<PAGE>
As filed with the Securities and Exchange Commission on February 12, 1998
Registration No. 333-45019
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________
AMENDMENT NO.1
TO FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_____________________
INTERMEDIA COMMUNICATIONS INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
_____________________
DELAWARE 59-29-13586
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
3625 QUEEN PALM DRIVE
TAMPA, FLORIDA 33619
(813) 829-0011
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
_____________________
DAVID C. RUBERG, CHAIRMAN OF THE BOARD,
PRESIDENT AND CHIEF EXECUTIVE OFFICER
INTERMEDIA COMMUNICATIONS INC.
3625 QUEEN PALM DRIVE
TAMPA, FLORIDA 33619
(813) 829-0011
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
_____________________
COPY TO:
RALPH J. SUTCLIFFE, ESQ.
KRONISH, LIEB, WEINER & HELLMAN LLP
1114 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036-7798
_____________________
Approximate date of commencement of proposed sale to public: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
<PAGE>
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
2
<PAGE>
_____________________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title at each class of securities Amount to be Proposed maximum Proposed maximum aggregate Amount of
to be registered registered (1) offering price per unit offering price (1) registration fee
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Debt Securities (2)
Preferred Stock, par value $1.00 per
share (3)
Depositary Shares (4) $500,000,000 (1) $500,000,000 $147,500
Common Stock, par value $.01 per
share (5)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purposes of calculating the registration fee
pursuant to Rule 457(0) under the Securities Act of 1933, as amended. The
aggregate public offering price of the Debt Securities, Preferred Stock and
Common Stock registered hereby will not exceed $500,000,000. No separate
consideration will be received for Common Stock, Preferred Stock or Debt
Securities that are issued upon conversion or exchange of Preferred Stock
or Debt Securities.
(2) Such indeterminate amount of Debt Securities as may from time to time be
issued at indeterminate prices or issuable upon conversion or exchange of
Debt Securities or Preferred Stock to the extent such Debt Securities or
Preferred Stock are, by their terms, convertible into or exchangeable for
Debt Securities.
(3) Such indeterminate number of shares of Preferred Stock as may from time to
time be issued at indeterminate prices or issuable upon conversion or
exchange of Debt Securities or Preferred Stock to the extent such Debt
Securities or Preferred Stock are, by their terms, convertible into or
exchangeable for shares of Preferred Stock.
(4) Such indeterminate number of Depositary Shares as may be issued in the
event that the registrant elects to offer fractional interests in shares of
Preferred Stock registered hereby.
(5) Such indeterminate number of shares of Common Stock as may from time to
time be issued at indeterminate prices or issuable upon conversion or
exchange of Debt Securities or Preferred Stock to the extent such Debt
Securities or Preferred Stock are, by their terms, convertible into or
exchangeable for shares of Common Stock.
_____________________
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE OR DATES AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
3
<PAGE>
PROSPECTUS
INTERMEDIA COMMUNICATIONS INC.
------------------------------
$500,000,000
DEBT SECURITIES PREFERRED STOCK DEPOSITARY SHARES COMMON STOCK
------------------------------
Intermedia Communications Inc., a Delaware corporation
("Intermedia" or the "Company"), may issue from time to time, together or
separately, (i) debt securities (the "Debt Securities"), which may be
senior (the "Senior Debt Securities") or subordinated ("Subordinated Debt
Securities"), secured or unsecured, and which may be convertible into or
exchangeable for shares of common stock, par value $.01 per share, of the
Company (the "Common Stock"), shares of preferred stock, par value $1.00
per share (the "Preferred Stock"), or other debt securities; (2) Preferred
Stock, which may be convertible into or exchangeable for shares of Common
Stock, shares of Preferred Stock or Debt Securities; (3) depositary shares
("Depositary Shares") in the event that the Company elects to offer
fractional interests in shares of Preferred Stock, which may be convertible
into or exchangeable for shares of Preferred Stock or Common Stock; and (4)
Common Stock, each in amounts and at prices and on terms to be determined
by market conditions at the time of offering thereof. The Debt Securities,
Preferred Stock, Depositary Shares and Common Stock are collectively
referred to herein as the "Securities."
The Securities may be issued in one or more series or issuances
and will be limited to $500,000,000 in aggregate public offering price. Of
the Securities being registered, a portion of the shares of Common Stock of
Intermedia may be offered and sold by Intermedia Capital Inc.
("Intermedia Capital"), a wholly owned subsidiary of Intermedia. Intermedia
Capital may be deemed to be an "underwriter" and any profits on the sale of
Common Stock by it might be deemed to be underwriting discounts and
commissions under the Securities Act of 1933, as amended (the "Securities
Act"). To the extent Intermedia Capital may be deemed to be an underwriter,
Intermedia Capital may be subject to certain statutory liabilities
of the Securities Act, including, but not limited to, Sections 11, 12 and
17 of the Securities Act and Rule 10b-5 under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). See "Plan of Distribution." The
specific terms of the Securities in respect of which this Prospectus is
being delivered are set forth in the accompanying prospectus supplement
(the "Prospectus Supplement"), including, where applicable, (1) in the case
of Debt Securities, the specific designation, aggregate principal amount,
authorized denomination, initial offering price, maturity, premium (if
any), interest rate (which may be fixed or floating), time of and method of
calculating the payment of interest, if any, any redemption or sinking fund
terms, any terms for the conversion into or exchange for shares of Common
Stock or Preferred Stock or other Debt Securities, terms of subordination
of Subordinated Debt Securities, and other specific terms; (2) in the case
of Preferred Stock, the specific designation, any dividend, liquidation,
redemption, sinking fund, voting or other rights, time of payment of
dividends, any terms for the conversion into or exchange for shares of
Common Stock or shares of Preferred Stock or Debt Securities, the initial
offering price and other specific terms; (3) in the case of Depositary
Shares, the specific designation, any dividend, liquidation preference,
redemption, sinking fund, voting or other rights, time of payment of
dividends, any terms for the conversion into or exchange for shares of
Common Stock or shares of Preferred Stock or Debt Securities, the initial
offering price and other specific terms; and (4) in the case of Common
Stock, the offering price. The Prospectus Supplement will also contain
information, where applicable, about certain United States federal income
tax considerations relating to, and any listing on a securities exchange
of, the Securities covered by the Prospectus Supplement.
PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY MATTERS
DISCUSSED UNDER THE CAPTION "RISK FACTORS" ON PAGE 5.
_____________________
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.
_____________________
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. NEITHER THE
<PAGE>
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OFFERED HEREBY BY ANYONE IN
ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR
IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO
DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
THE DATE OF THIS PROSPECTUS IS FEBRUARY 13, 1998.
2
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Exchange Act, and in accordance therewith, files reports, proxy statements
and other information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy and information statements and other
information can be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, its Midwest Regional Office, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511 and at its Northeast Regional Office, 7 World
Trade Center, Suite 1300, New York, New York 10048. Copies of such material
can be obtained from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Such
material can also be inspected at the Web site of the Commission located at
http://www.sec.gov. The Common Stock is listed on the Nasdaq National
Market under the symbol "ICIX". Reports, proxy and information statements,
and other information concerning the Company can also be inspected at the
Nasdaq National Market at 1735 17 Street, N.W., Washington, D.C. 20006-
1506.
Statements contained in this Prospectus as to the contents of any
contract or other document are not necessarily complete, and reference is
made to the copy of such contract or other document filed as an exhibit to
the Registration Statement of which this Prospectus forms a part, each such
statement being qualified in all respects by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents or information have been filed by the
Company with the Commission and are incorporated herein by reference:
The Company's Annual Report on Form 10-K for the year ended December
31, 1996.
The Company's Annual Report on Form 10-K/A for the year ended December
31, 1996 filed with the Commission on May 15, 1997.
The portions of the Proxy Statement for the Annual Meeting of
Stockholders of the Company held on May 22, 1997 that have been
incorporated by reference into the Company's Annual Report on Form
10-K for the year ended December 31, 1996.
The Company's Current Report on Form 8-K filed with the Commission on
February 24, 1997.
The Company's 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.
The Company's Current Report on Form 8-K filed with the Commission
on February 12, 1998.
The description of the capital stock contained in the Company's
registration statements on Form 8-A under the Exchange Act, filed
April 7, 1992, April 28, 1992 and April 30, 1992 (File No. 0-20135).
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-SKB for the year ended
December 31, 1996.
3
<PAGE>
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 HEREBY UNDERTAKES TO PROVIDE WITHOUT CHARGE TO EACH
PERSON TO WHOM A COPY OF THIS PROSPECTUS HAS BEEN DELIVERED, UPON THE
WRITTEN OR ORAL REQUEST OF SUCH PERSON TO INTERMEDIA COMMUNICATIONS INC.,
3625 QUEEN PALM DRIVE, TAMPA, FLORIDA 33619 (TELEPHONE 813-829-0011),
ATTENTION: INVESTOR RELATIONS, A COPY OF ANY OR ALL OF THE DOCUMENTS
REFERRED TO ABOVE (OTHER THAN EXHIBITS TO SUCH DOCUMENTS) WHICH HAVE BEEN
INCORPORATED BY REFERENCE IN THIS PROSPECTUS.
4
<PAGE>
RISK FACTORS
Prospective investors should consider carefully the following
factors relating to the business of the Company and this offering, in
addition to other information set forth elsewhere in this Prospectus,
before purchasing the Securities offered hereby.
Limited Operations of Certain Services; History of Net Losses.
The Company's business commenced in 1987. Substantially all of the
Company's revenues are derived from local exchange services, enhanced data
services, long distance services, integration services and certain local
network services. Many of these services have only recently been initiated
or their availability only recently expanded in new market areas. The
Company is expecting to substantially increase the size of its operations
in the near future. Prospective investors, therefore, have limited
historical financial information about the Company upon which to base an
evaluation of the Company's performance. Given the Company's limited
operating history, there is no assurance that it will be able to compete
successfully in the telecommunications business.
The development of the Company's business and the expansion of
its networks requires significant capital, operational and administrative
expenditures, a substantial portion of which are incurred before the
realization of revenues. These capital expenditures will result in negative
cash flow until an adequate customer base is established. Although its
revenues have increased in each of the last three years, Intermedia has
incurred significant increases in expenses associated with the installation
of local/long distance voice switches and expansion of its fiber optic
networks, services and customer base. Intermedia reported net losses of
approximately $3.1 million, $20.7 million, $57.2 million for the years
ended December 31, 1994, 1995 and 1996 and a net loss of $201.2 million for
the nine months ended September 30, 1997, respectively. The Company
anticipates recording a significant net loss in 1997 that is expected to be
substantially greater than the loss in 1996 and expects net losses to
continue for the next several years. In addition, the Company expects to
have negative EBITDA in 1997. There can be no assurance that Intermedia
will achieve or sustain profitability or positive EBITDA in the future.
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 pending acquisition of 100% of the
outstanding equity of Shared Technologies (the "Shared Technologies
Acquisition"), the offering (the "October 30 Offerings") of the Company's
7% Junior Convertible Series E Preferred Stock (the "Series E Preferred
Stock") and the Company's 8 7/8% Senior Notes due 2007 (the "8 7/8%
Notes"), and the offering (the "December 23 Offering") of the Company's 8
1/2% Senior Notes due 2008 (the "8 1/2% Notes) and the application of the
net proceeds therefrom, 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 Company's 7%
Junior Convertible Series D Preferred Stock (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 Securities, including the following: (i) a substantial portion of the
Company's cash flow from operations will be dedicated to payment of the
principal and interest on its indebtedness, to payment of dividends on and
the redemption of the Series B Preferred Stock and the payment of dividends
on the Series D Preferred Stock and the Series E Preferred Stock, thereby
reducing funds available for other purposes; (ii) the Company's significant
degree of leverage could increase its vulnerability to changes in general
economic conditions or increases in prevailing interest rates; (iii) the
Company's ability to obtain additional financing for working capital,
capital expenditures, acquisitions, general corporate purposes or other
purposes could be impaired; and (iv) the Company may be more leveraged than
certain of its competitors, which may be a competitive disadvantage.
5
<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.
Combined fixed charges and dividends include interest and dividends whether
paid or accrued. In addition, insufficiencies of $37.6 million and $187.0
million were experienced in the nine-month periods ended September 30, 1996
and 1997, respectively. On a pro forma basis, after giving applicable
effect to the DIGEX, EMI Communications, Inc. ("EMI"), Universal Telecom
Inc. ("UTT") and Net Solve Incorporated ("NetSolve") acquisitions, the
pending acquisition of Shared Technologies, the March 1997 sale of $300
million of preferred stock (the "March 1997 Offerings"), the concurrent
offerings (the "July 9 Offerings") of the Series D Preferred Stock and the
Company's 11 1/4% Senior Discount Notes due 2007 (the 11 1/4% Notes), the
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.
Effect of Substantial Additional Indebtedness on the Company's
Ability to Make Payments on the Securities. The indenture governing the 12
1/2% Notes (the "12 1/2% Notes Indenture"), the indenture governing the 11
1/4% Notes (the "11 1/4% Notes Indenture"), the indenture governing the 8
7/8% Notes (the "8 7/8% Notes Indenture") and the indenture governing the
Company's 8 1/2% Notes (the "8 1/2% Notes Indenture"; the 12 1/2% Notes
Indenture, 11 1/4% Notes Indenture, 8 7/8% Notes Indenture and 8 1/2%
Notes Indenture collectively referred to as the "Existing Indentures") and
the Certificate of Designation governing the Series B Preferred Stock (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. All
additional indebtedness of the Company, including any indebtedness under a
bank credit facility may rank pari passu with or senior in right of payment
to any payment obligations with respect to the Securities. The debt service
requirements of any additional indebtedness would make it more difficult
for the Company to pay cash dividends and principal and interest with
respect to existing securities and indebtedness of the Company as well as
any Securities.
Risks Associated with Acquisitions. The Company intends to use
the net proceeds of the October 30 Offerings and the December 23 Offering,
to expand its networks and service offerings through internal development
and acquisitions. 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 pending acquisition of
Shared Technologies and in anticipation of Shared Technologies becoming a
"Restricted Subsidiary" within the meaning of the Company's Existing
Indentures and the Series B Certificate of Designation, the Company
purchased certain equity interests and certain notes issued by Shared
Technologies. If the pending 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 Indentures and the Series B
Certificate of Designation unless the Company disposes of its investment in
Shared Technologies without a loss or holds its investment through an
Unrestricted Subsidiary. If such an event of default occurs, upon receipt
of notice from
6
<PAGE>
the trustee under any of the Existing Indentures, or the holders of at
least 25% of the outstanding principal amounts of the 12 1/2% Notes, the 11
1/4% Notes, the 8 7/8% Notes or the 8 1/2% Notes, acceleration of the 12
1/2% Notes, the 11 1/4% Notes, the 8 7/8% Notes or the 8 1/2% 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 12 1/2% Notes, 11 1/4% Notes, 8 7/8% Notes and 8 1/2% Notes were
accelerated, the Company would not have sufficient funds available to repay
the all of the 12 1/2% Notes, 11 1/4% Notes, 8 7/8% Notes and 8 1/2% Notes,
unless it could arrange a refinancing of such notes. The Company has used
a portion of the net proceeds of the October 30 Offerings and December 23
Offering to fund a pending acquisition of Shared Technologies.
On December 17, 1997, the Company entered into a definitive
agreement for the acquisition of the Long Distance Savers group of
companies ("LDS") for a purchase price of approximately $151.0 million, of
which $120.0 million is payable in Intermedia common stock and $31.0
million is payable in cash, in each case, subject to certain adjustments
(the "LDS Acquisition"). On February 11, 1998, the Company entered into a
definitive agreement and plan of merger for the acquisition of National
Telecommunications of Florida, Inc. and its affiliate, NTC, Inc.
(collectively, "National"), for a purchase price of approximately $151.0
million, subject to certain adjustments, of which 70% is payable in
Intermedia common stock and 30% is payable in cash. Such acquisitions, if
made, could divert the Company's resources and management time and would
require integration with the Company's existing networks and services.
There can be no assurance that the pending acquisitions of Shared
Technologies, LDS and National will be consummated or that any other
acquisitions will occur or that any such acquisitions, including the
acquisitions of Shared Technologies, LDS and National, if made, would be on
terms favorable to the Company or would be successfully integrated into the
Company's operations.
The Company is currently evaluating, has made offers with respect
to, and is engaged in discussions regarding various other acquisition
opportunities. These acquisitions could be funded by cash (including the
proceeds of the October 30 Offerings and the December 23 Offering), a
portion of the proceeds of the securities offered hereby (unless otherwise
indicated in the applicable supplement prospectus) 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.
Failure to Obtain Third Party Consents in connection with an
Acquisition or Merger. The Company has consummated a number of acquistions
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.
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"). The acquisition was consummated
through a tender offer for all of the outstanding shares of DIGEX, which
closed on July 9, 1997, followed by a cash merger effective on July 11,
1997 (the "Merger").
On June 20, 1997, two purported class action complaints were
filed in the Court of Chancery of the State of Delaware in and for New
Castle County respectively by TAAM Associates, Inc. and David and Chaile
Steinberg (the "Complaints"), purported stockholders of DIGEX, on behalf of
all non-affiliated common stockholders of DIGEX, against Intermedia, DIGEX
and the Directors of DIGEX (the "DIGEX Directors"). The Complaints allege
that the DIGEX Directors violated their fiduciary duties to the public
stockholders of DIGEX by agreeing to vote in favor of the Merger and that
Intermedia knowingly aided and abetted such violation by offering to retain
DIGEX management in their present positions and consenting to stock option
grants to certain executive officers of DIGEX. The Complaints sought
preliminary and permanent injunctions enjoining the Merger but no
applications were made for such injunctions prior to the consummation of
the Merger on July 11, 1997. In addition, the Complaints seek cash damages
from the DIGEX Directors. In August 1997, a motion to dismiss the
Complaints was filed on behalf of Intermedia, DIGEX and the DIGEX
Directors. The action has been dormant since that time.
These cases are in their very early stages and no assurance can
be given as to their ultimate outcome. Intermedia, after consultation with
its counsel, believes that there are meritorious factual and legal defenses
to the claims in the Complaints. Intermedia intends to defend vigorously
the claims in the Complaints.
7
<PAGE>
Regulatory Approval of the October 30 Offerings and the December
23 Offering. Certain states in which Intermedia is certificated provide for
prior approval or notification of the issuance of securities by Intermedia.
Because of time constraints, Intermedia did not seek the approval from such
states prior to the October 30 Offerings and 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. Intermedia subsequently filed the necessary notifications and
applications for approval in these states. After consultation with counsel,
Intermedia believes the regulatory approvals will be granted and that
obtaining such approvals subsequent to the October 30 Offerings and the
December 23 Offering should not result in any material adverse consequences
to Intermedia, although there can be no assurance that such a consequence
will not result.
Significant Capital Requirements and Need for Additional
Financing. Expansion of the Company's existing networks and services and
the development of new networks and services require significant capital
expenditures. Intermedia expects to fund its capital requirements through
existing resources, joint ventures, debt or equity financing (including
capital raised through the October 30 Offerings and the December 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 Existing Indentures, the Series B
Certificate of Designation, the Certificate of Designation setting forth
the rights of the Series D Preferred Stock (the "Series D Certificate of
Designation") and the Certificate of Designation setting forth the rights
of the Series E Preferred Stock (the "Series E Certificate of Designation")
impose certain restrictions upon the Company's ability to incur additional
indebtedness or issue additional preferred stock. In addition, the
Company's future capital requirements will depend upon a number of factors,
including marketing expenses, staffing levels and customer growth, as well
as other factors that are not within the Company's control, such as
competitive conditions, government regulation and capital costs. Failure to
generate sufficient funds may require Intermedia to delay or abandon some
of its future expansion or expenditures, which would have a material
adverse effect on its growth and its ability to compete in the
telecommunications industry.
Expansion Risk. The Company is experiencing a period of rapid
expansion which management expects will increase in the near future. This
growth has increased the operating complexity of the Company as well as the
level of responsibility for both existing and new management personnel. The
Company's ability to manage its expansion effectively will require it to
continue to implement and improve its operational and financial systems and
to expand, train and manage its employee base. The Company's inability to
effectively manage its expansion could have a material adverse effect on
its business.
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.
Maintenance of Peering Relationships. The Internet is comprised
of many Internet service providers ("ISPs") who operate their own networks
and interconnect with other ISPs at various peering points. The
establishment and maintenance of peering relationships with other ISPs is
necessary in order to exchange traffic with other ISPs without having to
pay settlement charges. Although the Company meets the industry's current
standards for peering, there is no assurance that other national ISPs will
maintain peering relationships with the Company. In addition, there may
develop increasing requirements associated with maintaining peering with
the major national ISPs with which the Company may have to comply. There
can be no assurance that the Company
8
<PAGE>
will be able to expand or adapt their network infrastructure to meet the
industry's evolving standards on a timely basis, at a commercially
reasonable cost, or at all.
Potential Liability of On-Line Service Providers. The law in the
United States relating to the liability of on-line service providers and
ISPs for information carried on, disseminated through or hosted on their
systems is currently unsettled. Several private lawsuits seeking to impose
such liability are currently pending. In one case brought against an ISP,
Religious Technology Center v. Netcom On-Line Communication Services, Inc.,
the United States District Court for the Northern District of California
ruled in a preliminary phase that under certain circumstances ISPs could be
held liable for copyright infringement. The Telecommunications Act of 1996
(the "1996 Act") prohibits and imposes criminal penalties for using an
interactive computer service to transmit certain types of information and
content, such as indecent or obscene communications. On June 26, 1997, the
Supreme Court affirmed the decision of a panel of three federal judges
which granted a preliminary injunction barring enforcement of this portion
of the 1996 Act to the extent that enforcement is based upon allegations
other than obscenity or child pornography as an impermissible restriction
on the First Amendment's right of free speech. In addition, numerous states
have adopted or are currently considering similar types of legislation. The
imposition upon ISPs or Web hosting sites of potential liability for
materials carried on or disseminated through their systems could require
the Company to implement measures to reduce their 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.
Risks of Implementation; Need to Obtain Permits and Rights of
Way. The Company is continuing to expand its existing networks. The Company
has identified other expansion opportunities in the eastern half of the
United States and is currently extending the reach of its networks to
pursue such opportunities. There can be no assurance that the Company will
be able to expand its existing networks or construct or acquire new
networks as currently planned on a timely basis. The expansion of the
Company's existing networks and its construction or acquisition of new
networks will be dependent, among other things, on its ability to acquire
rights-of-way and any required permits on satisfactory terms and conditions
and on its ability to finance such expansion, acquisition and construction.
In addition, the Company may require pole attachment agreements with
utilities and incumbent local exchange carriers ("ILECs") to operate
existing and future networks, and there can be no assurance that such
agreements will be obtained or obtainable on reasonable terms. These
factors and others could adversely affect the expansion of the Company's
customer base on its existing networks and commencement of operations on
new networks. If the Company is not able to expand, acquire or construct
its networks in accordance with its plans, the growth of its business would
be materially adversely affected.
Competition. In each of its markets, the Company faces
significant competition for the local network services, including local
exchange services, it offers from incumbent local exchange carriers
("ILECs"), which currently dominate their local telecommunications markets.
ILECs have long-standing relationships with their
9
<PAGE>
customers which relationships may create competitive barriers. Furthermore,
ILECs may have the potential to subsidize competitive service from monopoly
service revenues. In addition, a continuing trend toward business
combinations and alliances in the telecommunications industry may create
significant new competitors to the Company. The Company also faces
competition in most markets in which it operates from one or more
integrated communications services providers ("ICPs") and ILECs operating
fiber optic networks. In addition, the Company faces competition in its
integration services business from equipment manufacturers, the regional
Bell operating companies ("RBOCs") and other ILECs, long distance carriers
and systems integrators, and in its enhanced data services business
(including Internet) from local telephone companies, long distance
carriers, very small aperture terminal ("VSAT") providers, other ISPs and
others. In particular, the market for Internet services is extremely
competitive and there are limited barriers to entry. Many of the Company's
existing and potential competitors have financial, personnel and other
resources significantly greater than those of the Company.
The Company believes that various legislative initiatives,
including the recently enacted 1996 Act, have removed remaining legislative
barriers to local exchange competition. Nevertheless, in light of the
passage of the 1996 Act, regulators are also likely to provide ILECs with
increased pricing flexibility as competition increases. If ILECs are
permitted to lower their rates substantially or engage in excessive volume
or term discount pricing practices for their customers, the net income or
cash flow of ICPs and competitive local exchange carriers ("CLECs"),
including the Company, could be materially adversely affected. In addition,
while the Company currently competes with AT&T, MCI and others in the
interexchange services market, the recent federal legislation permits the
RBOCs to provide interexchange services once certain criteria are met. Once
the RBOCs begin to provide such services, they will be in a position to
offer single source service similar to that being offered by Intermedia.
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. 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. Intermedia is subject to varying degrees of federal,
state and local regulation. Intermedia 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 Intermedia,
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, Intermedia will continue to
maintain tariffs for these services. In June 1997, the FCC issued another
order stating that non-dominant carriers, such as Intermedia, could
withdraw their tariffs for interstate access services. While Intermedia has
no immediate plans to withdraw its tariff, this FCC order allows Intermedia
to do so. The FCC does require Intermedia to file tariffs on an ongoing
basis for international traffic.
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. Intermedia believes that the FCC's new
access charge rules do not adversely affect Intermedia's business plan,
and that they in fact present significant new opportunities for new
entrants, including Intermedia. 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.
Intermedia is generally subject to certification or registration
and tariff or price list filing requirements for intrastate services by
state regulators. 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 ILEC
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 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 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's and other parties' petitions to the Supreme Court request that
review of these decisions has been granted. Most recently, on January 22,
1998, the Eighth Circuit Court reiterated that the FCC is bound by the
pricing policies of the state regulatory commissions regarding
interconnection, unbundled access, resale, and transport and termination of
local telecommunications traffic and rebuffed what it perceived as an
attempt by the FCC to condition the RBOCs' provision of in-region long
distance service on compliance with federal pricing policies regarding
these items. Even though these decisions restrict the role of the FCC in
the pricing and other issues, these issues remain subject to scrutiny and
oversight by state regulatory commissions.
Although Intermedia is not able to predict the impact of these
decisions on future efforts to negotiate interconnection agreements with
ILECs, Intermedia'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 to expand local competition and
Intermedia'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 Intermedia'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.
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 Intermedia. 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 Intermedia for the
required interconnection of the competitor's networks with those of the
ILECs or that such agreements will be favorable. Moreover, 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 the
RBOCs providing interexchange service in their operating regions sooner
than previously expected.
10
<PAGE>
Potential Diminishing Rate of Growth. During the period from 1994
to 1996, the Company's revenues have grown at a compound annual growth rate
of 169%. While the Company expects to continue to grow, as its size
increases it is likely that its rate of growth will diminish.
Risk of New Service Acceptance by Customers. The Company has
recently introduced a number of services, primarily local exchange
services, that the Company believes are important to its long-term growth.
The success of these services will be dependent upon, among other things,
the willingness of customers to accept the Company as the provider of such
services. No assurance can be given that such acceptance will occur; the
lack of such acceptance could have a material adverse effect on the
Company.
Rapid Technological Changes. The telecommunications industry is
subject to rapid and significant changes in technology. While Intermedia
believes that, for the foreseeable future, these changes will neither
materially affect the continued use of its fiber optic networks nor
materially hinder its ability to acquire necessary technologies, the effect
on the business of Intermedia of technological changes such as changes
relating to emerging wireline and wireless transmission technologies,
including software protocols, cannot be predicted.
Dependence on Key Personnel. The Company's business is managed by
a small number of key management and operating personnel, the loss of
certain of whom could have a material adverse impact on the Company's
business. The Company believes that its future success will depend in large
part on its continued ability to attract and retain highly skilled and
qualified personnel. None of the Company's key executives, other than David
C. Ruberg, President, Chief Executive Officer and Chairman of the Board, is
a party to a long-term employment agreement with the Company.
Risk of Cancellation or Non-Renewal of Network Agreements,
Licenses and Permits. The Company has lease and/or purchase agreements for
rights-of-way, utility pole attachments, conduit and dark fiber for its
fiber optic networks. Although the Company does not believe that any of
these agreements will be cancelled in the near future, cancellation or non-
renewal of certain of such agreements could materially adversely affect the
Company's business in the affected metropolitan area. In addition, the
Company has certain licenses and permits from local government authorities.
The 1996 Act requires that local government authorities treat
telecommunications carriers in a competitively neutral, non-discriminatory
manner, and that most utilities, including most ILECs and electric
companies, afford alternative carriers access to their poles, conduits and
rights-of-way at reasonable rates on non-discriminatory terms and
conditions. There can be no assurance that the Company will be able to
maintain its existing franchises, permits and rights or to obtain and
maintain the other franchises, permits and rights needed to implement its
strategy on acceptable terms.
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.
11
<PAGE>
Business Combinations; Change of Control. The Company has from
time to time held, and continues to hold, preliminary discussions with (i)
potential strategic investors who have expressed an interest in making an
investment in or acquiring the Company and (ii) potential joint venture
partners looking toward the formation of strategic alliances that would
expand the reach of the Company's networks or services without necessarily
requiring an additional investment in the Company. In addition to providing
additional growth capital, management believes that an alliance with an
appropriate strategic investor would provide operating synergy to, and
enhance the competitive positions of, both Intermedia and the investor
within the rapidly consolidating telecommunications industry. There can be
no assurance that agreements for any of the foregoing will be reached. An
investment, business combination or strategic alliance could constitute a
change of control. The Existing 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 Existing Senior Notes.
Anti-Takeover Provisions. The Company's Certificate of
Incorporation and Bylaws, the provisions of the Delaware General
Corporation Law (the "DCGL"), the Existing Indentures, the Series B
Certificate of Designation, the Series D Certificate of Designation and
the Series E Certificate of Designation may make it difficult in some
respects to effect a change in control of the Company and replace incumbent
management. In addition, the Company's Board of Directors has adopted a
Stockholder's Rights Plan, pursuant to which rights to acquire a series of
preferred stock, exercisable upon the occurrence of certain events, were
distributed to its stockholders. The existence of these provisions may have
a negative impact on the price of the Common Stock, may discourage third
party bidders from making a bid for the Company, or may reduce any premiums
paid to stockholders for their Common Stock. In addition, the Board has the
authority to fix the rights and preferences of, and to issue shares of, the
Company's preferred stock, which may have the effect of delaying or
preventing a change in control of the Company without action by its
stockholders.
Shares Eligible for Future Sale. Future sales of shares by
existing stockholders under Rule 144 of the Securities Act, or through the
exercise of outstanding registration rights or the issuance of shares of
Common Stock upon the exercise of options or warrants or conversion of
convertible securities could materially adversely affect the market price
of shares of Common Stock and could materially impair the Company's future
ability to raise capital through an offering of equity securities.
Substantially all of the Company's outstanding shares, other than those
held by affiliates, are transferable without restriction under the
Securities Act. No predictions can be made as to the effect, if any, that
market sales of such shares or the availability of such shares for future
sale will have on the market price of shares of Common Stock prevailing
from time to time.
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.
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The Company's historical earnings have been insufficient to cover
combined fixed charges and dividends on preferred stock by $0.6 million,
$2.3 million, $3.3 million, $19.8 million and $60.0 million for each of the
years ended December 31, 1992, 1993, 1994, 1995 and 1996, respectively.
Combined fixed charges and dividends include interest and dividends whether
paid or accrued. In addition, insufficiencies of $37.6 million and $187.0
million were experienced in the nine-month periods ended September 30, 1996
and 1997,
12
<PAGE>
respectively. On a pro forma basis, after giving effect to the DIGEX, EMI,
NetSolve and UTT acquisitions, the pending acquisition of Shared
Technologies and the March 1997 offerings, July 9 Offerings, October 30
Offerings and 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.
See "Risk Factors Substantial Indebtedness; Insufficiency of
Earnings to Cover Fixed Charges" for a further discussion of factors which
may have an impact on the Company's ratio of earnings to combined fixed
charges and preferred stock dividends.
13
<PAGE>
THE COMPANY
Intermedia is a rapidly growing ICP, offering a full suite of
local, long distance and enhanced data telecommunications services to
business and government end user customers, long distance carriers, ISPs,
resellers and wireless communications companies. Founded in 1987, the
Company is currently the third largest (based on annualized
telecommunications services revenues) among providers generally referred to
as CLECs after MFS Communications Company, Inc. and Teleport Communications
Group Inc. As of September 30, 1997, the Company had sales offices in 43
cities throughout the eastern half of the United States and offered a full
product package of telecommunications services in 19 metropolitan
statistical areas. In April 1996, Intermedia became one of the first ICPs
in the United States to provide integrated switched local and long distance
service and as of December 16, 1997 had thirteen switches in service. The
Company provides enhanced data services, including frame relay, a
synchronous transfer mode ("ATM") and Internet access services, primarily
to business and government customers (including over 100 ISPs), in
approximately 3,800 cities nationwide, utilizing 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.
USE OF PROCEEDS
Unless otherwise specified in the Prospectus Supplement, the net
proceeds from the sale of the Securities will be used by the Company and
Intermedia Capital to finance the continued expansion of Intermedia's
telecommunications networks, including, but not limited to, network
electronics, such as local/long distance voice and data switches, and for
general corporate purposes, including working capital.
Unless otherwise specified in the Prospectus Supplement, a
portion of the Company's expansion may occur through acquisitions
(utilizing cash or securities of the Company) as an alternative to direct
investments in the assets required to implement the expansion. The
businesses that the Company may acquire will likely consist of companies
that own existing networks or companies that provide services that
complement the Company's existing businesses. The Existing Indentures
prohibit the Company, but not Intermedia Capital, from acquiring assets or
businesses which are not involved in the Telecommunications Business (as
defined therein). The Company is currently evaluating various acquisition
opportunities, however, no assurance can be given that any potential
acquisition will be consummated.
Prior to the application of the net proceeds as described above,
such funds will be invested in short-term investment grade securities.
14
<PAGE>
DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the Debt Securities
sets forth certain general terms and provisions of the Debt Securities to
which any Prospectus Supplement may relate. The particular terms of the
Debt Securities being offered (the "Offered Debt Securities"), the extent,
if any, to which such general provisions may apply to the Securities and
any modifications of or additions to the general terms of the Debt
Securities applicable in the case of the Offered Debt Securities will be
described in the Prospectus Supplement relating to such Debt Securities.
The Senior Debt Securities are to be issued under an indenture to
be dated as of a date on or prior to the first issuance of Senior Debt
Securities, as supplemented from time to time (the "Senior Indenture"),
between the Company and a trustee to be determined by the Company (the
"Senior Debt Trustee"), and the Subordinated Debt Securities are to be
issued under an indenture to be dated as of a date on or prior to the first
issuance of Subordinated Debt Securities, as supplemented from time to time
(the "Subordinated Indenture"), between the Company and a trustee to be
determined by the Company (the "Subordinated Debt Trustee"). The term
"Trustee" as used herein shall refer to either the Senior Debt Trustee or
the Subordinated Debt Trustee, as appropriate, for Senior Debt Securities
or Subordinated Debt Securities. The form of the Senior Indenture and the
form of the Subordinated Indenture (being referred to herein collectively
as the "Indentures" and individually as an "Indenture") are filed as
exhibits to the Registration Statement. The Indentures are subject to and
governed by the Trust Indenture Act of 1939, as amended (the "TIA"). The
statements made under this heading relating to the Debt Securities and the
Indentures are summaries of the provisions thereof, do not purport to be
complete and are qualified in their entirety by reference to the
Indentures, including the definitions of certain terms therein and in the
TIA. Certain capitalized terms used below but not defined herein have the
meanings ascribed to them in the applicable Indenture.
GENERAL
The Debt Securities will be direct, and may be secured or
unsecured, obligations of the Company. The indebtedness represented by the
unsecured Senior Debt Securities will rank equally with all other unsecured
and unsubordinated indebtedness of the Company. The indebtedness
represented by the secured Senior Debt Securities will rank equally with
all other secured and unsubordinated indebtedness of the Company and will
rank senior to all other unsecured indebtedness of the Company with respect
to the security interest. The indebtedness represented by the Subordinated
Debt Securities will be subordinated in right of payment to the prior
payment in full of the Senior Indebtedness of the Company (including the
Senior Debt Securities) as described under "Subordination" below. The
Indentures provide that the Debt Securities may be issued without limit as
to aggregate principal amount, in one or more series, in each case as
established from time to time in or pursuant to authority granted by a
resolution of the Board of Directors of the Company or as established in
one or more indentures supplemental to the Indenture. All Debt Securities
of one series need not be issued at the same time and, unless otherwise
provided, a series may be reopened, without the consent of the holders of
the Debt Securities of such series, for issuances of additional Debt
Securities of such series.
The Indentures provide that there may be more than one Trustee
thereunder, each with respect to one or more series of Debt Securities. Any
Trustee under the Indentures may resign or be removed with respect to one
or more series of Debt Securities, and a successor Trustee may be appointed
to act with respect to such series. In the event that two or more persons
are acting as Trustee with respect to different series of Debt Securities,
each such Trustee shall be a Trustee of a trust under the Indenture
separate and apart from the trust administered by any other Trustee, and,
except as otherwise indicated herein, any action described herein to be
taken by the Trustee may be taken by each such Trustee with respect to, and
only with respect to, the one or more series of Debt Securities for which
it is Trustee under the applicable Indenture.
15
<PAGE>
The accompanying Prospectus Supplement will set forth the terms
of the Offered Debt Securities, which may include the following:
(1) The title of the Offered Debt Securities and whether they are
Senior Debt Securities or Subordinated Debt Securities (which shall
distinguish the Debt Securities of such Offered Debt Securities from
all other series of Debt Securities).
(2) The aggregate principal amount of the Offered Debt Securities
and any limit on the aggregate principal amount of the Offered Debt
Securities of such series.
(3) The percentage of the principal amount at which the Offered
Debt Securities will be issued and, if other than the principal amount
thereof, the portion of the principal amount thereof payable upon
declaration of acceleration of the maturity or upon redemption thereof
or the method by which such portion shall be determined.
(4) The date or dates on which or periods during which the
Offered Debt Securities may be issued, and the date or dates, or the
method by which such date or dates will be determined, on which the
principal of (and premium, if any, on) the Offered Debt Securities
are, or may be, payable (which may be determined by the Company from
time to time as set forth in the Prospectus Supplement for such
Offered Debt Securities).
(5) The rate or rates (which may be variable or fixed) at which
the Offered Debt Securities will bear interest, if any, or the method
by which such rate or rates shall be determined, the date or dates
from which such interest, if any, shall accrue or the method by which
such date or dates shall be determined, the interest payment dates on
which such interest will be payable (or the method of determination
thereof) and the record dates, if any, for the interest payable on
such interest payment dates, and the notice, if any, to holders
regarding the determination of interest and the manner of giving such
notice, the basis upon which interest shall be calculated if other
than that of a 360-day year of twelve 30-day months and any conditions
or contingencies as to the payment of interest in cash or
otherwise, if any.
(6) The place or places where the principal of (and premium, if
any) and interest on the Offered Debt Securities shall be payable; the
extent to which, or the manner in which, any interest payable on any
Global Note (as defined below) on an interest payment date will be
paid, and the manner in which any principal of, or premium, if any,
on, any Global Note will be paid and whether any Global Note will
require any notation to evidence payment of principal or interest.
(7) The obligation, if any, of the Company to redeem, repay,
purchase or offer to purchase the Offered Debt Securities pursuant to
any mandatory redemption, sinking fund or analogous provisions or upon
other conditions or at the option of the Holder thereof and the period
or periods within which, or the dates on which, the prices at which
and the terms and conditions upon which the Offered Debt Securities
shall be redeemed, repaid, purchased or offered to be purchased, in
whole or in part, pursuant to such obligation.
(8) The right, if any, of the Company to redeem the Offered Debt
Securities at its option and the period or periods within which, or
the date or dates on which, the price or prices at which, and the
terms and conditions upon which Offered Debt Securities may be
redeemed, if any, in whole or in part, at the option of the Company or
otherwise.
(9) The denominations of the Offered Debt Securities if other
than denominations of $1,000 and any integral multiple thereof.
16
<PAGE>
(10) Whether the Offered Debt Securities are to be issued as
original issue discount securities ("Discount Securities") and the
amount of discount at which such Offered Debt Securities may be issued
and, if other than the principal amount thereof, the portion of the
principal amount of Offered Debt Securities which shall be payable
upon declaration of acceleration of the Maturity thereof upon an Event
of Default.
(11) Provisions, if any, for the defeasance or discharge of
certain of the Company's obligations with respect to the Offered Debt
Securities.
(12) Whether provisions for payment of additional amounts or tax
redemptions shall apply and, if such provisions shall apply, such
provisions.
(13) The date as of which any Offered Debt Securities shall be
dated.
(14) The applicable overdue interest rate, if any.
(15) If the Offered Debt Securities do not bear interest,
applicable dates for determining record holders of Offered Debt
Securities.
(16) Any addition to, or modification or deletion of, any Events
of Default, covenants or terms of the subordination provided for in
the applicable Indenture with respect to the Offered Debt Securities.
(17) Whether the Offered Debt Securities shall be issued in whole
or in part in the form of one or more Global Notes and, in such case,
the depositary or any common depositary for such Global Notes; and the
manner in which and the circumstances under which Global Notes
representing Offered Debt Securities may be exchanged for Debt
Securities in definitive form.
(18) The designation, if any, of any depositaries, trustees
(other than the applicable Trustee), paying agents, authenticating
agents, security registrars (other than the Trustee) or other agents
with respect to the Offered Debt Securities.
(19) If the Offered Debt Securities are to be issuable in
definitive form only upon receipt of certain certificates or other
documents or upon satisfaction of certain conditions, the form and
terms of such certificates, documents or conditions.
(20) Whether the Offered Debt Securities will be convertible into
shares of Common Stock or Preferred Stock and, if so, the terms and
conditions, which may be in addition to or in lieu of the provisions
contained in the Indentures, upon which such Offered Debt Securities
will be so convertible, including the conversion price and the
conversion period.
(21) The portion of the principal amount of the Offered Debt
Securities which will be payable upon declaration of acceleration of
the maturity thereof, if other than the principal amount thereof.
(22) The nature, content and dates for reports by the Company to
the holders of the Offered Debt Securities or the Trustees.
(23) Any other terms of the Offered Debt Securities not specified
in the Indenture under which such Offered Debt Securities are to be
issued.
Each Indenture provides that the aggregate principal amount of
Debt Securities that may be issued thereunder is unlimited. The Debt
Securities may be issued in one or more series thereunder, in each case
17
<PAGE>
as authorized from time to time by the Board of Directors of the Company,
or any committee thereof or any duly authorized officer.
In the event that Discount Securities are issued, the Federal
income tax consequences and other special considerations applicable to such
Discount Securities will be described in the Prospectus Supplement relating
thereto.
The general provisions of the Indentures do not contain any
provisions that would limit the ability of the Company or its Subsidiaries
to incur indebtedness or that would afford holders of Debt Securities
protection in the event of a highly leveraged or similar transaction
involving the Company or its Subsidiaries. Reference is made to the
accompanying Prospectus Supplement for information with respect to any
deletions from, modifications of or additions, if any, to the Events of
Default of the Company described below that are applicable to the Offered
Debt Securities or any covenants or other provisions providing event risk
or similar protection.
All of the Debt Securities of a series need not be issued at the
same time, and may vary as to interest rate, maturity and other provisions
and unless otherwise provided, a series may be reopened for issuance of
additional Debt Securities of such series.
The Debt Securities of certain series may be issued under the
Indentures upon the exchange or conversion of exchangeable or convertible
Debt Securities. The specific terms of exchange or conversion of any such
Debt Securities and the specific terms of the Debt Securities issuable upon
any such exchange or conversion will be described in the Prospectus
Supplement relating to any such exchangeable or convertible Debt
Securities.
DENOMINATIONS, REGISTRATION AND TRANSFER
Unless specified in the Prospectus Supplement, the Debt
Securities of any series shall be issuable in denominations of $1,000 and
any integral multiple thereof and shall be payable only in U.S. dollars.
The Indentures also provide that Debt Securities of a series may be
issuable in global form. See "Book-Entry Debt Securities."
Upon surrender for registration of transfer of any Registered
Security of any series at the office or agency of the Company maintained
for such purpose, the Company shall deliver, in the name of the designated
transferee, one or more new Registered Securities of the same series of
like aggregate principal amount of such denominations as are authorized for
Registered Securities of such series and of a like Stated Maturity and with
like terms and conditions. No service charge will be made for any transfer
or exchange of Debt Securities, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith.
The Company shall not be required (i) to register, transfer or
exchange Debt Securities of any series during a period beginning at the
opening of business 15 days before the day of the transmission of a notice
of redemption of Debt Securities of such series selected for redemption and
ending at the close of business on the day of such transmission, or (ii) to
register, transfer or exchange any Debt Security so selected for redemption
in whole or in part, except the unredeemed portion of any Debt Security
being redeemed in part.
EVENTS OF DEFAULT
Under the Indentures, "Event of Default" with respect to the Debt
Securities of any series means any one of the following events (whatever
the reason for such Event of Default and whether it shall be
18
<PAGE>
voluntary or involuntary or be effected by operation of law, pursuant to
any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body): (1) default in the payment of
any interest upon any Debt Security of such series when it becomes due and
payable, and continuance of such default for a period of 30 days; (2)
default in the payment of the principal of (and premium, if any, on) any
Debt Security of such series at its Maturity; (3) default in the deposit of
any sinking fund payment, when and as due by the terms of a Debt Security
of such series; (4) default in the performance, or breach, of any covenant
or warranty in the applicable Indenture (other than a covenant or warranty
a default in whose performance or whose breach is elsewhere specifically
dealt with or which expressly has been included in the applicable Indenture
solely for the benefit of Debt Securities of a series other than such
series), and continuance of such default or breach for a period of 30 days
after there has been given by registered or certified mail, to the Company
by the applicable Trustee or to the Company and the applicable Trustee by
the Holders of at least 30% in principal amount of the outstanding Debt
Securities of such series, a written notice specifying such default or
breach and requiring it to be remedied and stating that such notice is a
"Notice of Default"; (5) certain events of bankruptcy, insolvency or
reorganization with respect to the Company; or (6) any other Event of
Default provided with respect to Debt Securities of that series.
Each Indenture requires the Company to file with the applicable
Trustee, annually, an officers' certificate as to the Company's compliance
with all conditions and covenants under the applicable Indenture. Each
Indenture provides that the applicable Trustee may withhold notice to the
Holders of a series of Debt Securities of any default (except payment
defaults on such Debt Securities) if it considers such withholding to be in
the interest of the Holders of such series of Debt Securities.
If an Event of Default with respect to Debt Securities of any
series at the time outstanding occurs and is continuing, then in every case
the applicable Trustee or the Holders of not less than 25% in principal
amount of the outstanding Debt Securities of such series may declare the
principal amount (or, if any Debt Securities of such series are Discount
Securities, such portion of the principal amount of such Discount
Securities as may be specified in the terms of such Discount Securities) of
all the Debt Securities of such series to be due and payable immediately,
by a notice in writing to the Company (and to the applicable Trustee if
given by Holders), and upon any such declaration such principal amount (or
specified amount), plus accrued and unpaid interest (and premium, if any)
shall become immediately due and payable. Upon payment of such amount, all
obligations of the Company in respect of the payment of principal of the
Debt Securities of such series shall terminate.
Subject to the provisions of each Indenture relating to the
duties of the applicable Trustee, in case an Event of Default with respect
to Debt Securities of a particular series shall occur and be continuing,
the applicable Trustee shall be under no obligation to exercise any of its
rights or powers under such Indenture at the request, order or direction of
any of the Holders of Debt Securities of that series, unless such Holders
shall have offered to the applicable Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be
incurred by it in complying with such request or direction. Subject to such
provisions for the indemnification of the applicable Trustee, the Holders
of a majority in principal amount of the outstanding Debt Securities of
such series shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the applicable
Trustee under such Indenture, or exercising any trust or power conferred on
the applicable Trustee with respect to the Debt Securities of that series.
At any time after such a declaration of acceleration with respect
to Debt Securities of any series has been made and before a judgment or
decree for payment of the money due has been obtained by the applicable
Trustee as provided in the Indentures, the Holders of a majority in
principal amount of the outstanding Debt Securities of such series, by
written notice to the Company and the applicable Trustee, may rescind and
annul such declaration and its consequences, subject to any terms or
conditions specified in the applicable Prospectus Supplement.
19
<PAGE>
MERGER OR CONSOLIDATION
Each Indenture provides that the Company may not consolidate with
or merge with or into or wind up into (whether or not the Company is the
surviving corporation) or sell, assign, convey, transfer or lease its
properties and assets substantially as an entirety to any Person, unless
(1) the corporation formed by such consolidation or into which the Company
is merged or the Person which acquires by conveyance or transfer, or which
leases, the properties and assets of the Company substantially as an
entirety (the "successor corporation") is a corporation organized and
existing under the laws of the United States or any State or territory
thereof or the District of Columbia and expressly assumes by a supplemental
indenture the due and punctual payment of the principal of (and premium, if
any) and interest on all the Debt Securities issued under the applicable
Indenture and the performance of every covenant in the applicable Indenture
on the part of the Company to be performed or observed; (2) immediately
after giving effect to such transaction, no Event of Default under the
applicable Indenture, and no event which, after notice or lapse of time, or
both, would become such an Event of Default, shall have happened and be
continuing; and (3) such other conditions as may be specified in the
applicable Prospectus Supplement.
MODIFICATION OR WAIVER
Without prior notice to or consent of any Holders, the Company
and the applicable Trustee, at any time and from time to time, may modify
the applicable Indenture for any of the following purposes: (1) to evidence
the succession of another corporation to the rights of the Company and the
assumption by such successor of the covenants and obligations of the
Company in the applicable Indenture and in the Debt Securities issued
thereunder in accordance with the terms of the applicable Indenture; (2) to
add to the covenants of the Company for the benefit of the Holders of all
or any series of Debt Securities (and if such covenants are to be for the
benefit of less than all series, stating that such covenants are expressly
being included solely for the benefit of such series), or to surrender any
right or power conferred in the applicable Indenture upon the Company; (3)
to add any additional Events of Default (and if such Events of Default are
to be applicable to less than all series, stating that such Events of
Default are expressly being included solely to be applicable to such
series); (4) to change or eliminate any of the provisions of the applicable
Indenture, provided that any such change or elimination will become
effective only when there is no outstanding Debt Security issued thereunder
of any series created prior to such modification which is entitled to the
benefit of such provision and as to which such modification would apply;
(5) to secure the Debt Securities issued thereunder or to provide that any
of the Company's obligations under the Debt Securities or the applicable
Indenture shall be guaranteed and the terms and conditions for the release
or substitution of such security or guarantee; (6) to supplement any of the
provisions of the applicable Indenture to such extent as is necessary to
permit or facilitate the defeasance and discharge of any series of Debt
Securities, provided that any such action will not adversely affect the
interests of the Holders of Debt Securities of such series or any other
series of Debt Securities issued under such Indenture in any material
respect; (8) to establish the form or terms of Debt Securities as permitted
by the applicable Indenture; (9) to evidence and provide for the acceptance
of appointment thereunder by a successor Trustee with respect to one or
more series of Debt Securities and to add to or change any of the
provisions of the applicable Indenture as is necessary to provide for or
facilitate the administration of the trusts thereunder by more than one
Trustee; or (10) to cure any ambiguity, to correct or supplement any
provision in the applicable Indenture which may be defective or
inconsistent with any other provision therein, to eliminate any conflict
between the terms of the applicable Indenture and the Debt Securities
issued thereunder and the TIA or to make any other provisions with respect
to matters or questions arising under the applicable Indenture which will
not be inconsistent with any provision of the applicable Indenture;
provided such other provisions shall not adversely affect the interests of
the Holders of outstanding Debt Securities of any series created thereunder
prior to such modification in any material respect.
With the written consent of the Holders of not less than a
majority in principal amount of the outstanding Debt Securities of each
series affected by such modification voting separately, the Company and the
20
<PAGE>
applicable Trustee may modify the applicable Indenture for the purpose of
adding any provisions to or changing in any manner or eliminating any of
the provisions of the applicable Indenture or of modifying in any manner
the rights of the Holders of Debt Securities under the applicable
Indenture; provided, however, that such modifications may not, without the
consent of the Holder of each outstanding Debt Security of each series
affected, conflict with the required provisions of the TIA or make any
change or modification specified as requiring the consent of each such
Holder in the applicable Prospectus Supplement.
A modification which changes or eliminates any covenant or other
provision of the applicable Indenture with respect to one or more
particular series of Debt Securities or which modifies the rights of the
Holders of Debt Securities of such series with respect to such covenant or
other provision, shall be deemed not to affect the rights under the
applicable Indenture of the Holders of Debt Securities of any other series.
Each of the Indentures provides that the Holders of not less than
a majority in aggregate principal amount of the then outstanding Debt
Securities of any series, by notice to the relevant Trustee, may on behalf
of the Holders of the Debt Securities of such series waive any Default or
Event of Default and its consequences under the applicable Indenture,
except (1) a continuing Default or Event of Default in the payment of
interest on, premium, if any, or the principal of, any such Debt Security
held by a non-consenting Holder or (2) a default in respect of a covenant
or provision hereof which cannot be modified or amended without the consent
of the Holder of each outstanding Debt Security of each series affected.
SUBORDINATION
Upon any distribution of assets of the Company upon the
dissolution, winding up, liquidation or reorganization of the Company, the
payment of the principal of (and premium, if any) and interest on the
Subordinated Debt Securities will be subordinated to the extent provided in
the Subordinated Indenture or as described in the applicable Prospectus
Supplement in right of payment to the prior payment in full of all Senior
Indebtedness, including Senior Debt Securities, but the obligation of the
Company to make payment of principal (and premium, if any) or interest on
the Subordinated Debt Securities will not otherwise be affected. Unless
otherwise indicated in a Prospectus Supplement, no payment on account of
principal (and premium, if any), sinking funds or interest may be made on
the Subordinated Debt Securities at any time when there is a default in the
payment of principal (and premium, if any), interest or certain other
obligations on Senior Indebtedness. In addition, the Prospectus Supplement
for each series of Subordinated Debt Securities may provide that payments
on account of principal (any premium, if any) or interest in respect of
such Subordinated Debt Securities may be delayed or not paid under the
circumstances and for the periods specified in such Prospectus Supplement.
Unless otherwise indicated in a Prospectus Supplement, in the event that,
notwithstanding the foregoing, any payment by the Company described in the
foregoing sentence is received by the Trustee under the Subordinated
Indenture or the Holders of any of the Subordinated Debt Securities before
all Senior Indebtedness is paid in full, such payment or distribution shall
be paid over to the Holders of such Senior Indebtedness or on their behalf
for application to the payment of all such Senior Indebtedness remaining
unpaid until all such Senior Indebtedness shall have been paid in full,
after giving effect to any concurrent payment or distribution to the
Holders of such Senior Indebtedness. Subject to payment in full of Senior
Indebtedness, the Holders of the Subordinated Debt Securities will be
subrogated to the rights of the Holders of the Senior Indebtedness to the
extent of payments made to the Holders of such Senior Indebtedness out of
the distributive share of the Subordinated Debt Securities.
By reason of such subordination, in the event of a distribution
of assets upon insolvency, certain general creditors of the Company may
recover more, ratably, than holders of the Subordinated Debt Securities.
The Subordinated Indenture provides that the subordination provisions
thereof shall not apply to money and securities held in trust pursuant to
the satisfaction and discharge and the legal defeasance provisions of the
Subordinated Indenture.
21
<PAGE>
If this Prospectus is being delivered in connection with the
offering of a series of Subordinated Debt Securities, the accompanying
Prospectus Supplement or the information incorporated by reference therein
will set forth the approximate amount of Senior Indebtedness outstanding as
of a recent date. "Senior Indebtedness" with respect to any series of
Subordinated Debt Securities shall have the meaning specified in the
applicable Prospectus Supplement for such series.
22
<PAGE>
DESCRIPTION OF OUTSTANDING INDEBTEDNESS
12 1/2% NOTES
The Company has outstanding an aggregate principal amount of $330,000,000
of 12 1/2% Senior Discount Notes due 2006 (the "12 1/2% Notes), 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 8 1/2 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 11 1/4% Notes and the 8 7/8% Notes
and are substantially similar (with modifications to certain definitions
and exceptions) to the covenants in the 8 1/2% Notes Indenture. 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 (the "11 1/4%
Notes), 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
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
8 7/8% Notes, the 12 1/2% Notes and the 8 1/2% 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
23
<PAGE>
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.
The covenants in the 11 1/4% Notes Indenture are substantially similar to
the covenants in the indentures for the 12 1/2%Notes and the 8 7/8% Notes
and are substantially similar (with modifications to certain definitions
and exceptions) to the covenants in the 8 1/2% Notes Indenture. The 11
1/4% 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
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 (the "8 7/8% Notes), 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 8 1/2% 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 12 1/2% Notes and 11 1/4% Notes and
are substantially similar (with modifications to certain definitions and
exceptions) to the covenants in the 8 1/2% Notes Indenture. 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.
8 1/2% NOTES
The Company has outstanding an aggregate principal amount of $400,000,000
of 8 1/2% Senior Notes due 2008 (the "8 1/2% Notes"), which will mature on
January 15, 2008. Cash interest on the 8 1/2% Notes is payable semi-
annually in arrears on January 15 and July 15 of each year at a rate of 8
1/2% per annum. The
24
<PAGE>
8 1/2% Notes may be redeemed at the Company's option at any time, in whole
or in part, on or after January 15, 2003 upon payment of the redemption
price plus accrued and unpaid interest, if any, to the date of redemption.
The 8 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 12 1/2% Notes,
the 11 1/4% Notes and the 8 7/8% Notes, and rank senior to any future
subordinated indebtedness. In the event of a change of control of the
Company, holders of the 8 1/2% Notes have the right to require the Company
to repurchase their 8 1/2% 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 1/2% Notes Indenture are substantially similar to
the covenants in the indentures for the 12 1/2% Notes, the 11 1/4% Notes
and the 8 7/8% Notes. The 8 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 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 1/2% Notes is intended as a summary and is qualified in its
entirety by reference to the 8 1/2% 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.
25
<PAGE>
DESCRIPTION OF CAPITAL STOCK
Intermedia's authorized capital stock consists of 50,000,000 shares of
Common Stock, par value $.01 per share, and 2,000,000 shares of Preferred
Stock, par value $1.00 per share ("Preferred Stock"). As of November 30,
1997, there were 17,315,317 shares of Common Stock, 323,499.1404 shares of
Series B Preferred Stock, 69,000 shares of Series D Preferred Stock and
80,000 shares of Series E Preferred Stock issued and outstanding. On a
fully-diluted basis, at that date, the Company had outstanding 32,796,833
shares of Common Stock assuming (a) the exercise of the Public Warrants
(defined below), (b) the exercise of the warrant held by Ralph J. Sutcliffe
to purchase 100,000 shares of Common Stock at an exercise price of $41.50
per share, (c) the exercise of the warrant granted by DIGEX prior to the
DIGEX Aquisition and held by Current Science Group, Inc., formerly known as
Electronic Press Services Inc., which upon consummation of the DIGEX
Acquisition was converted into the right to purchase 83,870 shares of
Common Stock of the Company at an exercise price of $21.65 per share, (d)
the exercise of all outstanding options issued pursuant to the Company's
employee stock option plans and (e) conversions of the Depositary Shares,
the Series D Preferred Stock and the Series E Preferred Stock. As of
November 30, 1997, the Company has reserved (i) 4,364,410 shares of Common
Stock for issuance pursuant to the Company's employee stock option plans,
(ii) 350,400 shares of Common Stock for issuance upon exercise of the
Public Warrants, (iii) 276,500.8596 shares of Series B Preferred Stock for
issuance as dividends on the outstanding shares of Series B Preferred
Stock, (iv) 40,000 shares of Series C Preferred Stock for issuance in
connection with the Stockholder's Rights Plan, (v) 4,434,448 shares of
Common Stock for issuance on conversion of the Series D Preferred Stock,
(vi) 1,938,728 shares of Common Stock for issuance as dividends on the
outstanding shares of Series D Preferred Stock, (vii) 3,307,425 shares of
Common Stock for issuance on conversion of the Series E Preferred Stock,
(viii) 933,334 shares of Common Stock for issuance as dividends on the
outstanding shares of Series E Preferred Stock, (ix) 100,000 shares of
Common Stock for issuance upon exercise of the warrant held by Ralph J.
Sutcliffe and (x) 83,870 shares of Common Stock for issuance upon exercise
of the warrant held by Current Science Group, Inc., formerly known as
Electronic Press Services Inc. All outstanding shares of Common Stock,
Series B Preferred Stock, Series D Preferred Stock and Series E Preferred
Stock are fully paid and non-assessable.
COMMON STOCK
Holders of Common Stock are entitled to one vote for each share held
of record on all matters submitted to a vote of the stockholders. Holders
of Common Stock do not have cumulative rights, so that holders of more than
50% of the shares of Common Stock are able to elect all of Intermedia's
directors eligible for election in a given year. For a description of the
classification of the Board, see "-Delaware Law and Certain Provisions of
Intermedia's Certificate of Incorporation and Bylaws." Subject to the
preferences that may be applicable to any then outstanding Preferred Stock,
holders of Common Stock are entitled to receive ratably such dividends, if
any, as may be declared from time to time by the Board out of funds legally
available therefor. See "-Dividend Restrictions." Upon any liquidation,
dissolution or winding up, whether voluntary or involuntary, of Intermedia,
holders of Common Stock are entitled to receive pro rata all assets
available for distribution to stockholders after payment or provision for
payment of the debts and other liabilities of Intermedia and the
liquidation preferences of any then outstanding Preferred Stock. There are
no preemptive or other subscription rights, conversion rights, or
redemption or sinking fund provisions with respect to shares of Common
Stock. All outstanding shares of Common Stock are, and all shares of Common
Stock to be outstanding upon exercise of the Public Warrants and conversion
of the Depositary Shares or shares of Series D Preferred Stock or Series E
Preferred Stock will be, fully paid and non-assessable.
26
<PAGE>
PREFERRED STOCK
The Preferred Stock may be issued at any time or from time to time in
one or more series with such designations, powers, preferences, rights,
qualifications, limitations and restrictions (including dividend,
conversion and voting rights) as may be fixed by the Board, without any
further vote or action by the stockholders.
The following is a description of certain general terms and provisions
of the Preferred Stock. The particular terms of any series of Preferred
Stock will be described in the applicable Prospectus Supplement. If so
indicated in a Prospectus Supplement, the terms of any such series may
differ from the terms set forth below.
The Preferred Stock offered hereby will, upon issuance and full
payment of the purchase price therefor, be fully paid and nonassessable and
will not have, or be subject to, any preemptive or similar rights.
Reference is made to the Prospectus Supplement relating to the series
of Preferred Stock being offered for the specific terms thereof, including:
(i) the title and stated value of such Preferred Stock; (ii) the number of
shares of such Preferred Stock offered, the liquidation preference per
share and the purchase price of such Preferred Stock; (iii) the dividend
rate(s), period(s) and/or payment date(s) or method(s) of calculation
thereof applicable to such Preferred Stock; (iv) whether dividends shall be
cumulative or non-cumulative and, if cumulative, the date from which
dividends on such Preferred Stock shall accumulate; (v) the procedures for
any auction and remarketing, if any, for such Preferred Stock; (vi) the
provisions for a sinking fund, if any, for such Preferred Stock; (vii) the
provisions for redemption, if applicable, of such Preferred Stock; (viii)
any listing of such Preferred Stock on any securities exchange; (ix) the
terms and conditions, if applicable, upon which such Preferred Stock will
be convertible into Common Stock or any other security, including the
conversion price (or manner of calculation thereof) and conversion period;
(x) voting rights, if any, of such Preferred Stock; (xi) a discussion of
any material and/or special Federal income tax considerations applicable to
such Preferred Stock; (xii) the relative ranking and preferences of such
Preferred Stock as to dividend rights and rights upon liquidation,
dissolution or winding up of the affairs of the Company; (xiii) any
limitations on issuance of any series of Preferred Stock ranking senior to
or on a parity with such series of Preferred Stock as to dividend rights
and rights upon liquidation, dissolution or winding up of the affairs of
the Company, and (xiv) any other specific terms, preferences, rights,
limitations or restrictions of such Preferred Stock.
DEPOSITARY SHARES
General. The following summary is qualified in its entirety by
reference to the applicable Deposit Agreement or form of Depositary
Receipt. The Company may, at its option, elect to offer fractional shares
or some multiple of shares of Preferred Stock, rather than individual
shares of Preferred Stock. In the event such option is exercised, the
Company will issue receipts for Depositary Shares, each of which will
represent a fraction or a multiple (to be set forth in the Prospectus
Supplement relating to a particular series of offered Preferred Stock) of a
share of a particular series of offered Preferred Stock as described below.
The shares of any series of offered Preferred Stock represented by
Depositary Shares will be deposited under a Deposit Agreement (the "Deposit
Agreement") among the Company, a depositary agent to be determined by the
Company, as depositary (the "Preferred Stock Depositary"), and the holders
from time to time of depositary receipts issued thereunder. Subject to the
terms of the Deposit Agreement, each holder of a Depositary Share will be
entitled, in proportion to the applicable fraction or multiple of a share
of Preferred Stock represented by such Depositary Share, to all the rights
and preferences of the Preferred Stock represented thereby (including
dividend, voting and liquidation rights).
27
<PAGE>
The Depositary Shares will be evidenced by depositary receipts issued
pursuant to the Deposit Agreement ("Depositary Receipts"). Depositary
Receipts will be distributed to those persons purchasing the fractional or
multiple shares of the related series of Preferred Stock. Immediately
following the issuance of shares of a series of Preferred Stock by the
Company, the Company will deposit such shares with the Preferred Stock
Depositary, which will then issue and deliver the Depositary Receipts to
the purchasers thereof. Depositary Receipts will only be issued evidencing
whole Depositary Shares. A Depositary Receipt may evidence any number of
whole Depositary Shares.
Pending the preparation of definitive engraved Depositary Receipts,
the Preferred Stock Depositary may, upon the written order of the Company,
issue temporary Depositary Receipts substantially identical to (and
entitling the holders thereof to all the rights pertaining to) the
definitive Depositary Receipts but not in definitive form. Definitive
Depositary Receipts will be prepared thereafter without unreasonable delay,
and such temporary Depositary Receipts will be exchangeable for definitive
Depositary Receipts at the Company's expense.
Dividends and Other Distributions. The Preferred Stock Depositary
will distribute all cash dividends or other cash distributions received in
respect of the related series of Preferred Stock to the record holders of
Depositary Shares relating to such series of Preferred Stock in proportion
to the number of such Depositary Shares owned by such holders.
In the event of a distribution other than in cash, the Preferred Stock
Depositary will distribute property received by it to the record holders of
Depositary Shares entitled thereto in proportion to the number of
Depositary Shares owned by such holders, unless the Preferred Stock
Depositary determines that such distribution cannot be made proportionately
among such holders or that it is not feasible to make such distribution, in
which case the Preferred Stock Depositary may, with the approval of the
Company, sell such property and distribute the net proceeds from such sale
to such holders in proportion to the number of Depositary Shares owned by
such holders.
The amount distributed in any of the foregoing cases will be reduced
by any amounts required to be withheld by the Company or the Preferred
Stock Depositary on account of taxes or other governmental charges.
Withdrawal of Stock. Upon surrender of the Depositary Receipts at the
corporate trust office of the Preferred Stock Depositary and upon payment
of the taxes, charges and fees provided for in the Deposit Agreement and
subject to the terms thereof, the holder of the Depositary Shares evidenced
thereby is entitled to delivery at such office, to or upon his or her
order, of the number of whole shares of the related series of Preferred
Stock and any money or other property, if any, represented by such
Depositary Shares. Holders of Depositary Shares will be entitled to
receive whole shares of the related series of Preferred Stock, but holders
of such whole shares of Preferred Stock will not thereafter be entitled to
deposit such shares of Preferred Stock with the Preferred Stock Depositary
or to receive Depositary Shares therefor. If the Depositary Receipts
delivered by the holder evidence a number of Depositary Shares in excess of
the number of Depositary Shares representing the number of whole shares of
the related series of Preferred Stock to be withdrawn, the Preferred Stock
Depositary will deliver to such holder, or upon his or her order, at the
same time a new Depositary Receipt evidencing such excess number of
Depositary Shares.
Voting the Preferred Stock. Upon receipt of notice of any meeting at
which the holders of any series of the Preferred Stock are entitled to
vote, the Preferred Stock Depositary will mail the information contained in
such notice of meeting to the record holders of the Depositary Shares
relating to such series of Preferred Stock. Each record holder of such
Depositary Shares on the record date (which will be the same date as the
record date for the related series of Preferred Stock) will be entitled to
instruct the Preferred Stock Depositary as to the exercise of the voting
rights pertaining to the number of shares of the series of Preferred Stock
represented by such holder's Depositary Shares. The Preferred Stock
Depositary will endeavor, insofar as practicable, to vote or cause to be
voted the number of shares of the Preferred Stock represented by such
Depositary Shares in
28
<PAGE>
accordance with such instructions, provided the Preferred Stock Depositary
receives such instructions sufficiently in advance of such meeting to
enable it to so vote or cause to be voted the shares of Preferred Stock,
and the Company will agree to take all reasonable action that may be deemed
necessary by the Preferred Stock Depositary in order to enable the
Preferred Stock Depositary to do so. The Preferred Stock Depositary will
abstain from voting shares of the Preferred Stock to the extent it does not
receive specific instructions from the holders of Depositary Shares
representing such Preferred Stock.
Redemption of Depositary Shares. If a series of the Preferred Stock
underlying the Depositary Shares is subject to redemption, the Depositary
Shares will be redeemed from the proceeds received by the Preferred Stock
Depositary resulting from any redemption, in whole or in part, of such
series of the Preferred stock held by the Preferred Stock Depositary. The
redemption price per Depositary Share will be equal to the applicable
fraction or multiple of the redemption price per share payable with respect
to such series of the Preferred Stock. If the Company redeems shares of a
series of Preferred Stock held by the Preferred Stock Depositary, the
Preferred Stock Depositary will redeem as of the same redemption date the
number of Depositary Shares representing the shares of Preferred Stock so
redeemed. If less than all the Depositary Shares are to be redeemed, the
Depositary Shares to be redeemed will be selected by lot or substantially
equivalent method determined by the Preferred Stock Depositary.
After the date fixed for redemption, the Depositary Shares so called
for redemption will no longer be deemed to be outstanding and all rights of
the holders of the Depositary Shares will cease, except the right to
receive the moneys payable upon such redemption and any money or other
property to which the holders of such Depositary Shares were entitled upon
such redemption, upon surrender to the Preferred Stock Depositary of the
Depositary Receipts evidencing such Depositary Shares. Any funds deposited
by the Preferred Stock Depositary for any Depositary Shares that the
holders thereof fail to redeem will be returned to the Company after a
period of two years from the date such funds are so deposited.
Amendment and Termination of the Deposit Agreement. The form of
Depositary Receipt evidencing the Depositary Shares and any provision of
the Deposit Agreement may at any time and from time to time be amended by
the Company and the Preferred Stock Depositary. However, any amendment
that materially and adversely alters the rights of the holders of
Depositary Shares will not be effective unless such amendment has been
approved by the holders of at least a majority of the Depositary Shares
then outstanding. Notwithstanding the foregoing, in no event may any
amendment impair the right of any holder of any Depositary Shares, upon
surrender of the Depositary Receipts evidencing such Depositary Shares and
subject to any conditions specified in the Deposit Agreement, to receive
shares of the related series of Preferred Stock and any money or other
property represented thereby, except in order to comply with mandatory
provisions of applicable law. The Deposit Agreement may be terminated by
the Company at any time upon not less than 60 days' prior written notice to
the Preferred Stock Depositary, in which case, on a date that is not later
than 30 days after the date of such notice, the Preferred Stock Depositary
shall deliver or make available for delivery to holders of Depositary
Shares, upon surrender of the Depositary Receipts evidencing such
Depositary Shares, such number of whole or fractional shares of the related
series of Preferred Stock as are represented by such Depositary Shares.
The Deposit Agreement shall automatically terminate after there has been a
final distribution in respect of the related series of Preferred Stock in
connection with any liquidation, dissolution or winding up of the Company
and such distribution has been distributed to the holders of Depositary
Shares.
Charges of Preferred Stock Depositary. The Company will pay all
transfer and other taxes and governmental charges arising solely from the
existence of the depositary arrangements. The Company will pay charges of
the Preferred Stock Depositary, including charges in connection with the
initial deposit of the related series of Preferred Stock and the initial
issuance of the Depositary Shares and all withdrawals of shares of the
related series of Preferred Stock, except that holders of Depositary Shares
will pay other transfer and other taxes and governmental charges and such
other charges as are expressly provided in the Deposit Agreement to be for
their accounts.
29
<PAGE>
Miscellaneous. The Preferred Stock Depositary will forward to the
holders of Depositary Shares all reports and communications from the
Company that are delivered to the Preferred Stock Depositary and which the
Company is required to furnish to the holders of the Preferred Stock.
Neither the Preferred Stock Depositary nor the Company will be liable
if it is prevented or delayed by law or any circumstance beyond its control
in performing its obligations under the Deposit Agreement. The obligations
of the Company and the Preferred Stock Depositary under the Deposit
Agreement will be limited to performance with best judgment and in good
faith of their duties thereunder, except that they are liable for
negligence and willful misconduct in the performance of their duties
thereunder, and they will not be obligated to appear in, prosecute or
defend any legal proceeding in respect of any Depositary Receipts,
Depositary Shares or series of Preferred Stock unless satisfactory
indemnity is furnished. The Preferred Stock Depositary and the Company may
rely on advice of legal counsel or accountants of their choice, or
information provided by persons presenting Preferred Stock for deposit,
holders of Depositary Shares or other persons believed in good faith to be
competent and on documents believed to be genuine.
The Preferred Stock Depositary's corporate trust office is currently
located at 2 Broadway, New York, New York 10004. The Preferred Stock
Depositary will act as transfer agent and registrar for Depositary Receipts
and if shares of a series of Preferred Stock are redeemable, the Preferred
Stock Depositary will act as redemption agent for the corresponding
Depositary Receipts.
Resignation and Removal of Preferred Stock Depositary. The Preferred
Stock Depositary may resign at any time by delivering to the Company
written notice of its election to do so, and the Company may at any time
remove the Preferred Stock Depositary, any such resignation or removal to
take effect upon the appointment of a successor Preferred Stock Depositary,
which successor Preferred Stock Depositary must be appointed within 60 days
after delivery of the notice of resignation or removal and must be a bank
or trust company having its principal office in the United States and
having a combined capital and surplus of at least $50,000,000.
SERIES B PREFERRED STOCK
As of November 30, 1997, the Company had outstanding 323,499.1404
shares of Series B Preferred Stock (aggregate liquidation preference of
approximately $323.5 million). Dividends on the Series B Preferred Stock
accumulate at a rate of 13 1/2% of the aggregate liquidation preference
thereof and are payable quarterly, in arrears. Dividends are payable in
cash or, at the Company's option, by the issuance of additional Series B
Preferred Stock having an aggregate liquidation preference equal to the
amount of such dividends. The Series B Preferred Stock is subject to
mandatory redemption at a liquidation preference of $1,000 per share, plus
accumulated and unpaid dividends on March 31, 2009. The Series B Preferred
Stock will be redeemable at the option of the Company at any time after
March 31, 2002 at rates commencing with 106.75%, declining to 100% on March
31, 2007. The Series B Certificate of Designation contains certain
covenants that, among other things, limit the ability of the Company and
its subsidiaries to make certain restricted payments, incur additional
indebtedness and issue additional preferred stock, pay dividends or make
other distributions, repurchase equity interests, conduct certain lines of
business or enter into certain mergers and consolidations. In the event of
a change of control of the Company, holders of the Series B Preferred Stock
have the right to require the Company to purchase their shares of Series B
Preferred Stock at a price equal to 101% of the aggregate liquidation
preference with respect thereto, plus accumulated and unpaid dividends, if
any, to the date of purchase. This description is intended as a summary and
is qualified in its entirety by reference to the Series B Certificate of
Designation.
The Company may, at its option, exchange some or all of the Series B
Preferred Stock for the Company's 13 1/2% Senior Subordinated Debentures,
due 2009 (the "Exchange Debentures"). The Exchange Debentures would mature
on March 31, 2009. Interest on the Exchange Debentures would be payable
semi-annually, and could be paid in the form of additional Exchange
Debentures at the Company's option.
30
<PAGE>
Exchange Debentures would be redeemable by the Company at any time after
March 31, 2002 at rates commencing with 106.75%, declining to 100% on March
31, 2007. The Exchange Debentures contain covenants similar to those
contained in the Indenture.
SERIES D PREFERRED STOCK
As of November 30, 1997, the Company had outstanding 69,000 shares of
Series D Preferred Stock (aggregate liquidation preference approximately
$172.5 million). Dividends on the Series D Preferred Stock accumulate at a
rate of 7% of the aggregate liquidation preference thereof and are payable
quarterly, in arrears, on each January 15, April 15, July 15 and October
15. Dividends are payable in cash or, at the Company's option, by the
issuance of shares of Common Stock. The Series D Preferred Stock will be
redeemable at the option of the Company at any time on or after July 19,
2000 at rates commencing with 104%, declining to 100% on July 19, 2004.
The Series D Preferred Stock is convertible (since October 7, 1997), at the
option of the holder, into Common Stock at a conversion price of $38.90 per
share of Common Stock, subject to certain adjustments. In the event of a
change of control of the Company, holders of the Series D Preferred Stock
have the right to require the Company to purchase their shares of Series D
Preferred Stock at a price equal to 100% of the aggregate liquidation
preference with respect thereto, plus accumulated and unpaid dividends and
preferred stock liquidated damages, if any, to the date of purchase,
subject to the restrictions on such repurchase contained in the Series B
Preferred Stock Certificate of Designation and the outstanding indebtedness
of the Company. This description is intended as a summary and is qualified
in its entirety by reference to the Series D Certificate of Designation.
SERIES E PREFERRED STOCK
As of November 30, 1997, the Company had outstanding 80,000 shares of
Series E Preferred Stock (aggregate liquidation preference approximately
$200,000,000 million). Dividends on the Series E Preferred Stock
accumulate at a rate of 7% of the aggregate liquidation preference thereof
and are payable quarterly, in arrears, on each January 15, April 15, July
15 and October 15. Dividends are payable in cash or, at the Company's
option, by the issuance of shares of Common Stock. The Series E Preferred
Stock will be redeemable at the option of the Company at any time on or
after October 18, 2000 at rates commencing with 104%, declining to 100% on
October 18, 2004. The Series E Preferred Stock is convertible (since
December 29, 1997), at the option of the holder, into Common Stock at a
conversion price of $60.47 per share of Common Stock, subject to certain
adjustments. In the event of a change of control of the Company, holders of
the Series E Preferred Stock have the right to require the Company to
purchase their shares of Series E Preferred Stock at a price equal to 100%
of the aggregate liquidation preference with respect thereto, plus
accumulated and unpaid dividends and preferred stock liquidated damages, if
any, to the date of purchase, subject to the restrictions on such
repurchase contained in the Series B Preferred Stock Certificate of
Designation and the outstanding indebtedness of the Company. This
description is intended as a summary and is qualified in its entirety by
reference to the Series E Certificate of Designation.
DEPOSITARY SHARES
As of November 30, 1997, all of the outstanding shares of Series D
Preferred Stock and Series E Preferred Stock were held in the form of
Depository Shares, each of which represents a one-hundredth interest in a
share of Series D Preferred Stock or Series E Preferred Stock. Each owner
of a Depositary Share is entitled proportionately to all of the rights and
preferences of the shares of Series D Preferred Stock or Series E Preferred
Stock represented thereby (including dividend, voting, redemption and
liquidation rights) contained in the Company's Certificate of Incorporation
and the Certificate of Designations and summarized above.
DELAWARE LAW AND CERTAIN PROVISIONS OF INTERMEDIA'S CERTIFICATE OF
INCORPORATION AND BYLAWS
31
<PAGE>
General. The Certificate of Incorporation and the Bylaws of Intermedia
contain certain provisions that could make more difficult the acquisition
of Intermedia by means of a tender offer, a proxy contest or otherwise.
These provisions are expected to discourage certain types of coercive
takeover practices and inadequate takeover bids and to encourage persons
seeking to acquire control of Intermedia first to negotiate with
Intermedia. Although such provisions may have the effect of delaying,
deferring or preventing a change in control of Intermedia, the Company
believes that the benefits of increased protection of Intermedia's
potential ability to negotiate with the proponent of an unfriendly or
unsolicited proposal to acquire or restructure the Company outweigh the
disadvantages of discouraging such proposals because, among other things,
negotiation of such proposals could result in an improvement of their
terms. The description set forth below is intended as a summary only and is
qualified in its entirety by reference to the Certificate of Incorporation
and Bylaws of Intermedia.
Board of Directors. Intermedia's Certificate of Incorporation provides
that (i) the Board be divided into three classes of directors, with each
class having a number as nearly equal as possible and with the term of each
class expiring in a different year and (ii) the Board shall consist of not
less than three nor more than seven members, the exact number to be
determined from time to time by the Board. The Board has set the number of
directors at four. Subject to any rights of holders of Preferred Stock, a
majority of the Board then in office will have the sole authority to fill
any vacancies on the Board. Stockholders can remove members of the Board
only for cause.
Stockholder Action and Special Meetings. Intermedia's Certificate of
Incorporation provides that (i) any action required or permitted to be
taken by Intermedia's stockholders must be effected at a duly called annual
or special meeting of Stockholders and may not be effected by any consent
in writing and (ii) the authorized number of directors may be changed only
by resolution of the Board. The Company's Bylaws provide that, subject to
any rights of holders of any series of Preferred Stock, special meetings of
stockholders may be called only by the Chairman of the Board or the
President of Intermedia, by a majority of the Board or by stockholders
owning shares representing at least a majority of the capital stock of
Intermedia issued and outstanding and entitled to vote.
Stockholder's Rights Plan. Intermedia's Board of Directors has adopted
a Stockholder's Rights Plan, pursuant to which rights to acquire the
Company's Series C Preferred Stock, exercisable upon the occurrence of
certain events, including the acquisition by a person or group of a
specified percentage of the Common Stock, were distributed to its
stockholders.
Anti-Takeover Statute. Subject to certain exceptions, Section 203 of
the DGCL prohibits a publicly held Delaware corporation, such as
Intermedia, from engaging in any "business combination" with an "interested
stockholder" for a three-year period following the date on which such
person became an interested stockholder, unless (i) prior to such date, the
board of directors of the corporation approved either such business
combination or the transaction that resulted in such person becoming an
interested stockholder, (ii) upon consummation of the transaction that
resulted in such person becoming an interested stockholder, such person
owned at least 85% of the voting stock of the corporation outstanding
immediately prior to such transaction (excluding certain shares) or (iii)
on or subsequent to such date, such business combination is approved by the
board of directors of the corporation and by the affirmative vote of at
least 66 2/3% of the outstanding voting stock that is not owned by the
interested stockholder. A "business combination" includes a merger, asset
sale or other transaction resulting in a financial benefit to the
interested stockholder. An "interested stockholder" is essentially a person
who, together with affiliates and associates, owns (or within the past
three years has owned) 15% or more of the corporation's voting stock. It is
anticipated that the provisions of Section 203 of the DGCL may encourage
any person interested in acquiring Intermedia to negotiate in advance with
the Board since the stockholder approval requirement would be avoided if a
majority of Intermedia's directors then in office approved either the
business combination or the transaction that resulted in such person
becoming an interested stockholder.
32
<PAGE>
DIVIDEND RESTRICTIONS
The terms of the Existing Indentures restrict the Company's ability to
pay cash dividends on the Series B Preferred Stock. The Existing
Indentures and the Series B Certificate of Designation restrict
Intermedia's ability to pay cash dividends on the Common Stock, the Series
D Preferred Stock and the Series E Preferred Stock.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock, Series B
Preferred Stock, the Series D Preferred Stock and the Series E Preferred
Stock is Continental Stock Transfer & Trust Company.
OUTSTANDING WARRANTS
160,000 warrants (the "Public Warrants"), each to purchase 2.19 shares
of Common Stock, at an exercise price of $10.86 per share (subject to anti-
dilution adjustments) were issued as part of a June 1995 private placement.
The Public Warrants are currently exercisable. Unless exercised, the Public
Warrants will expire on June 1, 2000.
Ralph J. Sutcliffe, a partner of Kronish, Lieb, Weiner & Hellman LLP,
owns a warrant to purchase 100,000 shares of Common Stock at an exercise
price of $41.50 per share.
On January 13, 1998, the warrant owned by Current Science Group, Inc.,
formerly known as Electronic Press Services Inc was exercised pursuant to a
cashless exercise provision for 53,172 shares of Common Stock.
RESERVATION OF SHARES
The Company has authorized and reserved for issuance such number of
Common Shares as will be issuable upon the exercise of all warrants and the
conversion of all Depositary Shares (or all shares of the Series D
Preferred Stock and Series E Preferred Stock). Such Common Shares, when
issued, will be duly and validly issued, fully paid and non-assessable,
free of preemptive rights and free from all taxes, liens, charges and
security interests with respect to the issue thereof.
REGISTRATION RIGHTS
The Company is a party to several agreements pursuant to which certain
stockholders have the right, among other matters, to require the Company to
register their shares of Common Stock under the Securities Act under
certain circumstances. As a result, substantially all of the Company's
outstanding shares, other than those held by affiliates, are transferable
without restriction under the Securities Act.
33
<PAGE>
PLAN OF DISTRIBUTION
The Company or Intermedia Capital, as the case may be, may sell the
Securities or Common Stock, respectively, offered hereby (1) through
underwriters or dealers; (2) through agents; (3) directly to purchasers, or
(4) through a combination of any such methods of sale. For purposes of this
Registration Statement, Intermedia Capital and any such underwriter, dealer
or agent who participate in the distribution of any of the Securities may
be deemed to be "underwriters", and any profits on the sale of Securities
by them and any discounts, commissions, or concessions received by any such
underwriter, dealer, or agent might be deemed to be underwriting discounts
and commissions under the Securities Act. Further, to the extent Intermedia
Capital may be deemed to be an underwriter, Intermedia Capital may be
subject to certain statutory liabilites of the Securities Act, including,
but not limited to, Sections 11, 12 and 17 of the Secutities Act and Rule
10b-5 under the Exchange Act. Any such underwriter, dealer or agent may be
deemed to be an underwriter within the meaning of the Securities Act.
The Prospectus Supplement relating to the Securities will set forth
their offering terms, including the name or names of any underwriters,
dealers or agents, the purchase price of the Securities and the proceeds to
the Company or Intermedia Capital, as the case may be, from such sale, any
underwriting discounts, commissions and other items constituting
compensation to underwriters, dealers or agents, any initial public
offering price, any discounts or concessions allowed or reallowed or paid
by underwriters or dealers to other dealers, and any securities exchanges
on which the Securities may be listed.
If underwriters or dealers are used in the sale, the Securities will
be acquired by the underwriters or dealers for their own account and may be
resold from time to time in one or more transactions, at a fixed price or
prices, which may be changed, or at market prices prevailing at the time of
sale, or at prices related to such prevailing market prices, or at
negotiated prices. The Securities may be offered to the public either
through underwriting syndicates represented by one or more managing
underwriters or directly by one or more of such firms. Unless otherwise
set forth in the Prospectus Supplement, the obligations of underwriters or
dealers to purchase the Securities will be subject to certain conditions
precedent and the underwriters or dealers will be obligated to purchase all
the Securities if any are purchased. Any initial public offering price and
any discounts or concessions allowed or reallowed or paid by underwriters
or dealers to other dealers may be changed from time to time.
Securities may be sold directly by the Company or Intermedia Capital,
or through agents designated by the Company or Intermedia Capital from time
to time. Any agent involved in the offer or sale of the Securities in
respect of which this Prospectus is delivered will be named, and any
commissions payable by the Company or Intermedia Capital to such agent will
be set forth, in the Prospectus Supplement. Unless otherwise indicated in
the Prospectus Supplement, any such agent will be acting on a best efforts
basis for the period of its appointment.
If so indicated in the Prospectus Supplement, the Company or
Intermedia Capital, will authorize underwriters, dealers or agents to
solicit offers by certain specified institutions to purchase Securities
from the Company or Intermedia Capital, at the public offering price set
forth in the Prospectus Supplement pursuant to delayed delivery contracts
providing for payment and delivery on a specified date in the future. Such
contracts will be subject to any conditions set forth in the Prospectus
Supplement and the Prospectus Supplement will set forth the commission
payable for solicitation of such contracts. The underwriters and other
persons soliciting such contracts will have no responsibility for the
validity or performance of any such contracts.
Underwriters, dealers and agents may be entitled under agreements
entered into with the Company or Intermedia Capital, to indemnification by
the Company against certain civil liabilities, including liabilities under
the Securities Act, or to contribution by the Company to payments they may
be required to make in respect thereof. The terms and conditions of such
indemnification will be described in an applicable Prospectus Supplement.
Underwriters, dealers and agents may be customers of, engage in
transactions with, or perform services for the Company or Intermedia
Capital, in the ordinary course of business.
Each series of Securities other than Common Stock will be a new issue
of securities with no established trading market. Any underwriters to whom
Securities are sold by the Company for public offering and sale may make a
market in such Securities, but such underwriters will not be obligated to
do so and may discontinue any market making at any time without notice. No
assurance can be given as to the liquidity of the trading market for any
Securities.
34
<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 and for the underwriters, dealers
or agents, if any, by Latham & Watkins, 885 Third Avenue, New York, New
York 10022, unless otherwise specified in the Prospectus Supplement. Ralph
J. Sutcliffe, a partner of Kronish, Lieb, Weiner & Hellman LLP,
beneficially owns 5,745 shares of the Common Stock and a warrant to
purchase 100,000 shares of Common Stock at an exercise price of $41.50 per
share.
EXPERTS
The consolidated financial statements and schedule of Intermedia
Communications Inc. appearing in Intermedia Communication Inc.'s Annual
Report (Form 10-K) for the year ended December 31, 1996, have been audited
by Ernst & Young LLP, independent certified public accountants, as set
forth in their report thereon included therein and incorporated herein by
reference. Such consolidated financial statements and schedule are
incorporated herein by reference in reliance upon such report given upon
the authority of such firm as experts in accounting and auditing.
The consolidated financial statements of DIGEX, Incorporated,
appearing in DIGEX, Incorporated's Annual Report (Form 10-KSB) for the year
ended December 31, 1996, have been audited by Ernst & Young, LLP,
independent auditors, as set forth in their report thereon included therein
and incorporated herein by reference. Such consolidated financial
statements are incorporated herein by reference in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.
The December 31, 1996 audited financial statements of Shared
Technologies Fairchild Inc. incorporated by reference in this Prospectus
and elsewhere in the Registration Statement have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report
with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said report.
The consolidated financial statements and schedule of Shared
Technologies Fairchild Inc. and subsidiaries at December 31, 1995 and for
each of the two years in the period ended December 31, 1995 incorporated by
reference in this Prospectus have been audited by Rothstein, Kass &
Company, P.C., independent certified public accountants, as indicated in
their report, which includes an explanatory paragraph relating to the
changing of the method of accounting for its investment in one of its
subsidiaries, with respect thereto, and are incorporated by reference
herein in reliance upon the authority of said firm as experts in accounting
and auditing.
35
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. Other Expenses of Issuance and Distribution.
The following statement sets forth the expenses payable in connection
with this Registration Statement (estimated except for the registration
fee), all of which will be borne by the Company:
Securities and Exchange Commission filing fee................ $147,500.00
Legal fees and expenses...................................... $100,000.00
Accountant's fees and expenses............................... $ 14,000.00
Miscellaneous................................................ $ 8,500.00
Total........................................................ $270,000.00
ITEM 15. Indemnification of Directors and Officers.
The Company's Certificate of Incorporation provides that the Company
will to the fullest extent permitted by the 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 By-laws
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 to the Company unless
and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for
such expenses. The 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
Certificate of Incorporation contains a provision limiting the personal
liability of the Company's directors for monetary damages for certain
breaches of their fiduciary duty. The Company has indemnification
insurance under which directors and officers are insured against certain
liability that may occur in their capacity as such.
II-1
<PAGE>
ITEM 16. Exhibits.
2.1 -- Agreement and Plan of Merger, dated as of June 4, 1997, among the
Company, Daylight Acquisition Corp. and DIGEX, Incorporated.
Exhibit 99(c)(1) to the Company's Schedule 14D-1 filed with the
Commission on June 11, 1997 is incorporated herein by reference.
2.2 -- Agreement and Plan of Merger, dated as of November 20, 1997, by
and among the Company, Moonlight Acquisition Corp. and Shared
Technologies Fairchild Inc. Exhibit 99(c)(1) to the Company's
Schedule 14D-1 and Schedule 13D filed with the Commission on
November 26, 1997 is incorporated herein by reference.
2.3 -- Acquisition Agreement, dated as of December 17, 1997, among the
Company and the holders of interest in the Long Distance Savers
companies. Exhibit 2.3 to the Company's S-3 Registration
Statement filed with the Commission on January 14, 1998 is
incorporated herein by reference.
*4.1 -- Form of Senior Indenture between Intermedia Communications Inc.
and the Trustee.
*4.2 -- Form of Subordinated Indenture between Intermedia Communications
Inc. and the Trustee.
*5.1 -- Opinion of Kronish, Lieb, Weiner & Hellman LLP re: legality of
securities offered hereby.
*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.
*Filed with the Registration Statement of January 27, 1998.
**Filed herewith.
ITEM 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) To reflect in the Prospectus any facts or events arising
after the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
Registration Statement.
II-2
<PAGE>
Notwithstanding the foregoing, any increase or decrease in the volume of
securities offered (if the total dollar value of securities offered would
not exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in the
form of prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than a 20
percent change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this Registration
Statement or any material change to such information in this Registration
Statement;
provided, however, that paragraphs (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 with or furnished to the
Commission by the Company pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in this Registration
Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act, each filing of the registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Exchange Act) that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused
this Amendment No. 1 to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Tampa,
State of Florida, on this 12th day of February, 1998.
INTERMEDIA COMMUNICATIONS INC.
By: /s/ Robert M. Manning
--------------------------
Robert M. Manning,
Chief Financial Officer and
Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ---------------------------------------------- --------------------------- --------------
<S> <C> <C>
Principal Executive Officers:
/s/ * Chairman of the Board, February 12, 1998
- ---------------------------------------------- President and Chief
David C. Ruberg Executive Officer
Principal Financial and Accounting Officers:
/s/ Robert M. Manning Chief Financial Officer February 12, 1998
- ---------------------------------------------- and
Robert M. Manning Senior Vice President
/s/ * Controller and Chief February 12, 1998
- ---------------------------------------------- Accounting Officer
Jeanne M. Walters
Other Directors:
/s/ * Director February 12, 1998
- ----------------------------------------------
John C. Baker
/s/ * Director February 12, 1998
- ----------------------------------------------
George F. Knapp
/s/ * Director February 12, 1998
- ----------------------------------------------
Philip A. Campbell
By: /s/ Robert M. Manning
- ----------------------------------------------
Robert M. Manning
Attorney-in-fact
</TABLE>
II-4
<PAGE>
Exhibit 23.2
Consent of Independent Certified Public Accountants
We consent to the reference to our firm under the caption "Experts" in Amendment
No. 1 to the Registration Statement (Form S-3 No. 333-45019) and related
prospectus of Intermedia Communications Inc. for the registration of
$500,000,000 of Debt Securities, Preferred Stock, Depositary Shares and Common
Stock and to the incorporation by reference therein of our report dated February
10, 1997, except for Note 13, as to which the date is March 7, 1997, with
respect to the consolidated financial statements and schedule of Intermedia
Communications Inc. included in its Annual Report (Form 10-K) for the year ended
December 31, 1996, filed with the Securities and Exchange Commission.
Tampa, Florida
February 9, 1998
<PAGE>
Exhibit 23.3
Consent of Independent Certified Public Accountants
We consent to the reference to our firm under the caption "Experts" in Amendment
No. 1 to the Registration Statement (Form S-3 No. 333-45019) and related
prospectus of Intermedia Communications Inc. for the registration of
$500,000,000 of Debt Securities, Preferred Stock, Depositary Shares and Common
Stock and to the incorporation by reference therein of our report dated February
24, 1997, with respect to the consolidated financial statements of DIGEX,
Incorporated included in its Annual Report (Form 10-KSB) for the year ended
December 31, 1996, filed with the Securities and Exchange Commission.
Baltimore, Maryland
February 9, 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 Amendment No. 1 to Form S-3 Registration Statement of
our report dated March 7, 1997 incorporated by reference in the Shared
Technologies Fairchild Inc. Form 10-K for the year ended December 31, 1996
and to all references to our Firm included in this Form S-3 Registration
Statement.
/s/ Arthur Andersen LLP
Washington, D.C.
February 9, 1998
<PAGE>
Exhibit 23.5
Consent of Independent Certified Public Accountants
We consent to the incorporation by reference in this Amendment No. 1 to the
Registration Statement on Form S-3 of Intermedia Communications Inc. for
the registration of Debt Securities, Preferred Stock, Depositary Shares and
Common Stock up to an aggregate amount of $500,000,000, 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 1994. We
also consent to the reference to our firm under the caption "Experts".
/s/ Rothstein, Kass & Company, P.C.
Roseland, New Jersey
February 9, 1998