities)

================================================================================
<PAGE>
 
Item 1.   General Information.  Furnish the following information as to the
          -------------------
          trustee:

          (a)  Name and address of each examining or supervising authority
               to which it is subject.

                   Name                         Address
                   ----                         -------

               Comptroller of Currency        Washington, D.C.

               The Board of Governors of      Washington, D.C.
               the Federal Reserve System
               Corporation                    Washington, D.C.

               Federal Deposit Insurance      Washington, D.C.
               Corporation

          (b)  Whether it is authorized to exercise corporate trust powers.

          Yes.

Item 2.   Affiliations with the Obligor.  If the obligor or any underwriter
          -----------------------------
          for the obligor is an affiliate of the trustee, describe each such
          affiliation.

          None.

Item 16.  List of Exhibits.
          ----------------

          List below all exhibits filed as a part of this statement of 
          eligibility.

          Exhibit 1 - Copy of the articles of association of the Trustee as
          now in effect (see Exhibit 1 to Form T-1 filed in connection with 
          Registration Statement No. 33-34738, which is incorporated by
          reference).

          Exhibit 2 - Copy of the certificate of authority of the Trustee to
          commence business (see Exhibit 1 to Form T-2 filed in connection
          with Registration Statement No. 33-34738, which is incorporated by
          reference).

          Exhibit 3 - Copy of the authorization of the Trustee to exercise 
          corporate trust powers (see Exhibit 3 to Form T-1 filed in connection 
          with Registration Statement No. 33-34738, which is incorporated by
          reference).

          Exhibit 4 - Copy of the existing bylaws of the Trustee (see Exhibit
          4 to Form T-1 filed in connection with Registration Statement No.
          33-34738, which is incorporated by reference).

          Exhibit 5 - Not applicable.

          Exhibit 6 - Not applicable.

<PAGE>
 
          Exhibit 7 - Copy of the latest report of condition of the Trustee,
          published pursuant to law or the requirements of its supervising
          or examining authority.

          Exhibit 8 - Not applicable.

          Exhibit 9 - Not applicable.



                                      -2-
<PAGE>
 
                                   SIGNATURE

        Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, SunTrust Bank, Central Florida, National Association, a national
banking association organized and existing under the laws of the United States
of America, has duly caused this statement of eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of
Orlando, State of Florida, on the 15th day of January, 1998.

                                        SUNTRUST BANK, CENTRAL FLORIDA,
                                          NATIONAL ASSOCIATION


                                        By: /s/ Alice Springer
                                            ---------------------------
                                            Alice Springer
                                            Corporate Trust Officer


                                      -3-
<PAGE>
 
                                   EXHIBIT 7
                                   ---------

                            Report of Condition of
             SunTrust Bank, Central Florida, National Association
<PAGE>
 
<TABLE> 
<S>                                                             <C> 
                                                                Board of Governors of the Federal Reserve System
                                                                OMB Number: 7100-0036

                                                                Federal Deposit Insurance Corporation
                                                                OMB Number: 3064-0052

                                                                Office of the Comptroller of the Currency
                                                                OMB Number: 1557-0081
                                
Federal financial Institutions Examination Council              Expires March 31, 2000
- - -----------------------------------------------------------------------------------------------------------------------
                                                                                                               [1]
[LOGO APPEARS HERE]                                             Please refer to page i,
                                                                Table of Contents, for
                                                                the required disclosure
                                                                of estimated burden.
- - -----------------------------------------------------------------------------------------------------------------------
</TABLE> 

Consolidated Reports of Condition and Income for
A Bank With Domestic Offices Only and
Total Assets of $300 million or More -- FFIEC 032
                                                          (970930)
                                                        -----------
Report at the close of business September 30, 1997      (RCRI 9999)

This report is required by law: 12 U.S.C. (S)324 (State member banks); 12 U.S.C.
(S)1817 (State nonmember banks); and 12 U.S.C. (S)161 (National banks).

This report form is to be filed by banks with domestic offices only. Banks with 
foreign offices (as defined in the instructions) must file FFIEC 031.

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

NOTE: The Reports of Condition and income must be signed by an authorized 
officer and the Report of Condition must be attested to by not less than two 
directors (trustees) for State nonmember banks and three directors for State 
member and National banks.

I, R. Todd Bowers/ Senior Vice President & CFO
  ------------------------------------------------------------------------
  Name and Title of Officer Authorized to Sign Report

of the named bank do hereby declare that the Reports of Condition and Income 
(including the supporting schedules) for this report date have been prepared in 
conformance with the instructions issued by the appropriate Federal regulatory 
authority and are true to the best of my knowledge and belief.

  /s/ R. Todd Bower 
  ------------------------------------------------------------------------
  Signature of Officer Authorized to Sign Report

         October 27, 1997
  ------------------------------------------------------------------------
  Date of Signature

- - --------------------------------------------------------------------------
The Reports of Condition and Income are to be prepared in accordance with 
Federal regulatory authority instructions.

We, the undersigned directors (trustees), attest to the correctness of the 
Report of Condition (including the supporting schedules) for this report date 
and declare that it has been examined by us and to the best or our knowledge and
belief has been prepared in conformance with the instructions issued by the 
appropriate Federal regulatory and is true and correct.

/s/ George W. Koehn                                    George W. Koehn
- - --------------------------------------------------------------------------------
Director (Trustee)

/s/ Robert L. Mellen, Jr.
- - --------------------------------------------------------------------------------
Director (Trustee)                                     Robert L. Mellen, Jr.

/s/ William B. Wilson
- - --------------------------------------------------------------------------------
Director (Trustee)                                     William B. Wilson

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

Submission of Reports

Each bank must prepare its Reports of Condition and Income either:

(a) in automated form and then file the computer data file directly with the
    banking agencies' collection agent, Electronic Data Systems
    Corporation(EDS), by modem or on computer diskette; or

(b) in hard-copy (paper) form and arrange for another party to convert the paper
    report to automated form. That party (if other than EDS) must transmit the
    bank's computer data file to EDS.
    
To fulfill the signature and attestation requirement for the Reports of 
Condition and Income for this report date, attach this signature page to the 
hard-copy record of the completed report that the bank places in its files.

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

FDIC Certificate Number [_][_][_][_][_]
                          (RCRI 9050)       CALL NO. 201        32   09-30-97

                                            STBK: 12-1159 08514 STCERT: 12-21043
    
                                            SUNTRUST BANK, CENTRAL FLORIDA, NATI
                                            P.O. BOX 3833
                                            ORLANDO, FL  32802

Board of Governors of the Federal Reserve System, Federal Deposit Insurance 
Corporation, Office of the Governor of the Currency

<PAGE>
 
                                                                      FFIEC 032
                                                                         RI-1
                                                                     -----------
                                                                          3
                                                                     -----------
SUNTRUST BANK, CENTRAL FLORIDA, N.A.    Call Date: 09/30/97     State #: 12-1159
P.O. BOX 4418 CENTER 632                Vendor ID: D             Cert #: 21043
ATLANTA, GA 30302                       Transit #: 06310215        


Consolidated Report of Income
for the period January 1, 1997 - September 30, 1997

All Report of income schedules are to be reported on a calendar year-to-date 
basis in thousands of dollars.

 Schedule RI- Income Statement 1380
<TABLE> 
<CAPTION> 
                                                                                                         Dollar Amounts in Thousands
- - ------------------------------------------------------------------------------------------------------------------------------------
 <S>                                                                                                         <C>  <C>        <C>  
 1. Interest income:
    a. Interest and fee income on loans:                                                                     RIAD
                                                                                                             ----
       (1) Loans secured by real estate..................................................................... 4011   108,698  1.a.1
       (2) Loans to finance agricultural production and other loans to farmers.............................. 4024     1,828  1.a.2
       (3) Commercial and industrial loans.................................................................. 4012    96,723  1.a.3
       (4) Loans to individuals for household, family, and other personal expenditures:
           (a) Credit cards and related plans............................................................... 4054     2,421  1.a.4.a
           (b) Other........................................................................................ 4055    30,648  1.a.4.b
       (5) Loans to foreign governments and official institutions........................................... 4056         0  1.a.5
       (6) Obligations (other than securities and leases) of states and political subdivisions
           in the U.S.:
           (a) Taxable obligations.......................................................................... 4503       280  1.a.6.a
           (b) Tax-exempt obligations....................................................................... 4504     7,508  1.a.6.b
       (7) All other loans.................................................................................. 4058    18,326  1.a.7
    b. Income from lease financing receivables:
       (1) Taxable leases................................................................................... 4505     6,342  1.b.1
       (2) Tax-exempt leases................................................................................ 4307       182  1.b.2
    c. Interest income on balances due from depository institutions (1)..................................... 4115       168  1.c
    d. Interest and dividend income on securities:
       (1) U.S. Treasury securities and U.S. Government agency obligations.................................. 4027    40,152  1.d.1
       (2) Securities issued by states and political subdivisions in the U.S.:
           (a) Taxable securities........................................................................... 4508         0  1.d.2.a
           (b) Tax-exempt securities........................................................................ 4507     1,625  1.d.2.b
       (3) Other domestic debt securities................................................................... 3657         0  1.d.3
       (4) Foreign debt securities.......................................................................... 3658        15  1.d.4
       (5) Equity securities (including investments in mutual funds)........................................ 3659       179  1.d.5
    e. Interest income from trading assets.................................................................. 4069         0  1.e
    f. Interest income on federal funds sold and securities purchased under agreements to resell............ 4020    24,408  1.f
    g. Total interest income (sum of items 1.a through 1.f)................................................. 4107   339,503  1.g
</TABLE> 
- - --------------
(1) Includes interest income on time certificates of deposits not held for 
trading.
<PAGE>
 
SUNTRUST BANK, CENTRAL FLORIDA N.A.
P.O. BOX 4418 CENTER 632
ATLANTA, GA 30302

Call Date:   09/30/97           State #:   12-1159                 FFIEC 032
Vendor ID:   D                   Cert #:   21043                      RI-3
Transit #:   06310215
                                                                   ---------  
                                                                       5
                                                                   ---------  

Schedule RI - Continued
                                                                      1381

<TABLE> 
<CAPTION> 
                                                                                                Dollar Amounts in Thousands
- - ---------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                    <C>     <C> 
Memoranda                                                                                              RIAD    Year to Date 
1.  Interest expense incurred to carry tax-exempt securities, loans, and leases acquired after         ----    
    August 7, 1986, that is not deductible for federal income tax purposes___________________________  4513           1,583 M.1
2.  Income from the sale and servicing of mutual funds and annuities (included in                             
    Schedule RI, item 8)_____________________________________________________________________________  8431           4,420 M.2
3.  Not applicable                                                                                            
                                                                                                                  Number
4.  Number of full-time equivalent employees on payroll at end of current period (round to                    
    nearest whole number)____________________________________________________________________________  4150           1,592 M.4
                                                                                                             CCYY / MM / DD
5.  Not Applicable                                                                                           
6.  Not Applicable
7.  If the reporting bank has restated its balance sheet as a result of applying push                       
    down accounting this calendar year, report the date of the bank's acquisition____________________  9106             N/A M.7
8.  Trading revenue (from cash instruments and off-balance sheet derivative instruments)                    
    (sum of Memorandum items 8.a through 8.d must equal Schedule RI, item 5.c):                             
    a. Interest rate exposures_______________________________________________________________________  8757               0 M.8.a
    b. Foreign exchange exposures____________________________________________________________________  8758               0 M.8.b
    c. Equity security and index exposures___________________________________________________________  8759               0 M.8.c
    d. Commodity and other exposures_________________________________________________________________  8760               0 M.8.d
9.  Impact on income of off-balance sheet derivatives held for purposes other than trading:                   
    a. Net increase (decrease) to interest income____________________________________________________  8761               0 M.9.a
    b. Net (increase) decrease to interest expense___________________________________________________  8762            (178)M.9.b
    c. Other (noninterest) allocations_______________________________________________________________  8763               0 M.9.c
10. Credit losses on off-balance sheet derivatives (see instructions)________________________________  A251               0 M.10
                                                                                                                  Yes/No
11. Does the reporting bank have a Subchapter S election in effect for                                       
    federal income tax purposes for the current tax year?____________________________________________  A530              NO M.11
12. Deferred portion of total applicable income taxes included in Schedule RI,                               
    items 9 and 11 (to be reported with the December Report of Income)_______________________________  4772             N/A M.12
</TABLE> 
- - -----------
(1) For example, a bank acquired on June 1, 1997, would report 1997/06/01

Schedule RI-A - Changes in Equity Capital

Indicate decreases and losses in parentheses.                         1383

<TABLE> 
<CAPTION> 
                                                                                                Dollar Amounts in Thousands
- - ---------------------------------------------------------------------------------------------------------------------------
                                                                                                         RIAD         
                                                                                                         ----         
<S>                                                                                                      <C>     <C>  
1.  Total equity capital originally reported in the December 31, 1996, Reports of Condition and Income   3215       477,333 1.
2.  Equity capital adjustments from amended Reports of Income, net*___________________________________   3216             0 2.
3.  Amended balance end of previous calendar year (sum of items 1 and 2)______________________________   3217       477,333 3.
4.  Net income (loss) (must equal Schedule RI, item 12)_______________________________________________   4340        70,303 4.
5.  Sale, conversion, acquisition, or retirement of capital stock, net________________________________   4346             0 5.
6.  Changes incident to business combinations, net____________________________________________________   4356             0 6.
7.  LESS: Cash dividends declared on preferred stock__________________________________________________   4470             0 7.
8.  LESS: Cash dividends declared on common stock_____________________________________________________   4460        37,500 8.
9.  Cumulative effect of changes in accounting principles from prior years* (see instructions for              
    this schedule)____________________________________________________________________________________   4411             0 9.
10. Corrections of material accounting errors from prior years* (see instructions for this schedule)__   4412             0 10.
11. Change in net unrealized holding gains (losses) on available-for-sale securities__________________   8433         1,302 11.
12. Other transactions with parent holding company* (not included in item 5, 7, or 8 above)___________   4415             0 12.
13. Total equity capital end of current period (sum of items 3 through 12) (must equal                         
    Schedule RC item 28)______________________________________________________________________________   3210       511,438 13.
</TABLE> 
- - ----------
* Describe on Schedule RI-E - Explanations.
<PAGE>
 
SUNTRUST BANK, CENTRAL FLORIDA N.A.
P.O. BOX 4418 CENTER 632
ATLANTA, GA 30302

 Call date:    09/30/97     State #:    12-1159     FFIEC 032
 Vendor ID:    D             Cert #:    21043          RI-5
 Transit #:    06310215                         ----------------
                                                        7         
                                                 ----------------


Schedule RI-B - Continued

Part II. Changes in Allowance for Loan and Lease Losses

<TABLE> 
<CAPTION> 
                                                                                                Dollar Amounts in Thousands
- - ---------------------------------------------------------------------------------------------------------------------------
                                                                                                            RIAD
                                                                                                            ----
<S>                                                                                                         <C>    <C> 
1. Balance originally reported in the December 31, 1996, Reports of Condition and Income __________________ 3124    87,104   1.
2. Recoveries (must equal part I, item 9, column B above) _________________________________________________ 4605     1,644   2.
3. LESS: Charge-offs (must equal part I, item 9, column A above) __________________________________________ 4635     4,941   3.
4. Provision for loan and lease losses (must equal Schedule RI, item 4.a) _________________________________ 4230     5,247   4.
5. Adjustments *(see instructions for this schedule) ______________________________________________________ 4815         0   5.
6. Balance end of current period (sum of items 1 through 5) (must equal Schedule RC, item 4.b)_____________ 3123    89,054   6.
                                                                                                                   
</TABLE> 

- - -------------
* Describe on Schedule RI-E - Explanations.

Schedule RI-E - Explanations

Schedule RI-E is to be completed each quarter on a calendar year-to-date basis.

Detail all adjustments in Schedules RI-A and RI-B, all extraordinary items and 
other adjustments in Schedule RI, and all significant items of other noninterest
income and other noninterest expense in Schedule RI.
(See instructions for details)

                                                                            1395


<TABLE> 
<CAPTION> 
                                                                                                Dollar Amounts in Thousands
- - ------------------------------------------------------------------------------------------------------------------------------
1. All other noninterest income (from Schedule RI, item 5.f.(2))
   Report amounts that exceed 10% of Schedule RI, item 5.f.(2):
                                                                                                            RIAD  Year to Date
                                                                                                            ----  
<S>                                                                                                         <C>   <C> 
   a. Net gains (losses) on other real estate owned________________________________________________________ 5415         0   1.a
   b. Net gains (losses) on sales of loans_________________________________________________________________ 5416     1,173   1.b
   c. Net gains (losses) on sales of premises and fixed assets_____________________________________________ 5417         0   1.c
   Itemize and describe the three largest other amounts that exceed 10% of Schedule RI, item 5.f.(2)
                 TEXT
   d. 4461 SALE OF CUSTOMER CHECKS                                                                          4461     1,234   1.d
   e. 4462 FOREIGN EXCHG-GAIN/LOSS                                                                          4462     1,173   1.e
   f. 4463                                                                                                  4463         0   1.f
2. Other noninterest expense (from Schedule RI, item 7.c):                                                  RIAD  Year to Date
                                                                                                            ----  
   a. Amortization expense of intangible assets___________________________________________________________  4531         0   2.a
   Report amounts that exceed 10% of Schedule RI, item 7.c
   b. Net (gains) losses on other real estate owned_______________________________________________________  5418         0   2.b
   c. Net (gains) losses on sales of loans________________________________________________________________  5419         0   2.c
   d. Net (gains) losses on sales of premises and fixed assets____________________________________________  5420         0   2.d
   Itemize and describe the three largest other amounts that exceed 10% of Schedule RI, item 7.c:
                 TEXT                                                                                       RIAD
                                                                                                            ----  
   e. 4464 I/C DATA PROCESSING FEE                                                                          4464    32,114   2.e
   f. 4467 CR CD-INTERCHANGE EXP                                                                            4467    20,536   2.f
   g. 4468                                                                                                  4468         0   2.g
</TABLE> 
<PAGE>
 
<TABLE> 
<S>                                               <C>             <C>                  <C>         <C>             <C> 
SUNTRUST BANK, CENTRAL FLORIDA N.A.               Call Date:      09/30/97            State #:     12-1159         FFIEC 032
P.O. BOX 4418 CENTER 632                          Vendor ID:      D                    Cert #:     21043             RC-1
ATLANTA, GA  30302                                TRANSIT #:      06310215              
                                                                                                                  -----------
                                                                                                                       9
                                                                                                                  -----------
</TABLE> 


 Consolidated Report of Condition for Insured Commercial
 and State-Chartered Savings Banks for September 30, 1997

 All schedules are to be reported in thousands of dollars.  Unless otherwise 
 indicated, report the amount outstanding as of the last business day of the 
 quarter.

 Schedule RC - Balance Sheet
<TABLE> 
<CAPTION> 
                                                                                                                         C300
                                                                                           Dollar Amounts in Thousands
- - -----------------------------------------------------------------------------------------------------------------------
<S>                                                                              <C>       <C>       <C>          <C>       <C>  
ASSETS
1.  Cash and balances due from depository institutions (from Schedule RC-A):                          RCON   
                                                                                                      ----  
    a. Noninterest-bearing balances and currency and coin (1)_______________________________________  0081        551,719   1.a
    b. Interest-bearing balances (2) _______________________________________________________________  0071          4,167   1.b
2.  Securities:
    a. Held-to-maturity securities (from Schedule RC-B, column A)___________________________________  1754              0   2.a
    b. Available-for-sale securities (from Schedule RC-B, column D)_________________________________  1773        900,751   2.b
3.  Federal funds sold and securities purchased under agreements to resell__________________________  1350        528,935   3
4.  Loans and lease financing receivables:                                         RCON
                                                                                   ----
    a. Loans and leases, net of unearned income (from Schedule RC-C)_____________  2122     5,126,931                       4.a
    b. LESS: Allowance for loan and lease losses_________________________________  3123        89,054                       4.b
    c. LESS: Allowance transfer risk reserve_____________________________________  3128             0                       4.c
    d. Loans and leases, net of unearned income,                                                      RCON
                                                                                                      ----
       allowance, and reserve (item 4.a minus 4.b and 4.c)__________________________________________  2125      5,037,877   4.d
5.  Trading assets (from Schedule RC-D)_____________________________________________________________  3545              0   5.
6.  Premises and fixed assets (including capitalized leases)________________________________________  2145         55,384   6.
7.  Other real estate owned (from Schedule RC-M)____________________________________________________  2150          5,274   7.
8.  Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M)________  2130          7,804   8.
9.  Customers' liability to this bank an acceptances outstanding____________________________________  2155          4,194   9.
10. Intangible assets (from Schedule RC-M)__________________________________________________________  2143              0   10.
11. Other assets (from Schedule RC-F)_______________________________________________________________  2160         86,597   11.
12. Total assets (sum of items 1 through 11)________________________________________________________  2170      7,182,702   12.
</TABLE> 
- - ----------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.

<PAGE>
 
SUNTRUST BANK, CENTRAL FLORIDA N.A.
P.O. BOX 4418 CENTER 632
ATLANTA, GA 30302

Call Date:    09/30/97            State #:    12-1159            FFIEC  032
Vendor ID:    D                    Cert #:    21043                 RC-3
Transit #:    06310215
                                                                 ----------
                                                                     11
                                                                 ----------

Schedule RC-A - Cash and Balances Due From Depository Institutions

Exclude assets held for trading.
                                                                    C305
<TABLE> 
<CAPTION> 
                                                                                              Dollar Amounts in Thousands
- - -------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                        <C>    <C> 
1.  Cash items in process of collection, unposted debits, and currency and coin:                           RCON
                                                                                                           ----
    a. Cash items in process of collection and unposted debits________________________________________     0020   419,413 1.a
    b. Currency and coin______________________________________________________________________________     0080    96,493 1.b
2.  Balance due from depository institutions in the U.S.:
    a. U.S. branches and agencies of foreign banks____________________________________________________     0083         0 2.a
    b. Other commercial banks in the U.S. and other depository institutions in the U.S._______________     0085     6,862 2.b
3.  Balances due from banks in foreign countries and foreign central banks:
    a. Foreign branches of other U.S. banks___________________________________________________________     0073         0 3.a
    b. Other banks in foreign countries and foreign central banks_____________________________________     0074       295 3.b
4.  Balances due from Federal Reserve Banks___________________________________________________________     0090    32,823 4
5.  Total (sum of items 1 through 4)(must equal Schedule RC, sum of items 1.a and 1.b)________________     0010   555,886 5
</TABLE> 

Memorandum

<TABLE> 
<CAPTION> 
                                                                                              Dollar Amounts in Thousands
- - -------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                        <C>    <C> 
1.  Noninterest-bearing balances due from commercial banks in the U.S. (included in items 2.a and          RCON
                                                                                                           ----
    2.b above)________________________________________________________________________________________     0050     2,695 M.1
</TABLE> 

Schedule RC-B - Securities

Exclude assets held for trading.
                                                                    C310

<TABLE> 
<CAPTION> 
                                                                                                  Dollar Amounts in Thousands
- - -----------------------------------------------------------------------------------------------------------------------------
                                                   ------Held-to-maturity------            ------Available-for-sale------
                                                      (Column A)         (Column B)           (Column C)           (Column D)
                                                  Amortized Cost         Fair Value          Amortized Cost       Fair Value(1)
                                                  RCON             RCON                RCON                 RCON
                                                  ----             ----                ----                 ----
<S>                                               <C>          <C> <C>            <C>  <C>        <C>       <C>   <C>          
1.  U.S. Treasury securities____________________  0211         0   0213           0    1286       478,635   1287  481,834  1
2.  U.S. Government agency obligations                                                                         
    (exclude mortgage-backed securities):                                                                      
    a. Issued by U.S. Government agencies (2)___  1289         0   1290           0    1291             0   1293        0  2.a
    b. Issued by U.S. Government-sponsored                                                                     
       agencies (3)_____________________________  1294         0   1295           0    1297        69,342   1298   70,607  2.b
</TABLE> 

- - -----------
(1) Includes equity securities without readily determinable fair values at 
    historical cost in item 6.b, column D.
(2) Includes Small Business Administration "Guaranteed Loan Pool Certificates",
    U.S. Maritime Administration obligations, and Export - Import Bank
    participation certificates.
(3) Includes obligations (other than mortgage-backed securities) issued by the
    Farm Credit System, the Federal Home Loan Bank System, The Federal Home Loan
    Mortgage Corporation, the Federal National Mortgage Association, the
    Financing Corporation, the Resolution Funding Corporation, the Student Loan
    Marketing Association, and the Tennessee Valley Authority.
<PAGE>
 
SUNTRUST BANK, CENTRAL FLORIDA N.A.       
P.O. BOX 4418 CENTER 632
ATLANTA, GA 30302

Call Date:  09/30/97         State #: 12-1159       FFIEC  032
Vendor ID:  D                Cert #:  21043            RC-5
Transit #:  06310215                                ----------
                                                        13
                                                    ----------

Schedule RC-B - Continued
                                                       C312


<TABLE> 
<CAPTION> 

Memoranda                                                                                  Dollar Amounts in Thousands
- - ----------------------------------------------------------------------------------------------------------------------
<S>                                                                                                   <C>      <C>      <C> 
                                                                                                      RCON
                                                                                                      ----
1. Pledged securities(1)___________________________________________________________________________   0416     667,831  M.2.a1
2. Maturity and repricing data for debt securities (1.2)(excluding those in nonaccrual status):
   a. Securities issued by the U.S. Treasury, U.S. Government agencies, and states
      and political subdivisions in the U.S.: other non-mortgage debt securities; and 
      mortgage pass-through securities other than those backed by closed-end
      first lien 1-4 family residential mortgages with a remaining maturity or repricing
      frequency of: (3,4)
      (1) Three months or less_____________________________________________________________________  A549        1,500  M.2.a1 
      (2) Over three months through 12 months______________________________________________________  A550      244,822  M.2.a2
      (3) Over one year through three years________________________________________________________  A551      284,985  M.2.a3
      (4) Over three years through five years______________________________________________________  A552       44,355  M.2.a4
      (5) Over five years through 15 years_________________________________________________________  A553       16,732  M.2.a5
      (6) Over 15 years____________________________________________________________________________  A554            0  M.2.a6
   b. Mortgage pass-through securities backed by closed-end first lien 1-4 family
      residential mortgages with a remaining maturity or repricing frequency of: (3,5)
      (1) Three months or less_____________________________________________________________________  A565       16,480  M.2.b1
      (2) Over three months through 12 months______________________________________________________  A556       80,675  M.2.b2
      (3) Over one year through three years________________________________________________________  A557       37,673  M.2.b3
      (4) Over three years through five years______________________________________________________  A558        8,805  M.2.b4
      (5) Over five years through 15 years_________________________________________________________  A559        4,270  M.2.b5
      (6) Over 15 years____________________________________________________________________________  A560        1,163  M.2.b6
   c. Other mortgage-backed securities (include CMOs, REMICs, and stripped MBS;
      exclude mortgage pass-through securities) with an expected average life of: (6)
      (1) Three years or less______________________________________________________________________  A561      100,077  M.2.c1
      (2) Over three years_________________________________________________________________________  A562       14,589  M.2.c2
   d. Fixed rate AND floating rate debt securities with a REMAINING MATURITY of one
      year or less (included in Memorandum items 2.a through 2.c above)____________________________  A248      261,180  M.2.d
3. -6. Not applicable 
7. Amortized cost of held-to-maturity securities sold or transferred to available-for-sale or
   trading securities during the calendar year-to-date (report the amortized cost at date
   of sale or transfer)____________________________________________________________________________  1778            0  M.7
8. High-risk mortgage securities (included in the held-to-maturity and available-for-sale
   accounts in Schedule RC-B, item 4,b):
   a. Amortized cost_______________________________________________________________________________  8780            0  M.8.a
   b. Fair value___________________________________________________________________________________  8781            0  M.8.b
9. Structured notes (included in the held-to-maturity and available-for sale
   accounts in Schedule RC-B, items 2, 3, and 5):
   a. Amortized cost_______________________________________________________________________________  8782            0  M.9.a
   B. Fair value___________________________________________________________________________________  8783            0  M.9.b
</TABLE> 
____________
  (1) Includes held-to-maturity securities at amortized cost and 
      available-for-sale securities at fair value.
  (2) Exclude equity securities, e.g., investments in mutual funds, Federal 
      Reserve stock, common stock, and preferred stock.
  (3) Report fixed rate debt securities by remaining maturity and floating rate 
      debt securities by repricing frequency.
  (4) Sum of Memorandum items 2.a.(1) through 2.a.(6) plus any nonaccrual debt
      securities in the categories of debt securities reported in Memorandum
      item 2.a that are included in Schedule RC-N, Item 9. column C, must equal
      Schedule RC-B, sum of items 1, 2, 3 and 6, columns A and D, plus mortgage
      pass-through securities other than those backed by closed-end first lien
      1-4 family residential mortgages included in Schedule RC-B, item 4.a,
      columns A and D.
  (5) Sum of Memorandum items 2.b.(1) through 2.b.(6) plus any nonaccrual
      mortgage pass-through securities backed by closed-end first lien 1-4
      family residential mortgages included in Schedule RC-N, item 9, column C,
      must equal Schedule RC-B, item 4.a, sum of columns A and D, less the
      amount of mortgage pass-through securities other than those backed by
      closed-end first lien 1-4 family residential mortgages included in
      Schedule RC-B, item 4.a, columns A and D.
  (6) Sum of Memorandum items 2.c.(1) and 2.c.(2) plus any nonaccrual "Other
      mortgage-backed securities" included in Schedule RC-N, item 9, column C,
      must equal Schedule RC-B, item 4.b, sum of columns A and D.



























     
<PAGE>
 
SUNTRUST BANK, CENTRAL FLORIDA N.A.
P.O. BOX 4418 CENTER 632
ATLANTA, GA 30302

Call Date:   09/30/97           State #:   12-1159                 FFIEC 032
Vendor ID:   D                   Cert #:   21043                      RC-7
Transit #:   06310215
                                                                   ---------  
                                                                       15
                                                                   ---------  
Schedule RC-C - Continued

Part I. Continued

<TABLE> 
<CAPTION> 

Memoranda                                                                                       Dollar Amounts in Thousands
- - ---------------------------------------------------------------------------------------------------------------------------
<S>                                                                                              <C>      <C> 
1. Not applicable
2. Loans and Leases restructured and in compliance with modified terms (included in
   Schedule RC-C, part I, above, and not reported as past due or nonaccrual in Schedule RC-N.
   Memorandum item 1):
   a. Loans secured by real estate:                                                                  RCON
                                                                                                     ----
      (1) To U.S. addressees (domicile)____________________________________________________________  1687             0  M.2.a.1
      (2) To non-U.S. addressees (domicile)________________________________________________________  1689             0  M.2.a.2
   b. All other loans and lease financing receivables (exclude loans to individuals for  
       household, family, and other personal expenditures)_________________________________________  8691             0  M.2.b
   c. Commercial and industrial loans to and lease financing receivables of 
       non-U.S. addressees (domicile) included in Memorandum item 2.b above________________________  8692             0  M.2.c
3. Maturity and repricing data for loans and leases (excluding those in nonaccrual status):
   a. Closed-end loans secured by first liens on 1-4 family residential properties
      with a remaining maturity or repricing frequency of: (1,2)
      (1) Three months or less_____________________________________________________________________  A564         4,540  M.3.a1
      (2) Over three months through 12 months______________________________________________________  A565       875,000  M.3.a2
      (3) Over one year through three years________________________________________________________  A566         9,979  M.3.a3
      (4) Over three years through five years______________________________________________________  A567        12,838  M.3.a4
      (5) Over five years through 15 years_________________________________________________________  A568        73,644  M.3.a5
      (6) Over 15 years____________________________________________________________________________  A569        37,383  M.3.a6
   b. All loans and leases other than closed-end loans secured by first liens on 1-4 family
      residential properties with a remaining maturity or repricing frequency of: (1,3)
      (1) Three months or less_____________________________________________________________________  A570     1,239,867  M.3.b1
      (2) Over three months through 12 months______________________________________________________  A571     1,777,386  M.3.b2
      (3) Over one year through three years________________________________________________________  A572       248,308  M.3.b3
      (4) Over three years through five years______________________________________________________  A573       548,735  M.3.b4
      (5) Over five years through 15 years_________________________________________________________  A574       273,267  M.3.b5
      (6) Over 15 years____________________________________________________________________________  A574        15,833  M.3.b6 
   c. Fixed rate AND floating rate loans and leases with a REMAINING MATURITY of one
      year or less (included in Memorandum items 3.a and 3.b above)________________________________  A247     1,121,344  M.3.c
   d. Fixed rate AND floating rate loans secured by nonfarm nonresidential properties (4)
      with a REMAINING MATURITY of over five years (included in 
      Memorandum item 3.b above)___________________________________________________________________  A577       161,148  M.3.d
   e. Fixed rate AND floating rate commercial and industrial loans (5) with a REMAINING 
      MATURITY of over three years (included in Memorandum items 3.b above)________________________  A578     1,205,711  M.3.e
</TABLE> 
- - --------------
(1) Report fixed rate loans and leases by remaining maturity and floating rate
    loans by repricing frequency.
(2) Sum of Memorandum items 3.a.(1) through 3.a.(6) plus total nonaccrual 
    closed-end loans secured by first liens on 1-4 family residential properties
    included in Schedule RC-N, Memorandum item 3.c.(2), column C, must equal
    total closed-end loans secured by first liens on 1-4 family residential
    properties from Schedule RC-C, part I, item 1.c.(2)(a).
(3) Sum of Memorandum items 3.b.(1) through 3.b.(6) plus total nonaccrual loans
    and leases from Schedule RC-N, sum of items 1 through 8, column C, minus
    nonaccrual closed-end loans secured by first liens on 1-4 family residential
    properties included in Schedule RC-N, Memorandum item 3.c.(2), column C,
    must equal total loans and leases from Schedule RC-C, Part I, sum of items 1
    through 10, minus total closed-end loans secured by first liens on 1-4
    family residential properties in domestic offices from Schedule RC-C, part
    I, item 1.c.(2)(a).
(4) As defined for Schedule RC-C, part I, item 1.e, column B.
(5) As defined for Schedule RC-C, part I, item 4, column A. 

<PAGE>
 
SUNTRUST BANK, CENTRAL FLORIDA N.A.
P.O. BOX 4418 CENTER 632
ATLANTA, GA 30302

Call Date:   09/30/97           State #:   12-1159                 FFIEC 032
Vendor ID:   D                   Cert #:   21043                      RC-9
Transit #:   06310215
                                                                   ---------  
                                                                       17
                                                                   ---------  

Schedule RC-E - Deposit Liabilities
                                                                    C325
<TABLE> 
<CAPTION> 
                                                                         -------Transaction Accounts-------    -Nontransaction-
                                                                                                                   Accounts
                                                                           (Column A)           (Column B)        (Column C)
                                                                              Total             Memo: Total         Total
                                                                           Transaction            Demand        nontransaction
                                         Dollar Amounts in Thousands         accounts            Deposits          Accounts
- - ----------------------------------------------------------------------   (including total      (included in       (including
                                                                         demand deposits)        column A)          MMDAs)
<S>                                                                   <C> <C>              <C>  <C>          <C><C>           <C> 
Deposits of:                                                          RCON                 RCON              RCON
                                                                      ----                 ----              ----
1. Individuals, partnerships and corporations_______________________  2201     1,070,486   2240     909,986  2346   2,720,272 1
2. U.S. Government__________________________________________________  2202           728   2280         728  2520           0 2
3. States and political subdivisions in the U.S.____________________  2203        46,457   2290      39,162  2530      51,906 3
4. Commercial banks in the U.S._____________________________________  2206       201,423   2310     201,423  2550           0 4
5. Other depository institutions in the U.S.________________________  2207         7,121   2312       7,121  2349           0 5
6. Banks in foreign countries_______________________________________  2213           191   2320         191  2236           0 6
7. Foreign governments, and official institutions
   (including foreign central banks)________________________________  2216             0   2300           0  2377           0 7
8. Certified and official checks____________________________________  2330        32,348   2330      32,348                   8
9. Total (sum of items 1 through 8)(sum of 
   columns A and C must equal Schedule RC,
   item 13.a)_______________________________________________________  2215     1,358,754   2210   1,190,959  2385   2,772,178 9

<CAPTION> 

Memoranda                                                                                        Dollar Amounts in Thousands
- - -----------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                          <C>      <C>     <C> 
1. Selected components of total deposits (i.e., sum of item 9, columns A and C):                             RCON
                                                                                                             ----
   a. Total individual Retirement Accounts (IRAs) and Keogh Plan accounts__________________________________  6835     143,783 M.1.a
   b. Total brokered deposits______________________________________________________________________________  2365       4,000 M.1.b
   c. Fully insured brokered deposits (included in Memorandum item 1.b above):
      (1) Issued in denominations of less than $100,000____________________________________________________  2343           0 M.1.c1
      (2) Issued either in denominations of $100,000 or in denominations greater than
          $100,000 and participated out by the broker in shares of $100,000 or less________________________  2344           0 M.1.c2
   d. Maturity data for brokered deposits:
      (1) Brokered deposits issued in denominations of less than $100,000 with a remaining
          maturity of one year or less (included in Memorandum Item 1.c.(1) above)_________________________  A243           0 M.1.d1
      (2) Brokered deposits issued in denominations of $100,000 or more with a remaining
          maturity of one year or less (included in Memorandum item 1.b above)_____________________________  A244       4,000 M.1.d2
   e. Preferred deposits (uninsured deposits of states and political subdivisions in the U.S.
      reported in item 3 above which are secured or collateralized as required under state law)____________  5590      93,716 M.1.e
2. Components of total nontransaction accounts (sum of Memorandum items 2.a through 2.d
   must equal item 9, column C, above):
   a. Savings deposits:
      (1) Money market deposit accounts (MMDAs)____________________________________________________________  6810     821,114 M.2.a1
      (2) Other savings deposits (excludes MMDAs)__________________________________________________________  0352     974,954 M.2.a2
   b. Total time deposits of less than $100,000____________________________________________________________  6648     685,118 M.2.b
   c. Total time deposits of $100,000 or more______________________________________________________________  2604     290,992 M.2.c
3. All NOW accounts (included in column A above)____________________________________________________________ 2398     167,795 M.3
4. Not applicable
</TABLE> 
<PAGE>
 
SUNTRUST BANK, CENTRAL FLORIDA N.A.
P.O. BOX 4418 CENTER 632
ATLANTA, GA 30302

Call Date:  09/30/97          State #: 12-1159          FFIEC  032
Vendor ID:  D                 Cert#:   21043              RC-11
Transit #:  06310215                                    ----------              
                                                            19
                                                        ----------              
Schedule RC-F - Other Assets
                                                            C330
<TABLE> 
<CAPTION> 
                                                                                        Dollar Amounts in Thousands
- - -------------------------------------------------------------------------------------------------------------------
                                                                                                    RCON
                                                                                                    ----
<S>                                                                                                 <C>      <C>     <C> 
1. Income earned, not collected on loans___________________________________________________________ 2164     28,930  1.
2. Net deferred tax assets (1) ____________________________________________________________________ 2148     29,790  2.
3. Interest-only strips receivable (not in the form of a security)(2) on:
   a. Mortgage loans_______________________________________________________________________________ A519          0  3.a
   b. Other financial assets_______________________________________________________________________ A520          0  3.b
4. Other (itemize and describe amounts that exceed 25% of this item)_______________________________ 2168     27,877  4.
            TEXT                                                                  RCON
            --------------------------------------------------------------------------
   a. 3549  SECURITIES-ACCRD INC                                                  3549        8,504                  4.a
            ---------------------------------------------------------------------
   b. 3550                                                                        3550            0                  4.b
   c. 3551                                                                        3551            0 RCON             4.c
5. Total (sum of items 1 thorough 4) (must equal Schedule RC, item 11)_____________________________ 2160     86,597  5.

                                                                                        Dollar Amounts in Thousands
- - -------------------------------------------------------------------------------------------------------------------
Memorandum                                                                                          RCON
                                                                                                    ----
1. Deferred tax assets disallowed for regulatory capital purposes__________________________________5610          0  M.1

Schedule RC-G - Other Liabilities
                                                                                C335
                                                                                        Dollar Amounts in Thousands
- - ------------------------------------------------------------------------------------------------------------------- 
                                                                                                    RCON
                                                                                                    ----
1. a. Interest accrued and unpaid on deposits (3)__________________________________________________ 3645      9,759  1.a
   b. Other expenses accrued and unpaid (includes accrued income taxes payable)____________________ 3646     17,528  1.b
2. Net deferred tax liabilities (1)________________________________________________________________ 3049          0  2.
3. Minority interest in consolidated subsidiaries__________________________________________________ 3000          0  3.
4. Other (itemize and describe amounts that exceed 25% of this item)_______________________________ 2938      6,899  4.
                 TEXT                                                             RCON
                                                                                  ----      
   a.  3552                                                                       3552            0                  4.a
   b.  3553                                                                       3553            0                  4.b
   c.  3554                                                                       3554            0 RCON             4.c
5. Total (sum of items 1 through 4) (must equal Schedule RC, item 20)______________________________ 2930     34,186  5.
</TABLE> 
- - --------------
(1) See discussion of deferred income taxes in Glossary entry on 'income taxes'.
(2) Report interest-only strips receivable in the form of a security as
    available-for sale securities in Schedule RC, item 2.b, or as trading assets
    in Schedule RC, item 5, as appropriate.
(3) For savings banks, includes 'dividends' accrued and unpaid on deposits.

<PAGE>
 
SUNTRUST BANK, CENTRAL FLORIDA N.A.
P.O. BOX 4418 CENTER 632
ATLANTA, GA 30302

Call Date:    09/30/97                  State #:    12-1159     FFIEC 032
Vendor ID:    D                         Cert # :    21043          RC-13
Transit #:    06310215                                          ---------
                                                                    21
                                                                ---------

Schedule RC-L - Off-Balance Sheet Items

Please read carefully the instructions for the preparation of Schedule RC-L. 
Some of the amounts reported in Schedule RC-L are regarded as volume indicators 
and not necessarily as measures of risk.

                                                                   C360
<TABLE> 
<CAPTION> 
                                                                                          Dollar Amounts in Thousands
- - ---------------------------------------------------------------------------------------------------------------------
<S>                                                                                                 <C>      <C>     <C> 
1.  Unused commitments:                                                                              RCON
    a. Revolving, open-end lines secured by 1-4 family residential properties,                       ----
       e.g., home equity lines______________________________________________________________________ 3814     183,504  1.a
    b. Credit card lines____________________________________________________________________________ 3815           0  1.b
    c. Commercial real estate, construction, and land development: 
       (1) Commitments to fund loans secured by real estate_________________________________________ 3816     209,949  1.c.1
       (2) Commitments to fund loans not secured by real estate_____________________________________ 6550      84,912  1.c.2
    d. Securities underwriting______________________________________________________________________ 3817           0  1.d
    e. Other unused commitments_____________________________________________________________________ 3818   4,958,337  1.e
2.  Financial standby letters of credit_______________________________________ RCON                  3819     629,714  2.
                                                                               ----
    a. Amount of financial standby letters of credit conveyed to others________3820          277,565                   2.a
3.  Performance standby letters of credit___________________________________________________________ 3821      32,094  3.
    a. Amount of performance standby letters of credit conveyed to others______3822            1,960                   3.a
4.  Commercial and similar letters of credit________________________________________________________ 3411       7,231  4.
5.  Participations in acceptances (as described in the instructions) conveyed to others by the 
    reporting bank__________________________________________________________________________________ 3428         378  5.
6.  Participations in acceptances (as described in the instructions) acquired by the reporting
    (nonaccepting) bank_____________________________________________________________________________ 3429           0  6.
7.  Securities borrowed_____________________________________________________________________________ 3432           0  7.
8.  Securities lent (including customers' securities lent where the customer is indemnifed
    against loss by the reporting bank)_____________________________________________________________ 3433           0  8.
9.  Financial assets transferred with recourse that have been treated as
    sold for Call Report purposes:
    a. First lien 1-to-4 family residential mortgage loans:                                          RCON 
       (1) Outstanding principal balance of mortgages transferred                                    ----      
           as of the report date____________________________________________________________________ A521           0  9.a.1
       (2) Amount of recourse exposure on these mortgages                                                     
           as of the report date____________________________________________________________________ A522           0  9.a.2
    b. Other financial assets (excluding small business obligations                                           
       reported in item 9.c):                                                                                 
       (1) Outstanding principal balance of assets transferred                                                
           as of the report date____________________________________________________________________ A523           0  9.b.1
       (2) Amount of recourse exposure on these assets                                                        
           as of the report date____________________________________________________________________ A524           0  9.b.2
    c. Small business obligations transferred with recourse under Section 206 of the Riegle                 
       Community Development and Regulatory Improvement Act of 1994:                                          
       (1) Outstanding principal balance of small business obligations                                        
       (1) Outstanding principal balance of small business obligations transferred as of the report           
           date_____________________________________________________________________________________ A249           0  9.c.1
       (2) Amount of retained recourse on these obligations as of the report date___________________ A250           0  9.c.2
10. Notional amount of credit derivatives:                                                                    
    a. Credit derivatives on which the reporting bank is the guarantor______________________________ A534           0  10.a
    b. Credit derivatives on which the reporting bank is the beneficiary____________________________ A535           0  10.b
11. Spot foreign exchange contracts_________________________________________________________________ 8765           0  11
12. All other off-balance sheet liabilities (exclude off-balance sheet derivatives)(itemize and                      
    describe each component of this item over 25% of Schedule RC, item 28, "Total equity capital")__ 3430           0  12
<CAPTION> 
                      TEXT                                                    RCON
                                                                              ----
   <S>                                                                       <C>                 <C>                  <C> 
   a. 3555                                                                    3555                0                    12.a
   b. 3556                                                                    3556                0                    12.b
   c. 3557                                                                    3557                0                    12.c
   d. 3558                                                                    3558                0                    12.d 
</TABLE> 







<PAGE>
 
SUNTRUST BANK, CENTRAL FLORIDA N.A.
P.O. BOX 4418 CENTER 632
ATLANTA, GA 30302

Call Date:   09/30/97           State #:   12-1159                 FFIEC 032
Vendor ID:   D                   Cert #:   21043                      RI-15
Transit #:   06310215
                                                                   ---------  
                                                                       23
                                                                   ---------  

Schedule RC-L Continued

<TABLE> 
<CAPTION> 

                                                                                                 Dollar Amounts in Thousands
- - -----------------------------------------------------------------------------------------------------------------------------
<S>                                                         <C>  <C>         <C>  <C>        <C>  <C>        <C>  <C>        <C> 
 Off-Balance Sheet Derivatives                                   (Column A)       (Column B)      (Column C)      (Column D)
 Position Indicators                                              Interest         Foreign          Equity        Commodity
                                                                    Rate           Exchange       Derivative      and other
17. Total gross fair value of derivative contracts:              Contracts        Contracts       Contracts       Contracts
    a. Contracts held for trading:                          RCON             RCON            RCON            RCON 
                                                            ----             ----            ----            ---- 
       (1) Gross positive fair value______________________  8733          0  8734          0 8735          0 8736          0 17.a1
       (2) Gross negative fair value______________________  8737          0  8738          0 8739          0 8740          0 17.a2
    b. Contracts held for purposes other than
       trading that are marked to market:                   RCON             RCON            RCON            RCON
                                                            ----             ----            ----            ----
       (1) Gross positive fair value______________________  8741          0  8742          0 8743          0 8744          0 17.b1
       (2) Gross negative fair value______________________  8745          0  8746          0 8747          0 8748          0 17.b2
    c. Contracts held for purposes other than
       trading that are not marked to market:
                                                            RCON             RCON            RCON            RCON
                                                            ----             ----            ----            ---- 
       (1) Gross positive fair value______________________  8749      2,091  8750          0 8751          0 8752         0 17.c1
       (2) Gross negative fair value______________________  8753        882  8754          0 8755          0 8756         0 17.c2

<CAPTION> 

Memoranda                                                                                        Dollar Amounts in Thousands
- - -----------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                          <C>   <C>      <C> 
1.-2. Not applicable
3. Unused commitments with an original maturity exceeding one year that are reported in                      RCON
   Schedule RC-L, items 1.a through 1.e. above (report only the unused portions of                           ----
   commitments that are fee paid or otherwise legally binding)_____________________________________________  3833 3,625,979 M.3
                                                                                             RCON
   a. Participations in commitments with an original maturity                                ----
      exceeding one year conveyed to others________________________________________________  3834   580,013                 M.3.a
4. To be completed only by banks with $ 1 billion or more in total assets:                                   RCON
   Standby letters of credit (both financial and performance) issued to non-U.S. addressees                  ----
   (domicile) included in Schedule RC-L, items 2 and 3, above______________________________________________  3377     1,364 M.4
5. Installment loans to individuals for household, family, and other personal expenditures 
   that have been securitized and sold (with servicing retained), amounts outstanding by      
   type of loan:                                                                                             RCON
   a. Loans to purchase private passenger automobiles                                                        ----
      (to be completed for the September report only)______________________________________________________  2741         0 M.5.a
   b. Credit cards and related plans (TO BE COMPLETED QUARTERLY)___________________________________________  2742         0 M.5.b
   c. All other consumer installment credit (including mobile home loans)
      (to be completed for the September report only)______________________________________________________  2743         0 M.5.c
</TABLE> 

<PAGE>
 
SUNTRUST BANK, CENTRAL FLORIDA N.A
P.O BOX 4418 CENTER 632
ATLANTA, GA 30302

CALL DATE:   09/30/97           STATE#:       12-1159       FFIEC 032
VENDOR ID:   D                  Cert#:        21043           RC-17
TRANSIT#:    06310215                                       ---------
                                                               25
                                                            ---------
<TABLE> 
<CAPTION> 
                                                           

Schedule RC-M - Continued
                                                                                                Dollar Amounts in Thousands
- - ----------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                         <C>     <C>       <C> 
8. a. Other real estate owned:                                                                               RCON
      (1) Direct and indirect investments in real estate ventures__________________________________________   5372         0  8.A.1
      (2) All other real estate owned:
          (a) Construction and land development____________________________________________________________   5508     3,754  8.a.2a
          (b) Farmland_____________________________________________________________________________________   5509         0  8.a.2b
          (c) 1-4 family residential properties____________________________________________________________   5510     1,520  8.a.2c
          (d) Multifamily (5 or more) residential properties_______________________________________________   5511         0  8.a.2d
          (e) Nonfarm nonresidential properties____________________________________________________________   5512         0  8.a.2e
      (3) Total (sum of items 8.a.(1) and 8.a.(2)) (must equal Schedule RC, item 7)________________________   2150     5,274  8.a.3
   b. Investments in unconsolidated subsidiaries and associated companies:
      (1) Direct and indirect investments in real estate ventures__________________________________________   5374         0  8.b.1
      (2) All other investments in unconsolidated subsidiaries and associated companies____________________   5375     7,804  8.b.2
      (3) Total (sum of items 8.b.(1) and 8.b. (2)) (must equal Schedule RC, item 8)_______________________   2130     7,804  8.b.3
9. Noncumulative perpetual preferred stock and related surplus included in Schedule RC.
   item 23, "Perpetual preferred stock and related surplus"________________________________________________   3778         0  9
10. Mutual fund and annuity sales during the quarter(including proprietary, private label,
    and third party products):
    a. Money market funds__________________________________________________________________________________   6441   129,799  10.a
    b. Equity securities funds_____________________________________________________________________________   8427    11,377  10.b
    c. Debt securities funds_______________________________________________________________________________   8428     4,194  10.c
    d. Other mutual funds__________________________________________________________________________________   8429     8,664  10.d
    e. Annuities___________________________________________________________________________________________   8430     4,191  10.e
    f. Sales of proprietary mutual funds and annuities (included in items 10.a through
       10.e above)_________________________________________________________________________________________   8784   144,294  10.f
11. Net unamortized realized deferred gains (losses)
    on off-balance sheet derivative contracts included
    in assets and liabilities reported in Schedule RC______________________________________________________   A525         0  11
12. Amount of assets netted against nondeposit
    liabilities on the balance sheet (Schedule RC)
    in accordance with generally accepted accounting principles(1)_________________________________________   A526         0  12
13. Outstanding principal balance of loans other than 1-4 family residential
    mortgage loans that are serviced for other (to be completed
    if this balance is more than $10 million and exceeds ten percent
    of total assets)_______________________________________________________________________________________   A591         0  13
</TABLE> 

<TABLE> 
<CAPTION> 
- - ------------------------------------------------------------------------------------------------------------------------------------
Memorandum                                                                              Dollar Amounts in Thousands
- - --------------------------------------------------------------------------------------------------------------------
<S>                                                                                     <C>                   <C>        <C> 
1. Reciprocal holdings of banking organizations' capital instruments
   (to be completed for the December report only)__________________________________________________________   3836       N/A  M.1
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE> 

- - -------------------
 (1) Exclude netted on-balance sheet amounts associated with off-balance sheet 
     derivative contracts, deferred tax assets netted against deferred tax 
     liabilities, and assets netted in accounting for pensions.

<PAGE>
 
SUNTRUST BANK, CENTRAL FLORIDA N.A.
P.O. BOX 4418 CENTER 632
ATLANTA, GA 30302

Call Date:   09/30/97           State #:   12-1159                 FFIEC 032
Vendor ID:   D                   Cert #:   21043                     RC-19
Transit #:   06310215
                                                                   ---------  
                                                                      27
                                                                   ---------  

Schedule RC-N Continued
                                                                      C373

<TABLE> 
<CAPTION> 
                                                                                                Dollar Amounts in Thousands
- - ---------------------------------------------------------------------------------------------------------------------------
<S>                                                          <C>    <C>             <C>  <C>            <C>  <C> 
                                                                    --(Column A)--       --(Column B)--      --(Column C)--  
                                                                       Past due            Past due 90         Nonaccrual
Memoranda                                                            30 through 89         days or more
                                                                     days and still         and still
1.  Restructured loans and leases included in                           accruing             accruing
    Schedule RC-N, items 1 through 8, above                  RCON                    RCON               RCON
    (and not reported in Schedule RC-C,                      ----                    ----               ----
    Memorandum item 2)_____________________________________  1658               0    1659           0   1661            0 M.1
2.  Loans to finance commercial real estate,
    construction, and land development activities
    (not secured by real estate) included in
    Schedule RC-N, items 4 and 7, above____________________  6558               0    6559           0   6560            0 M.2
3.  Loans secured by real estate (sum of
    Memorandum items 3.a through 3.e must
    equal sum of Schedule RC-N items 1.a and
    1.b above):
    a. Construction and land development___________________  2759             643    2769           0   3492          157 M.3a
    b. Secured by farmland_________________________________  3493               0    3494         700   3495        1,976 M.3b
    c. Secured by 1-4 family residential properties:
       (1) Revolving, open-end loans secured by
           1-4 family residential properties and
           extended under lines of credit__________________  5398             115    5399           0   5400          305 M.3.c1
       (2) All other loans secured by 1-4 family
           residential properties__________________________  5401           2,672    5402          41   5403        2,192 M.3c2
    d. Secured by multifamily (5 or more) residential
       properties__________________________________________  3499              53    3500           0   3501           71 M.3d
    e. Secured by nonfarm nonresidential properties________  3502           1,609    3503         236   3504        2,345 M.3e
</TABLE> 

<TABLE> 
<CAPTION> 
                                                                    --(Column A)--       --(Column B)--     
                                                                       Past due            Past due 90      
                                                                     30 through 89         days or more
                                                                     days and still         and still
                                                                        accruing             accruing
<S>                                                          <C>                <C>  <C>            <C> 
4.  Interest rate, foreign exchange rate, and other          RCON                    RCON             
    commodity and equity contracts:                          ----                    ----           
    a. Book value of amounts carried as assets_____________  3522               0    3528           0                     M.4.a
    b. Replacement cost of contracts with a
       positive replacement cost___________________________  3529               0    3530           0                     M.4.b
</TABLE> 
================================================================================
Person to whom questions about the Reports of Condition and Income should be 
directed:
                                                                      C377

                Name           Title            Area Code/Phone Number/Extension
          -------------        --------------       ----------------------------
    8901  KEN MUTELL     8901  VICE PRESIDENT  8902 (404) 724-3833
          -------------        --------------       ----------------------------
<PAGE>
 
SUNTRUST BANK, CENTRAL FLORIDA N.A.                 
P.O. BOX 4418 CENTER 632                            
ATLANTA, GA  30302                                  
                                                    

Call Date:              09/30/97           State #:      12-1159      FFIEC 032 
Vendor ID:              D                   Cert #:      21043          RC-21   
  Transit:              06310215                                                
                                                                  ------------
                                                                       29     
                                                                  ------------
    
Schedule RC-O - Continued
<TABLE> 
<CAPTION> 
                                                                                                    Dollar Amounts in Thousands
- - --------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                             <C>                <C>  <C>  
11. Adjustments to demand deposits reported
    in Schedule RC-E for certain reciprocal demand balances:
    a. Amount by which demand deposits would be reduced if the reporting bank's
       reciprocal demand balances with the domestic offices of U.S. banks and
       savings associations and insured branches in Puerto Rico and U.S. territories              RCON
       and possessions that were reported on a gross basis in Schedule RC-E                       ----
       had been reported on a net basis_________________________________________________________  8785               0  11.a
    b. Amount by which demand deposits would be increased if the reporting bank's
       reciprocal demand balances with foreign banks and foreign offices of other
       U.S. banks (other than insured branches in Puerto Rico and U.S.
       territories and possessions) that were reported on a net basis in
       Schedule RC-E had been reported on a gross basis_________________________________________  A181               0  11.b
    c. Amount by which demand deposits would be reduced if cash items in process
       of collection were included in the calculation of the reporting bank's net
       reciprocal demand balances with the domestic offices of U.S. banks and 
       savings associations and insured branches in Puerto Rico and U.S.
       territories and possessions in Schedule RC-E_____________________________________________  A182               0  11.c
12. Amount of assets netted against deposit liabilities
    on the balance sheet (Schedule RC) in accordance with generally accepted
    accounting principles (exclude amounts related to reciprocal demand balances):
    a. Amount of assets netted against demand deposits__________________________________________  A527               0  12.a
    b. Amount of assets netted against time and savings deposits________________________________  A528               0  12.b
<CAPTION> 

Memoranda (To be completed each quarter except as noted)                                            Dollar Amounts in Thousands
- - --------------------------------------------------------------------------------------------------------------------------------
<S>                                                                          <C>      <C>        <C>         <C>        <C> 
1. Total deposits of the bank (sum of Memorandum items 1.a.(1) and 1.b.(1) must equal
   Schedule RC, item 13.a):
   a. Deposit accounts of $100,000 or less:                                                       RCON
                                                                                                  ----
      (1) Amount of deposit accounts of $100,0000 or less_______________________________________  2702       2,529,605  M.1.a1
      (2) Number of deposit accounts of $100,000 or less                      RCON      Number
                                                                              ----
          (to be completed for the June report only)________________________  3779         N/A                          M.1.a2
   b. Deposit accounts of more than $100,000:                                                     RCON
                                                                                                  ----
      (1) Amount of deposit accounts of more than $100,000______________________________________  2710       1,601,327  M.1.b1
      (2) Number of deposit accounts of more than $100,000__________________  2722       4,539                          M.1.b2
2. Estimated amount of uninsured deposits of the bank:
   a. An estimate of your bank's uninsured deposits can be determined by 
      multiplying the number of deposit accounts of more than $100,000 
      reported in Memorandum item 1.b(2) above by $100,000 and subtracting 
      the result from the amount of deposit accounts of more than $100,000
      reported in Memorandum item 1.b.(1) above.

      indicated in the appropriate box at right whether your bank has a                           RCON        YES/NO
      method or procedure for determining a better estimate of uninsured                          ----
      deposits than the estimate described above________________________________________________  6861          NO      M.2.a
   b. If the box marked YES has been checked, report the estimate of uninsured deposits
      determined by using your bank's method or procedure_______________________________________  5597               0  M.2.b
3. Has the reporting institution been consolidated with a parent bank
   or savings association in that parent bank's or parent savings association's
   Call Report or Thrift Financial Report ?
   If so, report the legal title and FDIC Certificate Number of the 
   parent bank or parent savings association:
             Text                                                                                 RCON   FDIC Cert No.
                                                                                                  ----
          A545                                                                                    A545                  M.3
</TABLE> 
<PAGE>
 

SUNTRUST BANK, CENTRAL FLORIDA N.A.
P.O. BOX 4418 CENTER 632
ATLANTA, GA 30302

Call Date:   09/30/97           State #:   12-1159                 FFIEC 032
Vendor ID:   D                   Cert #:   21043                     RC-23
Transit #:   06310215
                                                                   ---------  
                                                                       31
                                                                   ---------  

Schedule RC-R - Continued
                                                     

<TABLE> 
<CAPTION> 

                                                                                --(Column A)        -(Column B)--
                                                                                    Assets          Credit Equiv-
                                                                                   Recorded         valent Amount
                                                                                    on the          of Off-Balance
                                           Dollar Amounts in Thousands           Balance Sheet      Sheet Items (2)
- - -------------------------------------------------------------------------------------------------------------------
<S>                                                                      <C>     <C>            <C> <C>           
5. Assets and credit equivalent amounts of off-balance sheet items 
   assigned to the 20 percent risk category:                             RCON
                                                                         ----
   a. Assets recorded on the balance sheet______________________________ 5165      1,211,746    RCON              5.a
                                                                                                ----
   b. Credit equivalent amount of off-balance sheet items_____________________________________  3801      572,341 5.b
6. Assets and credit equivalent amounts of off-balance sheet items
   assigned to the 50 percent risk category:
   a. Assets recorded on the balance sheet______________________________ 3802      1,251,194                      6.a
   b. Credit equivalent amount of off-balance sheet items_____________________________________  3803      143,286 6.b
7. Assets and credit equivalent amounts of off-balance sheet items
   assigned to the 100 percent risk category:
   a. Assets recorded on the balance sheet______________________________ 3804      3,872,655                      7.a
   b. Credit equivalent amount of off-balance sheet items_____________________________________  3805    1,748,761 7.b
8. On-balance sheet asset values excluded from and deducted in
   the calculation of the risk-based capital ratio(2)___________________ 3806          6,027                      8.
9. Total assets recorded on the balance sheet (sum of
   items 4.a, 5.a, 6.a, 7.a, and 8, column A) (must equal Schedule RC,
   item 12.c plus items 4.b and 4.c_____________________________________ 3807      7,271,756                      9.

Memoranda                                                                               Dollar Amounts in Thousands
- - -------------------------------------------------------------------------------------------------------------------
1. Current credit exposure across all off-balance sheet derivative contracts covered by the
   risk-based capital standards_______________________________________________________________  8764        2,091 M.1
</TABLE> 

<TABLE> 
<CAPTION> 
                                                                    ------ With a remaining maturity of ------
                                                           --(Column A)--         --(Column B)--     --(Column C)--
                                                              One Year                 Over               Over
                                                              or less                one year           five years
2. Notional principal amounts of off-balance                                      thru five years
   sheet derivative contracts;(3)                      RCON               RCON                     RCON
                                                       ----               ----                     ----
<S>                                                    <C>                <C>                      <C> 
   a. Interest rate contracts________________________  3809            0  8766           23,572    8767     132,168  M.2.a
   b. Foreign exchange contracts_____________________  3812            0  8769                0    8770           0  M.2.b
   c. Gold contracts_________________________________  8771            0  8772                0    8773           0  M.2.c
   d. Other precious metals contracts________________  8774            0  8775                0    8776           0  M.2.d
   e. Other commodity contracts______________________  8777            0  8778                0    8779           0  M.2.e
   f. Equity derivatives contracts___________________  A000            0  A001                0    A002           0  M.2.f
</TABLE> 
- - -----------
(1) Do not report in column B the risk-weighted amount of assets reported in 
    column A.
(2) Include the difference between the fair value and the amortized costs of its
    available-for-sale securities in item 8 and report the amortized cost of
    these securities in items 4 through 7 above. Item 8 also includes on-balance
    sheet asset values (or portions thereof) of off-balance sheet interest rate,
    foreign exchange rate, and commodity contracts and those contracts (e.g.
    future contracts) not subject to risk-based capital, item 8 margin accounts
    and accrued receivables not included in the calculation of credit equivalent
    amounts of off-balance sheet derivatives as well as any portion of the
    allowance for loan and lease losses in excess of the amount that may be
    included in Tier 2 capital.
(3) Exclude foreign exchange contracts with an original maturity of 14 days or 
    less and all futures contracts.
<PAGE>
 
                                                                           ----
                                                                            33
                                                                           ----
SUNTRUST BANK, CENTRAL FLORIDA N.A.             OMB No. For FDIC: 1557-0081
P.O. BOX 4418 CENTER 632                        OMB No. For FDIC: 3064-0052
ATLANTA, GA 30302                         OMB No. For Federal Reserve: 7100-0036
                                                 Expiration Date: 3/31/2000

                                                            SPECIAL REPORT

                                                                            C700

                                                     Dollar Amounts in Thousands
- - --------------------------------------------------------------------------------
                                               Close of Busi-           
                                                ness Date:        FDIC Cert.#
                                                 09/30/97           21043
- - --------------------------------------------------------------------------------
LOANS TO EXECUTIVE OFFICERS (Complete as of each Call Report Date)

- - --------------------------------------------------------------------------------
 The following information is required by Public Laws 90-44 and 102-242, but
 does not constitute a part of the Report of Condition. With each Report of
 Condition, these Laws require all banks to furnish a report of all loans or
 other extensions of credit to their executive officers made since the date of
 the previous, Report of Condition. Data regarding individual loans or other
 extensions of credit are not required. If no such loans or other extensions of
 credit were made during the period, insert "none" against subitem (a). (Exclude
 the first $15,000 of indebtedness of each executive officer under bank credit
 card plan.) See Section 215.2 and 215.3 of Title 12 of the Code of Federal 
 Regulations (Federal Reserve Board Regulation O) for the definitions of
 "executive officer" and "extension of credit", respectively. Exclude loans and
 other extensions of credit to directors and principal shareholders who are not
 executive officers. 

 The following information is required by Public Laws 90-44 and 102-242, but
 does not constitute a part of the Report of

<TABLE> 
<S>                                                                      <C>          <C>         <C>          <C>     
                                                                                                     RCON
                                                                                                     ----
 a. Number of loans made to executive officers since the previous Call Report date_________________  3561           0  a.
 b. Total dollar amount of above loans (in thousands of dollars)___________________________________  3562           0  b.
                                                                            RCON         From                      To
 c. Range of interest charged on above loans                                ----         ----                      --
    (example: 9-3/4% = 9.75)_______________________________________________ 7701         0.00%       7702        0.00% c.

       /s/ R. Todd Bowers                                                           10/28/97
- - -------------------------------------------------------------------------------------------------------------------------
SIGNATURE AND TITLE OF OFFICER AUTHORIZED TO SIGN REPORT:                    DATE (Month, Day, Year):          

             
                      NAME AND TITLE OF PERSON TO 
                WHOM INQUIRIES MAY BE DIRECTED: (TEXT)                  AREA CODE/PHONE NUMBER/EXTENSION: (TEXT) 
        8903                                                      8904
        8903

- - ------------------------------------------------------------------------------------------------------------------------
FDIC 8040/53 (6-95)

</TABLE> 

<PAGE>


                                                                    EXHIBIT 99.1

 
                             LETTER OF TRANSMITTAL
                                      FOR
                         8 1/2% SENIOR NOTES DUE 2008
                                      OF
                        INTERMEDIA COMMUNICATIONS INC.
 
                 PURSUANT TO THE EXCHANGE OFFER IN RESPECT OF
             ALL OF THEIR OUTSTANDING 8 1/2% SENIOR NOTES DUE 2008
                                      FOR
                     8 1/2% SERIES B SENIOR NOTES DUE 2008
               PURSUANT TO THE PROSPECTUS DATED JANUARY   , 1998
 
     THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
     TIME, ON         , 1998, UNLESS EXTENDED. TENDERS OF OLD NOTES
     MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M., NEW YORK CITY
     TIME, ON THE BUSINESS DAY PRIOR TO THE EXPIRATION DATE.
 
   TO: SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION, EXCHANGE AGENT
 
      By Mail, Hand or Overnight Courier:             By Facsimile:
      SunTrust Bank, Central Florida, National Association
                                                      (407) 237-5299
      225 East Robinson Street, Suite 250
 
      Orlando, Florida 32801                          Confirm by Telephone:
      Attention: Alice L. Springer                    (407) 237-5179
 
  Delivery of this Letter of Transmittal to an address, or transmission via
telegram, telex or facsimile, other than as set forth above will not
constitute a valid delivery. The instructions contained herein should be read
carefully before this Letter of Transmittal is completed.
 
  HOLDERS WHO WISH TO BE ELIGIBLE TO RECEIVE NEW NOTES FOR THEIR OLD NOTES
PURSUANT TO THE EXCHANGE OFFER MUST VALIDLY TENDER (AND NOT WITHDRAW) THEIR
OLD NOTES TO THE EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE.
 
  By execution hereof, the undersigned acknowledges receipt of the Prospectus
(the "Prospectus"), dated January   , 1998, of Intermedia Communications Inc.
(the "Issuer"), which, together with this Letter of Transmittal and the
Instructions hereto (the "Letter of Transmittal"), constitute the Issuer's
offer (the "Exchange Offer") to exchange $1,000 principal amount of its 8 1/2%
Series B Senior Notes due 2008 (the "New Notes") that have been registered
under the Securities Act of 1933, as amended (the "Securities Act"), pursuant
to a Registration Statement of which the Prospectus constitutes a part, for
each $1,000 principal amount of its outstanding 8 1/2% Senior Notes due 2008
(the "Old Notes"), upon the terms and subject to the conditions set forth in
the Prospectus.
 
  The Company has not entered into any arrangement or understanding with any
person to distribute the New Notes to be received in the Exchange Offer and to
the best of the Company's information and belief, each person participating in
the Exchange Offer is acquiring the New Notes in its ordinary course of
business and has no arrangement or understanding with any person to
participate in the distribution of the New Notes to be received in the
Exchange Offer.
 
  This Letter of Transmittal is to be used by Holders if: (i) certificates
representing Old Notes are to be physically delivered to the Exchange Agent
herewith by Holders; (ii) tender of Old Notes is to be made by book-entry
transfer to the Exchange Agent's account at The Depository Trust Company
("DTC") pursuant to the procedures set forth in the Prospectus under "The
Exchange Offer--Procedures for Tendering Old Notes" by any financial
institution that is a participant in DTC and whose name appears on a security
position listing as the owner of Old Notes (such participants, acting on
behalf of Holders, are referred to herein, together with such Holders, as
"Acting Holders"); or (iii) tender of Old Notes is to be made according to the
guaranteed delivery procedures set forth in the Prospectus under "The Exchange
Offer--Procedures for Tendering Old Notes." Delivery of documents to DTC does
not constitute delivery to the Exchange Agent.
 
                                       1
<PAGE>
 
  The term "Holder" with respect to the Exchange Offer means any person: (i)
in whose name Old Notes are registered on the books of the Issuer or any other
person who has obtained a properly completed bond power from the registered
Holder or (ii) whose Old Notes are held of record by DTC who desires to
deliver such Old Notes by book entry transfer at DTC.
 
  The undersigned has completed, executed and delivered this Letter of
Transmittal to indicate the action the undersigned desires to take with
respect to the Exchange Offer. Holders who wish to tender their Old Notes must
complete this Letter of Transmittal in its entirety.
 
  All capitalized terms used herein and not defined herein shall have the
meaning ascribed to them in the Prospectus.
 
  The instructions included with this Letter of Transmittal must be followed.
Questions and requests for assistance or for additional copies of the
Prospectus, this Letter of Transmittal and the Notice of Guaranteed Delivery
may be directed to the Exchange Agent. See Instruction 8 herein.
 
  HOLDERS WHO WISH TO ACCEPT THE EXCHANGE OFFER AND TENDER THEIR OLD NOTES
MUST COMPLETE THIS LETTER OF TRANSMITTAL IN ITS ENTIRETY.
 
  List below the Old Notes to which this Letter of Transmittal relates. If the
space provided below is inadequate, list the certificate numbers and principal
amounts on a separately executed schedule and affix the schedule to this
Letter of Transmittal. Tenders of Old Notes will be accepted only in principal
amounts equal to $1,000 or integral multiples thereof.
 
 
                           DESCRIPTION OF OLD NOTES
- - -------------------------------------------------------------------------------
                                       CERTIFICATE       AGGREGATE
                                        NUMBER(S)*       PRINCIPAL
                                      (ATTACH SIGNED      AMOUNT
NAME(S) AND ADDRESS(ES) OF HOLDER(S)     LIST IF     TENDERED (IF LESS
     (PLEASE FILL IN, IF BLANK)         NECESSARY)      THAN ALL)**
- - ----------------------------------------------------------------------
                                                  --------------------
                                                  --------------------
                                                  --------------------
                                                  --------------------
                                                  --------------------
                                                  --------------------
                                                  --------------------
                                                  --------------------
                                                  --------------------
                                                  --------------------
                                                  --------------------
                                                  --------------------
- - ----------------------------------------------------------------------
 TOTAL PRINCIPAL AMOUNT OF OLD NOTES TENDERED
- - -------------------------------------------------------------------------------
 *  Need not be completed by Holders tendering by book-entry transfer.
 ** Need not be completed by Holders who wish to tender with respect to all
    Old Notes listed. See Instruction 2.
 
                                       2
<PAGE>
 
[_]CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY DTC TO THE EXCHANGE
   AGENT'S ACCOUNT AT DTC AND COMPLETE THE FOLLOWING:
  Name of Tendering Institution: _____________________________________________
  DTC Book-Entry Account No.: ________________________________________________
  Transaction Code No.: ______________________________________________________
 
  If Holders desire to tender Old Notes pursuant to the Exchange Offer and (i)
certificates representing such Old Notes are not lost but are not immediately
available, (ii) time will not permit this Letter of Transmittal, certificates
representing such Old Notes or other required documents to reach the Exchange
Agent prior to the Expiration Date or (iii) the procedures for book-entry
transfer cannot be completed prior to the Expiration Date, such Holders may
effect a tender of such Old Notes in accordance with the guaranteed delivery
procedures set forth in the Prospectus under "The Exchange Offer--Procedures
for Tendering Old Notes."
 
[_]CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE
   OF GUARANTEED DELIVERY PREVIOUSLY DELIVERED TO THE EXCHANGE AGENT AND
   COMPLETE THE FOLLOWING:
  Name(s) of Holder(s) of Old Notes: _________________________________________
  Window Ticket No. (if any): ________________________________________________
  Date of Execution of Notice of Guaranteed Delivery: ________________________
  Name of Eligible Institution that Guaranteed Delivery: _____________________
  DTC Book-Entry Account No.: ________________________________________________
  If Delivered by Book-Entry Transfer,
  Name of Tendering Institution: _____________________________________________
  Transaction Code No.: ______________________________________________________
 
[_]CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
   COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
   THERETO.
  Name: ______________________________________________________________________
  Address: ___________________________________________________________________
  ____________________________________________________________________________
 
LADIES AND GENTLEMEN:
 
  Subject to the terms of the Exchange Offer, the undersigned hereby tenders
to the Issuer the principal amount of Old Notes indicated above. Subject to
and effective upon the acceptance for exchange of the principal amount of Old
Notes tendered in accordance with this Letter of Transmittal, the undersigned
sells, assigns and transfers to, or upon the order of, the Issuer all right,
title and interest in and to the Old Notes tendered hereby. The undersigned
hereby irrevocably constitutes and appoints the Exchange Agent its agent and
attorney-in-fact (with full knowledge that the Exchange Agent also acts as the
agent of the Issuer and as Trustee under the Indenture for the Old Notes and
the New Notes) with respect to the tendered Old Notes with full power of
substitution to (i) deliver certificates for such Old Notes to the Issuer, or
transfer ownership of such Old Notes on the account books maintained by DTC,
together, in either such case, with all accompanying evidences of transfer and
authenticity to, or upon the order of, the Issuer and (ii) present such Old
Notes for transfer on the books of the Issuer and receive all benefits and
otherwise exercise all rights of beneficial ownership of such Old Notes, all
in accordance with the terms of the Exchange Offer. The power of attorney
granted in this paragraph shall be deemed irrevocable and coupled with an
interest.
 
  The undersigned hereby represents and warrants that he or she has full power
and authority to tender, sell, assign and transfer the Old Notes tendered
hereby and that the Issuer will acquire good and unencumbered title thereto,
free and clear of all liens, restrictions, charges and encumbrances and not
subject to any adverse claim, when the same are acquired by the Issuer. The
undersigned also acknowledges that this Exchange Offer is being made in
reliance upon an interpretation by the staff of the Securities and Exchange
Commission that the New
 
                                       3
<PAGE>
 
Notes issued in exchange for the Old Notes pursuant to the Exchange Offer may
be offered for resale, resold and otherwise transferred by holders thereof
(other than any such holder that is an "affiliate" of the Issuer within the
meaning of Rule 405 under the Securities Act) without compliance with the
registration and prospectus delivery provisions of the Securities Act,
provided that such New Notes are acquired in the ordinary course of such
holders' business and such holders have no arrangement with any person to
participate in the distribution of such New Notes. The undersigned
acknowledges that if he or she is participating in the Exchange Offer for the
purpose of distributing the New Notes, the undersigned must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with a secondary resale transaction. If the undersigned is not a
broker-dealer, the undersigned represents that it is not engaged in, and does
not intend to engage in, a distribution of the New Notes. If the undersigned
is a broker-dealer that will receive New Notes for its own account in exchange
for Old Notes, the undersigned represents that such Old Notes were acquired as
a result of market-making activities or other trading activities and
acknowledges that it will deliver a prospectus in connection with any resale
of such New Notes; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
 
  The undersigned represents that (i) the New Notes acquired pursuant to the
Exchange Offer are being obtained in the ordinary course of such Holder's
business, (ii) such Holder has no arrangements with any person to participate
in the distribution of such New Notes and (iii) such Holder is not an
"affiliate," as defined under Rule 405 of the Securities Act, of the Issuer
or, if such Holder is an affiliate, that such Holder will comply with the
registration and prospectus delivery requirements of the Securities Act to the
extent applicable.
 
  The undersigned will, upon request, execute and deliver any additional
documents deemed by the Exchange Agent or the Issuer to be necessary or
desirable to complete the assignment and transfer of the Old Notes tendered
hereby.
 
  For purposes of the Exchange Offer, the Issuer shall be deemed to have
accepted validly tendered Old Notes when, as and if the Issuer has given oral
or written notice thereof to the Exchange Agent. If any tendered Old Notes are
not accepted for exchange pursuant to the Exchange Offer for any reason,
certificates for any such unaccepted Old Notes will be returned (except as
noted below with respect to tenders through DTC), without expense, to the
undersigned at the address shown below or at a different address shown below
or at a different address as may be indicated under "Special Issuance
Instructions" as promptly as practicable after the Expiration Date.
 
  All authority conferred or agreed to be conferred by this Letter of
Transmittal shall survive the death, incapacity or dissolution of the
undersigned and every obligation under this Letter of Transmittal shall be
binding upon the undersigned's heirs, personal representatives, successors and
assigns.
 
  The undersigned understands that tenders of Old Notes pursuant to the
procedures described under the caption "The Exchange Offer--Procedures for
Tendering Old Notes" in the Prospectus and in the instructions hereto will
constitute a binding agreement between the undersigned and the Issuer upon the
terms and subject to the conditions of the Exchange Offer.
 
  Unless otherwise indicated under "Special Issuance Instructions," please
issue the certificates representing the New Notes issued in exchange for the
Old Notes accepted for exchange and return any Old Notes not tendered or not
exchanged, in the name(s) of the undersigned (or in either such event in the
case of Old Notes tendered by DTC, by credit to the account at DTC).
Similarly, unless otherwise indicated under "Special Delivery Instructions,"
please send the certificates representing the New Notes issued in exchange for
the Old Notes accepted for exchange and any certificates for Old Notes not
tendered or not exchanged (and accompanying documents, as appropriate) to the
undersigned at the address shown below the undersigned's signatures, unless,
in either event, tender is being made through DTC. In the event that both
"Special Issuance Instructions" and "Special Delivery Instructions" are
completed, please issue the certificates representing the New Notes issued in
exchange for the Old Notes accepted for exchange and return any Old Notes not
tendered or not exchanged in the name(s) of, and send said certificates to,
the person(s) so indicated. The undersigned recognizes that the Issuer has no
obligation pursuant to the "Special Issuance Instructions" and "Special
Delivery Instructions" to transfer any Old Notes from the name of the
registered holder(s) thereof if the Issuer does not accept for exchange any of
the Old Notes so tendered.
 
                                       4
<PAGE>
 
                                PLEASE SIGN HERE
 
       (TO BE COMPLETED BY ALL TENDERING HOLDERS OF OLD NOTES REGARDLESS
         OF WHETHER OLD NOTES ARE BEING PHYSICALLY DELIVERED HEREWITH)
 
   This Letter of Transmittal must be signed by the Holder(s) of Old Notes
 exactly as their name(s) appear(s) on certificate(s) for Old Notes or, if
 tendered by a participant in DTC, exactly as such participant's name
 appears on a security position listing as the owner of Old Notes, or by
 person(s) authorized to become registered Holder(s) by endorsements and
 documents transmitted with this Letter of Transmittal. If signature is by
 a trustee, executor, administrator, guardian, attorney-in-fact, officer or
 other person acting in a fiduciary or representative capacity, such person
 must set forth his or her full title below under "Capacity" and submit
 evidence satisfactory to the Issuer of such person's authority to so act.
 See Instruction 3 herein.
 
   If the signature appearing below is not of the registered Holder(s) of
 the Old Notes, then the registered Holder(s) must sign a valid proxy.
 
 X _______________________       Date: ___________________
 
 X _______________________       Date: ___________________
      SIGNATURE(S) OF
       HOLDER(S) OR
   AUTHORIZED SIGNATORY
 
 Name(s): ____________________   Address __________________________________
 
     ______________________            ___________________________________
         (PLEASE PRINT)                       (INCLUDING ZIP CODE)
 
 Capacity: ___________________   Area Code and Telephone No.: _____________
 
 Social Security No.: ________
 
                 SIGNATURE GUARANTEE (SEE INSTRUCTION 3 HEREIN)
        CERTAIN SIGNATURES MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION
 
 ---------------------------------------------------------------------------
             (NAME OF ELIGIBLE INSTITUTION GUARANTEEING SIGNATURES)
 
 ---------------------------------------------------------------------------
  (ADDRESS (INCLUDING ZIP CODE) AND TELEPHONE NUMBER (INCLUDING AREA CODE) OF
                                     FIRM)
 
 ---------------------------------------------------------------------------
                             (AUTHORIZED SIGNATURE)
 
 ---------------------------------------------------------------------------
                                 (PRINTED NAME)
 
 ---------------------------------------------------------------------------
                                    (TITLE)
 
 Date: ___________________
 
                                       5
<PAGE>
 
 
    SPECIAL ISSUANCE INSTRUCTIONS             SPECIAL DELIVERY INSTRUCTIONS
  (SEE INSTRUCTIONS 3 AND 4 HEREIN)         (SEE INSTRUCTIONS 3 AND 4 HEREIN)
 
 
  To be completed ONLY if certifi-          To be completed ONLY if
 cates for Old Notes in a principal        certificates for Old Notes in a
 amount not tendered are to be is-         principal amount not tendered or
 sued in the name of, or the New           not accepted for purchase or the
 Notes issued pursuant to the Ex-          New Notes issued pursuant to the
 change Offer are to be issued to          Exchange Offer are to be sent to
 the order of, someone other than          someone other than the person or
 the person or persons whose signa-        persons whose signature(s)
 ture(s) appear(s) within this Let-        appear(s) within this Letter of
 ter of Transmittal or issued to an        Transmittal or to an address
 address different from that shown         different from that shown in the
 in the box entitled "Description          box entitled "Description of Old
 of Old Notes" within this Letter          Notes" within this Letter of
 of Transmittal, or if Old Notes           Transmittal.
 tendered by book-entry transfer
 that are not accepted for purchase
 are to be credited to an account
 maintained at DTC.
 
                                           Name: .............................
                                                       (PLEASE PRINT)
 
 
                                           Address: ..........................
 Name: .............................                   (PLEASE PRINT)
           (PLEASE PRINT)
 
 
                                           ...................................
 Address: ..........................                      ZIP CODE
           (PLEASE PRINT)
 
 
                                           ...................................
 ...................................        TAXPAYER IDENTIFICATION OR SOCIAL
              ZIP CODE                               SECURITY NUMBER
 
 ...................................
  TAXPAYER IDENTIFICATION OR SOCIAL
           SECURITY NUMBER
 
                                       6
<PAGE>
 
                                 INSTRUCTIONS
 
                   FORMING PART OF THE TERMS AND CONDITIONS
                  OF THE EXCHANGE OFFER AND THE SOLICITATION
 
  1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND OLD NOTES. The certificates
for the tendered Old Notes (or a confirmation of a book-entry into the
Exchange Agent's account at DTC of all Old Notes delivered electronically), as
well as a properly completed and duly executed copy of this Letter of
Transmittal or facsimile hereof and any other documents required by this
Letter of Transmittal must be received by the Exchange Agent at its address
set forth herein prior to 5:00 p.m., New York City time, on the Expiration
Date. The method of delivery of the tendered Old Notes, this Letter of
Transmittal and all other required documents to the Exchange Agent is at the
election and risk of the Holder and, except as otherwise provided below, the
delivery will be deemed made only when actually received by the Exchange
Agent. Instead of delivery by mail, it is recommended that the Holder use an
overnight or hand delivery service. In all cases, sufficient time should be
allowed to assure timely delivery. No Letter of Transmittal or Old Notes
should be sent to the Issuer.
 
  Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available or (ii) who cannot deliver their Old Notes, this Letter
of Transmittal or any other documents required hereby to the Exchange Agent
prior to the Expiration Date must tender their Old Notes and follow the
guaranteed delivery procedures set forth in the Prospectus. Pursuant to such
procedures: (i) such tender must be made by or through an Eligible
Institution; (ii) prior to the Expiration Date, the Exchange Agent must have
received from the Eligible Institution a properly completed and duly executed
Notice of Guaranteed Delivery (by facsimile transmission, mail or hand
delivery) setting forth the name and address of the Holder of the Old Notes,
the certificate number or numbers of such Old Notes and the principal amount
of Old Notes tendered, stating that the tender is being made thereby and
guaranteeing that, within five business days after the Expiration Date, this
Letter of Transmittal (or facsimile thereof) together with the certificate(s)
representing the Old Notes (or a confirmation of electronic delivery of book-
entry delivery into the Exchange Agent's account at DTC) and any of the
required documents will be deposited by the Eligible Institution with the
Exchange Agent; and (iii) such properly completed and executed Letter of
Transmittal (or facsimile hereof), as well as all other documents required by
this Letter of Transmittal and the certificate(s) representing all tendered
Old Notes in proper form for transfer (or a confirmation of electronic mail
delivery of book-entry delivery into the Exchange Agent's account at DTC),
must be received by the Exchange Agent within five business days after the
Expiration Date, all as provided in the Prospectus under the caption
"Guaranteed Delivery Procedures." Any Holder of Old Notes who wishes to tender
his Old Notes pursuant to the guaranteed delivery procedures described above
must ensure that the Exchange Agent receives the Notice of Guaranteed Delivery
prior to 5:00 p.m., New York City time, on the Expiration Date.
 
  All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Old Notes will be determined
by the Issuer in its sole discretion, which determination will be final and
binding. The Issuer reserves the absolute right to reject any and all Old
Notes not properly tendered or any Old Notes the Issuer's acceptance of which
would, in the opinion of counsel for the Issuer, be unlawful. The Issuer also
reserves the right to waive any irregularities or conditions of tender as to
particular Old Notes. The Issuer's interpretation of the terms and conditions
of the Exchange Offer (including the instructions in this Letter of
Transmittal) will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of Old Notes must be
cured within such time as the Issuer shall determine. Neither the Issuer, the
Exchange Agent nor any other person shall be under any duty to give
notification of defects or irregularities with respect to tenders of Old
Notes, nor shall any of them incur any liability for failure to give such
notification. Tenders of Old Notes will not be deemed to have been made until
such defects or irregularities have been cured or waived. Any Old Notes
received by the Exchange Agent that are not properly tendered and as to which
the defects or irregularities have not been cured or waived will be returned
without cost by the Exchange Agent to the tendering Holders of Old Notes,
unless otherwise provided in this Letter of Transmittal, as soon as
practicable following the Expiration Date.
 
 
                                       7
<PAGE>
 
  2. PARTIAL TENDERS. Tenders of Old Notes will be accepted in all
denominations of $1,000 and integral multiples in excess thereof. If less than
the entire principal amount of any Old Notes is tendered, the tendering
Holders should fill in the principal amount tendered in the third column of
the chart entitled "Description of Old Notes." The entire principal amount of
Old Notes delivered to the Exchange Agent will be deemed to have been tendered
unless otherwise indicated. If the entire principal amount of all Old Notes is
not tendered, Old Notes for the principal amount of Old Notes delivered to the
Exchange Agent will be deemed to have been tendered unless otherwise
indicated. If the entire principal amount of all Old Notes is not tendered,
Old Notes for the principal amount of Old Notes not tendered and a certificate
or certificates representing New Notes issued in exchange of any Old Notes
accepted will be sent to the Holder at his or her registered address, unless a
different address is provided in the appropriate box on this Letter of
Transmittal or unless tender is made through DTC, promptly after the Old Notes
are accepted for exchange.
 
  3. SIGNATURES ON THE LETTER OF TRANSMITTAL; BOND POWERS AND ENDORSEMENTS;
GUARANTEE OF SIGNATURES. If this Letter of Transmittal (or facsimile hereof)
is signed by the registered Holder(s) of the Old Notes tendered hereby, the
signature must correspond with the name(s) as written on the face of the Old
Notes without alteration, enlargement or any change whatsoever.
 
  If this Letter of Transmittal (or facsimile hereof) is signed by the
registered Holder(s) of Old Notes tendered and the certificate(s) for New
Notes issued in exchange therefor is to be issued (or any untendered principal
amount of Old Notes is to be reissued) to the registered Holder, such Holder
need not and should not endorse any tendered Old Note, nor provide a separate
bond power. In any other case, such Holder must either properly endorse the
Old Notes tendered or transmit a properly completed separate bond power with
this Letter of Transmittal, with the signatures on the endorsement or bond
power guaranteed by an Eligible Institution.
 
  If this Letter of Transmittal (or facsimile hereof) is signed by a person
other than the registered Holder(s) of any Old Notes listed, such Old Notes
must be endorsed or accompanied by appropriate bond powers signed as the name
of the registered Holder(s) appears on the Old Notes.
 
  If this Letter of Transmittal (or facsimile hereof) or any Old Notes or bond
powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, or officers of corporations or others acting in a fiduciary
or representative capacity, such persons should so indicate when signing, and
unless waived by the Issuer, evidence satisfactory to the Issuer of their
authority so to act must be submitted with this Letter of Transmittal.
 
  Endorsements on Old Notes or signatures on bond powers required by this
Instruction 3 must be guaranteed by an Eligible Institution.
 
  Signatures on this Letter of Transmittal (or facsimile hereof) must be
guaranteed by an Eligible Institution unless the Old Notes tendered pursuant
thereto are tendered (i) by a registered Holder (including any participant in
DTC whose name appears on a security position listing as the owner of Old
Notes) who has not completed the box set forth herein entitled "Special
Issuance Instructions" or the box entitled "Special Delivery Instructions" or
(ii) for the account of an Eligible Institution.
 
  4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. Tendering Holders should
indicate, in the applicable spaces, the name and address to which New Notes or
substitute Old Notes for principal amounts not tendered or not accepted for
exchange are to be issued or sent, if different from the name and address of
the person signing this Letter of Transmittal (or in the case of tender of the
Old Notes through DTC, if different from DTC). In the case of issuance in a
different name, the taxpayer identification or social security number of the
person named must also be indicated.
 
  5. TRANSFER TAXES. The Issuer will pay all transfer taxes, if any,
applicable to the exchange of Old Notes pursuant to the Exchange Offer. If,
however, certificates representing New Notes or Old Notes for principal
amounts not tendered or accepted for exchange are to be delivered to, or are
to be registered or issued in the name of, any person other than the
registered Holder of the Old Notes tendered hereby, or if tendered Old Notes
 
                                       8
<PAGE>
 
are registered in the name of any person other than the person signing this
Letter of Transmittal, or if a transfer tax is imposed for any reason other
than the exchange of Old Notes pursuant to the Exchange Offer, then the amount
of any such transfer taxes (whether imposed on the registered Holder or any
other person) will be payable by the tendering Holder. If satisfactory
evidence of payment of such taxes or exemption therefrom is not submitted with
this Letter of Transmittal, the amount of such transfer taxes will be billed
directly to such tendering Holder.
 
  Except as provided in this Instruction 5, it will not be necessary for
transfer tax stamps to be affixed to the Old Notes listed in this Letter of
Transmittal.
 
  6. WAIVER OF CONDITIONS. The Issuer reserves the absolute right to amend,
waive or modify specified conditions in the Exchange Offer in the case of any
Old Notes tendered.
 
  7. MUTILATED, LOST, STOLEN OR DESTROYED OLD NOTES. Any tendering Holder
whose Old Notes have been mutilated, lost, stolen or destroyed should contact
the Exchange Agent at the address indicated herein for further instruction.
 
  8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for
assistance and requests for additional copies of the Prospectus or this Letter
of Transmittal may be directed to the Exchange Agent at the address specified
in the Prospectus. Holders may also contact their broker, dealer, commercial
bank, trust company or other nominee for assistance concerning the Exchange
Offer.
 
                         (DO NOT WRITE IN SPACE BELOW)
 
 CERTIFICATE SURRENDERED      OLD NOTES TENDERED         OLD NOTES ACCEPTED
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
 
 Delivery Prepared by  Checked by  Date
 
                                       9

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