<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 16, 1998
REGISTRATION NO. 33-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
INTERMEDIA COMMUNICATIONS INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 59-29-13586
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>
3625 QUEEN PALM DRIVE
TAMPA, FLORIDA 33619
(813) 829-0011
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
DAVID C. RUBERG, CHAIRMAN OF THE BOARD,
PRESIDENT AND CHIEF EXECUTIVE OFFICER
INTERMEDIA COMMUNICATIONS INC.
3625 QUEEN PALM DRIVE
TAMPA, FLORIDA 33619
(813) 829-0011
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
COPY TO:
RALPH J. SUTCLIFFE, ESQ.
KRONISH, LIEB, WEINER & HELLMAN LLP
1114 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036-7798
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after the
effective date of this Registration Statement.
If any of the securities being registered on this form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
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<CAPTION>
==============================================================================================================================
PROPOSED PROPOSED
TITLE OF SECURITIES AMOUNT TO BE MAXIMUM OFFERING MAXIMUM AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED PRICE PER UNIT OFFERING PRICE REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
8.60% Series B Senior Notes
due 2008.................... $500,000,000 $1,000 $500,000,000 $147,500.00
==============================================================================================================================
</TABLE>
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE OR DATES AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
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<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JUNE 16, 1998
OFFER TO EXCHANGE
8.60% Series B Senior Notes due 2008
for Any and All Outstanding 8.60% Senior Notes due 2008 of
INTERMEDIA COMMUNICATIONS INC.
The Exchange Offer will expire at 5:00 P.M.,
New York City time, on , 1998, unless extended
------------------------
Intermedia Communications Inc., a Delaware corporation ("Intermedia" or the
"Company"), hereby offers, upon the terms and subject to the conditions set
forth in this Prospectus and the accompanying Letter of Transmittal (which
together constitute the "Exchange Offer"), to exchange $1,000 principal amount
of 8.60% Series B Senior Notes due 2008 (the "Senior Notes") of the Company for
each $1,000 principal amount of the issued and outstanding 8.60% Senior Notes
due 2008 (the "Old Notes" and collectively with the Senior Notes, the "Notes")
of the Company. As of the date of this Prospectus, $500,000,000 principal amount
of the Old Notes was outstanding. The terms of the Senior Notes are
substantially identical in all material respects (including interest rate and
maturity) to the terms of the Old Notes except for certain transfer restrictions
and registration rights relating to the Old Notes.
The Exchange Offer is being made to satisfy certain obligations of the
Company under the Note Registration Rights Agreement, dated May 27, 1998, among
the Company and the other signatories thereto (the "Note Registration Rights
Agreement"). Upon consummation of the Exchange Offer, holders of Old Notes that
were not prohibited from participating in the Exchange Offer and did not tender
their Old Notes will not have any registration rights under the Note
Registration Rights Agreement covering such Old Notes not tendered and such Old
Notes will continue to be subject to the restrictions on transfer contained in
the legend thereon. If the Exchange Offer is not consummated, or the Shelf
Registration Statement (as defined) is not filed or is not declared effective
or, after either this Registration Statement (the "Exchange Registration
Statement") or the Shelf Registration Statement has been declared effective,
such registration statement thereafter ceases to be effective or usable (subject
to certain exceptions) in connection with resales of Old Notes or Senior Notes
in accordance with and during the periods specified in the Note Registration
Rights Agreement, additional interest will accrue and be payable on the Notes
until so declared effective or the consummation of such resales. See "The
Exchange Offer," "Description of the Senior Notes -- Registration Rights;
Liquidated Damages."
Based on interpretations by the staff of the Securities and Exchange
Commission (the "SEC" or the "Commission") with respect to similar transactions,
the Company believes that Senior Notes issued pursuant to the Exchange Offer in
exchange for Old Notes may be offered for resale, resold and otherwise
transferred by holders thereof (other than any holder which is an "affiliate" of
the Company within the meaning of Rule 405 under the Securities Act of 1933, as
amended (the "Securities Act")) without compliance with the registration and
prospectus delivery requirements of the Securities Act, provided that the Senior
Notes are acquired in the ordinary course of the holders' business, the holders
have no arrangement with any person to participate in the distribution of the
Senior Notes and neither the holder nor any other person is engaging in or
intends to engage in a distribution of the Senior Notes. Each broker-dealer that
receives Senior Notes for its own account pursuant to the Exchange Offer must
acknowledge that it will deliver a prospectus in connection with any resale of
Senior Notes. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. This Prospectus, as
it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of Senior Notes received in exchange
for Old Notes acquired as a result of market-making activities or other trading
activities. The Company has agreed that, for a period of 365 days after the
Exchange Date (as defined), it will make this Prospectus available to any
broker-dealer for use in connection with any such resale. See "Plan of
Distribution."
(continued on next page)
------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 11 FOR A DESCRIPTION OF CERTAIN FACTORS
THAT SHOULD BE
CONSIDERED BY PARTICIPANTS IN THE EXCHANGE OFFER.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
The date of this Prospectus is , 1998
<PAGE> 3
(Continuation of front cover page)
The Senior Notes will evidence the same debt as the Old Notes and will be
entitled to the benefits of the Indenture (as defined). For a more complete
description of the terms of the Senior Notes, see "Description of the Senior
Notes." There will be no cash proceeds to the Company from the Exchange Offer.
The Senior Notes will be senior unsecured obligations of the Company ranking
pari passu in right of payment of principal and interest with all other existing
and future senior indebtedness of the Company, including the Company's 12 1/2%
Senior Discount Notes due 2006 (the "12 1/2% Notes"), the 11 1/4% Senior
Discount Notes due 2007 (the "11 1/4% Notes"), the 8 7/8% Senior Notes due 2007
(the "8 7/8% Notes"), the 8 1/2% Senior Notes due 2008 (the "8 1/2% Notes" and,
together with the 12 1/2% Notes, the 11 1/4% Notes and the 8 7/8% Notes, the
"Existing Senior Notes") and the Old Notes, and will rank senior in right of
payment to any future subordinated indebtedness of the Company. Holders of
secured indebtedness of the Company will, however, have claims that are prior to
the claims of the holders of the Senior Notes with respect to the assets
securing such other indebtedness. See "Description of the Senior Notes." As of
March 31, 1998, on a pro forma basis after giving effect to the May Offering (as
defined) and the acquisition of National (as defined), the Company would have
had approximately $2.4 billion of indebtedness and other liabilities, including
trade payables outstanding, which includes approximately $148.9 million of
indebtedness and other liabilities of the Company's subsidiaries.
The Old Notes were originally issued and purchased by Bear Stearns & Co.
Inc., Salomon Brothers Inc, Merrill Lynch & Co. and SBC Warburg Dillon Read Inc.
(the "Initial Purchasers") pursuant to a note purchase agreement (the "Purchase
Agreement") dated as of May 21, 1998 among the Company and the Initial
Purchasers, including the exercise of the over-allotment option provided for
therein (the "May Offering"). The Initial Purchasers, in turn, resold the Old
Notes in private sales exempt from registration under the Securities Act in
reliance upon the exemptions provided by Rule 144A and by Section 4(2) of the
Securities Act. The Old Notes may not be reoffered, resold or otherwise pledged,
hypothecated or transferred in the United States unless registered or unless an
exemption from the registration requirements of the Securities Act and
applicable state securities laws is available.
The Company has not entered into any arrangement or understanding with any
person to distribute the Senior Notes to be received in the Exchange Offer and
to the best of the Company's information and belief, each person participating
in the Exchange Offer is acquiring the Senior Notes in its ordinary course of
business and has no arrangement or understanding with any person to participate
in the distribution of the Senior Notes to be received in the Exchange Offer.
The Exchange Offer is not conditioned upon any minimum aggregate principal
amount of Old Notes being tendered for exchange. The Exchange Offer will expire
at 5:00 p.m., New York City time, on , 1998, unless extended (the
"Expiration Date"). The date of acceptance for exchange of the Old Notes for the
Senior Notes (the "Exchange Date") will be the first business day following the
Expiration Date. Old Notes tendered pursuant to the Exchange Offer may be
withdrawn at any time prior to the Expiration Date; otherwise such tenders are
irrevocable.
The Senior Notes will have the same issue date and issue price as the Old
Notes. For a discussion of the tax consequences of the Exchange Offer, see
"Certain Federal Income Tax Considerations."
Prior to this Exchange Offer, there has been no public market for the
Notes. The Company does not currently intend to list the Senior Notes on any
securities exchange or to seek approval for quotation through any automated
quotation system. There can be no assurance that an active public market for the
Senior Notes will develop.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE UPON REQUEST FROM
INTERMEDIA COMMUNICATIONS INC., 3625 QUEEN PALM DRIVE, TAMPA, FLORIDA 33619
(TELEPHONE 813-829-0011). IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS,
ANY REQUEST SHOULD BE MADE BY JUNE , 1998.
<PAGE> 4
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports and other information with the Commission. Such
reports, proxy and other information can be inspected and copied without charge
at the Public Reference Room maintained by the Commission at 450 Fifth Street,
N.W., Room 1024, Washington D.C. 20549. In addition, upon request, such reports,
proxy statements and other information will be made available for inspection and
copying at the Commission's public reference facilities at 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661 and at Seven World Trade Center,
13th floor, New York, New York 10048. Copies of such material can be obtained at
prescribed rates upon request from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington D.C. 20549. The Commission also
maintains a site on the World Wide Web (http://www.sec.gov) that contains
reports, proxy and information statements and other information regarding
registrants, like the Company, that file electronically with the Commission. The
Company's common stock is listed on the Nasdaq National Market under the symbol
"ICIX". Reports, proxy statements and other information concerning the Company
may be inspected and copied at the offices of the National Association of
Securities Dealers, Inc. 1735 K Street, N.W., Washington D.C. 20006.
In the event that the Company ceases to be subject to the informational
reporting requirements of the Exchange Act, the Company has agreed that, whether
or not it is required to do so by the rules and regulations of the Commission,
for so long as any of the securities offered hereby remain outstanding, it will
furnish to the holders of the securities and file with the Commission (unless
the Commission will not accept such a filing) (i) all quarterly and annual
financial information that would be required to be contained in a filing with
the Commission on Forms 10-Q and 10-K if the Company were required to file such
forms, including a "Management's Discussion and Analysis of Results of
Operations and Financial Condition" and, with respect to the annual information
only, a report thereon by the Company's certified independent public accountants
and (ii) all reports that would be required to be filed with the Commission on
Form 8-K if the Company were required to file such reports. In addition, for so
long as any of the securities offered hereby remain outstanding, the Company has
agreed to make available to any prospective purchaser of the securities or
beneficial owner of the securities in connection with any sale thereof the
information required by Rule 144A(d)(4) under the Securities Act.
ii
<PAGE> 5
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,
1997.
The portions of the Proxy Statement for the Annual Meeting of Stockholders
of the Company held on May 20, 1998 that have been incorporated by reference
into the Company's Annual Report on Form 10-K for the year ended December 31,
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 Company's Current Report on Form 8-K filed with the Commission on March
18, 1998
The Company's Current Report on Form 8-K/A filed with the Commission on
March 30, 1998.
The Company's Quarterly Report on Form 10-Q for the quarter ended March 31,
1998.
The Company's Current Report on Form 8-K filed with the Commission on April
6, 1998.
The Company's Current Report on Form 8-K filed with the Commission on April
30, 1998.
The Company's Current Report on Form 8-K filed with the Commission on May
1, 1998.
The Company's Current Report on Form 8-K/A filed with the Commission on May
13, 1998.
The Company's Current Report on Form 8-K filed with the Commission on May
20, 1998.
The Company's Current Report on Form 8-K filed with the Commission on May
29, 1998.
The Company's Current Report on Form 8-K/A filed with the Commission on
June 11, 1998.
In addition, the following information that has been filed with the
Commission is incorporated herein by reference:
The consolidated financial statements of DIGEX, Incorporated ("DIGEX")
appearing in DIGEX's Annual Report on Form 10-KSB for the year ended
December 31, 1996.
The audited financial statements of Shared Technologies Fairchild Inc.
("Shared") appearing in Shared's Annual Report on Form 10-K for the year
ended December 31, 1996.
All documents subsequently filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date
of this Prospectus and prior to the termination of the offering covered by this
Prospectus will be deemed incorporated by reference into this Prospectus and to
be a part hereof from the date of filing of such documents. Any statement
contained in a document incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein modifies or supersedes such statement. Any statement
so modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus has been delivered, including any beneficial owner, upon the
written or oral request of such person to Intermedia Communications Inc., 3625
Queen Palm Drive, Tampa, Florida 33619 (telephone 813-829-0011), Attention:
Investor Relations, a copy of any or all of the documents referred to above
(other than exhibits to such documents) which have been incorporated by
reference in this Prospectus.
iii
<PAGE> 6
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus and in the Consolidated
Financial Statements and the Notes thereto incorporated herein by reference.
References in this Prospectus to the "Company" or "Intermedia" mean Intermedia
Communications Inc. together with its subsidiaries, except where the context
otherwise requires. This Prospectus contains certain "forward-looking
statements" concerning the Company's operations, economic performance and
financial condition, which are subject to inherent uncertainties and risks,
including those identified under "Risk Factors." Actual results could differ
materially from those anticipated in this Prospectus. When used in this
Prospectus, the words "estimate," "project," "anticipate," "expect," "intend,"
"believe" and similar expressions are intended to identify forward-looking
statements.
THE COMPANY
Intermedia is a rapidly growing integrated communications provider ("ICP")
delivering local, long distance and enhanced data services (including
Internet-related services) to business and government customers. Intermedia is
currently the largest domestic independent company among those companies
generally referred to as competitive local exchange carriers ("CLECs") (based
upon annualized telecommunications services revenues and assuming the closing of
the announced transaction between AT&T, Inc. ("AT&T") and Teleport
Communications Group, Inc.) and is also the largest provider of shared tenant
telecommunications services in the United States. As a tier-one Internet
services provider ("ISP") and the fourth largest (based on number of nodes)
frame relay provider in the United States, Intermedia is also a leading provider
of enhanced data services to business and government customers. Intermedia
provides services to its customers throughout the United States and in selected
international markets through a combination of owned and leased network
facilities. As an ICP with over 10 years experience focusing on business and
government customers, Intermedia believes it is positioned to take advantage of
technical, regulatory and market dynamics which currently promote demand for a
fully integrated set of communications services.
As of May 21, 1998, Intermedia served approximately 95,000 business
customers and had over 560 quota carrying sales personnel operating in 81 cities
serviced by 102 Company sales offices. The Company's annualized first quarter
1998 pro forma revenues were $738.8 million. Intermedia's reported revenues have
grown from $14.3 million in 1994 to $247.9 million in 1997, representing a
compound annual growth rate of 158.8%.
Through a combination of acquisitions, leased infrastructure, expansion of
existing network and asset purchases, Intermedia continues to increase its
customer base and network density. Additionally, the Company continues to pursue
attractive opportunities to complement and support its existing network
infrastructure and service offerings and to expand into new geographic markets.
As of May 21, 1998, Intermedia's network infrastructure included over 238,000
access line equivalents in service, 20 voice switches, 150 data switches, 22,789
frame relay nodes, 433 network to network interfaces ("NNIs"), including NNIs
with BellSouth Telecommunications Inc. ("BellSouth"), US West Communications
("US West"), Sprint Corporation ("Sprint"), GTE Corporation ("GTE"), Bell
Atlantic Nynex Corp. ("Bell Atlantic") and Southern New England
Telecommunications Corp ("SNET"), and approximately 36,000 miles of nationwide
long distance fiber facilities. This infrastructure is capable of delivering
local, long distance and enhanced data services (including frame relay,
asynchronous transfer mode ("ATM") and Internet services) and enabled Intermedia
to address $34 billion of a $222 billion national market opportunity by the end
of 1997. The Company believes that at the end of 1998, its addressable market
will be over $90 billion. Management believes that continuing expansion will
enable Intermedia to (i) increase the size of its addressable market to reach a
significant number of new potential customers, (ii) achieve economies of scale
in network operations and sales and marketing and (iii) more effectively serve
customers having a presence in multiple metropolitan areas.
In order to capitalize on the significant increase in the Company's
addressable market, Intermedia has rapidly expanded, and intends to continue to
expand, its direct sales and support team consisting of highly
1
<PAGE> 7
skilled engineering and sales professionals. The sales and support team has
complete product knowledge and technical, integration and program or project
management skills. This team approach promotes a close working relationship
between Intermedia and the customers' telecommunications, information services
and user constituencies. Intermedia believes such relationships enable it to
sell more of its services and maintain longer relationships with its customers.
During the 16 month period commencing January 1, 1997 and ending April 30,
1998, Intermedia increased the number of its sales offices from 21 to 102 and
substantially increased its engineering support personnel and sales
representatives. Intermedia believes that the continued deployment of its
skilled end user engineering support and sales teams will allow Intermedia to
establish service in new markets and gain a stronger competitive position in
existing markets. By focusing first on establishing customer relationships in
both new and existing markets, Intermedia believes it can subsequently deploy
capital efficiently in response to customer demand.
Intermedia expects to realize economies of scale on its intercity network:
(i) through the continued deployment of local/long distance voice switches to
serve its rapidly growing customer base, and (ii) by combining long distance
voice traffic between switches with intercity enhanced data and Internet
traffic. In addition, Intermedia plans to introduce a new class of voice
products which utilize data protocols to deliver voice traffic over Intermedia's
packet/cell switched network which efficiently combines multiple data and voice
protocols over a single network fabric ("Packet/Cell Switched Network"). These
services will provide a competitive service offering to customers seeking a more
cost efficient and flexible alternative to voice services provided over
traditional circuit switched telecommunications networks. Intermedia believes
that Packet/Cell Switched Networks, such as its own, will displace a significant
portion of the national telecommunications market that is currently served over
traditional circuit switched networks. Intermedia believes this new service
offering, when implemented, will accelerate its penetration of the traditional
voice services market and provide improved returns on its network investment.
Enhanced data services, such as those provided over Intermedia's ATM and
frame relay network, include specialized communications services for customers
needing to transport various forms of digital data among multiple locations. An
important category of Intermedia's enhanced data services are its Internet
services, both access to the Internet and various Web hosting and Web site
management services. These Internet services are regularly delivered over
Intermedia's ATM and frame relay network. According to industry sources, the
frame relay services market is projected to grow from $1.3 billion in 1996 to
$2.7 billion in 1999 and Internet Web site management services are estimated to
grow from $450 million in 1997 to $7 billion in 2002. There can be no assurance
that such market growth will be realized or that the assumptions underlying such
projections are reliable. While Intermedia has historically concentrated its
enhanced data sales in the eastern half of the United States, Intermedia is
currently the fourth largest national provider of frame relay networking
services (based on number of nodes) after AT&T, MCI Communications Corporation
("MCI") combined with WorldCom, Inc. ("WorldCom") and Sprint. To satisfy its
customers' desire for end-to-end enhanced data services (both networking and
Internet services) from a single provider, Intermedia has deployed its network
and made interconnection arrangements with other providers to offer national and
international service.
Intermedia's mission is to become the premier provider of communications
services to business and government customers. Intermedia believes its target
customers have sophisticated communications services requirements, including the
need for reliable network infrastructure, high quality, solutions-oriented and
responsive customer service and continuous focus on service enhancements and new
service development. Intermedia believes it has multiple advantages over its
competitors in serving its targeted customer base as a result of the Company's:
(i) specialized sales and service approach employing engineering and sales
professionals who design and implement integrated, cost-effective
telecommunications solutions; (ii) expertise in developing and operating a
highly reliable, advanced digital fiber optic network offering substantial
transmission capacity for the provision of a full suite of "all distance"
communications services; (iii) emphasis on providing solutions-oriented and
responsive customer service; (iv) network platform capable of servicing
customers throughout the United States and in selected international markets;
(v) network development plan designed to assure an efficient evolution from a
voice-oriented, circuit switched network to a Packet/Cell
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Switched Network; (vi) ongoing development and integration of new
telecommunications technologies into its services, especially those technologies
that allow the increasing integration of voice and data applications onto a
single Packet/Cell Switched Network; (vii) ability to deliver local,
long-distance and enhanced data services over a network controlled from
end-to-end by Intermedia; and (viii) long-term contracts with building owners
where the Company acts as a shared tenant telecommunications services provider.
Over the past few years, a portion of Intermedia's growth has been
accomplished through acquisitions and other strategic ventures or selling
relationships. Intermedia continues to examine various acquisitions and other
strategic relationship proposals to accelerate its rate of growth. In addition
to financial considerations, Intermedia assesses each acquisition opportunity to
determine if it provides: (i) an established customer base to whom Intermedia
can cross-sell its other services, (ii) a greater network density in region or
provides needed network connectivity out of region, (iii) accelerated time to
market in a pre-defined target market, (iv) products and services that are
complementary to Intermedia's existing portfolio and (v) skilled staff,
particularly in sales and sales support. While management does not believe that
acquisitions are necessary to achieve Intermedia's strategic goals or to satisfy
its business plan, strategic alliances with or acquisitions of appropriate
companies may accelerate achievement of certain goals by creating financial and
operating synergies, and by providing for more rapid expansion of Intermedia's
network and services. Intermedia is currently evaluating various acquisitions
and strategic relationship opportunities. No assurance can be given that any
potential acquisition or strategic relationship will be consummated.
Intermedia was incorporated in the state of Delaware on November 9, 1987,
as the successor to a Florida corporation that was founded in 1986. Intermedia's
principal offices are located at 3625 Queen Palm Drive, Tampa, Florida 33619 and
its telephone number is (813) 829-0011.
RECENT DEVELOPMENTS
US West and Ameritech Agreements. In January 1998, Intermedia entered into
a frame relay services agreement with US West. In May 1998, Intermedia entered
into a similar frame relay services agreement with Ameritech Communications
International, Inc. ("Ameritech"). Pursuant to these agreements both US West and
Ameritech will utilize Intermedia as its preferred data provider for the
provisioning of frame relay networking and Internet services for all interLATA
connections, both inside and outside US West's and Ameritech's respective
regions. The Company believes these agreements will bring additional traffic
onto Intermedia's network and will create cross-selling opportunities in US
West's 14 state territory (where Intermedia currently has no selling activity)
and in Ameritech's five state territory (where Intermedia intends to
substantially expand its selling activities). Intermedia has undertaken
discussions with other incumbent local exchange carriers ("ILECs"), including
other regional Bell operating companies ("RBOCs"), with the intent of
establishing similar agreements, although there is no assurance such additional
agreements will be consummated.
1998 Acquisitions. In March 1998, Intermedia consummated the acquisition
of Shared. The total purchase price for Shared was approximately $769.3 million,
including certain transaction expenses and fees relating to certain agreements.
Shared is the nation's largest provider of shared telecommunications services
and systems. Through its technical infrastructure and 741 employees, Shared acts
as a single point of contact for business telecommunications services at
approximately 500 Class A office buildings throughout the United States and
Canada, and provides turnkey PBX and key system implementation and operation in
other buildings throughout the United States. Shared's revenues for the year
ended December 31, 1997 were approximately $181.8 million. This acquisition is
expected to enhance Intermedia's national presence in the telecommunications
market, enabling it to provide an integrated offering of local, long distance,
data and systems integration services to Shared's existing customer base of
approximately 12,800 customers.
Also in March 1998, Intermedia consummated the acquisition of the
affiliated entities known as Long Distance Savers (collectively, "LDS") for
approximately $168.6 million including approximately $137.2 million in
Intermedia's Common Stock and $31.4 million in cash, of which $15.0 million was
used to retire LDS's long-term debt. LDS is an established regional
interexchange carrier, providing long distance services and Internet access to
more than 48,000 business customers and employing approximately 77 quota
carrying sales
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<PAGE> 9
professionals in Louisiana, Texas, Oklahoma, Mississippi and Florida. LDS's
revenues for the year ended December 31, 1997 were approximately $122.3 million.
The acquisition of LDS provides a significant time-to-market advantage in a
region important to Intermedia's expansion, while also contributing an
experienced regional management team and established sales organization. Because
LDS's service portfolio and footprint complement those of Intermedia, the
Company believes that the acquisition of LDS also presents significant synergy
realization opportunities. By joining forces with an established operating
company having a staff of experienced sales, management and technical personnel,
Intermedia expects to consolidate its position in the southern markets served by
LDS.
In April 1998, Intermedia consummated the acquisition of the affiliated
entities known as National Tel (collectively, "National"). The total purchase
price for National was approximately $151.8 million consisting of approximately
$88.7 million of Intermedia's Common Stock and $63.1 million in cash, including
debt repayment of $2.8 million. National is an emerging switch-based CLEC and an
established interexchange carrier providing local exchange and long distance
voice services to approximately 11,000 business customers concentrated in
Florida's major metropolitan markets. National had revenues of approximately
$65.2 million for the year ended December 31, 1997. Intermedia believes that the
acquisition of National will help build critical mass in the State of Florida,
one of the top five telecommunications usage states in the country, and provide
an experienced team of sales professionals.
The Company has committed resources to develop and implement a program to
integrate its recently acquired businesses in order to realize maximum synergies
and future costs savings. In connection with the integration and realignment of
the Company's businesses and operating structure, Intermedia expects to record a
one-time charge later this year, the amount of which is subject to finalization
of a detailed restructuring program. The charge will be excluded from the
Company's EBITDA (as defined). Management believes that the implementation of
this program will enhance the Company's ability to realize the maximum synergies
from its acquisitions.
Williams Agreement. In March 1998, Intermedia signed a definitive
agreement with the Williams Telecommunications Group ("Williams") to purchase
nationwide transmission capacity on Williams' fiber optic network. The 20 year
indefeasible right of use ("IRU") provides Intermedia with high capacity
transport for its integrated voice and data services, connecting major markets
throughout the continental United States. The agreement will immediately reduce
Intermedia's unit cost for digital, intercity transmission capacity. Initial
implementation of the agreement is expected to connect approximately 50 cities
over the next 12 months, with additional cities to follow. The capacity provided
by Williams will become part of Intermedia's nationwide network of self-healing
rings, over which the Company will deliver its integrated voice and data
services.
Stock Split. On May 20, 1998, the Company announced a 2 for 1 split of its
Common Stock (the "Stock Split") to be effected through a stock dividend payable
on June 15, 1998 to stockholders of record on June 1, 1998.
4
<PAGE> 10
THE EXCHANGE OFFER
Securities Offered............ Up to $500,000,000 principal amount of 8.60%
Series B Senior Notes due 2008 of the Company.
The terms of the Senior Notes and the Old Notes
are substantially identical in all material
respects, except for certain transfer
restrictions and registration rights relating
to the Old Notes which do not apply to the
Senior Notes. See "Description of the Senior
Notes."
The Exchange Offer............ The Company is offering to exchange $1,000
principal amount of Senior Notes for each
$1,000 principal amount of Old Notes. See "The
Exchange Offer" for a description of the
procedures for tendering Old Notes. The
Exchange Offer satisfies the registration
obligations of the Company under the Note
Registration Rights Agreement. Upon
consummation of the Exchange Offer, holders of
Old Notes that were not prohibited from
participating in the Exchange Offer and did not
tender their Old Notes will not have any
registration rights under the Note Registration
Rights Agreement with respect to such
non-tendered Old Notes and, accordingly, such
Old Notes will continue to be subject to the
restrictions on transfer contained in the
legend thereon.
Tenders, Expiration Date;
Withdrawal.................. The Exchange Offer will expire at 5:00 p.m.,
New York City time, on , 1998,
or such later date and time to which it is
extended. Tenders of Old Notes pursuant to the
Exchange Offer may be withdrawn and Old Notes
retendered at any time prior to the Expiration
Date. Any Old Notes not accepted for exchange
for any reason will be returned without expense
to the tendering holder as promptly as
practicable after the expiration or termination
of the Exchange Offer.
Federal Income Tax
Considerations................ The Exchange Offer will not result in any
income, gain or loss to the holders or the
Company for federal income tax purposes. See
"Certain Federal Income Tax Considerations."
Use of Proceeds............... There will be no proceeds to the Company from
the exchange of the Old Notes for the Senior
Notes pursuant to the Exchange Offer.
Exchange Agent................ SunTrust Bank, Central Florida, National
Association, the trustee (the "Trustee") under
the Indenture, is serving as Exchange Agent in
connection with the Exchange Offer.
5
<PAGE> 11
CONSEQUENCES OF EXCHANGING OLD NOTES PURSUANT TO THE EXCHANGE OFFER
Generally, holders of Old Notes (other than any holder who is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act) who exchange their Old Notes for Senior Notes pursuant to the Exchange
Offer may offer their Senior Notes for resale, resell their Senior Notes, and
otherwise transfer their Senior Notes without compliance with the registration
and prospectus delivery provisions of the Securities Act, provided such Senior
Notes are acquired in the ordinary course of the holders' business, such holders
have no arrangement with any person to participate in a distribution of such
Senior Notes and neither the holder nor any other person is engaging in or
intends to engage in a distribution of the Senior Notes. Each broker-dealer that
receives Senior Notes for its own account in exchange for Old Notes must
acknowledge that it will deliver a prospectus in connection with any resale of
its Senior Notes. Broker-dealers may not exchange Old Notes which are part of an
unsold original allotment in the Exchange Offer. See "Plan of Distribution." To
comply with the securities laws of certain jurisdictions, it may be necessary to
qualify for sale or register the Senior Notes prior to offering or selling such
Senior Notes. The Company is required, under the Note Registration Rights
Agreement, to register the Senior Notes in any jurisdiction reasonably requested
by the holders, subject to certain limitations. Upon consummation of the
Exchange Offer, holders that were not prohibited from participating in the
Exchange Offer and did not tender their Old Notes will not have any registration
rights under the Note Registration Rights Agreement with respect to such
non-tendered Old Notes and, accordingly, such Old Notes will continue to be
subject to the restrictions on transfer contained in the legend thereon. In
general, the Old Notes may not be offered or sold (except in private
transactions), unless registered under the Securities Act and applicable state
securities laws. See "The Exchange Offer -- Consequences of Failure to
Exchange".
6
<PAGE> 12
SUMMARY DESCRIPTION OF THE SENIOR NOTES
Securities Offered............ Up to $500,000,000 principal amount of 8.60%
Series B Senior Notes due June 1, 2008 of the
Company. The terms of the Senior Notes and the
Old Notes are substantially identical in all
material aspects, except for certain transfer
restrictions and registration rights relating
to the Old Notes which do not apply to the
Senior Notes. See "Description of the Senior
Notes."
Issue Price................... $1,000 stated principal amount of the Old Notes
per $1,000 stated principal amount of the
Senior Notes.
Maturity Date................. June 1, 2008.
Interest...................... Interest on the Senior Notes will accrue at
8.60% per annum and will be payable
semi-annually in arrears on June 1 and December
1 of each year, commencing on December 1, 1998.
Yield......................... 8.60% per annum, computed on the basis of a 360
day year comprised of twelve 30-day months.
Optional Redemption........... Prior to June 1, 2003, the Senior Notes may be
redeemed at any time at the option of the
Company, in whole or in part, at the Make-Whole
Price (as defined), plus accrued and unpaid
interest and Liquidated Damages (as defined),
if any, thereon to the redemption date. On or
after June 1, 2003, the Senior Notes may be
redeemed at the option of the Company at any
time, in whole or in part, at the redemption
prices set forth herein, plus accrued and
unpaid interest and Liquidated Damages, if any,
thereon to the date of redemption.
In addition, at the option of the Company, up
to 25% of the aggregate principal amount of the
Notes originally issued may be redeemed at any
time prior to June 1, 2001 at a redemption
price of 108.60% of the principal amount
thereof plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the date
of redemption, with the net proceeds of one or
more Qualified Equity Offerings (as defined);
provided, however, that at least 75% in
aggregate principal amount of the Notes
originally issued remains outstanding following
any such redemption and, provided, further,
that such redemption occurs within 90 days of
the date of the closing of each such sale.
Change of Control............. In the event of a Change of Control, each
holder of the Senior Notes will have the right
to require the Company to repurchase all or any
part of such holder's Senior Notes at a
repurchase price equal to 101% of the principal
amount thereof, plus accrued and unpaid
interest and Liquidated Damages, if any,
thereon to the date of purchase.
Ranking....................... The Senior Notes will be senior unsecured
obligations of the Company, ranking senior in
right of payment to all subordinated
Indebtedness of the Company and pari passu in
right of payment with all existing and future
senior borrowings, including the Existing
Senior Notes, the Old Notes and any borrowings
under a credit facility which may be
established by the Company. In addition, the
Senior Notes will be effectively subordinated
to any
7
<PAGE> 13
indebtedness of the Company's subsidiaries. As
of March 31, 1998, on a pro forma basis after
giving effect to the May Offering and the
acquisition of National, the Company would have
had approximately $2.4 billion of indebtedness
and other liabilities, including trade payables
outstanding, which includes approximately
$148.9 million of indebtedness and other
liabilities of the Company's subsidiaries.
Certain Covenants............. The indenture governing the Senior Notes (the
"Indenture") contains certain covenants that,
among other things, limit the ability of the
Company and its Subsidiaries (as defined) to
make certain restricted payments, incur
additional indebtedness and issue Disqualified
Stock (as defined), 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
or enter into mergers and consolidations. See
"Description of the Senior Notes -- Certain
Covenants." In addition, under certain
circumstances, the Company will be required to
offer to purchase the Senior Notes at a price
equal to 100% of the principal amount thereof,
plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the date of
purchase.
For additional information regarding the Senior Notes and the definitions
of certain capitalized terms used above, see "Description of the Senior Notes."
8
<PAGE> 14
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
The following table sets forth selected historical consolidated financial
information and other data of the Company for the three years ended December 31,
1997 which have been derived from the consolidated financial statements of the
Company, which financial statements have been audited by Ernst & Young LLP,
independent certified public accountants. The summary financial data presented
below for the quarters ended March 31, 1997 and 1998 have been derived from
unaudited financial statements of the Company. In the opinion of management, the
unaudited financial statements have been prepared on the same basis as the
audited financial statements and include all adjustments, which consist only of
normal recurring adjustments, necessary for a fair presentation of the financial
position and the results of operations for these periods. Operating results for
the three months ended March 31, 1998 are not necessarily indicative of the
results that may be expected for the full year.
The 1998 pro forma financial data give effect to the acquisitions of
Shared, LDS and National as if they occurred on January 1, 1998. The 1997 pro
forma financial data give effect to the acquisitions of DIGEX, Incorporated
("DIGEX"), Shared, LDS, and National as if they occurred on January 1, 1997.
Both 1997 and 1998 pro forma statement of operations and other information give
effect to the Company's 1997 debt and equity offerings as if they occurred at
the beginning of 1997. However, such pro forma information does not give effect
to additional interest expense that will result from the May Offering. The
following financial information should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations", the
"Consolidated Financial Statements of the Company" and Notes thereto, the
"Unaudited Condensed Consolidated Financial Statements of the Company" and Notes
thereto and the "Unaudited Pro Forma Condensed Consolidated Financial
Statements", which are incorporated herein by reference to the Company's Annual
Report on Form 10-K for the year ended December 31, 1997, the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1998 and the
Company's Current Report on Form 8-K/A filed with the Commission on June 11,
1998.
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA HISTORICAL PRO FORMA
------------------------------- ---------- -------------------- ---------
YEAR ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31,
-------------------------------------------- --------------------------------
1995 1996 1997 1997 1997 1998 1998
-------- -------- --------- ---------- -------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues................................ $ 38,631 $103,397 $ 247,899 $ 636,882 $ 43,938 $ 136,786 $ 184,695
Costs and Expenses:
Network expenses, facilities
administration and maintenance
costs............................... 22,990 81,105 199,139 441,855 36,907 100,266 132,535
Selling, general and administrative... 14,992 36,610 98,598 227,126 19,526 46,347 55,548
Depreciation and amortization......... 10,196 19,836 53,613 128,587 8,294 39,864 44,323
Charge for in-process R&D(1).......... -- -- 60,000 60,000 -- 85,000 85,000
-------- -------- --------- ---------- -------- --------- ---------
48,178 137,551 411,350 857,568 64,727 271,477 317,406
-------- -------- --------- ---------- -------- --------- ---------
Income (loss) from operations........... (9,547) (34,154) (163,451) (220,686) (20,789) (134,691) (132,711)
Interest expense........................ (13,767) (35,213) (60,662) (141,513) (11,089) (49,301) (42,229)
Interest and other income............... 4,060 12,168 26,824 6,505 4,474 10,729 9,635
Income tax (provision) benefit.......... 97 -- -- (380) -- -- --
-------- -------- --------- ---------- -------- --------- ---------
Loss before extraordinary item.......... (19,157) (57,199) (197,289) (356,074) (27,404) (173,263) (165,305)
Extraordinary loss on early
extinguishment of debt(2)............. (1,592) -- (43,834) (43,834) -- -- --
-------- -------- --------- ---------- -------- --------- ---------
Net loss................................ (20,749) (57,199) (241,123) (399,908) (27,404) (173,263) (165,305)
Preferred stock dividends and
accretions............................ -- -- (43,742) (71,850) (3,375) (18,594) (18,594)
-------- -------- --------- ---------- -------- --------- ---------
Net loss attributable to common
stockholders.......................... $(20,749) $(57,199) $(284,865) $ (471,758) $(30,779) $(191,857) $(183,899)
======== ======== ========= ========== ======== ========= =========
OTHER DATA:
EBITDA(3)............................... $ 649 $(14,318) $ (49,838) $ (32,099) $(12,495) $ (9,827) $ (3,388)
Capital expenditures, including cash
portion of acquisitions............... $ 31,914 $143,615 $ 812,061 $1,252,292 $ 33,333 $ 464,739 $ 529,155
</TABLE>
(Continued
on following page)
9
<PAGE> 15
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
------------------------------------- -----------
1995 1996 1997 1998
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
NETWORK DATA:
Buildings connected(4)................................ 380 487 3,005 4,071
Route miles........................................... 504 655 757 770
Fiber miles........................................... 17,128 24,122 34,956 35,999
Number of city-based networks in service.............. 9 9 10 10
ENHANCED DATA SERVICES:
Nodes(5).............................................. 2,300 9,777 20,209 22,789
Cities(6)............................................. 600 2,260 4,104 4,146
Switches.............................................. 31 89 136 150
LOCAL AND LONG DISTANCE SERVICES:
Voice switches in operation........................... 1 5 16 19
Long distance billable minutes........................ 32,912,501 69,118,148 139,437,921 184,227,094
Access line equivalents............................... -- 7,106 81,349 220,587
EMPLOYEES............................................... 287 874 2,036 3,320
</TABLE>
<TABLE>
<CAPTION>
AS OF MARCH 31, 1998
----------------------------
ACTUAL AS ADJUSTED(9)
---------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents(7).............................. $ 335,260 $ 763,852
Working capital(8)........................................ 299,074 730,116
Total assets.............................................. 2,425,755 3,027,214
Long-term debt (including current maturities)............. 1,741,552 2,241,552
Redeemable preferred stock................................ 701,437 701,437
Total stockholders' deficiency............................ (184,993) (91,144)
</TABLE>
- ---------------
(1) Represents a one time charge to earnings as a result of the write-off of
in-process research and development in connection with the acquisitions of
DIGEX and Shared in 1997 and the first quarter of 1998, respectively.
(2) The Company incurred extraordinary charges in 1995 and 1997 related to early
extinguishment of debt.
(3) EBITDA consists of earnings (loss) before interest expense, interest and
other income, income tax (provision) benefit, depreciation, amortization and
non-recurring charges (such as the charges in 1997 and 1998 for in-process
R&D). EBITDA is presented since it is a measure commonly used in the
telecommunications industry to measure operating performance, asset value
and financial leverage. It is presented to enhance the reader's
understanding of the Company's operating results and is not intended to
present cash flow for the periods presented.
(4) Beginning in January 1997, the Company changed its definition of "Buildings
connected" to include buildings connected to the Company's network via
facilities leased by the Company in addition to those connected to the
Company's network via facilities constructed by the Company. The Company
believes the new definition is consistent with industry practice.
(5) Each node represents an individual point of origination and termination of
data served by the Company's enhanced data network. In the opinion of
management of the Company, the number of nodes reported is an accurate
representation of the quantity of enhanced data network services provided.
(6) Represents the number of discrete postal cities to which enhanced data
services are provided by the Company.
(7) Cash and cash equivalents excludes investments of $7.5 million for the
quarter ended March 31, 1998, restricted under the terms of various notes
and other agreements.
(8) Working capital includes the restricted investments referred to in Note 7
above whose restrictions either lapse within one year or will be used to pay
current liabilities.
(9) As adjusted gives effect to the May Offering and the acquisition of National
as if they occurred on March 31, 1998.
10
<PAGE> 16
RISK FACTORS
In addition to other information set forth elsewhere in this Prospectus.
Before tendering their Old Notes for Senior Notes, holders should consider
carefully the following factors which (other than "Consequences of Failure to
Exchange" and "Resale of Senior Notes") are generally applicable to the Old
Notes as well as to the Senior Notes.
Consequences of Failure to Exchange. Upon the consummation of the Exchange
Offer, holders of Old Notes that were not prohibited from participating in the
Exchange Offer and did not tender their Old Notes will not have any registration
rights under the Note Registration Rights Agreement with respect to such non-
tendered Old Notes and, accordingly, such Old Notes will continue to be subject
to the restrictions on transfer contained in the legend thereon. In general, the
Old Notes may not be offered or sold, unless registered under the Securities Act
and applicable state securities laws, except pursuant to an exemption from, or
in a transaction not subject to, the Securities Act and applicable state
securities laws. The Company does not intend to register the Old Notes under the
Securities Act.
Resale of Senior Notes. Based on interpretations by the Staff of the SEC
with respect to similar transactions, the Company believes that Senior Notes
issued pursuant to the Exchange Offer in exchange for Old Notes may be offered
for resale, resold or otherwise transferred by holders (other than any holder
which is an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act) without compliance with the registration and prospectus delivery
provisions of the Securities Act provided that the Senior Notes are acquired in
the ordinary course of the holders' business, the holders have no arrangement
with any person to participate in the distribution of the Senior Notes and
neither the holder nor any other person is engaging in or intends to engage in a
distribution of the Senior Notes. Each broker-dealer that receives Senior Notes
for its own account pursuant to the Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of the Senior Notes. The
Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-dealer
in connection with resales of Senior Notes received in exchange for the Old
Notes acquired by the broker-dealer as a result of market-making activities or
other trading activities. Broker-Dealers may not exchange Old Notes which are
part of an unsold original allotment in the Exchange Offer. The Company has
agreed that, for a period of 365 days after the Exchange Date, it will make this
Prospectus available to any broker-dealer for use in connection with any such
resale of the Senior Notes. See "Plan of Distribution." The Senior Notes may not
be offered or sold unless they have been registered or qualified for sale under
applicable state securities laws or an exemption from registration or
qualification is available and is complied with. The Note Registration Rights
Agreement requires the Company to register or qualify the Senior Notes for
resale in any state as may be reasonably requested by their holders, subject to
certain limitations.
Limited Operations of Certain Services; History of Net Losses. The
Company's business commenced in 1986. Substantially all of the Company's
revenues are derived from local exchange services, enhanced data services, long
distance services, integration services and certain local network services. Many
of these services have only recently been initiated or their availability only
recently expanded in new market areas. The Company is expecting to substantially
increase the size of its operations in the near future. Prospective investors,
therefore, have limited historical financial information about the Company upon
which to base an evaluation of the Company's performance. Given the Company's
limited operating history, there is no assurance that it will be able to compete
successfully in the telecommunications business.
The development of the Company's business and the expansion of its networks
require significant capital, operational and administrative expenditures, a
substantial portion of which are incurred before the realization of revenues.
These capital expenditures will result in negative cash flow until an adequate
customer base is established. Although its revenues have increased in each of
the last three years, Intermedia has incurred significant increases in expenses
associated with the installation of local/long distance voice switches and
expansion of its fiber optic networks, services and customer base. Intermedia
reported net losses attributable to Common Stockholders of approximately $20.7
million, $57.2 million and $284.9 million for the years ended December 31, 1995,
1996 and 1997, respectively, and a net loss of $191.9 million for the three
months ended March 31, 1998. The Company expects net losses to continue for the
next several years. In addition, the
11
<PAGE> 17
Company had negative EBITDA in 1997 and in the first quarter of 1998 of $49.8
million and $9.8 million, respectively. There can be no assurance that
Intermedia will achieve or sustain profitability and/or positive EBITDA in the
future.
Substantial Indebtedness; Insufficiency of Earnings to Cover Fixed
Charges. The Company is highly leveraged. At March 31, 1998, after giving pro
forma effect to the acquisition of National and the May Offering, the Company
would have had outstanding approximately $2.4 billion in aggregate principal
amount of indebtedness and other liabilities on a consolidated basis (including
trade payables), approximately $345.7 million of obligations with respect to the
mandatory redemption of the Company's 13 1/2% Series B Redeemable Preferred
Stock due 2009 (the "Series B Preferred Stock"), and $172.5 million and $200.0
million of obligations with respect to the Company's 7% Series D Junior
Convertible Preferred Stock (the "Series D Preferred Stock") and the 7% Series E
Junior Convertible Preferred Stock (the "Series E Preferred Stock"),
respectively, in the event of a change of control of the Company. The degree to
which the Company is leveraged could have important consequences to holders of
the Senior Notes, including the following: (i) a substantial portion of the
Company's cash flow from operations will be dedicated to payment of the
principal and interest on its indebtedness, to payment of dividends on and the
redemption of the Series B Preferred Stock and the payment of dividends on the
Series D Preferred Stock and 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.
Commencing on November 15, 2001, semi-annual cash interest payments of
$20.7 million will be due on the 12 1/2% Notes and commencing on January 15,
2003, semi-annual cash interest payments of $36.6 million will be due on the
11 1/4% Notes. Because the Company currently has a net cash flow deficit from
its operating and investing activities, its ability to make such cash interest
payments and to repay its obligations on the Existing Senior Notes and the Notes
at maturity will depend on the Company developing one or more sources of cash
flow prior to the dates on which such cash payment obligations arise.
Alternatively, the Company may seek to refinance all or a portion of the
Existing Senior Notes and the Notes. There can be no assurance, however, that
the Company will be able to refinance such indebtedness or develop additional
sources of cash flow.
The Company's historical earnings have been insufficient to cover combined
fixed charges and dividends on preferred stock by $2.3 million, $3.3 million,
$19.9 million, $60.0 million and $245.7 million for each of the years ended
December 31, 1993, 1994, 1995, 1996 and 1997, respectively. In addition,
insufficiencies of $31.6 million and $193.8 million were experienced in the
three month periods ended March 31, 1997 and 1998, respectively. Combined fixed
charges and dividends include interest and dividends whether paid or accrued. On
a pro forma basis, after giving applicable effect to the acquisitions of Shared,
National and LDS and each of the Company's 1997 debt and equity offerings as if
they had been consummated at the beginning of the year, the Company's earnings
were insufficient to cover combined fixed charges and dividends on preferred
stock by $432.3 million for the year ended December 31, 1997 and $185.9 million
for the three month period ended March 31, 1998. On a pro forma basis, after
giving effect to the May Offering and the transactions referred to in the
preceding sentence, the Company's earnings were insufficient to cover combined
fixed charges and dividends on preferred stock by $474.8 million for the year
ended December 31, 1997 and $196.5 million for the three month period ended
March 31, 1998. 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 may 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.
12
<PAGE> 18
Effect of Substantial Additional Indebtedness on the Company's Ability to
Repay the Senior Notes. The Indenture, the indentures governing the Existing
Senior Notes (the "Existing Senior Notes Indentures") and the Certificate of
Designation governing the Series B Preferred Stock 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 effectively senior (if secured) to the Senior Notes. See
"Description of the Senior Notes." The debt service requirements of any
additional indebtedness would make it more difficult for the Company to make
principal and interest payments on the Senior Notes.
Effective Subordination of the Senior Notes. The Senior Notes are not
secured by any of the assets of the Company. Holders of secured indebtedness of
the Company will have claims that are prior to the claims of the holders of the
Senior Notes to the extent of the assets securing such other indebtedness. The
Indenture and the Existing Senior Notes Indentures permit certain indebtedness
of the Company to be secured. In addition, the Senior Notes will be effectively
subordinated to $148.9 million of indebtedness and other liabilities and
commitments (including trade payables) of the Company's subsidiaries as of March
31, 1998 after giving pro forma effect to the acquisition of National.
Historically, the Company's operations were conducted primarily through
Intermedia. However, the operations of the Company's recent acquisitions are
conducted through subsidiaries. No guarantees will be issued with respect to the
Senior Notes; thus the Company's subsidiaries are not directly obligated under
the Senior Notes. Earnings generated by any of the Company's subsidiaries, as
well as the existing assets of such subsidiaries, will have to be used first by
such subsidiaries to fulfill their debt service requirements. Moreover, the
Company has had preliminary discussions with several banks regarding the
establishment of a senior credit facility. Such credit facility may be secured
by a substantial portion of the assets of the Company. Therefore, the Senior
Notes would be effectively subordinated to such senior credit facility to the
extent of such security. There can be no assurance that the Company will enter
into such a senior credit facility.
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. The Company expects to fund its capital requirements through
existing resources, joint ventures, debt or equity financing, credit
availability and internally generated funds. The Company expects that continued
expansion of its business will require raising equity and/or debt by the end of
fiscal 1999. Depending on market conditions, the Company may determine to raise
additional capital before such time. There can be no assurance, however, that
the Company will be successful in raising sufficient debt or equity on terms
that it will consider acceptable. Moreover, the Indenture, the Existing Senior
Notes Indentures, the Series B Certificate of Designation, the Certificate of
Designation setting forth the rights of the Series D Preferred Stock and the
Certificate of Designation setting forth the rights of the Series E Preferred
Stock impose certain restrictions upon the Company's ability to incur additional
indebtedness or issue additional preferred 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 the Company 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.
Risks Associated with Acquisitions. In March and April 1998, the Company
completed its acquisitions of Shared, LDS and National. The Company's
acquisitions of Shared, LDS and National could divert the resources and
management time of the Company and will require integration with the Company's
existing networks and services. There can be no assurance that Shared, LDS and
National will be successfully integrated into the Company's operations and will
not have a material adverse affect on the Company's business, financial
condition and results of operations.
Consistent with its strategy, the Company is currently evaluating and often
engages in discussions regarding various acquisition opportunities. These
acquisitions could be funded by cash on hand and/or the
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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, in 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 acquisitions over the past two
years, including the acquisitions of Shared, LDS and National. In connection
therewith, the Company may not have obtained or, as in the case of the
acquisition of Shared, may have elected not to seek, 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.
Year 2000 Risk. The Company has implemented a Year 2000 date conversion
program to ensure that its computer systems and applications will function
properly beyond 1999. The Company believes that it has allocated adequate
resources for this purpose and expects its Year 2000 date conversion program to
be successfully completed on a timely basis. There can, however, be no assurance
that this will be the case. The Company does not expect to incur significant
expenditures to address this issue. The ability of third parties with whom the
Company transacts business or companies that Intermedia may acquire to
adequately address their Year 2000 issues is outside of the Company's control.
There can be no assurance that the failure of the Company or such third parties
to adequately address their respective Year 2000 issues will not have a material
adverse effect on the Company's business, financial condition, cash flows and
results of operations.
Maintenance of Peering Relationships. The Internet is comprised of many
Internet service providers 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 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
relationships with the major national ISPs with which the Company may have to
comply. There can be no assurance that the Company will be able to expand or
adapt its network infrastructure to meet the industry's evolving standards on a
timely basis, at a commercially reasonable cost, or at all.
Potential Liability of On-Line Service Providers. The law in the United
States relating to the liability of on-line service providers and ISPs for
information carried on, disseminated through or hosted on their systems is
currently unsettled. Several private lawsuits seeking to impose such liability
are currently pending. In one case brought against an ISP, Religious Technology
Center v. Netcom On-Line Communication Services, Inc., the United States
District Court for the Northern District of California ruled in a preliminary
phase that, under certain circumstances, ISPs could be held liable for copyright
infringement. The Telecommunications Act of 1996 (the "1996 Act") prohibits and
imposes criminal penalties for using an interactive computer service to transmit
certain types of information and content, such as indecent or obscene
communications. On June 26, 1997, the Supreme Court affirmed the decision of a
panel of three federal judges which granted a preliminary injunction barring
enforcement of this portion of the 1996 Act to the extent enforcement is based
upon allegations other than obscenity or child pornography as an impermissible
restriction on the First Amendment's right of free speech. In addition, numerous
states have adopted or are currently considering similar types of legislation.
The imposition upon ISPs or Web hosting sites of potential liability for
materials carried on or disseminated through their systems could require the
Company to implement measures to reduce its exposure to such liability, which
could 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.
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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.
Expansion Risk. The Company is experiencing a period of rapid expansion
which management expects will continue in the near future. This growth has
increased the operating complexity of the Company as well as the level of
responsibility for both existing and new management personnel. The Company's
ability to manage its expansion effectively will require it to continue to
implement and improve its operational and financial systems and to expand, train
and manage its employee base. The Company's inability to effectively manage its
expansion could have a material adverse effect on its business.
A portion of the Company's expansion may occur through acquisitions as an
alternative to direct investments in the assets required to implement the
expansion. No assurance can be given that suitable acquisitions can be
identified, financed and completed on acceptable terms, or that the Company's
future acquisitions, if any, will be successful or will not impair the Company's
ability to service its outstanding obligations.
Risks of Implementation; Need to Obtain Permits and Rights of Way. The
Company is continuing to expand its existing networks. The Company has
identified other expansion opportunities 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 on a timely basis. The
expansion of the Company's existing networks and its construction or acquisition
of new networks will be dependent, among other things, on its ability to acquire
rights-of-way and any required permits on satisfactory terms and conditions and
on its ability to finance such expansion, acquisition and construction. In
addition, the Company may require pole attachment agreements with utilities and
ILECs to operate existing and future networks, and there can be no assurance
that such agreements will be obtained on reasonable terms. These factors and
others could adversely affect the expansion of the Company's customer base on
its existing networks and commencement of operations on new networks. If the
Company is not able to expand, acquire or construct its networks in accordance
with its plans, the growth of its business would be materially adversely
affected.
Competition. In each of its markets, the Company faces significant
competition for the local network services, including local exchange services,
it offers from ILECs, which currently dominate their local telecommunications
markets. ILECs have longstanding relationships with their customers, which
relationships may create competitive barriers. Furthermore, ILECs may have the
potential to subsidize competitive service from monopoly service revenues. In
addition, a continuing trend toward business combinations and alliances in the
telecommunications industry may create significant new competitors for the
Company. The Company also faces competition in most markets in which it operates
from one or more ICPs and ILECs operating fiber optic networks. In addition, the
Company faces competition in its integration services business from equipment
manufacturers, the RBOCs and other ILECs, long distance carriers and systems
integrators, and in its enhanced data services business (including Internet)
from local telephone companies, long distance carriers, very small aperture
terminal 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
1996 Act, have removed most of the 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
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discount pricing practices for their customers, the net income or cash flow of
ICPs and 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, 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 the Company. 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.
This decision has been stayed pending appeal. 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, the local exchange services market, which is facilitated by the 1996
Act's resale and unbundled network element provisions. The Company cannot
predict the number of competitors that will emerge as a result of existing or
new federal and state regulatory or legislative actions. Competition from the
RBOCs with respect to interexchange services or from AT&T, MCI or others with
respect to local exchange services could have a material adverse effect on the
Company's business.
Regulation. The Company is subject to varying degrees of federal, state
and local regulation. The Company is not currently subject to price cap or rate
of return regulation at the state or federal level, nor is it currently required
to obtain Federal Communication Commission ("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, the Company will continue to
maintain tariffs for these services. In June 1997, the FCC issued another order
stating that non-dominant carriers, such as Intermedia, could withdraw their
tariffs for interstate access services. While the Company has no immediate plans
to withdraw its tariff, this FCC order allows the Company to do so. The FCC does
require the Company to obtain authority to provide and 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. The Company believes that the FCC's new access charge rules do not
adversely affect the Company's business plan, and that they in fact present
significant new opportunities for new entrants, including the Company. Aspects
of the access charge order may be changed in the future. Numerous parties have
either filed appeals with federal courts or asked the FCC to reconsider portions
of its new rules.
The Company 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 ILECs and CLECs, as well as
pro-competitive policies already developed by state regulatory commissions, have
caused fundamental changes in the structure of the markets for local exchange
services. 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 requesting
review of these decisions have been granted. Most recently, on January 22, 1998,
the Eighth Circuit 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 pricing and other issues (pending review by the Supreme Court), these
issues remain subject to scrutiny and oversight by state regulatory commissions.
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Two RBOCs, US West and Ameritech, have entered into "teaming agreements"
with an interexchange carrier ("IXC"), Qwest Communications International, Inc.
("Qwest"), whereby the RBOCs would solicit customers for Qwest's long distance
service and handle billing of those customers in exchange for a fee. These
agreements would permit the RBOCs to offer their customers a package of local
and long distance services in competition with the Company's offerings even
though the RBOCs are not themselves providing the long distance component.
Certain IXCs, consider these agreements to be an attempt to evade the 1996 Act's
restrictions on RBOC's offering in-region long distance services and have
requested the FCC to block the proposed arrangement and also have initiated
litigation in federal courts, all of which are pending. On June 4, 1998, a
federal court issued a preliminary injunction barring further performance of the
US West agreement but another federal court subsequently refused to similarly
enjoin performance under the Ameritech agreement. Both courts, at the request of
the FCC, have referred the question of the legality of the agreements under the
1996 Act to the FCC. The Company is unable to predict the FCC's ultimate
determination of whether these agreements comply with the 1996 Act or the nature
of any policies the FCC may adopt generally relating to the agreements between
RBOCs and other carriers.
Although passage of the 1996 Act should result in increased opportunities
for companies that are competing with the ILECS, no assurance can be given that
changes in current or future regulations adopted by the FCC or state regulators
or other legislative or judicial initiatives relating to the telecommunications
industry would not have a material adverse effect on the Company.
The regulatory status of telephone service over the Internet is presently
uncertain. The Company is unable to predict what regulations may be adopted in
the future or to what extent existing laws and regulations may be found by state
and federal authorities to be applicable to such services or the impact such new
or existing laws and regulations may have on the business of the Company.
Although specific statutes and regulations addressing this service have not been
adopted at this time, the extent to which current laws and regulations at the
state and federal levels will be interpreted to include such Internet telephone
services has not been determined. The FCC has recently indicated, for example,
that voice telecommunications carried over the Internet between two telephone
sets using the public switched network may be subject to payment of access
charges and Universal Service funding obligations, while voice
telecommunications using computers rather than telephone sets may not be subject
to such obligations. There can be no assurance that new laws or regulations
relating to these services or a determination that existing laws are applicable
to them will not have a material adverse effect on the Company's business.
Regulatory Approval of the May Offering and Prior Offerings. Nine of the
states in which the Company is certificated provide for prior approval or
notification of the issuance of securities by the Company. Because of time
constraints, the Company may not have obtained such approval or completed the
notification process in any of the nine states prior to consummation of the May
Offering. The requirements for these filings may have been preempted by the
National Securities Market Improvement Act of 1996, although there is no case
law on this point. The Company has filed the necessary notifications and
applications for approval of the May Offering in those states. After
consultation with counsel, the Company believes the approvals will be granted
and that seeking such approvals subsequent to the May Offering should not result
in any material adverse consequences to the Company, although there can be no
assurance that such a consequence will not result. With respect to the 1997 debt
and equity offerings by the Company, the notification process has been completed
and approvals obtained from all states except Hawaii where approval remains
pending.
Potential Diminishing Rate of Growth. During the period from 1994 through
1997, the Company's revenues grew at a compound annual growth rate of 158.8%
(including the effect of acquisitions). 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.
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Rapid Technological Changes. The telecommunications industry is subject to
rapid and significant changes in technology. While the Company 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 the Company 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, financial
condition and results of operations. 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 are
party to a long-term employment agreement with the Company.
Risk of Termination, Cancellation or Non-Renewal of Interexchange
Agreements, 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. The IRU between the
Company and Williams may be terminated by Williams after a payment default by
the Company and, in the event of a bankruptcy of Williams, the IRU may be
rejected by Williams in a bankruptcy proceeding.
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 or by 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
position of, both the Company and the investor within the rapidly consolidating
telecommunications industry. There can be no assurance that agreements for any
of the foregoing will be reached. An investment, business combination or
strategic alliance could constitute a change of control. The Indenture and the
Existing Senior Notes Indentures provide that a change of control would require
the Company to repay the indebtedness outstanding under such instruments. A
change of control also requires the Company to offer to redeem its outstanding
series of preferred stock. If a change of control does occur, there is no
assurance that the Company would have sufficient funds, or could obtain any
additional debt or equity financing necessary, to make such repayments and
redemptions.
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 DIGEX Acquisition was consummated through a tender
offer for all of the outstanding shares of DIGEX, which closed on July 9, 1997,
followed by a cash merger effective on July 11, 1997 (the "Merger").
On June 20, 1997, two purported class action complaints ("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,
purported stockholders of DIGEX, on behalf of all non-affiliated common
stockholders of DIGEX, against Intermedia, DIGEX and the Board of 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
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<PAGE> 24
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 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.
Absence of a Public Market for the Senior Notes. The Senior Notes are a
new issue of securities for which there is currently no public market. The
Company does not intend to apply for listing of the Senior Notes on any
securities exchange or on the Nasdaq National Market. Although the Initial
Purchasers have informed the Company that they currently intend to make a market
in the Senior Notes, they are not obligated to do so and any such market-making
may be discontinued at any time without notice. Accordingly, there can be no
assurance as to the development or liquidity of any market for the Senior Notes.
If a market for the Senior Notes were to develop, the Senior Notes may trade at
prices that may be higher or lower than their respective initial offering price
depending upon many factors, including prevailing interest rates, the Company's
operating results and the markets for similar securities. Historically, the
market for securities such as the Senior Notes has been subject to disruptions
that have caused substantial volatility in the prices of similar securities.
There can be no assurance that, if a market for the Senior Notes were to
develop, such a market would not be subject to similar disruptions.
Certain Tax Considerations. For a discussion of certain material federal
income tax considerations which are relevant to holders acquiring Senior Notes
pursuant to the Exchange Offer, see "Certain Federal Income Tas Consequences."
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, such as Intermedia's plans to
expand its existing networks or to build and acquire networks in new areas, the
market opportunity presented by larger metropolitan areas, its anticipation of
installation of switches or the provision of local exchange services and
revenues from designated markets during 1998 and statements regarding
development of Intermedia's businesses, the estimate of market sizes and
addressable markets for Intermedia's services and products, Intermedia's
anticipated capital expenditures, regulatory reform and other statements
contained in this Prospectus regarding matters that are not historical facts,
are only estimates and 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 Intermedia or actual events differing from the
assumptions underlying such statements. Such risks and assumptions include, but
are not limited to, Intermedia's ability to successfully market its services to
current and new customers, generate customer demand for its services in the
particular markets where it plans to market services, access markets, identify,
finance and complete suitable acquisitions, design and construct fiber optic
networks, install cable and facilities, including switching electronics, and
obtain rights-of-way, building access rights and any required governmental
authorizations, franchises and permits, all in a timely manner, at reasonable
costs and on satisfactory terms and conditions, as well as regulatory,
legislative and judicial developments that could cause actual results to vary
materially from the future results indicated, expressed or implied, in such
forward-looking statements.
Moreover, Intermedia presents certain data contained herein on an
annualized basis, based on quarterly or monthly data, because Intermedia
believes that such annualized data is a standard method to present certain data
in the telecommunications industry. However, actual annual results could differ
materially from annualized data because annualized data does not account for
factors such as seasonality, growth or decline. Consequently, readers should not
place undue reliance on the annualized data.
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<PAGE> 25
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
The Old Notes were originally issued and sold on May 27, 1998 in reliance
upon the exemptions from registration under Rule 144A and Section 4(2) of the
Securities Act. Pursuant to the Note Registration Rights Agreement, the Company
agreed to register with the SEC a series of notes with substantially identical
terms as the Old Notes, to be offered in exchange for the Old Notes. The purpose
of the Exchange Offer is to satisfy the Company's obligations under the Note
Registration Rights Agreement. Holders that are not prohibited from
participating in the Exchange Offer and do not tender all of their Old Notes
will no longer have any registration rights under the Note Registration Rights
Agreement.
TERMS OF THE EXCHANGE
The Company offers to exchange, subject to the conditions set forth in this
Prospectus and in the Letter of Transmittal accompanying this Prospectus, the
same principal amount of Senior Notes for the Old Notes tendered for exchange.
The terms of the Senior Notes are substantially identical to the Old Notes in
all material respects (including interest rate and maturity), except that (i)
the Senior Notes will not be subject to the restrictions on transfer (other than
with respect to holders who are affiliates and as otherwise described below) and
(ii) the Note Registration Rights Agreement covenants regarding registration and
the related Liquidated Damages (other than those that have accrued and were not
paid) with respect to Registration Defaults (as defined) will have been deemed
satisfied. The Senior Notes will evidence the same debt as the Old Notes and
will be entitled to the benefits of the Indenture. See "Description of the
Senior Notes." The Exchange Offer is not conditioned upon any minimum aggregate
principal amount of Old Notes being tendered for exchange.
The Company believes that Senior Notes received in exchange for Old Notes
may be offered for sale, sold and otherwise transferred by any holder (other
than any holder which is an "affiliate" of the Company within the meaning of
Rule 405 under the Securities Act) without compliance with the registration and
prospectus delivery requirements of the Securities Act, provided that the Senior
Notes are acquired in the ordinary course of the holder's business, the holder
has no arrangement or understanding with any person to participate in the
distribution of the Senior Notes and neither the holder nor any other person is
engaging in or intends to engage in a distribution of the Senior Notes. Any
holder who tenders in the Exchange Offer for the purpose of participating in a
public distribution of the Senior Notes must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with the
distribution. Broker-dealers may not exchange Old Notes which are part of an
unsold original allotment in the Exchange Offer.
Tendering holders of the Old Notes will not be required to pay brokerage
commissions or fees or, subject to the instructions in the Letter of
Transmittal, transfer taxes with respect to the Exchange Offer.
EXPIRATION DATE; EXTENSIONS, TERMINATION; AMENDMENT
The Exchange Offer will expire on the Expiration Date. The term "Expiration
Date" means 5:00 p.m., New York City time, on , 1998 or such
later date and time, if any, as extended by the Company, in its sole discretion.
The Company may extend the Exchange Offer at any time and from time to time by
giving oral or written notice to holders of the Old Notes and unless otherwise
required by applicable law or regulation, by timely public announcement, by
making a release to the Dow Jones News Service on or before 9:00 a.m. of the
next business day following the Expiration Date. During any extension of the
Exchange Offer, all Old Notes tendered for exchange will remain subject to the
Exchange Offer. In connection with the Exchange Offer, the Company will comply
with all applicable requirements of the federal securities laws, including, but
not limited to, Rule 14e-1 under the Exchange Act.
The Exchange Date will be the first business day following the Expiration
Date. The Company expressly reserves the right to (i) terminate the Exchange
Offer and not accept for exchange any Old Notes if either of the events set
forth under "Conditions to the Exchange Offer" shall have occurred and shall not
have been waived by the Company and (ii) amend the terms of the Exchange Offer
in any manner which, in its good
20
<PAGE> 26
faith judgment, is advantageous to the holders of the Old Notes, whether before
or after any tender of the Old Notes. Unless the Company terminates the Exchange
Offer prior to 5:00 p.m., New York City time, on the Expiration Date, the
Company will exchange the Senior Notes for the Old Notes on the Exchange Date.
PROCEDURES FOR TENDERING OLD NOTES
The Exchange Offer is subject to the terms and conditions set forth in this
Prospectus and the Letter of Transmittal.
Old Notes may be tendered by properly completing and signing the Letter of
Transmittal and delivering the Letter of Transmittal to the Exchange Agent at
its address set forth in this Prospectus on or prior to the Expiration Date,
together with (i) the certificate or certificates representing the Old Notes
being tendered and any required signature guarantees, (ii) a timely confirmation
of a book-entry transfer (a "Book-Entry Confirmation") of the Old Notes, if such
procedure is available, into the Exchange Agent's account at The Depository
Trust Company (the "Book-Entry Transfer Facility" or "Depository") pursuant to
the procedure for book-entry transfer described below, or (iii) the completion
of the procedures for guaranteed delivery set forth below. See "Guaranteed
Delivery Procedures."
If the Senior Notes are to be issued in the name of the registered holder
and the registered holder has signed the Letter of Transmittal the holder's
signature need not be guaranteed. In any other case, the tendered Old Notes must
be endorsed or accompanied by written instruments of transfer in form
satisfactory to the Exchange Agent and duly executed by the registered holder
and the signature on the endorsement or instrument of transfer must be
guaranteed by a commercial bank or trust company located or having an office or
correspondent in the United States, or by a member firm of a national securities
exchange or of the National Association of Securities Dealers, Inc. (an
"Eligible Institution"). If the Senior Notes and/or Old Notes not exchanged are
to be delivered to an address other than that of the registered holder appearing
on the register for the Old Notes, the signature on the Letter of Transmittal
must be guaranteed by an Eligible Institution.
THE METHOD OF DELIVERY OF OLD NOTES, LETTERS OF TRANSMITTAL AND ALL OTHER
DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDER. IF SENT BY MAIL, IT IS
RECOMMENDED THAT REGISTERED MAIL, RETURN RECEIPT REQUESTED, BE USED, PROPER
INSURANCE OBTAINED, AND THE MAILING BE MADE SUFFICIENTLY IN ADVANCE OF THE
EXPIRATION DATE TO PERMIT DELIVERY TO THE EXCHANGE AGENT ON OR BEFORE THE
EXPIRATION DATE. NO LETTERS OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE
COMPANY.
A tender will be deemed to have been received as of the date when the
tendering holder's properly completed and duly signed Letter of Transmittal, the
Old Notes or a Book-Entry Confirmation and all other required documents are
received by the Exchange Agent.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance for exchange of any tender of Old Notes will be
determined by the Company in its sole discretion, which determination will be
final and binding. The Company reserves the right to reject any or all tenders
not in proper form or the acceptance for exchange of which may, in the opinion
of the Company's counsel, be unlawful. The Company also reserves the right to
waive any of the conditions of the Exchange Offer or any defect, withdrawal,
rejection of tender or irregularity in the tender of any Old Notes. Neither the
Company, the Exchange Agent nor any other person will be under any duty to give
notification of any defects, withdrawals, rejections or irregularities or incur
any liability for failure to give any such notification.
TERMS AND CONDITIONS OF THE LETTER OF TRANSMITTAL
The Letter of Transmittal contains, among other things, the following terms
and conditions, which are part of the Exchange Offer.
The holder tendering Old Notes exchanges, assigns and transfers the Old
Notes to the Company and irrevocably constitutes and appoints the Exchange Agent
as the holder's agent and attorney-in-fact to cause
21
<PAGE> 27
the Old Notes to be assigned, transferred and exchanged. The holder represents
and warrants that (i) it has full power and authority to tender, exchange,
assign and transfer the Old Notes and to acquire Senior Notes in exchange for
the Old Notes, (ii) when the Old Notes are accepted for exchange, the Company
will acquire good and unencumbered title to the Old Notes, free and clear of all
liens, restrictions, charges and encumbrances and not subject to any adverse
claim and (iii) it will, upon request, execute and deliver any additional
documents deemed by the Company to be necessary or desirable to complete the
exchange, assignment and transfer of tendered Old Notes. The holder further
agrees that acceptance of any tendered Old Notes by the Company and the issuance
of Senior Notes in exchange therefor shall constitute performance in full by the
Company of its obligations under the Note Registration Rights Agreement and that
the Company shall have no further obligations or liabilities thereunder (except
with respect to accrued and unpaid Liquidated Damages, if any). All authority
conferred by the holder will survive the death or incapacity of the holder and
every obligation of the holder shall be binding upon the heirs, legal
representatives, successors assigns, executors and administrators of the holder.
Each holder will also certify that it (i) is not an "affiliate" of the
Company within the meaning of Rule 405 under the Securities Act or that, if it
is an "affiliate," it will comply with the registration and prospectus delivery
requirements of the Securities Act to the extent applicable, (ii) is acquiring
the Senior Notes offered in the ordinary course of its business and (iii) has no
arrangement with any person to participate in the distribution of the Senior
Notes.
WITHDRAWAL RIGHTS
Old Notes tendered pursuant to the Exchange Offer may be withdrawn at any
time prior to the Expiration Date.
To be effective, a written notice of withdrawal must be timely received by
the Exchange Agent at its address set forth in this Prospectus by mail, courier,
telegraphic, telex or facsimile transmission. Any notice of withdrawal must
specify the person named in the Letter of Transmittal as having tendered Old
Notes to be withdrawn, the certificate numbers of Old Notes to be withdrawn, the
principal amount of Old Notes to be withdrawn, a statement that the holder is
withdrawing its election to tender the Old Notes for exchange, and the name of
the registered holder of the Old Notes, and must be signed by the holder in the
same manner as the original signature on the Letter of Transmittal (including
any required signature guarantees) or be accompanied by evidence satisfactory to
the Exchange Agent that the person withdrawing the tender has succeeded to the
beneficial ownership of the Old Notes being withdrawn. The Exchange Agent will
return the properly withdrawn Old Notes promptly following receipt of notice of
withdrawal. If Old Notes have been tendered pursuant to a book-entry transfer,
any notice of withdrawal must specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Old Notes and
otherwise comply with the procedures of the Book-Entry Transfer Facility. All
questions as to the validity of notices of withdrawals, including time of
receipt, will be determined by the Company, and such determination will be final
and binding on all parties. Any Old Notes which have been tendered for exchange
but which are not exchanged will be returned to the holder thereof without cost
to the holder (or, in the case of Old Notes tendered by book-entry transfer by
crediting an account maintained with the Book-Entry Transfer Facility for the
Old Notes) as soon as practicable after withdrawal, rejection of tender or
termination of the Exchange Offer. Properly withdrawn Old Notes may be
re-tendered at any time on or prior to the Expiration Date. Any Old Notes so
withdrawn and not re-tendered will not be exchanged for Senior Notes under the
Exchange Offer.
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF SENIOR NOTES
Upon terms and subject to the conditions of the Exchange Offer, the
acceptance for exchange of Old Notes validly tendered and not withdrawn and
issuance of the Senior Notes will be made on the Exchange Date. For the purposes
of the Exchange Offer, the Company shall be deemed to have accepted for exchange
validly tendered Old Notes when, as and if the Company has given oral or written
notice thereof to the holders.
22
<PAGE> 28
The Exchange Agent will act as agent for the tendering holders of Old Notes
for the purpose of causing the Old Notes to be assigned, transferred and
exchanged for Senior Notes. Upon the terms and subject to the conditions of the
Exchange Offer, delivery of Senior Notes in exchange for Old Notes will be made
by the Exchange Agent promptly after acceptance of the tendered Old Notes by the
Company. Tendered Old Notes not accepted for exchange by the Company will be
returned without expense to the tendering holders (or, in the case of Old Notes
tendered by book-entry transfer crediting an account maintained with the
Depository) promptly following the Expiration Date or, if the Company terminates
the Exchange Offer prior to the Expiration Date, promptly after the Exchange
Offer is terminated.
BOOK-ENTRY TRANSFER
The Exchange Agent will establish an account at the Book-Entry Transfer
Facility for purposes of the Exchange Offer within two business days after the
date of this Prospectus, and any financial institution that is a participant in
the Book-Entry Transfer Facility's systems may make book-entry delivery of Old
Notes by causing the Book-Entry Transfer Facility to transfer the Old Notes into
the Exchange Agent's account at the Book-Entry Transfer Facility in accordance
with the Book-Entry Transfer Facility's procedure for transfer. The Letter of
Transmittal with any required signature guarantees and any other required
documents, must be received by the Exchange Agent on or prior to the Expiration
Date for any book-entry transfers.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available or (ii) who cannot deliver their Old Notes, the Letter of
Transmittal or any other documents required hereby to the Exchange Agent prior
to the Expiration Date must tender their Old Notes and follow the guaranteed
delivery procedures. Pursuant to such procedures: (i) such tender must be made
by or through an Eligible Institution; (ii) prior to the Expiration Date, the
Exchange Agent must have received from the Eligible Institution a properly
completed and duly executed Notice of Guaranteed Delivery (by facsimile
transmission, mail or hand delivery) setting forth the name and address of the
holder of the Old Notes, the certificate number or numbers of such Old Notes and
the principal amount of Old Notes tendered, stating that the tender is being
made thereby and guaranteeing that, within five business days after the
Expiration Date, the Letter of Transmittal (or facsimile thereof) together with
the certificate(s) representing the Old Notes (or a confirmation of electronic
delivery of book-entry delivery into the Exchange Agent's account at the
Depository) and any of the required documents will be deposited by the Eligible
Institution with the Exchange Agent; and (iii) such properly completed and
executed Letter of Transmittal (or facsimile hereof), as well as all other
documents required by the Letter of Transmittal and the certificate(s)
representing all tendered Old Notes in proper form for transfer (or a
confirmation of electronic mail delivery or book-entry delivery into the
Exchange Agent's account at the Depository) must be received by the Exchange
Agent within five business days after Expiration Date. Any holder of Old Notes
who wishes to tender his Old Notes pursuant to the guaranteed delivery
procedures described above must ensure that the Exchange Agent receives the
Notice of Guaranteed Delivery prior to 5:00 P.M., New York City time, on the
Expiration Date.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, the Company will
not be required to issue Senior Notes in exchange for any properly tendered Old
Notes not previously accepted and may terminate the Exchange Offer (by oral or
written notice to the holders and by timely public announcement communicated,
unless otherwise required by applicable law or regulation, by making a release
to the Dow Jones News Service), or, at its option, modify or otherwise amend the
Exchange Offer, if any of the following events occur:
(a) there shall be threatened, instituted or pending any action or
proceeding before, or any injunction, order or decree shall have been
issued by, any court or governmental agency or other governmental
regulatory or administrative agency or commission (i) seeking to restrain
or prohibit the making or consummation of the Exchange Offer or any other
transaction contemplated by the Exchange Offer, or assessing or seeking any
damages as a result thereof, or (ii) resulting in a material delay in the
ability of the Company to accept for exchange or exchange some or all of
the Old Notes pursuant to the
23
<PAGE> 29
Exchange Offer, or any statute, rule, regulation, order or injunction shall
be sought, proposed, introduced, enacted, promulgated or deemed applicable
to the Exchange Offer or any of the transactions contemplated by the
Exchange Offer by any government or governmental authority, domestic or
foreign, or any action shall have been taken, proposed or threatened, by
any government, governmental authority, agency or court, domestic or
foreign, that in the sole judgment of the Company might directly or
indirectly result in any of the consequences referred to in clause (i) or
(ii) above or, in the sole judgment of the Company, might result in the
holders of Senior Notes having obligations with respect to resales and
transfers of Senior Notes which are greater than those described in the
interpretation of the SEC referred to on the cover page of this Prospectus,
or would otherwise make it inadvisable to proceed with the Exchange Offer;
or
(b) any change (or any development involving a prospective change)
shall have occurred or be threatened in the business, properties, assets,
liabilities, financial condition, operations, results of operations or
prospects of the Company, taken as a whole, that, in the sole judgment of
the Company is or may be adverse to the Company, or the Company shall have
become aware of facts that, in the sole judgment of the Company have or may
have adverse significance with respect to the value of the Old Notes or the
Senior Notes; which, in the sole judgment of the Company in any case, and
regardless of the circumstances (including any action by the Company)
giving rise to any such condition, makes it unlawful to proceed with the
Exchange Offer and/or with such acceptance for exchange or with such
exchange.
The Company expressly reserves the right to terminate the Exchange Offer
and not accept for exchange any Old Notes upon the occurrence of any of the
foregoing conditions (which represent all of the material conditions to the
acceptance by the Company of properly tendered Old Notes). In addition, the
Company may amend the Exchange Offer at any time prior to the Expiration Date if
any of the conditions set forth above occur. Moreover, regardless of whether any
of such conditions has occurred, the Company may amend the Exchange Offer in any
manner which, in its good faith judgment, is advantageous to holders of the Old
Notes.
These conditions are for the sole benefit of the Company and may be waived
by the Company, in whole or in part, in its sole discretion. Any determination
made by the Company that any of these conditions has occurred will be final and
binding on all holders, absent manifest error.
In addition, the Company will not accept for exchange any Old Notes
tendered, and no Senior Notes will be issued in exchange for any such Old Notes,
if at such time any stop order shall be threatened or in effect with respect to
the Registration Statement of which this Prospectus constitutes a part or the
qualification of the Indenture under the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act").
EXCHANGE AGENT
SunTrust Bank, Central Florida, National Association, the Trustee under the
Indenture, has been appointed as the Exchange Agent for the Exchange Offer. All
executed Letters of Transmittal, questions and requests for assistance and
requests for additional copies of this Prospectus or of the Letter of
Transmittal should be directed to the Exchange Agent, addressed as follows:
SunTrust Bank, Central Florida, National Association
225 East Robinson St.
Suite 250
Orlando, FL 32801
Attention: Alice Springer
Facsimile: (407) 237-5299
Confirm by telephone: (407) 237-5179
DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF
INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A
VALID DELIVERY.
24
<PAGE> 30
SOLICITATION OF TENDERS; EXPENSES
The Company has not retained any dealer-manager or similar agent in
connection with the Exchange Offer and will not make any payments to brokers,
dealers or others for soliciting acceptances of the Exchange Offer.
No person has been authorized to give any information or to make any
representations in connection with the Exchange Offer other than those contained
in this Prospectus and the Letter of Transmittal. If given or made, such
information or representations should not be relied upon as having been
authorized by the Company. Neither the delivery of this Prospectus nor any
exchange made hereunder shall, under any circumstances, create any implication
that there has been no change in the affairs of the Company since the respective
dates as of which information is given herein. The Exchange Offer is not being
made to (nor will tenders be accepted from or on behalf of) holders of Old Notes
in any jurisdiction in which the making of the Exchange Offer or the acceptance
thereof would not be in compliance with the laws of such jurisdiction. The
Company may, however, at the reasonable request of any holder, take such action
as it may deem necessary to make the Exchange Offer in any such jurisdiction and
extend the Exchange Offer to holders of Old Notes in such jurisdiction.
TRANSFER TAXES
Holders who tender their Old Notes in exchange for Senior Notes will not be
obligated to pay any transfer taxes in connection therewith, except that holders
who instruct the Company to register Senior Notes in the name of, or request
that Old Notes not tendered or not accepted in the Exchange Offer be returned
to, a person other than the registered tendering holder will be responsible for
the payment of any applicable transfer tax thereon.
CONSEQUENCES OF FAILURE TO EXCHANGE
Upon consummation of the Exchange Offer, holders of Old Notes that were not
prohibited from participating in the Exchange Offer and did not tender their Old
Notes will not have any registration rights under the Note Registration Rights
Agreement with respect to such non-tendered Old Notes and, accordingly such Old
Notes will continue to be subject to the restrictions on transfer contained in
the legend thereon. In general, the Old Notes may not be offered or sold, unless
registered under the Securities Act and the applicable state securities laws,
except pursuant to an exemption from, or in a transaction not subject to, the
Securities Act and applicable state securities laws. The Company does not intend
to register the Old Notes under the Securities Act. Based on interpretations by
the staff of the SEC, Senior Notes issued pursuant to the Exchange Offer in
exchange for Old Notes may be offered for resale, resold or otherwise
transferred by holders (other than any holder which is an "affiliate" of the
Company within the meaning of Rule 405 under the Securities Act) without
compliance with the registration and prospectus delivery requirements of
Securities Act provided that the Senior Notes are acquired in the ordinary
course of the holders' business, the holders have no arrangement with any person
to participate in the distribution of the Senior Notes and neither the holder
nor any other person is engaging in or intends to engage in a distribution of
the Senior Notes. If any holder has any arrangement or understanding with
respect to the distribution of the Senior Notes to be acquired pursuant to the
Exchange Offer, the holder (i) could not rely on the applicable interpretations
of the staff of the SEC and (ii) must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transaction. Each broker-dealer that receives Senior Notes for its own
account in exchange for Old Notes must acknowledge that it will deliver a
prospectus in connection with any resale of the Senior Notes. See "Plan of
Distribution." In addition, to comply with the securities laws of certain
jurisdictions, if applicable, the Senior Notes may not be offered or sold unless
they have been registered or qualified for sale in such jurisdiction or an
exemption from registration or qualification is available and is complied with.
The Company has agreed under the Note Registration Rights Agreement to register
or qualify the Senior Notes for resale in any jurisdictions reasonably requested
by any holder, subject to certain limitations.
25
<PAGE> 31
OTHER
Participation in the Exchange Offer is voluntary and holders should
carefully consider whether to accept. Holders of the Old Notes are urged to
consult their financial and tax advisors in making their own decisions on what
action to take.
Upon consummation of the Exchange Offer, holders of Old Notes that were not
prohibited from participating in the Exchange Offer and did not tender their Old
Notes will not have any registration rights under the Note Registration Rights
Agreement with respect to such non-tendered Old Notes and, accordingly, such Old
Notes will continue to be subject to the restrictions on transfer contained in
the legend thereon.
The Company has not entered into any arrangement or understanding with any
person to distribute the Senior Notes to be received in the Exchange Offer and
to the best of the Company's information and belief, each person participating
in the Exchange Offer is acquiring the Senior Notes in its ordinary course of
business and has no arrangement or understanding with any person to participate
in the distribution of the Senior Notes to be received in the Exchange Offer. In
this regard, the Company will make each person participating in the Exchange
Offer aware (through this Prospectus or otherwise) that if the Exchange Offer is
being registered for the purpose of secondary resale, any holder using the
Exchange Offer to participate in a distribution of Senior Notes to be acquired
in the registered Exchange Offer (1) may not rely on the staff position
enunciated in Morgan Stanley and Co. Inc. (avail. June 5, 1991) and Exxon
Capital Holding Corp. (avail. May 13, 1988) or similar letters and (2) must
comply with registration and prospectus delivery requirements of the Securities
Act in connection with a secondary resale transaction.
ACCOUNTING TREATMENT
The Senior Notes will be recorded at the same carrying value as the Old
Notes, as reflected in the Company's accounting records on the Exchange Date.
Accordingly, no gain or loss for accounting purposes will be recognized by the
Company. The expenses of the Exchange Offer will be amortized over the term of
the Senior Notes.
26
<PAGE> 32
USE OF PROCEEDS
There will be no proceeds to the Company from the Exchange Offer.
CAPITALIZATION
The following table sets forth as of March 31, 1998, the consolidated
capitalization of the Company, the pro forma capitalization, which gives effect
to the acquisition of National, and the pro forma as adjusted capitalization,
which gives effect to the acquisition of National and the May Offering. This
table should be read in conjunction with the "Consolidated Financial Statements
of the Company" and Notes thereto, the "Unaudited Condensed Financial Statements
of the Company" and Notes thereto and the "Unaudited Pro Forma Condensed
Consolidated Financial Statements", which are incorporated herein by reference
to the Company's Annual Report on Form 10-K for the year ended December 31,
1997, the Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1998 and the Company's Current Report on Form 8-K/A filed with the
Commission on June 11, 1998.
<TABLE>
<CAPTION>
AS OF MARCH 31, 1998
-------------------------------------
PRO FORMA
HISTORICAL PRO FORMA AS ADJUSTED
---------- ---------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Cash and cash equivalents................................... $ 335,260 $ 275,602 $ 763,852
========== ========== ==========
Long-term debt (including current maturities):
12.50% Senior Discount Notes due 2006..................... $ 226,326 $ 226,326 $ 226,326
11.25% Senior Discount Notes due 2007..................... 405,761 405,761 405,761
8.875% Senior Notes due 2007.............................. 260,250 260,250 260,250
8.50% Senior Notes due 2008............................... 400,000 400,000 400,000
8.60% Senior Notes due 2008............................... -- -- 500,000
Other long-term debt...................................... 1,251 1,251 1,251
Capital lease obligations................................. 447,964 447,964 447,964
---------- ---------- ----------
Total long-term debt.............................. 1,741,552 1,741,552 2,241,552
13.50% Series B redeemable exchangeable preferred
stock due 2009............................................ 334,742 334,742 334,742
7% Series D junior convertible preferred stock.............. 169,936 169,936 169,936
7% Series E junior convertible preferred stock.............. 196,759 196,759 196,759
Total stockholders' deficiency.............................. (184,993) (91,144) (91,144)
---------- ---------- ----------
Total capitalization........................................ $2,257,996 $2,351,845 $2,851,845
========== ========== ==========
</TABLE>
27
<PAGE> 33
SELECTED HISTORICAL FINANCIAL AND OTHER OPERATING DATA
The following selected historical financial data for the five years ended
December 31, 1997 are derived from the consolidated financial statements of the
Company, which financial statements have been audited by Ernst & Young, LLP,
independent certified public accountants. The financial data for the three
months ended March 31, 1997 and 1998 are derived from the Company's unaudited
condensed consolidated financial statements. The unaudited condensed
consolidated financial statements include all adjustments, consisting only of
normal recurring accruals, which management of the Company considers necessary
for a fair presentation of the financial position and the results of operations
for these periods. Operating results for the three months ended March 31, 1998
are not necessarily indicative of the results that may be expected for the
entire year ending December 31, 1998.
The following financial information should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations", the "Consolidated Financial Statements of the Company" and Notes
thereto, the "Unaudited Condensed Consolidated Financial Statements of the
Company" and Notes thereto and the "Unaudited Pro Forma Condensed Consolidated
Financial Statements", which are incorporated herein by reference to the
Company's Annual Report on Form 10-K for the year ended December 31, 1997, the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1998 and
the Company's Current Report on Form 8-K/A filed with the Commission on June 11,
1998.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
--------------------------------------------------- --------------------
1993 1994 1995 1996 1997 1997 1998
------- ------- -------- -------- --------- -------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues........................................ $ 8,292 $14,272 $ 38,631 $103,397 $ 247,899 $ 43,938 $ 136,786
Costs and Expenses:
Network expenses, facilities administration
and maintenance costs....................... 2,843 5,396 22,990 81,105 199,139 36,907 100,266
Selling, general and administrative........... 3,893 6,412 14,992 36,610 98,598 19,526 46,347
Depreciation and amortization................. 3,020 5,132 10,196 19,836 53,613 8,294 39,864
Charge for in-process R&D(1).................. -- -- -- -- 60,000 -- 85,000
------- ------- -------- -------- --------- -------- ---------
9,756 16,940 48,178 137,551 411,350 64,727 271,477
------- ------- -------- -------- --------- -------- ---------
Income (loss) from operations................... (1,464) (2,668) (9,547) (34,154) (163,451) (20,789) (134,691)
Interest expense................................ (844) (1,218) (13,767) (35,213) (60,662) (11,089) (49,301)
Interest and other income....................... 234 819 4,060 12,168 26,824 4,474 10,729
Income tax (provision) benefit.................. -- -- 97 -- -- -- --
------- ------- -------- -------- --------- -------- ---------
Loss before extraordinary item.................. (2,074) (3,067) (19,157) (57,199) (197,289) (27,404) (173,263)
Extraordinary loss on early extinguishment of
debt(2)....................................... -- -- (1,592) -- (43,834) -- --
------- ------- -------- -------- --------- -------- ---------
Net loss........................................ (2,074) (3,067) (20,749) (57,199) (241,123) (27,404) (173,263)
Preferred stock dividends and accretions........ -- -- -- -- (43,742) (3,375) (18,594)
------- ------- -------- -------- --------- -------- ---------
Net loss attributable to common stockholders.... $(2,074) $(3,067) $(20,749) $(57,199) $(284,865) $(30,779) $(191,857)
======= ======= ======== ======== ========= ======== =========
Basic and diluted loss per common share:
Loss before extraordinary item................ $ (0.15) $ (0.17) $ (0.96) $ (2.04) $ (7.23) $ (0.95) $ (5.44)
Extraordinary item(2)......................... -- -- (0.08) -- (1.32) -- --
------- ------- -------- -------- --------- -------- ---------
Basic and diluted loss per common share(3).... $ (0.15) $ (0.17) $ (1.04) $ (2.04) $ (8.55) $ (0.95) $ (5.44)
======= ======= ======== ======== ========= ======== =========
Weighted average number of shares
outstanding(3)................................ 14,154 17,912 20,072 28,018 33,340 32,594 35,306
======= ======= ======== ======== ========= ======== =========
OTHER DATA:
EBITDA(4)....................................... $ 1,556 $ 2,464 $ 649 $(14,138) $ (49,838) $(12,495) $ (9,827)
Capital expenditures including cash portion of
acquisitions.................................. $10,486 $13,731 $ 31,915 $143,615 $ 812,061 $ 33,333 $ 464,739
Book value per common share(3).................. $ 2.59 $ 2.70 $ 1.95 $ 3.51 $ (24.28) $ (6.63) $ (21.98)
Insufficiency of earnings to cover combined
fixed charges and preferred stock
dividends(5).................................. $ 2,288 $ 3,324 $ 19,834 $ 59,978 $ 245,685 $ 31,557 $ 193,825
</TABLE>
(Continued on following page)
28
<PAGE> 34
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
--------------------------------------------------------- ------------------------
1993 1994 1995 1996 1997 1997 1998
------- ------- ---------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
NETWORK DATA:
Buildings connected(6)............. 234 293 380 487 3,005 1,157 4,071
Route miles........................ 335 378 504 655 757 679 770
Fiber miles........................ 10,239 11,227 17,128 24,122 34,956 29,841 35,999
Number of city-based networks in
service.......................... 5 6 9 9 10 9 10
ENHANCED DATA SERVICES:
Nodes(7)........................... 100 900 2,300 9,777 20,209 12,447 22,789
Cities(8).......................... 37 336 600 2,266 4,104 2,526 4,146
Switches........................... 4 12 31 89 136 100 150
LOCAL AND LONG DISTANCE SERVICES:
Voice switches in operation........ -- 1 1 5 16 6 19
Long distance billable minutes..... -- -- 32,912,501 69,118,148 139,437,921 87,501,080 184,227,094
Access line equivalents............ -- -- -- 7,106 81,349 17,385 220,587
EMPLOYEES............................ 58 146 287 874 2,036 1,026 3,320
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------------------------- MARCH 31,
1993 1994 1995 1996 1997 1998
------- ------- -------- -------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents(9).............. $27,954 $10,208 $ 50,997 $189,546 $ 756,923 $ 335,260
Working capital(10)....................... 25,712 9,588 70,353 206,029 747,246 299,074
Total assets.............................. 61,219 74,086 216,018 512,940 1,874,970 2,425,755
Long-term debt (including current
maturities)............................. 11,613 16,526 165,545 358,507 1,252,343 1,741,552
Redeemable preferred stock................ -- -- -- -- 688,876 701,437
Total stockholders' equity (deficiency)... 45,987 52,033 40,254 114,230 (140,009) (184,993)
</TABLE>
- ---------------
(1) Represents a one time charge to earnings as a result of the write-off of
in-process research and development in connection with the acquisitions of
DIGEX and Shared in 1997 and the first quarter of 1998, respectively.
(2) The Company incurred extraordinary charges in 1995 and 1997 related to
early extinguishment of debt.
(3) Represents amounts after giving effect to a 2-for-1 stock split effected
through a stock dividend issued on June 15, 1998 to holders of record on
June 1, 1998.
(4) EBITDA consists of earnings (loss) before interest expense, interest and
other income, income tax (provision) benefit, depreciation, amortization
and non recurring charges (such as charges in 1997 and 1998 for in-process
R&D). EBITDA is presented since it is a measure commonly used in the
telecommunications industry to measure operating performance, asset value
and financial leverage. It is presented to enhance the reader's
understanding of the Company's operating results and is not intended to
present cash flow for the periods presented.
(5) For purposes of calculating the insufficiency of earnings to cover combined
fixed charges and preferred stock dividends: (i) earnings consist of loss
before income taxes, plus fixed charges excluding capitalized interest and
preferred stock dividends and (ii) fixed charges consist of interest
expensed and capitalized, plus amortization of deferred financing costs,
preferred stock dividends, plus a portion of rent expense under operating
leases deemed by the Company to represent an interest factor.
(6) Beginning in January 1997, Intermedia changed its definition of "Buildings
connected" to include buildings connected to Intermedia's network via
facilities leased by Intermedia in addition to those connected to
Intermedia's network via facilities constructed by Intermedia. Intermedia
believes the new definition is consistent with industry practice.
(7) Each node represents an individual point of origination and termination of
data served by the Company's enhanced data network. In the opinion of
management of the Company, the number of nodes reported is an accurate
representation of the quantity of enhanced data services provided.
(8) Represents the number of discrete postal cities to which enhanced data
services are provided by the Company.
(9) Cash and cash equivalents excludes investments of $26.7 million, $6.9
million and $7.5 million for the years ended December 31, 1996 and 1997 and
the quarter ended March 31, 1998, respectively, restricted under the terms
of various notes and other agreements.
(10) Working capital includes the restricted investments referred to in Note 9
above whose restrictions either lapse within one year or will be used to
pay current liabilities.
29
<PAGE> 35
BUSINESS
Intermedia is a rapidly growing integrated communications provider
delivering local, long distance and enhanced data services (including
Internet-related services) to business and government customers. Intermedia is
currently the largest domestic independent company among those companies
generally referred to as competitive local exchange carriers (based upon
annualized telecommunications services revenues and assuming the closing of the
announced transaction between AT&T and Teleport Communications Group, Inc.) and
is also the largest provider of shared tenant telecommunications services in the
United States. As a tier-one Internet services provider and the fourth largest
(based on number of nodes) frame relay provider in the United States, Intermedia
is also a leading provider of enhanced data services to business and government
customers. Intermedia provides services to its customers throughout the United
States and in selected international markets through a combination of owned and
leased network facilities. As an ICP with over 10 years experience focusing on
business and government customers, Intermedia believes it is positioned to take
advantage of technical, regulatory and market dynamics which currently promote
demand for a fully integrated set of communications services.
As of May 21, 1998, Intermedia served approximately 95,000 business
customers and had over 560 quota carrying sales personnel operating in 81 cities
serviced by 102 Company sales offices. The Company's annualized first quarter
1998 pro forma revenues were $738.8 million. Intermedia's reported revenues have
grown from $14.3 million in 1994 to $247.9 million in 1997, representing a
compound annual growth rate of 158.8%.
Through a combination of acquisitions, leased infrastructure, expansion of
existing network and asset purchases, Intermedia continues to increase its
customer base and network density. Additionally, the Company continues to pursue
attractive opportunities to complement and support its existing network
infrastructure and service offerings and to expand into new geographic markets.
As of May 21, 1998, Intermedia's network infrastructure included over 238,000
access line equivalents in service, 20 voice switches, 150 data switches, 22,789
frame relay nodes, 433 NNIs, including NNIs with BellSouth, US West, Sprint,
GTE, Bell Atlantic and SNET, and approximately 36,000 miles of nationwide long
distance fiber facilities. This infrastructure is capable of delivering local,
long distance and enhanced data services (including frame relay, asynchronous
transfer mode and Internet services) and enabled Intermedia to address $34
billion of a $222 billion national market opportunity by the end of 1997. The
Company believes that at the end of 1998, its addressable market will be over
$90 billion. Management believes that continuing expansion will enable
Intermedia to (i) increase the size of its addressable market to reach a
significant number of new potential customers, (ii) achieve economies of scale
in network operations and sales and marketing and (iii) more effectively serve
customers having a presence in multiple metropolitan areas.
In order to capitalize on the significant increase in the Company's
addressable market, Intermedia has rapidly expanded, and intends to continue to
expand, its direct sales and support team consisting of highly skilled
engineering and sales professionals. The sales and support team has complete
product knowledge and technical, integration and program or project management
skills. This team approach promotes a close working relationship between
Intermedia and the customers' telecommunications, information services and user
constituencies. Intermedia believes such relationships enable it to sell more of
its services and maintain longer relationships with its customers. During the 16
month period commencing January 1, 1997 and ending April 30, 1998, Intermedia
increased the number of its sales offices from 21 to 102 and substantially
increased its engineering support personnel and sales representatives.
Intermedia believes that the continued deployment of its skilled end user
engineering support and sales teams will allow Intermedia to establish service
in new markets and gain a stronger competitive position in existing markets. By
focusing first on establishing customer relationships in both new and existing
markets, Intermedia believes it can subsequently deploy capital efficiently in
response to customer demand.
Intermedia expects to realize economies of scale on its intercity network:
(i) through the continued deployment of local/long distance voice switches to
serve its rapidly growing customer base, and (ii) by combining long distance
voice traffic between switches with intercity enhanced data and Internet
traffic. In addition, Intermedia plans to introduce a new class of voice
products which utilize data protocols to deliver
30
<PAGE> 36
voice traffic over Intermedia's Packet/Cell Switched Network. These services
will provide a competitive service offering to customers seeking a more cost
efficient and flexible alternative to voice services provided over traditional
circuit switched telecommunications networks. Intermedia believes that
Packet/Cell Switched Networks, such as its own, will displace a significant
portion of the national telecommunications market that is currently served over
traditional circuit switched networks. Intermedia believes this new service
offering, when implemented, will accelerate its penetration of the traditional
voice services market and provide improved returns on its network investment.
Enhanced data services, such as those provided over Intermedia's ATM and
frame relay network, include specialized communications services for customers
needing to transport various forms of digital data among multiple locations. An
important category of Intermedia's enhanced data services are its Internet
services, both access to the Internet and various Web hosting and Web site
management services. These Internet services are regularly delivered over
Intermedia's ATM and frame relay network. According to industry sources, the
frame relay services market is projected to grow from $1.3 billion in 1996 to
$2.7 billion in 1999 and Internet Web site management services are estimated to
grow from $450 million in 1997 to $7 billion in 2002. There can be no assurance
that such market growth will be realized or that the assumptions underlying such
projections are reliable. While Intermedia has historically concentrated its
enhanced data sales in the eastern half of the United States, Intermedia is
currently the fourth largest national provider of frame relay networking
services (based on number of nodes) after AT&T, MCI combined with WorldCom and
Sprint. To satisfy its customers' desire for end-to-end enhanced data services
(both networking and Internet services) from a single provider, Intermedia has
deployed its network and made interconnection arrangements with other providers
to offer national and international service.
Intermedia's mission is to become the premier provider of communications
services to business and government customers. Intermedia believes its target
customers have sophisticated communications services requirements, including the
need for reliable network infrastructure, high quality, solutions-oriented and
responsive customer service and continuous focus on service enhancements and new
service development. Intermedia believes it has multiple advantages over its
competitors in serving its targeted customer base as a result of the Company's:
(i) specialized sales and service approach employing engineering and sales
professionals who design and implement integrated, cost-effective
telecommunications solutions; (ii) expertise in developing and operating a
highly reliable, advanced digital fiber optic network offering substantial
transmission capacity for the provision of a full suite of "all distance"
communications services; (iii) emphasis on providing solutions-oriented and
responsive customer service; (iv) network platform capable of servicing
customers throughout the United States and in selected international markets;
(v) network development plan designed to assure an efficient evolution from a
voice-oriented, circuit switched network to a Packet/Cell Switched Network; (vi)
ongoing development and integration of new telecommunications technologies into
its services, especially those technologies that allow the increasing
integration of voice and data applications onto a single Packet/Cell Switched
Network; (vii) ability to deliver local, long-distance and enhanced data
services over a network controlled from end-to-end by Intermedia; and (viii)
long-term contracts with building owners where the Company acts as a shared
tenant telecommunications services provider.
Over the past few years, a portion of Intermedia's growth has been
accomplished through acquisitions and other strategic ventures or selling
relationships. Intermedia continues to examine various acquisitions and other
strategic relationship proposals to accelerate its rate of growth. In addition
to financial considerations, Intermedia assesses each acquisition opportunity to
determine if it provides: (i) an established customer base to whom Intermedia
can cross-sell its other services, (ii) a greater network density in region or
provides needed network connectivity out of region, (iii) accelerated time to
market in a pre-defined target market, (iv) products and services that are
complementary to Intermedia's existing portfolio and (v) skilled staff,
particularly in sales and sales support. While management does not believe that
acquisitions are necessary to achieve Intermedia's strategic goals or to satisfy
its business plan, strategic alliances with or acquisitions of appropriate
companies may accelerate achievement of certain goals by creating financial and
operating synergies, and by providing for more rapid expansion of Intermedia's
network and services. Intermedia is currently evaluating various acquisitions
and strategic relationship opportunities. No assurance can be given that any
potential acquisition or strategic relationship will be consummated.
31
<PAGE> 37
Intermedia was incorporated in the state of Delaware on November 9, 1987,
as the successor to a Florida corporation that was founded in 1986. Intermedia's
principal offices are located at 3625 Queen Palm Drive, Tampa, Florida 33619 and
its telephone number is (813) 829-0011.
RECENT DEVELOPMENTS
US West and Ameritech Agreements. In January 1998, Intermedia entered into
a frame relay services agreement with US West. In May 1998, Intermedia entered
into a similar frame relay services agreement with Ameritech. Pursuant to these
agreements both US West and Ameritech will utilize Intermedia as its preferred
data provider for the provisioning of frame relay networking and Internet
services for all interLATA connections, both inside and outside US West's and
Ameritech's respective regions. The Company believes these agreements will bring
additional traffic onto Intermedia's network and will create cross-selling
opportunities in US West's 14 state territory (where Intermedia currently has no
selling activity) and in Ameritech's five state territory (where Intermedia
intends to substantially expand its selling activities). Intermedia has
undertaken discussions with other incumbent local exchange carriers, including
other regional Bell operating companies, with the intent of establishing similar
agreements, although there is no assurance such additional agreements will be
consummated.
1998 Acquisitions. In March 1998, Intermedia consummated the acquisition
of Shared. The total purchase price for Shared was approximately $769.3 million,
including certain transaction expenses and fees relating to certain agreements.
Shared is the nation's largest provider of shared telecommunications services
and systems. Through its technical infrastructure and 741 employees, Shared acts
as a single point of contact for business telecommunications services at
approximately 500 Class A office buildings throughout the United States and
Canada, and provides turnkey PBX and key system implementation and operation in
other buildings throughout the United States. Shared's revenues for the year
ended December 31, 1997 were approximately $181.8 million. This acquisition is
expected to enhance Intermedia's national presence in the telecommunications
market, enabling it to provide an integrated offering of local, long distance,
data and systems integration services to Shared's existing customer base of
approximately 12,800 customers.
Also in March 1998, Intermedia consummated the acquisition of LDS for
approximately $168.6 million including approximately $137.2 million in
Intermedia's Common Stock and $31.4 million in cash, of which $15.0 million was
used to retire LDS's long-term debt. LDS is an established regional
interexchange carrier, providing long distance services and Internet access to
more than 48,000 business customers and employing approximately 77 quota
carrying sales professionals in Louisiana, Texas, Oklahoma, Mississippi and
Florida. LDS's revenues for the year ended December 31, 1997 were approximately
$122.3 million. The acquisition of LDS provides a significant time-to-market
advantage in a region important to Intermedia's expansion, while also
contributing an experienced regional management team and established sales
organization. Because LDS's service portfolio and footprint complement those of
Intermedia, the Company believes that the acquisition of LDS also presents
significant synergy realization opportunities. By joining forces with an
established operating company having a staff of experienced sales, management
and technical personnel, Intermedia expects to consolidate its position in the
southern markets served by LDS.
In April 1998, Intermedia consummated the acquisition of National. The
total purchase price for National was approximately $151.8 million consisting of
approximately $88.7 million of Intermedia's Common Stock and $63.1 million in
cash, including debt repayment of $2.8 million. National is an emerging
switch-based CLEC and an established interexchange carrier, providing local
exchange and long distance voice services to approximately 11,000 business
customers concentrated in Florida's major metropolitan markets. National had
revenues of approximately $65.2 million for the year ended December 31, 1997.
Intermedia believes that the acquisition of National will help build critical
mass in the State of Florida, one of the top five telecommunications usage
states in the country, and provide an experienced team of sales professionals.
The Company has committed resources to develop and implement a program to
integrate its recently acquired businesses in order to realize maximum synergies
and future costs savings. In connection with the integration and realignment of
the Company's businesses and operating structure, Intermedia expects to
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<PAGE> 38
record a one-time charge later this year, the amount of which is subject to
finalization of a detailed restructuring program. The charge will be excluded
from the Company's EBITDA. Management believes that the implementation of this
program will enhance the Company's ability to realize the maximum synergies from
its acquisitions.
Williams Agreement. In March 1998, Intermedia signed a definitive
agreement with Williams to purchase nationwide transmission capacity on
Williams' fiber optic network. The 20 year indefeasible right of use provides
Intermedia with high capacity transport for its integrated voice and data
services, connecting major markets throughout the continental United States. The
agreement will immediately reduce Intermedia's unit cost for digital, intercity
transmission capacity. Initial implementation of the agreement is expected to
connect approximately 50 cities over the next 12 months, with additional cities
to follow. The capacity provided by Williams will become part of Intermedia's
nationwide network of self-healing rings, over which the Company will deliver
its integrated voice and data services.
Stock Split. On May 20, 1998, the Company announced a 2 for 1 split of its
Common Stock to be effected through a stock dividend payable on June 15, 1998 to
stockholders of record on June 1, 1998.
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<PAGE> 39
DESCRIPTION OF OUTSTANDING INDEBTEDNESS
In addition to the Old Notes, the Company has outstanding the following
indebtedness:
12 1/2% NOTES
The Company has outstanding an aggregate principal amount of $330.0 million
of 12 1/2% Notes, with an aggregate accreted value of $226.3 million as of March
31, 1998. 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 Existing Senior Notes and the 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 indenture governing the 12 1/2% Notes (the "12 1/2%
Notes Indenture") are substantially similar to the covenants in the other
Existing Senior Notes Indentures. 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 the 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
$649.0 million of 11 1/4% Notes, with an aggregate accreted value of $405.8
million as of March 31, 1998. 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 Existing Senior Notes and the Notes,
and rank senior to any future subordinated indebtedness. In the event of a
change of control of the Company prior to July 15, 2002, holders of the 11 1/4%
Notes have the right to require the Company to repurchase their 11 1/4% Notes,
in whole or in part, at a price equal to 101% of the accreted value thereof or,
in the case of any such purchase on or after July 15, 2002, at 101% of the
principal amount thereof, plus accrued and unpaid interest, if any, to the date
of purchase.
The covenants in the indenture governing the 11 1/4% Notes (the "11 1/4%
Notes Indenture") are substantially similar to the covenants in the other
Existing Senior Notes Indentures. The 11 1/4% Notes Indenture contains certain
covenants that, among other things, limit the ability of the Company and its
34
<PAGE> 40
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 the 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 $260.3 million
of 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 commencing May 1, 1998, 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 Existing Senior Notes and the 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 indenture governing the 8 7/8% Notes (the "8 7/8%
Notes Indenture") are substantially similar to the covenants in the other
Existing Senior Notes Indentures. 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 the 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 $400.0 million
of 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 commencing July 15, 1998, at a rate of 8 1/2% per annum. The 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 Existing Senior Notes and the 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 indenture governing the 8 1/2% Notes (the "8 1/2%
Notes Indenture") are substantially similar to the covenants in the other
Existing Senior Notes Indenture (except that certain of the covenants in the
8 1/2% Notes Indenture are less restrictive to the Company than those contained
in the other indentures,
35
<PAGE> 41
including with respect to restricted payments and incurrence of indebtedness by
the Company). 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 the 8 1/2% 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 March 31, 1998, the Company had outstanding approximately $448.0
million aggregate principal amount of capital lease obligations arising
primarily from 73 agreements for leases of fiber optic cable used in various of
the Company's networks. The effective interest rates under these agreements
range from 6.0% to 19.4% and expire, subject to various Intermedia renewal
options, from 2001 to 2018.
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<PAGE> 42
DESCRIPTION OF THE SENIOR NOTES
GENERAL
Set forth below is a summary of certain provisions of the Senior Notes. The
Senior Notes, like the Old Notes, will be issued pursuant to an Indenture, dated
May 27, 1998 (the "Indenture"), between the Company and SunTrust Bank, Central
Florida, National Association, as trustee (the "Trustee"), a copy of which has
been filed as an exhibit to the Registration Statement of which this Prospectus
is a part. The terms of the Senior Notes include those stated in the Indenture
and those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"). The Senior Notes are subject to
all such terms, and holders of Senior Notes are referred to the Indenture and
the Trust Indenture Act for a statement thereof. The following summary of
certain provisions of the Indenture and the Note Registration Rights Agreement
does not purport to be complete and is qualified in its entirety by reference to
the Indenture and the Note Registration Rights Agreement, including the
definitions therein of certain terms used below. A copy of the form of Indenture
and Note Registration Rights Agreement has been filed as a exhibit to the
Exchange Registration Statement of which this Prospectus is a part. The
definitions of certain terms used in the following summary are set forth below
under "-- Certain Definitions." As of the date hereof, none of the Company's
Subsidiaries are Unrestricted Subsidiaries. However, under certain
circumstances, the Company will be able to designate current or future
Subsidiaries as Unrestricted Subsidiaries. Unrestricted Subsidiaries will not be
subject to many of the restrictive covenants set forth in the Indenture. As used
in this section, the term "Company" refers only to Intermedia Communications
Inc. and not to its Subsidiaries. The terms of the Senior Notes are
substantially identical to the Old Notes in all material respects (including
interest rate and maturity), except that (i) the Senior Notes will not be
subject to the restrictions on transfer (other than with respect to holders who
are affiliates) and (ii) the Note Registration Rights Agreement covenants
regarding registration and the related Liquidated Damages (other than those that
have accrued and were not paid) with respect to Registration Defaults will have
been deemed satisfied.
RANKING
The Senior Notes will rank senior in right of payment to all subordinated
Indebtedness of the Company. The Senior Notes will rank pari passu in right of
payment with all existing and future senior borrowings, including the Existing
Senior Notes, the Old Notes and borrowings under a credit facility which may be
established by the Company. Holders of secured Indebtedness of the Company will,
however, have claims that are prior to the claims of the Holders of the Senior
Notes with respect to the assets securing such other Indebtedness.
Certain of the Company's operations are conducted through its Subsidiaries
and, therefore, the Company is dependent upon the cash flow of its Subsidiaries
to meet its obligations, including its obligations under the Senior Notes. The
Senior Notes will be effectively subordinated to all indebtedness and other
liabilities and commitments (including trade payables and lease obligations) of
the Company's Subsidiaries. Any right of the Company to receive assets of any of
its Subsidiaries upon the latter's liquidation or reorganization (and the
consequent right of the Holders of the Senior Notes to participate in those
assets) will be effectively subordinated to the claims of that Subsidiary's
creditors, except to the extent that the Company is itself recognized as a
creditor of such Subsidiary, in which case the claims of the Company would still
be subordinate to any security in the assets of such Subsidiary and any
indebtedness of such Subsidiary senior to that held by the Company. As of March
31, 1998, on a pro forma basis after giving effect to the May Offering and the
acquisition of National, the Company would have had approximately $2.4 billion
of senior indebtedness outstanding, including trade payables outstanding, which
includes approximately $148.9 million of indebtedness and other liabilities of
the Company's Subsidiaries.
PRINCIPAL, MATURITY AND INTEREST
The Senior Notes are limited in aggregate principal amount to $500.0
million and will mature on June 1, 2008. Interest on the Senior Notes will
accrue at a rate of 8.60% per annum and will be payable semi-annually in arrears
on June 1 and December 1 of each year, commencing on December 1, 1998, to
holders of record on
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<PAGE> 43
the immediately preceding May 15 and November 15. Interest on the Senior Notes
will accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from the Issue Date. Interest will be computed on the
basis of a 360-day year comprised of twelve 30-day months. The Senior Notes will
be issued, in denominations of $1,000 and integral multiples thereof.
OPTIONAL REDEMPTION
Prior to June 1, 2003, the Senior Notes will be subject to redemption at
any time at the option of the Company, in whole or in part, upon not less than
30 nor more than 60 days' notice, at the Make-Whole Price, plus accrued and
unpaid interest and Liquidated Damages, if any, thereon to the applicable
redemption date. On or after June 1, 2003, the Senior Notes will be subject to
redemption at the option of the Company, in whole or in part, upon not less than
30 nor more than 60 days' notice, at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest and Liquidated Damages, if any, thereon to the applicable redemption
date, if redeemed during the twelve-month period beginning on June 1 of the
years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---- ----------
<S> <C>
2003........................................................ 104.300%
2004........................................................ 102.867
2005........................................................ 101.433
2006 and thereafter......................................... 100.000%
</TABLE>
Notwithstanding the foregoing, in the event of the sale by the Company
prior to June 1, 2001 of its Capital Stock (other than Disqualified Stock) (i)
to a Strategic Investor in a single transaction or series of related
transactions for an aggregate purchase price equal to or exceeding $50.0 million
or (ii) in one or more Public Offerings (each of clauses (i) and (ii), a
"Qualified Equity Offering"), up to a maximum of 25% of the aggregate principal
amount of the Notes originally issued will, at the option of the Company, be
redeemable from the net cash proceeds of such sale or sales (but only to the
extent such proceeds consist of cash or readily marketable cash equivalents
received in respect of the Capital Stock, other than Disqualified Stock, so
sold) at a redemption price equal to 108.60% of the principal amount thereof
plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the
redemption date, provided that at least 75% of the aggregate principal amount of
the Notes originally issued remains outstanding immediately after the occurrence
of such redemption and that such redemption occurs within 90 days of the date of
the closing of each such sale.
MANDATORY REDEMPTION
The Company will not be required to make mandatory redemption or sinking
fund payments with respect to the Senior Notes.
OFFER TO PURCHASE UPON CHANGE OF CONTROL
Upon the occurrence of a Change of Control, the Company will be required to
make an offer (the "Change of Control Offer") to each holder of Senior Notes to
repurchase all or any part (equal to $1,000 or an integral multiple thereof) of
such holder's Senior Notes at a purchase price equal to 101% of the aggregate
principal amount thereof plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the date of purchase (the "Change of Control
Payment"). The Change of Control Offer must be commenced within 30 days
following a Change of Control, must remain open for at least 30 and not more
than 40 days (unless required by applicable law) and must comply with the
requirements of Rule 14e-1 under the Exchange Act and any other applicable
securities laws and regulations.
Except as described above with respect to a Change of Control, the
Indenture does not contain provisions that permit the holders of the Senior
Notes to require that the Company repurchase or redeem the Senior Notes in the
event of a takeover, recapitalization or similar transaction.
Due to the leveraged structure of the Company and the effective
subordination of the Senior Notes to secured Indebtedness of the Company and
Indebtedness of the Company's Subsidiaries, the Company may
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<PAGE> 44
not have sufficient funds available to purchase the Senior Notes tendered in
response to a Change of Control Offer. In addition, the Existing Senior Notes or
other agreements relating to Indebtedness of the Company's Subsidiaries may
contain prohibitions or restrictions on the Company's ability to effect a Change
of Control Payment.
The definition of Change of Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"
of the Company's assets. Although there is a developing body of case law
interpreting the phrase "substantially all," there is no precise established
definition of the phrase under applicable law. Accordingly, the ability of a
holder of Senior Notes to require the Company to repurchase such Senior Notes as
a result of a sale, lease, transfer, conveyance or other disposition of less
than all of the assets of the Company to another Person may be uncertain.
OFFER TO PURCHASE WITH EXCESS ASSET SALE PROCEEDS
When the cumulative amount of Excess Proceeds (as defined below under
"Certain Covenants -- Asset Sales") exceeds $10.0 million, the Company will make
an offer to all holders of Senior Notes and Pari Passu Notes (an "Excess
Proceeds Offer"), to purchase the maximum principal amount of Notes and Pari
Passu Notes that may be purchased out of such Excess Proceeds, at an offer price
in cash in an amount equal to 100% of the outstanding principal amount of the
Notes and 100% of the accreted value or 100% of the outstanding principal
amount, as applicable, of the Pari Passu Notes, plus accrued and unpaid interest
and Liquidated Damages thereon, if any, to the date fixed for the closing of
such offer, in accordance with the procedures specified in the Indenture.
If the aggregate principal amount and/or accreted value, as the case may
be, of Notes and Pari Passu Notes surrendered by holders thereof exceeds the
amount of Excess Proceeds, the Trustee will select the Notes and Pari Passu
Notes to be purchased on a pro rata basis. To the extent that the aggregate
amount of Notes and Pari Passu Notes tendered pursuant to an Excess Proceeds
Offer is less than the amount of Excess Proceeds, the Company may use such
deficiency for general purposes. Upon completion of an Excess Proceeds Offer,
the amount of Excess Proceeds will be reset at zero.
SELECTION OF NOTES FOR REDEMPTION OR OFFERS TO PURCHASE
If less than all of the Notes are to be redeemed or to be purchased
pursuant to any purchase offer required under the Indenture at any time,
selection of Senior Notes for redemption or purchase will be made by the Trustee
in compliance with the requirements of the principal national securities
exchange, if any, on which the Senior Notes are listed, or, if the Senior Notes
are not so listed, on a pro rata basis, by lot or by such method as the Trustee
shall deem fair and appropriate, provided that no Senior Notes with a principal
amount of $1,000 or less shall be redeemed or purchased in part. A new Senior
Note in principal amount equal to the unredeemed or unpurchased portion will be
issued in the name of the holder thereof upon cancellation of the original
Senior Note. On and after the redemption or purchase date, interest will cease
to accrue on the Senior Notes or portions of them called for redemption or
purchase.
NOTICE OF REDEMPTION
Notice of redemption shall be mailed by first class mail at least 30 but
not more than 60 days before the redemption date to each holder of Senior Notes
to be redeemed at its registered address. If any Senior Note is to be redeemed
in part only, the notice of redemption that relates to such Senior Note shall
state the portion of the principal amount to be redeemed.
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<PAGE> 45
CERTAIN COVENANTS
Restricted Payments
The Indenture provides that the Company and its Subsidiaries may not,
directly or indirectly:
(i) declare or pay any dividend or make any distribution on account of
any Equity Interests of the Company or any of its Subsidiaries other than
dividends or distributions payable (A) in Equity Interests of the Company
that are not Disqualified Stock or (B) to the Company or any Subsidiary;
(ii) purchase, redeem, defease, retire or otherwise acquire for value
("Retire" and correlatively, a "Retirement") any Equity Interests of the
Company or any of its Subsidiaries or other Affiliate of the Company (other
than any such Equity Interests owned by the Company or any Subsidiary);
(iii) Retire for value any Indebtedness of (A) the Company that is
subordinate in right of payment to the Senior Notes or (B) any Subsidiary,
except, with respect to clause (A) or (B) above, at final maturity or in
accordance with the mandatory redemption or repayment provisions set forth
in the original documentation governing such Indebtedness; or
(iv) make any Restricted Investment (all such payments and other
actions set forth in clauses (i) through (iv) above being collectively
referred to as "Restricted Payments"), unless, at the time of such
Restricted Payment:
(a) no Default or Event of Default has occurred and is continuing
or would occur as a consequence thereof;
(b) after giving effect to such Restricted Payment on a pro forma
basis as if such Restricted Payment had been made at the beginning of
the applicable four-quarter period, the Company could incur at least
$1.00 of additional Indebtedness pursuant to the Consolidated Cash Flow
Leverage Ratio test described under "-- Incurrence of Indebtedness and
Issuance of Disqualified Stock;" and
(c) such Restricted Payment, together with the aggregate of all
other Restricted Payments made by the Company and its Subsidiaries after
the Issue Date (including any Restricted Payments made pursuant to
clauses (i), (v) and (vi) of the next paragraph), is less than the sum
of
(w) 50% of the Consolidated Net Income of the Company for the
period (taken as one accounting period) from June 30, 1996 to the end
of the Company's most recently ended fiscal quarter for which
internal financial statements are available at the time of such
Restricted Payment (or, if such Consolidated Net Income for such
period is a deficit, less 100% of such deficit), plus
(x) 100% of the aggregate net cash proceeds received by the
Company from the issue or sale of Equity Interests of the Company or
of debt securities or Disqualified Stock of the Company that have
been converted into such Equity Interests (other than Equity
Interests (or convertible debt securities) sold to a Subsidiary of
the Company and other than Disqualified Stock or debt securities that
have been converted into Disqualified Stock) after June 30, 1996
(other than any such Equity Interests, the proceeds of which were
used as set forth in clauses (ii) and (viii) below) plus
(y) 100% of the sum of, without duplication, (1) aggregate
dividends or distributions received by the Company or any Subsidiary
from any Joint Venture (other than dividends or distributions to pay
any obligations of such Joint Venture to Persons other than the
Company or any Subsidiary, such as income taxes), with non-cash
distributions to be valued at the lower of book value or fair market
value as determined by the Board of Directors, (2) the amount of the
principal and interest payments received since the Issue Date by the
Company or any Subsidiary from any Joint Venture and (3) the net
proceeds from the sale of an Investment in a Joint Venture received
by the Company or any Subsidiary; provided that there is no
obligation to return any such amounts to the Joint Venture, and
excluding any such dividend, distribution,
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<PAGE> 46
interest payment or net proceeds that constitutes a return of capital
invested pursuant to clause (vi) of the next succeeding paragraph,
plus
(z) $10.0 million.
The foregoing provisions will not prohibit:
(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at such date of declaration such payment would have
complied with the provisions of the Indenture;
(ii) the Retirement of (A) any Equity Interests of the Company or any
Subsidiary of the Company, (B) Indebtedness of the Company that is
subordinate to the Senior Notes or (C) Indebtedness of a Subsidiary of the
Company, in exchange for, or out of the proceeds of the substantially
concurrent sale (other than to a Subsidiary of the Company) of, Equity
Interests of the Company (other than Disqualified Stock);
(iii) the Retirement of any Indebtedness of the Company subordinated
in right of payment to the Senior Notes in exchange for, or out of the
proceeds of the substantially concurrent Incurrence of Indebtedness of the
Company (other than Indebtedness to a Subsidiary of the Company), but only
to the extent that such new Indebtedness is permitted under the covenant
described below under the caption, "Incurrence of Indebtedness and Issuance
of Disqualified Stock" and (1) is subordinated in right of payment to the
Senior Notes at least to the same extent as, (2) has a Weighted Average
Life to Maturity at least as long as, and (3) has no scheduled principal
payments due in any amount earlier than, any equivalent amount of principal
under the Indebtedness so Retired;
(iv) the Retirement of any Indebtedness of a Subsidiary of the Company
in exchange for, or out of the proceeds of the substantially concurrent
incurrence of Indebtedness of the Company or any Subsidiary but only to the
extent that such incurrence is permitted under the covenant described below
under the caption "Incurrence of Indebtedness and Issuance of Disqualified
Stock" and only to the extent that such Indebtedness (1) is not secured by
any assets of the Company or any Subsidiary to a greater extent than the
Retired Indebtedness was so secured, (2) has a Weighted Average Life to
Maturity at least as long as the Retired Indebtedness and (3) if such
Retired Indebtedness was an obligation of the Company, is pari passu or
subordinated in right of payment to the Senior Notes at least to the same
extent as the Retired Indebtedness;
(v) the Retirement of any Equity Interests of the Company or any
Subsidiary of the Company held by any member of the Company's (or any of
its Subsidiaries') management pursuant to any management equity
subscription agreement or stock option agreement; provided that the
aggregate price paid for all such repurchased, redeemed, acquired or
retired Equity Interests shall not exceed $5.0 million in any twelve-month
period plus the aggregate cash proceeds received by the Company during such
twelve-month period from any reissuance of Equity Interests by the Company
to members of management of the Company and its Subsidiaries;
(vi) Investments in any Joint Venture; provided that at the time any
such Investment is made, such Investment will not cause the aggregate
amount of Investments at any one time outstanding under this clause (vi) to
exceed the greater of (x) $25 million and (y) 5% of the Total Common Equity
of the Company;
(vii) the payment of cash in lieu of fractional shares (a) payable as
dividends on Equity Interests of the Company or (b) issuable upon
conversion of or in exchange for securities convertible into or
exchangeable for Equity Interests of the Company or (c) issuable as a
result of a corporate reorganization, provided that, in the case of (a) and
(b), the issuance of such Equity Interests or securities and, in the case
of (c), such corporate reorganization, was permitted under the terms of the
Indenture; and
(viii) Investments with the net cash proceeds received by the Company
from the issue or sale of Equity Interests of the Company (other than
Disqualified Stock) after December 31, 1997;
41
<PAGE> 47
provided, however, that at the time of, and after giving effect to, any
Restricted Payment permitted under clauses (i), (ii), (iii), (iv), (v), (vi) and
(viii) no Default or Event of Default shall have occurred and be continuing.
The Indenture provides that a Permitted Investment that ceases to be a
Permitted Investment pursuant to the definition thereof, shall become a
Restricted Investment, deemed to have been made on the date that it ceases to be
a Permitted Investment.
The Board of Directors may designate any Subsidiary to be an Unrestricted
Subsidiary if such designation would not cause a Default or an Event of Default.
For purposes of making such determination, all outstanding Investments by the
Company and its Subsidiaries (except to the extent repaid in cash) in such
Subsidiary so designated will be deemed to be Restricted Payments at the time of
such designation and will reduce the amount available for Restricted Payments
under the first paragraph of this covenant. All such outstanding Investments
will be deemed to constitute Investments in an amount equal to the greatest of
(x) the net book value of such Investments at the time of such designation, (y)
the fair market value of such Investments at the time of such designation and
(z) the original fair market value of such Investments at the time they were
made. Such designation will only be permitted if such Restricted Payment would
be permitted at such time.
The Board of Directors of the Company may at any time designate any
Unrestricted Subsidiary to be a Subsidiary; provided that such designation shall
be deemed to be an incurrence of Indebtedness by a Subsidiary of the Company of
any outstanding Indebtedness of such Unrestricted Subsidiary and such
designation shall only be permitted if (i) such Indebtedness is permitted under
the covenant entitled "Incurrence of Indebtedness and Issuance of Disqualified
Stock," and (ii) no Default or Event of Default would be in existence following
such designation.
Not later than the date of making any Restricted Payment, the Company shall
deliver to the Trustee an Officers' Certificate stating that such Restricted
Payment is permitted and setting forth the basis upon which the calculations
required by the covenant "-- Restricted Payments" were computed, which
calculations may be based upon the Company's latest available financial
statements.
Incurrence of Indebtedness and Issuance of Disqualified Stock
The Indenture provides that:
(i) the Company and its Subsidiaries may not, directly or indirectly,
create, incur, issue, assume, guarantee or otherwise become directly or
indirectly liable for the payment of (collectively, "incur" and,
correlatively, "incurred" and "incurrence") any Indebtedness (including,
without limitation, Acquired Debt) and
(ii) the Company and its Subsidiaries may not issue any Disqualified
Stock,
provided, however, that the Company and/or any of its Subsidiaries may incur
Indebtedness (including, without limitation, Acquired Debt) or issue shares of
Disqualified Stock if, after giving effect to the incurrence of such
Indebtedness or the issuance of such Disqualified Stock, the Consolidated Cash
Flow Leverage Ratio for the Company's most recently ended four full fiscal
quarters for which internal financial statements are available immediately
preceding the date of such incurrence or issuance (A) does not exceed 5.5 to 1
if such incurrence or issuance occurs on or prior to June 1, 1999 and (B) does
not exceed 5.0 to 1 if such occurrence or issuance occurs after June 1, 1999, in
each case, determined on a pro forma basis (including a pro forma application of
the net proceeds therefrom), as if the additional Indebtedness had been
incurred, or the Disqualified Stock had been issued, as the case may be, at the
beginning of such four-quarter period. If the Company incurs any Indebtedness or
issues or redeems any Preferred Stock subsequent to the commencement of the
period for which such ratio is being calculated but prior to the event for which
the calculation of the ratio is made, then the ratio will be calculated giving
pro forma effect to any such incurrence of Indebtedness, or such issuance or
redemption of Preferred Stock, as if the same had occurred at the beginning of
the applicable period. In making such calculation on a pro forma basis, interest
attributable to Indebtedness
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<PAGE> 48
bearing a floating interest rate shall be computed as if the rate in effect on
the date of computation had been the applicable rate for the entire period.
The foregoing limitation will not apply to (with each exception to be given
independent effect):
(a) the incurrence by the Company and/or any of its Subsidiaries of
Indebtedness under the Credit Facility in an aggregate principal amount at
any one time outstanding (with letters of credit being deemed to have a
principal amount equal to the maximum potential liability of the Company
and/or any of its Subsidiaries thereunder) not to exceed $150.0 million in
the aggregate at any one time outstanding, less the aggregate amount of all
Net Proceeds of Asset Sales applied to permanently reduce the commitments
with respect to such Indebtedness pursuant to the covenant described above
under the caption "Asset Sales;"
(b) the incurrence by the Company and/or any of its Subsidiaries of
Vendor Indebtedness, provided that the aggregate amount of such Vendor
Indebtedness incurred does not exceed 80% of the total cost of the
Telecommunications Related Assets financed therewith (or 100% of the total
cost of the Telecommunications Related Assets financed therewith if such
Vendor Indebtedness was extended for the purchase of tangible physical
assets and was so financed by the vendor thereof or an affiliate of such
vendor);
(c) the incurrence by the Company and/or any of its Subsidiaries of
the Existing Indebtedness, including the Existing Senior Notes;
(d) the incurrence by the Company and/or any of its Subsidiaries of
Indebtedness in an aggregate amount not to exceed $50.0 million at any one
time outstanding;
(e) the incurrence by the Company of Indebtedness, but only to the
extent that such Indebtedness has a final maturity no earlier than, and a
Weighted Average Life to Maturity equal to or greater than, the final
maturity and Weighted Average Life to Maturity, respectively, of the Senior
Notes, in an aggregate principal amount not to exceed 2.0 times the net
cash proceeds received by the Company after June 30, 1996 from the issuance
and sale of Equity Interests of the Company (that are not Disqualified
Stock) plus the fair market value of Equity Interests (other than
Disqualified Stock) issued after June 30, 1996 in connection with any
acquisition of any Telecommunications Business;
(f) the incurrence (a "Permitted Refinancing") by the Company and/or
any of its Subsidiaries of Indebtedness issued in exchange for, or the
proceeds of which are used to refinance, replace, refund or defease
("Refinance" and correlatively, "Refinanced" and "Refinancing")
Indebtedness, other than Indebtedness incurred pursuant to clause (a)
above, but only to the extent that:
(1) the net proceeds of such Refinancing Indebtedness do not exceed
the principal amount of and premium, if any, and accrued interest on the
Indebtedness so Refinanced (or if such Indebtedness was issued at an
original issue discount, the original issue price plus amortization of
the original issue discount at the time of the repayment of such
Indebtedness) plus the fees, expenses and costs of such Refinancing and
reasonable prepayment premiums, if any, in connection therewith;
(2) the Refinancing Indebtedness shall have a final maturity no
earlier than, and a Weighted Average Life to Maturity equal to or
greater than, the final maturity and Weighted Average Life to Maturity
of the Indebtedness being Refinanced; and
(3) if the Indebtedness being Refinanced is subordinated in right
of payment to the Senior Notes, the Refinancing Indebtedness shall be
subordinated in right of payment to the Senior Notes on terms at least
as favorable to the holders of Senior Notes as those contained in the
documentation governing the Indebtedness being so Refinanced;
(g) the incurrence by the Company or any of its Subsidiaries of
intercompany Indebtedness between or among the Company and any of its
Subsidiaries; and
(h) the incurrence by the Company or any of its Subsidiaries of
Hedging Obligations that are incurred for the purpose of fixing or hedging
interest rate or foreign currency risk with respect to any floating rate
Indebtedness that is permitted by the terms of the Indenture to be
outstanding.
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For purposes of determining compliance with this covenant, in the event
that an item of Indebtedness, Disqualified Stock or Preferred Stock meets the
criteria of more than one of the categories described in clauses (a) through (h)
above or is entitled to be incurred pursuant to the first paragraph of this
covenant, the Company shall, in its sole discretion, classify such item in any
manner that complies with this covenant and such item will be treated as having
been incurred pursuant to only one of such clauses or pursuant to the first
paragraph herein. Accrual of interest or dividends, the accretion of accreted
value or liquidation preference and the payment of interest or dividends in the
form of additional Indebtedness, Common Stock or Preferred Stock will not be
deemed to be an incurrence of Indebtedness for purposes of this covenant.
Asset Sales
The Indenture provides that the Company and its Subsidiaries may not,
whether in a single transaction or a series of related transactions occurring
within any twelve-month period,
(i) sell, lease, convey, dispose or otherwise transfer any assets
(including by way of a Sale and Leaseback Transaction) other than sales,
leases, conveyances, dispositions or other transfers (A) in the ordinary
course of business, (B) to the Company by any Subsidiary of the Company or
from the Company to any Subsidiary of the Company, (C) that constitute a
Restricted Payment, Investment or dividend or distribution permitted under
the covenant described above under the caption "Restricted Payments" or (D)
that constitute the disposition of all or substantially all of the assets
of the Company pursuant to the covenant described below under the caption
"Merger, Consolidation or Sale of Assets" or
(ii) issue or sell Equity Interests in any of its Subsidiaries (other
than an issuance or sale of Equity Interests of any such Subsidiary to the
Company or a Subsidiary),
if, in the case of either (i) or (ii) above, in a single transaction or a series
of related transactions occurring within any twelve-month period, such assets or
securities
(x) have a Fair Market Value in excess of $2.0 million or
(y) are sold or otherwise disposed of for net proceeds in excess of
$2.0 million (each of the foregoing, an "Asset Sale"), unless:
(a) no Default or Event of Default exists or would occur as a
result thereof;
(b) the Company, or such Subsidiary, as the case may be,
receives consideration at the time of such Asset Sale at least equal
to the Fair Market Value (evidenced by a resolution of the Board of
Directors of the Company set forth in an Officers' Certificate
delivered to the Trustee), of the assets or securities issued or sold
or otherwise disposed of; and
(c) at least 75% of the consideration therefor received by the
Company or such Subsidiary is in the form of cash, provided, however,
that (A) the amount of (x) any liabilities (as shown on the Company's
or such Subsidiary's most recent balance sheet or in the notes
thereto), of the Company or any Subsidiary of the Company (other than
liabilities that are by their terms subordinated to the Senior Notes)
that are assumed by the transferee of any such assets and (y) any
notes, obligations or other securities received by the Company or any
such Subsidiary from such transferee that are immediately converted
by the Company or such Subsidiary into cash, shall be deemed to be
cash (to the extent of the cash received in the case of subclause
(y)) for purposes of this clause (c); and (B) an amount equal to the
Fair Market Value (determined as set forth in clause (b) above) of
(1) Telecommunications Related Assets received by the Company or any
such Subsidiary from the transferee that will be used by the Company
or any such Subsidiary in the operation of a Telecommunications
Business in the United States and (2) the Voting Stock of any Person
engaged in the Telecommunications Business in the United States
received by the Company or any such Subsidiary (provided that such
Voting Stock is converted to cash within 270 days or such Person
concurrently becomes or is a Subsidiary of the Company) will be
deemed to be cash for purposes of this clause (c).
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<PAGE> 50
The foregoing provisions will not apply to a sale, lease, conveyance or other
disposition of all or substantially all of the assets of the Company, which will
be governed by the provisions of the Indenture described below under "Merger,
Consolidation or Sale of Assets."
The Indenture also provides that within 360 days after the receipt of net
proceeds of any Asset Sale, the Company (or such Subsidiary, as the case may be)
may apply the Net Proceeds from such Asset Sale to (i) permanently reduce the
amounts permitted to be borrowed by the Company under the terms of any of its
Senior Indebtedness or (ii) the purchase of Telecommunications Related Assets or
Voting Stock of any Person engaged in the Telecommunications Business in the
United States (provided that such Person concurrently becomes a Subsidiary of
the Company). Any Net Proceeds from any Asset Sales that are not so applied or
invested will constitute "Excess Proceeds." When the aggregate amount of Excess
Proceeds exceeds $10.0 million, the Company will be required to make an Excess
Proceeds Offer in accordance with the terms set forth under "Offer to Purchase
with Excess Asset Sale Proceeds."
Liens
The Indenture provides that the Company and its Subsidiaries may not,
directly or indirectly, create, incur, assume or suffer to exist any Lien on any
asset now owned or hereafter acquired, or any income or profits therefrom or
assign or convey any right to receive income therefrom, except for Permitted
Liens.
Dividend and Other Payment Restrictions Affecting Subsidiaries
The Indenture provides that the Company and its Subsidiaries may not,
directly or indirectly, create or otherwise cause to become effective any
consensual encumbrance or restriction on the ability of any Subsidiary to:
(i) pay dividends or make any other distributions to the Company or
any of its Subsidiaries on its Capital Stock or with respect to any other
interest or participation in, or measured by, its profits, or pay any
Indebtedness owed to the Company or any of its Subsidiaries;
(ii) make loans or advances to the Company or any of its Subsidiaries;
or
(iii) transfer any of its properties or assets to the Company or any
of its Subsidiaries; except for such encumbrances or restrictions existing
as of the Issue Date or under or by reason of:
(a) Existing Indebtedness;
(b) applicable law;
(c) any instrument governing Acquired Debt as in effect at the time
of acquisition (except to the extent such Indebtedness was incurred in
connection with, or in contemplation of, such acquisition), which
encumbrance or restriction is not applicable to any Person, or the
properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired;
(d) by reason of customary non-assignment provisions in leases
entered into in the ordinary course of business and consistent with past
practices;
(e) Indebtedness in respect of a Permitted Refinancing, provided
that the restrictions contained in the agreements governing such
Refinancing Indebtedness are not materially more restrictive than those
contained in the agreements governing the Indebtedness being refinanced;
(f) with respect to clause (iii) above, purchase money obligations
for property acquired in the ordinary course of business, Vendor
Indebtedness incurred in connection with the purchase or lease of
Telecommunications Related Assets or performance bonds or similar
security for performance which liens securing such obligations do not
cover any asset other than the asset acquired or, in the case of
performance bonds or similar security for performance, the assets
associated with the Company's performance;
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(g) Indebtedness incurred under clause (a) of the covenant entitled
"Incurrence of Indebtedness and Issuance of Disqualified Stock;"
(h) the Indenture and the Senior Notes or future Indebtedness with
substantially similar restrictions, if any, to the Senior Notes; or
(i) in the case of clauses (a), (c), (e), (g) and (h) above, any
amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings thereof, provided
that such amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings are not materially
more restrictive with respect to such dividend and other payment
restrictions than those contained in such instruments as in effect on
the date of their incurrence or, if later, the Issue Date.
Merger, Consolidation or Sale of Assets
The Indenture provides that the Company may not consolidate or merge with
or into (whether or not the Company is the surviving entity), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
properties or assets in one or more related transactions to, another
corporation, Person or entity unless:
(i) the Company is the surviving entity or the entity or Person formed
by or surviving any such consolidation or merger (if other than the
Company) or to which such sale, assignment, transfer, lease, conveyance or
other disposition has been made is a corporation organized or existing
under the laws of the United States, any state thereof or the District of
Columbia;
(ii) the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company) or the entity or Person
to which such sale, assignment, transfer, lease, conveyance or other
disposition has been made assumes all the obligations of the Company under
the Senior Notes and the Indenture pursuant to a supplemental indenture in
form reasonably satisfactory to the Trustee;
(iii) immediately after such transaction no Default or Event of
Default exists;
(iv) except in connection with a Merger with or into a wholly owned
Subsidiary of the Company, the Company, or any entity or Person formed by
or surviving any such consolidation or merger, or to which such sale,
assignment, transfer, lease, conveyance or other disposition has been made,
at the time of such transaction after giving pro forma effect thereto as if
such transaction had occurred at the beginning of the applicable fiscal
quarter (including any Indebtedness incurred or anticipated to be incurred
in connection with or in respect of such transaction or series of
transactions), either (A) could incur at least $1.00 of additional
Indebtedness pursuant to the Consolidated Cash Flow Leverage Ratio test
described under "-- Incurrence of Indebtedness and Issuance of Disqualified
Stock" or (B) would have (x) Total Market Capitalization of at least $1.0
billion and (y) total Indebtedness (net of cash and cash equivalents that
are not restricted cash or restricted cash equivalents as reflected on the
Company's consolidated balance sheet as of the time of such event) in an
amount no greater than 40% of its Total Market Capitalization; and
(v) such transaction would not result in the loss, material impairment
or adverse modification or amendment of any authorization or license of the
Company or its Subsidiaries that would have a material adverse effect on
the business or operations of the Company and its Subsidiaries taken as a
whole.
Transactions with Affiliates
The Indenture provides that the Company and its Subsidiaries may not sell,
lease, transfer or otherwise dispose of any of their respective properties or
assets to, or purchase any property or assets from, or enter into
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any contract, agreement, understanding, loan, advance or guarantee with, or for
the benefit of, any Affiliate (each of the foregoing, an "Affiliate
Transaction"), unless:
(i) such Affiliate Transaction is on terms that are no less favorable
to the Company or the relevant Subsidiary than those that would have been
obtained in a comparable transaction by the Company or such Subsidiary with
an unrelated Person;
(ii) such Affiliate Transaction is approved by a majority of the
disinterested directors on the Board of Directors of the Company; and
(iii) the Company delivers to the Trustee, with respect to any
Affiliate Transaction involving aggregate payments in excess of $1.0
million, a resolution of a committee of independent directors of the
Company set forth in an Officers' Certificate certifying that such
Affiliate Transaction complies with clauses (i) and (ii) above;
provided that
(a) transactions pursuant to any employment, stock option or stock
purchase agreement entered into by the Company or any of its Subsidiaries,
or any grant of stock, in the ordinary course of business that are approved
by the Board of Directors of the Company,
(b) transactions between or among the Company and its Subsidiaries,
(c) transactions permitted by the provisions of the Indenture
described above under the covenant "-- Restricted Payments," and
(d) loans and advances to employees and officers of the Company or any
of its Subsidiaries in the ordinary course of business in an aggregate
principal amount not to exceed $1.0 million at any one time outstanding,
shall not be deemed Affiliate Transactions.
Use of Proceeds
The Indenture provides that the Company may use the gross proceeds from the
sale of the Old Notes only for the following purposes:
(i) to pay the fees and expenses of the issuance of the Old Notes
including any discount or commission to the Initial Purchasers of the Old
Notes;
(ii) with respect to any funds remaining after application under
clause (i) above, to fund up to 80% of the cost of the acquisition or
construction of Telecommunications Related Assets, or to the repayment of
the Existing Senior Notes.
Pending application of the proceeds in accordance with clause (ii) above,
the Company will deposit such proceeds into a segregated account in the
Company's name. The Company will deliver to the Trustee an Officer's Certificate
with each annual compliance certificate certifying that the amounts in such
account were applied in accordance with this covenant.
Business Activities
The Indenture provides that the Company and its Subsidiaries may not,
directly or indirectly, engage in any business other than the Telecommunications
Business.
Limitations on Sale and Leaseback Transactions
The Indenture provides that the Company and its Subsidiaries may not,
directly or indirectly, enter into, assume, Guarantee or otherwise become liable
with respect to any Sale and Leaseback Transaction, provided that the Company or
any Subsidiary of the Company may enter into any such transaction if (i) the
Company or such Subsidiary would be permitted under the covenants described
above under "-- Incurrence of Indebtedness and Issuance of Disqualified Stock"
and "-- Liens" to incur secured Indebtedness in an amount equal to the
Attributable Debt with respect to such transaction, (ii) the consideration
received by the
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Company or such Subsidiary from such transaction is at least equal to the Fair
Market Value of the property being transferred, and (iii) the Net Proceeds
received by the Company or such Subsidiary from such transaction are applied in
accordance with the covenant described above under the caption "-- Asset Sales."
Reports
The Indenture provides that the Company will file with the Trustee within
15 days after it files them with the Commission copies of the annual and
quarterly reports and the information, documents, and other reports that the
Company is required to file with the Commission pursuant to Section 13(a) or
15(d) of the Exchange Act (as defined) ("SEC Reports"). In the event the Company
is not required or shall cease to be required to file SEC Reports, pursuant to
the Exchange Act, the Company will nevertheless continue to file such reports
with the Commission (unless the Commission will not accept such a filing) and
the Trustee. Whether or not required by the Exchange Act to file SEC Reports
with the Commission, so long as any Senior Notes are outstanding, the Company
will furnish copies of the SEC Reports to the holders of Senior Notes at the
time the Company is required to file the same with the Trustee and make such
information available to investors who request it in writing. In addition, the
Company has agreed that, for so long as any Senior Notes remain outstanding, it
will furnish to the holders and to securities analysts and prospective
investors, upon their request, the information required to be delivered pursuant
to Rule 144A(d)(4) under the Securities Act.
Payments for Consents
The Indenture provides that neither the Company nor any of its Affiliates
shall, directly or indirectly, pay or cause to be paid any consideration,
whether by way of interest, fee or otherwise, to any holder of any Senior Notes
for or as an inducement to any consent, waiver or amendment of any of the terms
or provisions of the Indenture or the Senior Notes unless such consideration is
offered to be paid or agreed to be paid to all holders of the Notes that
consent, waive or agree to amend in the time frame set forth in the solicitation
documents relating to such consent, waiver or agreement.
EVENTS OF DEFAULT AND REMEDIES
The Indenture provides that each of the following constitutes an Event of
Default:
(i) default for 30 days in the payment when due of interest or
Liquidated Damages, if any, on the Notes;
(ii) default in payment when due of principal or premium, if any, on
the Notes at maturity, upon redemption or otherwise;
(iii) failure by the Company to perform or comply with the provisions
of the covenants described above under "-- Offer to Purchase Upon Change of
Control," "-- Asset Sales," "-- Restricted Payments," "-- Incurrence of
Indebtedness and Issuance of Disqualified Stock" or "-- Merger,
Consolidation or Sale of Assets;"
(iv) failure by the Company for 30 days after notice from the Trustee
or the holders of at least 25% in principal amount of the Notes then
outstanding to comply with its other agreements in the Indenture or the
Notes;
(v) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Subsidiaries
(or the payment of which is guaranteed by the Company or any of its
Subsidiaries), whether such Indebtedness or Guarantee now exists, or is
created after the Issue Date, which default (x) is caused by a failure to
pay when due principal, premium, if any, or interest on such Indebtedness
within the grace period provided in such Indebtedness (a "Payment
Default"), and the principal amount of any such Indebtedness, together with
the principal amount of any other such Indebtedness of the Company or any
Significant Subsidiary under which there has been a Payment Default or the
maturity of which has been accelerated as provided in clause (y),
aggregates $5.0 million or more or (y) results in the acceleration (which
acceleration has not been rescinded) of such Indebtedness prior to its
express
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maturity and the principal amount of any such Indebtedness, together with
the principal amount of any other such Indebtedness under which there has
been a Payment Default or the maturity of which has been so accelerated,
aggregates $5.0 million or more;
(vi) failure by the Company or any of its Significant Subsidiaries to
pay final judgments (other than any judgment as to which a reputable
insurance company has accepted full liability in writing) aggregating in
excess of $5.0 million which judgments are not paid, discharged or stayed
within 45 days after their entry; and
(vii) certain events of bankruptcy or insolvency with respect to the
Company or any of its Significant Subsidiaries.
If any Event of Default occurs and is continuing under the Indenture, the
Trustee or the holders of at least 25% in principal amount of the then
outstanding Notes may declare all the Notes to be due and payable immediately.
Upon such declaration, the principal of, premium, if any, and accrued and unpaid
interest and Liquidated Damages, if any, on the Senior Notes shall be due and
payable immediately. Notwithstanding the foregoing, in the case of an Event of
Default arising from certain events of bankruptcy or insolvency with respect to
the Company or any of its Significant Subsidiaries, the foregoing amount shall
ipso facto become due and payable without further action or notice. No premium
is payable upon acceleration of the Senior Notes except that in the case of an
Event of Default that is the result of an action or inaction by the Company or
any of its Subsidiaries intended to avoid restrictions on or premiums related to
redemptions of the Senior Notes contained in the Indenture or the Senior Notes.
The amount declared due and payable will include the premium that would have
been applicable on a voluntary prepayment of the Senior Notes. Holders of the
Senior Notes may not enforce the Indenture or the Senior Notes except as
provided in the Indenture. Subject to certain limitations, holders of a majority
in principal amount of the then outstanding Notes may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from holders of the
Senior Notes notice of any continuing Default or Event of Default (except a
Default or Event of Default relating to the payments of principal or interest)
if it determines that withholding notice is in such holders' interest.
The holders of a majority in aggregate principal amount of the Notes then
outstanding, by notice to the Trustee, may on behalf of the holders of all of
the Notes, waive any existing Default or Event of Default and its consequences
under the Indenture, except a continuing Default or Event of Default in the
payment of interest or Liquidated Damages or premium on, or the principal of,
the Notes.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required upon
becoming aware of any Default or Event of Default to deliver to the Trustee a
statement specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF PARTNERS, DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of the Company,
as such, shall have any liability for any obligations of the Company under the
Senior Notes or the Indenture or for any claim based on, in respect of, or by
reason of such obligations or their creation. Each holder of Senior Notes by
accepting a Senior Note waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Senior Notes. Such
waiver may not be effective to waive liabilities under the federal securities
laws and it is the view of the Commission that such a waiver is against public
policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have its
obligations discharged with respect to the outstanding Senior Notes ("Legal
Defeasance"). Such Legal Defeasance means that the Company shall be deemed to
have paid and discharged the entire indebtedness represented by the outstanding
Senior Notes, except for:
(a) the rights of holders of outstanding Senior Notes to receive from
the trust described below payments in respect of the principal of, premium,
if any, and interest on and Liquidated Damages with respect to such Senior
Notes when such payments are due, or on the redemption date, as the case
may be;
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(b) the Company's obligations with respect to the Senior Notes
concerning issuing temporary Senior Notes, registration of Senior Notes,
mutilated, destroyed, lost or stolen Senior Notes and the maintenance of an
office or agency for payment and money for security payments held in trust;
(c) the rights, powers, trust, duties and immunities of the Trustee,
and the Company's obligations in connection therewith; and
(d) the Legal Defeasance provisions of the Indenture.
In addition, the Company may, at its option and at any time, elect to have
the obligations of the Company released with respect to certain covenants that
are described in the Indenture ("Covenant Defeasance") and thereafter any
omission to comply with such obligations shall not constitute a Default or Event
of Default with respect to the Senior Notes. In the event Covenant Defeasance
occurs, certain events (not including non payment, bankruptcy, receivership,
rehabilitation and insolvency events) described under "Events of Default" will
no longer constitute an Event of Default with respect to the Senior Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance:
(i) the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the holders of the Senior Notes, cash in U.S. dollars,
non-callable U.S. government obligations, or a combination thereof, in such
amounts as will be sufficient, in the opinion of a nationally recognized
firm of independent public accountants selected by the Company, to pay the
principal of, premium, if any, and interest on the outstanding Senior
Notes, on the stated maturity or on the applicable optional redemption
date, as the case may be, of such principal or installment of principal of,
premium, if any, or interest on or Liquidated Damages with respect to the
outstanding Senior Notes;
(ii) in the case of Legal Defeasance, the Company must deliver to the
Trustee an opinion of counsel in the United States reasonably acceptable to
the Trustee confirming that (A) the Company has received from, or there has
been published by, the Internal Revenue Service a ruling or (B) since the
Issue Date, there has been a change in the applicable federal income tax
law, in either case to the effect that, and based thereon such opinion of
counsel shall confirm that, the holders of the outstanding Senior Notes
will not recognize income, gain or loss for federal income tax purposes as
a result of such Legal Defeasance and will be subject to federal income tax
on the same amounts, in the same manner and at the same times as would have
been the case if such Legal Defeasance had not occurred;
(iii) in the case of Covenant Defeasance, the Company must deliver to
the Trustee an opinion of counsel in the United States reasonably
acceptable to the Trustee confirming that the holders of the outstanding
Senior Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Covenant Defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not
occurred;
(iv) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of
Default resulting from the borrowing of funds to be applied to such
deposit) or insofar as Events of Default from bankruptcy or insolvency
events are concerned, at any time in the period ending on the 91st day
after the date of deposit;
(v) such Legal Defeasance or Covenant Defeasance will not result in a
breach or violation of, or constitute a default under any material
agreement or instrument (other than the Indenture) to which the Company or
any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound;
(vi) the Company must have delivered to the Trustee an opinion of
counsel to the effect that after the 91st day (or such other applicable
date) following the deposit, the trust funds will not be subject to the
effect of any applicable bankruptcy, insolvency, reorganization or similar
laws affecting creditors' rights generally;
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(vii) the Company must deliver to the Trustee an Officers' Certificate
stating that the deposit was not made by the Company with the intent of
preferring the holders of Senior Notes over the other creditors of the
Company with the intent of defeating, hindering, delaying or defrauding
creditors of the Company or others; and
(viii) the Company must deliver to the Trustee an Officers'
Certificate and an opinion of counsel, each stating that all conditions
precedent provided for relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
TRANSFER AND EXCHANGE
A holder may transfer or exchange Senior Notes in accordance with the
Indenture. The Registrar and the Trustee may require a holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company is not required to transfer or exchange
any Senior Note selected for redemption. Also, the Company is not required to
transfer or exchange any Senior Note for a period of 15 days before a selection
of Senior Notes to be redeemed.
The registered holder of a Senior Note will be treated as the owner of it
for all purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next succeeding paragraph, the Indenture or the
Senior Notes may be amended or supplemented with the consent of the holders of
at least a majority in principal amount of the Notes then outstanding (including
consents obtained in connection with a tender offer or exchange offer for
Notes), and any existing default or compliance with any provision of the
Indenture or the Senior Notes may be waived with the consent of the holders of a
majority in principal amount of the then outstanding Notes (including consents
obtained in connection with a tender offer or exchange offer for Notes).
Without the consent of each holder affected, however, an amendment or
waiver may not (with respect to any Senior Note held by a non-consenting
holder):
(i) reduce the principal amount of Notes whose holders must consent to
an amendment, supplement or waiver;
(ii) reduce the principal or change the fixed maturity of any Senior
Note or alter the provisions with respect to the redemption of the Senior
Notes (other than provisions relating to the covenants described under the
caption "-- Offer to Purchase upon Change of Control" and "-- Offer to
Purchase with Excess Asset Sale Proceeds");
(iii) reduce the rate of or change the time for payment of interest on
any Senior Notes;
(iv) waive a Default or Event of Default in the payment of principal
of or premium, if any, or interest on the Senior Notes (except a rescission
of acceleration of the Senior Notes by the holders of at least a majority
in aggregate principal amount of the Notes and a waiver of the payment
default that resulted from such acceleration);
(v) make any Senior Note payable in money other than that stated in
the Senior Notes;
(vi) make any change in the provisions of the Indenture relating to
waivers of past Defaults or the rights of holders of Senior Notes to
receive payments of principal of, premium, if any, or interest on the
Senior Notes;
(vii) waive a redemption payment with respect to any Senior Note
(other than a payment required by one of the covenants described above
under the captions "-- Offer to Purchase upon Change of Control" and "Offer
to Purchase with Excess Asset Sale Proceeds"); or
(viii) make any change in the foregoing amendment and waiver
provisions.
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Notwithstanding the foregoing, without the consent of any holder of Senior
Notes, the Company and the Trustee may amend or supplement the Indenture or the
Senior Notes:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Senior Notes in addition to or in
place of certificated Senior Notes;
(c) to provide for the assumption of the Company's obligations to
holders of the Senior Notes in the case of a merger or consolidation;
(d) to make any change that would provide any additional rights or
benefits to the holders of the Senior Notes or that does not adversely
affect the legal rights under the Indenture of any such holder; or
(e) to comply with requirements of the Commission in order to effect
or maintain the qualification of the Indenture under the Trust Indenture
Act.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the Trustee,
should the Trustee become a creditor of the Company, to obtain payment of claims
in certain cases, or to realize on certain property received in respect of any
such claim as security or otherwise. The Trustee is permitted to engage in other
transactions with the Company; however, if the Trustee acquires any conflicting
interest, it must eliminate such conflict within 90 days, apply to the
Commission for permission to continue as Trustee or resign.
The holders of a majority in principal amount of the then outstanding Notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event of Default
shall occur and be continuing, the Trustee will be required, in the exercise of
its powers, to use the degree of care of a prudent man in the conduct of his own
affairs. Subject to such provisions, the Trustee will be under no obligation to
exercise any of its rights or powers under the Indenture at the request of any
holder of Senior Notes, unless such holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense. No holder of any Senior Note will have any right to institute any
proceeding with respect to the Indenture or for any remedy thereunder, unless
(i) such holder gives to the Trustee written notice of a continuing Event of
Default, (ii) holders of at least 25% in principal amount of the then
outstanding Notes make a written request to pursue the remedy, (iii) such
holders of the Senior Notes provide to the Trustee satisfactory indemnity and
(iv) the Trustee does not comply within 60 days. Otherwise, no holder of any
Senior Note will have any right to institute any proceeding with respect to the
Indenture or for any remedy thereunder, except: (i) a holder of a Senior Note
may institute suit for enforcement of payment of the principal of and premium,
if any, or interest on such Senior Note on or after the respective due dates
expressed in such Senior Note (including upon acceleration thereof) or (ii) the
institution of any proceeding with respect to the Indenture or any remedy
thereunder, including without limitation acceleration, by the Holders of a
majority in principal amount of the outstanding Senior Notes, provided that,
upon institution of any proceeding or exercise of any remedy such Holders
provide the Trustee with prompt notice thereof.
REGISTRATION RIGHTS; LIQUIDATED DAMAGES
The Company and the Initial Purchasers entered into the Note Registration
Rights Agreement on May 27, 1998. Pursuant to the Note Registration Rights
Agreement, the Company agreed to file with the Commission the Exchange
Registration Statement of which this Prospectus forms a part with respect to the
Notes. Upon the effectiveness of the Exchange Registration Statement, the
Company will offer to the holders of Transfer Restricted Securities pursuant to
the Exchange Offer who are able to make certain representations the opportunity
to exchange their Transfer Restricted Securities for the Senior Notes. If (i)
the Company is not required to file the Exchange Registration Statement or
permitted to consummate the Exchange Offer because the Exchange Offer is not
permitted by applicable law or Commission policy or (ii) any holder of Transfer
Restricted Securities notifies the Company within the specified time period that
(A) it is prohibited by law or Commission policy from participating in the
Exchange Offer, (B) it may not resell the Senior Notes acquired by it in the
Exchange Offer to the public without delivering a prospectus and the prospectus
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contained in the Exchange Registration Statement is not appropriate or available
for such resales or (C) it is a broker-dealer and owns Old Notes acquired
directly from the Company or an affiliate of the Company, the Company will file
with the Commission a shelf registration statement (the "Shelf Registration
Statement") to cover resales of the Old Notes by the Holders thereof who satisfy
certain conditions relating to the provision of information in connection with
the Shelf Registration Statement. The Company will use its best efforts to cause
the applicable registration statement to be declared effective as promptly as
possible by the Commission. For purposes of the foregoing, "Transfer Restricted
Securities" means each Old Note until (i) the date on which such Old Note has
been exchanged by a Person other than a broker-dealer for a Senior Note in the
Exchange Offer, (ii) following the exchange by a broker-dealer in the Exchange
Offer of an Old Note for a Senior Note, the date on which such Senior Note is
sold to a purchaser who receives from such broker-dealer on or prior to the date
of such sale a copy of the prospectus contained in the Exchange Registration
Statement, (iii) the date on which such Note has been effectively registered
under the Securities Act and disposed of in accordance with the Shelf
Registration Statement or (iv) the date on which such Old Note is distributed to
the public pursuant to Rule 144 under the Act.
The Note Registration Rights Agreement provides that (i) the Company will
file the Exchange Registration Statement with the Commission on or prior to 60
days after May 27, 1998 (the "Closing Date"), (ii) the Company will use its best
efforts to have the Exchange Registration Statement declared effective by the
Commission on or prior to 120 days after the Closing Date, (iii) unless the
Exchange Offer would not be permitted by applicable law or Commission policy,
the Company will commence the Exchange Offer and use its best efforts to issue
on or prior to 30 business days after the date on which the Exchange
Registration Statement was declared effective by the Commission, Senior Notes in
exchange for all Old Notes tendered prior thereto in the Exchange Offer and (iv)
if obligated to file the Shelf Registration Statement, the Company will use its
best efforts to file the Shelf Registration Statement with the Commission on or
prior to 60 days after such filing obligation arises (and in any event within
150 days after the Closing Date) and to cause the Shelf Registration Statement
to be declared effective by the Commission on or prior to 90 days after such
obligation arises (and in any event within 240 days after the Closing Date). If
(a) the Company fails to file any of the registration statements required by the
Note Registration Rights Agreement on or before the date specified for such
filing, (b) any of such registration statements is not declared effective by the
Commission on or prior to the date specified for such effectiveness (the
"Effectiveness Target Date"), (c) the Company fails to consummate the Exchange
Offer within 30 business days of the Effectiveness Target Date with respect to
the Exchange Registration Statement, or (d) the Shelf Registration Statement or
the Exchange Registration Statement is declared effective but thereafter ceases
to be effective or usable in connection with resales of Transfer Restricted
Securities during the periods specified in the Note Registration Rights
Agreement, provided, that the Company will have the option of suspending the
effectiveness of the Shelf Registration Statement, without becoming obligated to
pay Liquidated Damages for periods of up to a total of 60 days in any calendar
year if the Board of Directors of the Company determines that compliance with
the disclosure obligations necessary to maintain the effectiveness of the Shelf
Registration Statement at such time could reasonably be expected to have an
adverse effect on the Company or a pending corporate transaction, (each such
event referred to in clauses (a) through (d) above a "Registration Default"),
then the Company will pay liquidated damages ("Liquidated Damages") to each
Holder of Transfer Restricted Securities, with respect to the first 90-day
period immediately following the occurrence of such Registration Default in an
amount equal to $.05 per week per $1,000 principal amount of Old Notes
constituting Transfer Restricted Securities held by such Holder. The amount of
the Liquidated Damages will increase by an additional $.05 per week per $1,000
principal amount of Old Notes constituting Transfer Restricted Securities with
respect to each subsequent 90-day period until all Registration Defaults have
been cured, up to a maximum amount of Liquidated Damages of $.50 per week per
$1,000 principal amount of Old Notes constituting Transfer Restricted
Securities. All accrued Liquidated Damages will be paid by the Company on each
Interest Payment Date to the holder of the Global Securities (as defined) by
wire transfer of immediately available funds or by federal funds check and to
Holders of Certificated Securities (as defined) by mailing checks to their
registered addresses. Following the cure of all Registration Defaults, the
accrual of Liquidated Damages will cease.
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Holders of Old Notes will be required to make certain representations to
the Company (as described in the Note Registration Rights Agreement) in order to
participate in the Exchange Offer and will be required to deliver information to
be used in connection with the Shelf Registration Statement and to provide
comments on the Shelf Registration Statement within the time periods set forth
in the Note Registration Rights Agreement in order to have their Old Notes
included in the Shelf Registration Statement and benefit from the provisions
regarding Liquidated Damages set forth above.
BOOK-ENTRY, DELIVERY AND FORM
Except as set forth in the next paragraph, the Senior Notes may be issued
in the form of one or more Global Securities (the "Global Securities"). The
Global Securities will be deposited on the Exchange Date with, or on behalf of,
The Depository Trust Company (the "Depositary") and registered in the name of
Cede & Co., as nominee of the Depositary (such nominee being referred to herein
as the "Global Holder").
Senior Notes that are issued as described below under "-- Certificated
Securities" will be issued in the form of registered definitive certificates
(the "Certificated Securities"). Upon the transfer of Certificated Securities,
such Certificated Securities may, unless the Global Securities have previously
been exchanged for Certificated Securities, be exchanged for an interest in the
Global Securities representing the principal amount of Senior Notes being
transferred.
The Depositary is a limited-purpose trust company that was created to hold
securities for its participating organizations (collectively, the "Participants"
or the "Depositary's Participants") and to facilitate the clearance and
settlement of transactions in such securities between Participants through
electronic book-entry changes in accounts of its Participants. The Depositary's
Participants include securities brokers and dealers (including the Initial
Purchasers), banks and trust companies, clearing corporations and certain other
organizations. Access to the Depositary's system is also available to other
entities such as banks, brokers, dealers and trust companies (collectively, the
"Indirect Participants" or the "Depositary's Indirect Participants") that clear
through or maintain a custodial relationship with a Participant, either directly
or indirectly. Persons who are not Participants may beneficially own securities
held by or on behalf of the Depositary only through the Depositary's
Participants or the Depositary's Indirect Participants.
The Company expects that pursuant to procedures established by the
Depositary (i) upon deposit of the Global Securities, the Depositary will credit
the accounts of Participants designated by the Exchange Agent with portions of
the principal amount of the Global Securities and (ii) ownership of the Senior
Notes evidenced by the Global Securities will be shown on, and the transfer of
ownership thereof will be effected only through, records maintained by the
Depositary (with respect to the interests of the Depositary's Participants), the
Depositary's Participants and the Depositary's Indirect Participants.
Prospective purchasers are advised that the laws of some states require that
certain persons take physical delivery in definitive form of securities that
they own. Consequently, the ability to transfer Senior Notes evidenced by the
Global Securities will be limited to such extent.
So long as the Global Holder is the registered owner of any Senior Notes,
the Global Holder will be considered the sole holder under the Indenture of any
Senior Notes evidenced by the Global Securities. Beneficial owners of Senior
Notes evidenced by the Global Securities will not be considered the owners or
holders thereof under the Indenture for any purpose, including with respect to
the giving of any directions, instructions or approvals to the Trustee
thereunder. Neither the Company nor the Trustee will have any responsibility or
liability for any aspect of the records of the Depositary or for maintaining,
supervising or reviewing any records of the Depositary relating to the Senior
Notes.
Payments in respect of the principal of, premium, if any, interest and
Liquidated Damages, if any, on any Senior Notes registered in the name of the
Global Holder on the applicable record date will be payable by the Trustee to or
at the direction of the Global Holder in its capacity as the registered holder
under the Indenture. Under the terms of the Indenture, the Company and the
Trustee may treat the persons in whose names Senior Notes, including the Global
Securities, are registered as the owners thereof for the purpose of receiving
such payments. Consequently, neither the Company nor the Trustee has or will
have any responsibility or liability for the payment of such amounts to
beneficial owners of Senior Notes. The Company believes, however, that
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it is currently the policy of the Depositary to immediately credit the accounts
of the relevant Participants with such payments, in amounts proportionate to
their respective holdings of beneficial interests in the relevant security as
shown on the records of the Depositary. Payments by the Depositary's
Participants and the Depositary's Indirect Participants to the beneficial owners
of the Senior Notes will be governed by standing instructions and customary
practice and will be the responsibility of the Depositary's Participants or the
Depositary's Indirect Participants.
CERTIFICATED SECURITIES
Subject to certain conditions, any person having a beneficial interest in
the Global Securities may, upon request to the Trustee, exchange such beneficial
interest for Senior Notes in the form of Certificated Securities. Upon any such
issuance, the Trustee is required to register such Certificated Securities in
the name of, and cause the same to be delivered to, such person or persons (or
the nominee of any thereof). In addition, if (i) the Company notifies the
Trustee in writing that the Depositary is no longer willing or able to act as a
depositary and the Company is unable to locate a qualified successor within 90
days or (ii) the Company, at its option, notifies the Trustee in writing that it
elects to cause the issuance of Senior Notes in the form of Certificated
Securities under the Indenture, then, upon surrender by the Global Holder of its
Global Security, Senior Notes in such form will be issued to each person that
the Global Holder and the Depositary identify as being the beneficial owner of
the related Senior Notes.
Neither the Company nor the Trustee will be liable for any delay by the
Global Holder or the Depositary in identifying the beneficial owners of Senior
Notes and the Company and the Trustee may conclusively rely on, and will be
protected in relying on, instructions from the Global Holder or the Depositary
for all purposes.
SAME DAY SETTLEMENT AND PAYMENT
The Indenture requires that payments in respect of the Senior Notes
represented by the Global Securities (including principal, premium, if any,
interest and Liquidated Damages, if any) be made by wire transfer of immediately
available funds to the accounts specified by the Global Holder. With respect to
Certificated Securities in certificated form, the Company will make all payments
of principal, premium, if any, interest and Liquidated Damages, if any, by wire
transfer of immediately available funds to the accounts specified by the holders
thereof or, if no such account is specified, by mailing a check to each such
holder's registered address. The Senior Notes represented by the Global
Securities are expected to be eligible to trade in the Depositary's Same-Day
Funds Settlement System, and any permitted secondary market trading activity in
such Senior Notes will, therefore, be required by the Depositary to be settled
in immediately available funds. The Company expects that secondary trading in
any Certificated Securities will also be settled in immediately available funds.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
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ownership of voting securities, by agreement or otherwise, provided, however,
that beneficial ownership of 25% or more of the voting securities of a Person
shall be deemed to be control.
"Attributable Debt" means, with respect to any Sale and Leaseback
Transaction, the present value at the time of determination (discounted at a
rate consistent with accounting guidelines, as determined in good faith by the
Company) of the payments during the remaining term of the lease (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended) or until the earliest date on which the lessee may
terminate such lease without penalty or upon payment of a penalty (in which case
the rental payments shall include such penalty), after excluding all amounts
required to be paid on account of maintenance and repairs, insurance, taxes,
assessments, water, utilities and similar charges.
"Beneficial Owner" means a beneficial owner as defined in Rules 13d-3 and
13d-5 under the Exchange Act (or any successor rules), including the provision
of such Rules that a Person shall be deemed to have beneficial ownership of all
securities that such Person has a right to acquire within 60 days; provided that
a Person will not be deemed a beneficial owner of, or to own beneficially, any
securities if such beneficial ownership (1) arises solely as a result of a
revocable proxy delivered in response to a proxy or consent solicitation made
pursuant to, and in accordance with, the Exchange Act and (2) is not also then
reportable on Schedule 13D or Schedule 13G (or any successor schedule) under the
Exchange Act.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be so required to be capitalized on the balance sheet in accordance
with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock and (iii) in the case of a partnership, partnership interests
(whether general or limited) and any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, such partnership.
"Change of Control" means the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition, in one or a series of
related transactions, of all or substantially all of the assets of the Company
and its Subsidiaries, taken as a whole, to any Person or group (as such term is
used in Section 13(d)(3) and 14(d)(2) of the Exchange Act), (ii) the adoption of
a plan relating to the liquidation or dissolution of the Company, (iii) any
Person or group (as defined above) is or becomes the Beneficial Owner, directly
or indirectly, of more than 50% of the total Voting Stock or Total Common Equity
of the Company, including by way of merger, consolidation or otherwise or (iv)
the first day on which a majority of the members of the Board of Directors of
the Company are not Continuing Directors.
"Closing Price" on any Trading Day with respect to the per share price of
any shares of Capital Stock means the last reported sale price regular way or,
in case no such reported sale takes place on such day, the average of the
reported closing bid and asked prices regular way, in either case on the New
York Stock Exchange or, if such shares of Capital Stock are not listed or
admitted to trading on such exchange, on the principal national securities
exchange on which such shares are listed or admitted to trading or, if not
listed or admitted to trading on any national securities exchange, on the Nasdaq
National Market or, if such shares are not listed or admitted to trading on any
national securities exchange or quoted on Nasdaq National Market but the issuer
is a Foreign Issuer (as defined in Rule 3b-4(b) under the Exchange Act) and the
principal securities exchange on which such shares are listed or admitted to
trading is a Designated Offshore Securities Market (as defined in Rule 902(a)
under the Securities Act), the average of the reported closing bid and asked
prices regular way on such principal exchange, or, if such shares are not listed
or admitted to trading on any national securities exchange or quoted on Nasdaq
National Market and the issuer and principal securities exchange do not meet
such requirements, the average of the closing bid and asked prices in the
over-the-counter market as furnished by any New York Stock Exchange member firm
that is selected from time to time by the Company for that purpose and is
reasonably acceptable to the Trustee.
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"Common Stock" of any Person means Capital Stock of such Person that does
not rank prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding up
of such Person, to shares of Capital Stock of any other class of such Person.
"Consolidated Cash Flow Leverage Ratio" with respect to any Person means
the ratio of the Consolidated Indebtedness of such Person to the Consolidated
EBITDA of such Person for the relevant period; provided, however, that (1) if
the Company or any Subsidiary of the Company has incurred any Indebtedness
(including Acquired Debt) or if the Company has issued any Disqualified Stock or
if any Subsidiary of the Company has issued any Preferred Stock since the
beginning of such period that remains outstanding on the date of such
determination or if the transaction giving rise to the need to calculate the
Consolidated Cash Flow Leverage Ratio is an incurrence of Indebtedness
(including Acquired Debt) or the issuance of Disqualified Stock by the Company,
Consolidated EBITDA and Consolidated Indebtedness for such period will be
calculated after giving effect on a pro forma basis to (A) such Indebtedness,
Disqualified Stock or Preferred Stock, as applicable, as if such Indebtedness
had been incurred or such stock had been issued on the first day of such period,
(B) the discharge of any other Indebtedness repaid, repurchased, defeased or
otherwise discharged with the proceeds of such new Indebtedness or sale of stock
as if such discharge had occurred on the first day of such period, and (C) the
interest income realized by the Company or its Subsidiaries on the proceeds of
such Indebtedness or of such stock sale, to the extent not yet applied at the
date of determination, assuming such proceeds earned interest at the rate in
effect on the date of determination from the first day of such period through
such date of determination, (2) if since the beginning of such period the
Company or any Subsidiary of the Company has made any sale of assets (including,
without limitation, any Asset Sales or pursuant to any Sale and Leaseback
Transaction), Consolidated EBITDA for such period will be (A) reduced by an
amount equal to Consolidated EBITDA (if positive) directly attributable to the
assets which are the subject of such sale of assets for such period or (B)
increased by an amount equal to Consolidated EBITDA (if negative) directly
attributable thereto for such period and (3) if since the beginning of such
period the Company or any Subsidiary of the Company (by merger or otherwise) has
made an Investment in any Subsidiary of the Company (or any Person which becomes
a Subsidiary of the Company) or has made an acquisition of assets, including,
without limitation, any acquisition of assets occurring in connection with a
transaction causing a calculation of Consolidated EBITDA to be made hereunder,
which constitutes all or substantially all of an operating unit of a business,
Consolidated EBITDA for such period will be calculated after giving pro forma
effect thereto (including the incurrence of any Indebtedness (including Acquired
Debt)) as if such Investment or acquisition occurred on the first day of such
period. For purposes of this definition, whenever pro forma effect is to be
given to an acquisition of assets, the pro forma calculations will be determined
in good faith by a responsible financial or accounting Officer of the Company,
provided, however, that such Officer shall assume (i) the historical sales and
gross profit margins associated with such assets for any consecutive 12-month
period ended prior to the date of purchase (provided that the first month of
such 12-month period will be no more than 18 months prior to such date of
purchase) and (ii) other expenses as if such assets had been owned by the
Company since the first day of such period. If any Indebtedness (including,
without limitation, Acquired Debt) bears a floating rate of interest and is
being given pro forma effect, the interest on such Indebtedness will be
calculated as if the rate in effect on the date of determination had been the
applicable rate for the entire period.
"Consolidated EBITDA" as of any date of determination means the
Consolidated Net Income for such period (but without giving effect to
adjustments, accruals, deductions or entries resulting from purchase accounting
extraordinary losses or gains and any gains or losses from any Asset Sales),
plus the following to the extent deducted in calculating such Consolidated Net
Income: (i) provision for taxes based on income or profits of such Person and
its Subsidiaries for such period, (ii) Consolidated Interest Expense, (iii)
depreciation, amortization (including amortization of goodwill and other
intangibles) and (iv) other non-cash charges (excluding any such non-cash charge
to the extent that it represents an accrual of or reserve for cash charges in
any future period or amortization of a prepaid cash expense that was paid in a
prior period and excluding non-cash interest and dividend income) of such Person
and its Subsidiaries for such period, in each case, on a consolidated basis and
determined in accordance with GAAP. Notwithstanding the foregoing, the provision
for taxes on the income or profits of, and the depreciation, amortization,
interest expense, and other non-cash charges of, a Subsidiary of the referent
Person shall be added to Consolidated Net Income to
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compute Consolidated EBITDA only to the extent (and in same proportion) that the
Net Income of such Subsidiary was included in calculating the Consolidated Net
Income of such Person and only if a corresponding amount would be permitted at
the date of determination to be dividended to the Company by such Subsidiary, or
loaned to the Company by any such Subsidiary, without prior approval (that has
not been obtained), pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to that Subsidiary or its stockholders.
"Consolidated Indebtedness" means, with respect to any Person, as of any
date of determination, the aggregate amount of Indebtedness of such Person and
its Subsidiaries as of such date calculated on a consolidated basis in
accordance with GAAP consistently applied.
"Consolidated Interest Expense" means, for any Person, for any period, the
aggregate of the following for such Person for such period determined on a
consolidated basis in accordance with GAAP: (a) the amount of interest in
respect of Indebtedness (including amortization of original issue discount,
amortization of debt issuance costs, and non-cash interest payments on any
Indebtedness, the interest portion of any deferred payment obligation and after
taking into account the effect of elections made under any Interest Rate
Agreement however denominated with respect to such Indebtedness), (b) the amount
of Redeemable Dividends (to the extent not already included in Indebtedness in
determining Consolidated Interest Expense for the relevant period) and (c) the
interest component of rentals in respect of any Capital Lease Obligation paid,
in each case whether accrued or scheduled to be paid or accrued by such Person
during such period to the extent such amounts were deducted in computing
Consolidated Net Income, determined on a consolidated basis in accordance with
GAAP. For purposes of this definition interest on a Capital Lease Obligation
shall be deemed to accrue at an interest rate reasonably determined by such
Person to be the rate of interest implicit in such Capital Lease Obligation in
accordance with GAAP consistently applied.
"Consolidated Net Income" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Subsidiaries for such
period, on a consolidated basis, determined in accordance with GAAP; provided
that:
(i) the Net Income of any Person that is not a Subsidiary or that is
accounted for by the equity method of accounting shall be included only to
the extent of the amount of dividends or distributions paid in cash to the
referent Person or a Subsidiary thereof,
(ii) the Net Income of any Subsidiary shall be excluded to the extent
that the declaration or payment of dividends or other distributions by that
Subsidiary of that Net Income is not at the date of determination permitted
without any prior governmental approval (which has not been obtained) or,
directly or indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Subsidiary or its stockholders,
(iii) the Net Income of any Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition shall be
excluded,
(iv) the cumulative effect of a change in accounting principles shall
be excluded, and
(v) the Net Income of any Unrestricted Subsidiary shall be excluded,
whether or not distributed to the Company or one of its Subsidiaries.
"Contingent Investment" means, with respect to any Person, any guarantee by
such Person of the performance of another Person or any commitment by such
Person to invest in another Person. Any Investment that consists of a Contingent
Investment shall be deemed made at the time that the guarantee of performance or
the commitment to invest is given, and the amount of such Investment shall be
the maximum monetary obligation under such guarantee of performance or
commitment to invest. To the extent that a Contingent Investment is released or
lapses without payment under the guarantee of performance or the commitment to
invest, such Investment shall be deemed not made to the extent of such release
or lapse. With respect to any Contingent Investment, the payment of the
guarantee of performance or the payment under the commitment to invest shall not
be deemed to be an additional Investment.
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"Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of the Company who (i) was a member of such Board of
Directors on the Issue Date or (ii) was nominated for election or elected to
such Board of Directors with the affirmative vote of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.
"Credit Facility" means any credit facility entered into by and among the
Company and one or more commercial banks or financial institutions, providing
for senior term or revolving credit borrowings of a type similar to credit
facilities typically entered into by commercial banks and financial
institutions, including any related notes, Guarantees, collateral documents,
instruments and agreements executed in connection therewith, as such credit
facility and related agreements may be amended, extended, refinanced, renewed,
restated, replaced or refunded from time to time.
"Default" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
"Disqualified Stock" means any Capital Stock to the extent that, and only
to the extent that, by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the option of the holder thereof,
in whole or in part, on or prior to the date on which the Senior Notes mature,
provided, however, that any Capital Stock which would not constitute
Disqualified Stock but for provisions thereof giving holders thereof the right
to require the Company to repurchase or redeem such Capital Stock upon the
occurrence of a Change of Control occurring prior to the final maturity of the
Senior Notes shall not constitute Disqualified Stock if the change in control
provisions applicable to such Capital Stock are no more favorable to the holders
of such Capital Stock than the provisions applicable to the Senior Notes
contained in the covenant described under "Offer to Purchase Upon a Change of
Control" and such Capital Stock specifically provides that the Company will not
repurchase or redeem any such stock pursuant to such provisions prior to the
Company's repurchase of such Senior Notes as are required to be repurchased
pursuant to the covenant described under "Offer to Purchase Upon Change of
Control."
"Eligible Institution" means a commercial banking institution that has
combined capital and surplus of not less than $500 million or its equivalent in
foreign currency, whose debt is rated "A" (or higher) according to S&P or
Moody's at the time as of which any investment or rollover therein is made.
"Eligible Receivable" means any Receivable not more than 90 days past due
under its scheduled payment terms.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock or that are measured by the value of Capital
Stock (but excluding any debt security that is convertible into or exchangeable
for Capital Stock).
"Exchange Act" means the Securities Exchange Act of 1934, as amended (or
any successor act), and the rules and regulations thereunder.
"Existing Indebtedness" means the Existing Senior Notes and all other
Indebtedness of the Company and its Subsidiaries in existence on the Issue Date.
"Existing Senior Notes" means the Company's 12 1/2% Senior Discount Notes
due 2006, the Company's 11 1/4% Senior Discount Notes due 2007, the Company's
8 7/8% Senior Notes due 2007 and the Company's 8 1/2% Senior Notes due 2008.
"Fair Market Value" means with respect to any asset or property, the sale
value that would be obtained in an arm's length transaction between an informed
and willing seller under no compulsion to sell and an informed and willing buyer
under no compulsion to buy.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other
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entity as may be approved by a significant segment of the accounting profession
of the United States, which are in effect on the Issue Date.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States is pledged.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Hedging Obligations" means, with respect to any Person, the obligations of
such Person under Interest Rate Agreements.
"Indebtedness" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or representing the balance
deferred and unpaid of the purchase price of any property (including pursuant to
capital leases) or representing any Hedging Obligations, except any such balance
that constitutes an accrued expense or trade payable, if and to the extent any
of the foregoing (other than Hedging Obligations or letters of credit) would
appear as a liability upon a balance sheet of such Person prepared in accordance
with GAAP, all indebtedness of others secured by a Lien on any asset of such
Person (whether or not such indebtedness is assumed by such Persons), all
obligations to purchase, redeem, retire, defease or otherwise acquire for value
any Disqualified Stock or any warrants, rights or options to acquire such
Disqualified Stock valued, in the case of Disqualified Stock, at the greatest
amount payable in respect thereof on a liquidation (whether voluntary or
involuntary) plus accrued and unpaid dividends, the liquidation value of any
Preferred Stock issued by Subsidiaries of such Person plus accrued and unpaid
dividends, and also includes, to the extent not otherwise included, the
Guarantee of items that would be included within this definition and any
amendment, supplement, modification, deferral, renewal, extension or refunding
of any of the above; notwithstanding the foregoing, in no event will performance
bonds or similar security for performance be deemed Indebtedness so long as such
performance bonds or similar security for performance would not appear as a
liability on a balance sheet of such Person prepared in accordance with GAAP;
and provided further, that the amount of any Indebtedness in respect of any
Guarantee shall be the maximum principal amount of the Indebtedness so
guaranteed.
"Interest Rate Agreements" means (i) interest rate swap agreements,
interest rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of loans,
Guarantees, Contingent Investments, advances or capital contributions (excluding
commission, travel and similar advances to officers and employees made in the
ordinary course of business), purchases or other acquisitions for consideration
of Indebtedness, Equity Interests or other securities of any other Person and
all other items that are or would be classified as investments on a balance
sheet prepared in accordance with GAAP; provided, however, that any investment
to the extent made with Capital Stock of the Company (other than Disqualified
Stock) shall not be deemed an "Investment" for purposes of the Indenture.
"Issue Date" means May 27, 1998.
"Joint Venture" means a Person in the Telecommunications Business in which
the Company holds less than a majority of the shares of Voting Stock or an
Unrestricted Subsidiary in the Telecommunications Business.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to
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give any financing statement under the Uniform Commercial Code (or equivalent
statutes) of any jurisdiction).
"Make-Whole Amount" means, with respect to any Senior Note, an amount equal
to the excess, if any, of (i) the present value of the remaining principal,
premium and interest payments that would be payable with respect to such Senior
Note if such Senior Note were redeemed on June 1, 2003, computed using a
discount rate equal to the Treasury Rate plus 50 basis points, over (ii) the
outstanding principal amount of such Senior Note.
"Make-Whole Average Life" means, with respect to any date of redemption of
Senior Notes, the number of years (calculated to the nearest one-twelfth) from
such redemption date to June 1, 2003.
"Make-Whole Price" means, with respect to any Senior Note, the greater of
(i) the sum of the principal amount of such Senior Note and the Make-Whole
Amount with respect to such Senior Note and (ii) the redemption price of such
Senior Note on June 1, 2003.
"Marketable Securities" means:
(i) Government Securities;
(ii) any certificate of deposit maturing not more than 270 days after
the date of acquisition issued by, or time deposit of, an Eligible
Institution;
(iii) commercial paper maturing not more than 270 days after the date
of acquisition issued by a corporation (other than an Affiliate of the
Company) with a rating at the time as of which any investment therein is
made, of "A-1" (or higher) according to S&P or "P-1" (or higher) according
to Moody's;
(iv) any banker's acceptances or money market deposit accounts issued
or offered by an Eligible Institution; and
(v) any fund investing exclusively in investments of the types
described in clauses (i) through (iv) above.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to Sale and Leaseback Transactions) or (b) the
disposition of any securities by such Person or any of its Subsidiaries or the
extinguishment of any Indebtedness of such Person or any of its Subsidiaries and
(ii) any extraordinary gain (but not loss), together with any related provision
for taxes on such extraordinary gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by the Company or
any of its Subsidiaries in respect of any Asset Sale, net of the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements), amounts required to be applied to the repayment of Indebtedness
secured by a Lien on the asset or assets that are the subject of such Asset Sale
and any reserve for adjustment in respect of the sale price of such asset or
assets. Net Proceeds shall exclude any non-cash proceeds received from any Asset
Sale, but shall include such proceeds when and as converted by the Company or
any Subsidiary of the Company to cash.
"Note Registration Rights Agreement" means the Note Registration Rights
Agreement between the Company and the Initial Purchasers in respect of the
Notes.
"Pari Passu Notes" means any notes issued by the Company which, by their
terms and the terms of any indenture governing such notes, have an obligation to
be repurchased by the Company upon the occurrence of an Asset Sale.
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"Permitted Investment" means (a) any Investments in the Company or any
Subsidiary of the Company; (b) any Investments in Marketable Securities; (c)
Investments by the Company or any Subsidiary of the Company in a Person, if as a
result of such Investment (i) such Person becomes a Subsidiary of the Company or
(ii) such Person is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is liquidated into,
the Company or a Subsidiary of the Company; (d) any Investments in property or
assets to be used in (A) any line of business in which the Company or any of its
Subsidiaries was engaged on the Issue Date or (B) any Telecommunications
Business; (e) Investments in any Person in connection with the acquisition of
such Person or substantially all of the property or assets of such Person by the
Company or any Subsidiary of the Company; provided that within 180 days from the
first date of any such Investment, either (A) such Person becomes a Subsidiary
of the Company or any of its Subsidiaries or (B) the amount of any such
Investment is repaid in full to the Company or any of its Subsidiaries; (f)
Investments pursuant to any agreement or obligation of the Company or a
Subsidiary, in effect on the Issue Date or on the date a Subsidiary becomes a
Subsidiary (provided that any such agreement was not entered into in
contemplation of such Subsidiary becoming a Subsidiary), to make such
Investments; (g) Investments in prepaid expenses, negotiable instruments held
for collection and lease, utility and workers' compensation, performance and
other similar deposits; (h) Hedging Obligations permitted to be incurred by the
covenant entitled "Incurrence of Indebtedness and Issuance of Preferred Stock;"
and (i) bonds, notes, debentures or other securities received as a result of
Asset Sales permitted under the covenant entitled "Asset Sales."
"Permitted Liens" means (i) Liens securing Indebtedness (including Capital
Lease Obligations) permitted to be incurred pursuant to clauses (a), (b) and (d)
of the second paragraph of the covenant entitled "Incurrence of Indebtedness and
Issuance of Preferred Stock;" (ii) Liens in favor of the Company; (iii) Liens on
property of a Person existing, at the time such Person is merged into or
consolidated with the Company or any Subsidiary of the Company; provided that
such Liens were in existence prior to the contemplation of such merger or
consolidation and do not extend to any assets other than those of the Person
merged into or consolidated with the Company; (iv) Liens on property existing at
the time of acquisition thereof by the Company or any Subsidiary of the Company,
provided that such Liens were in existence prior to the contemplation of such
acquisition; (v) Liens to secure the performance of statutory obligations,
surety or appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business; (vi) Liens existing, on the Issue
Date; (vii) Liens for taxes, assessments or governmental charges or claims that
are not yet delinquent or that are being contested in good faith by appropriate
proceedings timely instituted and diligently concluded, provided that any
reserve or other appropriate provision as shall be required in conformity with
GAAP shall have been made therefor; (viii) Liens incurred in the ordinary course
of business of the Company or any Subsidiary of the Company with respect to
obligations that do not exceed $5.0 million at any one time outstanding and that
(a) are not incurred in connection with the borrowing of money or the obtaining
of advances or credit (other than trade credit in the ordinary course of
business) and (b) do not in the aggregate materially detract from the value of
the property or materially impair the use thereof in the operation of business
by the Company or such Subsidiary; (ix) Liens on Telecommunications Related
Assets existing during the time of the construction thereof; (x) Liens on
Receivables to secure Indebtedness permitted to be incurred by the covenant
entitled "Incurrence of Indebtedness and Issuance of Preferred Stock," but only
to the extent that the outstanding amount of the Indebtedness secured by such
Liens would not represent more than 80% of Eligible Receivables; and (xi) Liens
to secure any Permitted Refinancing of any Indebtedness secured by Liens
referred to in the foregoing clauses (i), (iii), (v) or (x); but only to the
extent that such Liens do not extend to any other property or assets and the
principal amount of the Indebtedness secured by such Liens is not increased.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof or any other entity.
"Preferred Stock" as applied to the Capital Stock of any Person, means
Capital Stock of such Person of any class or classes (however designated) that
ranks prior, as to payment of dividends or as to the distribution
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of assets upon any voluntary or involuntary liquidation, dissolution or winding
up of such Person, to shares of Capital Stock of any other class of such Person.
"Public Offering" means an underwritten offering of Common Stock of the
Company registered under the Securities Act.
"Receivables" means, with respect to any Person, all of the following
property and interests in property of such person or entity, whether now
existing or existing in the future or hereafter acquired or arising: (i)
accounts; (ii) accounts receivable, including, without limitation, all rights to
payment created by or arising from sales of goods, leases of goods or the
rendition of services no matter how evidenced, whether or not earned by
performance; (iii) all unpaid seller's or lessor's rights including, without
limitation, rescission, replevin, reclamation and stoppage in transit, relating
to any of the foregoing after creation of the foregoing or arising therefrom;
(iv) all rights to any goods or merchandise represented by any of the foregoing,
including, without limitation, returned or repossessed goods; (v) all reserves
and credit balances with respect to any such accounts receivable or account
debtors; (vi) all letters of credit, security, or Guarantees for any of the
foregoing; (vii) all insurance policies or reports relating to any of the
foregoing; (viii) all collection of deposit accounts relating to any of the
foregoing; (ix) all proceeds of any of the foregoing; and (x) all books and
records relating to any of the foregoing.
"Redeemable Dividend" means, for any dividend with regard to Disqualified
Stock and Preferred Stock, the quotient of the dividend divided by the
difference between one and the maximum statutory federal income tax rate
(expressed as a decimal number between 1 and 0) then applicable to the issuer of
such Disqualified Stock or Preferred Stock.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Retire" means, with respect to any Indebtedness, to repay, redeem, refund,
purchase or otherwise to acquire for value, such Indebtedness. The terms
"Retired" and "Retirement" shall have correlative meanings.
"S & P" means, Standard and Poor's Corporation and its successors.
"Sale and Leaseback Transaction" means, with respect to any Person, any
direct or indirect arrangement pursuant to which any property (other than
Capital Stock) is sold by such Person or a Subsidiary of such Person and is
thereafter leased back from the purchaser or transferee thereof by such Person
or one of its Subsidiaries.
"Senior Indebtedness" means any Indebtedness permitted to be incurred by
the Company under the terms of the Indenture, unless the instrument under which
such Indebtedness is incurred expressly provides that it is subordinated in
right of payment to the Senior Notes. Notwithstanding anything to the contrary
in the foregoing, Senior Indebtedness will not include (i) any liability for
federal, state, local or other taxes owed or owing by the Company, (ii) any
Indebtedness of the Company to any of its Subsidiaries or other Affiliates,
(iii) any trade payables or (iv) any Indebtedness that is incurred in violation
of the Indenture.
"Significant Subsidiary" means any Subsidiary that would be a "Significant
Subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Act, as such Regulation is in effect on the date hereof.
"Strategic Investor" means, with respect to any sale of the Company's
Capital Stock, any Person which, both as of the Trading Day immediately before
the day of such sale and the Trading Day immediately after the day of such sale,
has, or whose parent has, a Total Market Capitalization of at least $1.0 billion
on a consolidated basis. In calculating Total Market Capitalization for the
purpose of this definition, the consolidated Indebtedness of such Person, solely
when calculated as of the Trading Day immediately after the day of such sale,
will be calculated after giving effect to such sale (including any Indebtedness
incurred in connection with such sale). For purposes of this definition, the
term parent means any Person of which the referent Strategic Investor is a
Subsidiary.
"Subsidiary" of any Person means (i) any corporation, association or
business entity of which more than 50% of the total voting power of shares of
Capital Stock entitled (without regard to the occurrence of any
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contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by such Person or
one or more of the other Subsidiaries of such Person or a combination thereof
and (ii) any partnership (a) the sole general partner or the managing general
partner of which is such Person or a Subsidiary of such Person or (b) the only
general partners of which are such Person or one or more Subsidiaries of such
Person or any combination thereof; provided that any Unrestricted Subsidiary
shall be excluded from this definition of "Subsidiary."
"Telecommunications Business" means, when used in reference to any Person,
that such Person is engaged primarily in the business of (i) transmitting, or
providing services relating to the transmission of, voice, video or data through
owned or leased transmission facilities, (ii) creating, developing or marketing
communications related network equipment, software and other devices for use in
a Telecommunications Business or (iii) evaluating, participating or pursuing any
other activity or opportunity that is related to those identified in (i) or (ii)
above; provided that the determination of what constitutes a Telecommunications
Business shall be made in good faith by the Board of Directors of the Company.
"Telecommunications Related Assets" means all assets, rights (contractual
or otherwise) and properties, whether tangible or intangible, used in connection
with a Telecommunications Business.
"Total Common Equity" of any Person means, as of any date of determination,
the product of (i) the aggregate number of outstanding primary shares of Common
Stock of such Person on such day (which shall not include any options or
warrants on, or securities convertible or exchangeable into, shares of Common
Stock of such Person) and (ii) the average Closing Price of such Common Stock
over the 20 consecutive Trading Days immediately preceding such day. If no such
Closing Price exists with respect to shares of any such class, the value of such
shares for purposes of clause (ii) of the preceding sentence shall be determined
by the Board of Directors of the Company in good faith and evidenced by a
resolution of the Board of Directors filed with the Trustee.
"Total Market Capitalization" of any Person means, as of any day of
determination (and as modified for purposes of the definition of "Strategic
Investor"), the sum of (1) the consolidated Indebtedness of such Person and its
Subsidiaries (except in the case of the Company, in which case of the Company
and its Subsidiaries) on such day, plus (2) the product of (i) the aggregate
number of outstanding primary shares of Common Stock of such Person on such day
(which shall not include any options or warrants on, or securities convertible
or exchangeable into, shares of Common Stock of such Person) and (ii) the
average Closing Price of such Common Stock over the 20 consecutive Trading Days
immediately preceding such day, plus (3) the liquidation value of any
outstanding share of Preferred Stock of such Person on such day less (4) cash
and cash equivalents (other than restricted cash and restricted cash
equivalents) as presented on such Person's consolidated balance sheet on such
date. If no such Closing Price exists with respect to shares of any such class,
the value of such shares for purposes of clause (2) of the preceding sentence
shall be determined by the Company's Board of Directors in good faith and
evidenced by a resolution of the Board of Directors filed with the Trustee.
"Trading Day," with respect to a securities exchange or automated quotation
system, means a day on which such exchange or system is open for a full day of
trading.
"Treasury Rate" means, at any date of computation, the yield to maturity as
of such date (as compiled by and published in the most recent Federal Reserve
Statistical Release H.15 (519), which has become publicly available at least two
business days prior to the date of the redemption notice for which such
computation is being made, or if such Statistical Release is no longer
published, as reported in any publicly available source of similar market data)
of United States Treasury securities with a constant maturity most nearly equal
to the Make-Whole Average Life; provided, however, that if the Make-Whole
Average Life is not equal to the constant maturity of the United States Treasury
security for which a weekly average yield is given, the Treasury Rate shall be
obtained by linear interpolation (calculated to the nearest one-twelfth of a
year) from the weekly average yields of United States Treasury securities for
which such yields are given, except that if the Make-Whole Average Life is less
than one year, the weekly average yield on actually traded United States
treasury securities adjusted to a constant maturity of one year shall be used.
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"Unrestricted Subsidiary" means any Subsidiary that is designated by the
Board of Directors as an Unrestricted Subsidiary pursuant to a resolution of the
Board of Directors.
"Vendor Indebtedness" means any Indebtedness of the Company or any
Subsidiary incurred in connection with the acquisition or construction of
Telecommunications Related Assets.
"Voting Stock" of any Person means Capital Stock of such Person which
ordinarily has voting power for the election of directors (or Persons performing
similar functions) of such Person, whether at all times or only so long as no
senior class of securities has such voting power by reason of any contingency.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (a) the then outstanding
principal amount of such Indebtedness into (b) the total of the product obtained
by multiplying (x) the amount of each then remaining installment, sinking fund,
serial maturity or other required payments of principal, including payment at
final maturity, in respect thereof, by (y) the number of years (calculated to
the nearest one-twelfth) that will elapse between such date and the making of
such payment; provided, that with respect to Capital Lease Obligations, that
maturity shall be calculated after giving effect to all renewal options by the
Lessee.
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion summarizes the material United States federal
income tax considerations generally applicable to holders acquiring the Senior
Notes pursuant to the Exchange Offer but does not purport to be a complete
analysis of all potential consequences. The discussion is based upon the United
States Internal Revenue Code of 1986, as amended (the "Code"), Treasury
regulations, Internal Revenue Service ("IRS") rulings and judicial decisions now
in effect, all of which are subject to change at any time by legislative,
judicial or administrative action. Any such changes may be applied retroactively
in a manner that could adversely affect a holder of the Senior Notes. The
discussion assumes that the holders of the Senior Notes will hold them as
"capital assets" within the meaning of Section 1221 of the Code.
The tax treatment of a holder of the Senior Notes may vary depending on
such holder's particular situation or status. Certain holders (including S
corporations, insurance companies, tax-exempt organizations, financial
institutions, broker-dealers, taxpayers subject to alternative minimum tax and
persons holding the Senior Notes as part of a straddle, hedging or conversion
transaction) may be subject to special rules not discussed below. The following
discussion does not consider all aspects of United States federal income
taxation that may be relevant to the purchase, ownership and disposition of the
Senior Notes by a holder in light of such holder's personal circumstances. In
addition, the discussion does not consider the effect of any applicable foreign,
state or local tax laws. PERSONS CONSIDERING THE PURCHASE OF SENIOR NOTES SHOULD
CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE UNITED
STATES FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX
CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE, LOCAL OR FOREIGN TAXING
JURISDICTION.
For purposes of this discussion, a "U.S. Holder" means a citizen or
resident of the United States, a corporation, partnership or other entity
created or organized in the United States or under the laws of the United States
or of any political subdivision thereof, an estate whose income is includible in
gross income for United States federal income tax purposes regardless of its
source or a trust, if a U.S. court is able to exercise primary supervision over
the administration of the trust and one or more U.S. persons have the authority
to control all substantial decisions of the trust. A "Non-U.S. Holder" means a
holder that is not a U.S. Holder.
INTRODUCTION
The exchange of Old Notes for Senior Notes will not constitute a
recognition event for federal income tax purposes. Consequently, no gain or loss
will be recognized by holders upon receipt of the Senior Notes. The Senior Notes
will have the same issue date and issue price as the Old Notes. A holder's
adjusted tax basis in the Senior Notes will be the same as the holder's adjusted
tax basis in the Old Notes exchanged therefor. A holder will be considered to
have held the Senior Notes from the time the holder originally acquired the Old
Notes.
TAX CONSEQUENCES TO U.S. HOLDERS
Interest on the Senior Notes
Interest paid on the Senior Notes will generally be taxable to a U.S.
Holder as ordinary interest income at the time it is accrued or is received in
accordance with the U.S. Holder's method of accounting for federal income tax
purposes.
Sale or Other Taxable Disposition of the Senior Notes
Upon the sale or other taxable disposition of a Senior Note, the difference
between the sum of the amount of cash and the fair market value of other
property received (other than amounts attributable to accrued unpaid interest)
and the holder's adjusted tax basis in the Senior Note will be generally capital
gain or loss. In the case of a holder who acquired an Old Note at a "market
discount", (as that term is defined in the Code) a portion of any gain
recognized on the disposition of the Senior Note received in exchange for such
Old Note will be treated as ordinary income. Any capital gain or loss will be
long-term capital gain or loss if
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the holder's holding period for the Senior Note exceeds one year. The most
favorable tax rate on long-term capital gains of non-corporate holders (20%)
will not be available unless the holding period exceeds 18 months.
TAX CONSEQUENCES TO NON-U.S. HOLDERS
Interest on the Senior Notes
Interest paid by the Company to a Non-U.S. Holder will not be subject to
United States federal income or withholding tax if such interest is not
effectively connected with the conduct of a trade or business within the United
States by such Non-U.S. Holder and such Non-U.S. Holder (i) does not actually or
constructively own 10% or more of the total combined voting power of all classes
of stock of the Company entitled to vote; (ii) is not a controlled foreign
corporation with respect to which the Company is a "related person" within the
meaning of the Code; and (iii) certifies, under penalties of perjury, that such
holder is not a United States person and provides such holder's name and address
(the "Portfolio Interest Exemption").
Interest paid to a Non-U.S. Holder of the Senior Notes that is effectively
connected with a United States trade or business conducted by such Non-U.S.
Holder will be taxed at the graduated rates applicable to United States
citizens, resident aliens and domestic corporations (the "Regular Federal Income
Tax") and will not be subject to withholding tax if the Non-U.S. Holder gives an
appropriate statement to the Company or its paying agent in advance of the
interest payment. In addition to the Regular Federal Income Tax, effectively
connected interest received by a Non-U.S. Holder that is a corporation may also
be subject to a branch profits tax at a rate of 30% (or such lower rate as may
be specified by an applicable income tax treaty).
Sale or Other Taxable Disposition of the Senior Notes
A Non-U.S. Holder will generally not be subject to United States federal
income tax on gain recognized on a sale or other disposition of a Senior Note
unless (i) the gain is effectively connected with the conduct of a trade or
business within the United States by the Non-U.S. Holder or (ii) in the case of
a Non-U.S. Holder who is a nonresident alien individual and holds the Senior
Note as a capital asset, such holder is present in the United States for 183 or
more days in the taxable year and certain other requirements are met.
If a Non-U.S. Holder falls within clause (i) in the preceding paragraph,
the holder will be taxed on the net gain derived from the sale under the Regular
Federal Income Tax and may be subject to withholding under certain circumstances
(and, in the case of a corporate Non-U.S. Holder, may also be subject to the
branch profits tax described above). If an individual Non-U.S. Holder falls
under clause (ii) in the preceding paragraph, the holder generally will be
subject to United States federal income tax at a rate of 30% on the gain derived
from the sale.
Federal Estate Tax
If interest on the Senior Notes is exempt from withholding of United States
federal income tax under the Portfolio Interest Exemption, the Senior Notes will
not be included in the estate of a deceased Non-U.S. Holder for United States
federal estate tax purposes.
New Withholding Regulations
The Treasury Department recently promulgated final regulations regarding
the withholding and information-reporting rules applicable to Non-U.S. Holders
(the "New Withholding Regulations"). In general, the New Withholding Regulations
do not significantly alter the substantive withholding and information-reporting
requirements but rather unify current certification procedures and forms and
clarify reliance standards. The New Withholding Regulations are generally
effective for payments made after December 31, 1999, subject to certain
transition rules. NON-U.S. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH
RESPECT TO THE IMPACT, IF ANY, OF THE NEW WITHHOLDING REGULATIONS.
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INFORMATION REPORTING AND BACKUP WITHHOLDING
Generally interest on and proceeds from the sale of the Senior Notes will
be reported to the IRS with respect to U.S. Holders. Interest on the Senior
Notes will be reported to the IRS with respect to Non-U.S. Holders.
A U.S. Holder of Senior Notes may be subject to backup withholding at the
rate of 31% with respect to interest paid on, or the proceeds of a sale or other
disposition of, the Senior Notes unless such holder (a) is a corporation or
comes within certain other exempt categories and, when required, demonstrates
its exemption or (b) provides a correct taxpayer identification number,
certifies as to no loss of exemption from backup withholding and otherwise
complies with applicable requirements of the backup withholding rules. A U.S.
Holder of Senior Notes that does not provide the Company with the holder's
correct taxpayer identification number may be subject to penalties imposed by
the IRS. A Non-U.S. Holder of Senior Notes may also be subject to certain
information reporting or backup withholding if certain requisite certification
is not received or other exemptions do not apply. Any amount paid as backup
withholding would be creditable against the holder's federal income tax
liability, provided the required information is furnished to the IRS.
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PLAN OF DISTRIBUTION
Each broker-dealer that receives Senior Notes for its own account pursuant
to the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of the Senior Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of Senior Notes received in exchange for Old Notes
acquired as a result of market-making activities or other trading activities.
The Company has agreed that for a period expiring on the earlier of (i) the date
that all holders of Transfer Restricted Securities have registered such
securities pursuant to the Exchange Offer and (ii) 365 days after the Exchange
Date, it will make this Prospectus, as amended or supplemented, available to any
broker-dealer for use in connection with any such resale.
The Company will not receive any proceeds from any sale of Senior Notes by
broker-dealers. Senior Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options of the Senior Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any Senior Notes. Any broker-dealer that
resells Senior Notes that were received by it for its own account pursuant to
the Exchange Offer and any broker-dealer that participates in a distribution of
Senior Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any resale of Senior Notes and any commissions
or concessions received by any such persons may be deemed to be underwriting
compensation under the Securities Act. The Letter of Transmittal states that by
acknowledging that it will deliver and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
The Company has not entered into any arrangement or understanding with any
person to distribute the Senior Notes to be received in the Exchange Offer and
to the best of the Company's information and belief, each person participating
in the Exchange Offer is acquiring the Senior Notes in its ordinary course of
business and has no arrangement or understanding with any person to participate
in the distribution of the Senior Notes to be received in the Exchange Offer.
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LEGAL MATTERS
The legality of the securities offered hereby will be passed upon for the
Company by Kronish, Lieb, Weiner & Hellman LLP, 1114 Avenue of the Americas, New
York, New York 10036-7798. Ralph J. Sutcliffe, a partner of Kronish, Lieb,
Weiner & Hellman LLP, beneficially owns 11,490 shares of the Common Stock and
owns a warrant to purchase 200,000 shares of Common Stock at an exercise price
of $20.75 per share (after giving effect to the Stock Split).
EXPERTS
The consolidated financial statements and schedule of the Company and
Shared appearing in the Company's Annual Report (Form 10-K) for the year ended
December 31, 1997, have been audited by Ernst & Young LLP, independent certified
public accountants, as set forth in their reports thereon included therein and
incorporated herein by reference. Such consolidated financial statements and
schedule are incorporated herein by reference in reliance upon such reports
given upon the authority of such firm as experts in accounting and auditing.
The consolidated financial statements of DIGEX appearing in DIGEX's Annual
Report (Form 10-KSB) for the year ended December 31, 1996, have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report thereon
included therein and incorporated herein by reference. Such consolidated
financial statements are incorporated herein by reference in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.
The December 31, 1996 audited financial statements of Shared incorporated
by reference in this Prospectus and in the Exchange 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 statements of operations, stockholders' equity and cash
flows of Shared and subsidiaries for the year 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.
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======================================================
NO DEALER, SALES REPRESENTATIVE OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER
THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN THOSE TO WHICH IT
RELATES, NOR DOES IT CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION OF AN
OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATIONS
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. ii
Incorporation of Certain Documents by
Reference........................... iii
Prospectus Summary.................... 1
Risk Factors.......................... 11
The Exchange Offer.................... 20
Use of Proceeds....................... 27
Capitalization........................ 27
Selected Historical Consolidated
Financial and Operating Data........ 28
Business.............................. 30
Description of Outstanding
Indebtedness........................ 34
Description of the Senior Notes....... 37
Plan of Distribution.................. 69
Legal Matters......................... 70
Experts............................... 70
</TABLE>
======================================================
======================================================
$500,000,000
[LOGO]
INTERMEDIA
COMMUNICATIONS INC.
8.60% SERIES
SENIOR NOTES
DUE 2008
------------------------
PROSPECTUS
------------------------
, 1998
======================================================
<PAGE> 77
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Restated Certificate of Incorporation, as amended, provides
that the Company shall to the fullest extent permitted by the General
Corporation Law of the State of Delaware (the "GCL"), as amended from time to
time, indemnify all persons whom it may indemnify pursuant thereto. The
Company's Bylaws contain a similar provision requiring indemnification of the
Company's directors and officers to the fullest extent authorized by the GCL.
The GCL permits a corporation to indemnify its directors and officers (among
others) against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by them in
connection with any action, suit or proceeding brought (or threatened to be
brought) by third parties, if such directors or officers acted in good faith and
in a manner they reasonably believed to be in or not opposed to the best
interests of the corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe their conduct was unlawful. In a
derivative action, i.e., one by or in the right of the corporation,
indemnification may be made for expenses (including attorneys' fees) actually
and reasonably incurred by directors and officers in connection with the defense
or settlement of such action if they had acted in good faith and in a manner
they reasonably believed to be in or not opposed to the best interests of the
corporation, except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged liable
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses.
The GCL further provides that, to the extent any director or officer has been
successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in this paragraph, or in defense of any claim, issue or
matter therein, such person shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith. In addition, the Company's Restated Certificate of Incorporation, as
amended, contains a provision limiting the personal liability of the Company's
directors for monetary damages for certain breaches of their fiduciary duty. The
Company has indemnification insurance under which directors and officers are
insured against certain liability that may occur in their capacity as such.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers or persons controlling the Company pursuant to
the foregoing provisions, the Company has been informed that in the opinion of
the Commission such indemnification is against public policy as expressed in the
Act and is therefore unenforceable.
II-1
<PAGE> 78
ITEM 21. EXHIBITS.
(a) EXHIBITS
<TABLE>
<S> <C> <C>
1 -- Note Purchase Agreement, dated as of May 21, 1998, among the
Company and the Initial Purchasers.
2.1 -- Agreement and Plan of Merger, dated as of June 4, 1997,
among the Company, Daylight Acquisition Corp. and DIGEX.
Exhibit 99(c)(1) to the Company's Schedule 14D-1 filed with
the Commission on June 11, 1997 is incorporated herein by
reference.
2.2 -- Agreement and Plan of Merger, dated as of November 20, 1997,
among the Company, Moonlight Acquisition Corp. and Shared
Technologies Fairchild Inc. Exhibit 99(c)(1) to the
Company's Schedule 14D-1 and Schedule 13D filed with the
Commission on November 26, 1997 is incorporated herein by
reference.
2.3 -- Acquisition Agreement, dated as of December 17, 1997, among
the Company and the holders of interests in the Long
Distance Savers companies. Exhibit 2.3 to Amendment No. 1 to
the Company's Registration Statement on Form S-3 filed with
the Commission on January 14, 1998 (No. 333-42999) is
incorporated herein by reference.
2.4 -- Agreement and Plan of Merger, dated as of February 11, 1998,
among the Company, Sumter One Acquisition, Inc., Sumter Two
Acquisition, Inc., National Telecommunications of Florida,
Inc., NTC, Inc. and the stockholders of National. Exhibit
2.4 to the Company's Registration Statement on Form S-3
filed with the Commission on February 13, 1998 (No.
333-46369) is incorporated herein by reference.
3.1 -- Restated Certificate of Incorporation of the Company,
together with all amendments thereto.
3.2 -- By-laws of the Company, together with all amendments
thereto. Exhibit 3.2 to the Company's Registration Statement
on Form S-1 filed with the Commission on November 8, 1993
(No. 33-69053) is incorporated herein by reference.
4.1 -- Indenture, dated as of June 2, 1995, between the Company and
SunBank National Association, as trustee. Exhibit 4.1 to the
Company's Registration Statement on Form S-4 filed with the
Commission on June 20, 1995 (No. 33-93622) is incorporated
herein by reference.
4.1(a) -- Amended and Restated Indenture, dated as of April 26, 1996,
governing the Company's 13 1/2% Series B Senior Notes due
2005, between the Company and SunTrust Bank, Central
Florida, National Association, as trustee. Exhibit 4.1 to
the Company's Current Report on Form 8-K filed with the
Commission on April 29, 1996 is incorporated herein by
reference.
4.2 -- Indenture, dated as of May 14, 1996, between the Company and
SunTrust Bank, Central Florida, National Association, as
trustee. Exhibit 4.1 to Amendment No. 1 to the Company's
Registration Statement on Form S-3 (Commission File No.
33-34738) filed with the Commission on April 18, 1996 is
incorporated herein by reference.
4.3 -- Indenture, dated as of July 9, 1997, between the Company and
SunTrust Bank, Central Florida, National Association, as
trustee. Exhibit 4.1 to the Company's Current Report on Form
8-K filed with the Commission on July 17, 1997 is
incorporated herein by reference.
4.4 -- Indenture, dated as of October 30, 1997, between the Company
and SunTrust Bank, Central Florida, National Association, as
trustee. Exhibit 4.1 to the Company's Current Report on Form
8-K filed with the Commission on November 6, 1997 is
incorporated herein by reference.
4.5 -- Indenture, dated as of December 23, 1997, between the
Company and SunTrust Bank, Central Florida, National
Association, as trustee. Exhibit 4.5 to the Company's
Registration Statement on Form S-4 filed with the Commission
on February 11, 1998 (No. 333-44875) is incorporated herein
by reference.
4.6 -- Indenture, dated as of May 27, 1998, between the Company and
SunTrust Bank, Central Florida, National Association, as
trustee.
4.7 -- Registration Rights Agreement, dated as of May 27, 1998,
among the Company and the Initial Purchasers.
</TABLE>
II-2
<PAGE> 79
<TABLE>
<S> <C> <C>
5 -- Opinion of Kronish, Lieb, Weiner & Hellman LLP.
8 -- Opinion of Kronish, Lieb, Weiner & Hellman LLP re: tax matters, is contained in their opinion filed
as Exhibit 5 to this Registration Statement.
12 -- Statement Re: Computation of Ratios.
23.1 -- Consent of Kronish, Lieb, Weiner & Hellman LLP is contained in their opinion filed as Exhibit 5 to
this Registration Statement.
23.2 -- Consent of Ernst & Young LLP.
23.3 -- Consent of Ernst & Young LLP.
23.4 -- Consent of Ernst & Young LLP.
23.5 -- Consent of Arthur Andersen LLP.
23.6 -- Consent of Rothstein, Kass & Company, P.C.
24 -- Power of Attorney is set forth on the signature page of this Registration Statement.
25 -- Statement of Eligibility and Qualification under the Trust Indenture Act of 1939 on Form T-1.
99 -- Form of Letter of Transmittal.
</TABLE>
(b) FINANCIAL STATEMENT SCHEDULES.
Financial Statement Schedules are not required to be filed since all
financial statements have been previously included in filings with the
Commission.
ITEM 22. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the 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.
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 Exchange 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
Exchange Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this Exchange Registration
Statement or any material change to such information in this Exchange
Registration Statement;
provided, however, that paragraphs (i) and (ii) above do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Company pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in this Exchange Registration Statement.
II-3
<PAGE> 80
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) For purposes of determining any liability under the Securities Act,
each filing of the Company'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 Exchange 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.
(5) To deliver or cause to be delivered with the Prospectus, to each person
to whom the Prospectus is sent or given, the latest annual report, to security
holders that is incorporated by reference in the Prospectus and furnished
pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3 under the
Exchange Act; and where interim financial information required to be presented
by Article 3 of Regulation S-X is not set forth in the Prospectus, to deliver or
cause to be delivered to each person to whom the Prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the Prospectus to provide such interim financial information.
(6) To file an application for the purpose of determining eligibility of
the trustee to act under subsection (a) of Section 310 of the Trust Indenture
Act in accordance with the rules and regulations prescribed by the Commission
under Section 305(b)(2) of the Trust Indenture Act.
(7) To respond to requests for information that is incorporated by
reference into the Prospectus pursuant to Item 4, 10(b), 11 or 13 of this
Exchange Registration Statement, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of this Exchange Registration Statement through
the date of responding to the request.
(8) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein, that
was not the subject of and included in this Exchange Registration Statement when
it became effective.
II-4
<PAGE> 81
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of Tampa,
state of Florida, on this 16th day of June, 1998.
INTERMEDIA COMMUNICATIONS INC.
By: /s/ ROBERT M. MANNING
------------------------------------
Robert M. Manning,
Chief Financial Officer
Secretary and Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated. Each person whose signature appears
below authorizes David C. Ruberg and Robert M. Manning, or either of them, as
attorney-in-fact to sign and file in each capacity stated below, all amendments
and post-effective amendments to this Registration Statement.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<C> <S> <C>
/s/ DAVID C. RUBERG Chairman of the Board, President June 16, 1998
- --------------------------------------------------- and Chief Executive Officer
David C. Ruberg
Principal Financial and Accounting Officers:
/s/ ROBERT M. MANNING Chief Financial Officer, June 16, 1998
- --------------------------------------------------- Secretary
Robert M. Manning and Senior Vice President
/s/ JEANNE M. WALTERS Controller and Chief Accounting June 16, 1998
- --------------------------------------------------- Officer
Jeanne M. Walters
Other Directors:
/s/ JOHN C. BAKER Director June 16, 1998
- ---------------------------------------------------
John C. Baker
/s/ GEORGE F. KNAPP Director June 16, 1998
- ---------------------------------------------------
George F. Knapp
/s/ PHILIP A. CAMPBELL Director June 16, 1998
- ---------------------------------------------------
Philip A. Campbell
</TABLE>
<PAGE> 82
EXHIBIT INDEX
<TABLE>
<CAPTION>
NUMBER EXHIBIT PAGE
- ------ ------- ----
<S> <C> <C> <C>
1 -- Note Purchase Agreement, dated as of May 21, 1998, among the
Company and the Initial Purchasers.
2.1 -- Agreement and Plan of Merger, dated as of June 4, 1997,
among the Company, Daylight Acquisition Corp. and DIGEX.
Exhibit 99(c)(1) to the Company's Schedule 14D-1 filed with
the Commission on June 11, 1997 is incorporated herein by
reference.
2.2 -- Agreement and Plan of Merger, dated as of November 20, 1997,
among the Company, Moonlight Acquisition Corp. and Shared
Technologies Fairchild, Inc. Exhibit 99(c)(1) to the
Company's Schedule 14D-1 and Schedule 13D filed with the
Commission on November 26, 1997 is incorporated herein by
reference.
2.3 -- Acquisition Agreement, dated as of December 17, 1997, among
the Company and the holders of interests in the Long
Distance Savers companies. Exhibit 2.3 to Amendment No. 1 to
the Company's Registration Statement on Form S-3 filed with
the Commission on January 14, 1998 (No. 333-42999) is
incorporated herein by reference.
2.4 -- Agreement and Plan of Merger, dated as of February 11, 1998,
among the Company, Sumter One Acquisition, Inc., Sumter Two
Acquisition, Inc., National Telecommunications of Florida,
Inc., NTC, Inc. and the stockholders of National. Exhibit
2.4 to the Company's Registration Statement on Form S-3
filed with the Commission on February 13, 1998 (No.
333-46369) is incorporated herein by reference.
3.1 -- Restated Certificate of Incorporation of the Company,
together with all amendments thereto.
3.2 -- By-laws of the Company, together with all amendments
thereto. Exhibit 3.2 to the Company's Registration Statement
on Form S-1 filed with the Commission on November 8, 1993
(No. 33-69053) is incorporated herein by reference.
4.1 -- Indenture, dated as of June 2, 1995, between the Company and
SunBank National Association, as trustee. Exhibit 4.1 to the
Company's Registration Statement on Form S-4 filed with the
Commission on June 20, 1995 (No. 33-93622) is incorporated
herein by reference.
4.1(a) -- Amended and Restated Indenture, dated as of April 26, 1996,
governing the Company's 13 1/2% Series B Senior Notes due
2005, between the Company and SunTrust Bank, Central
Florida, National Association, as trustee. Exhibit 4.1 to
the Company's Current Report on Form 8-K filed with the
Commission on April 29, 1996 is incorporated herein by
reference.
4.2 -- Indenture, dated as of May 14, 1996, between the Company and
SunTrust Bank, Central Florida, National Association, as
trustee. Exhibit 4.1 to Amendment No. 1 to the Company's
Registration Statement on Form S-3 (Commission File No.
33-34738) filed with the Commission on April 18, 1996 is
incorporated herein by reference.
4.3 -- Indenture, dated as of July 9, 1997, between the Company and
SunTrust Bank, Central Florida, National Association, as
trustee. Exhibit 4.1 to the Company's Current Report on Form
8-K filed with the Commission on July 17, 1997 is
incorporated herein by reference.
4.4 -- Indenture, dated as of October 30, 1997, between the Company
and SunTrust Bank, Central Florida, National Association, as
trustee. Exhibit 4.1 to the Company's Current Report on Form
8-K filed with the Commission on November 6, 1997 is
incorporated herein by reference.
4.5 -- Indenture, dated as of December 23, 1997, between the
Company and SunTrust Bank, Central Florida, National
Association, as trustee. Exhibit 4.5 to the Company's
Registration Statement on Form S-4 filed with the Commission
on February 11, 1998 (No. 333-44875) is incorporated herein
by reference.
</TABLE>
<PAGE> 83
<TABLE>
<CAPTION>
NUMBER EXHIBIT PAGE
- ------ ------- ----
<S> <C> <C> <C>
4.6 -- Indenture, dated as of May 27, 1998, between the Company and
SunTrust Bank, Central Florida, National Association, as
trustee.
4.7 -- Registration Rights Agreement, dated as of May 27, 1998,
among the Company and the Initial Purchasers.
5 -- Opinion of Kronish, Lieb, Weiner & Hellman LLP.
8 -- Opinion of Kronish, Lieb, Weiner & Hellman LLP re: tax
matters, is contained in their opinion filed as Exhibit 5 to
this Registration Statement.
12 -- Statement Re: Computation of Ratios.
23.1 -- Consent of Kronish, Lieb, Weiner & Hellman LLP is contained
in their opinion filed as Exhibit 5 to this Registration
Statement.
23.2 -- Consent of Ernst & Young LLP.
23.3 -- Consent of Ernst & Young LLP.
23.4 -- Consent of Ernst & Young LLP.
23.5 -- Consent of Arthur Andersen LLP.
23.6 -- Consent of Rothstein, Kass & Company, P.C.
24 -- Power of Attorney is set forth on the signature page of this
Registration Statement.
25 -- Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 on Form T-1.
99 -- Form of Letter of Transmittal.
</TABLE>
<PAGE> 1
Exhibit 1
EXECUTION COPY
- --------------------------------------------------------------------------------
INTERMEDIA COMMUNICATIONS INC.
$450,000,000
8.60% Senior Notes due 2008
Note Purchase Agreement
May 21, 1998
BEAR, STEARNS & CO. INC.
SALOMON BROTHERS INC
MERRILL LYNCH & CO.
SBC WARBURG DILLON READ INC.
- --------------------------------------------------------------------------------
<PAGE> 2
INTERMEDIA COMMUNICATIONS INC.
$450,000,000
8.60% Senior Notes Due 2008
NOTE PURCHASE AGREEMENT
May 21, 1998
New York, New York
BEAR, STEARNS & CO. INC.
SALOMON BROTHERS INC
MERRILL LYNCH & CO.
SBC WARBURG DILLON READ INC.
c/o Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Ladies & Gentlemen:
Intermedia Communications Inc., a Delaware corporation (the
"Company"), proposes to issue and sell to Bear, Stearns & Co. Inc., Salomon
Brothers Inc, Merrill Lynch & Co. and SBC Warburg Dillon Read Inc. (together,
the "Initial Purchasers") $450,000,000 aggregate principal amount of 8.60%
Senior Notes due 2008 subject to the terms and conditions set forth herein,
which will be issued pursuant to an indenture (the "Indenture"), to be dated the
Closing Date (as defined below), between the Company and SunTrust Bank, Central
Florida, National Association, as trustee (the "Trustee").
1. Issuance of Senior Notes. The Company proposes to, upon the
terms and subject to the conditions set forth herein, issue and sell to the
Initial Purchasers $450,000,000 aggregate principal amount of 8.60% Senior Notes
due 2008 (the "Firm Notes"). The Company also proposes to sell to the Initial
Purchasers, upon the terms and conditions set forth herein, up to an additional
$50,000,000 principal amount of 8.60% Senior Notes due 2008 (the "Additional
Notes" and together with the "Firm Notes", the "Senior Notes"). The Senior Notes
are more fully described in the Offering Memorandum referred to below. For
purposes of this Purchase Agreement (this "Agreement"), the term "Subsidiaries"
shall mean the entities listed on Exhibit D hereto. Capitalized terms used but
not otherwise defined herein shall have the meanings given to such terms in the
Indenture.
The proceeds to the Company from the sale to the Initial
Purchasers of the Senior Notes will be used to fund up to 80% of the cost of
acquisition or construction of Telecommunications Related Assets (as described
in the Offering Memorandum).
Upon original issuance thereof, and until such time as the
same is no longer required under the applicable requirements of the Act, the
Senior Notes shall bear the following legend:
<PAGE> 3
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY
WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE
SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE
SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION
5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE
HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT
OF THE COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED
OR OTHERWISE TRANSFERRED, ONLY (1) TO THE COMPANY, (2)
PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (3) TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS
DEFINED IN RULE 144A IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 144A, (4) TO AN INSTITUTIONAL "ACCREDITED INVESTOR"
(AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D
UNDER THE SECURITIES ACT THAT, PRIOR TO SUCH TRANSFER,
FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF
THIS SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM
THE TRUSTEE) OR (5) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT
(AND BASED ON AN OPINION OF COUNSEL IF THE COMPANY SO
REQUESTS), SUBJECT IN EACH OF THE FOREGOING CASES TO
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL,
AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE
RESALE RESTRICTIONS SET FORTH IN (A) ABOVE."
2. Offering. The Senior Notes will be offered and sold to the
Initial Purchasers pursuant to an exemption from the registration requirements
under the Securities Act of 1933, as amended (the "Act"). The Company has
prepared a preliminary offering memorandum, dated May 18, 1998 (the "Preliminary
Offering Memorandum"), and a final offering memorandum, dated May 21, 1998 the
"Offering Memorandum"), relating to the Company and the Senior Notes.
The Initial Purchasers have advised the Company that the
Initial Purchasers will make offers (the "Exempt Resales") of the Senior Notes
on the terms set forth in the Offering Memorandum, as amended or supplemented,
solely to persons whom any of the Initial Purchasers reasonably believe to be
"qualified institutional buyers," as defined in Rule 144A under the Act
("QIBs"). Such QIBs shall be
2
<PAGE> 4
referred to herein as the "Eligible Purchasers." The Initial Purchasers will
offer the Senior Notes to such Eligible Purchasers initially at a purchase price
of 100% of the principal amount of such Senior Notes. Such price may be changed
at any time without notice.
Holders (including subsequent transferees) of the Senior Notes
will have the registration rights set forth in the registration rights agreement
relating thereto (the "Registration Rights Agreement") hereto, to be dated the
Closing Date for so long as such Senior Notes constitute "Transfer Restricted
Securities" (as defined in such agreement). Pursuant to the Registration Rights
Agreement, the Company will agree to file with the Securities and Exchange
Commission (the "Commission"), under the circumstances set forth therein, (i) a
registration statement under the Act (the "Exchange Offer Registration
Statement") with respect to an offer to exchange (the "Exchange Offer") the
Senior Notes for a new issue of 8.60% Senior Notes due 2008 (the "Exchange
Notes") to be offered in exchange for the Senior Notes and/or (ii) a shelf
registration statement pursuant to Rule 415 under the Act (the "Shelf
Registration Statement") relating to the resale by certain holders of the Senior
Notes, and to use its best efforts to cause such Registration Statements to be
declared effective and consummate the Exchange Offer. This Agreement, the Senior
Notes, the Indenture, and the Registration Rights Agreement are hereinafter
sometimes referred to collectively as the "Operative Documents."
3. Purchase, Sale and Delivery. (a) On the basis of the
representations, warranties and covenants contained in this Agreement, and
subject to its terms and conditions, the Company agrees to issue and sell to
each Initial Purchaser, and each Initial Purchaser agrees severally and not
jointly to purchase from the Company, that amount of Senior Notes set forth
opposite its name on Schedule I hereto. The purchase price for the Senior Notes
shall be 97.75% of the principal amount thereof.
The Company also agrees, subject to all the terms and
conditions set forth herein, to sell to the Initial Purchasers, and upon the
basis of the representations, warranties and agreements of the Company herein
contained and subject to all the terms and conditions set forth herein, the
Initial Purchasers shall have the right to purchase from the Company, solely for
the purpose of covering over-allotments in connection with sales of the Firm
Notes, at the purchase price per note of 97.75% of the principal amount thereof
plus accrued interest from the date of issuance of the Firm Notes to the date of
closing of the Additional Notes, pursuant to an option (the "over-allotment
option") which may be exercised at any one time prior to 10:00 a.m., New York
City time, on the 30th day after the date of the Offering Memorandum (or, if
such 30th day shall be a Saturday or Sunday or a holiday, on the next business
day thereafter when the New York Stock Exchange is open for trading), up to an
aggregate principal amount of $50,000,000 of Additional Notes. Upon any exercise
of the over-allotment option, each Initial Purchaser, severally and not jointly,
agrees to purchase from the Company the number of Additional Notes (subject to
such adjustments as the Initial Purchasers may determine in order to avoid
fractional Notes) that bears the same proportion to the aggregate number of
Additional Notes to be purchased by the Initial Purchasers as the number of Firm
Notes set forth opposite the name of such Initial Purchasers as the number of
Firm Notes set forth opposite the name of such Initial Purchaser on Schedule I
hereto bears to the aggregate number of Firm Notes.
(b) Delivery of, and payment of the purchase price for, the
Senior Notes shall be made, against payment of the purchase price, at the
offices of Latham & Watkins, 885 Third Avenue, New York, NY 10022, or such other
location as may be mutually acceptable. Such delivery and payment shall be made
at 9:00 A.M. New York time, on May 27, 1998 or at such other time as shall be
agreed upon by
3
<PAGE> 5
the Initial Purchasers and the Company. The time and date of such delivery and
payment are herein called the "Closing Date."
Delivery to the Initial Purchasers of any payment for any
Additional Notes to be purchased by the Initial Purchasers shall be made at the
office of Latham & Watkins, 885 Third Avenue, New York, NY 10022, or such other
location as may be mutually acceptable at such time on such date (the "Option
Closing Date"), which may be the same as the Closing Date but shall in no event
be earlier that the Closing Date nor later than ten business days after the
giving of the notice hereinafter referred to, as shall be specified in a written
notice from Bear, Stearns & Co., Inc. on behalf of the Initial Purchasers to
purchase a number, specified in such notice, of Additional Notes.
(c) One or more Senior Notes in global form, (the "Global
Securities"), registered in the name of Cede & Co. (such nominee the "Global
Security Holder"), as nominee of the Depository Trust Company ("DTC"), having an
aggregate principal amount corresponding to the aggregate principal amount of
the Senior Notes sold shall be delivered by the Company to the Initial
Purchasers (or as the Initial Purchasers direct), against payment by the Initial
Purchasers of the purchase price therefor, by wire transfer of immediately
available funds to an account specified by the Company or as the Company may
direct in writing, provided that the Company shall give at least two business
days' prior written notice to the Initial Purchasers of the information required
to effect such wire transfers. The Global Securities shall be made available to
the Initial Purchasers for inspection not later than 9:30 a.m., New York City
time, on the business day immediately preceding the Closing Date.
4. Agreements of the Company. The Company covenants and agrees
with each of the Initial Purchasers as follows:
(a) To advise the Initial Purchasers promptly and, if
requested by the Initial Purchasers, confirm such advice in writing, (i) of the
issuance by any state securities commission of any stop order suspending the
qualification or exemption from qualification of any Senior Notes for offering
or sale in any jurisdiction, or the initiation of any proceeding for such
purpose by any state securities commission or other regulatory authority and
(ii) of the happening of any event that, in the reasonable opinion of either
counsel to the Company or counsel to the Initial Purchasers, makes any statement
of a material fact made in the Preliminary Offering Memorandum or the Offering
Memorandum untrue or that requires the making of any additions to or changes in
the Preliminary Offering Memorandum or the Offering Memorandum in order to make
the statements therein, in the light of the circumstances under which they are
made, not misleading. The Company shall use its best efforts to prevent the
issuance of any stop order or order suspending the qualification or exemption of
any Senior Notes under any state securities or Blue Sky laws and, if at any time
any state securities commission or other regulatory authority shall issue an
order suspending the qualification or exemption of any Senior Notes under any
state securities or Blue Sky laws, the Company shall use its best efforts to
obtain the withdrawal or lifting of such order at the earliest possible time.
(b) To furnish the Initial Purchasers and those persons
identified by the Initial Purchasers to the Company, without charge, as many
copies of the Preliminary Offering Memorandum and the Offering Memorandum, and
any amendments or supplements thereto, as the Initial Purchasers may reasonably
request. The Company consents to the use of the Preliminary Offering Memorandum
and the
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<PAGE> 6
Offering Memorandum, and any amendments and supplements thereto required
pursuant hereto, by the Initial Purchasers in connection with Exempt Resales.
(c) Not to amend or supplement the Preliminary Offering
Memorandum or the Offering Memorandum prior to the Closing Date unless the
Initial Purchasers shall previously have been advised thereof and shall not have
objected thereto within a reasonable time after being furnished a copy thereof.
The Company shall promptly prepare, upon the Initial Purchasers' request, any
amendment or supplement to the Preliminary Offering Memorandum or the Offering
Memorandum that may be necessary or advisable in connection with Exempt Resales.
(d) If, after the date hereof and prior to consummation of any
Exempt Resale, any event shall occur as a result of which, in the judgment of
the Company or in the reasonable opinion of either counsel to the Company or
counsel to the Initial Purchasers, it becomes necessary or advisable to amend or
supplement the Preliminary Offering Memorandum or Offering Memorandum in order
to make the statements therein, in the light of the circumstances when such
Offering Memorandum is delivered to an Eligible Purchaser which is a prospective
purchaser, not misleading, or if it is necessary or advisable to amend or
supplement the Preliminary Offering Memorandum or Offering Memorandum to comply
with applicable law, (i) notify the Initial Purchasers and (ii) forthwith to
prepare an appropriate amendment or supplement to such Offering Memorandum so
that the statements therein as so amended or supplemented will not, in the light
of the circumstances when it is so delivered, be misleading, or so that such
Offering Memorandum will comply with applicable law.
(e) To cooperate with the Initial Purchasers and counsel to
the Initial Purchasers in connection with the qualification or registration of
the Senior Notes under the securities or Blue Sky laws of such jurisdictions as
the Initial Purchasers may reasonably request and to continue such qualification
in effect so long as required for the Exempt Resales; provided, however that the
Company shall not be required in connection therewith to register or qualify as
a foreign corporation where it is not now so qualified or to take any action
that would subject it to service of process in suits or taxation, in each case,
other than as to matters and transactions relating to the Preliminary Offering
Memorandum, the Offering Memorandum or Exempt Resales, in any jurisdiction where
it is not now so subject.
(f) Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement becomes effective or is terminated,
to pay all costs, expenses, fees and taxes incident to the performance of the
obligations of the Company hereunder, including in connection with: (i) the
preparation, printing, filing and distribution of the Preliminary Offering
Memorandum and the Offering Memorandum (including, without limitation, financial
statements) and all amendments and supplements thereto required pursuant hereto,
(ii) the preparation (including, without limitation, duplication costs) and
delivery of all preliminary and final Blue Sky memoranda prepared and delivered
in connection herewith and with the Exempt Resales, (iii) the issuance, transfer
and delivery by the Company of the Senior Notes to the Initial Purchasers, (iv)
the qualification or registration of the Senior Notes for offer and sale under
the securities or Blue Sky laws of the several states (including, without
limitation, the cost of printing and mailing a preliminary and final Blue Sky
Memorandum and the reasonable fees and disbursements of counsel to the Initial
Purchasers relating thereto), (v) furnishing such copies of the Preliminary
Offering Memorandum and the Offering Memorandum, and all amendments and
supplements thereto, as may be requested for use in connection with Exempt
Resales, (vi) the preparation of certificates for the Senior Notes (including,
without limitation, printing and engraving thereof), (vii) the fees,
disbursements and
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<PAGE> 7
expenses of the Company's counsel and accountants, (viii) all expenses and
listing fees in connection with the application for quotation of the Senior
Notes in the National Association of Securities Dealers, Inc. ("NASD") Automated
Quotation System - PORTAL ("PORTAL"), (ix) all fees and expenses (including fees
and expenses of counsel to the Company) of the Company in connection with the
approval of the Senior Notes by DTC for "book-entry" transfer, (x) rating the
Senior Notes by rating agencies, (xi) the reasonable fees and expenses of the
Trustee and its counsel in connection with the Indenture and the Senior Notes,
(xii) the performance by the Company of its other obligations under this
Agreement and the other Operative Documents and (ix) "roadshow" travel and other
expenses incurred in connection with the marketing and sale of the Senior Notes
(other than out-of-pocket expenses incurred by the Initial Purchasers for
travel, meals and lodgings).
(g) To use the proceeds from the sale of the Senior Notes in
the manner described in the Offering Memorandum under the caption "Use of
Proceeds."
(h) Not to voluntarily claim, and to resist actively any
attempts to claim, the benefit of any usury laws against the holders of any
Senior Notes.
(i) To do and perform all things required to be done and
performed under this Agreement by it prior to or after the Closing Date and to
satisfy all conditions precedent on its part to the delivery of the Senior
Notes.
(j) Not to sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Act) that
would be integrated with the sale of the Senior Notes in a manner that would
require the registration under the Act of the sale to the Initial Purchasers or
the Eligible Purchasers of the Senior Notes or to take any other action that
would result in the Exempt Resales not being exempt from registration under the
Act.
(k) For so long as any of the Senior Notes remain outstanding
and during any period in which the Company is not subject to Section 13 or 15(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), to make
available to any QIB or beneficial owner of Senior Notes in connection with any
sale thereof and any prospective purchaser of such Senior Notes from such QIB or
beneficial owner, the information required by Rule 144A(d)(4) under the Act.
(l) To cause the Exchange Offer to be made in the appropriate
form to permit registered Senior Notes to be offered in exchange for the Senior
Notes and to comply with all applicable federal and state securities laws in
connection with the Exchange Offer.
(m) To comply with all of its agreements set forth in the
Registration Rights Agreement and all agreements set forth in the representation
letters of the Company to DTC relating to the approval of the Senior Notes by
DTC for "book-entry" transfer.
(n) To use its best efforts to effect the inclusion of the
Senior Notes in PORTAL and to obtain approval of the Senior Notes by DTC for
"book-entry" transfer.
(o) During a period of five years following the Closing Date,
to deliver without charge to each of the Initial Purchasers, as they may
reasonably request, promptly upon their becoming available, copies of (i) all
reports or other publicly available information that the Company shall mail or
otherwise
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<PAGE> 8
make available to its stockholders and (ii) all reports, financial statements
and proxy or information statements filed by the Company with the Commission or
any national securities exchange and such other publicly available information
concerning the Company or its Subsidiaries, including without limitation, press
releases.
(p) Prior to the Closing Date, to furnish to each of the
Initial Purchasers, as soon as they have been prepared in the ordinary course by
the Company, copies of any consolidated financial statements or any unaudited
interim financial statements of the Company for any period subsequent to the
periods covered by the financial statements appearing in the Offering
Memorandum.
(q) Neither the Company nor any of its subsidiaries will take,
directly or indirectly, any action designed to, or that might reasonably be
expected to, cause or result in stabilization or manipulation of the price of
any security of the Company to facilitate the sale or resale of the Senior
Notes. Except as permitted by the Act, the Company will not distribute any
preliminary offering memorandum, offering memorandum or other offering material
in connection with the offering and sale of the Senior Notes.
(r) To comply with the agreements in the Indenture, the
Registration Rights Agreement, and any other Operative Document.
(s) Not to engage in any directed selling efforts with respect
to the Senior Notes within the meaning of Regulation S, and that the Company and
each person acting on behalf of the Company has complied and will comply with
the offering restrictions requirement of Regulation S.
5. Representations and Warranties. (a) The Company represents
and warrants to each of the Initial Purchasers that:
(i) The Preliminary Offering Memorandum and the Offering Memorandum
have been prepared in connection with the Exempt Resales. The Preliminary
Offering Memorandum and the Offering Memorandum do not, and any supplement or
amendment to them will not, contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except that the representations and warranties contained in this
paragraph shall not apply to statements in or omissions from the Preliminary
Offering Memorandum and the Offering Memorandum (or any supplement or amendment
thereto) made in reliance upon and in conformity with information relating to
the Initial Purchasers furnished to the Company in writing by the Initial
Purchasers expressly for use therein. No stop order preventing the use of the
Preliminary Offering Memorandum or the Offering Memorandum, or any amendment or
supplement thereto, or any order asserting that any of the transactions
contemplated by this Agreement are subject to the registration requirements of
the Act, has been issued.
(ii) When the Senior Notes are issued and delivered pursuant to this
Agreement, no Senior Notes will be of the same class (within the meaning of Rule
144A under the Act) as securities of the Company that are listed on a national
securities exchange registered under Section 6 of the Exchange Act or that are
quoted in a United States automated inter-dealer quotation system.
(iii) Each of the Company and the Subsidiaries (A) has been duly
organized, is
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<PAGE> 9
validly existing as a corporation in good standing under the laws of its
respective jurisdiction of incorporation, (B) has all requisite corporate power
and authority to carry on its business as it is currently being conducted and as
described in the Offering Memorandum and to own, lease and operate its
properties, and (C) is duly qualified and in good standing as a foreign
corporation authorized to do business in each jurisdiction in which the nature
of its business or its ownership or leasing of property requires such
qualification except, with respect to this clause (C), where the failure to be
so qualified or in good standing does not and could not reasonably be expected
to (x) individually or in the aggregate, result in a material adverse effect on
the properties, business, results of operations, condition (financial or
otherwise), affairs or prospects of the Company and the Subsidiaries, taken as a
whole, (y) interfere with or adversely affect the issuance or marketability of
the Senior Notes pursuant hereto or (z) in any manner draw into question the
validity of this Agreement or any other Operative Document or the transactions
described in the Offering Memorandum under the caption "Use of Proceeds" (any of
the events set forth in clauses (x), (y) or (z), a "Material Adverse Effect").
The Company has no direct or indirect subsidiaries as of the Closing Date other
than the Subsidiaries.
(iv) All of the outstanding shares of capital stock of the Company
have been duly authorized, validly issued, and are fully paid and nonassessable
and were not issued in violation of any preemptive or similar rights. At March
31, 1998, on a combined basis, after giving effect to the issuance and sale of
the Senior Notes pursuant hereto and to the events stated therein, the Company
had an authorized and outstanding consolidated capitalization as set forth in
the Offering Memorandum under the caption "Capitalization."
(v) All of the outstanding capital stock of the Subsidiaries is owned
by the Company, free and clear of any security interest, claim, lien, limitation
on voting rights or encumbrance. Except as disclosed in the Offering Memorandum
there are not currently, and will not be as a result of the Offering, any
outstanding subscriptions, rights, warrants, calls, commitments of sale or
options to acquire (other than options issued pursuant to the Company's stock
option plans, the 160,000 warrants each to purchase 2.19 shares of Common Stock,
a warrant to purchase 100,000 shares of Common Stock, the 7% Series D Junior
Convertible Preferred Stock and the Series E Preferred Stock, and noting that at
present rights trade with the Common Stock), or instruments convertible into or
exchangeable for, any capital stock or other equity interest of the Company or
any Subsidiary.
(vi) The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement, the
Indenture, the Registration Rights Agreement, and the other Operative Documents
and to consummate the transactions contemplated hereby and thereby, including,
without limitation, the corporate power and authority to issue, sell and deliver
the Senior Notes as provided herein and therein.
(vii) This Agreement has been duly and validly authorized, executed
and delivered by the Company and is the legal, valid and binding agreement of
the Company, enforceable against it in accordance with its terms, except insofar
as indemnification and contribution provisions may be limited by applicable law
or equitable principles and subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization or similar laws affecting the rights of
creditors generally and subject to general principles of equity.
(viii) The Indenture has been duly and validly authorized by the
Company and, when
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<PAGE> 10
duly executed and delivered by the Company, will be the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization or similar laws affecting the rights of creditors generally and
subject to general principles of equity. The Offering Memorandum contains a fair
summary of the terms of the Indenture.
(ix) The Senior Notes have been duly and validly authorized by the
Company, and have been duly and validly authorized for issuance and sale to the
Initial Purchasers by the Company pursuant to this Agreement and, when issued
and authenticated in accordance with the terms of the Indenture and delivered
against payment therefor in accordance with the terms hereof and thereof, will
be the legal, valid and binding obligations of the Company, enforceable against
the Company in accordance with their terms and entitled to the benefits of the
Indenture, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization or similar laws affecting the rights of creditors generally and
subject to general principles of equity. The Offering Memorandum contains a fair
summary of the terms of the Senior Notes.
(x) The Exchange Notes have been duly and validly authorized for
issuance by the Company and, when issued and authenticated in accordance with
the terms of the Exchange Offer and the Indenture, will be the legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms and entitled to the benefits of the Indenture,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization or similar laws affecting the rights of creditors generally and
subject to general principles of equity. The Offering Memorandum contains a fair
summary of the terms of the Exchange Notes.
(xi) The Registration Rights Agreement has been duly and validly
authorized by the Company and, when duly executed and delivered by the Company,
will be the legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization or similar laws
affecting the rights of creditors generally and subject to general principles of
equity. The Offering Memorandum contains a fair summary of the terms of the
Registration Rights Agreement.
(xii) None of the Company or any of the Subsidiaries is and, after
giving effect to the Offering, will not be (A) in violation of its charter or
bylaws, (B) in default in the performance of any bond, debenture, note,
indenture, mortgage, deed of trust or other agreement or instrument to which it
is a party or by which it is bound or to which any of its properties is subject,
or (C) in violation of any local, state or Federal law, statute, ordinance,
rule, regulation, requirement, judgment or court decree (including, without
limitation, the Communications Act and the rules and regulations of the FCC and
environmental laws, statutes, ordinances, rules, regulations, judgments or court
decrees) applicable to the Company or any Subsidiary or any of their assets or
properties (whether owned or leased) other than, in the case of clauses (B) and
(C), any default or violation that (i) could not reasonably be expected to have
a Material Adverse Effect or (2) which is disclosed in the Offering Memorandum.
There exists no condition that, with notice, the passage of time or otherwise,
would constitute a default under any such document or instrument, except as
disclosed in the Offering Memorandum.
(xiii) None of (A) the execution, delivery or performance by the
Company of this Agreement and the other Operative Documents, (B) the issuance
and sale of the Senior Notes and (C)
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<PAGE> 11
consummation by the Company and the Subsidiaries of the transactions described
in the Offering Memorandum under the caption "Use of Proceeds" violate, conflict
with or constitute a breach of any of the terms or provisions of, or a default
under (or an event that with notice or the lapse of time, or both, would
constitute a default), or require consent under, or result in the imposition of
a lien or encumbrance on any properties of the Company or any Subsidiary, or an
acceleration of any indebtedness of the Company or any Subsidiary pursuant to,
(i) the charter or bylaws of the Company or any Subsidiary, (ii) any bond,
debenture, note, indenture, mortgage, deed of trust or other agreement or
instrument to which the Company or any Subsidiary is a party or by which any of
them or their property is or may be bound, (iii) any statute, rule or regulation
applicable to the Company or any Subsidiary or any of their respective assets or
properties or (iv) any judgment, order or decree of any court or governmental
agency or authority having jurisdiction over the Company or the Subsidiaries or
any of their assets or properties, except in the case of clauses (ii), (iii) and
(iv) for such violations conflicts, breaches, defaults, consents, impositions of
liens or accelerations that (x) would not singly, or in the aggregate, have a
Material Adverse Effect or (y) which are disclosed in the Offering Memorandum.
Other than as described in the Offering Memorandum, no consent, approval,
authorization or order of, or filing, registration, qualification, license or
permit of or with, (A) any court or governmental agency, body or administrative
agency (including, without limitation, the FCC) or (B) any other person is
required for (1) the execution, delivery and performance by the Company of this
Agreement and the other Operative Documents, (2) the issuance and sale of the
Senior Notes and the transactions contemplated hereby and thereby, except (x)
such as have been obtained and made (or, in the case of the Registration Rights
Agreement, will be obtained and made) under the Act, the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act") and state securities or Blue Sky
laws and regulations or such as may be required by the NASD or (y) where the
failure to obtain any such consent, approval, authorization or order of, or
filing registration, qualification, license or permit would not reasonably be
expected to result in a Material Adverse Effect.
(xiv) There is (i) no action, suit or proceeding before or by any
court, arbitrator or governmental agency, body or official, domestic or foreign,
now pending or, to the best knowledge of the Company or any Subsidiary,
threatened or contemplated to which the Company or any of the Subsidiaries is a
party or to which the business or property of the Company or any Subsidiary is
subject, (ii) no statute, rule, regulation or order that has been enacted,
adopted or issued by any governmental agency or that has been proposed by any
governmental body or (iii) no injunction, restraining order or order of any
nature by a federal or state court or foreign court of competent jurisdiction to
which the Company or any Subsidiary is or may be subject or to which the
business, assets, or property of the Company or any Subsidiary are or may be
subject, that, in the case of clauses (i), (ii) and (iii) above, (w) is required
to be disclosed in the Preliminary Offering Memorandum and the Offering
Memorandum and that is not so disclosed, or (x) could reasonably be expected to
individually or in the aggregate, result in a Material Adverse Effect.
(xv) No action has been taken and no statute, rule, regulation or
order has been enacted, adopted or issued by any governmental agency that
prevents the issuance of the Senior Notes or prevents or suspends the use of the
Offering Memorandum; no injunction, restraining order or order of any nature by
a federal or state court of competent jurisdiction has been issued that prevents
the issuance of the Senior Notes or prevents or suspends the sale of the Senior
Notes in any jurisdiction referred to in Section 4(e) hereof; and every request
of any securities authority or agency of any jurisdiction for additional
information has been complied with in all material respects.
(xvi) Except as set forth in the Offering Memorandum, there is (i) no
significant
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unfair labor practice complaint pending against the Company or any Subsidiary
nor, to the best knowledge of the Company, threatened against any of them,
before the National Labor Relations Board, any state or local labor relations
board or any foreign labor relations board, and no significant grievance or
significant arbitration proceeding arising out of or under any collective
bargaining agreement is so pending against the Company or any Subsidiary to the
best knowledge of the Company, threatened against any of them, (ii) no
significant strike, labor dispute, slowdown or stoppage pending against the
Company or any Subsidiary nor, to the best knowledge of the Company, threatened
against the Company or any Subsidiary and (iii) to the best knowledge of the
Company, no union representation question existing with respect to the employees
of the Company or any Subsidiary that, in the case of clauses (i), (ii) or
(iii), could reasonably be expected to result in a Material Adverse Effect. To
the best knowledge of the Company, no collective bargaining organizing
activities are taking place with respect to the Company or the Subsidiaries.
None of the Company or any Subsidiary has violated (A) any federal, state or
local law or foreign law relating to discrimination in hiring, promotion or pay
of employees (except as set forth in the Offering Memorandum), (B) any
applicable wage or hour laws or (C) any provision of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or the rules and regulations
thereunder, which in the case of clause (A), (B) or (C) above could reasonably
be expected to result in a Material Adverse Effect.
(xvii) None of the Company or any Subsidiary has violated any
environmental, safety or similar law or regulation applicable to it or its
business or property relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), lacks any permit, license or other approval
required of it under applicable Environmental Laws or is violating any term or
condition of such permit, license or approval which could reasonably be expected
to, either individually or in the aggregate, have a Material Adverse Effect.
(xviii) Each of the Company and the Subsidiaries has (i) good and
marketable title to all of the properties and assets described in the Offering
Memorandum as owned by it, free and clear of all liens, charges, encumbrances
and restrictions, except such as are described in the Offering Memorandum or as
would not have a Material Adverse Effect, (ii) peaceful and undisturbed
possession under all material leases to which any of them is a party as lessee,
(iii) all licenses, certificates, permits, authorizations, approvals, franchises
and other rights from, and has made all declarations and filings with, all
federal, state and local authorities (including, without limitation, the FCC),
all self-regulatory authorities and all courts and other tribunals (each an
"Authorization") necessary to engage in the business conducted by any of them in
the manner described in the Offering Memorandum, except as described in the
Offering Memorandum or where failure to hold such Authorizations would not,
individually or in the aggregate, have a Material Adverse Effect and (iv) no
reason to believe that any governmental body or agency is considering limiting,
suspending or revoking any such Authorization. Except where the failure to be in
full force and effect would not have a Material Adverse Effect, all such
Authorizations are valid and in full force and effect and each of the Company
and the Subsidiaries is in compliance in all material respects with the terms
and conditions of all such Authorizations and with the rules and regulations of
the regulatory authorities having jurisdiction with respect thereto. All
material leases to which the Company and the Subsidiaries is a party are valid
and binding and no default by the Company or any Subsidiary has occurred and is
continuing thereunder and, to the best knowledge of the Company and the
Subsidiaries, no material defaults by the landlord are existing under any such
lease that could reasonably be expected to result in a Material Adverse Effect.
(xix) Each of the Company and the Subsidiaries owns, possesses or has
the right to
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employ all patents, patent rights, licenses (including all FCC, state, local or
other jurisdictional regulatory licenses), inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, software, systems or procedures), trademarks, service
marks and trade names, inventions, computer programs, technical data and
information (collectively, the "Intellectual Property") presently employed by it
or its subsidiaries in connection with the businesses now operated by it or
which are proposed to be operated by it or its subsidiaries free and clear of
and without violating any right, claimed right, charge, encumbrance, pledge,
security interest, restriction or lien of any kind of any other person and none
of the Company or any Subsidiary has received any notice of infringement of or
conflict with asserted rights of others with respect to any of the foregoing
except as could not reasonably be expected to have a Material Adverse Effect.
The use of the Intellectual Property in connection with the business and
operations of the Company and the Subsidiaries does not infringe on the rights
of any person, except as could not reasonably be expected to have a Material
Adverse Effect.
(xx) None of the Company or any Subsidiary, or to the best knowledge
of the Company, any of their respective officers, directors, partners,
employees, agents or affiliates or any other person acting on behalf of the
Company or any Subsidiary has, directly or indirectly, given or agreed to give
any money, gift or similar benefit (other than legal price concessions to
customers in the ordinary course of business) to any customer, supplier,
employee or agent of a customer or supplier, official or employee of any
governmental agency (domestic or foreign), instrumentality of any government
(domestic or foreign) or any political party or candidate for office (domestic
or foreign) or other person who was, is or may be in a position to help or
hinder the business of the Company and any Subsidiary (or assist the Company or
any Subsidiary in connection with any actual or proposed transaction) which (i)
might subject the Company or any Subsidiary, or any other individual or entity
to any damage or penalty in any civil, criminal or governmental litigation or
proceeding (domestic or foreign), (ii) if not given in the past, might have had
a material adverse effect on the assets, business or operations of the Company
or any Subsidiary or (iii) if not continued in the future, might have a Material
Adverse Effect.
(xxi) All material tax returns required to be filed by the Company and
each of the Subsidiaries in all jurisdictions have been so filed. All taxes,
including withholding taxes, penalties and interest, assessments, fees and other
charges due or claimed to be due from such entities or that are due and payable
have been paid, other than those being contested in good faith and for which
adequate reserves have been provided or those currently payable without penalty
or interest. To the knowledge of the Company, there are no material proposed
additional tax assessments against the Company, the assets or property of the
Company or any Subsidiary.
(xxii) None of the Company or the Subsidiaries is (i) an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended (the "Investment Company
Act"), or (ii) a "holding company" or a "subsidiary company" or an "affiliate"
of a holding company within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
(xxiii) Except as disclosed in the Offering Memorandum, there are no
holders of securities of the Company or the Subsidiaries who, by reason of the
execution by the Company of this Agreement or any other Operative Document to
which it is a party or the consummation by the Company of the transactions
contemplated hereby and thereby, have the right to request or demand that the
Company or any of the Subsidiaries register under the Act or analogous foreign
laws and regulations securities held
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by them.
(xxiv) Each of the Company and the Subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurance that:
(i) transactions are executed in accordance with management's general or
specific authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect thereto.
(xxv) Each of the Company and the Subsidiaries maintains insurance
covering its properties, operations, personnel and businesses. Such insurance
insures against such losses and risks as are adequate in accordance with
customary industry practice to protect the Company and the Subsidiaries and
their respective businesses. None of the Company or any Subsidiary has received
notice from any insurer or agent of such insurer that substantial capital
improvements or other expenditures will have to be made in order to continue
such insurance. All such insurance is outstanding and duly in force on the date
hereof, subject only to changes made in the ordinary course of business,
consistent with past practice, which do not, singly or in the aggregate,
materially alter the coverage thereunder or the risks covered thereby.
(xxvi) None of the Company or any Subsidiary has (i) taken, directly
or indirectly, any action designed to, or that might reasonably be expected to,
cause or result in stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Senior Notes or (ii) since
the date of the Preliminary Offering Memorandum (A) sold, bid for, purchased or
paid any person any compensation for soliciting purchases of, the Senior Notes
or (B) paid or agreed to pay to any person any compensation for soliciting
another to purchase any other securities of the Company.
(xxvii) No registration under the Act of the Senior Notes is required
for the sale thereof to the Initial Purchasers as contemplated hereby or for the
Exempt Resales assuming (i) that the purchasers who buy the Senior Notes in the
Exempt Resales are Eligible Purchasers and (ii) the accuracy of the Initial
Purchasers' representations regarding the absence of general solicitation in
connection with the sale of Senior Notes to the Initial Purchasers and the
Exempt Resales contained herein. No form of general solicitation or general
advertising was used by the Company or any of its representatives (other than
the Initial Purchasers, as to which the Company makes no representation or
warranty) in connection with the offer and sale of any of the Senior Notes in
connection with Exempt Resales, including, but not limited to, articles, notices
or other communications published in any newspaper, magazine, or similar medium
or broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising.
(xxviii) Set forth on Exhibit A hereto is a list of each employee
pension or benefit plan with respect to which the Company or any corporation
considered an affiliate of the Company within the meaning of Section 407(d)(7)
of ERISA (an "ERISA Affiliate") is a party in interest or disqualified person.
The execution and delivery of this Agreement, the other Operative Documents and
the sale of the Senior Notes to be purchased by the Eligible Purchasers will not
involve any prohibited transaction within the meaning of Section 406 of ERISA or
Section 4975 of the Internal Revenue Code of 1986. The
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<PAGE> 15
representation made by the Company in the preceding sentence is made in reliance
upon and subject to the accuracy of, and compliance with, the representations
and covenants made or deemed made by the Eligible Purchasers as set forth in the
Offering Memorandum under the caption "Notice to Investors."
(xxix) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its date, and each amendment or supplement thereto, as of its
date, contains the information specified in, and meets the requirements of, Rule
144A(d)(4) under the Act.
(xxx) Subsequent to the respective dates as of which information is
given in the Offering Memorandum and up to the Closing Date, except as set forth
in the Offering Memorandum, (i) none of the Company or any Subsidiary has
incurred any liabilities or obligations, direct or contingent, which are
material, individually or in the aggregate, to the Company and the Subsidiaries
taken as a whole, nor entered into any transaction not in the ordinary course of
business, (ii) none of the Company or any Subsidiary has incurred any
liabilities or obligations, direct or contingent, which will be material to the
Company and the Subsidiaries taken as a whole, (iii) there has not been, singly
or in the aggregate, any change or development which could reasonably be
expected to result in a Material Adverse Effect and (iv) there has been no
dividend or distribution of any kind declared, paid or made by the Company or
any of its Subsidiaries on any class of its capital stock, except for the stock
dividend payable pursuant to the two-for-one split of the Company's Common
Stock, dividends paid in respect of the Series B Redeemable Exchangeable
Preferred Stock due 2009 (the "Series B Preferred Stock") the Series D Junior
Convertible Preferred Stock (the "Series D Preferred Stock") or the Series E
Junior Convertible Preferred Stock (the "Series E Preferred Stock").
(xxxi) None of the execution, delivery and performance of this
Agreement, the issuance and sale of the Senior Notes, the application of the
proceeds from the issuance and sale of the Senior Notes and the consummation of
the transactions contemplated thereby as set forth in the Offering Memorandum,
will violate Regulations G, T, U or X promulgated by the Board of Governors of
the Federal Reserve System or analogous foreign laws and regulations.
(xxxii) To the best knowledge of the Company, each of the accountants
who have certified or will certify the financial statements included or to be
included as part of the Offering Memorandum are independent accountants. The
historical financial statements of the Company and its Subsidiaries comply as to
form in all material respects with the requirements applicable to registration
statements on Form S-1 under the Act and present fairly in all material respects
the financial position and results of operations of the Company and its
Subsidiaries at the respective dates and for the respective periods indicated.
Such financial statements have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods presented. The pro forma financial statements included in the Offering
Memorandum have been prepared on a basis consistent with such historical
statements, except for the pro forma adjustments specified therein, and give
effect to assumptions made on a reasonable basis and present fairly in all
material respects the historical and proposed transactions contemplated by this
Agreement, the other Operative Documents; and such pro forma financial
statements comply as to form in all material respects with the requirements
applicable to pro forma financial statements included in registration statements
on Form S-1 under the Act. The other financial and statistical information and
data included in the Offering Memorandum, historical and pro forma, are
accurately presented in all material respects and prepared on a basis consistent
with the financial statements, historical and pro forma, included in the
Offering Memorandum and the books and
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<PAGE> 16
records of the Company and its Subsidiaries, as applicable.
(xxxiii) The Company does not intend to, nor does it believe that it
will, incur debts beyond its ability to pay such debts as they mature. The
present fair saleable value of the assets of the Company on a consolidated basis
exceeds the amount that will be required to be paid on or in respect of the
existing debts and other liabilities (including contingent liabilities) of the
Company on a consolidated basis as they become absolute and matured. The assets
of the Company on a consolidated basis do not constitute unreasonably small
capital to carry out the business of the Company and the Subsidiaries, taken as
a whole, as conducted or as proposed to be conducted. Upon the issuance of the
Senior Notes, the present fair saleable value of the assets of the Company on a
consolidated basis will exceed the amount that will be required to be paid on or
in respect of the existing debts and other liabilities (including contingent
liabilities) of the Company on a consolidated basis as they become absolute and
matured. Upon the issuance of the Senior Notes, the assets of the Company on a
consolidated basis will not constitute unreasonably small capital to carry out
its businesses as now conducted, including the capital needs of the Company on a
consolidated basis, taking into account the projected capital requirements and
capital availability.
(xxxiv) Except pursuant to this Agreement, there are no contracts,
agreements or understandings between the Company and its Subsidiaries and any
other person that would give rise to a valid claim against the Company or either
of the Initial Purchasers for a brokerage commission, finder's fee or like
payment in connection with the issuance, purchase and sale of the Senior Notes.
(xxxv) Each certificate signed by any officer of the Company and
delivered to the Initial Purchasers or counsel for the Initial Purchasers shall
be deemed to be a representation and warranty by the Company to the Initial
Purchasers as to the matters covered thereby.
(xxxvi) Each of the Company and its Subsidiaries have implemented Year
2000 compliance programs designed to ensure that each respective company's
computer systems and applications will function properly beyond 1999. The
Company believes that adequate resources have been allocated for this purpose
and expects the Company's and its Subsidiaries' Year 2000 date conversion
programs to be completed on a timely basis.
The Company acknowledges that each of the Initial Purchasers and, for
purposes of the opinions to be delivered to the Initial Purchasers pursuant to
Section 8 hereof, counsel to the Company and counsel to the Initial Purchasers,
will rely upon the accuracy and truth of the foregoing representations and
hereby consents to such reliance.
(b) Each of the Initial Purchasers severally and not jointly
represents, warrants and covenants to the Company and agrees that:
(i) Such Initial Purchaser is a QIB, with such knowledge and
experience in financial and business matters as are necessary in order to
evaluate the merits and risks of an investment in the Senior Notes.
(ii) Such Initial Purchaser (A) is not acquiring the Senior Notes with
a view to any distribution thereof that would violate the Act or the securities
laws of any state of the United States or any
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<PAGE> 17
other applicable jurisdiction and (B) will be reoffering and reselling the
Senior Notes only to QIBs in reliance on the exemption from the registration
requirements of the Act provided by Rule 144A.
(iii) No form of general solicitation or general advertising has been
or will be used by either of the Initial Purchasers or any of their
representatives in connection with the offer and sale of any of the Senior
Notes, including, but not limited to, articles, notices or other communications
published in any newspaper, magazine, or similar medium or broadcast over
television or radio, or any seminar or meeting whose attendees have been invited
by any general solicitation or general advertising.
(iv) Each of the Initial Purchasers agrees that, in connection with
the Exempt Resales, it will solicit offers to buy the Senior Notes only from,
and will offer to sell the Senior Notes only to, Eligible Purchasers. The
Initial Purchasers further agree (A) that they will offer to sell the Senior
Notes only to, and will solicit offers to buy the Senior Notes only from QIBs
who in purchasing such Senior Notes will be deemed to have represented and
agreed that they are purchasing the Senior Notes for their own accounts or
accounts with respect to which they exercise sole investment discretion and that
they or such accounts are QIBs and (B) that such Eligible Purchasers shall
acknowledge and agree that such Senior Notes will not have been registered under
the Act and may be resold, pledged or otherwise transferred only (i) to the
Company, (ii) pursuant to a registration statement which has been declared
effective under the Securities Act, (iii) to a person it reasonably believes is
a QIB in a transaction meeting the requirements of Rule 144A under the
Securities Act, (iv) to an institutional "accredited investor" (as defined in
Rule 501(a) (1), (2), (3) or (7) of Regulation D under the Securities Act that,
prior to such transfer, furnishes to the trustee a signed letter containing
certain representations and agreements relating to the transfer of the Senior
Notes (the form of which letter can be obtained from the Trustee) or (v)
pursuant to any other available exemption from the registration requirements of
the Securities Act (and based on an opinion of counsel if the Company so
requests) subject in each of the foregoing cases to the applicable state
securities laws of any State of the United States or any other applicable
jurisdiction and (C) that the holder will, and each subsequent holder is
required to, notify any purchaser of the security evidenced thereby of the
resale restrictions set forth in (B) above. Accordingly, each of the Initial
Purchasers agrees that neither it, its affiliates nor any persons acting on its
behalf has engaged or will engage in any directed selling efforts within the
meaning of Rule 902 of Regulation S with respect to the Senior Notes and it, its
affiliates and all persons acting on its or their behalf have complied and will
comply with the offering restrictions requirements of Regulation S.
(v) Each of the Initial Purchasers understands that the Company and,
for purposes of the opinions to be delivered to the Initial Purchasers pursuant
to Section 8 hereof, counsel to the Company and counsel to the Initial
Purchasers will rely upon the accuracy and truth of the foregoing
representations and hereby consents to such reliance.
6. Indemnification.
(a) The Company agrees to indemnify and hold harmless (i) each
of the Initial Purchasers, (ii) each person, if any, who controls either of the
Initial Purchasers within the meaning of Section 15 of the Act or Section 20(a)
of the Exchange Act and (iii) the respective officers, directors, partners,
employees, representatives and agents of any of the Initial Purchasers or any
controlling person to the fullest extent lawful, from and against any and all
losses, liabilities, claims, damages and expenses whatsoever (including but not
limited to attorneys' fees and any and all expenses whatsoever incurred in
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<PAGE> 18
investigating, preparing or defending against any investigation or litigation,
commenced or threatened, or any claim whatsoever, and any and all amounts paid
in settlement of any claim or litigation), joint or several, to which they or
any of them may become subject under the Act, the Exchange Act or otherwise,
insofar as such losses, liabilities, claims, damages or expenses (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in the Preliminary Offering
Memorandum or the Offering Memorandum, or in any supplement thereto or amendment
thereof, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that the Company will not be liable in
any such case to the extent, but only to the extent, that (i) any such loss,
liability, claim, damage or expense arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written information
furnished to the Company by or on behalf of the Initial Purchasers expressly for
use therein and (ii) the foregoing indemnity with respect to any untrue
statement contained in or omitted from a preliminary offering memorandum shall
not inure to the benefit of any Initial Purchaser (or any person controlling
such Initial Purchaser), from whom the person asserting any such loss,
liability, claim, damage or expense purchased any of the Senior Notes which are
the subject thereof if it is finally judicially determined that such loss,
liability, claim, damage or expense resulted solely from the fact that the
Initial Purchaser sold Senior Notes to a person to whom there was not sent or
given, at or prior to the written confirmation of such sale, a copy of the
Offering Memorandum, as amended or supplemented, and (x) the Company shall have
previously and timely furnished sufficient copies of the Offering Memorandum, as
so amended or supplemented, to such Initial Purchaser in accordance with this
Agreement and (y) the Offering Memorandum, as so amended or supplemented, would
have corrected such untrue statement or omission of a material fact. This
indemnity agreement will be in addition to any liability which the Company may
otherwise have, including, under this Agreement.
(b) Each Initial Purchaser, severally and not jointly, agrees
to indemnify and hold harmless the Company and each person, if any, who controls
the Company within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, against any losses, liabilities, claims, damages and expenses
whatsoever (including but not limited to attorneys' fees and any and all
expenses whatsoever incurred in investigating, preparing or defending against
any investigation or litigation, commenced or threatened, or any claim
whatsoever and any and all amounts paid in settlement of any claim or
litigation), joint or several, to which they or any of them may become subject
under the Act, the Exchange Act or otherwise, insofar as such losses,
liabilities, claims, damages or expenses (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Preliminary Offering Memorandum or the Offering
Memorandum, or in any amendment thereof or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading, in
each case to the extent, but only to the extent, that any such loss, liability,
claim, damage or expense arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made therein in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of either Initial Purchaser expressly for use therein;
provided, however, that in no case shall either Initial Purchaser be liable or
responsible for any amount in excess of the discounts and commissions received
by such Initial Purchaser, as set forth on the cover page of the Offering
Memorandum. This indemnity will be in addition to any liability which either
Initial Purchaser may otherwise have, including under this Agreement.
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(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 6 except to the extent that it
has been prejudiced in any material respect by such failure or from any
liability which it may otherwise have). In case any such action is brought
against any indemnified party, and it notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. Notwithstanding the foregoing, the
indemnified party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by the indemnifying parties
in connection with the defense of such action, (ii) the indemnifying parties
shall not have employed counsel to take charge of the defense of such action
within a reasonable time after notice of commencement of the action, or (iii)
such indemnified party or parties shall have reasonably concluded that there may
be defenses available to it or them which are different from or additional to
those available to one or all of the indemnifying parties (in which case the
indemnifying party or parties shall not have the right to direct the defense of
such action on behalf of the indemnified party or parties), in any of which
events such fees and expenses of counsel shall be borne by the indemnifying
parties; provided, however, that the indemnifying party under subsection (a) or
(b) above, shall only be liable for the legal expenses of one counsel (in
addition to any local counsel) for all indemnified parties in each jurisdiction
in which any claim or action is brought. Anything in this subsection to the
contrary notwithstanding, an indemnifying party shall not be liable for any
settlement of any claim or action effected without its prior written consent;
provided, however, that such consent was not unreasonably withheld.
7. Contribution. In order to provide for contribution in
circumstances in which the indemnification provided for in Section 6 is for any
reason held to be unavailable from the Company or is insufficient to hold
harmless a party indemnified thereunder, the Company and the Initial Purchasers
shall contribute to the aggregate losses, claims, damages, liabilities and
expenses of the nature contemplated by such indemnification provision (including
any investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claims
asserted, but after deducting in the case of losses, claims, damages,
liabilities and expenses suffered by the Company, any contribution received by
the Company from persons, other than the Initial Purchasers, who may also be
liable for contribution, including persons who control the Company within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act) to which
the Company and one or both of the Initial Purchasers may be subject, in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Initial Purchasers from the offering of the Senior Notes or, if
such allocation is not permitted by applicable law or indemnification is not
available as a result of the indemnifying party not having received notice as
provided in Section 6, in such proportion as is appropriate to reflect not only
the relative benefits referred to above but also the relative fault of the
Company and the Initial Purchasers in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Initial Purchasers shall be deemed to
be in the same proportion as (x) the total proceeds from the offering of Senior
Notes (net of discounts but before deducting expenses) received by the Company
and (y) the
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<PAGE> 20
discounts received by the Initial Purchasers, respectively, in each case as set
forth in the table on the cover page of the Offering Memorandum. The relative
fault of the Company and of the Initial Purchasers shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Initial Purchasers and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and the Initial
Purchasers agree that it would not be just and equitable if contribution
pursuant to this Section 7 were determined by pro rata allocation or by any
other method of allocation which does not take into account the equitable
considerations referred to above. Notwithstanding the provisions of this Section
7, (i) in no case shall either of the Initial Purchasers be required to
contribute any amount in excess of the amount by which the discount applicable
to the Senior Notes purchased by such Initial Purchaser pursuant to this
Agreement exceeds the amount of any damages which such Initial Purchaser has
otherwise been required to pay by reason of any untrue or alleged untrue
statement or omission or alleged omission and (ii) no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 7, (A) each person,
if any, who controls either of the Initial Purchasers within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act and (B) the
respective officers, directors, partners, employees, representatives and agents
of any of the Initial Purchasers or any controlling person shall have the same
rights to contribution as such Initial Purchaser, and each person, if any, who
controls the Company within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act shall have the same rights to contribution as the
Company, subject in each case to clauses (i) and (ii) of this Section 7. Any
party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim for contribution may be made against another party or parties
under this Section 7, notify such party or parties from whom contribution may be
sought, but the failure to so notify such party or parties shall not relieve the
party or parties from whom contribution may be sought from any obligation it or
they may have under this Section 7 or otherwise. No party shall be liable for
contribution with respect to any action or claim settled without its prior
written consent; provided, however, that such written consent was not
unreasonably withheld.
8. Conditions of Initial Purchasers' Obligations. The several
obligations of the Initial Purchasers to purchase and pay for the Senior Notes,
as provided herein, shall be subject to the satisfaction of the following
conditions, except that with respect to the Additional Notes, references to the
term Closing Date shall mean the Option Closing Date:
(a) All of the representations and warranties of the Company
contained in this Agreement shall be true and correct on the date hereof and on
the Closing Date with the same force and effect as if made on and as of the date
hereof and the Closing Date, respectively. The Company shall have performed or
complied with all of the agreements herein contained and required to be
performed or complied with by it at or prior to the Closing Date.
(b) The Offering Memorandum shall have been printed and copies
distributed to the Initial Purchasers not later than 10:00 a.m., New York City
time, on the day following the date of this Agreement or at such later date and
time as to which the Initial Purchasers may agree, and no stop order suspending
the qualification or exemption from qualification of the Senior Notes in any
jurisdiction referred to in Section 4(e) shall have been issued and no
proceeding for that purpose shall have been commenced or shall be pending or
threatened.
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(c) No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any
governmental agency which would, as of the Closing Date, prevent the issuance of
the Senior Notes; no action, suit or proceeding shall have been commenced and be
pending against or affecting or, to the best knowledge of the Company,
threatened against, the Company or the Subsidiaries before any court or
arbitrator or any governmental body, agency or official that (1) could
reasonably be expected to result in a Material Adverse Effect or (2) has not
been disclosed in the Offering Memorandum; and no stop order shall have been
issued preventing the use of the Offering Memorandum, or any amendment or
supplement thereto, or which could reasonably be expected to have a Material
Adverse Effect.
(d) Since the dates as of which information is given in the
Offering Memorandum and except as contemplated by the Offering Memorandum, (i)
there shall not have been any material adverse change, or any development that
is reasonably likely to result in a material adverse change, in the capital
stock or the long-term debt, or material increase in the short-term debt, of the
Company or the Subsidiaries from that set forth in the Offering Memorandum, (ii)
no dividend or distribution of any kind shall have been declared, paid or made
by the Company or any Subsidiary on any class of its capital stock, except for
the stock dividend payable pursuant to the two-for-one split of the Company's
Common Stock, dividends paid in respect of the Series B Preferred Stock, the
Series D Preferred Stock or the Series E Preferred Stock, (iii) neither the
Company nor any Subsidiary shall have incurred any liabilities or obligations,
direct or contingent, that are material, individually or in the aggregate, to
the Company and the Subsidiaries, taken as a whole, and that are required to be
disclosed on a balance sheet or notes thereto in accordance with generally
accepted accounting principles and are not disclosed on the latest balance sheet
or notes thereto included in the Offering Memorandum. Since the date hereof and
since the dates as of which information is given in the Offering Memorandum,
there shall not have occurred any Material Adverse Effect.
(e) The Initial Purchasers shall have received a certificate,
dated the Closing Date, signed on behalf of the Company by (i) David C. Ruberg,
Chairman of the Board, President and Chief Executive Officer and (ii) Robert
Manning, Senior Vice President and Chief Financial Officer, in form and
substance reasonably satisfactory to the Initial Purchasers, confirming, as of
the Closing Date, the matters set forth in paragraphs (a), (b), (c) and (d) of
this Section 8 and that, as of the Closing Date, the obligations of the Company
to be performed hereunder on or prior thereto have been duly performed in all
material respects.
(f) The Initial Purchasers shall have received on the Closing
Date an opinion, dated the Closing Date, in form and substance satisfactory to
the Initial Purchasers and counsel to the Initial Purchasers, of Kronish, Lieb,
Weiner & Hellman LLP, counsel for the Company, to the effect set forth in
Exhibit B hereto.
(g) The Initial Purchasers shall have received on the Closing
Date an opinion, dated the Closing Date, in form and substance satisfactory to
the Initial Purchasers and counsel to the Initial Purchasers, of Kelley, Drye &
Warren, special regulatory counsel to the Company, to the effect set forth in
Exhibit C hereto.
(h) The Initial Purchasers shall have received an opinion,
dated the Closing Date, in form and substance reasonably satisfactory to the
Initial Purchasers, of Latham & Watkins, counsel to the Initial Purchasers,
covering such matters as are customarily covered in such opinions.
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(i) At the time this Agreement is executed and at the Closing
Date the Initial Purchasers shall have received from Ernst & Young LLP,
independent public accountants for the Company and its Subsidiaries, dated as of
the date of this Agreement and as of the Closing Date, customary comfort letters
addressed to the Initial Purchasers and in form and substance satisfactory to
the Initial Purchasers and counsel to the Initial Purchasers with respect to the
financial statements and certain financial information of the Company and its
Subsidiaries contained in the Offering Memorandum.
(j) Latham & Watkins shall have been furnished with such
documents, in addition to those set forth above, as they may reasonably require
for the purpose of enabling them to review or pass upon the matters referred to
in this Section 8 and in order to evidence the accuracy, completeness or
satisfaction in all material respects of any of the representations, warranties
or conditions herein contained.
(k) Prior to the Closing Date, the Company and the
Subsidiaries shall have furnished to the Initial Purchasers such further
information, certificates and documents as the Initial Purchasers may reasonably
request.
(l) The Company and the Trustee shall have entered into the
Indenture and the Initial Purchasers shall have received counterparts, conformed
as executed, thereof.
(m) The Company shall have entered into the Registration
Rights Agreement and the Initial Purchasers shall have received counterparts,
conformed as executed, thereof.
All opinions, certificates, letters and other documents
required by this Section 8 to be delivered by the Company will be in compliance
with the provisions hereof only if they are reasonably satisfactory in form and
substance to the Initial Purchasers. The Company will furnish the Initial
Purchasers with such conformed copies of such opinions, certificates, letters
and other documents as it shall reasonably request.
9. Initial Purchasers' Information. The Company and the
Initial Purchasers severally acknowledge that the statements with respect to the
offering of the Senior Notes set forth in the last paragraph of the cover page,
and the third, fifth and seventh paragraphs under the caption "Plan of
Distribution" in such Offering Memorandum constitute the only information
furnished in writing by the Initial Purchasers expressly for use in the Offering
Memorandum.
10. Survival of Representations and Agreements. All
representations and warranties, covenants and agreements of the Initial
Purchasers and the Company contained in this Agreement, including the agreements
contained in Sections 4(f) and 11(d), the indemnity agreements contained in
Section 6 and the contribution agreements contained in Section 7, shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of the Initial Purchasers any controlling person thereof or by or
on behalf of the Company or any controlling person thereof, and shall survive
delivery of and payment for the Senior Notes to and by the Initial Purchasers.
The representations contained in Section 5 and the agreements contained in
Sections 4(f), 6, 7 and 11(d) shall survive the termination of this Agreement,
including any termination pursuant to Section 11.
21
<PAGE> 23
11. Effective Date of Agreement; Termination.
(a) This Agreement shall become effective upon execution and
delivery of a counterpart hereof by each of the parties hereto.
(b) The Initial Purchasers shall have the right to terminate
this Agreement at any time prior to the Closing Date by notice to the Company
from the Initial Purchasers, without liability (other than with respect to
Sections 6 and 7) on the Initial Purchasers' part to the Company if, on or prior
to such date, (i) the Company shall have failed, refused or been unable to
perform in any material respect any agreement on its part to be performed
hereunder, (ii) any other condition to the obligations of the Initial Purchasers
hereunder as provided in Section 8 is not fulfilled when and as required in any
material respect, (iii) in the reasonable judgment of the Initial Purchasers any
material adverse change shall have occurred since the respective dates as of
which information is given in the Offering Memorandum in the condition
(financial or otherwise), business, properties, assets, liabilities, prospects,
net worth, results of operations or cash flows of the Company and the
Subsidiaries taken as a whole, other than as set forth in the Offering
Memorandum, or (iv)(A) any domestic or international event or act or occurrence
has materially disrupted, or in the opinion of the Initial Purchasers will in
the immediate future materially disrupt, the market for the Company's securities
or for securities in general; or (B) trading in securities generally on the New
York or American Stock Exchanges shall have been suspended or materially
limited, or minimum or maximum prices for trading shall have been established,
or maximum ranges for prices for securities shall have been required, on such
exchange, or by such exchange or other regulatory body or governmental authority
having jurisdiction; or (C) a banking moratorium shall have been declared by
Federal or state authorities, or a moratorium in foreign exchange trading by
major international banks or persons shall have been declared; or (D) there is
an outbreak or escalation of armed hostilities involving the United States on or
after the date hereof, or if there has been a declaration by the United States
of a national emergency or war, the effect of which shall be, in the Initial
Purchasers' judgment, to make it inadvisable or impracticable to proceed with
the offering or delivery of the Senior Notes on the terms and in the manner
contemplated in the Offering Memorandum; or (E) there shall have been such a
material adverse change in general economic, political or financial conditions
or if the effect of international conditions on the financial markets in the
United States shall be such as, in the Initial Purchasers' judgment, makes it
inadvisable or impracticable to proceed with the delivery of the Senior Notes as
contemplated hereby.
(c) Any notice of termination pursuant to this Section 11
shall be by telephone, telex, telephonic facsimile, or telegraph, confirmed in
writing by letter.
(d) If this Agreement shall be terminated pursuant to any of
the provisions hereof (otherwise than pursuant to any of clauses (iii) or (iv)
of Section 11(b), in which case each party will be responsible for its own
expenses), or if the sale of the Senior Notes provided for herein is not
consummated because any condition to the obligations of the Initial Purchasers
set forth herein is not satisfied or because of any refusal, inability or
failure on the part of the Company to perform any agreement herein or comply
with any provision hereof, the Company will, subject to demand by the Initial
Purchasers, reimburse the Initial Purchasers for all out-of-pocket expenses
(including the reasonable fees and expenses of Initial Purchasers' counsel),
incurred by the Initial Purchasers in connection herewith.
12. Notice. All communications hereunder, except as may be
otherwise specifically provided herein, shall be in writing and, if sent to the
Initial Purchasers shall be mailed, delivered, or
22
<PAGE> 24
telexed, telegraphed or telecopied and confirmed in writing the Initial
Purchasers, c/o Bear, Stearns & Co. Inc., 245 Park Avenue, New York, New York
10167, Attention: Corporate Finance Department, telecopy number: (212) 272-3092;
and if sent to the Company, shall be mailed, delivered or telexed, telegraphed
or telecopied and confirmed in writing to Intermedia Communications Inc., 3625
Queen Palm Drive, Tampa, Florida 33619, Attention: Chief Financial Officer,
telecopy number: (813) 744-2470, with a copy to Kronish, Lieb, Weiner & Hellman
LLP, 1114 Avenue of the Americas, 46th Floor, New York, New York 10036,
Attention: Ralph J. Sutcliffe; provided, however, that any notice pursuant to
Section 7 shall be mailed, delivered or telexed, telegraphed or telecopied and
confirmed in writing.
13. Parties. This Agreement shall inure solely to the benefit
of, and shall be binding upon, the Initial Purchasers and the Company and the
controlling persons and agents referred to in Sections 6 and 7, and their
respective successors and assigns, and no other person shall have or be
construed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Agreement or any provision herein contained. The
term "successors and assigns" shall not include a purchaser, in its capacity as
such, of Senior Notes from the Initial Purchasers.
14. Construction. This Agreement shall be construed in
accordance with the internal laws of the State of New York. TIME IS OF THE
ESSENCE IN THIS AGREEMENT.
15. Captions. The captions included in this Agreement are
included solely for convenience of reference and are not to be considered a part
of this Agreement.
16. Counterparts. This Agreement may be executed in various
counterparts which together shall constitute one and the same instrument.
[Signature page to follow]
23
<PAGE> 25
If the foregoing correctly sets forth the understanding among
the Initial Purchasers and the Company, please so indicate in the space provided
below for that purpose, whereupon this letter shall constitute a binding
agreement between us.
Very truly yours,
Intermedia Communications Inc.
By:________________________________
Name:
Title:
Accepted and agreed to as of
the date first above written:
BEAR, STEARNS & CO. INC.
By:_________________________________
Name:
Title:
SALOMON BROTHERS INC
By:_________________________________
Name:
Title:
MERRILL LYNCH & CO.
By:_________________________________
Name:
Title:
24
<PAGE> 26
SBC WARBURG DILLON READ INC.
By:_________________________________
Name:
Title:
25
<PAGE> 27
SCHEDULE I
<TABLE>
<CAPTION>
Amount of
Senior
Notes to
Initial Purchaser be Purchased
- ----------------- ------------
<S> <C>
Bear, Stearns & Co. Inc. $247,500,000
Salomon Brothers Inc 90,000,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated 90,000,000
SBC Warburg Dillon Read Inc. 22,500,000
------------
Total $450,000,000
</TABLE>
Sched - 1
<PAGE> 28
EXHIBIT A
List of Employee Pension and Benefit Plans
of Intermedia Communications Inc.
and its Subsidiaries
1. Intermedia Communications Inc. 401(k) Profit Sharing Plan
A-1
<PAGE> 29
EXHIBIT B
Form of Opinion of Kronish, Lieb, Weiner & Hellman LLP
1. Each of the Company and the Subsidiaries is duly organized
and validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, and has all requisite corporate power and
authority to carry on its business as it is being conducted and as described in
the Offering Memorandum and to own, lease and operate its properties, and is
duly qualified and in good standing as a foreign corporation authorized to do
business in each jurisdiction in which the nature of its business or its
ownership or leasing of property requires such qualification, except where the
failure to be so qualified would not, singly or in the aggregate, have a
Material Adverse Effect.
2. All of the outstanding shares of capital stock of the
Company has been duly authorized, validly issued, and are fully paid and
nonassessable and were not issued in violation of any preemptive or similar
rights under the Delaware General Corporation Law. The authorized, issued and
outstanding capital stock of the Company conforms in all respects to the
description thereof set forth in the Offering Memorandum.
3. To our knowledge, after reasonable inquiry, all of the
issued and outstanding capital stock of the Company's Subsidiaries have been
duly authorized and validly issued, are fully paid and non-assessable and were
not issued in violation of or subject to any preemptive or similar rights under
the Delaware General Corporation Law or known to us, after reasonable inquiry,
and, is owned by the Company of record, free and clear of any security interest,
claim, lien, limitation on voting rights or encumbrance. Except as set forth on
Schedule A hereto, there are not, to our knowledge, currently, and will not be
following the Offering, any outstanding subscriptions, rights, warrants, calls,
commitments of sale or options to acquire (other than options issued pursuant to
the Company's stock option plans, the 160,000 warrants each to purchase 2.19
shares of Common Stock, the 7% Series D Junior Convertible Preferred Stock and
the Series E Preferred Stock, and noting that at present rights trade with the
Common Stock), or instruments convertible into or exchangeable for, any capital
stock or other equity interest of the Company or any Subsidiary.
4. When the Senior Notes are issued and delivered pursuant to
this Agreement, no Senior Notes will be of the same class (within the meaning of
Rule 144A under the Act) as securities of the Company that are listed on a
national securities exchange registered under Section 6 of the Exchange Act or
that are quoted in a United States automated inter-dealer quotation system.
5. The Company has all requisite corporate power and authority
to execute, deliver and perform its obligations under this Agreement, the
Indenture, the Registration Rights Agreement, and the other Operative Documents,
as applicable, and to consummate the transactions contemplated thereby,
including, without limitation, the corporate power and authority to issue, sell
and deliver the Senior Notes as provided herein and therein.
6. This Agreement has been duly and validly authorized,
executed and delivered by the Company and, assuming due execution by the other
parties hereto, is the legally valid and binding agreement of the Company.
B-1
<PAGE> 30
7. Each of the Indenture and the Registration Rights Agreement
has been duly and validly authorized, executed and delivered by the Company,
and, assuming due execution by the other parties thereto, is the legal, valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except that we express no opinion as to the validity
or enforceability of rights of indemnity or contribution, or both and except as
such enforceability may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization or similar laws affecting the rights of creditors
generally and subject to general principles of equity.
8. The Senior Notes have been duly and validly authorized for
issuance and sale to the Initial Purchasers by the Company pursuant to this
Agreement and, when issued and authenticated in accordance with the terms of the
Indenture and delivered against payment therefor in accordance with the terms of
this Agreement and the Indenture, assuming due execution by the other parties
thereto, will be the legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms and entitled to
the benefits of the Indenture, except that we express no opinion as to the
validity or enforceability of rights of indemnity or contribution, or both, and
except as such enforceability may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization or similar laws affecting the rights of
creditors generally and subject to general principles of equity.
9. The Exchange Notes have been duly and validly authorized
for issuance by the Company and, when issued and authenticated in accordance
with the terms of the Indenture, assuming due execution by the other parties
thereto, will be the legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms and entitled to
the benefits of the Indenture, except that we express no opinion as to the
validity or enforceability of rights of indemnity or contribution, or both, and
except as such enforceability may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization or similar laws affecting the rights of
creditors generally and subject to general principles of equity.
10. The Offering Memorandum contains a fair summary of each of
the Senior Notes, the Indenture, and the Registration Rights Agreement.
11. No registration under the Act of the Senior Notes is
required for the sale of the Senior Notes to the Initial Purchasers as
contemplated by this Agreement or for the Exempt Resales assuming (i) that the
Initial Purchasers are Qualified Institutional Buyers, as defined in Rule 144A
under the Act ("QIB"), (ii) that the purchasers who buy the Senior Notes in the
Exempt Resales are Eligible Purchasers, (iii) the accuracy of the Initial
Purchasers' representations regarding the absence of general solicitation in
connection with the sale of Senior Notes to the Initial Purchasers and the
Exempt Resales contained in this Agreement and (iv) the accuracy of the
Company's representations in Sections 5(a)(ii), (xxvi), (xxvii) (other than with
respect to the first sentence) and (xxix) of this Agreement.
12. The Offering Memorandum, as of its date (except for the
financial statements, including the notes thereto, and supporting schedules and
other financial, statistical and accounting data included therein or omitted
therefrom, as to which no opinion need be expressed), and each amendment or
supplement thereto, as of its date, contains all the information specified in,
and meets the requirements of, Rule 144A(d)(4) under the Act.
B-2
<PAGE> 31
13. Prior to the effectiveness of the Exchange Offer
Registration Statement or the Shelf Registration Statement, the Indenture is not
required to be qualified under the Trust Indenture Act.
14. None of (A) the execution, delivery or performance by the
Company of this Agreement and the other Operative Documents, (B) the issuance
and sale of the Senior Notes or (C) consummation by the Company and the
Subsidiaries of the transactions described in the Offering Memorandum under the
caption "Use of Proceeds" will violate, conflict with or constitute a breach of
any of the terms or provisions of, or a default under (or an event that with
notice or the lapse of time, or both, would constitute a default), or require
consent under, or result in the imposition of a lien or encumbrance on any
properties of the Company or any Subsidiary, or an acceleration of any
indebtedness of the Company or any Subsidiary pursuant to, (i) the charter or
bylaws of the Company or any Subsidiary, (ii) any bond, debenture, note,
indenture, mortgage, deed of trust or other agreement or instrument to which the
Company or any Subsidiary is a party or by which any of them or their property
is or may be bound identified to such counsel as material (assuming all of such
agreements are governed by New York law), (iii) any judgment, order or decree of
any court or governmental agency or authority having jurisdiction over the
Company or any Subsidiary or any of their assets or properties known to such
counsel, except that we express no opinion as to the matters addressed by the
opinion of Kelley, Drye & Warren LLP, and except in the case of clauses (ii) and
(iii) for such violations, conflicts, breaches, defaults, consents, impositions
of liens or accelerations that (x) would not, singly or in the aggregate, have a
Material Adverse Effect or (y) are disclosed in the Offering Memorandum.
Assuming compliance with applicable state securities and Blue Sky laws, as to
which such counsel need express no opinion, and except for the filing of a
registration statement under the Act and qualification of the Indenture under
the Trust Indenture Act of 1939, as amended, in connection with the Registration
Rights Agreement, no consent, approval, authorization or order of, or filing,
registration, qualification, license or permit of or with, any court or
governmental agency, body or administrative agency is required for (1) the
execution, delivery and performance by the Company of this Agreement and the
other Operative Documents, (2) the issuance and sale of the Senior Notes or (3)
consummation by the Company and the Subsidiaries of the transactions described
in the Offering Memorandum under the caption "Use of Proceeds," except (i) such
as have been obtained and made or have been disclosed in the Offering
Memorandum, (ii) where the failure to obtain such consents or waivers would not,
singly or in the aggregate, have a Material Adverse Effect, and (iii) we express
no opinion as to the matters addressed by the opinion of Kelley, Drye & Warren
LLP. To the best of such counsel's knowledge, after reasonable inquiry, no
consents or waivers from any other person are required for the execution,
delivery and performance by the Company of this Agreement and the other
Operative Documents, the issuance and sale of the Senior Notes, other than such
consents and waivers as have been obtained or are being applied for.
15. None of the Company and any of its Subsidiaries is (i) an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended, or (ii) a
"holding company" or a "subsidiary company" or an "affiliate" of a holding
company within the meaning of the Public Utility Holding Company Act of 1935, as
amended.
16. Except as set forth in this Agreement or in the
Registration Rights Agreement, to such counsel's knowledge, after reasonable
inquiry there are no holders of any securities of the Company who, by reason of
the execution by the Company of this Agreement or any other Operative Document
to which it is a party or the consummation by the Company of the transactions
contemplated thereby, have the right to request or demand that the Company
register under the Act securities held by them.
B-3
<PAGE> 32
17. None of the execution, delivery and performance of this
Agreement, the issuance and sale of the Senior Notes, the application of the
proceeds from the issuance and sale of the Senior Notes and the consummation of
the transactions contemplated thereby as set forth in the Offering Memorandum,
will violate Regulations G, T, U or X promulgated by the Board of Governors of
the Federal Reserve System.
18. To the knowledge of such counsel, after reasonable
inquiry, no search of courts having been made, there is (i) no action, suit,
investigation or proceeding before or by any court, arbitrator or governmental
agency, body or official, domestic or foreign, now pending, or threatened or
contemplated to which any of the Company or any Subsidiary is or may be a party
or to which the business or property of any of the Company or any Subsidiary is
or may be subject, (ii) no statute, rule, regulation or order that has been
enacted, adopted or issued by any governmental agency or that has been proposed
by any governmental body, or (iii) no injunction, restraining order or order of
any nature by a federal or state court of competent jurisdiction to which any of
the Company or any Subsidiary is or may be subject has been issued that, in the
case of clauses (i), (ii) and (iii) above, (w) is required to be disclosed in
the Preliminary Offering Memorandum and the Offering Memorandum and that is not
so disclosed or, (x) could reasonably be expected to have, either individually
or in the aggregate, a Material Adverse Effect, except as disclosed in the
Offering Memorandum; or (y) might interfere with, adversely affect or in any
manner question the validity of the issuance and sale of the Senior Notes or any
of the other transactions contemplated by this Agreement or any of the other
Operative Documents, except that such counsel shall express no opinion as to the
matters addressed in the opinion of Kelley, Drye & Warren LLP.
19. The statements contained in the Offering Memorandum under
the caption "Certain Federal Income Tax Consequences" are a fair and accurate
summary of the matters discussed herein.
We have participated in conferences with officers and other
representatives of the Company, representatives of the independent certified
public accountants of the Company and the Initial Purchasers and their
representatives at which the contents of the Preliminary Offering Memorandum and
the Offering Memorandum and related matters were discussed and, although we have
not undertaken to investigate or verify independently, and do not assume any
responsibility for, the accuracy, completeness or fairness of the statements
contained in the Preliminary Offering Memorandum or the Offering Memorandum
(except as indicated above), on the basis of the foregoing, no facts have come
to our attention which led us to believe that the Preliminary Offering
Memorandum or the Offering Memorandum, as of its date or the Closing Date,
contained an untrue statement of a material fact or omitted to state any fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading
(except as to financial statements and related notes, the financial statement
schedules and other financial and statistical data included therein).
B-4
<PAGE> 33
EXHIBIT C
Form of Opinion of Kelley, Drye & Warren
C-1
<PAGE> 34
EXHIBIT D
Subsidiaries of Intermedia Communications Inc.
Intermedia Communications Inc., a Virginia corporation
EMI Telecommunications Inc.
Eastern Message Communications Inc.
Intermedia Licensing Company
Intermedia Capital Inc.
DIGEX Incorporated
Shared Technologies Fairchild, Inc.
Shared Technologies Fairchild Telecom, Inc.
Shared Technologies Fairchild Communications Corp.
Access Network Services, Inc.
STF Canada Inc.
Access Virginia, Inc.
Long Distance Savers, Inc. (Florida)
Long Distance Savers, Inc. (Louisiana)
LDS-Natchez, Inc.
Long Distance Savers - Longview, Inc.
Netwave Systems, Inc.
LDS - Oklahoma City, Inc.
Long Distance Savers of the Metroplex, Inc.
LDS Communications, Inc.
LDS - Ventures, Inc.
LDS I - America, Inc. (Delaware)
LDS I - America, Inc. (Louisiana)
Express Communications, Inc.
National Telecommunications of Florida, Inc.
NTC, Inc.
LDS of Tulsa (Limited Partnership)
D-1
<PAGE> 1
EXHIBIT 3.1
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE PAGE 1
-----------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE,
DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE RESTATED
CERTIFICATE OF "INTERMEDIA COMMUNICATIONS OF FLORIDA, INC.", FILED IN THIS
OFFICE ON THE SEVENTH DAY OF MAY, A.D. 1992, AT 9 O'CLOCK A.M.
[LOGO]
/s/ Edward J. Freel, Secretary of State
---------------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION: 8714777
DATE: 10-21-97
<PAGE> 2
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 05/07/1992
921285160 - 214051
RESTATED
CERTIFICATE OF INCORPORATION
OF
INTERMEDIA COMMUNICATIONS OF FLORIDA, INC.
---------------------
UNDER SECTION 245 OF THE
GENERAL CORPORATION LAW
----------------------
The undersigned DOES HEREBY CERTIFY as follows:
I. The name of the Corporation is INTERMEDIA
COMMUNICATIONS OF FLORIDA, INC. (the "Corporation").
II. The date of filing of the Corporation's original
Certificate of Incorporation with the Secretary of State of the
State of Delaware was November 9, 1987.
III. Upon the filing of this Restated Certificate of
Incorporation, each 2.8 issued and outstanding shares of Common
Stock, $.01 par value per share, of the Corporation ("Old Common
Stock"), shall automatically, without any further action by the
holder thereof or by the Corporation, be reclassified and deemed
to be one validly issued, fully paid and nonassessable share of
Common Stock, $.01 par value per share, of the Corporation ("New
Common Stock"). No certificates or scrip representing fractional
shares of New Common Stock shall be issued by reason hereof. If
a fractional share would be issuable to any one holder of Old
Common Stock pursuant hereto, then the number of shares into
which such old Common Stock will be reclassified pursuant hereto
<PAGE> 3
will be rounded to the next highest number of whole shares of New Common Stock.
Each certificate for 2.8 shares of Old Common Stock prior to the filing of this
Restated Certificate of Incorporation will be deemed upon the filing hereof to
represent a certificate for one share of New Common Stock (subject to the
treatment of fractional interests described above).
IV. Concurrently with the filing of this Restated Certificate of
Incorporation, each outstanding share of the Corporation's Series A Preferred
Stock, Series B Preferred Stock and Series C Preferred Stock, $1.00 par value
per share, is being converted (without the payment of accrued but unpaid
dividends thereon), at the election of the Corporation, into fully paid and
nonassessable shares of New Common Stock, all pursuant to the terms and
conditions of such Preferred Stock.
V. The Certificate of Incorporation, as heretofore amended, of the
Corporation (the "Certificate of Incorporation") is amended hereby as follows:
(a) Article FOURTH is amended to (i) increase the number of shares of
capital stock which the Corporation shall have authority to issue,
(ii) eliminate the designations of the Series A, B, C, and D
Preferred Stock of the Corporation (the "Series Preferred Stock")
and all powers, preference, privileges, voting, dividend and other
special or relative rights and qualifications of the Series
Preferred Stock, including the related prohibition on reissuance
of such Series
-2-
<PAGE> 4
Preferred Stock, and (iii) eliminate the parenthetical reference
in A(2) of Article FOURTH to written actions by stockholders in
lieu of meetings;
(b) Articles FIFTH and SIXTH are hereby deleted in their entirety, in
part, to eliminate the supermajority voting requirement to effect
a merger or consolidation;
(c) new Articles FIFTH and SIXTH are inserted, among other things, to
(i) establish the number of directors of the Corporation, with the
number of directors to be fixed from time to time by resolution of
the Board of Directors of the Corporation (the "Board"), (ii)
reorganize the Board into three classes with staggered terms, and
(iii) eliminate the ability of stockholders to take action by
written consent; and
(d) Article NINTH is amended to conform it to the changes stated
hereinabove.
VI. This Restated Certificate of incorporation was duly adopted
by the Board and authorized by the affirmative vote of the stockholders pursuant
to Sections 222 and 242 of the General Corporation Law of the State of Delaware.
VII. The Certificate of Incorporation is hereby amended and
restated in its entirety to read as follows:
-3-
<PAGE> 5
CERTIFICATE OF INCORPORATION
OF
INTERMEDIATE COMMUNICATIONS OF FLORIDA, INC.
FIRST: The name of the Corporation is Intermediate Communications
of Florida, Inc. (the "Corporation").
SECOND: The address of the registered office of the Corporation in
the State of Delaware is 15 East North Street, in the City of Dover, County of
Kent. The name of its registered agent at that address is United Corporate
Services, Inc.
THIRD: The purpose of the Corporation is to engage in any lawful
act or activity for which a corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of Delaware as set forth in Title 8 of the Delaware Code (the "GCL").
FOURTH: The total number of shares of capital stock which the
Corporation shall have authority to issue is 20,500,000 shares, of which
20,000,000 shares shall be classified as Common stock, $.01 par value per share
("Common Stock"), and 500,000 shares shall be classified as Preferred Stock,
$1.00 par value per share ("Preferred Stock").
The following is a statement of the designations and the powers,
privileges and rights, and the qualifications, limitations or restrictions
thereof in respect of each class of capital stock of the Corporation.
-4-
<PAGE> 6
A. COMMON STOCK.
1. General. The voting, dividend and liquidation rights of the
holders of the Common Stock are subject to and qualified by the rights of the
holders of the Preferred Stock of any series as may be designated by the Board
of Directors of the Corporation (the "Board") upon any issuance of the
Preferred Stock of any series.
2. Voting. The holders of the Common Stock are entitled to one
vote for each share held at all meetings of stockholders. There shall be no
cumulative voting.
3. Dividends. Dividends may be declare and paid on the Common
Stock from lawfully available therefor as and when determined by the Board and
subject to any preferential dividend rights of any then outstanding Preferred
Stock.
4. Liquidation. Upon the dissolution or liquidation of the
Corporation, whether voluntary or involuntary, holders of Common Stock will be
entitled to receive all assets of the Corporation available for distribution to
its stockholders, subject to any preferential or participating rights of any
then outstanding Preferred Stock.
B. PREFERRED STOCK.
The Preferred Stock may be issued in one or more series. The
number, designation and all of the powers, preferences and rights and the
qualifications, limitations or restrictions of the shares of any series of
Preferred Stock may be fixed by the Board as provided in Section 151 of the
GCL.
-5-
<PAGE> 7
Different series of Preferred Stock shall not be construed to constitute
different classes of shares for the purposes of voting by classes unless
expressly so provided.
FIFTH: The number of directors constituting the entire Board shall
be not less than three nor more than seven as determined from time to time by
resolution of the Board. The Board shall consist of three classes, designated
as Class I, Class II, and Class III, respectively, with the size of each class
determined from time to time by resolution of the Board. The Board shall
consist of three classes, designated as Class I, Class II, and Class III,
respectively, with the size of each class determined from time to time by
resolution of the Board; each of which classes shall, however, consist of a
number of directors as equal as possible, with no class having more than one
director more than any other class. Except for the initial directors in each
class who shall have terms of office of one, two and three years, respectively,
each class of directors shall thereafter have a term of office of three years
and until their respective successors shall have been elected and qualified, or
until a director's earlier resignation or removal. Any director may resign at
any time upon notice to the Corporation.
SIXTH: All action required or permitted to be taken by the
Corporation's stockholders must be effected at a duly called Annual or Special
Meeting (and may not be effected by written consent in lieu thereof).
SEVENTH: The Corporation shall to the fullest extent permitted by
Section 145 of the GCL, as amended from time to time, indemnify all persons
whom it may indemnify pursuant
-6-
<PAGE> 8
thereto. Directors of the Corporation shall have no personal liability for
monetary damages for breach of a fiduciary duty, or failure to exercise any
applicable standard of care, of a director to the fullest extent permitted by
Section 102(b)(7) of the GCL.
EIGHTH: Whenever a compromise or arrangement is proposed between
this Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of section 291 of the GCL or on the application of trustees in
dissolution or of any receiver or receivers appointed for this Corporation
under the provisions of Section 279 of the GCL, order a meeting of the creditors
or class of creditors, and/or of the stockholders or class of stockholders of
this Corporation, as the case may be, to be summoned in such manner as the said
court directs. If a majority in number representing three-fourths in value of
the creditors or class of creditors, and/or of the stockholders or class of
stockholders of this Corporation, as the case may be, agree to any compromise
or arrangement and to any reorganization of this Corporation as a consequence
of such compromise or arrangement and the said reorganization shall, if
sanctioned by the court to which the said application has been
-7-
<PAGE> 9
made, be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this Corporation, as the case may be,
and also on this Corporation.
NINTH: The Corporation reserves the right to amend, alter, change
or repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by law, and all rights and powers conferred
upon stockholders, directors and officers are subject to this reservation.
IN WITNESS WHEREOF, this Restated Certificate of Incorporation of the
Corporation has been signed, and the statements made herein affirmed as true
under the penalties of perjury, this 27th day of April, 1992.
ATTEST:
/s/ Daniel J. Montague /s/ Robert F. Benton
- - -------------------------- ------------------------
Daniel J. Montague, Robert F. Benton,
Secretary President
-8-
<PAGE> 10
State of Delaware
Office of the Secretary of State PAGE 1
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF "INTERMEDIA COMMUNICATIONS OF FLORIDA, INC.", FILED IN THIS OFFICE
ON THE TWENTY-FIRST DAY OF JUNE, A.D. 1993, AT 9 O'CLOCK A.M.
/s/ Edward J. Freel
[SEAL] ---------------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION: 8714778
DATE: 10-21-97
<PAGE> 11
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 06/21/1993
703172017 - 2143051
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
INTERMEDIA COMMUNICATIONS OF FLORIDA, INC.
(Pursuant to Section 242 of the
General Corporation Law of the State of Delaware)
It is hereby certified that:
1. The name of the corporation (the "Corporation") is Intermedia
Communications of Florida, Inc.
2. To allow the Corporation's Board of Directors to amend the
Corporation's By-laws without stockholder approval, the Certificate of
Incorporation of the Corporation, as heretofore amended and restated, is hereby
further amended to add the following Article TENTH:
"TENTH: The Board of Directors (by action
taken by a majority of the entire Board of Directors
then in office) may amend or change the By-Laws of
the Corporation in any respect."
3. The foregoing amendment to the Certificate was duly adopted by
the Board of Directors and stockholders of the Corporation in accordance with
the provisions of Section 242 of the General corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be executed on this 4th day of June, 1993.
INTERMEDIA COMMUNICATIONS OF
FLORIDA, INC.
By: /s/ David Ruberg 6/4/93
----------------------------------------
David Ruberg, Chief Executive Officer
Attest:
/s/ Daniel J. Montague
- - --------------------------------
Daniel J. Montague, Secretary
<PAGE> 12
State of Delaware
Office of the Secretary of State PAGE 1
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF "INTERMEDIA COMMUNICATIONS OF FLORIDA, INC.", CHANGING ITS NAME
FROM "INTERMEDIA COMMUNICATIONS OF FLORIDA, INC." TO "INTERMEDIA COMMUNICATIONS
INC.", FILED IN THIS OFFICE ON THE THIRTIETH DAY OF MAY, A.D. 1996, AT 9
O'CLOCK A.M.
/s/ Edward J. Freel
[SEAL] ------------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION: 8714780
DATE: 10-21-97
<PAGE> 13
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 05/30/1996
960157445 - 2143051
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
INTERMEDIA COMMUNICATIONS OF FLORIDA, INC.
------------------------------------------
Under Section 242 of the Delaware General
Corporation Law
------------------------------------------
Pursuant to the provisions of Section 242 of the General
Corporation Law of the State of Delaware, the undersigned, being the President
and Secretary of Intermedia Communications of Florida, Inc. do hereby certify
that:
FIRST: The name of the corporation is Intermedia
Communications of Florida, Inc. (hereinafter referred to as the "Corporation").
SECOND: The Certificate of Incorporation of the Corporation
was filed with the Office of the Secretary of State of the State of Delaware on
November 9, 1987. The Certificate of Incorporation was Restated and filed with
the Office of the Secretary of State of Delaware on May 7, 1992.
THIRD: The Restated Certificate of Incorporation of the
Corporation is hereby amended to (i) change the name of the Corporation from
Intermedia Communications of Florida, Inc. to Intermedia Communications Inc.,
and (ii) increase the authorized Common Stock from 20,000,000 shares to
50,000,000 shares, so that Article FIRST and paragraph 1 of ARTICLE FOURTH of
the Restated Certificate of Incorporation are hereby amended to read as
follows:
"FIRST: The name of the corporation is Intermedia
Communications Inc. (hereinafter referred to as the "Corporation").
"FOURTH: The total number of shares of capital stock which
the Corporation shall have authority to issue is 50,500,000, of which
50,000,000 shares shall be classified as Common stock, $.01 par value per share
("Common Stock"), and 500,000 shares shall be classified as Preferred Stock,
$1.00 par value per share ("Preferred Stock").
"FOURTH: This Amendment to the Restated Certificate of
Incorporation of the Corporation was duly adopted by the Board of Directors and
by a majority of stockholders of the Corporation
<PAGE> 14
entitled in vote in accordance with the provisions of Section 242 of the
General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the undersigned have executed this Certificate of
Amendment to the Certificate of Incorporation of the Corporation as of this 28
day of May, 1996 and affirm that the statements set forth herein are true and
correct under the penalties of perjury.
/s/ David Ruberg
-----------------------------------
David Ruberg, President and Chief
Executive Officer
/s/ Oscar Williams
-----------------------------------
Oscar Williams, Secretary
2
<PAGE> 15
State of Delaware
Office of the Secretary of State PAGE 1
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF "INTERMEDIA COMMUNICATIONS INC.", FILED IN THIS OFFICE ON THE
THIRTIETH DAY OF MAY, A.D. 1997, AT 9 O'CLOCK A.M.
/s/ Edward J. Freel,
[SEAL] ---------------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION: 8714783
DATE: 10-21-97
<PAGE> 16
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 05/30/1997
971176982 - 2143051
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
INTERMEDIA COMMUNICATIONS INC.
--------------------------------
Pursuant to Section 242 of the Delaware
General Corporation Law
--------------------------------
Pursuant to the provisions of Section 242 of the Delaware General
Corporation Law, the undersigned, being a duly authorized officer of Intermedia
Communications Inc., does hereby certify that:
FIRST: The name of the corporation is Intermedia Communications
Inc. (hereinafter, the "Corporation").
SECOND: The Certificate of Incorporation of the Corporation was
filed with the Office of the Secretary of State of the State of Delaware on
November 9, 1987. The Certificate of Incorporation was Restated (as amended,
the "Restated Certificate of Incorporation") and filed with the Office of the
Secretary of State of the State of Delaware on May 7, 1992. A Certificate of
Designation of Voting Power, Designation Preferences and Relative,
Participating, Optional and Other Special Rights and Qualifications,
Limitations and Restrictions of the 13 1/2% Series A and Series B Redeemable
Exchangeable Preferred Stock due 2009 of the Corporation was filed with the
Office of the Secretary of State of the State of Delaware on March 6, 1997 (the
"Certificate of Designation").
THIRD: The Restated Certificate of Incorporation is hereby
amended to (i) increase the number of authorized shares of the Corporation's
Preferred Stock, par value $1.00 per share, from 500,000 shares to 2,000,000
shares, (ii) increase the number of authorized shares of the Corporation's 13
1/2% Series B Redeemable Exchangeable Preferred Stock (the "Series B Preferred
Stock") from 60,000 shares to 600,000 shares, and (iii) decrease the
liquidation preference of each authorized share of Series B Preferred Stock
from $10,000 per share to $1,000 per share as follows:
The first paragraph of ARTICLE FOURTH of the Restated Certificate of
Incorporation is hereby amended to read as follows:
"FOURTH: The total number of shares of capital stock which the
Corporation shall have authority to issue is
<PAGE> 17
52,000,000 shares, of which $50,000,000 shares shall be classified as
Common Stock, $.01 par value per share ("Common Stock"), and 2,000,000
shares shall be classified as Preferred Stock, $1.00 par value per share
("Preferred Stock")."
The second paragraph of the first page of the Certificate of
Designation is hereby amended to read as follows:
"RESOLVED, that pursuant to the authority vested in the Board of
Directors by the Certificate of Incorporation, the Board of Directors does
hereby designate, create, authorize and provide for the issue of two series
of preferred stock having a par value of $1.00 per share, which shall be
designated as Series A Redeemable Exchangeable Preferred Stock due 2009
(the "Series A Preferred Stock") and Series B Redeemable Exchangeable
Preferred Stock due 2009 (the "Series B Preferred Stock" and, together
with the Series A Preferred Stock, the "Exchangeable Preferred Stock"),
the Series A Preferred Stock consisting of 60,000 shares, and the Series
B Preferred Stock consisting of 600,000 shares provided that no shares of
Series B Preferred Stock may be issued, except upon the surrender and
cancellation of such number of shares of Series A Preferred Stock
having an aggregate Liquidation Preference equal to the aggregate
Liquidation Preference of the shares of Series B Preferred Stock so
issued, and each shall have the following voting powers, preferences and
relative, participating, optional and other special rights, and
qualifications, limitations and restrictions thereof as follows:"
The definition of "Liquidation Preference" in the Certificate of
Designation is hereby amended to read as follows:
""Liquidation Preference" means $10,000 per share of Series A
Preferred Stock and $1,000 per share of Series B Preferred Stock."
FOURTH: The additional shares of Preferred Stock created by this
Certificate of Amendment in excess of the 500,000 shares of Preferred Stock
previously authorized may only be issued by the Corporation in connection with
financing transactions, including financing of corporate acquisitions by the
Corporation, and may not be issued for anti-takeover purposes.
FIFTH: This amendment to the Restated Certificate of Incorporation
was duly adopted by the Board of Directors of the Corporation and by holders of
a majority of the outstanding shares of capital stock of the Corporation
entitled to vote in accordance with the provisions of Section 242 of the
Delaware General Corporation Law.
2
<PAGE> 18
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Amendment to the Restated Certificate of Incorporation as of May 20, 1997, and
affirms that the statements set forth herein are true under the penalties of
perjury.
/s/ Robert M. Manning
-------------------------------
Robert M. Manning
Senior Vice President, Chief
Financial Officer & Secretary
3
<PAGE> 19
State of Delaware
Office of the Secretary of State PAGE 1
-------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
CHANGE OF REGISTERED AGENT OF "INTERMEDIA COMMUNICATIONS INC.", FILED IN THIS
OFFICE ON THE SECOND DAY OF OCTOBER, A.D. 1997, AT 9 O'CLOCK A.M.
[SEAL] /s/ Edward J. Freel
----------------------------------------
Edward J. Freel, Secretary of State
2143051 8100 AUTHENTICATION: 8714785
971355443 DATE: 10-21-97
<PAGE> 20
CERTIFICATE OF CHANGE OF LOCATION OF REGISTERED OFFICE
AND OF REGISTERED AGENT
It is hereby certified that:
1. The name of the corporation (hereinafter called the
"corporation") is INTERMEDIA COMMUNICATIONS, INC.
2. The registered office of the corporation within the State of
Delaware is hereby changed to 1013 Centre Road, City of Wilmington 19805,
County of New Castle.
3. The registered agent of the corporation within the State of
Delaware is hereby changed to Corporation Service Company, the business office
of which is identical with the registered office of the corporation as hereby
changed.
4. The corporation has authorized the changes hereinbefore set forth
by resolution of its Board of Directors.
Signed on August 29, 1997.
/s/ Jeanne M. Walters
------------------------------------
Jeanne M. Walters
Controller/Chief Accounting Officer
DE BCD-:COA CERTIFICATE OF CHANGE 03/96
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 10/02/1997
971332236 - 2143051
<PAGE> 21
State of Delaware
Office of the Secretary of State PAGE 1
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT
OF INTERMEDIA COMMUNICATIONS INC., FILED IN THIS OFFICE ON THE TWENTIETH DAY OF
MAY, A.D. 1998, AT 11:30 O'CLOCK A.M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS.
[SCREENED IMAGE OF THE SEAL OF THE STATE OF DELAWARE]
/s/ Edward J. Freel
----------------------------
[IMAGE OF Edward J. Freel, Secretary of State
CERTIFICATE SEAL]
2143051 8100 AUTHENTICATION: 9092209
981193761 DATE: 05-20-98
<PAGE> 22
CERTIFICATE OF AMENDMENT
TO THE
RESTATED CERTIFICATE OF INCORPORATION
OF
INTERMEDIA COMMUNICATIONS INC.
-----------------------------------------
Pursuant to Section 242 of the Delaware
General Corporation Law
-----------------------------------------
Pursuant to the provisions of Section 242 of the Delaware General
Corporation Law, the undersigned, being a duly authorized officer of Intermedia
Communications Inc., does hereby certify that:
FIRST: The name of the corporation is Intermedia Communications Inc.
(hereinafter, the "Corporation").
SECOND: The Certificate of Incorporation of the Corporation was filed
with the Office of the Secretary of State of the State of Delaware on November
9, 1987 and was Restated (as amended, the "Restated Certificate of
Incorporation") and filed with the Office of the Secretary of State of the
State of Delaware on May 7, 1992.
THIRD: The Restated Certificate of Incorporation is hereby further
amended to increase the total number of authorized shares of the Corporation by
increasing the total number of the Corporation's Common Stock, $.01 par value
per share (the "Common Stock"), from 50,000,000 shares to 150,000,000 shares,
so that the first paragraph of Paragraph Fourth of the Restated Certificate of
Incorporation is hereby amended to read as follows:
"FOURTH: The total number of shares of capital stock which the
Corporation shall have authority to issue is 152,000,000 shares, of which
150,000,000 shares shall be classified as Common Stock, $.01 par value per
share ("Common Stock"), and 2,000,000 shares shall be classified as
Preferred Stock, $1.00 par value per share ("Preferred Stock")."
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 11:30 AM 05/20/1998
<PAGE> 23
FOURTH: This amendment to the Restated Certificate of Incorporation was
duly adopted by the Board of Directors of the Corporation and by holders of a
majority of the outstanding shares of capital stock of the Corporation entitled
to vote in accordance with the provisions of Section 242 of the Delaware
General Corporation Law.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Amendment to the Restated Certificate of
<PAGE> 24
Incorporation as of the 20th day of May, 1998 and affirms that the statements
set forth herein are true under the penalties of perjury.
/s/ Robert M. Manning
-------------------------
Name: Robert M. Manning
Title: Chief Financial Officer,
Secretary and Senior Vice
President
<PAGE> 1
Exhibit 4.6
EXECUTION COPY
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
INTERMEDIA COMMUNICATIONS INC.
$450,000,000
8.60% SENIOR NOTES DUE 2008
---------------------------------------------------------
-----------------
INDENTURE
Dated as of May 27, 1998
-----------------
-----------------
SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION
-----------------
Trustee
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE> 2
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Trust Indenture
Act Section Indenture Section
<S> <C>
310 (a)(1).................................................................... 7.10
(a)(2)................................................................... 7.10
(a)(3) .................................................................. N.A.
(a)(4)................................................................... N.A.
(a)(5)................................................................... 7.10
(b) ..................................................................... 7.10
(c) ..................................................................... N.A.
311 (a) ...................................................................... 7.11
(b) ..................................................................... 7.11
(c) ..................................................................... N.A.
312 (a)....................................................................... 2.05
(b)...................................................................... 10.03
(c) ..................................................................... 10.03
313 (a) ...................................................................... 7.06
(b)(1) .................................................................. N.A.
(b)(2) .................................................................. 7.06
(c) ..................................................................... 7.06; 10.02
(d)...................................................................... 7.06
314 (a) ...................................................................... 4.03; 10.05
(b) ..................................................................... 4.17
(c)(1) .................................................................. 10.04
(c)(2) .................................................................. 10.04
(c)(3) .................................................................. N.A.
(d)...................................................................... 4.17
(e) .................................................................... N.A.
(f)...................................................................... N.A.
315 (a)....................................................................... N.A.
(b)...................................................................... 7.05
(c) .................................................................... N.A.
(d)...................................................................... N.A.
(e)...................................................................... N.A.
316 (a)(last sentence) ....................................................... N.A.
(a)(1)(A)................................................................ N.A.
(a)(2) .................................................................. N.A.
(b) ..................................................................... N.A.
(c) ..................................................................... 2.13
317 (a)(1) ................................................................... N.A.
(a)(2)................................................................... N.A.
(b) ..................................................................... N.A.
318 (a)....................................................................... N.A.
(b)...................................................................... N.A.
(c)...................................................................... 10.01
</TABLE>
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions................................................................. 1
Section 1.02. Other Definitions........................................................... 15
Section 1.03. Incorporation by Reference of Trust Indenture Act........................... 15
Section 1.04. Rules of Construction....................................................... 16
ARTICLE 2
THE SENIOR NOTES
Section 2.01. Form and Dating............................................................. 16
Section 2.02. Execution and Authentication................................................ 17
Section 2.03. Registrar and Paying Agent.................................................. 17
Section 2.04. Paying Agent to Hold Money in Trust......................................... 18
Section 2.05. Holder Lists................................................................ 18
Section 2.06. Transfer and Exchange....................................................... 19
Section 2.07. Replacement Notes........................................................... 29
Section 2.08. Outstanding Notes........................................................... 29
Section 2.09. Treasury Notes.............................................................. 30
Section 2.10. Temporary Notes............................................................. 30
Section 2.11. Cancellation................................................................ 30
Section 2.12. Defaulted Interest.......................................................... 31
Section 2.13. Record Date................................................................. 31
Section 2.14. CUSIP Number................................................................ 31
ARTICLE 3
REDEMPTION AND CERTAIN REPURCHASES
Section 3.01. Notices to Trustee.......................................................... 31
Section 3.02. Selection of Notes to Be Redeemed........................................... 31
Section 3.03. Notice of Redemption........................................................ 32
Section 3.04. Effect of Notice of Redemption.............................................. 33
Section 3.05. Deposit of Redemption Price................................................. 33
Section 3.06. Senior Notes Redeemed in Part............................................... 33
Section 3.07. Optional Redemption......................................................... 33
Section 3.08. Mandatory Redemption........................................................ 34
Section 3.09. Offer to Purchase With Excess Asset Sale Proceeds........................... 34
ARTICLE 4
COVENANTS
Section 4.01. Payment of Notes............................................................ 36
Section 4.02. Maintenance of Office or Agency............................................. 37
Section 4.03. Reports..................................................................... 37
</TABLE>
i
<PAGE> 4
<TABLE>
<CAPTION>
<S> <C>
Section 4.04. Compliance Certificate...................................................... 38
Section 4.05. Taxes....................................................................... 38
Section 4.06. Stay, Extension and Usury Laws.............................................. 38
Section 4.07. Restricted Payments......................................................... 39
Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries.............. 42
Section 4.09. Incurrence of Indebtedness and Issuance of Disqualified Stock............... 43
Section 4.10. Asset Sales................................................................. 45
Section 4.11. Transactions with Affiliates................................................ 46
Section 4.12. Liens....................................................................... 47
Section 4.13. Limitations on Sale and Leaseback Transactions.............................. 47
Section 4.14. Corporate Existence......................................................... 47
Section 4.15. Offer to Purchase Upon Change of Control.................................... 47
Section 4.16. Business Activities......................................................... 48
Section 4.17. Payments for Consent........................................................ 48
Section 4.18. Use of Proceeds............................................................. 49
ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation or Sale of Assets..................................... 49
Section 5.02. Successor Corporation Substituted........................................... 50
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default........................................................... 50
Section 6.02. Acceleration................................................................ 52
Section 6.03. Other Remedies.............................................................. 52
Section 6.04. Waiver of Past Defaults..................................................... 52
Section 6.05. Control by Majority......................................................... 53
Section 6.06. Limitation on Suits......................................................... 53
Section 6.07. Rights of Holders of Notes to Receive Payment............................... 54
Section 6.08. Collection Suit by Trustee.................................................. 54
Section 6.09. Trustee May File Proofs of Claim............................................ 54
Section 6.10. Priorities.................................................................. 54
Section 6.11. Undertaking for Costs....................................................... 55
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee........................................................... 55
Section 7.02. Rights of Trustee........................................................... 56
Section 7.03. Individual Rights of Trustee................................................ 57
Section 7.04. Trustee's Disclaimer........................................................ 57
Section 7.05. Notice of Defaults.......................................................... 57
Section 7.06. Reports by Trustee to Holders of the Senior Notes........................... 57
Section 7.07. Compensation and Indemnity.................................................. 58
Section 7.08. Replacement of Trustee...................................................... 58
Section 7.09. Successor Trustee by Merger, etc............................................ 59
Section 7.10. Eligibility; Disqualification............................................... 59
</TABLE>
ii
<PAGE> 5
<TABLE>
<CAPTION>
<S> <C>
Section 7.11. Preferential Collection of Claims Against Company........................... 59
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance.................... 60
Section 8.02. Legal Defeasance and Discharge.............................................. 60
Section 8.03. Covenant Defeasance......................................................... 60
Section 8.04. Conditions to Legal or Covenant Defeasance.................................. 61
Section 8.05. Deposited Money and Government Securities to be Held in Trust;
Other Miscellaneous Provisions.............................................. 62
Section 8.06. Repayment to Company........................................................ 62
Section 8.07. Reinstatement............................................................... 63
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Senior Notes.................................. 63
Section 9.02. With Consent of Holders of Senior Notes..................................... 64
Section 9.03. Compliance with Trust Indenture Act......................................... 65
Section 9.04. Revocation and Effect of Consents........................................... 65
Section 9.05. Notation on or Exchange of Senior Notes..................................... 65
Section 9.06. Trustee to Sign Amendments, etc............................................. 66
Section 9.07. Payment for Consents........................................................ 66
ARTICLE 10
MISCELLANEOUS
Section 10.01. Trust Indenture Act Controls................................................ 66
Section 10.02. Notices..................................................................... 66
Section 10.03. Communication by Holders of Senior Notes with Other Holders of
Senior Notes................................................................ 67
Section 10.04. Certificate and Opinion as to Conditions Precedent.......................... 67
Section 10.05. Statements Required in Certificate or Opinion............................... 68
Section 10.06. Rules by Trustee and Agents................................................. 68
Section 10.07. No Personal Liability of Partners, Directors, Officers, Employees and
Stockholders................................................................ 68
Section 10.08. Governing Law............................................................... 68
Section 10.09. No Adverse Interpretation of Other Agreements............................... 68
Section 10.10. Successors.................................................................. 69
Section 10.11. Severability................................................................ 69
Section 10.12. Counterpart Originals....................................................... 69
Section 10.13. Table of Contents, Headings, etc............................................ 69
EXHIBITS
Exhibit A FORM OF NOTE
Exhibit B FORM OF CERTIFICATE OF TRANSFER
Exhibit C FORM OF CERTIFICATE OF EXCHANGE
</TABLE>
iii
<PAGE> 6
<TABLE>
<CAPTION>
<S> <C> <C>
Exhibit D FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL
ACCREDITED INVESTOR
</TABLE>
iv
<PAGE> 7
INDENTURE dated as of May 27, 1998 between Intermedia
Communications Inc. (the "Company"), and SunTrust Bank, Central Florida,
National Association, as trustee (the "Trustee").
The Company and the Trustee agree as follows for the benefit
of each other and for the equal and ratable benefit of the holders of the 8.60%
Senior Notes due 2008 (the "Senior Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.01. DEFINITIONS.
"144A Global Security" means the global security in the form
of Exhibit A hereto bearing the Global Security Legend and the Private Placement
Legend and deposited with and registered in the name of the Depositary or its
nominee that will be issued in a denomination equal to the outstanding principal
amount of the Senior Notes sold in reliance on Rule 144A.
"Acquired Debt" means, with respect to any specified Person,
(i) Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by agreement or otherwise,
provided, however, that beneficial ownership of 25% or more of the voting
securities of a Person shall be deemed to be control.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Procedures" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Note, the rules and
procedures of the Depositary that apply to such transfer or exchange.
"Attributable Debt" means, with respect to any Sale and
Leaseback Transaction, the present value at the time of determination
(discounted at a rate consistent with accounting guidelines, as determined in
good faith by the Company) of the payments during the remaining term of the
lease (including any period for which such lease has been extended or may, at
the option of the lessor, be extended) or until the earliest date on which the
lessee may terminate such lease without penalty or upon payment of a penalty (in
which case the rental payments shall include such penalty), after excluding all
amounts required to be paid on account of maintenance and repairs, insurance,
taxes, assessments, water, utilities and similar charges.
<PAGE> 8
"Beneficial Owner" means a beneficial owner as defined in
Rules 13d-3 and 13d-5 under the Exchange Act (or any successor rules), including
the provision of such Rules that a Person shall be deemed to have beneficial
ownership of all securities that such Person has a right to acquire within 60
days; provided that a Person will not be deemed a beneficial owner of, or to own
beneficially, any securities if such beneficial ownership (1) arises solely as a
result of a revocable proxy delivered in response to a proxy or consent
solicitation made pursuant to, and in accordance with, the Exchange Act and (2)
is not also then reportable on Schedule 13D or Schedule 13G (or any successor
schedule) under the Exchange Act.
"Board of Directors" means, unless otherwise specified, the
Board of Directors of the Company or any authorized committee thereof.
"Board Resolution" means a resolution authorized by the Board
of Directors.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any
determination thereof is to be made, the amount of the liability in respect of a
capital lease that would at such time be so required to be capitalized on the
balance sheet in accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation,
corporate stock, (ii) in the case of an association or business entity, any and
all shares, interests, participations, rights or other equivalents (however
designated) of corporate stock and (iii) in the case of a partnership,
partnership interests (whether general or limited) and any other interest or
participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, such partnership.
"Certificated Security" means a certificated Senior Note
registered in the name of the holder thereof and issued in accordance with
Section 2.06 hereof, substantially in the form of Exhibit A hereto, except that
such Senior Note shall not bear the Global Security Legend and shall not have
the "Schedule of Exchanges of Interests in the Global Security" attached
thereto.
"Change of Control" means the occurrence of any of the
following: (i) the sale, lease, transfer, conveyance or other disposition, in
one or a series of related transactions, of all or substantially all of the
assets of the Company and its Subsidiaries, taken as a whole, to any Person or
group (as such term is used in Section 13(d)(3) and 14(d)(2) of the Exchange
Act), (ii) the adoption of a plan relating to the liquidation or dissolution of
the Company, (iii) any Person or group (as defined above) is or becomes the
Beneficial Owner, directly or indirectly, of more than 50% of the total Voting
Stock or Total Common Equity of the Company, including by way of merger,
consolidation or otherwise or (iv) the first day on which a majority of the
members of the Board of Directors of the Company are not Continuing Directors.
"Closing Price" on any Trading Day with respect to the per
share price of any shares of Capital Stock means the last reported sale price
regular way or, in case no such reported sale takes place on such day, the
average of the reported closing bid and asked prices regular way, in either case
on the New York Stock Exchange or, if such shares of Capital Stock are not
listed or admitted to trading on such exchange, on the principal national
securities exchange on which such shares are listed or admitted to trading or,
if not listed or admitted to trading on any national securities exchange, on the
Nasdaq National Market or, if such shares are not listed or admitted to trading
on any national securities exchange or quoted on Nasdaq National Market but the
issuer is a Foreign Issuer (as defined in Rule 3b-4(b) under the Exchange Act)
and the principal securities exchange on
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<PAGE> 9
which such shares are listed or admitted to trading is a Designated Offshore
Securities Market (as defined in Rule 902(a) under the Securities Act), the
average of the reported closing bid and asked prices regular way on such
principal exchange, or, if such shares are not listed or admitted to trading on
any national securities exchange or quoted on Nasdaq National Market and the
issuer and principal securities exchange do not meet such requirements, the
average of the closing bid and asked prices in the over-the-counter market as
furnished by any New York Stock Exchange member firm that is selected from time
to time by the Company for that purpose and is reasonably acceptable to the
Trustee.
"Common Stock" of any Person means Capital Stock of such
Person that does not rank prior, as to the payment of dividends or as to the
distribution of assets upon any voluntary or involuntary liquidation,
dissolution or winding up of such Person, to shares of Capital Stock of any
other class of such Person.
"Consolidated Cash Flow Leverage Ratio" with respect to any
Person means the ratio of the Consolidated Indebtedness of such Person to the
Consolidated EBITDA of such Person for the relevant period; provided, however,
that (1) if the Company or any Subsidiary of the Company has incurred any
Indebtedness (including Acquired Debt) or if the Company has issued any
Disqualified Stock or if any Subsidiary of the Company has issued any Preferred
Stock since the beginning of such period that remains outstanding on the date of
such determination or if the transaction giving rise to the need to calculate
the Consolidated Cash Flow Leverage Ratio is an incurrence of Indebtedness
(including Acquired Debt) or the issuance of Disqualified Stock by the Company,
Consolidated EBITDA and Consolidated Indebtedness for such period will be
calculated after giving effect on a pro forma basis to (A) such Indebtedness,
Disqualified Stock or Preferred Stock, as applicable, as if such Indebtedness
had been incurred or such stock had been issued on the first day of such period,
(B) the discharge of any other Indebtedness repaid, repurchased, defeased or
otherwise discharged with the proceeds of such new Indebtedness or sale of stock
as if such discharge had occurred on the first day of such period, and (C) the
interest income realized by the Company or its Subsidiaries on the proceeds of
such Indebtedness or of such stock sale, to the extent not yet applied at the
date of determination, assuming such proceeds earned interest at the rate in
effect on the date of determination from the first day of such period through
such date of determination, (2) if since the beginning of such period the
Company or any Subsidiary of the Company has made any sale of assets (including,
without limitation, any Asset Sales or pursuant to any Sale and Leaseback
Transaction), Consolidated EBITDA for such period will be (A) reduced by an
amount equal to Consolidated EBITDA (if positive) directly attributable to the
assets which are the subject of such sale of assets for such period or (B)
increased by an amount equal to Consolidated EBITDA (if negative) directly
attributable thereto for such period and (3) if since the beginning of such
period the Company or any Subsidiary of the Company (by merger or otherwise) has
made an Investment in any Subsidiary of the Company (or any Person which becomes
a Subsidiary of the Company) or has made an acquisition of assets, including,
without limitation, any acquisition of assets occurring in connection with a
transaction causing a calculation of Consolidated EBITDA to be made hereunder,
which constitutes all or substantially all of an operating unit of a business,
Consolidated EBITDA for such period will be calculated after giving pro forma
effect thereto (including the incurrence of any Indebtedness (including Acquired
Debt)) as if such Investment or acquisition occurred on the first day of such
period. For purposes of this definition, whenever pro forma effect is to be
given to an acquisition of assets, the pro forma calculations will be determined
in good faith by a responsible financial or accounting Officer of the Company,
provided, however, that such Officer shall assume (i) the historical sales and
gross profit margins associated with such assets for any consecutive 12-month
period ended prior to the date of purchase (provided that the first month of
such 12-month period will be no more than 18 months prior to such date of
purchase) and (ii) other expenses as if such assets
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<PAGE> 10
had been owned by the Company since the first day of such period. If any
Indebtedness (including, without limitation, Acquired Debt) bears a floating
rate of interest and is being given pro forma effect, the interest on such
Indebtedness will be calculated as if the rate in effect on the date of
determination had been the applicable rate for the entire period.
"Consolidated EBITDA" as of any date of determination means
the Consolidated Net Income for such period (but without giving effect to
adjustments, accruals, deductions or entries resulting from purchase accounting,
extraordinary losses or gains and any gains or losses from any Asset Sales),
plus the following to the extent deducted in calculating such Consolidated Net
Income: (i) provision for taxes based on income or profits of such Person and
its Subsidiaries for such period, (ii) Consolidated Interest Expense, (iii)
depreciation, amortization (including amortization of goodwill and other
intangibles) and (iv) other non-cash charges (excluding any such non-cash charge
to the extent that it represents an accrual of or reserve for cash charges in
any future period or amortization of a prepaid cash expense that was paid in a
prior period and excluding non-cash interest and dividend income) of such Person
and its Subsidiaries for such period, in each case, on a consolidated basis and
determined in accordance with GAAP. Notwithstanding the foregoing, the provision
for taxes on the income or profits of, and the depreciation, amortization,
interest expense and other non-cash charges of, a Subsidiary of the referent
Person shall be added to Consolidated Net Income to compute Consolidated EBITDA
only to the extent (and in same proportion) that the Net Income of such
Subsidiary was included in calculating the Consolidated Net Income of such
Person and only if a corresponding amount would be permitted at the date of
determination to be dividended to the Company by such Subsidiary, or loaned to
the Company by any such Subsidiary, without prior approval (that has not been
obtained), pursuant to the terms of its charter and all agreements, instruments,
judgments, decrees, orders, statutes, rules and governmental regulations
applicable to that Subsidiary or its stockholders.
"Consolidated Indebtedness" means, with respect to any Person,
as of any date of determination, the aggregate amount of Indebtedness of such
Person and its Subsidiaries as of such date calculated on a consolidated basis
in accordance with GAAP consistently applied.
"Consolidated Interest Expense" means, for any Person, for any
period, the aggregate of the following for such Person for such period
determined on a consolidated basis in accordance with GAAP: (a) the amount of
interest in respect of Indebtedness (including amortization of original issue
discount, amortization of debt issuance costs, and non-cash interest payments on
any Indebtedness, the interest portion of any deferred payment obligation and
after taking into account the effect of elections made under any Interest Rate
Agreement, however denominated, with respect to such Indebtedness), (b) the
amount of Redeemable Dividends (to the extent not already included in
Indebtedness in determining Consolidated Interest Expense for the relevant
period) and (c) the interest component of rentals in respect of any Capital
Lease Obligation paid, in each case whether accrued or scheduled to be paid or
accrued by such Person during such period to the extent such amounts were
deducted in computing Consolidated Net Income, determined on a consolidated
basis in accordance with GAAP. For purposes of this definition, interest on a
Capital Lease Obligation shall be deemed to accrue at an interest rate
reasonably determined by such Person to be the rate of interest implicit in such
Capital Lease Obligation in accordance with GAAP consistently applied.
"Consolidated Net Income" means, with respect to any Person
for any period, the aggregate of the Net Income of such Person and its
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that:
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<PAGE> 11
(i) the Net Income of any Person that is not a Subsidiary or
that is accounted for by the equity method of accounting shall be
included only to the extent of the amount of dividends or distributions
paid in cash to the referent Person or a Subsidiary thereof,
(ii) the Net Income of any Subsidiary shall be excluded to the
extent that the declaration or payment of dividends or other
distributions by that Subsidiary of that Net Income is not at the date
of determination permitted without any prior governmental approval
(which has not been obtained) or, directly or indirectly, by operation
of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to
that Subsidiary or its stockholders,
(iii) the Net Income of any Person acquired in a pooling of
interests transaction for any period prior to the date of such
acquisition shall be excluded,
(iv) the cumulative effect of a change in accounting
principles shall be excluded, and
(v) the Net Income of any Unrestricted Subsidiary shall be
excluded, whether or not distributed to the Company or one of its
Subsidiaries.
"Contingent Investment" means, with respect to any Person, any
guarantee by such Person of the performance of another Person or any commitment
by such Person to invest in another Person. Any Investment that consists of a
Contingent Investment shall be deemed made at the time that the guarantee of
performance or the commitment to invest is given, and the amount of such
Investment shall be the maximum monetary obligation under such guarantee of
performance or commitment to invest. To the extent that a Contingent Investment
is released or lapses without payment under the guarantee of performance or the
commitment to invest, such Investment shall be deemed not made to the extent of
such release or lapse. With respect to any Contingent Investment, the payment of
the guarantee of performance or the payment under the commitment to invest shall
not be deemed to be an additional Investment.
"Continuing Directors" means, as of any date of determination,
any member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the Issue Date or (ii) was nominated for election or
elected to such Board of Directors with the affirmative vote of a majority of
the Continuing Directors who were members of such Board at the time of such
nomination or election.
"Corporate Trust Office of the Trustee" shall be at the
address of the Trustee specified in Section 10.02 hereof or such other address
as to which the Trustee may give notice to the Company.
"Credit Facility" means any credit facility entered into by
and among the Company and one or more commercial banks or financial
institutions, providing for senior term or revolving credit borrowings of a type
similar to credit facilities typically entered into by commercial banks and
financial institutions, including any related notes, Guarantees, collateral
documents, instruments and agreements executed in connection therewith, as such
credit facility and related agreements may be amended, extended, refinanced,
renewed, restated, replaced or refunded from time to time.
"Default" means any event that is or with the passage of time
or the giving of notice or both would be an Event of Default.
5
<PAGE> 12
"Depositary" means, with respect to the Senior Notes issuable
or issued in whole or in part in global form, the Person specified in Section
2.03 hereof as the Depositary with respect to the Senior Notes, until a
successor shall have been appointed and become such pursuant to the applicable
provision of this Indenture, and, thereafter, "Depositary" shall mean or include
such successor.
"Disqualified Stock" means any Capital Stock to the extent
that, and only to the extent that, by its terms (or by the terms of any security
into which it is convertible or for which it is exchangeable), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or is redeemable at the option of the
holder thereof, in whole or in part, on or prior to the date on which the Senior
Notes mature, provided, however, that any Capital Stock which would not
constitute Disqualified Stock but for provisions thereof giving holders thereof
the right to require the Company to repurchase or redeem such Capital Stock upon
the occurrence of a Change of Control occurring prior to the final maturity of
the Senior Notes shall not constitute Disqualified Stock if the change in
control provisions applicable to such Capital Stock are no more favorable to the
holders of such Capital Stock than the provisions applicable to the Senior Notes
contained in Section 4.15 hereof and such Capital Stock specifically provides
that the Company will not repurchase or redeem any such stock pursuant to such
provisions prior to the Company's repurchase of such Senior Notes as are
required to be repurchased pursuant to Section 4.15 hereof.
"Eligible Institution" means a commercial banking institution
that has combined capital and surplus of not less than $500 million or its
equivalent in foreign currency, whose debt is rated "A" (or higher) according to
S&P or Moody's at the time as of which any investment or rollover therein is
made.
"Eligible Receivable" means any Receivable not more than 90
days past due under its scheduled payment terms.
"Equity Interests" means Capital Stock and all warrants,
options or other rights to acquire Capital Stock or that are measured by the
value of Capital Stock (but excluding any debt security that is convertible into
or exchangeable for Capital Stock).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended (or any successor act), and the rules and regulations thereunder.
"Exchange Notes" means the Notes issued in Exchange Offer
pursuant to Section 2.06(f) hereof.
"Exchange Offer" has the meaning set forth in the Note
Registration Rights Agreement.
"Exchange Offer Registration Statement" has the meaning set
forth in the Note Registration Rights Agreement.
"Existing Indebtedness" means the Existing Senior Notes and
all other Indebtedness of the Company and its Subsidiaries in existence on the
Issue Date.
"Existing Senior Notes" means the Company's 12 1/2% Senior
Discount Notes due 2006, the Company's 11 1/4% Senior Discount Notes due 2007,
the Company's 87/8% Senior Notes due 2007 and the Company's 8 1/2% Senior Notes
due 2008.
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<PAGE> 13
"Fair Market Value" means with respect to any asset or
property, the sale value that would be obtained in an arm's length transaction
between an informed and willing seller under no compulsion to sell and an
informed and willing buyer under no compulsion to buy.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession of the United States, which are in effect on the Issue
Date.
"Global Security" means, individually and collectively, each
of the Restricted Global Securities and the Unrestricted Global Security,
substantially in the form of Exhibit A.
"Global Security Legend" means the legend set forth in Section
2.07(g)(ii) to be placed on all Global Securities issued under this Indenture.
"Government Securities" means direct obligations of, or
obligations guaranteed by, the United States of America for the payment of which
guarantee or obligations the full faith and credit of the United States is
pledged.
"Guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part of
any Indebtedness.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under Interest Rate Agreements.
"Holder" and "holder" shall mean a Person in whose name a
Senior Note is registered.
"IAI Global Security" means the Global Security in the form of
Exhibit A hereto bearing the Global Security Legend and the Private Placement
Legend and deposited with and registered in the name of the Depositary or its
nominee that will be issued in a denomination equal to the outstanding principal
amount of the Senior Notes sold to Institutional Accredited Investors.
"Indebtedness" means, with respect to any Person, any
indebtedness of such Person, whether or not contingent, in respect of borrowed
money or evidenced by bonds, notes, debentures or similar instruments or letters
of credit (or reimbursement agreements in respect thereof) or representing the
balance deferred and unpaid of the purchase price of any property (including
pursuant to capital leases) or representing any Hedging Obligations, except any
such balance that constitutes an accrued expense or trade payable, if and to the
extent any of the foregoing (other than Hedging Obligations or letters of
credit) would appear as a liability upon a balance sheet of such Person prepared
in accordance with GAAP, all indebtedness of others secured by a Lien on any
asset of such Person (whether or not such indebtedness is assumed by such
Persons), all obligations to purchase, redeem, retire, defease or otherwise
acquire for value any Disqualified Stock or any warrants, rights or options to
acquire such Disqualified Stock valued, in the case of Disqualified Stock, at
the greatest amount payable in respect thereof on a liquidation (whether
voluntary or involuntary) plus accrued and unpaid dividends, the liquidation
value of any Preferred Stock issued by Subsidiaries of such Person plus accrued
and unpaid dividends, and also includes, to the extent not
7
<PAGE> 14
otherwise included, the Guarantee of items that would be included within this
definition and any amendment, supplement, modification, deferral, renewal,
extension or refunding of any of the above; notwithstanding the foregoing, in no
event will performance bonds or similar security for performance be deemed
Indebtedness so long as such performance bonds or similar security for
performance would not appear as a liability on a balance sheet of such Person
prepared in accordance with GAAP; and provided, further that the amount of any
Indebtedness in respect of any Guarantee shall be the maximum principal amount
of the Indebtedness so guaranteed.
"Indenture" means this Indenture, as amended or supplemented
from time to time.
"Indirect Participant" means a Person who holds a beneficial
interest in a Global Security through a Participant.
"Initial Purchasers" means Bear, Stearns & Co. Inc., Salomon
Brothers Inc, Merrill Lynch & Co. and SBC Warburg Dillon Read Inc., as initial
purchasers in the Offering.
"Interest Rate Agreements" means (i) interest rate swap
agreements, interest rate cap agreements and interest rate collar agreements and
(ii) other agreements or arrangements designed to protect such Person against
fluctuations in interest rates.
"Institutional Accredited Investor" means an institution that
is an "accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under
the Securities Act.
"Investments" means, with respect to any Person, all
investments by such Person in other Persons (including Affiliates) in the forms
of loans, Guarantees, Contingent Investments, advances or capital contributions
(excluding commission, travel and similar advances to officers and employees
made in the ordinary course of business), purchases or other acquisitions for
consideration of Indebtedness, Equity Interests or other securities of any other
Person and all other items that are or would be classified as investments on a
balance sheet prepared in accordance with GAAP; provided, however, that any
investment to the extent made with Capital Stock of the Company (other than
Disqualified Stock) shall not be deemed an "Investment" for purposes of this
Indenture.
"Issue Date" means May 27, 1998.
"Joint Venture" means a Person in the Telecommunications
Business in which the Company holds less than a majority of the shares of Voting
Stock or an Unrestricted Subsidiary in the Telecommunications Business.
"Legal Holiday" means a Saturday, a Sunday or a day on which
banking institutions in the City of New York or at a place of payment are
authorized by law, regulation or executive order to remain closed. If a payment
date is a Legal Holiday at a place of payment, payment may be made at that place
on the next succeeding day that is not a Legal Holiday, and no interest shall
accrue for the intervening period.
"Letter of Transmittal" means the letter of transmittal to be
prepared by the Company and sent to all holders of the Senior Notes for use by
such holders in connection with the Exchange Offer.
"Liquidated Damages" means all liquidated damages then owing
pursuant to Section 5 of the Note Registration Rights Agreement.
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<PAGE> 15
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset, whether or not filed, recorded or otherwise perfected under applicable
law (including any conditional sale or other title retention agreement, any
lease in the nature thereof, any option or other agreement to sell or give a
security interest in and any filing of or agreement to give any financing
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"Make-Whole Amount" means, with respect to any Senior Note, an
amount equal to the excess, if any, of (i) the present value of the remaining
principal, premium and interest payments that would be payable with respect to
such Senior Note if such Senior Note were redeemed on June 1, 2003, computed
using a discount rate equal to the Treasury Rate plus 50 basis points, over (ii)
the outstanding principal amount of such Senior Note.
"Make-Whole Average Life" means, with respect to any date of
redemption of Senior Notes, the number of years (calculated to the nearest
one-twelfth) from such redemption date to June 1, 2003.
"Make-Whole Price" means, with respect to any Senior Note, the
greater of (i) the sum of the principal amount of such Senior Note and the
Make-Whole Amount with respect to such Senior Note and (ii) the redemption price
of such Senior Note on June 1, 2003.
"Marketable Securities" means:
(i) Government Securities;
(ii) any certificate of deposit maturing not more than 270
days after the date of acquisition issued by, or time deposit of, an
Eligible Institution;
(iii) commercial paper maturing not more than 270 days after
the date of acquisition issued by a corporation (other than an
Affiliate of the Company) with a rating, at the time as of which any
investment therein is made, of "A-1" (or higher) according to S&P or
"P-1" (or higher) according to Moody's;
(iv) any banker's acceptances or money market deposit accounts
issued or offered by an Eligible Institution; and
(v) any fund investing exclusively in investments of the types
described in clauses (i) through (iv) above.
"Moody's" means Moody's Investors Service, Inc. and its
successors.
"Net Income" means, with respect to any Person, the net income
(loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however, (i) any
gain (but not loss), together with any related provision for taxes on such gain
(but not loss), realized in connection with (a) any Asset Sale (including,
without limitation, dispositions pursuant to Sale and Leaseback Transactions) or
(b) the disposition of any securities by such Person or any of its Subsidiaries
or the extinguishment of any Indebtedness of such Person or any of its
Subsidiaries and (ii) any extraordinary gain (but not loss), together with any
related provision for taxes on such extraordinary gain (but not loss).
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<PAGE> 16
"Net Proceeds" means the aggregate cash proceeds received by
the Company or any of its Subsidiaries in respect of any Asset Sale, net of the
direct costs relating to such Asset Sale (including, without limitation, legal,
accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), amounts required to be applied to
the repayment of Indebtedness secured by a Lien on the asset or assets that are
the subject of such Asset Sale and any reserve for adjustment in respect of the
sale price of such asset or assets. Net Proceeds shall exclude any non-cash
proceeds received from any Asset Sale, but shall include such proceeds when and
as converted by the Company or any Subsidiary of the Company to cash.
"Note Custodian" means the Trustee, as custodian with respect
to the Senior Notes in global form, or any successor entity thereto.
"Note Registration Rights Agreement" means the Registration
Rights Agreement dated as of the date hereof between the Company and the Initial
Purchasers.
"Offering" means the offering of the Senior Notes pursuant to
the Offering Memorandum.
"Offering Memorandum" means the offering memorandum of the
Company, dated May 21, 1998, relating to the Offering.
"Officer" means, with respect to any Person, the Chairman of
the Board, the Chief Executive Officer, the President, the Chief Operating
Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer,
Controller, Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed by two
Officers of the Company, one of whom must be the principal executive officer,
principal financial officer, treasurer or principal accounting officer of the
Company.
"Opinion of Counsel" means an opinion from legal counsel, who
may be an employee of or counsel to the Company, any Subsidiary of the Company
or the Trustee.
"Pari Passu Notes" means any notes issued by the Company
which, by their terms and the terms of any indenture governing such notes, have
an obligation to be repurchased by the Company upon the occurrence of an Asset
Sale.
"Participant" means, with respect to the Depositary, a Person
who has an account with the Depositary.
"Participating Broker-Dealer" means any broker-dealer that is
the beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of
Exchange Notes received by such broker-dealer in the Exchange Offer.
"Permitted Investment" means (a) any Investments in the
Company or any Subsidiary of the Company; (b) any Investments in Marketable
Securities; (c) Investments by the Company or any Subsidiary of the Company in a
Person, if as a result of such Investment (i) such Person becomes a Subsidiary
of the Company or (ii) such Person is merged, consolidated or amalgamated with
or into, or transfers or conveys substantially all of its assets to, or is
liquidated into, the Company or a
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<PAGE> 17
Subsidiary of the Company; (d) any Investments in property or assets to be used
in (A) any line of business in which the Company or any of its Subsidiaries was
engaged on the Issue Date or (B) any Telecommunications Business; (e)
Investments in any Person in connection with the acquisition of such Person or
substantially all of the property or assets of such Person by the Company or any
Subsidiary of the Company; provided that within 180 days from the first date of
any such Investment, either (A) such Person becomes a Subsidiary of the Company
or any of its Subsidiaries or (B) the amount of any such Investment is repaid in
full to the Company or any of its Subsidiaries; (f) Investments pursuant to any
agreement or obligation of the Company or a Subsidiary, in effect on the Issue
Date or on the date a subsidiary becomes a Subsidiary (provided that any such
agreement was not entered into in contemplation of such subsidiary becoming a
Subsidiary), to make such Investments; (g) Investments in prepaid expenses,
negotiable instruments held for collection and lease, utility and workers'
compensation, performance and other similar deposits; (h) Hedging Obligations
permitted to be incurred pursuant to Section 4.09(b) hereof; and (i) bonds,
notes, debentures or other securities received as a result of Asset Sales
permitted under Section 4.10 hereof.
"Permitted Liens" means (i) Liens securing Indebtedness
(including Capital Lease Obligations) permitted to be incurred pursuant to
Sections 4.09(b)(i), 4.09(b)(ii) and 4.09(b)(iv) hereof; (ii) Liens in favor of
the Company; (iii) Liens on property of a Person existing at the time such
Person is merged into or consolidated with the Company or any Subsidiary of the
Company; provided that such Liens were in existence prior to the contemplation
of such merger or consolidation and do not extend to any assets other than those
of the Person merged into or consolidated with the Company; (iv) Liens on
property existing at the time of acquisition thereof by the Company or any
Subsidiary of the Company, provided that such Liens were in existence prior to
the contemplation of such acquisition; (v) Liens to secure the performance of
statutory obligations, surety or appeal bonds, performance bonds or other
obligations of a like nature incurred in the ordinary course of business; (vi)
Liens existing on the Issue Date; (vii) Liens for taxes, assessments or
governmental charges or claims that are not yet delinquent or that are being
contested in good faith by appropriate proceedings timely instituted and
diligently concluded, provided that any reserve or other appropriate provision
as shall be required in conformity with GAAP shall have been made therefor;
(viii) Liens incurred in the ordinary course of business of the Company or any
Subsidiary of the Company with respect to obligations that do not exceed $5.0
million at any one time outstanding and that (a) are not incurred in connection
with the borrowing of money or the obtaining of advances or credit (other than
trade credit in the ordinary course of business) and (b) do not in the aggregate
materially detract from the value of the property or materially impair the use
thereof in the operation of business by the Company or such Subsidiary; (ix)
Liens on Telecommunications Related Assets existing during the time of the
construction thereof; (x) Liens on Receivables to secure Indebtedness permitted
to be incurred pursuant to Section 4.09(b) hereof, but only to the extent that
the outstanding amount of the Indebtedness secured by such Liens would not
represent more than 80% of Eligible Receivables; and (xi) Liens to secure any
Permitted Refinancing of any Indebtedness secured by Liens referred to in the
foregoing clauses (i), (iii), (v) or (x); but only to the extent that such Liens
do not extend to any other property or assets and the principal amount of the
Indebtedness secured by such Liens is not increased.
"Person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity.
"Preferred Stock" as applied to the Capital Stock of any
Person, means Capital Stock of such Person of any class or classes (however
designated) that ranks prior, as to payment of
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<PAGE> 18
dividends or as to the distribution of assets upon any voluntary or involuntary
liquidation, dissolution or winding up of such Person, to shares of Capital
Stock of any other class of such Person.
"Private Placement Legend" means the legend set forth in
Section 2.06(g)(i) to be placed on all Notes issued under this Indenture except
where otherwise permitted by the provisions of this Indenture.
"Public Offering" means an underwritten offering of Common
Stock of the Company registered under the Securities Act.
"QIB" means a "qualified institutional buyer" as defined in
Rule 144A.
"Receivables" means, with respect to any Person, all of the
following property and interests in property of such person or entity, whether
now existing or existing in the future or hereafter acquired or arising: (i)
accounts; (ii) accounts receivable, including, without limitation, all rights to
payment created by or arising from sales of goods, leases of goods or the
rendition of services no matter how evidenced, whether or not earned by
performance; (iii) all unpaid seller's or lessor's rights including, without
limitation, rescission, replevin, reclamation and stoppage in transit, relating
to any of the foregoing after creation of the foregoing or arising therefrom;
(iv) all rights to any goods or merchandise represented by any of the foregoing,
including, without limitation, returned or repossessed goods; (v) all reserves
and credit balances with respect to any such accounts receivable or account
debtors; (vi) all letters of credit, security, or Guarantees for any of the
foregoing; (vii) all insurance policies or reports relating to any of the
foregoing; (viii) all collection of deposit accounts relating to any of the
foregoing; (ix) all proceeds of any of the foregoing; and (x) all books and
records relating to any of the foregoing.
"Redeemable Dividend" means, for any dividend with regard to
Disqualified Stock and Preferred Stock, the quotient of the dividend divided by
the difference between one and the maximum statutory federal income tax rate
(expressed as a decimal number between 1 and 0) then applicable to the issuer of
such Disqualified Stock or Preferred Stock.
"Representative" means the indenture trustee or other trustee,
agent or representative for any Senior Indebtedness.
"Responsible Officer" when used with respect to the Trustee,
means any officer within the Corporate Trust Department of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Certificated Security" means a Certificated
Security bearing the Private Placement Legend.
"Restricted Global Security" means the 144A Global Security
and the IAI Global Security, which shall bear the Private Placement Legend.
"Restricted Investment" means an Investment other than a
Permitted Investment.
"Rule 144" means Rule 144 under the Securities Act.
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<PAGE> 19
"Rule 144A" means Rule 144A under the Securities Act.
"S&P" means Standard and Poor's Corporation and its
successors.
"Sale and Leaseback Transaction" means, with respect to any
Person, any direct or indirect arrangement pursuant to which any property (other
than Capital Stock) is sold by such Person or a Subsidiary of such Person and is
thereafter leased back from the purchaser or transferee thereof by such Person
or one of its Subsidiaries.
"Securities Act" means the Securities Act of 1933, as amended
(or any successor act), and the rules and regulations thereunder.
"Senior Indebtedness" means any Indebtedness permitted to be
incurred by the Company under the terms of this Indenture, unless the instrument
under which such Indebtedness is incurred expressly provides that it is
subordinated in right of payment to the Senior Notes. Notwithstanding anything
to the contrary in the foregoing, Senior Indebtedness will not include (i) any
liability for federal, state, local or other taxes owed or owing by the Company,
(ii) any Indebtedness of the Company to any of its Subsidiaries or other
Affiliates, (iii) any trade payables or (iv) any Indebtedness that is incurred
in violation of this Indenture.
"Shelf Registration Statement" means the Shelf Registration
Statement as defined in the Note Registration Rights Agreement.
"Significant Subsidiary" means any Subsidiary that would be a
"Significant Subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date hereof.
"Strategic Investor" means, with respect to any sale of the
Company's Capital Stock, any Person which, both as of the Trading Day
immediately before the day of such sale and the Trading Day immediately after
the day of such sale, has, or whose parent has, a Total Market Capitalization of
at least $1.0 billion on a consolidated basis. In calculating Total Market
Capitalization for the purpose of this definition, the consolidated Indebtedness
of such Person, solely when calculated as of the Trading Day immediately after
the day of such sale, will be calculated after giving effect to such sale
(including any Indebtedness incurred in connection with such sale). For purposes
of this definition, the term "parent" means any Person of which the referent
Strategic Investor is a Subsidiary.
"Subsidiary" of any Person means (i) any corporation,
association or business entity of which more than 50% of the total voting power
of shares of Capital Stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by such Person or
one or more of the other Subsidiaries of such Person or a combination thereof
and (ii) any partnership (a) the sole general partner or the managing general
partner of which is such Person or a Subsidiary of such Person or (b) the only
general partners of which are such Person or one or more Subsidiaries of such
Person or any combination thereof; provided that any Unrestricted Subsidiary
shall be excluded from this definition of "Subsidiary."
"Telecommunications Business" means, when used in reference to
any Person, that such Person is engaged primarily in the business of (i)
transmitting, or providing services relating to the transmission of, voice,
video or data through owned or leased transmission facilities, (ii) creating,
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<PAGE> 20
developing or marketing communications related network equipment, software and
other devices for use in a Telecommunications Business or (iii) evaluating,
participating or pursuing any other activity or opportunity that is related to
those identified in (i) or (ii) above; provided that the determination of what
constitutes a Telecommunications Business shall be made in good faith by the
Board of Directors of the Company.
"Telecommunications Related Assets" means all assets, rights
(contractual or otherwise) and properties, whether tangible or intangible, used
in connection with a Telecommunications Business.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
Section 77aaa-77bbbb) as in effect on the date on which this Indenture is
qualified under the TIA, except as provided in Section 9.03 hereof.
"Total Common Equity" of any Person means, as of any date of
determination, the product of (i) the aggregate number of outstanding primary
shares of Common Stock of such Person on such day (which shall not include any
options or warrants on, or securities convertible or exchangeable into, shares
of Common Stock of such Person) and (ii) the average Closing Price of such
Common Stock over the 20 consecutive Trading Days immediately preceding such
day. If no such Closing Price exists with respect to shares of any such class,
the value of such shares for purposes of clause (ii) of the preceding sentence
shall be determined by the Board of Directors of the Company in good faith and
evidenced by a resolution of the Board of Directors filed with the Trustee.
"Total Market Capitalization" of any Person means, as of any
day of determination (and as modified for purposes of the definition of
"Strategic Investor"), the sum of (1) the consolidated Indebtedness of such
Person and its Subsidiaries (except in the case of the Company, in which case of
the Company and its Subsidiaries) on such day, plus (2) the product of (i) the
aggregate number of outstanding primary shares of Common Stock of such Person on
such day (which shall not include any options or warrants on, or securities
convertible or exchangeable into, shares of Common Stock of such Person) and
(ii) the average Closing Price of such Common Stock over the 20 consecutive
Trading Days immediately preceding such day, plus (3) the liquidation value of
any outstanding shares of Preferred Stock of such Person on such day less (4)
cash and cash equivalents (other than restricted cash and restricted cash
equivalents) as presented on such Person's consolidated balance sheet on such
day. If no such Closing Price exists with respect to shares of any such class,
the value of such shares for purposes of clause (2) of the preceding sentence
shall be determined by the Company's Board of Directors in good faith and
evidenced by a resolution of the Board of Directors filed with the Trustee.
"Trading Day," with respect to a securities exchange or
automated quotation system, means a day on which such exchange or system is open
for a full day of trading.
"Treasury Rate" means, at any date of computation, the yield
to maturity as of such date (as compiled by and published in the most recent
Federal Reserve Statistical Release H.15 (519), which has become publicly
available at least two business days prior to the date of the redemption notice
for which such computation is being made, or if such Statistical Release is no
longer published, as reported in any publicly available source of similar market
data) of United States Treasury securities with a constant maturity most nearly
equal to the Make-Whole Average Life; provided, however, that if the Make-Whole
Average Life is not equal to the constant maturity of the United States Treasury
security for which a weekly average yield is given, the Treasury Rate shall be
obtained by linear interpolation (calculated to the nearest one-twelfth of a
year) from the weekly
14
<PAGE> 21
average yields of United States Treasury securities for which such yields are
given, except that if the Make-Whole Average Life is less than one year, the
weekly average yield on actually traded United States treasury securities
adjusted to a constant maturity of one year shall be used.
"Trustee" means the party named as such above until a
successor replaces it in accordance with the applicable provisions of this
Indenture and thereafter means the successor serving hereunder.
"Unrestricted Certificated Security" means one or more
Certificated Securities that do not and are not required to bear the Private
Placement Legend.
"Unrestricted Global Security" means a permanent global
security in the form of Exhibit A attached hereto that bears the Global Security
Legend and the "Schedule of Exchanges of Interests in the Global Security"
attached thereto, and that is deposited with and registered in the name of the
Depositary, representing a series of Senior Notes that do not bear the Private
Placement Legend.
"Unrestricted Subsidiary" means any Subsidiary that is
designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a
Board Resolution.
"Vendor Indebtedness" means any Indebtedness of the Company or
any Subsidiary incurred in connection with the acquisition or construction of
Telecommunications Related Assets.
"Voting Stock" of any Person means Capital Stock of such
Person which ordinarily has voting power for the election of directors (or
Persons performing similar functions) of such Person, whether at all times or
only so long as no senior class of securities has such voting power by reason of
any contingency.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding principal amount of such Indebtedness into (b) the total of the
product obtained by multiplying (x) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (y) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment; provided, that with respect to Capital
Lease Obligations, that maturity shall be calculated after giving effect to all
renewal options by the Lessee.
SECTION 1.02. OTHER DEFINITIONS.
<TABLE>
<CAPTION>
Defined in
Term Section
<S> <C>
"Affiliate Transaction"........................................ 4.11
"Asset Sale"................................................... 4.10
"Bankruptcy Custodian"......................................... 6.01
"Bankruptcy Law"............................................... 4.01
"Change of Control Offer"...................................... 4.15
"Change of Control Payment".................................... 4.15
"Change of Control Payment Date"............................... 4.15
"Commission"................................................... 4.03
"Covenant Defeasance".......................................... 8.03
</TABLE>
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<PAGE> 22
<TABLE>
<CAPTION>
<S> <C>
"Event of Default"............................................. 6.01
"Excess Proceeds".............................................. 4.10
"Excess Proceeds Offer"........................................ 3.09
"incur"........................................................ 4.09
"Legal Defeasance" ............................................ 8.02
"Offer Amount"................................................. 3.09
"Offer Period"................................................. 3.09
"Paying Agent"................................................. 2.03
"Payment Default".............................................. 6.01
"Permitted Refinancing"........................................ 4.09
"Purchase Date"................................................ 3.09
"Refinance".................................................... 4.09
"Registrar".................................................... 2.03
"Restricted Payments".......................................... 4.07
"Retire"....................................................... 4.07
"SEC Reports".................................................. 4.03
</TABLE>
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Senior Notes;
"indenture security holder" means a holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Senior Notes means the Company and any successor
obligor upon the Senior Notes.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a capitalized term has the meaning assigned to it under
this Article 1;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
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<PAGE> 23
(3) "or" is not exclusive;
(4) "including" means including without limitation; and
(5) words in the singular include the plural, and in the plural
include the singular.
ARTICLE 2
THE SENIOR NOTES
SECTION 2.01. FORM AND DATING.
The Senior Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto, the terms of which are
incorporated in and made a part of this Indenture. The Senior Notes may have
notations, legends or endorsements required by law, stock exchange rule or
usage. Each Senior Note shall be dated the date of its authentication. The
Senior Notes shall be in denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Senior Notes shall
constitute, and are hereby expressly made, a part of this Indenture and the
Company and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby. However,
to the extent any provision of any Senior Note conflicts with the express
provisions of this Indenture, the provisions of this Indenture shall govern and
be controlling.
Senior Notes issued in global form shall be substantially in the form
of Exhibit A attached hereto (including the Global Security Legend and the
"Schedule of Exchanges in the Global Security" attached thereto). Senior Notes
issued in definitive form shall be substantially in the form of Exhibit A
attached hereto (but without the Global Security Legend and without the
"Schedule of Exchanges of Interests in the Global Security" attached thereto).
Each Global Security shall represent such of the outstanding Senior Notes as
shall be specified therein and each shall provide that it shall represent the
aggregate principal amount of outstanding Senior Notes from time to time
endorsed thereon and that the aggregate principal amount of outstanding Senior
Notes represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges and redemptions. Any endorsement of a Global
Security to reflect the amount of any increase or decrease in the aggregate
principal amount of outstanding Senior Notes represented thereby shall be made
by the Trustee or the Note Custodian, at the direction of the Trustee, in
accordance with instructions given by the holder thereof as required by Section
2.06 hereof.
SECTION 2.02. EXECUTION AND AUTHENTICATION.
One Officer of the Company shall sign the Senior Notes for the
Company by manual or facsimile signature.
If an Officer whose signature is on a Senior Note no longer holds
that office at the time a Senior Note is authenticated, the Senior Note shall
nevertheless be valid. In addition, if a Person is not an Officer at the time a
Senior Note is authenticated, but becomes an Officer on or prior to the delivery
of the Senior Note, the Senior Note shall nevertheless be valid.
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<PAGE> 24
A Senior Note shall not be valid until authenticated by the manual
signature of an authorized signatory of the Trustee. The signature of the
Trustee shall be conclusive evidence that the Senior Note has been authenticated
under this Indenture.
The Trustee shall, upon a written order of the Company signed by an
Officer of the Company, authenticate Senior Notes for original issue up to the
aggregate principal amount stated in paragraph 4 of the Senior Notes. The
aggregate principal amount of Senior Notes outstanding at any time may not
exceed such amount except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Senior Notes. Unless limited by the terms of such
appointment, an authenticating agent may authenticate Senior Notes whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with the Company or an Affiliate of the Company.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency where Senior Notes may
be presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Senior Notes may be presented for payment ("Paying
Agent"). The Registrar shall keep a register of the Senior Notes and of their
transfer and exchange. The Company may appoint one or more co-registrars and one
or more additional paying agents. The term "Registrar" includes any co-registrar
and the term "Paying Agent" includes any additional paying agent. The Company
may change any Paying Agent or Registrar without notice to any holder. The
Company shall notify the Trustee and the Trustee shall notify the holders of the
Senior Notes in writing of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any of
its Subsidiaries may act as Paying Agent or Registrar. The Company shall enter
into an appropriate agency agreement with any Agent not a party to this
Indenture, which shall incorporate the provisions of the TIA. The agreement
shall implement the provisions of this Indenture that relate to such Agent. The
Company shall notify the Trustee of the name and address of any such Agent. If
the Company fails to maintain a Registrar or Paying Agent, or fails to give the
foregoing notice, the Trustee shall act as such, and shall be entitled to
appropriate compensation in accordance with Section 7.07 hereof.
The Company initially appoints The Depository Trust Company ("DTC")
to act as Depositary with respect to the Global Securities.
The Company initially appoints the Trustee to act as the Registrar
and Paying Agent and to act as Note Custodian with respect to the Global
Securities. Except as otherwise specifically provided herein, (i) all references
in this Indenture to the Trustee shall be deemed to refer to the Trustee in its
capacity as Trustee and in its capacities as Registrar and Paying Agent and (ii)
every provision of this Indenture relating to the conduct of or affecting the
liability of or offering protection, immunity or indemnity to the Trustee shall
be deemed to apply with the same force and effect to the Trustee acting in its
capacities as Paying Agent and Registrar.
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<PAGE> 25
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent shall hold in trust for the benefit of
holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Liquidated Damages, if any, or interest on the Senior
Notes, and will notify the Trustee of any default by the Company in making any
such payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the holders all money held by it as Paying Agent. Upon
any bankruptcy or reorganization proceedings relating to the Company, the
Trustee shall serve as Paying Agent and Registrar for the Senior Notes.
SECTION 2.05. HOLDER LISTS.
If it is the Registrar, the Trustee shall preserve in as current a
form as is reasonably practicable the most recent list available to it of the
names and addresses of all holders and shall otherwise comply with TIA Section
312(a). If the Trustee is not the Registrar, the Company shall furnish to the
Trustee at least five Business Days before each interest payment date and at
such other times as the Trustee may request in writing, a list in such form and
as of such date as the Trustee may reasonably require of the names and addresses
of the holders of the Senior Notes and the Company shall otherwise comply with
TIA Section 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Global Securities. A Global Security may
not be transferred as a whole except by the Depositary to a nominee of the
Depositary, by a nominee of the Depositary to the Depositary or to another
nominee of the Depositary, or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary. All Global
Securities will be exchanged by the Company for Certificated Securities if (i)
the Company delivers to the Trustee notice from the Depositary that it is
unwilling or unable to continue to act as Depositary or that it is no longer a
clearing agency registered under the Exchange Act and, in either case, a
successor Depositary is not appointed by the Company within 120 days after the
date of such notice from the Depositary or (ii) the Company in its sole
discretion determines that the Global Securities (in whole but not in part)
should be exchanged for Certificated Securities and delivers a written notice to
such effect to the Trustee. Upon the occurrence of either of the preceding
events in (i) or (ii) above, Certificated Securities shall be issued in such
names as the Depositary shall instruct the Trustee. Global Securities also may
be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and
2.10 hereof. Every Senior Note authenticated and delivered in exchange for, or
in lieu of, a Global Security or any portion thereof, pursuant to this Section
2.06 or Section 2.07 or 2.10 hereof, shall be authenticated and delivered in the
form of, and shall be, a Global Security. A Global Security may not be exchanged
for another Senior Note other than as provided in this Section 2.06(a), however
beneficial interests in a Global Security may be transferred and exchanged as
provided in Section 2.06(b), (c) or (f) hereof.
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<PAGE> 26
(b) Transfer and Exchange of Beneficial Interests in the Global
Securities. The transfer and exchange of beneficial interests in the Global
Securities shall be effected through the Depositary, in accordance with the
provisions of this Indenture and the Applicable Procedures. Beneficial interests
in the Restricted Global Securities shall be subject to restrictions on transfer
comparable to those set forth herein to the extent required by the Securities
Act. The Trustee shall have no obligation to ascertain the Depositary's
compliance with any such restrictions on transfer. Transfers of beneficial
interests in the Global Securities also shall require compliance with either
subparagraph (i) or (ii) below, as applicable, as well as one or more of the
other following subparagraphs as applicable:
(i) Transfer of Beneficial Interests in the Same Global Security.
Beneficial interests in any Restricted Global Security may be transferred
to Persons who take delivery thereof in the form of a beneficial interest
in the same Restricted Global Security in accordance with the transfer
restrictions set forth in the Private Placement Legend. Beneficial
interests in any Unrestricted Global Security may be transferred only to
Persons who take delivery thereof in the form of a beneficial interest in
an Unrestricted Global Security. No written orders or instructions shall
be required to be delivered to the Registrar to effect the transfers
described in this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in
Global Securities. In connection with all transfers and exchanges of
beneficial interests (other than transfers of beneficial interests in a
Global Security to Persons who take delivery thereof in the form of a
beneficial interest in the same Global Security), the transferor of such
beneficial interest must deliver to the Registrar either (A) (1) a written
order from a Participant or an Indirect Participant given to the
Depositary in accordance with the Applicable Procedures directing the
Depositary to credit or cause to be credited a beneficial interest in the
specified Global Security in an amount equal to the beneficial interest to
be transferred or exchanged and (2) instructions given in accordance with
the Applicable Procedures containing information regarding the Participant
account to be credited with such increase or (B) (1) a written order from
a Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to
cause to be issued a Certificated Security in an amount equal to the
beneficial interest to be transferred or exchanged and (2) instructions
given by the Depositary to the Registrar containing information regarding
the Person in whose name such Certificated Security shall be registered to
effect the transfer or exchange referred to in (1) above. Upon an Exchange
Offer by the Company in accordance with Section 2.06(f) hereof, the
requirements of this Section 2.06(b)(ii) shall be deemed to have been
satisfied upon receipt by the Registrar of the instructions contained in
the Letter of Transmittal delivered by the holder of such beneficial
interests in the Restricted Global Securities. Upon satisfaction of all of
the requirements for transfer or exchange of beneficial interests in
Global Securities contained in this Indenture, the Notes and otherwise
applicable under the Securities Act, the Trustee shall adjust the
principal amount of the relevant Global Security pursuant to Section
2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted Global
Security. Beneficial interests in any Restricted Global Security may be
transferred to Persons who take delivery thereof in the form of a
beneficial interest in another Restricted Global Security if the transfer
complies with the requirements of Section 2.06(b)(ii) above and the
Registrar receives the following:
(A) if the transferee will take delivery in the form of a
beneficial interest in the 144A Global Security, then the transferor
must deliver a certificate in the form of Exhibit B hereto, including
the certifications in item (1) thereof; and
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(B) if the transferee will take delivery in the form of a
beneficial interest in the IAI Global Security, then the transferor
must deliver (x) a certificate in the form of Exhibit B hereto,
including the certifications in item (2) thereof, (y) to the extent
required by item 2(d) of Exhibit B hereto, an Opinion of Counsel in
form reasonably acceptable to the Company to the effect that such
transfer is in compliance with the Securities Act and such beneficial
interest is being transferred in compliance with any applicable blue
sky securities laws of any State of the United States and (z) if the
transfer is being made to an Institutional Accredited Investor and
effected pursuant to an exemption from the registration requirements
of the Securities Act other than Rule 144A under the Securities Act
or Rule 144 under the Securities Act, a certificate from the
transferee in the form of Exhibit D hereto.
(iv) Transfer and Exchange of Beneficial Interests in a Restricted
Global Security for Beneficial Interests in the Unrestricted Global
Security. Beneficial interests in any Restricted Global Security may be
exchanged by any holder thereof for a beneficial interest in the
Unrestricted Global Security or transferred to Persons who take delivery
thereof in the form of a beneficial interest in the Unrestricted Global
Security if the exchange or transfer complies with the requirements of
Section 2.06(b)(ii) above and:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Note Registration Rights
Agreement and the holder, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the applicable
Letter of Transmittal that it is not (1) a broker-dealer, (2) a
Person participating in the distribution of the Exchange Notes or (3)
a Person who is an affiliate (as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Note Registration
Rights Agreement;
(C) any such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration Statement
in accordance with the Note Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Security proposes to exchange such beneficial
interest for a beneficial interest in the Unrestricted Global
Security, a certificate from such holder in the form of Exhibit C
hereto, including the certifications in item (1)(a) thereof;
(2) if the holder of such beneficial interest in a
Restricted Global Security proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the form of a
beneficial interest in the Unrestricted Global Security, a
certificate from such holder in the form of Exhibit B hereto,
including the certifications in item (3) thereof;
(3) in each such case set forth in this subparagraph (D),
an Opinion of Counsel in form reasonably acceptable to the Registrar
to the effect that such exchange or transfer is in compliance with
the Securities Act, that the restrictions on transfer contained
herein and in the Private Placement Legend are not required in order
to maintain compliance with the Securities Act, and such beneficial
interest is being exchanged or transferred in compliance with any
applicable blue sky securities laws of any State of the United
States.
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If any such transfer is effected pursuant to subparagraph (B) or
(D) above at a time when an Unrestricted Global Security has not yet been
issued, the Company shall issue and, upon receipt of an authentication
order in accordance with Section 2.02 hereof, the Trustee shall
authenticate one or more Unrestricted Global Securities in an aggregate
principal amount equal to the principal amount of beneficial interests
transferred pursuant to subparagraph (B) or (D) above.
Beneficial interests in an Unrestricted Global Security cannot
be exchanged for, or transferred to Persons who take delivery thereof in
the form of, a beneficial interest in any Restricted Global Security.
(c) Transfer or Exchange of Beneficial Interests for Certificated
Securities.
(i) If any holder of a beneficial interest in a Restricted Global
Security proposes to exchange such beneficial interest for a Certificated
Security or to transfer such beneficial interest to a Person who takes
delivery thereof in the form of a Certificated Security, then, upon
receipt by the Registrar of the following documentation (all of which may
be submitted by facsimile):
(A) if the holder of such beneficial interest in a Restricted
Global Security proposes to exchange such beneficial interest for a
Certificated Security, a certificate from such holder in the form of
Exhibit C hereto, including the certifications in item (2)(a)
thereof;
(B) if such beneficial interest is being transferred to a QIB in
accordance with Rule 144A under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including the
certifications in item (1) thereof;
(C) if such beneficial interest is being transferred pursuant to
an exemption from the registration requirements of the Securities Act
in accordance with Rule 144 under the Securities Act, a certificate
to the effect set forth in Exhibit B hereto, including the
certifications in item (2)(a) thereof;
(D) if such beneficial interest is being transferred to an
Institutional Accredited Investor in reliance on an exemption from
the registration requirements of the Securities Act other than those
listed in subparagraphs (B) through (C) above, a certificate to the
effect set forth in Exhibit B hereto, including the certifications in
item (2)(d) thereof, a certificate from the transferee to the effect
set forth in Exhibit D hereof and, to the extent required by item
2(d) of Exhibit B, an Opinion of Counsel from the transferee or the
transferor reasonably acceptable to the Company to the effect that
such transfer is in compliance with the Securities Act and such
beneficial interest is being transferred in compliance with any
applicable blue sky securities laws of any State of the United
States;
(E) if such beneficial interest is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item
(2)(b) thereof; or
(F) if such beneficial interest is being transferred pursuant to
an effective registration statement under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (2)(c) thereof,
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<PAGE> 29
the Trustee shall cause the aggregate principal amount of the applicable
Global Security to be reduced accordingly pursuant to Section 2.06(h)
hereof, and the Company shall execute and the Trustee shall authenticate
and deliver to the Person designated in the instructions a Certificated
Security in the appropriate principal amount. Certificated Securities
issued in exchange for beneficial interests in a Restricted Global
Security pursuant to this Section 2.06(c) shall be registered in such
names and in such authorized denominations as the holder shall instruct
the Registrar through instructions from the Depositary and the Participant
or Indirect Participant. The Trustee shall deliver such Certificated
Securities to the Persons in whose names such Notes are so registered.
Certificated Securities issued in exchange for a beneficial interest in a
Restricted Global Security pursuant to this Section 2.06(c)(i) shall bear
the Private Placement Legend and shall be subject to all restrictions on
transfer contained therein.
(ii) Notwithstanding 2.06(c)(i), a holder of a beneficial interest in
a Restricted Global Security may exchange such beneficial interest for an
Unrestricted Certificated Security or may transfer such beneficial
interest to a Person who takes delivery thereof in the form of an
Unrestricted Certificated Security only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Note Registration Rights
Agreement and the holder, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the applicable
Letter of Transmittal that it is not (1) a broker-dealer, (2) a
Person participating in the distribution of the Exchange Notes or (3)
a Person who is an affiliate (as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Note Registration
Rights Agreement;
(C) any such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration Statement
in accordance with the Note Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Security proposes to exchange such beneficial
interest for a Certificated Security that does not bear the Private
Placement Legend, a certificate from such holder in the form of
Exhibit C hereto, including the certifications in item (1)(b)
thereof;
(2) if the holder of such beneficial interest in a
Restricted Global Security proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the form of a
Certificated Security that does not bear the Private Placement
Legend, a certificate from such holder in the form of Exhibit B
hereto, including the certifications in item (3) thereof; and
(3) in each such case set forth in this subparagraph (D),
an Opinion of Counsel in form reasonably acceptable to the Company,
to the effect that such exchange or transfer is in compliance with
the Securities Act, that the restrictions on transfer contained
herein and in the Private Placement Legend are not required in order
to maintain compliance with the Securities Act, and such beneficial
interest in a Restricted Global Security is being exchanged or
transferred in compliance with any applicable blue sky securities
laws of any State of the United States.
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<PAGE> 30
(iii) If any holder of a beneficial interest in an Unrestricted
Global Security proposes to exchange such beneficial interest for a
Certificated Security or to transfer such beneficial interest to a Person
who takes delivery thereof in the form of a Certificated Security, then,
upon satisfaction of the conditions set forth in Section 2.06(b)(ii), the
Trustee shall cause the aggregate principal amount of the applicable
Global Security to be reduced accordingly pursuant to Section 2.06(h)
hereof, and the Company shall execute and the Trustee shall authenticate
and deliver to the Person designated in the instructions a Certificated
Security in the appropriate principal amount. Certificated Securities
issued in exchange for a beneficial interest pursuant to this Section
2.06(c)(iii) shall be registered in such names and in such authorized
denominations as the holder shall instruct the Registrar through
instructions from the Depositary and the Participant or Indirect
Participant. The Trustee shall deliver such Certificated Securities to the
Persons in whose names such Notes are so registered. Certificated
Securities issued in exchange for a beneficial interest pursuant to this
section 2.06(c)(iii) shall not bear the Private Placement Legend.
Beneficial interests in an Unrestricted Global Security cannot be
exchanged for a Certificated Security bearing the Private Placement Legend
or transferred to a Person who takes delivery thereof in the form of a
Certificated Security bearing the Private Placement Legend.
(d) Transfer or Exchange of Certificated Securities for Beneficial
Interests.
(i) If any holder of Restricted Certificated Securities proposes to
exchange such Notes for a beneficial interest in a Restricted Global
Security or to transfer such Certificated Securities to a Person who takes
delivery thereof in the form of a beneficial interest in a Restricted
Global Security, then, upon receipt by the Registrar of the following
documentation (all of which may be submitted by facsimile):
(A) if the holder of such Restricted Certificated Securities
proposes to exchange such Notes for a beneficial interest in a
Restricted Global Security, a certificate from such holder in the
form of Exhibit C hereto, including the certifications in item (2)(b)
thereof;
(B) if such Certificated Securities are being transferred to a
QIB in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (1) thereof;
(C) if such Certificated Securities are being transferred
pursuant to an exemption from the registration requirements of the
Securities Act in accordance with Rule 144 under the Securities Act,
a certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (2)(a) thereof;
(D) if such Certificated Securities are being transferred to an
Institutional Accredited Investor in reliance on an exemption from
the registration requirements of the Securities Act other than those
listed in subparagraphs (B) through (C) above, a certificate to the
effect set forth in Exhibit B hereto, including the certifications in
item (2)(d) thereof, a certificate from the transferee to the effect
set forth in Exhibit D hereof and, to the extent required by item
2(d) of Exhibit B, an Opinion of Counsel from the transferee or the
transferor reasonably acceptable to the Company to the effect that
such transfer is in compliance with the Securities Act and such
Certificated Securities are being transferred in compliance with any
applicable blue sky securities laws of any State of the United
States;
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<PAGE> 31
(E) if such Certificated Securities are being transferred to the
Company or any of its Subsidiaries, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item
(2)(b) thereof; or
(F) if such Certificated Securities are being transferred
pursuant to an effective registration statement under the Securities
Act, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (2)(c) thereof,
the Trustee shall cancel the Certificated Securities, increase or cause to
be increased the aggregate principal amount of, in the case of clause (A)
above, the appropriate Restricted Global Security, in the case of clause
(B) above, the 144A Global Security, and in all other cases, the IAI
Global Security.
(ii) A holder of Restricted Certificated Securities may exchange such
Notes for a beneficial interest in the Unrestricted Global Security or
transfer such Restricted Certificated Securities to a Person who takes
delivery thereof in the form of a beneficial interest in the Unrestricted
Global Security only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Note Registration Rights
Agreement and the holder, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the applicable
Letter of Transmittal that it is not (1) a broker-dealer, (2) a
Person participating in the distribution of the Exchange Notes or (3)
a Person who is an affiliate (as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Note Registration
Rights Agreement;
(C) any such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration Statement
in accordance with the Note Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such Certificated Securities proposes
to exchange such Notes for a beneficial interest in the Unrestricted
Global Security, a certificate from such holder in the form of
Exhibit C hereto, including the certifications in item (1)(c)
thereof;
(2) if the holder of such Certificated Securities proposes
to transfer such Notes to a Person who shall take delivery thereof in
the form of a beneficial interest in the Unrestricted Global
Security, a certificate from such holder in the form of Exhibit B
hereto, including the certifications in item (3) thereof; and
(3) in each such case set forth in this subparagraph (D),
an Opinion of Counsel in form reasonably acceptable to the Company to
the effect that such exchange or transfer is in compliance with the
Securities Act, that the restrictions on transfer contained herein
and in the Private Placement Legend are not required in order to
maintain compliance with the Securities Act, and such Certificated
Securities are being exchanged or transferred in compliance with any
applicable blue sky securities laws of any State of the United
States.
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<PAGE> 32
Upon satisfaction of the conditions of any of the subparagraphs in this
Section 2.06(d)(ii), the Trustee shall cancel the Certificated Securities
and increase or cause to be increased the aggregate principal amount of
the Unrestricted Global Security.
(iii) A holder of Unrestricted Certificated Securities may exchange
such Notes for a beneficial interest in the Unrestricted Global Security
or transfer such Certificated Securities to a Person who takes delivery
thereof in the form of a beneficial interest in the Unrestricted Global
Security. Upon receipt of a request for such an exchange or transfer, the
Trustee shall cancel the Unrestricted Certificated Securities and increase
or cause to be increased the aggregate principal amount of the
Unrestricted Global Security.
If any such exchange or transfer from a Certificated Security to a
beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or
(iii) above at a time when an Unrestricted Global Security has not yet been
issued, the Company shall issue and, upon receipt of an authentication order in
accordance with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Securities in an aggregate principal amount equal to the
principal amount of beneficial interests transferred pursuant to subparagraphs
(ii)(B), (ii)(D) or (iii) above.
(e) Transfer and Exchange of Certificated Securities. Upon request by
a holder of Certificated Securities and such holder's compliance with the
provisions of this Section 2.06(e), the Registrar shall register the transfer or
exchange of Certificated Securities. Prior to such registration of transfer or
exchange, the requesting holder shall present or surrender to the Registrar the
Certificated Securities duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such holder or
by his attorney, duly authorized in writing. In addition, the requesting holder
shall provide any additional certifications, documents and information, as
applicable, pursuant to the provisions of this Section 2.06(e).
(i) Restricted Certificated Securities may be transferred to and
registered in the name of Persons who take delivery thereof in the form of
Restricted Certificated Securities if the Registrar receives the
following:
(A) if the transfer will be made pursuant to Rule 144A under the
Securities Act, then the transferor must deliver a certificate in the
form of Exhibit B hereto, including the certifications in item (1)
thereof; and
(B) if the transfer will be made pursuant to any other exemption
from the registration requirements of the Securities Act, then the
transferor must deliver (x) a certificate in the form of Exhibit B
hereto, including the certifications in item (2) thereof, (y) to the
extent required by item 2(d) of Exhibit B hereto, an Opinion of
Counsel in form reasonably acceptable to the Company to the effect
that such transfer is in compliance with the Securities Act and such
beneficial interest is being transferred in compliance with any
applicable blue sky securities laws of any State of the United States
and (z) if the transfer is being made to an Institutional Accredited
Investor and effected pursuant to an exemption from the registration
requirements of the Securities Act other than Rule 144A under the
Securities Act or Rule 144 under the Securities Act, a certificate
from the transferee in the form of Exhibit D hereto.
(ii) Restricted Certificated Securities may be exchanged by any
holder thereof for an Unrestricted Certificated Security or transferred to
Persons who take delivery thereof in the form of an Unrestricted
Certificated Security if:
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<PAGE> 33
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Note Registration Rights
Agreement and the holder, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the applicable
Letter of Transmittal that it is not (1) a broker-dealer, (2) a
Person participating in the distribution of the Exchange Notes or (3)
a Person who is an affiliate (as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Note Registration
Rights Agreement;
(C) any such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration Statement
in accordance with the Note Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such Restricted Certificated
Securities proposes to exchange such Notes for an Unrestricted
Certificated Security, a certificate from such holder in the form of
Exhibit C hereto, including the certifications in item (1)(a)
thereof;
(2) if the holder of such Restricted Certificated
Securities proposes to transfer such Notes to a Person who shall take
delivery thereof in the form of an Unrestricted Certificated
Security, a certificate from such holder in the form of Exhibit B
hereto, including the certifications in item (3) thereof; and
(3) in each such case set forth in this subparagraph (D),
an Opinion of Counsel in form reasonably acceptable to the Company to
the effect that such exchange or transfer is in compliance with the
Securities Act, that the restrictions on transfer contained herein
and in the Private Placement Legend are not required in order to
maintain compliance with the Securities Act, and such Restricted
Certificated Security is being exchanged or transferred in compliance
with any applicable blue sky securities laws of any State of the
United States.
(iii) A holder of Unrestricted Certificated Securities may transfer
such Notes to a Person who takes delivery thereof in the form of an
Unrestricted Certificated Security. Upon receipt of a request for such a
transfer, the Registrar shall register the Unrestricted Certificated
Securities pursuant to the instructions from the holder thereof.
Unrestricted Certificated Securities cannot be exchanged for or
transferred to Persons who take delivery thereof in the form of a
Restricted Certificated Security.
(f) Exchange Offer. Upon the occurrence of the Exchange Offer in
accordance with the Note Registration Rights Agreement, the Company shall issue
and, upon receipt of an authentication order in accordance with Section 2.02,
the Trustee shall authenticate (i) one or more Unrestricted Global Securities in
an aggregate principal amount equal to the principal amount of the beneficial
interests in the Restricted Global Securities tendered for acceptance by persons
that are not (x) broker-dealers, (y) Persons participating in the distribution
of the Exchange Notes or (z) Persons who are affiliates (as defined in Rule 144)
of the Company and accepted for exchange in the exchange Offer and (ii)
Certificated Securities in an aggregate principal amount equal to the principal
amount of the Restricted Certificated Securities accepted for exchange in the
Exchange Offer. Concurrent with the issuance of such Notes, the Trustee shall
cause the aggregate principal amount of the applicable Restricted Global
Securities to be reduced accordingly, and the Company shall execute and the
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<PAGE> 34
Trustee shall authenticate and deliver to the Persons designated by the holders
of Certificated Securities so accepted Certificated Securities in the
appropriate principal amount.
(g) Legends. The following legends shall appear on the face of all
Global Securities and Certificated Securities issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (b) below, each Global
Security and each Certificated Security (and all Notes issued in
exchange therefor or substitution thereof) shall bear the legend in
substantially the following form:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FORM REGISTRATION
UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED
HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS
HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION
FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED
BY RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED
HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH
SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY
(1) TO THE COMPANY, (2) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (3)
TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" AS DEFINED IN RULE 144A IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (4) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501 (A)(1), (2), (3) OR (7) OF
REGULATION D UNDER THE SECURITIES ACT THAT, PRIOR TO SUCH
TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER
OF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM
THE TRUSTEE) OR (5) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT (AND
BASED ON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS),
SUBJECT IN EACH OF THE FOREGOING CASES TO SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION
AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED
TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED
HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE."
(B) Notwithstanding the foregoing, any Global Security or
Certificated Security issued pursuant to subparagraphs (b)(iv),
(c)(ii), (c)(iii), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to
this Section 2.06 (and all Senior Notes issued in exchange therefor
or substitution thereof) shall not bear the Private Placement Legend.
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<PAGE> 35
(ii) Global Security Legend. Each Global Security shall bear a
legend in substantially the following form:
"THIS GLOBAL SECURITY IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE
BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO
ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY
MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION
2.07 OF THE INDENTURE, (II) THIS GLOBAL SECURITY MAY BE EXCHANGED IN
WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE,
(III) THIS GLOBAL SECURITY MAY BE DELIVERED TO THE TRUSTEE FOR
CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS
GLOBAL SECURITY MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH
THE PRIOR WRITTEN CONSENT OF THE COMPANY."
(h) Cancellation and/or Adjustment of Global Securities. At such
time as all beneficial interests in a particular Global Security have been
exchanged for Certificated Securities or a particular Global Security has been
redeemed, repurchased or cancelled in whole and not in part, each such Global
Security shall be returned to or retained and cancelled by the Trustee in
accordance with Section 2.11 hereof. At any time prior to such cancellation, if
any beneficial interest in a Global Security is exchanged for or transferred to
a Person who will take delivery thereof in the form of a beneficial interest in
another Global Security or Certificated Securities, the principal amount of
Senior Notes represented by such Global Security shall be reduced accordingly
and an endorsement shall be made on such Global Security, by the Trustee or by
the Depositary at the direction of the Trustee, to reflect such reduction; and
if the beneficial interest is being exchanged for or transferred to a Person who
will take delivery thereof in the form of a beneficial interest in another
Global Security, such other Global Security shall be increased accordingly and
an endorsement shall be made on such Global Security, by the Trustee or by the
Depositary at the direction of the Trustee, to reflect such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate Global Securities and
Certificated Securities upon the Company's order or at the Registrar's
request.
(ii) No service charge shall be made to a holder of a beneficial
interest in a Global Security or to a holder of a Certificated Security
for any registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith (other than any such
transfer taxes or similar governmental charge payable upon exchange or
transfer pursuant to Sections 2.10, 3.06, 4.10, 4.15 and 9.05 hereof).
(iii) The Registrar shall not be required to register the transfer
of or exchange any Senior Note selected for redemption in whole or in
part, except the unredeemed portion of any Senior Note being redeemed in
part.
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<PAGE> 36
(iv) All Global Securities and Certificated Securities issued upon
any registration of transfer or exchange of Global Securities or
Certificated Securities shall be the valid obligations of the Company,
evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Global Securities or Certificated Securities surrendered
upon such registration of transfer or exchange.
(v) The Company shall not be required (A) to issue, to register the
transfer of or to exchange Senior Notes during a period beginning at the
opening of business 15 days before the day of any selection of Senior
Notes for redemption under Section 3.02 hereof and ending at the close of
business on the day of selection, (B) to register the transfer of or to
exchange any Senior Note so selected for redemption in whole or in part,
except the unredeemed portion of any Senior Note being redeemed in part or
(C) to register the transfer of or to exchange a Senior Note between a
record date and the next succeeding Interest Payment Date.
(vi) Prior to due presentment for the registration of a transfer of
any Senior Note, the Trustee, any Agent and the Company may deem and treat
the Person in whose name any Note is registered as the absolute owner of
such Senior Note for the purpose of receiving payment of principal of and
interest on such Senior Notes and for all other purposes, and none of the
Trustee, any Agent or the Company shall be affected by notice to the
contrary.
(vii) The Trustee shall authenticate Global Securities and
Certificated Securities in accordance with the provisions of Section 2.02
hereof.
SECTION 2.07. REPLACEMENT NOTES.
If any mutilated Note is surrendered to the Trustee, or the Company
and the Trustee receives evidence to their satisfaction of the destruction, loss
or theft of any Note, the Company shall issue and the Trustee, upon the written
order of the Company signed by two Officers of the Company, shall authenticate a
replacement Senior Note if the Trustee's requirements are met. If required by
the Trustee or the Company, an indemnity bond must be supplied by the holder
that is sufficient in the judgment of the Trustee and the Company to protect the
Company, the Trustee, any Agent and any authenticating agent from any loss that
any of them may suffer if a Note is replaced. The Company may charge for its
expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company
and shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
SECTION 2.08. OUTSTANDING NOTES.
The Senior Notes outstanding at any time are all the Senior Notes
authenticated by the Trustee except for those cancelled by it, those delivered
to it for cancellation and those described in this Section 2.08 as not
outstanding. Except as set forth in Section 2.09 hereof, a Note does not cease
to be outstanding because the Company or an Affiliate of the Company holds the
Note.
If a Senior Note is replaced pursuant to Section 2.07 hereof, it
ceases to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced Senior Note is held by a bona fide purchaser.
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If the principal amount of any Senior Note is considered paid under
Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to
accrue.
If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) segregates and holds in trust, in accordance with this
Indenture, on a redemption date or maturity date, money sufficient to pay all
principal and interest, if any, payable on that date with respect to the Senior
Notes (or the portion thereof to be redeemed or maturing, as the case may be),
then on and after that date such Senior Notes (or portions thereof) shall be
deemed to be no longer outstanding and shall cease to accrue interest.
SECTION 2.09. TREASURY NOTES.
In determining whether the holders of the required principal amount
of Senior Notes have concurred in any direction, waiver or consent, Senior Notes
owned by the Company, or an Affiliate of the Company, shall be considered as
though not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Senior Notes that a Trustee knows are so owned shall be so disregarded.
SECTION 2.10. TEMPORARY NOTES.
Until definitive Senior Notes are ready for delivery, the Company
may prepare and the Trustee shall authenticate temporary Senior Notes upon a
written order of the Company signed by two Officers of the Company. Temporary
Senior Notes shall be substantially in the form of definitive Senior Notes but
may have variations that the Company considers appropriate for temporary Senior
Notes and as shall be reasonably acceptable to the Trustee. Without unreasonable
delay, the Company shall prepare and the Trustee shall authenticate definitive
Senior Notes and deliver them in exchange for temporary Senior Notes.
Holders of temporary Senior Notes shall be entitled to all of the
benefits of this Indenture.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Senior Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Senior Notes surrendered to them for registration of transfer, exchange or
payment. The Trustee and no one else shall cancel all Senior Notes surrendered
for registration of transfer, exchange, payment, replacement or cancellation and
shall destroy cancelled Senior Notes (subject to the record retention
requirement of the Exchange Act), unless the Company directs cancelled Senior
Notes to be returned to it. Certification of the destruction of all cancelled
Senior Notes shall be delivered to the Company for all certificates so
destroyed. The Company may not issue new Senior Notes to replace Senior Notes
that it has redeemed, paid or delivered to the Trustee for cancellation.
SECTION 2.12. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Senior
Notes, it shall pay the defaulted interest in any lawful manner plus, to the
extent lawful, interest payable on the defaulted interest, to the Persons who
are holders on a subsequent special record date, which date shall be at
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<PAGE> 38
the earliest practicable date but in all events at least five Business Days
prior to the payment date, in each case at the rate provided in the Senior Notes
and in Section 4.01 hereof. The Company shall fix or cause to be fixed each such
special record date and payment date, provided that the Company shall fix or
cause to be fixed each such special record date as early as practicable prior to
the payment date, and the Company shall mail or cause to be mailed as early as
practicable to each holder a notice that states the special record date, the
related payment date and the amount of defaulted interest to be paid.
SECTION 2.13. RECORD DATE.
The record date for purposes of determining the identity of holders
of the Senior Notes entitled to vote or consent to any action by vote or consent
authorized or permitted under this Indenture shall be determined as provided for
in TIA Section 316(c).
SECTION 2.14. CUSIP NUMBER.
The Company in issuing the Senior Notes may use a "CUSIP" number
and, if it does so, the Trustee shall use the CUSIP number in notices of
redemption or exchange as a convenience to holders; provided that any such
notice may state that no representation is made as to the correctness or
accuracy of the CUSIP number printed in the notice or on the Senior Notes and
that reliance may be placed only on the other identification numbers printed on
the Senior Notes. The Company will promptly notify the Trustee of any change in
the CUSIP number.
ARTICLE 3
REDEMPTION AND CERTAIN REPURCHASES
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Senior Notes pursuant to the
optional redemption provisions of Section 3.07 hereof, it shall furnish to the
Trustee, at least 45 days (unless a shorter period is acceptable to the Trustee)
but not more than 60 days before a redemption date, an Officers' Certificate
setting forth (i) the clause of this Indenture pursuant to which the redemption
shall occur, (ii) the redemption date, (iii) the principal amount of Senior
Notes to be redeemed and (iv) the redemption price.
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED.
If less than all of the Senior Notes are to be redeemed at any time,
except as provided in Section 3.09, the Trustee shall select the Senior Notes to
be redeemed or purchased in compliance with the requirements of the principal
national securities exchange, if any, on which the Senior Notes are listed, or,
if the Senior Notes are not so listed, on a pro rata basis, by lot or in
accordance with any other method the Trustee considers fair and appropriate (and
in such manner as complies with applicable legal and stock exchange
requirements, if any), provided that no Senior Notes with a principal amount of
$1,000 or less shall be redeemed or purchased in part. A new Senior Note in
principal amount equal to the unredeemed or unpurchased portion shall be issued
in the name of the
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<PAGE> 39
holder thereof upon cancellation of the original Note. On and after the
redemption or purchase date, interest shall cease to accrue on the Senior Notes
or portions of them called for redemption or purchase. In the event of partial
redemption by lot, the particular Senior Notes to be redeemed shall be selected,
unless otherwise provided herein, not less than 30 nor more than 60 days prior
to the redemption date by the Trustee from the outstanding Senior Notes not
previously called for redemption.
The Trustee shall promptly notify the Company in writing of the
Senior Notes selected for redemption and, in the case of any Note selected for
partial redemption, the principal amount thereof to be redeemed. Senior Notes
and portions of them selected shall be in amounts of $1,000 or whole multiples
of $1,000; except that if all of the Senior Notes of a holder are to be
redeemed, the entire outstanding amount of Senior Notes held by such holder,
even if not a multiple of $1,000, shall be redeemed. Except as provided in the
preceding sentence, provisions of this Indenture that apply to Senior Notes
called for redemption also apply to portions of Senior Notes called for
redemption.
SECTION 3.03. NOTICE OF REDEMPTION.
Subject to the provisions of Section 3.09 hereof, at least 30 days
but not more than 60 days before a redemption date, the Company shall mail or
cause to be mailed, by first class mail, a notice of redemption to each holder
whose Senior Notes are to be redeemed at its registered address (provided that
in the event of a redemption pursuant to Section 3.07(b) hereof arising out of a
sale of the Company's Capital Stock (other than Disqualified Stock) to a
Strategic Equity Investor, such notice shall not be mailed prior to the
consummation of such sale).
The notice shall identify the Senior Notes to be redeemed and shall
state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the
redemption date upon surrender of such Note, a new Note or Senior Notes in
principal amount equal to the unredeemed portion shall be issued;
(d) the name and address of the Paying Agent;
(e) that Senior Notes called for redemption must be surrendered to
the Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption
payment, interest on Senior Notes (or portions thereof) called for
redemption ceases to accrue on and after the redemption date;
(g) the paragraph of the Senior Notes and/or section of this
Indenture pursuant to which the Senior Notes called for redemption are
being redeemed; and
(h) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on the
Senior Notes.
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<PAGE> 40
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall have delivered to the Trustee, at least 45 days (unless, except as
set forth above, a shorter period is acceptable to the Trustee) prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Senior Notes called for redemption become due and payable on the
redemption date at the redemption price stated in such notice. A notice of
redemption may not be conditional.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.
On or prior to the redemption date, the Company shall deposit with
the Trustee or with the Paying Agent (or, if the Company or a Subsidiary is the
Paying Agent, shall segregate and hold in trust) immediately available funds
sufficient to pay the redemption price of and accrued interest, if any, on all
Senior Notes to be redeemed on that date. The Trustee or the Paying Agent shall
promptly return to the Company any funds deposited with the Trustee or the
Paying Agent by the Company in excess of the amounts necessary to pay the
redemption price of, and accrued interest, if any, on, all Senior Notes to be
redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Senior Notes or the portions of Senior Notes called for redemption. If a
Note is redeemed on or after an interest record date but on or prior to the
related interest payment date, then any accrued and unpaid interest shall be
paid to the Person in whose name such Note was registered at the close of
business on such record date. If any Note called for redemption shall not be so
paid upon surrender for redemption because of the failure of the Company to
comply with the preceding paragraph, interest shall be paid on the unpaid
redemption price, from the redemption date until such redemption price is paid,
and to the extent lawful on any interest not paid on such unpaid principal, in
each case at the rate provided in the Senior Notes and in Section 4.01 hereof.
SECTION 3.06. SENIOR NOTES REDEEMED IN PART.
Upon surrender of a Senior Note that is redeemed in part, the
Company shall issue and the Trustee shall authenticate for the holder of the
Senior Notes at the expense of the Company a new Senior Note equal in principal
amount to the unredeemed portion of the Senior Note surrendered.
SECTION 3.07. OPTIONAL REDEMPTION.
(a) Except as set forth in Section 3.07(b) below, prior to June 1,
2003, the Senior Notes shall be subject to redemption at any time at the option
of the Company, in whole or in part, upon not less than 30 nor more than 60
days' notice, at the Make-Whole Price, plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the applicable redemption date. On or
after June 1, 2003, the Senior Notes shall be subject to redemption at the
option of the Company, in whole or in
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<PAGE> 41
part, upon not less than 30 nor more than 60 days' notice to the holders, at the
redemption prices (expressed as percentages of principal amount) set forth below
plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the
applicable redemption date, if redeemed during the twelve-month period beginning
on June 1 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2003.............................................. 104.300%
2004.............................................. 102.867%
2005.............................................. 101.433%
2006 and thereafter............................... 100.000%
</TABLE>
(b) Notwithstanding the provisions of Section 3.07(a) above, in the
event of the sale by the Company prior to June 1, 2001 of its Capital Stock
(other than Disqualified Stock) (i) to a Strategic Investor in a single
transaction or series of related transactions for an aggregate purchase price
equal to or exceeding $50.0 million or (ii) in one or more Public Offerings, up
to a maximum of 25% of the aggregate principal amount of the Senior Notes
originally issued shall, at the option of the Company, be redeemable from the
net cash proceeds of such sale or sales to such Strategic Investor (but only to
the extent such proceeds consist of cash or readily marketable cash equivalents
received in respect of the Capital Stock, other than Disqualified Stock, so
sold) at a redemption price equal to 108.60% of the principal amount thereof
plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the
redemption date, provided that at least 75% of the aggregate principal amount of
the Senior Notes originally issued remains outstanding immediately after the
occurrence of such redemption and that such redemption occurs within 90 days of
the date of the closing of each such sale.
(c) Any redemption pursuant to this Section 3.07 shall be made
pursuant to the provisions of Sections 3.01 through 3.06 hereof.
SECTION 3.08. MANDATORY REDEMPTION.
Except as set forth under Sections 3.09 and 4.15 hereof, the Company
shall not be required to make mandatory redemption or sinking fund payments with
respect to the Senior Notes.
SECTION 3.09. OFFER TO PURCHASE WITH EXCESS ASSET SALE PROCEEDS.
If at any time the cumulative amount of Excess Proceeds that have
not been applied in accordance with this Section 3.09 exceeds $10.0 million, the
Company shall, within 30 days thereafter, make an offer to all holders of Senior
Notes and Pari Passu Notes (an "Excess Proceeds Offer"), to purchase the maximum
principal amount of Senior Notes and Pari Passu Notes that may be purchased out
of such Excess Proceeds, at an offer price in cash in an amount equal to 100% of
the outstanding principal amount of the Senior Notes and 100% of the outstanding
principal amount or accreted value, as applicable, of the Pari Passu Notes, plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the date
fixed for the closing of such offer, in accordance with the procedures specified
below.
The Excess Proceeds Offer shall remain open for a period of 20
Business Days following its commencement and no longer, except to the extent
that a longer period is required by applicable law (the "Offer Period"). No
later than five Business Days after the termination of the Offer Period (the
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<PAGE> 42
"Purchase Date"), the Company shall purchase the maximum accreted value or
principal amount, as the case may be, of Senior Notes and Pari Passu Notes that
may be purchased with such Excess Proceeds (on a pro rata basis if Senior Notes
and Pari Passu Notes tendered is in excess of the Excess Proceeds) (which
maximum principal amount of Senior Notes shall be the "Offer Amount") or, if
less than the Offer Amount has been tendered, all Senior Notes and Pari Passu
Notes tendered in response to the Excess Proceeds Offer, subject to the
provisions of Section 4.10 hereof.
If the Purchase Date is on or after an interest record date and on
or before the related interest payment date, any accrued interest on the Senior
Notes shall be paid to the Person in whose name a Senior Note is registered at
the close of business on such record date, and no additional interest shall be
payable to holders who tender Senior Notes pursuant to the Excess Proceeds Offer
on the portion of the tendered Senior Notes purchased pursuant to the Excess
Proceeds Offer.
Upon the commencement of any Excess Proceeds Offer, the Company
shall send, by first class mail, a notice to the Trustee and each of the holders
of the Senior Notes, with a copy to the Trustee. The notice shall contain all
instructions and materials necessary to enable such holders to tender Senior
Notes pursuant to the Excess Proceeds Offer. The Excess Proceeds Offer shall be
made to all holders. The notice, which shall govern the terms of the Excess
Proceeds Offer, shall state:
(a) that the Excess Proceeds Offer is being made pursuant to
Sections 3.09 and 4.10 hereof and the length of time the Excess Proceeds
Offer shall remain open;
(b) the Offer Amount, the purchase price and the Purchase
Date;
(c) that any Senior Note or portion thereof not tendered or
accepted for payment shall continue to accrue interest;
(d) that any Senior Note or portion thereof accepted for
payment pursuant to the Excess Proceeds Offer shall cease to accrue
interest after the Purchase Date;
(e) that holders electing to have a Senior Note or portion
thereof purchased pursuant to any Excess Proceeds Offer shall be required
to surrender the Senior Note, with the form entitled "Option of Holder to
Elect Purchase" on the reverse of the Senior Note completed, to the
Company, a depositary, if appointed by the Company, or a Paying Agent at
the address specified in the notice at least three Business Days before
the Purchase Date;
(f) that holders shall be entitled to withdraw their election
if the Company, depositary or Paying Agent, as the case may be, receives,
not later than the expiration of the Offer Period, a telegram, telex,
facsimile transmission or letter setting forth the name of the holder, the
principal amount of the Senior Note or portion thereof the holder
delivered for purchase and a statement that such holder is withdrawing his
election to have the Senior Note or portion thereof purchased;
(g) that, if the aggregate principal amount, and/or the
aggregate accreted value as the case may be, of Senior Notes and Pari
Passu Notes tendered by holders of such notes exceeds the Offer Amount,
the Trustee shall select the Senior Notes to be purchased on a pro rata
basis above (with such adjustments as may be deemed appropriate by the
Trustee so that only Senior Notes in denominations of $1,000, or integral
multiples thereof, shall be purchased); and
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<PAGE> 43
(h) that holders whose Senior Notes were purchased only in
part shall be issued new Senior Notes equal in principal amount to the
unpurchased portion of the Senior Notes surrendered (or transferred by
book-entry transfer).
On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a pro rata basis (as described above) to the
extent necessary, the Offer Amount of Senior Notes, Parri Passu Notes or
portions thereof tendered pursuant to the Excess Proceeds Offer, or if less than
the Offer Amount has been tendered, all Senior Notes, Parri Passu Notes or
portions thereof tendered, and deliver to the Trustee an Officers' Certificate
stating that such Senior Notes, Parri Passu Notes or portions thereof were
accepted for payment by the Company in accordance with the terms of this Section
3.09. The Company or Paying Agent, as the case may be, shall promptly (but in
any case not later than five days after the Purchase Date) mail or deliver to
each tendering holder an amount equal to the purchase price of the Senior Note
or portion thereof tendered by such holder and accepted by the Company for
purchase, and the Company shall promptly issue a new Senior Note, and the
Trustee shall authenticate and mail or deliver such new Senior Note to such
holder equal in principal amount to any unpurchased portion of the Senior Note
surrendered. Any Senior Note not so accepted shall be promptly mailed or
delivered by the Company to the holder thereof. The Company shall publicly
announce the results of the Excess Proceeds Offer on the Purchase Date. In the
event that the aggregate amount of Excess Proceeds exceeds the aggregate
principal amount or accreted value, as the case may be, of Senior Notes, Pari
Passu Notes or portions thereof surrendered by holders of such notes pursuant to
an Excess Proceeds Offer, the Company may use the remaining Excess Proceeds for
general purposes. Upon completion of an Excess Proceeds Offer, the amount of
Excess Proceeds shall be deemed to be reset at zero.
Other than as specifically provided in this Section 3.09, any
purchase pursuant to this Section 3.09 shall be made pursuant to the provisions
of Sections 3.01 through 3.06 hereof. No repurchase of Senior Notes under this
Section 3.9 shall be deemed to be a redemption of Senior Notes.
ARTICLE 4
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
The Company shall pay or cause to be paid the principal of, premium,
if any, and interest, on the Senior Notes on the dates and in the manner
provided in the Senior Notes and this Indenture. Principal, premium, if any, and
interest shall be considered paid on the date due if the Paying Agent, if other
than the Company, holds as of the due date money deposited by, or on behalf of,
the Company in immediately available funds and designated for and sufficient to
pay all principal, premium, if any, and interest then due. The Company shall pay
all Liquidated Damages, if any, in the same manner on the dates and in the
amounts set forth in the Note Registration Rights Agreement.
The Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal at the rate equal
to the then applicable interest rate on the Senior Notes to the extent lawful
until such overdue principal is paid; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest (without regard to any applicable grace period) at the
same rate to the extent lawful until such overdue installments of interest are
paid.
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The term "Bankruptcy Law" means title 11, U.S. Code or any similar
federal or state law for the relief of debtors.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain an office or agency (which may be an
office of the Trustee or an affiliate of the Trustee, Registrar or co-registrar)
where Senior Notes may be surrendered for registration of transfer or exchange
and where notices and demands to or upon the Company in respect of the Senior
Notes and this Indenture may be served. The Company shall give prompt written
notice to the Trustee of the location, and any change in the location, of such
office or agency. If at any time the Company shall fail to maintain any such
required office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Senior Notes may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency for such
purposes. The Company shall give prompt written notice to the Trustee of any
such designation or rescission and of any change in the location of any such
other office or agency.
The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.03 hereof.
SECTION 4.03. REPORTS.
(a) So long as any of the Senior Notes remain outstanding, the
Company shall cause copies of all quarterly and annual financial reports and of
the information, documents, and other reports (or copies of such portions of any
of the foregoing as the Securities and Exchange Commission (the "Commission")
may by rules and regulations prescribe) which the Company is required to file
with the Commission pursuant to Section 13(a) or 15(d) of the Exchange Act ("SEC
Reports") to be filed with the Trustee within 15 days of filing with the
Commission. If the Company is not subject to the requirements of Section 13(a)
or 15(d) of the Exchange Act or shall cease to be required by the Commission to
file SEC Reports pursuant to the Exchange Act, the Company shall nevertheless
continue to cause SEC Reports, comparable to those which it would be required to
file pursuant to Section 13(a) or 15(d) of the Exchange Act if it were subject
to the requirements of either such section, to be so filed with the Commission
(unless the Commission will not accept such a filing) and with the Trustee
within the same time periods as would have applied (including under the
preceding sentence) had the Company been subject to the requirements of Section
13(a) or 15(d) of the Exchange Act. Whether or not required by the Exchange Act
to file SEC Reports with the Commission, so long as any Senior Notes are
outstanding, the Company shall furnish copies of the SEC Reports to the holders
of Senior Notes at the time the Company is required to file the same with the
Trustee and make such information available to investors who request it in
writing. In addition, the Company shall, for so long as any Senior Notes remain
outstanding, furnish to the holders and to securities analysts and prospective
investors, upon their request, the information required to be delivered pursuant
to Rule 144(d)(4) under the Securities Act. The Company shall also comply with
the provisions of TIA Section 314(a).
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<PAGE> 45
(b) The Company shall provide the Trustee with a sufficient number
of copies of all SEC Reports that the Trustee may be required to deliver to the
holders of the Senior Notes under this Section 4.03.
SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) The Company shall deliver to the Trustee, within 90 days after
the end of each fiscal year of the Company, an Officers' Certificate stating
that (i) a review of the activities of the Company and its Subsidiaries during
the preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether the Company has (x) kept, observed,
performed and fulfilled, and (y) caused each of its Subsidiaries to keep,
observe, perform and fulfill, its obligations under this Indenture, and (ii) as
to each such Officer signing such certificate, that to the best of his or her
knowledge (A) the Company has kept, observed, performed and fulfilled, and has
caused each of its Subsidiaries to keep, observe, perform and fulfill, each and
every covenant contained in this Indenture and is not in default in the
performance or observance of any of the terms, provisions and conditions of this
Indenture to be performed or observed by it (or, if a Default or Event of
Default shall have occurred, describing all such Defaults or Events of Default
of which he or she may have knowledge and what action each is taking or proposes
to take with respect thereto) and (B) no event has occurred and remains in
existence by reason of which payments on account of the principal of or
interest, if any, on the Senior Notes is prohibited or if such event has
occurred, a description of the event and what action each is taking or proposes
to take with respect thereto.
(b) So long as not contrary to the then current recommendations of
the American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03 above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention which would lead them to believe that the Company has violated
any provisions of Article 4 or Article 5 of this Indenture or, if any such
violation has occurred, specifying the nature and period of existence thereof,
it being understood that such accountants shall not be liable directly or
indirectly to any Person for any failure to obtain knowledge of any such
violation.
(c) The Company shall, so long as any of the Senior Notes are
outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware
of any Default or Event of Default, an Officers' Certificate specifying such
Default, Event of Default or default and what action the Company is taking or
proposes to take with respect thereto.
(d) The Company shall deliver to the Trustee an Officers'
Certificate as required by, and in accordance with, Section 4.07(f) hereof.
SECTION 4.05. TAXES.
The Company shall pay, and shall cause each of its Subsidiaries to
pay, prior to delinquency, all material taxes, assessments, and governmental
levies, except as contested in good faith and by appropriate proceedings or
where the failure to effect such payment is not adverse in any material respect
to the holders of the Senior Notes.
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<PAGE> 46
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
The Company covenants (to the extent that it may lawfully do so)
that it shall not at any time insist upon, plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay, extension or usury law
wherever enacted, now or at any time hereafter in force, that may affect the
covenants or the performance of this Indenture; and the Company (to the extent
that it may lawfully do so) hereby expressly waives all benefit or advantage of
any such law, and covenants that it shall not, by resort to any such law,
hinder, delay or impede the execution of any power herein granted to the
Trustee, but shall suffer and permit the execution of every such power as though
no such law has been enacted.
SECTION 4.07. RESTRICTED PAYMENTS.
(a) The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly:
(i) declare or pay any dividend or make any distribution on
account of any Equity Interests of the Company or any of its
Subsidiaries other than dividends or distributions payable (A) in
Equity Interests of the Company that are not Disqualified Stock or
(B) to the Company or any Subsidiary;
(ii) purchase, redeem, defease, retire or otherwise acquire
for value ("Retire" and correlatively, a "Retirement") any Equity
Interests of the Company or any of its Subsidiaries or other
Affiliate of the Company (other than any such Equity Interests owned
by the Company or any Subsidiary);
(iii) Retire for value any Indebtedness of (A) the Company
that is subordinate in right of payment to the Senior Notes or (B)
any Subsidiary, except, with respect to clause (i)(A) or (i)(B)
above, at final maturity or in accordance with the mandatory
redemption or repayment provisions set forth in the original
documentation governing such Indebtedness; or
(iv) make any Restricted Investment (all such payments and
other actions set forth in clauses (i) through (iv) above being
collectively referred to as "Restricted Payments"), unless, at the
time of such Restricted Payment:
(1) no Default or Event of Default has occurred and is
continuing or would occur as a consequence thereof;
(2) after giving effect to such Restricted Payment on a
pro forma basis as if such Restricted Payment had been made at
the beginning of the applicable four-quarter period, the
Company could incur at least $1.00 of additional Indebtedness
pursuant to the Consolidated Cash Flow Leverage Ratio test set
forth in Section 4.09(a) hereof; and
(3) such Restricted Payment, together with the aggregate
of all other Restricted Payments made by the Company and its
Subsidiaries after the Issue Date (including any Restricted
Payments made pursuant to clauses (i), (v) and (vi) of Section
4.07(b)), is less than the sum of
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<PAGE> 47
(w) 50% of the Consolidated Net Income of the
Company for the period (taken as one accounting period)
from June 30, 1996 to the end of the Company's most
recently ended fiscal quarter for which internal
financial statements are available at the time of such
Restricted Payment (or, if such Consolidated Net Income
for such period is a deficit, less 100% of such
deficit), plus
(x) 100% of the aggregate net cash proceeds
received by the Company from the issue or sale of Equity
Interests of the Company or of debt securities or
Disqualified Stock of the Company that have been
converted into such Equity Interests (other than Equity
Interests (or convertible debt securities) sold to a
Subsidiary of the Company and other than Disqualified
Stock or debt securities that have been converted into
Disqualified Stock) after June 30, 1996 (other than any
such Equity Interests, the proceeds of which were used
as set forth in clauses (b)(ii) and (b)(viii) below),
plus
(y) 100% of the sum of, without duplication, (1)
aggregate dividends or distributions received by the
Company or any Subsidiary from any Joint Venture (other
than dividends or distributions to pay any obligations
of such Joint Venture to Persons other than the Company
or any Subsidiary, such as income taxes), with non-cash
distributions to be valued at the lower of book value or
fair market value as determined by the Board of
Directors, (2) the amount of the principal and interest
payments received since the Issue Date by the Company or
any Subsidiary from any Joint Venture and (3) the net
proceeds from the sale of an Investment in a Joint
Venture received by the Company or any Subsidiary;
provided that there is no obligation to return any such
amounts to the Joint Venture, and excluding any such
dividend, distribution, interest payment or net proceeds
that constitutes a return of capital invested pursuant
to clause (b)(vi) of this Section 4.07, plus
(z) $10.0 million.
(b) The foregoing provisions in Section 4.07(a) shall not prohibit:
(i) the payment of any dividend within 60 days after the date
of declaration thereof, if at such date of declaration such payment
would have complied with the provisions of this Indenture;
(ii) the Retirement of (A) any Equity Interests of the Company
or any Subsidiary of the Company, (B) Indebtedness of the Company
that is subordinate to the Senior Notes or (C) Indebtedness of a
Subsidiary of the Company, in exchange for, or out of the proceeds
of the substantially concurrent sale (other than to a Subsidiary of
the Company) of, Equity Interests of the Company (other than
Disqualified Stock);
(iii) the Retirement of any Indebtedness of the Company
subordinated in right of payment to the Senior Notes in exchange
for, or out of the proceeds of the substantially concurrent
incurrence of Indebtedness of the Company (other than Indebtedness
to a Subsidiary of the Company), but only to the extent that such
new Indebtedness is permitted under Section 4.09 hereof and (1) is
subordinated in right of payment to the Senior Notes at least to the
same extent as, (2) has a Weighted Average Life to Maturity at least
as long as,
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and (3) has no scheduled principal payments due in any amount
earlier than, any equivalent amount of principal under the
Indebtedness so Retired;
(iv) the Retirement of any Indebtedness of a Subsidiary of the
Company in exchange for, or out of the proceeds of the substantially
concurrent incurrence of Indebtedness of the Company or any
Subsidiary but only to the extent that such incurrence is permitted
under Section 4.09 hereof and only to the extent that such
Indebtedness (1) is not secured by any assets of the Company or any
Subsidiary to a greater extent than the Retired Indebtedness was so
secured, (2) has a Weighted Average Life to Maturity at least as
long as the Retired Indebtedness and (3) if such Retired
Indebtedness was an obligation of the Company, is pari passu or
subordinated in right of payment to the Senior Notes at least to the
same extent as the Retired Indebtedness;
(v) the Retirement of any Equity Interests of the Company or
any Subsidiary of the Company held by any member of the Company's
(or any of its Subsidiaries') management pursuant to any management
equity subscription agreement or stock option agreement; provided
that the aggregate price paid for all such repurchased, redeemed,
acquired or retired Equity Interests shall not exceed $5.0 million
in any twelve-month period plus the aggregate cash proceeds received
by the Company during such twelve-month period from any reissuance
of Equity Interests by the Company to members of management of the
Company and its Subsidiaries;
(vi) Investments in any Joint Venture; provided that at the
time any such Investment is made, such Investment shall not cause
the aggregate amount of Investments at any one time outstanding
under this clause (vi) to exceed the greater of (x) $25.0 million
and (y) 5% of the Total Common Equity of the Company;
(vii) the payment of cash in lieu of fractional shares (a)
payable as dividends on Equity Interests of the Company or (b)
issuable upon conversion of or in exchange for securities
convertible into or exchangeable for Equity Interests of the Company
or (c) issuable as a result of a corporate reorganization, provided
that, in the case of (a) and (b), the issuance of such Equity
Interests or securities and, in the case of (c), such corporate
reorganization, is permitted under the terms of this Indenture; and
(viii) Investments with the net cash proceeds received by the
Company from the issue or sale of Equity Interests of the Company
(other than Disqualified Stock) after December 31, 1997;
provided, however, that at the time of, and after giving effect to, any
Restricted Payment permitted under clauses (i), (ii), (iii), (iv), (v), (vi) and
(viii), no Default or Event of Default shall have occurred and be continuing.
(c) A Permitted Investment that ceases to be a Permitted Investment
pursuant to the definition thereof set forth in Section 1.01 hereof, shall
become a Restricted Investment, deemed to have been made on the date that it
ceases to be a Permitted Investment.
(d) The Board of Directors may designate any Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Default or an
Event of Default pursuant to Article 6 hereof. For purposes of making such
determination, all outstanding Investments by the Company and its Subsidiaries
(except to the extent repaid in cash) in such Subsidiary so designated shall be
deemed to
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be Restricted Payments at the time of such designation and shall reduce the
amount available for Restricted Payments under paragraph (a) of this Section
4.07. All such outstanding Investments will be deemed to constitute Investments
in an amount equal to the greatest of (x) the net book value of such Investments
at the time of such designation, (y) the fair market value of such Investments
at the time of such designation and (z) the original fair market value of such
Investments at the time they were made. Such designation will only be permitted
if such Restricted Payment would be permitted at such time.
(e) The Board of Directors of the Company may at any time designate
any Unrestricted Subsidiary to be a Subsidiary; provided that such designation
shall be deemed to be an incurrence of Indebtedness by a Subsidiary of the
Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such
designation shall only be permitted if (i) such Indebtedness is permitted under
Section 4.09 hereof and (ii) no Default or Event of Default pursuant to Article
6 hereof would be in existence following such designation.
(f) Not later than the date of making any Restricted Payment, the
Company shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 4.07 were computed, which calculations may
be based upon the Company's latest available financial statements.
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create or otherwise cause to become effective any
consensual encumbrance or restriction on the ability of any Subsidiary to:
(i) pay dividends or make any other distributions to the
Company or any of its Subsidiaries on its Capital Stock or with
respect to any other interest or participation in, or measured by,
its profits, or pay any Indebtedness owed to the Company or any of
its Subsidiaries;
(ii) make loans or advances to the Company or any of its
Subsidiaries; or
(iii) transfer any of its properties or assets to the Company
or any of its Subsidiaries; except for such encumbrances or
restrictions existing as of the Issue Date or under or by reason of:
(a) Existing Indebtedness;
(b) applicable law;
(c) any instrument governing Acquired Debt as in effect at the
time of acquisition (except to the extent such Indebtedness was
incurred in connection with, or in contemplation of, such
acquisition), which encumbrance or restriction is not applicable to
any Person, or the properties or assets of any Person, other than
the Person, or the property or assets of the Person, so acquired;
(d) by reason of customary non-assignment provisions in leases
entered into in the ordinary course of business and consistent with
past practices;
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(e) Indebtedness in respect of a Permitted Refinancing,
provided that the restrictions contained in the agreements governing
such Refinancing Indebtedness are not materially more restrictive
than those contained in the agreements governing the Indebtedness
being refinanced;
(f) with respect to clause (iii) above, purchase money
obligations for property acquired in the ordinary course of
business, Vendor Indebtedness incurred in connection with the
purchase or lease of Telecommunications Related Assets or
performance bonds or similar security for performance which liens
securing such obligations do not cover any asset other than the
asset acquired or, in the case of performance bonds or similar
security for performance, the assets associated with the Company's
performance;
(g) Indebtedness incurred under Section 4.09(b)(i) hereof;
(h) this Indenture and the Senior Notes or future Indebtedness
with substantially similar restrictions, if any, to the Senior
Notes; or
(i) in the case of clauses (a), (c), (e), (g) and (h) above,
any amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings thereof;
provided that such amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacements or
refinancings are not materially more restrictive with respect to
such dividend and other payment restrictions than those contained in
such instruments as in effect on the date of their incurrence or, if
later, the Issue Date.
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED STOCK.
(a) The Company and its Subsidiaries shall not, directly or indirectly,
(i) create, incur, issue, assume, guarantee or otherwise become directly or
indirectly liable for the payment of (collectively, "incur" and, correlatively,
"incurred" and "incurrence") any Indebtedness (including, without limitation,
Acquired Debt) or (ii) issue any Disqualified Stock; provided, however, that the
Company and/or any of its Subsidiaries may incur Indebtedness (including,
without limitation, Acquired Debt) or issue shares of Disqualified Stock if,
after giving effect to the incurrence of such Indebtedness or the issuance of
such Disqualified Stock, the Consolidated Cash Flow Leverage Ratio for the
Company's most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date of such
incurrence or issuance (x) does not exceed 5.5 to 1 if such incurrence or
issuance occurs on or prior to June 1, 1999 and (y) does not exceed 5.0 to 1 if
such occurrence or issuance occurs after June 1, 1999, in each case, determined
on a pro forma basis (including a pro forma application of the net proceeds
therefrom), as if the additional Indebtedness had been incurred, or the
Disqualified Stock had been issued, as the case may be, at the beginning of such
four-quarter period. If the Company incurs any Indebtedness or issues or redeems
any Preferred Stock subsequent to the commencement of the period for which such
ratio is being calculated but prior to the event for which the calculation of
the ratio is made, then the ratio will be calculated giving pro forma effect to
any such incurrence of Indebtedness, or such issuance or redemption of Preferred
Stock, as if the same had occurred at the beginning of the applicable period. In
making such calculation on a pro forma basis, interest attributable to
Indebtedness bearing a floating interest rate shall be computed as if the rate
in effect on the date of computation had been the applicable rate for the entire
period.
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(b) The foregoing limitation in Section 4.09(a) shall not apply to (with
each exception to be given independent effect):
(i) the incurrence by the Company and/or any of its Subsidiaries of
Indebtedness under the Credit Facility in an aggregate principal amount at
any one time outstanding (with letters of credit being deemed to have a
principal amount equal to the maximum potential liability of the Company
and/or any of its Subsidiaries thereunder) not to exceed $150.0 million in
the aggregate at any one time outstanding, less the aggregate amount of
all Net Proceeds of Asset Sales applied to permanently reduce the
commitments with respect to such Indebtedness pursuant to Section 4.10
hereof;
(ii) the incurrence by the Company and/or any of its Subsidiaries of
Vendor Indebtedness, provided that the aggregate amount of such Vendor
Indebtedness incurred does not exceed 80% of the total cost of the
Telecommunications Related Assets financed therewith (or 100% of the total
cost of the Telecommunications Related Assets financed therewith if such
Vendor Indebtedness was extended for the purchase of tangible physical
assets and was so financed by the vendor thereof or an affiliate of such
vendor);
(iii) the incurrence by the Company and/or any of its Subsidiaries of the
Existing Indebtedness, including the Existing Senior Notes;
(iv) the incurrence by the Company and/or any of its Subsidiaries of
Indebtedness in an aggregate amount not to exceed $50.0 million at any one
time outstanding;
(v) the incurrence by the Company of Indebtedness, but only to the extent
that such Indebtedness has a final maturity no earlier than, and a
Weighted Average Life to Maturity equal to or greater than, the final
maturity and Weighted Average Life to Maturity, respectively, of the
Senior Notes, in an aggregate principal amount not to exceed 2.0 times the
net cash proceeds received by the Company after June 30, 1996 from the
issuance and sale of Equity Interests of the Company (that are not
Disqualified Stock) plus the fair market value of Equity Interests (other
than Disqualified Stock) issued after June 30, 1996 in connection with any
acquisition of any Telecommunications Business;
(vi) the incurrence (a "Permitted Refinancing") by the Company and/or any
of its Subsidiaries of Indebtedness issued in exchange for, or the
proceeds of which are used to refinance, replace, refund or defease
("Refinance" and correlatively, "Refinanced" and "Refinancing")
Indebtedness, other than Indebtedness incurred pursuant to clause (i)
above, but only to the extent that:
(1) the net proceeds of such Refinancing Indebtedness shall
not exceed the principal amount of and premium, if any, and accrued
interest on the Indebtedness so Refinanced (or if such Indebtedness
was issued at an original issue discount, the original issue price
plus amortization of the original issue discount at the time of the
repayment of such Indebtedness) plus the fees, expenses and costs of
such Refinancing and reasonable prepayment premiums, if any, in
connection therewith;
(2) the Refinancing Indebtedness shall have a final maturity
no earlier than, and a Weighted Average Life to Maturity equal to or
greater than, the final maturity and Weighted Average Life to
Maturity of the Indebtedness being Refinanced; and
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(3) if the Indebtedness being Refinanced is subordinated in
right of payment to the Senior Notes, the Refinancing Indebtedness
shall be subordinated in right of payment to the Senior Notes on
terms at least as favorable to the holders of Senior Notes as those
contained in the documentation governing the Indebtedness being so
Refinanced;
(vii) the incurrence by the Company or any of its Subsidiaries of
intercompany Indebtedness between or among the Company and any of
its Subsidiaries; and
(viii) the incurrence by the Company or any of its Subsidiaries of
Hedging Obligations that are incurred for the purpose of fixing or
hedging interest rate or foreign currency risk with respect to any
floating rate Indebtedness that is permitted by the terms of this
Indenture to be outstanding.
For purposes of determining compliance with this Section 4.09, in
the event that an item of Indebtedness, Disqualified Stock or Preferred Stock
meets the criteria of more than one of the categories described in clauses (i)
through (viii) above or is entitled to be incurred pursuant to Section 4.09(a),
the Company shall, in its sole discretion, classify such item in any manner that
complies with this Section and such item shall be treated as having been
incurred pursuant to only one of such clauses or pursuant to Section 4.09(a).
Accrual of interest or dividends, the accretion of accreted value or liquidation
preference and the payment of interest or dividends in the form of additional
Indebtedness, Common Stock or Preferred Stock shall not be deemed to be an
incurrence of Indebtedness for purposes of this Section.
SECTION 4.10. ASSET SALES.
(a) The Company shall not, and shall not permit any of its
Subsidiaries to, whether in a single transaction or a series of related
transactions occurring within any twelve-month period,
(i) sell, lease, convey, dispose or otherwise transfer any
assets (including by way of a Sale and Leaseback Transaction) other
than sales, leases, conveyances, dispositions or other transfers (A)
in the ordinary course of business, (B) to the Company by any
Subsidiary of the Company or from the Company to any Subsidiary of
the Company, (C) that constitute a Restricted Payment, Investment or
dividend or distribution permitted under Section 4.07 hereof or (D)
that constitute the disposition of all or substantially all of the
assets of the Company pursuant to Section 5.01 hereof or
(ii) issue or sell Equity Interests in any of its Subsidiaries
(other than an issuance or sale of Equity Interests of any such
Subsidiary to the Company or a Subsidiary),
if, in the case of either (i) or (ii) above, in a single transaction or a series
of related transactions occurring within any twelve-month period, such assets or
securities
(x) have a Fair Market Value in excess of $2.0 million or
(y) are sold or otherwise disposed of for net proceeds in excess of
$2.0 million (each of the foregoing, an "Asset Sale"), unless:
(a) no Default or Event of Default exists or would occur as a
result thereof;
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(b) the Company, or such Subsidiary, as the case may be,
receives consideration at the time of such Asset Sale at least equal
to the Fair Market Value (evidenced by a resolution of the Board of
Directors of the Company set forth in an Officers' Certificate
delivered to the Trustee), of the assets or securities issued or
sold or otherwise disposed of; and
(c) at least 75% of the consideration therefor received by the
Company or such Subsidiary is in the form of cash, provided,
however, that (A) the amount of (x) any liabilities (as shown on the
Company's or such Subsidiary's most recent balance sheet or in the
notes thereto), of the Company or any Subsidiary of the Company
(other than liabilities that are by their terms subordinated to the
Senior Notes) that are assumed by the transferee of any such assets
and (y) any notes, obligations or other securities received by the
Company or any such Subsidiary from such transferee that are
immediately converted by the Company or such Subsidiary into cash,
shall be deemed to be cash (to the extent of the cash received in
the case of subclause (y)) for purposes of this clause (c); and (B)
an amount equal to the Fair Market Value (determined as set forth in
clause (b) above) of (1) Telecommunications Related Assets received
by the Company or any such Subsidiary from the transferee that will
be used by the Company or any such Subsidiary in the operation of a
Telecommunications Business in the United States and (2) the Voting
Stock of any Person engaged in the Telecommunications Business in
the United States received by the Company or any such Subsidiary
(provided that such Voting Stock is converted to cash within 270
days or such Person concurrently becomes or is a Subsidiary of the
Company) shall be deemed to be cash for purposes of this clause (c).
The foregoing provisions shall not apply to a sale, lease,
conveyance or other disposition of all or substantially all of the assets of the
Company, which shall be governed by Article 5 hereof.
(b) Within 360 days after the receipt of net proceeds of any Asset
Sale, the Company (or such Subsidiary, as the case may be) may apply the Net
Proceeds from such Asset Sale to (i) permanently reduce the amounts permitted to
be borrowed by the Company under the terms of any of its Senior Indebtedness or
(ii) the purchase of Telecommunications Related Assets or Voting Stock of any
Person engaged in the Telecommunications Business in the United States (provided
that such Person concurrently becomes a Subsidiary of the Company). Any Net
Proceeds from any Asset Sales that are not so applied or invested as provided in
the preceding sentence, shall constitute "Excess Proceeds." When the aggregate
amount of Excess Proceeds exceeds $10.0 million, the Company shall be required
to make an Excess Proceeds Offer in accordance with the terms of Section 3.09
hereof.
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its Subsidiaries
to, sell, lease, transfer or otherwise dispose of any of their respective
properties or assets to, or purchase any property or assets from, or enter into
any contract, agreement, understanding, loan, advance or guarantee with, or for
the benefit of, any Affiliate (each of the foregoing, an "Affiliate
Transaction"), unless: (i) such Affiliate Transaction is on terms that are no
less favorable to the Company or the relevant Subsidiary than those that would
have been obtained in a comparable transaction by the Company or such Subsidiary
with an unrelated Person; (ii) such Affiliate Transaction is approved by a
majority of the disinterested directors on the Board of Directors of the
Company; and (iii) the Company delivers to the Trustee, with respect to any
Affiliate Transaction involving aggregate payments in excess of $1.0 million, a
resolution of a committee of independent directors of the Company set forth in
an Officers'
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Certificate certifying that such Affiliate Transaction complies with clauses (i)
and (ii) above; provided that (a) transactions pursuant to any employment, stock
option or stock purchase agreement entered into by the Company or any of its
Subsidiaries, or any grant of stock, in the ordinary course of business that are
approved by the Board of Directors of the Company, (b) transactions between or
among the Company and its Subsidiaries, (c) transactions permitted by Section
4.07 hereof, and (d) loans and advances to employees and officers of the Company
or any of its Subsidiaries in the ordinary course of business in an aggregate
principal amount not to exceed $1.0 million at any one time outstanding, shall
not be deemed Affiliate Transactions.
SECTION 4.12. LIENS.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create, incur, assume or suffer to exist any Lien on
any asset now owned or hereafter acquired, or any income or profits therefrom or
assign or convey any right to receive income therefrom, except for Permitted
Liens.
SECTION 4.13. LIMITATIONS ON SALE AND LEASEBACK TRANSACTIONS.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, enter into, assume, Guarantee or otherwise become
liable with respect to any Sale and Leaseback Transaction, provided that the
Company or any Subsidiary of the Company may enter into any such transaction if
(i) the Company or such Subsidiary would be permitted under Sections 4.09 and
4.12 hereof to incur secured Indebtedness in an amount equal to the Attributable
Debt with respect to such transaction, (ii) the consideration received by the
Company or such Subsidiary from such transaction is at least equal to the Fair
Market Value of the property being transferred, and (iii) the Net Proceeds
received by the Company or such Subsidiary from such transaction are applied in
accordance with Section 4.10 hereof.
SECTION 4.14. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to be
done all things necessary to preserve and keep in full force and effect (i) its
existence as a corporation, and the corporate, partnership or other existence of
any Subsidiary, in accordance with the respective organizational documents (as
the same may be amended from time to time) of the Company or any such Subsidiary
and (ii) the rights (charter and statutory), licenses and franchises of the
Company and its Subsidiaries; provided, however, that the Company shall not be
required to preserve any such right, license or franchise, or the corporate,
partnership or other existence of any of its Subsidiaries if the Board of
Directors of the Company shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company and its
Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any
material respect to the holders of the Senior Notes.
SECTION 4.15. OFFER TO PURCHASE UPON CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, the Company shall
make an offer (the "Change of Control Offer") to each holder of Senior Notes to
repurchase all or any part (equal to $1,000 or an integral multiple thereof) of
such holder's Senior Notes at a purchase price equal to
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101% of the aggregate principal amount thereof plus accrued and unpaid interest
and Liquidated Damages, if any, thereon, to the date of purchase (the "Change of
Control Payment"), provided that if the date of purchase is on or after an
interest record date and on or before the related interest payment date, any
accrued interest shall be paid to the Person in whose name a Senior Note is
registered at the close of business on such record date, and no additional
interest shall be paid or payable to holders who tender Senior Notes pursuant to
the Change of Control Offer. Within thirty (30) days following any Change of
Control, the Company shall mail a notice to the Trustee and each holder stating:
(1) that the Change of Control Offer is being made pursuant to this Section 4.15
and that all Senior Notes or portions thereof tendered will be accepted for
payment; (2) the purchase price and the purchase date, which shall be no earlier
than 30 days nor later than 40 days (unless required by applicable law) from the
date such notice is mailed (the "Change of Control Payment Date"); (3) that any
Senior Note or portion thereof not tendered will continue to accrue interest in
accordance with its terms; (4) that, unless the Company defaults in the payment
of the Change of Control Payment, all Senior Notes or portions thereof accepted
for payment pursuant to the Change of Control Offer shall cease to accrue
interest after the Change of Control Payment Date; (5) that holders electing to
have any Senior Notes or portions thereof purchased pursuant to a Change of
Control Offer will be required to surrender the Senior Notes, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Senior Notes
completed, to the Paying Agent at the address specified in the notice prior to
the close of business on the third Business Day preceding the Change of Control
Payment Date; (6) that holders will be entitled to withdraw their election if
the Paying Agent receives, not later than the close of business on the second
Business Day preceding the Change of Control Payment Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the holder, the
principal amount of Senior Notes or portions thereof delivered for purchase, and
a statement that such holder is withdrawing his election to have such Senior
Notes or portions thereof purchased; and (7) that holders whose Senior Notes are
being purchased only in part will be issued new Senior Notes equal in principal
amount to the unpurchased portion of the Senior Notes surrendered, which
unpurchased portion must be equal to $1,000 in principal amount or an integral
multiple thereof. The Company shall comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
repurchase of the Senior Notes or portions thereof in connection with a Change
of Control.
(b) On the Change of Control Payment Date, the Company shall, to the
extent lawful, (i) accept for payment Senior Notes or portions thereof tendered
pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Senior Notes or
portions thereof so tendered and (iii) deliver or cause to be delivered to the
Trustee the Senior Notes so accepted together with an Officers' Certificate
stating the Senior Notes or portions thereof tendered to the Company. The Paying
Agent shall promptly mail to each holder of Senior Notes so accepted payment in
an amount equal to the purchase price for such Senior Notes or portions thereof,
and the Trustee shall promptly authenticate and mail to each holder a new Senior
Note equal in principal amount to any unpurchased portion of the Senior Notes
surrendered, if any; provided, that each such new Senior Note shall be in a
principal amount of $1,000 or an integral multiple thereof. The Company shall
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
SECTION 4.16. BUSINESS ACTIVITIES.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, engage in any business other than the
Telecommunications Business.
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SECTION 4.17. PAYMENTS FOR CONSENT.
The Company shall not, and shall not permit any of its Affiliates
to, directly or indirectly, pay or cause to be paid any consideration, whether
by way of interest, fee or otherwise, to any holder of any Senior Notes for or
as an inducement to any consent, waiver or amendment of any of the terms or
provisions of this Indenture or the Senior Notes unless such consideration is
offered to be paid or agreed to be paid to all holders of the Senior Notes that
consent, waive or agree to amend in the time frame set forth in the solicitation
documents relating to such consent, waiver or agreement.
SECTION 4.18. USE OF PROCEEDS.
The Company shall use the gross proceeds from the sale of the Senior
Notes only for the following purposes:
(i) to pay the fees and expenses of the issuance of the Senior Notes
including any discount or commission to the Initial Purchasers of the Senior
Notes; and
(ii) with respect to any funds remaining after application under clause
(i) above, to fund up to 80% of the cost of the acquisition or construction of
Telecommunications Related Assets, or to the repayment of the Existing Senior
Notes.
Pending application of the proceeds in accordance with clause (ii)
above, the Company shall deposit such proceeds into a segregated account in the
Company's name. The Company shall deliver to the Trustee an Officer's
Certificate with each annual compliance certificate certifying that the amounts
in such account were applied in accordance with this Section 4.18.
ARTICLE 5
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION OR SALE OF ASSETS.
The Company shall not consolidate or merge with or into (whether or
not the Company is the surviving entity), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions to another corporation, Person or
entity unless:
(i) the Company is the surviving entity or the entity or
Person formed by or surviving any such consolidation or merger (if
other than the Company) or to which such sale, assignment, transfer,
lease, conveyance or other disposition has been made is a
corporation organized or existing under the laws of the United
States, any state thereof or the District of Columbia;
(ii) the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company) or the entity or
Person to which such sale, assignment, transfer, lease, conveyance
or other disposition has been made assumes all the obligations of
the
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Company under the Senior Notes and this Indenture pursuant to a
supplemental indenture in form reasonably satisfactory to the
Trustee;
(iii) immediately after such transaction no Default or Event
of Default exists;
(iv) except in connection with a Merger with or into a
wholly-owned Subsidiary of the Company, the Company, or any entity
or Person formed by or surviving any such consolidation or merger,
or to which such sale, assignment, transfer, lease, conveyance or
other disposition has been made, at the time of such transaction
after giving pro forma effect thereto as if such transaction had
occurred at the beginning of the applicable fiscal quarter
(including any Indebtedness incurred or anticipated to be incurred
in connection with or in respect of such transaction or series of
transactions), either (A) could incur at least $1.00 of additional
Indebtedness pursuant to the Consolidated Cash Flow Leverage Ratio
test described under Section 4.09 hereof or (B) would have (x) Total
Market Capitalization of at least $1.0 billion and (y) total
Indebtedness (net of cash and cash equivalents that are not
restricted cash or restricted cash equivalents as reflected on the
Company's consolidated balance sheet as at the time of such event)
in an amount no greater than 40% of its Total Market Capitalization;
and
(v) such transaction would not result in the loss, material
impairment or adverse modification or amendment of any authorization
or license of the Company or its Subsidiaries that would have a
material adverse effect on the business or operations of the Company
and its Subsidiaries taken as a whole.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, lease, conveyance or
other disposition of all or substantially all of the assets of the Company in
accordance with Section 5.01 hereof, the successor corporation formed by such
consolidation or into or with which the Company is merged or to which such sale,
lease, conveyance or other disposition is made shall succeed to, and be
substituted for (so that from and after the date of such consolidation, merger,
sale, lease, conveyance or other disposition, the provisions of this Indenture
referring to the Company shall refer instead to the successor corporation and
not to the Company), and may exercise every right and power of the Company under
this Indenture with the same effect as if such successor Person had been named
as the Company, herein; provided, however, that the predecessor Company shall
not be relieved from the obligations to pay the principal of, premium, if any,
and interest on the Senior Notes, except in the case of a sale of all of the
Company's assets that meets the requirements of Section 5.01 hereof.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
Each of the following constitutes an "Event of Default":
(a) default for 30 days in the payment when due of interest or
Liquidated Damages, if any, on the Senior Notes;
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(b) default in payment when due of principal or premium, if any,
on the Senior Notes at maturity, upon redemption or otherwise;
(c) failure by the Company to perform or comply with the
provisions of Sections 4.07, 4.09, 4.10, 4.15 or 5.01 hereof;
(d) failure by the Company for 30 days after notice from the
Trustee or the holders of at least 25% in principal amount of
the Senior Notes then outstanding to comply with its other
agreements in this Indenture or the Senior Notes;
(e) default under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company
or any of its Subsidiaries (or the payment of which is
guaranteed by the Company or any of its Subsidiaries), whether
such Indebtedness or Guarantee now exists, or is created after
the Issue Date, which default (x) is caused by a failure to
pay when due principal, premium, if any, or interest on such
Indebtedness within the grace period provided in such
Indebtedness (a "Payment Default"), and the principal amount
of any such Indebtedness, together with the principal amount
of any other such Indebtedness of the Company or any
Significant Subsidiary under which there has been a Payment
Default or the maturity of which has been accelerated as
provided in clause (y), aggregates $5.0 million or more or (y)
results in the acceleration (which acceleration has not been
rescinded) of such Indebtedness prior to its express maturity
and the principal amount of any such Indebtedness, together
with the principal amount of any other such Indebtedness under
which there has been a Payment Default or the maturity of
which has been so accelerated, aggregates $5.0 million or
more;
(f) failure by the Company or any of its Significant Subsidiaries
to pay final judgments (other than any judgment as to which a
reputable insurance company has accepted full liability in
writing) aggregating in excess of $5.0 million which judgments
are not paid, discharged or stayed within 45 days after their
entry; and
(g) the Company or any of its Significant Subsidiaries pursuant to
or within the meaning of Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief against
it in an involuntary case,
(C) consents to the appointment of a Bankruptcy
Custodian of it or for all or substantially all of its
property,
(D) makes a general assignment for the benefit of its
creditors, or
(E) admits in writing that it is generally not paying
its debts (other than debts which are the subject of a bona
fide dispute) as they become due; or
(h) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that;
(A) is for relief against the Company or any of its
Significant Subsidiaries in an involuntary case;
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(B) appoints a Bankruptcy Custodian of the Company or
any of its Significant Subsidiaries or for all or
substantially all of the property of the Company or any of its
Significant Subsidiaries; or
(C) orders the liquidation of the Company or any of its
Significant Subsidiaries;
and the order or decree remains unstayed and in effect for 60
consecutive days; provided, however; that if the entry of such order
or decree is appealed and dismissed on appeal or otherwise has
ceased to be in effect, then the Event of Default hereunder by
reason of the entry of such order or decree shall be deemed to have
been cured and the related acceleration, provided that no other
Event of Default has occurred and is continuing, shall be deemed
rescinded.
The term "Bankruptcy Custodian" means any receiver, trustee,
assignee, liquidator or similar official under any Bankruptcy Law.
SECTION 6.02. ACCELERATION.
If any Event of Default occurs and is continuing under this
Indenture, the Trustee or the holders of at least 25% in principal amount of the
then outstanding Senior Notes may declare all the Senior Notes to be due and
payable immediately. Upon such declaration, the principal of, premium, if any,
and accrued and unpaid interest and Liquidated Damages, if any, on the Senior
Notes shall be due and payable immediately. Notwithstanding the foregoing, in
the case of an Event of Default arising under Sections 6.01(g) or (h) hereof
with respect to the Company or any of its Significant Subsidiaries, the
foregoing amount shall ipso facto become due and payable without further action
or notice. No premium is payable upon acceleration of the Senior Notes except
that in the case of an Event of Default that is the result of an action or
inaction by the Company or any of its Subsidiaries intended to avoid
restrictions on or premiums related to redemptions of the Senior Notes
contained in this Indenture or the Senior Notes, the amount declared due and
payable shall include the premium that would have been applicable on a voluntary
prepayment of the Senior Notes. Holders of the Senior Notes may not enforce this
Indenture or the Senior Notes except as provided herein.
In the case of any Event of Default occurring by reason of any
willful action (or inaction) taken (or not taken) by or on behalf of the Company
with the intention of avoiding payment of the premium that the Company would
have had to pay if the Company then had elected to redeem the Senior Notes
pursuant to Section 3.07 hereof, an equivalent premium shall also become and be
immediately due and payable to the extent permitted by law.
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal, premium, if
any, interest and Liquidated Damages, if any, on the Senior Notes or to enforce
the performance of any provision of the Senior Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Senior Notes or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any holder of a Note in exercising any right
or remedy accruing upon an Event of Default shall not impair
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the right or remedy or constitute a waiver of or acquiescence in the Event of
Default. All remedies are cumulative to the extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
Holders of not less than a majority in aggregate principal amount of
the Senior Notes then outstanding, by notice to the Trustee, may on behalf of
the holders of all of the Senior Notes, waive any existing Default or Event of
Default and its consequences, except a continuing Default or Event of Default in
the payment of interest or Liquidated Damages or premium on, or the principal
of, the Senior Notes. Upon any such waiver, such Default shall cease to exist,
and any Event of Default arising therefrom shall be deemed to have been cured
for every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Default or impair any right consequent thereon.
SECTION 6.05. CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then outstanding
Senior Notes may direct the time, method and place of conducting any proceeding
for exercising any remedy available to the Trustee or exercising any trust or
power conferred on it. However, the Trustee may refuse to follow any direction
that conflicts with the law or this Indenture that the Trustee, in its sole
discretion, determines may be unduly prejudicial to the rights of other holders
of Senior Notes or that may involve the Trustee in personal liability.
SECTION 6.06. LIMITATION ON SUITS.
No holder of any Senior Note shall have any right to institute any
proceeding with respect to this Indenture or the Senior Notes or for any remedy
thereunder, unless:
(i) the holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
(ii) the holders of at least 25% in principal amount of the then
outstanding Senior Notes make a written request to the Trustee to pursue
the remedy;
(iii) such holder of a Senior Note or holders of the Senior Notes
offer and, if requested, provide to the Trustee indemnity satisfactory to
the Trustee against any loss, liability or expense; and
(iv) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer and, if requested, the
provision of indemnity.
Otherwise, no holder of any Senior Note shall have any right to
institute any proceeding with respect to this Indenture or the Senior Notes or
for any remedy thereunder, except:
(x) a holder of a Senior Note may institute suit for enforcement of
payment of the principal of and premium, if any, or interest on such Senior Note
on or after the respective due dates expressed in such Senior Note (including
upon acceleration thereof) or
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(y) the institution of any proceeding with respect to this Indenture
or the Senior Notes or any remedy thereunder, including without limitation
acceleration, by the holders of a majority in principal amount of the
outstanding Senior Notes; provided that, upon institution of any proceeding or
exercise of any remedy such holders provide the Trustee with prompt written
notice thereof.
A holder of a Senior Note may not use this Indenture to prejudice
the rights of another holder of a Senior Note or to obtain a preference or
priority over another holder of a Senior Note.
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of
any holder of a Senior Note to receive payment of principal, premium and
Liquidated Damages, if any, and interest on the Senior Note, on or after the
respective due dates expressed in the Senior Note, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of the holder of the Senior Note.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(a) or (b) hereof
occurs and is continuing, the Trustee is authorized to recover judgment in its
own name and as trustee of an express trust against the Company for the whole
amount of principal of, premium and Liquidated Damages, if any, and interest
remaining unpaid on the Senior Notes and interest on overdue principal and, to
the extent lawful, interest and such further amount as shall be sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
holders of the Senior Notes allowed in any judicial proceedings relative to the
Company (or any other obligor upon the Senior Notes), the Company's creditors or
the Company's property and shall be entitled and empowered to collect, receive
and distribute any money or other property payable or deliverable on any such
claims and any custodian in any such judicial proceeding is hereby authorized by
each holder of a Note to make such payments to the Trustee, and in the event
that the Trustee shall consent to the making of such payments directly to the
holders of the Senior Notes, to pay to the Trustee any amount due to it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, and any other amounts due the Trustee under Section 7.07
hereof. To the extent that the payment of any such compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07 hereof out of the estate in any such
proceeding, shall be denied for any reason, payment of the same shall be secured
by a Lien on, and shall be paid out of, any and all distributions, dividends,
money, securities and other properties which the holders of the Senior Notes may
be entitled to receive in such proceeding whether in liquidation or under any
plan of reorganization or arrangement or otherwise. Nothing contained herein
shall be deemed to authorize the Trustee to authorize or consent to or accept or
adopt on behalf of any holder of a Note any plan
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of reorganization, arrangement, adjustment or composition affecting the Senior
Notes or the rights of any holder of a Note thereof, or to authorize the Trustee
to vote in respect of the claim of any holder of a Note in any such proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article 6, it
shall pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due
under Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: (i) first to holders of Senior Notes, for amounts due and
unpaid on such Senior Notes for interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the Senior
Notes for interest, and (ii) second, to the extent any other monies are
available, to holders of all Senior Notes for amounts due and unpaid on all such
Senior Notes for principal and premium and Liquidated Damages, if any, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Senior Notes for principal and premium and Liquidated Damages, if
any; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any such
payment to holders of Senior Notes.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to a suit by the Trustee, a suit by a holder of
a Senior Note pursuant to Section 6.07 hereof, or a suit by holders of more than
10% in principal amount of the then outstanding Senior Notes.
ARTICLE 7
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and shall use the same degree of care and skill in their exercise as
a prudent man would exercise or use under the circumstances in the conduct of
his own affairs.
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(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform only
those duties that are specifically set forth in this Indenture and no
others, and no implied covenants or obligations shall be read into this
Indenture against the Trustee, and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of this Indenture.
However, the Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements of this
Indenture.
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of
this Section 7.01;
(ii) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), and (c) of this Section 7.01.
(e) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or incur any liability. The Trustee shall be under
no obligation to exercise any of its rights and powers under this Indenture at
the request of any holders of Senior Notes, unless such holder shall have
provided to the Trustee security and indemnity satisfactory to the Trustee
against any loss, liability or expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any document believed by
it to be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the advice of such counsel or any Opinion of Counsel shall be full
and
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complete authorization and protection from liability in respect of any action
taken, suffered or omitted by it hereunder in good faith and in reliance
thereon.
(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent appointed with
due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the holders unless such holders shall have provided to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that might be incurred by it in compliance with such request or direction.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Senior Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest, it must eliminate such conflict within 90 days, apply to the
Commission for permission to continue as Trustee or resign. Any Agent may do the
same with like rights and duties. The Trustee is also subject to Sections 7.10
and 7.11 hereof.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Senior Notes, it shall
not be accountable for the Company's use of the proceeds from the Senior Notes
or any money paid to the Company or upon the Company's direction under any
provision of this Indenture, it shall not be responsible for the use or
application of any money received by any Paying Agent other than the Trustee,
and it shall not be responsible for any statement or recital herein or any
statement in the Senior Notes or any other document in connection with the sale
of the Senior Notes or pursuant to this Indenture other than its certificate of
authentication.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if it
is known to a Responsible Officer of the Trustee, the Trustee shall mail to
holders of Senior Notes a notice of the Default or Event of Default within 90
days after it occurs. Except in the case of a Default or Event of Default in
payment of principal of, premium, if any, or interest on any Note, the Trustee
may withhold the notice if and so long as a committee of its Responsible
Officers in good faith determines that withholding the notice is in the
interests of the holders of the Senior Notes.
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SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE SENIOR NOTES.
Within 60 days after each May 15th beginning with the May 15th
following the date of this Indenture, the Trustee shall mail to the holders of
the Senior Notes a brief report dated as of such reporting date that complies
with TIA Section 313(a) (but if no event described in TIA Section 313(a) has
occurred within the twelve months preceding the reporting date, no report need
be transmitted). The Trustee also shall comply with TIA Section 313(b)(2). The
Trustee shall also transmit by mail all reports as required by TIA Section
313(c).
A copy of each report at the time of its mailing to the holders of
Senior Notes shall be mailed to the Company and filed with the Commission and
each stock exchange on which the Senior Notes are listed. The Company shall
promptly notify the Trustee when the Senior Notes are listed on any stock
exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred or
made by it in addition to the compensation for its services. Such expenses shall
include the reasonable compensation, disbursements and expenses of the Trustee's
agents and counsel.
The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, except any such
loss, liability or expense as may be attributable to the negligence or bad faith
of the Trustee. The Trustee shall notify the Company promptly of any claim for
which it may seek indemnity. Failure by the Trustee to so notify the Company
shall not relieve the Company of its obligations hereunder. The Company shall
defend the claim and the Trustee shall cooperate in the defense. The Trustee, in
its sole discretion, may elect to have separate counsel selected by it and the
Company shall pay the reasonable fees and expenses of such counsel. The Company
need not pay for any settlement made without its consent, which consent shall
not be unreasonably withheld.
The obligations of the Company under this Section 7.07 shall survive
the satisfaction and discharge of this Indenture.
To secure the Company' payment obligations in this Section 7.07, the
Trustee shall have a Lien prior to the Senior Notes on all money or property
held or collected by the Trustee, except that held in trust to pay principal,
premium, if any, interest and Liquidated Damages, if any, on particular Senior
Notes. Such Lien shall survive the satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 6.01(g) or (h) hereof occurs, the expenses and
the compensation for the services (including the fees and expenses of its agents
and counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
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SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section 7.08.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The holders of a majority
in principal amount of the then outstanding Senior Notes may remove the Trustee
by so notifying the Trustee and the Company in writing. The Company may remove
the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order
for relief is entered with respect to the Trustee under any Bankruptcy
Law;
(c) a Bankruptcy Custodian or public officer takes charge of the
Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the holders
of a majority in principal amount of the then outstanding Senior Notes may
appoint a successor Trustee to replace the successor Trustee appointed by the
Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the holders of Senior Notes of at least 10% in principal amount of the then
outstanding Senior Notes may petition any court of competent jurisdiction for
the appointment of a successor Trustee.
If the Trustee after written request by any holder of a Senior Note
who has been a holder of a Senior Note for at least six months fails to comply
with Section 7.10 hereof, such holder of a Senior Note may petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to holders of the Senior Notes. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee, provided
all sums owing to the Trustee hereunder have been paid and subject to the Lien
provided for in Section 7.07 hereof. Notwithstanding replacement of the Trustee
pursuant to this Section 7.08, the Company's obligations under Section 7.07
hereof shall continue for the benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
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If the Trustee consolidates, merges or converts into, or transfers
all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the laws of the United States of
America or of any state thereof authorized under such laws to exercise corporate
trustee power, shall be subject to supervision or examination by federal or
state authority and shall have a combined capital and surplus of at least $25.0
million as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to
TIA Section 310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at the option of its Board of Directors evidenced
by a resolution set forth in an Officers' Certificate and at any time, with
respect to the Senior Notes, elect to have either Section 8.02 or 8.03 hereof be
applied to all outstanding Senior Notes upon compliance with the conditions set
forth below in this Article 8.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company shall be deemed to have been
discharged from its obligations with respect to all outstanding Senior Notes on
the date the conditions set forth in Section 8.04 are satisfied (hereinafter,
"Legal Defeasance"). For this purpose, such Legal Defeasance means that the
Company shall be deemed to have paid and discharged the entire Indebtedness
represented by the outstanding Senior Notes, which shall thereafter be deemed to
be "outstanding" only for the purposes of Section 8.05 hereof and the other
sections of this Indenture referred to in (a) and (b) below, and to have
satisfied all of its other obligations under such Senior Notes and this
Indenture (and the Trustee, on demand of and at the expense of the Company,
shall execute proper instruments acknowledging the same), except for the
following which shall survive until otherwise terminated or discharged
hereunder: (a) the rights of holders of outstanding Senior Notes to receive from
the trust described below payments in respect of the principal of, premium, if
any, and interest on and Liquidated
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Damages with respect to such Senior Notes when such payments are due, or on the
redemption date, as the case may be; (b) the Company's obligations with respect
to the Senior Notes concerning issuing temporary Senior Notes, registration of
Senior Notes, mutilated, destroyed, lost or stolen Senior Notes and the
maintenance of an office or agency for payment and money for security payments
held in trust; (c) the rights, powers, trust, duties and immunities of the
Trustee, and the Company's obligations in connection therewith; and (d) the
Legal Defeasance provisions of this Indenture.
SECTION 8.03. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company shall be released from its
obligations under the covenants contained in Sections 4.03, 4.04, 4.05, 4.07,
4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16, 4.17 and 4.18 hereof and Article
5 hereof with respect to the outstanding Senior Notes on and after the date the
conditions set forth in Section 8.04 are satisfied (hereinafter, "Covenant
Defeasance"), and the Senior Notes shall thereafter be deemed not "outstanding"
for the purposes of any direction, waiver, consent or declaration or act of
holders (and the consequences of any thereof) in connection with such covenants,
but shall continue to be deemed "outstanding" for all other purposes hereunder
(it being understood that such Senior Notes shall not be deemed outstanding for
accounting purposes). For this purpose, such Covenant Defeasance means that,
with respect to the outstanding Senior Notes, the Company may omit to comply
with and shall have no liability in respect of any term, condition or limitation
set forth in any such covenant, whether directly or indirectly, by reason of any
reference elsewhere herein to any such covenant or by reason of any reference in
any such covenant to any other provision herein or in any other document and
such omission to comply shall not constitute a Default or an Event of Default
under Section 6.01 hereof but, except as specified above, the remainder of this
Indenture and such Senior Notes shall be unaffected thereby. In addition, upon
the Company's exercise under Section 8.01 hereof of the option applicable to
this Section 8.03, subject to the satisfaction of the conditions set forth in
Section 8.04 hereof, Sections 6.01(d) through 6.01(f) hereof shall not
constitute Events of Default.
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either Section
8.02 or Section 8.03 hereof to the outstanding Senior Notes:
(a) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements
of Section 7.10 hereof who shall agree to comply with the provisions of
this Article 8 applicable to it), in trust, for purpose of making the
following payments, specifically pledged as security for, and dedicated
solely to, the benefit of the holders of the Senior Notes, (i) cash in
U.S. dollars, (ii) non-callable Government Securities, or (iii) a
combination thereof, in such amounts as will be sufficient, in the opinion
of a nationally recognized firm of independent public accountants selected
by the Company, to pay the principal of, premium and Liquidated Damages,
if any, and interest on the outstanding Senior Notes, on the stated
maturity or on the applicable optional redemption date, as the case may
be, of such principal or installment of principal of, premium, if any, or
interest on or Liquidated Damages with respect to the outstanding Senior
Notes;
(b) In the case of Legal Defeasance, the Company shall have
delivered to the Trustee an opinion of counsel in the United States
reasonably acceptable to the Trustee confirming that (i)
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the Company has received from, or there has been published by, the
Internal Revenue Service a ruling or (ii) since the Issue Date, there has
been a change in the applicable federal income tax law, in either case to
the effect that, and based thereon such opinion of counsel shall confirm
that, the holders of the outstanding Senior Notes will not recognize
income, gain or loss for federal income tax purposes as a result of such
Legal Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the
case if such Legal Defeasance had not occurred;
(c) In the case of Covenant Defeasance, the Company shall have
delivered to the Trustee an opinion of counsel in the United States
reasonably acceptable to the Trustee confirming that the holders of the
outstanding Senior Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such Covenant Defeasance and
will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such Covenant
Defeasance had not occurred;
(d) No Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of
Default resulting from the borrowing of funds to be applied to such
deposit) or insofar as Events of Default from bankruptcy or insolvency
events are concerned, at any time in the period ending on the 91st day
after the date of deposit;
(e) Such Legal Defeasance or Covenant Defeasance shall not result in
a breach or violation of, or constitute a default under any material
agreement or instrument (other than this Indenture) to which the Company
or any of its Subsidiaries is a party or by which the Company or any of
its Subsidiaries is bound;
(f) The Company shall have delivered to the Trustee an opinion of
counsel to the effect that after the 91st day (or such other applicable
date) following the deposit, the trust funds will not be subject to the
effect of any applicable bankruptcy, insolvency, reorganization or similar
laws affecting creditors' rights generally;
(g) The Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of preferring the holders of Senior Notes over the other creditors
of the Company with the intent of defeating, hindering, delaying or
defrauding creditors of the Company or others; and
(h) The Company shall have delivered to the Trustee an Officers'
Certificate and an opinion of counsel, each stating that all conditions
precedent provided for relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and Government Securities
(including the proceeds thereof) deposited with the Trustee (or other qualifying
trustee, collectively for purposes of this Section 8.05, the "Trustee") pursuant
to Section 8.04 hereof in respect of the outstanding Senior Notes shall be held
in trust and applied by the Trustee, in accordance with the provisions of such
Senior Notes and this Indenture, to the payment, either directly or through any
Paying Agent (including the Company acting as Paying Agent) as the Trustee may
determine, to the holders of such Senior Notes of all sums due and to become due
thereon in respect of principal, premium, if any, and
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interest, but such money and Government Securities (including any proceeds
thereof) need not be segregated from other funds except to the extent required
by law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or Government Securities
deposited pursuant to Section 8.04 hereof or the principal and interest received
in respect thereof other than any such tax, fee or other charge which by law is
for the account of the holders of the outstanding Senior Notes.
Anything in this Article 8 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any money or Government Securities held by it as provided in
Section 8.04 hereof which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the opinion delivered under Section
8.04(a) hereof), are in excess of the amount thereof which would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
SECTION 8.06. REPAYMENT TO COMPANY.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of, premium, or
interest on any Senior Note and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable shall be
paid to the Company on its written request or (if then held by the Company)
shall be discharged from such trust; and the holder of such Senior Note shall
thereafter, as a creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, may at the expense of the Company cause to be
published once, in the New York Times and The Wall Street Journal (national
edition), notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
notification or publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
SECTION 8.07. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United States
Dollars or Government Securities in accordance with Section 8.02 or 8.03 hereof,
as the case may be, by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the Senior
Notes shall be revived and reinstated as though no deposit had occurred pursuant
to Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.02 or 8.03
hereof, as the case may be; provided, however, that, if the Company makes any
payment of principal of, premium, if any, or interest on any Senior Note
following the reinstatement of its obligations, the Company shall be subrogated
to the rights of the holders of such Senior Notes to receive such payment from
the money held by the Trustee or Paying Agent.
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ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF SENIOR NOTES.
Notwithstanding Section 9.02 hereof, the Company and the Trustee may
amend or supplement this Indenture or the Senior Notes without the consent of
any holder of Senior Notes:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Senior Notes in addition to or
in place of certificated Senior Notes;
(c) to provide for the assumption of the Company's obligations to
holders of the Senior Notes in the case of a merger or
consolidation;
(d) to make any change that would provide any additional rights or
benefits to the holders of the Senior Notes or that does not
adversely affect the legal rights under this Indenture of any
such holder; or
(e) to comply with requirements of the Commission in order to
effect or maintain the qualification of this Indenture under
the Trust Indenture Act.
Upon the request of the Company accompanied by a resolution of the
Board of Directors of the Company authorizing the execution of any such amended
or supplemental Indenture, and upon receipt by the Trustee of the documents
described in Section 9.06 hereof, the Trustee shall join with the Company in the
execution of any amended or supplemental Indenture authorized or permitted by
the terms of this Indenture and to make any further appropriate agreements and
stipulations which may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supplemental Indenture which affects its
own rights, duties or immunities under this Indenture or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF SENIOR NOTES.
The Company and the Trustee may amend or supplement this Indenture
or the Senior Notes or any amended or supplemental Indenture with the written
consent of the holders of Senior Notes of at least a majority in aggregate
principal amount of the Senior Notes then outstanding (including consents
obtained in connection with a tender offer or exchange offer for the Senior
Notes), and any existing Default and its consequences or compliance with any
provision of this Indenture or the Senior Notes may be waived with the consent
of the holders of a majority in principal amount of the then outstanding Senior
Notes (including consents obtained in connection with a tender offer or exchange
offer for the Senior Notes).
Upon the request of the Company accompanied by a resolution of the
Board of Directors of the Company authorizing the execution of any such amended
or supplemental Indenture, and upon the filing with the Trustee of evidence
satisfactory to the Trustee of the consent of the holders of Senior Notes as
aforesaid, and upon receipt by the Trustee of the documents described in Section
9.06 hereof, the Trustee shall join with the Company in the execution of such
amended or supplemental Indenture unless such amended or supplemental Indenture
affects the Trustee's own rights, duties or
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immunities under this Indenture or otherwise, in which case the Trustee may in
its discretion, but shall not be obligated to, enter into such amended or
supplemental Indenture.
It shall not be necessary for the consent of the holders of Senior
Notes under this Section 9.02 to approve the particular form of any proposed
amendment or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Company shall mail to the holders of Senior Notes
affected thereby a notice briefly describing the amendment, supplement or
waiver. Any failure of the Company to mail such notice, or any defect therein,
shall not, however, in any way impair or affect the validity of any such amended
or supplemental Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof,
the holders of a majority in aggregate principal amount of the Senior Notes then
outstanding may waive compliance in a particular instance by the Company with
any provision of this Indenture or the Senior Notes. However, without the
consent of each holder affected, an amendment or waiver may not (with respect to
any Senior Notes held by a nonconsenting holder of Senior Notes):
(i) reduce the principal amount of Senior Notes whose holders
must consent to an amendment, supplement or waiver;
(ii) reduce the principal of or change the fixed maturity of any
Note or alter the provisions with respect to the redemption
of the Senior Notes (other than Sections 3.09 and 4.15
hereof);
(iii) reduce the rate of or change the time for payment of interest
on any Senior Notes;
(iv) waive a Default or Event of Default in the payment of
principal of or premium, if any, or interest on the Senior
Notes (except a rescission of acceleration of the Senior
Notes by the holders of at least a majority in aggregate
principal amount of the Senior Notes and a waiver of the
payment default that resulted from such acceleration);
(v) make any Note payable in money other than that stated in the
Senior Notes;
(vi) make any change in the provisions of this Indenture relating
to waivers of past Defaults or the rights of holders of
Senior Notes to receive payments of principal of, premium, if
any, or interest on the Senior Notes;
(vii) waive a redemption payment with respect to any Senior Note
(other than a payment required by Sections 3.09 or 4.15
hereof); or
(viii) make any change in the foregoing amendment and waiver
provisions.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Senior Notes
shall be set forth in a amended or supplemental Indenture that complies with the
TIA as then in effect.
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SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a
consent to it by a holder of a Senior Note is a continuing consent by the holder
of a Senior Note and every subsequent holder of a Senior Note or portion of a
Note that evidences the same debt as the consenting holder's Senior Note, even
if notation of the consent is not made on any Senior Note. However, any such
holder of a Senior Note or subsequent holder of a Note may revoke the consent as
to its Senior Note if the Trustee receives written notice of revocation before
the date the waiver, supplement or amendment becomes effective. An amendment,
supplement or waiver becomes effective in accordance with its terms and
thereafter binds every holder of a Senior Note.
The Company may fix a record date for determining which holders of
the Senior Notes must consent to such amendment, supplement or waiver. If the
Company fixes a record date, the record date shall be fixed at (i) the later of
30 days prior to the first solicitation of such consent or the date of the most
recent list of holders of Senior Notes furnished to the Trustee prior to such
solicitation pursuant to Section 2.05 hereof or (ii) such other date as the
Company shall designate.
SECTION 9.05. NOTATION ON OR EXCHANGE OF SENIOR NOTES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Senior Note thereafter authenticated. The Company in
exchange for all Senior Notes may issue and the Trustee shall authenticate new
Senior Notes that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Senior Note
shall not affect the validity and effect of such amendment, supplement or
waiver.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture
authorized pursuant to this Article 9 if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
The Company may not sign an amendment or supplemental Indenture until the Board
of Directors approves it.
SECTION 9.07. PAYMENT FOR CONSENTS.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, pay or cause to be paid any consideration, whether
by way of interest, fee or otherwise, to any holder of Senior Notes for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of this Indenture or the Senior Notes, unless such consideration is offered to
be paid or agreed to be paid to all holders of the Senior Notes that consent,
waive or agree to amend in the time frame set forth in the solicitation
documents relating to such consent, waiver or agreement.
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ARTICLE 10
MISCELLANEOUS
SECTION 10.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts
with the duties imposed by TIA Section 318(c), the imposed duties shall control.
SECTION 10.02. NOTICES.
Any notice or communication by the Company or the Trustee to the
other is duly given if in writing and delivered in Person or mailed by first
class mail (registered or certified, return receipt requested), telex,
telecopier or overnight air courier guaranteeing next day delivery, to the
other's address:
If to the Company:
Intermedia Telecommunications Inc.
3625 Queen Palm Drive
Tampa, Florida 33619
Telecopier No.: (813) 829-2390
Attention: Chief Financial Officer
If to the Trustee:
SunTrust Bank, Central Florida, National Association
225 East Robinson Street, Suite 250
Orlando, Florida 32801
Telephone No.: (407) 237-5179
Telecopier No.: (407) 237-5299
Attention: Corporate Trust Department
The Company or the Trustee, by notice to the other may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to holders of
Senior Notes) shall be deemed to have been duly given: at the time delivered by
hand, if personally delivered; five Business Days after being deposited in the
mail, postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a holder of a Senior Note shall be
mailed by first class mail to its address shown on the register kept by the
Registrar. Any notice or communication shall also be so mailed to any Person
described in TIA Section 313(c), to the extent required by the TIA. Failure to
mail a notice or communication to a holder of a Senior Note or any defect in it
shall not affect its sufficiency with respect to other holders of Senior Notes.
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If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to holders of Senior
Notes, it shall mail a copy to the Trustee and each Agent at the same time.
SECTION 10.03. COMMUNICATION BY HOLDERS OF SENIOR NOTES WITH OTHER HOLDERS OF
SENIOR NOTES.
Holders of the Senior Notes may communicate pursuant to TIA Section
312(b) with other holders of Senior Notes with respect to their rights under
this Indenture or the Senior Notes. The Company, the Trustee, the Registrar and
anyone else shall have the protection of TIA Section 312(c).
SECTION 10.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 10.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 10.05 hereof) stating that, in the opinion of such counsel, all
such conditions precedent and covenants have been satisfied.
SECTION 10.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA Section 314(a)(4)) shall include:
(a) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
satisfied; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.
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SECTION 10.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting
of holders of Senior Notes. The Registrar or Paying Agent may make reasonable
rules and set reasonable requirements for its functions.
SECTION 10.07. NO PERSONAL LIABILITY OF PARTNERS, DIRECTORS, OFFICERS, EMPLOYEES
AND STOCKHOLDERS.
No director, officer, employee, incorporator or stockholder of the
Company, as such, shall have any liability for any obligations of the Company
under the Senior Notes or this Indenture or for any claim based on, in respect
of, or by reason of, such obligations or their creation. Each holder of the
Senior Notes by accepting a Senior Note waives and releases all such liability.
The waiver and release are part of the consideration for issuance of the Senior
Notes. Such waiver may not be effective to waive liabilities under the federal
securities laws and it is the view of the Commission that such a waiver is
against public policy.
SECTION 10.08. GOVERNING LAW.
The internal law of the State of New York shall govern and be used to
construe this Indenture and the Senior Notes.
SECTION 10.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret another indenture, loan
or debt agreement of the Company or its Subsidiaries. Any such indenture, loan
or debt agreement may not be used to interpret this Indenture.
SECTION 10.10. SUCCESSORS.
All agreements of the Company in this Indenture and the Senior Notes
shall bind its successors. All agreements of the Trustee in this Indenture shall
bind its successor.
SECTION 10.11. SEVERABILITY.
In case any provision in this Indenture or in the Senior Notes shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
SECTION 10.12. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
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SECTION 10.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the
articles and sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
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<PAGE> 78
SIGNATURES
Dated as of May 27, 1998 INTERMEDIA COMMUNICATIONS INC.
By:
------------------------------
Name:
Title:
Attest:
- -----------------------------------
Name:
Title:
Dated as of May 27, 1998 SUNTRUST BANK, CENTRAL FLORIDA,
NATIONAL ASSOCIATION
Trustee
By:
-------------------------------
Name:
Title:
Attest:
- ------------------------------------
Name:
Title:
<PAGE> 79
EXHIBIT A
(Face of Note)
8.60% Senior Note due 2008
No. $_______________
CUSIP No.
INTERMEDIA COMMUNICATIONS INC.
promises to pay to Cede & Co.
or its registered assigns,
the principal sum of $____________
on June 1, 2008.
Interest Payment Dates: June 1 and December 1, commencing December 1, 1998.
Record Dates: May 15 and November 15 (whether or not a Business Day).
Dated: May 27, 1998 INTERMEDIA COMMUNICATIONS INC.
By:__________________________
Title:
Trustee's Certification of Authentication
Dated: May 27, 1998
This is one of the Senior Notes
referred to in the within-
mentioned Indenture:
SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION,
as Trustee
By:
-----------------------------------
(Authorized Signatory)
Additional provisions of this Senior Note are set forth on the other
side of this Senior Note.
A-1
<PAGE> 80
(Back of Note)
8.60% Senior Note due 2008
THIS GLOBAL SECURITY IS HELD BY THE DEPOSITARY (AS DEFINED IN
THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE
BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY
PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE
SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF
THE INDENTURE, (II) THIS GLOBAL SECURITY MAY BE EXCHANGED IN WHOLE BUT
NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS
GLOBAL SECURITY MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION
PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL SECURITY
MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN
CONSENT OF THE COMPANY.
THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FORM REGISTRATION UNDER
SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF
THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE
RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE
SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT
(A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY
(1) TO THE COMPANY, (2) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS
BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (3) TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN
RULE 144A IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (4)
TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501
(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT THAT,
PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
TRANSFER OF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED
FROM THE TRUSTEE) OR (5) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT (AND BASED ON AN
OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), SUBJECT IN EACH OF THE
FOREGOING CASES TO APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER
WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER
FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET
FORTH IN (A) ABOVE.
Capitalized terms used herein have the meanings assigned to them in
the Indenture (as defined below) unless otherwise indicated.
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1. Interest. Intermedia Communications Inc., a Delaware corporation
(the "Company"), promises to pay interest on the principal amount of this Senior
Note at the rate and in the manner specified below. Interest will accrue at a
rate of 8.60% and will be payable semi-annually, in arrears, on June 1 and
December 1 of each year, commencing on December 1, 1998 or if any such day is
not a Business Day on the next succeeding Business Day (each an "Interest
Payment Date") to holders of record of the Senior Notes at the close of business
on the immediately preceding May 15 and November 15, whether or not a Business
Day. Interest on the Senior Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the Issue Date.
Interest will be computed on the basis of a 360-day year comprised of twelve
30-day months. To the extent lawful, the Company shall pay interest on overdue
principal at the then applicable interest rate on the Senior Notes; it shall pay
interest on overdue installments of interest (without regard to any applicable
grace periods) at the same rate to the extent lawful.
2. Method of Payment. The Company will pay interest on the Senior
Notes (except defaulted interest) to the Persons who are registered holders of
Senior Notes at the close of business on the record date next preceding the
Interest Payment Date, even if such Senior Notes are cancelled after such record
date and on or before such Interest Payment Date. The holder hereof must
surrender this Senior Note to a Paying Agent to collect principal payments.
Principal, premium, Liquidated Damages, if any, and interest on the Senior Notes
will be payable by wire transfer of immediately available funds to the accounts
specified by the holders thereof or if no such account(s) is specified, by
mailing a check to the address set forth for such holder in the register of the
holders of Senior Notes. Unless otherwise designated by the Company, the
Company's office or agency in New York will be the office of the Trustee
maintained for such purpose.
3. Paying Agent and Registrar. Initially, the Trustee will act as
Paying Agent and Registrar. The Company may change any Paying Agent, Registrar
or co-registrar without prior notice to any holder of a Note. The Company may
act in any such capacity.
4. Indenture. The Company issued the Senior Notes under an Indenture,
dated as of May 27, 1998 (the "Indenture"), between the Company and the Trustee.
The terms of the Senior Notes include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (15 U.S. Code Sections 77aaa-77bbbb), as in effect on the date of
the Indenture. The Senior Notes are subject to all such terms, and holders of
Senior Notes are referred to the Indenture and such act for a statement of such
terms. The terms of the Indenture shall govern any inconsistencies between the
Indenture and the Senior Notes. The Senior Notes are obligations of the Company
limited to the sum of $450,000,000 in aggregate principal amount of Senior Notes
($500,000,000 in aggregate principal amount if the Initial Purchasers exercise
their over-allotment option as described in the Offering Memorandum).
5. Optional Redemption. Prior to June 1, 2003, the Senior Notes shall
be subject to redemption at any time at the option of the Company, in whole or
in part, upon not less than 30 nor more than 60 days' notice, at the Make-Whole
Price, plus accrued and unpaid interest and Liquidated Damages, if any, thereon
to the applicable redemption date. On or after June 1, 2003, the Senior Notes
shall be subject to redemption at the option of the Company, in whole or in
part, upon not less than 30 nor more than 60 days' notice to the holders
thereof, at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest and Liquidated Damages, if any,
thereon to the applicable redemption date, if redeemed during the twelve-month
period beginning on June 1 of the years indicated below:
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YEAR PERCENTAGE
- ---- ----------
2003........................................................ 104.300%
2004 ....................................................... 102.867%
2005........................................................ 101.433%
2006........................................................ 100.000%
Notwithstanding the provisions of Section 3.07(a) of the Indenture, in
the event of the sale by the Company prior to June 1, 2001 of its Capital Stock
(other than Disqualified Stock) (i) to a Strategic Investor in a single
transaction or series of related transactions for an aggregate purchase price
equal to or exceeding $50.0 million or (ii) in one or more Public Offerings, up
to a maximum of 25% of the aggregate principal amount of the Senior Notes
originally issued shall, at the option of the Company, be redeemable from the
net cash proceeds of such sale or sales to such Strategic Investor (but only to
the extent such proceeds consist of cash or readily marketable cash equivalents
received in respect of the Capital Stock, other than Disqualified Stock, so
sold) at a redemption price equal to 108.60% of the principal amount thereof
plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the
redemption date; provided that at least 75% of the aggregate principal amount of
the Senior Notes originally issued remains outstanding immediately after the
occurrence of such redemption and that such redemption occurs within 90 days of
the date of the closing of each such sale.
6. Mandatory Redemption. Except as set forth in Sections 3.09 and
4.15 of the Indenture, the Company will not be required to make mandatory
redemption or sinking fund payments with respect to the Senior Notes.
7. Repurchase at Option of holder. (a) Upon the occurrence of a
Change of Control, the Company shall be required to make an offer to repurchase
on the Change of Control Payment Date all or any part (equal to $1,000 or an
integral multiple thereof) of the outstanding Senior Notes at a purchase price
equal to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest, and Liquidated Damages, if any thereon to the Change of Control
Payment Date. Holders of Senior Notes that are subject to an offer to purchase
will receive a Change of Control Offer from the Company prior to any related
Change of Control Payment Date and may elect to have such Senior Notes purchased
by completing the form entitled "Option of Holder to Elect Purchase" appearing
below.
(b) The Company shall be required when the cumulative amount of
Excess Proceeds from Asset Sales exceeds $10.0 million to offer to purchase the
maximum principal amount of Senior Notes and Pari Passu Notes that may be
purchased out of the Excess Proceeds, at an offer price in cash in an amount
equal to 100% of the outstanding principal amount of the Senior Notes and 100%
of the accreted value or 100% of the outstanding principal amount, as
applicable, of the Pari Passu Notes, plus accrued and unpaid interest and
Liquidated Damages thereon, if any, to the date fixed for the closing of such
accordance with the procedures set forth in Section 3.09 of the Indenture. If
the principal amount and/or aggregate accreted value, as the case may be, of
Senior Notes and Pari Passu Notes surrendered by holders thereof exceeds the
amount of Excess Proceeds, the Trustee shall select the Senior Notes and Pari
Passu Notes to be purchased on a pro rata basis (with such adjustments as may be
deemed appropriate by the Company so that only Senior Notes and Pari Passu Notes
in denominations of $1,000, or integral multiples thereof shall be purchased).
Holders of Senior Notes that are the subject of an offer to purchase will
receive an Excess Proceeds Offer from the Company prior to any related purchase
date and may elect to have such Senior Notes purchased by completing the form
entitled "Option of Holder to Elect Purchase" appearing below.
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8. Notice of Redemption. Notice of redemption shall be mailed by
first class mail at least 30 days but not more than 60 days before the
redemption date to each holder of Senior Notes to be redeemed at its registered
address. Senior Notes may be redeemed in part but only in whole multiples of
$1,000, unless all of the Senior Notes held by a holder of Senior Notes are to
be redeemed. If any Senior Note is to be redeemed in part only, the notice of
redemption that relates to such Senior Note shall state the portion of the
principal amount to be redeemed. On and after the redemption date, interest
ceases to accrue on Senior Notes or portions of them called for redemption.
9. Denominations, Transfer, Exchange. The Senior Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Senior Notes may be registered and Senior
Notes may be exchanged as provided in the Indenture. The Registrar and the
Trustee may require a holder of a Senior Note, among other things, to furnish
appropriate endorsements and transfer documents and the Company may require a
holder of a Senior Note to pay any taxes and fees required by law or permitted
by the Indenture. Neither the Company nor the Registrar need exchange or
register the transfer of any Senior Note or portion of a Senior Note selected
for redemption. Also, neither the Company nor the Registrar need exchange or
register the transfer of any Senior Notes for a period of 15 days before a
selection of Senior Notes to be redeemed.
10. Persons Deemed Owners. Prior to due presentment to the Trustee
for registration of the transfer of this Senior Note, the Trustee, any Agent and
the Company shall deem and treat the Person in whose name this Senior Note is
registered as its absolute owner for the purpose of receiving payment of
principal of, premium, Liquidated Damages, if any, and interest on this Senior
Note and for all other purposes whatsoever, whether or not this Senior Note is
overdue, and neither the Trustee, any Agent nor the Company shall be affected by
notice to the contrary. The registered holder of a Senior Note shall be treated
as its owner for all purposes.
11. Amendments, Supplement and Waivers. Subject to certain
exceptions, the Indenture or the Senior Notes may be amended or supplemented
with the consent of the holders of at least a majority in principal amount of
the Senior Notes then outstanding (including consents obtained in connection
with a tender offer or exchange offer for Senior Notes), and any existing
default or compliance with any provision of the Indenture or the Senior Notes
may be waived with the consent of the holders of a majority in principal amount
of the then outstanding Senior Notes (including consents obtained in connection
with a tender offer or exchange offer for Senior Notes). Without the consent of
any holder of a Senior Note, the Indenture or the Senior Notes may be amended or
supplemented to cure any ambiguity, defect or inconsistency; to provide for
uncertificated Senior Notes in addition to or in place of certificated Senior
Notes; to provide for the assumption of the Company's obligations to holders of
the Senior Notes in case of a merger or consolidation; to make any change that
would provide any additional rights or benefits to the holders of the Senior
Notes or that does not adversely affect the legal rights under the Indenture of
any such holder; or to comply with the requirements of the Commission in order
to effect or maintain the qualification of the Indenture under the Trust
Indenture Act. However, without the consent of each holder affected, an
amendment or waiver may not (with respect to any Senior Notes held by a
non-consenting holder of Senior Notes) reduce the principal amount of Senior
Notes whose holders must consent to an amendment, supplement or waiver; reduce
the principal of or change the fixed maturity of any Senior Note or alter the
provisions with respect to the redemption of the Senior Notes (other than a
payment required by Section 3.09 or Section 4.15 of the Indenture); reduce the
rate of or change the time for payment of interest on any Senior Notes; waive a
Default or Event of Default in the payment of principal of or premium, if any,
or interest on the Senior Notes (except a rescission of acceleration of the
Senior Notes by the holders of at least a majority in aggregate principal amount
of the Senior Notes and a waiver of the payment default that resulted from such
acceleration); make any Senior Note payable in money other than that stated in
the Senior Notes; make any change in the
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provisions of the Indenture relating to waivers of past Defaults or the rights
of holders of Senior Notes to receive payments of principal of, premium, if any,
or interest on the Senior Notes; waive a redemption payment with respect to any
Senior Note (other than a payment required by Section 3.09 or Section 4.15 of
the Indenture) or make any change in the foregoing amendment and waiver
provisions.
12. Defaults and Remedies. Events of Default include: default for 30
days in the payment when due of interest on the Senior Notes; default in payment
when due of principal or premium, if any, on the Senior Notes at maturity, upon
redemption or otherwise; failure by the Company to perform or comply with the
provisions described under Sections 4.07, 4.09, 4.10, 4.15 or 5.01 of the
Indenture; failure by the Company for 30 days after notice from the Trustee or
the holders of at least 25% in principal amount of the Senior Notes then
outstanding to comply with its other agreements in the Indenture or the Senior
Notes; default under any mortgage, indenture or instrument under which there may
be issued or by which there may be secured or evidenced any Indebtedness for
money borrowed by the Company or any of its Subsidiaries (or the payment of
which is guaranteed by the Company or any of its Subsidiaries), whether such
Indebtedness or Guarantee now exists, or is created after the Issue Date, which
default (x) is caused by a Payment Default, and the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
of the Company or any Significant Subsidiary under which there has been a
Payment Default or the maturity of which has been accelerated as provided in
clause (y), aggregates $5.0 million or more or (y) results in the acceleration
(which acceleration has not been rescinded) of such Indebtedness prior to its
express maturity and the principal amount of any such Indebtedness, together
with the principal amount of any other such Indebtedness under which there has
been a Payment Default or the maturity of which has been so accelerated,
aggregates $5.0 million or more; failure by the Company or any of its
Subsidiaries to pay final judgments (other than any judgment as to which a
reputable insurance company has accepted full liability in writing) aggregating
in excess of $5.0 million which judgments are not paid, discharged or stayed
within 45 days after their entry; and certain events of bankruptcy or insolvency
with respect to the Company or any of its Significant Subsidiaries. If any Event
of Default occurs and is continuing, the Trustee or the holders of at least 25%
in principal amount of the then outstanding Senior Notes may declare all the
Senior Notes to be due and payable immediately. Upon such declaration, the
principal of, premium, if any, and accrued and unpaid interest and Liquidated
Damages, if any, on the Senior Notes shall be due and payable immediately.
Notwithstanding the foregoing, in the case of an Event of Default arising from
certain events of bankruptcy or insolvency with respect to the Company or any of
its Significant Subsidiaries, the foregoing amount shall ipso facto become due
and payable without further action or notice. Holders of the Senior Notes may
not enforce the Indenture or the Senior Notes except as provided in the
Indenture. The holders of a majority in aggregate principal amount of the Senior
Notes then outstanding, by notice to the Trustee, may on behalf of the holders
of all of the Senior Notes, waive any existing Default or Event of Default and
its consequences under the Indenture, except a continuing Default or Event of
Default in the payment of interest or Liquidated Damages or premium on, or the
principal of, the Senior Notes.
13. Trustee Dealings with Company. The Trustee under the Indenture,
in its individual or any other capacity, may make loans to, accept deposits
from, and perform services for the Company or its Affiliates, and may otherwise
deal with the Company or its Affiliates, as if it were not Trustee; however, if
the Trustee acquires any conflicting interest, it must eliminate such conflict
within 90 days, apply to the Commission for permission to continue as Trustee or
resign.
14. No Personal Liabilities of Directors, Officers, Employees and
Stockholders. No director, officer, employee, incorporator or stockholder of the
Company, as such, shall have any liability for any obligations of the Company
under the Senior Notes or the Indenture or for any claim based on, in respect
of, or by reason of, such obligations or their creation. Each holder of the
Senior Notes by accepting a
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<PAGE> 85
Senior Note waives and releases all such liability. The waiver and release are
part of the consideration for issuance of the Senior Notes.
15. Authentication. This Senior Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
16. Abbreviations. Customary abbreviations may be used in the name of
a holder of a Senior Note or an assignee, such as: TEN COM (= tenants in
common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with
right of survivorship and not as tenants in common), CUST (= Custodian), and
U/G/M/A (= Uniform Gifts to Minors Act).
17. Additional Rights of Holders of Transfer Restricted Securities.
In addition to the rights provided to holders of Senior Notes under the
Indenture, holders of Transfer Restricted Securities shall have all the rights
set forth in the Note Registration Rights Agreement.
18. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Senior Notes and has directed the Trustee to
use CUSIP numbers in notices of redemption as a convenience to holders of Senior
Notes. No representation is made as to the accuracy of such numbers either as
printed on the Senior Notes or as contained in any notice of redemption and
reliance may be placed only on the other identification numbers placed thereon.
The Company will furnish to any holder of a Senior Note upon written
request and without charge a copy of the Indenture. Request may be made to:
Intermedia Communications Inc.
3625 Queen Palm Drive
Tampa, Florida 33619
Attention: Chief Financial Officer
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<PAGE> 86
ASSIGNMENT FORM
To assign this Senior Note, fill in the form below: (I) or (we) assign
and transfer this Senior Note to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
---------------------------------------------------------
agent to transfer this Senior Note on the books of the Company. The agent may
substitute another to act for him or her.
- --------------------------------------------------------------------------------
Date:
--------------
Your Signature:
-------------------------------
(Sign exactly as your name appears on the face
of this Note)
Signature Guarantee.
<PAGE> 87
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have all or any part of this Senior Note
purchased by the Company pursuant to Section 3.09 or Section 4.15 of the
Indenture check the appropriate box:
[ ] Section 3.09 [ ] Section 4.15
If you want to have only part of the Senior Note purchased by the
Company pursuant to Section 3.09 or Section 4.15 of the Indenture, state the
amount you elect to have purchased:
$ ---------------
Date:
--------------
Your Signature:
-------------------------------
(Sign exactly as your name appears on the face
of this Note)
Signature Guarantee.
<PAGE> 88
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL SECURITY
The following exchanges of a part of this Global Security for
an interest in another Global Security or for a Certificated Security, or
exchanges of a part of another Global Security or Certificated Security for an
interest in this Global Security, have been made:
<TABLE>
<CAPTION>
Amount of increase in Principal Amount
Amount of decrease in Principal Amount of Signature of
Principal Amount of this Global Security authorized officer of
of this Global Security following such decrease Trustee or Note
Date of Exchange this Global Security (or increase) Custodian
---------------- -------------------- ---------------------- ------------- ---------
<S> <C> <C> <C> <C>
</TABLE>
<PAGE> 89
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Intermedia Communications Inc.
3625 Queen Palm Drive
Tampa, Florida 33619
Attention: Chief Financial Officer
SunTrust Bank, Central Florida, National Association
225 East Robinson Street, Suite 250
Orlando, Florida 32801
Attention: Corporate Trust Department
Re: 8.60% Senior Notes due 2008
Reference is hereby made to the Indenture, dated as of May 27, 1998
(the "Indenture"), between Intermedia Communications Inc., as issuer (the
"Company"), and SunTrust Bank, Central Florida, National Association, as
trustee. Capitalized terms used but not defined herein shall have the meanings
given to them in the Indenture.
______________, (the "Transferor") owns and proposes to transfer the
Senior Note[s] or interest in such Senior Note[s] specified in Annex A hereto,
in the principal amount of $___________ in such Senior Note[s] or interests (the
"Transfer"), to __________ (the "Transferee"), as further specified in Annex A
hereto. In connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1.[ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF BOOK-ENTRY INTERESTS IN THE
GLOBAL SECURITY OR CERTIFICATED SECURITIES PURSUANT TO RULE 144A. The Transfer
is being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the "Securities Act"), and,
accordingly, the Transferor hereby further certifies that the Book-Entry
Interests or Certificated Securities are being transferred to a Person that the
Transferor reasonably believes is purchasing the Book- Entry Interests or
Certificated Securities for its own account, or for one or more accounts with
respect to which such Person exercises sole investment discretion, and such
Person and each such account is a "qualified institutional buyer" within the
meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and
such Transfer is in compliance with any applicable blue sky securities laws of
any state of the United States. Upon consummation of the proposed Transfer in
accordance with the terms of the Indenture, the transferred Book-Entry Interest
or Certificated Security will be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Global Security and/or
the Certificated Security and in the Indenture and the Securities Act.
2.[ ] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF BOOK-ENTRY
INTERESTS IN THE GLOBAL SECURITY OR CERTIFICATED SECURITIES PURSUANT TO ANY
PROVISION OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The
Transfer is being effected in compliance with the transfer restrictions
applicable to Book-Entry Interests in the Restricted Global Security and
Certificated Securities bearing the Private Placement Legend and pursuant to and
in accordance with the Securities Act and any applicable blue sky securities
laws of any State of the United States, and accordingly the Transferor hereby
further certifies that (check one):
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(a) [ ] such Transfer is being effected pursuant to and in accordance with
Rule 144 under the Securities Act;
or
(b) [ ] such Transfer is being effected to the Company or a subsidiary
thereof;
or
(c) [ ] such Transfer is being effected pursuant to an effective
registration statement under the Securities Act;
or
(d) [ ] such Transfer is being effected to an Institutional Accredited
Investor and pursuant to an exemption from the registration requirements of the
Securities Act other than Rule 144A or Rule 144 and the Transferor hereby
further certifies that the Transfer complies with the transfer restrictions
applicable to Book-Entry Interests in a Restricted Global Security or
Certificated Securities bearing the Private Placement Legend and the
requirements of the exemption claimed, which certification is supported by (1) a
certificate executed by the Transferee in the form of Exhibit D to the Indenture
and (2) an Opinion of Counsel provided by the Transferor or the Transferee (a
copy of which the Transferor has attached to this certification), to the effect
that (1) such Transfer is in compliance with the Securities Act and (2) such
Transfer complies with any applicable blue sky securities laws of any state of
the United States. Upon consummation of the proposed transfer in accordance with
the terms of the Indenture, the transferred Book-Entry Interest or Certificated
Security will be subject to the restrictions on transfer enumerated in the
Private Placement Legend printed on the Global Security and/or the Certificated
Securities and in the Indenture and the Securities Act.
3. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF BOOK-ENTRY INTERESTS IN THE
UNRESTRICTED GLOBAL SECURITY OR IN CERTIFICATED SECURITIES THAT DO NOT BEAR THE
PRIVATE PLACEMENT LEGEND.
(a) [ ] CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is
being effected pursuant to and in accordance with Rule 144 under the Securities
Act and in compliance with the transfer restrictions contained in the Indenture
and any applicable blue sky securities laws of any state of the United States
and (ii) the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act. Upon consummation of the proposed Transfer in accordance with
the terms of the Indenture, the transferred Book-Entry Interests or Certificated
Securities will no longer be subject to the restrictions on transfer enumerated
in the Private Placement Legend printed on the Restricted Global Security, on
Certificated Securities bearing the Private Placement Legend and in the
Indenture.
(b) [ ] CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The Transfer
is being effected pursuant to and in compliance with an exemption from the
registration requirements of the Securities Act other than Rule 144 and in
compliance with the transfer restrictions contained in the Indenture and any
applicable blue sky securities laws of any State of the United States and (ii)
the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act. Upon consummation of the proposed Transfer in accordance with
the terms of the Indenture, the transferred Book-Entry Interests or Certificated
Securities will not be subject to the restrictions on transfer enumerated in the
Private Placement Legend printed on the Restricted Global Security or
Certificated Securities bearing the Private Placement Legend and in the
Indenture.
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<PAGE> 91
This certificate and the statements contained herein are made for
your benefit and the benefit of the Company.
-------------------------
[NAME OF TRANSFEROR]
By:
----------------------
Name:
Title:
Dated:____________________,
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<PAGE> 92
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) [ ] Book-Entry Interests in the Global Security:
(i) [ ] 144A Global Security (CUSIP____________), or
(ii) [ ] IAI Global Security (CUSIP____________); or
(b) [ ] Restricted Certificated Securities.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) [ ] Book-Entry Interests in the:
(i) [ ] 144A Global Security (CUSIP_____________), or
(ii) [ ] IAI Global Security (CUSIP_____________); or
(iii) [ ] Unrestricted Global Security (CUSIP____________); or
(b) [ ] Restricted Certificated Securities; or
(c) [ ] Certificated Securities that do not bear the Private
Placement Legend,
in accordance with the terms of the Indenture.
B-4
<PAGE> 93
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Intermedia Communications Inc.
3625 Queen Palm Drive
Tampa, Florida 33619
Attention: Chief Financial Officer
SunTrust Bank, Central Florida, National Association
225 East Robinson Street, Suite 250
Orlando, Florida 32801
Attention: Corporate Trust Department
Re: 8.60% Senior Notes due 2008
(CUSIP_________________________)
Reference is hereby made to the Indenture, dated as of May 27,
1998 (the "Indenture"), between Intermedia Communications Inc., as issuer (the
"Company") and SunTrust Bank, Central Florida, National Association, as trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
, (the "Holder") owns and proposes to exchange the Senior
Note[s] or interest in such Senior Note[s] specified herein, in the principal
amount of $____________ in such Senior Note[s] or interests (the "Exchange"). In
connection with the Exchange, the Holder hereby certifies that:
1. EXCHANGE OF RESTRICTED CERTIFICATED SECURITIES OR RESTRICTED BOOK-ENTRY
INTERESTS FOR CERTIFICATED SECURITIES THAT DO NOT BEAR THE PRIVATE PLACEMENT
LEGEND OR UNRESTRICTED BOOK-ENTRY INTERESTS
(a) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED BOOK-ENTRY INTEREST TO
UNRESTRICTED BOOK-ENTRY INTEREST. In connection with the Exchange of the
Holder's Restricted Book-Entry Interest for Unrestricted Book-Entry Interests in
an equal principal amount, the Holder hereby certifies (i) the Unrestricted
Book-Entry Interests are being acquired for the Holder's own account without
transfer, (ii) such Exchange has been effected in compliance with the transfer
restrictions applicable to the Global Security and pursuant to and in accordance
with the United States Securities Act of 1933, as amended (the "Securities
Act"), (iii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act and (iv) the Unrestricted Book-Entry Interests are being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
(b) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED BOOK-ENTRY INTEREST TO
CERTIFICATED SECURITIES THAT DO NOT BEAR THE PRIVATE PLACEMENT LEGEND. In
connection with the Exchange of the Holder's Restricted Book-Entry Interests for
Certificated Securities that do not bear the Private Placement Legend, the
Holder hereby certifies (i) the Certificated Securities are being acquired for
the Holder's own account without transfer, (ii) such Exchange has been effected
in compliance with the transfer restrictions applicable to the Restricted Global
Security and pursuant to and in accordance with the Securities Act, (iii) the
restrictions on transfer contained in the Indenture and the Private Placement
Legend are not
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<PAGE> 94
required in order to maintain compliance with the Securities Act and (iv) the
Certificated Securities are being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.
(c) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED CERTIFICATED SECURITIES TO
UNRESTRICTED BOOK-ENTRY INTERESTS. In connection with the Holder's Exchange of
Restricted Certificated Securities for Unrestricted Book-Entry Interests, (i)
the Unrestricted Book-Entry Interests are being acquired for the Holder's own
account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Certificated Securities
and pursuant to and in accordance with the Securities Act, (iii) the
restrictions on transfer contained in the Indenture and the Private Placement
Legend are not required in order to maintain compliance with the Securities Act
and (iv) the Unrestricted Book-Entry Interests are being acquired in compliance
with any applicable blue sky securities laws of any state of the United States.
(d) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED CERTIFICATED SECURITIES TO
CERTIFICATED SECURITIES THAT DO NOT BEAR THE PRIVATE PLACEMENT LEGEND. In
connection with the Holder's Exchange of a Restricted Certificated Security for
Certificated Securities that do not bear the Private Placement Legend, the
Holder hereby certifies (i) the Certificated Securities that do not bear the
Private Placement Legend are being acquired for the Holder's own account without
transfer, (ii) such Exchange has been effected in compliance with the transfer
restrictions applicable to Restricted Certificated Securities and pursuant to
and in accordance with the Securities Act , (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act and (iv) the Senior Notes
are being acquired in compliance with any applicable blue sky securities laws of
any state of the United States.
2. EXCHANGE OF RESTRICTED CERTIFICATED SECURITIES OR RESTRICTED BOOK-ENTRY
INTERESTS FOR RESTRICTED CERTIFICATED SECURITIES OR RESTRICTED BOOK-ENTRY
INTERESTS
(a) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED BOOK-ENTRY INTERESTS TO
RESTRICTED CERTIFICATED SECURITY. In connection with the Exchange of the
Holder's Restricted Book-Entry Interest for Restricted Certificated Securities
with an equal principal amount, (i) the Restricted Certificated Securities are
being acquired for the Holder's own account without transfer and (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Security and pursuant to and in accordance
with the Securities Act, and in compliance with any applicable blue sky
securities laws of any state of the United States. Upon consummation of the
proposed Exchange in accordance with the terms of the Indenture, the Restricted
Certificated Securities issued will be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted
Certificated Securities and in the Indenture and the Securities Act.
(b) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED CERTIFICATED SECURITIES TO
RESTRICTED BOOK-ENTRY INTERESTS. In connection with the Exchange of the Holder's
Restricted Certificated Security for Restricted Book-Entry Interests in the
[CHECK ONE] o 144A Global Security, o IAI Global Security, (i) the Certificated
Securities are being acquired for the Holder's own account without transfer and
(ii) such Exchange has been effected in compliance with the transfer
restrictions applicable to the Restricted Certificated Security and pursuant to
and in accordance with the Securities Act, and in compliance with any applicable
blue sky securities laws of any state of the United States. Upon consummation of
the proposed Exchange in accordance with the terms of the Indenture, the
Book-Entry Interests issued will be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the relevant Restricted
Global Security and in the Indenture and the Securities Act.
C-2
<PAGE> 95
This certificate and the statements contained herein are made
for your benefit and the benefit of the Company.
---------------------------------
[Insert Name of Holder]
By:
------------------------------
Name:
Title:
Dated:_____________________,
C-3
<PAGE> 96
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Intermedia Communications Inc.
3625 Queen Palm Drive
Tampa, Florida 33619
Attention: Chief Financial Officer
SunTrust Bank, Central Florida, National Association
225 East Robinson Street, Suite 250
Orlando, Florida 32801
Attention: Corporate Trust Department
Re: 8.60% Senior Notes due 2008
Reference is hereby made to the Indenture, dated as of May 27,
1998 (the "Indenture"), between Intermedia Communications Inc., as issuer (the
"Company") and SunTrust Bank, Central Florida, National Association, as trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
In connection with our proposed purchase of $____________
aggregate principal amount of:
(a) [ ] Book-Entry Interests, or
(b) [ ] Certificated Securities,
we confirm that:
1. We understand that any subsequent transfer of the Senior
Notes or any interest therein is subject to certain restrictions and conditions
set forth in the Indenture and the undersigned agrees to be bound by, and not to
resell, pledge or otherwise transfer the Senior Notes or any interest therein
except in compliance with, such restrictions and conditions and the United
States Securities Act of 1933, as amended (the "Securities Act").
2. We understand that the offer and sale of the Senior Notes
have not been registered under the Securities Act, and that the Senior Notes and
any interest therein may not be offered or sold except as permitted in the
following sentence. We agree, on our own behalf and on behalf of any accounts
for which we are acting as hereinafter stated, that if we should sell the Senior
Notes or any interest therein, we will do so only (A) to the Company or any
subsidiary thereof, (B) in accordance with Rule 144A under the Securities Act to
a "qualified institutional buyer" (as defined therein), (C) to an institutional
"accredited investor" (as defined below) that, prior to such transfer, furnishes
(or has furnished on its behalf by a U.S. broker-dealer) to you and to the
Company a signed letter substantially in the form of this letter and an Opinion
of Counsel in form reasonably acceptable to the Company to the effect that such
transfer is in compliance with the Securities Act, (D) pursuant to the
provisions of Rule 144 under the Securities Act or (E) pursuant to an effective
registration statement under the Securities Act, and we further agree to provide
to any person purchasing the Certificated Securities or Book-Entry
D-1
<PAGE> 97
Interests from us in a transaction meeting the requirements of clauses (A)
through (D) of this paragraph a notice advising such purchaser that resales
thereof are restricted as stated herein.
3. We understand that, on any proposed resale of the Senior
Notes or Book-Entry Interests, we will be required to furnish to you and the
Company such certifications, legal opinions and other information as you and the
Company may reasonably require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that the Senior Notes
purchased by us will bear a legend to the foregoing effect. We further
understand that any subsequent transfer by us of the Senior Notes or Book-Entry
Interests therein acquired by us must be effected through one of the Placement
Agents.
4. We are an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the Senior
Notes, and we and any accounts for which we are acting are each able to bear the
economic risk of our or its investment.
5. We are acquiring the Senior Notes or Book-Entry Interests
purchased by us for our own account or for one or more accounts (each of which
is an institutional "accredited investor") as to each of which we exercise sole
investment discretion.
You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby.
[Insert Name of Accredited Investor]
By:
--------------------------------
Name:
Title:
Dated:________________,
D-2
<PAGE> 1
Exhibit 4.7
EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT
$450,000,000
8.60% Senior Notes due 2008
Dated as of May 27, 1998
by and among
INTERMEDIA COMMUNICATIONS INC.,
BEAR, STEARNS & CO. INC.,
SALOMON BROTHERS INC,
MERRILL LYNCH & CO.
and
SBC WARBURG DILLON READ INC.
<PAGE> 2
This Registration Rights Agreement (this "Agreement") is made
and entered into as of May 27, 1998 by and among Intermedia Communications Inc.,
a Delaware corporation (the "Company"), and Bear, Stearns & Co. Inc., Salomon
Brothers Inc, Merrill Lynch & Co. and SBC Warburg Dillon Read Inc. (each an
"Initial Purchaser" and together, the "Initial Purchasers"), each of whom have
agreed to purchase the Company's 8.60% Senior Notes due 2008 (the "Senior
Notes") pursuant to the Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement in
respect to the Senior Notes, dated May 21, 1998 (the "Purchase Agreement"), by
and among the Company and the Initial Purchasers. In order to induce the Initial
Purchasers to purchase the Senior Notes, the Company has agreed to provide the
registration rights set forth in this Agreement. The execution and delivery of
this Agreement is a condition to the obligations of the Initial Purchasers set
forth in Section 8 of the Purchase Agreement.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms
shall have the following meanings:
Act: The Securities Act of 1933, as amended.
Business Day: Any day except a Saturday, Sunday or other day
in the City of New York, or in the city of the corporate trust office of the
Trustee, on which banks are authorized to close.
Broker-Dealer: Any broker or dealer registered under the
Exchange Act.
Broker-Dealer Transfer Restricted Securities: New Senior Notes
that are acquired by a Broker-Dealer in the Exchange Offer in exchange for
Senior Notes that such Broker-Dealer acquired for its own account as a result of
market making activities or other trading activities (other than Senior Notes
acquired directly from the Company or any of its affiliates).
Certificated Securities: As defined in the Indenture.
Closing Date: The date hereof.
Commission: The Securities and Exchange Commission.
Consummate: An Exchange Offer shall be deemed "Consummated"
for purposes of this Agreement upon the occurrence of (a) the filing and
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the New Senior Notes to be issued in the Exchange Offer, (b) the
maintenance of such Registration Statement continuously effective and the
keeping of the Exchange Offer open for a period not less than the minimum period
required pursuant to Section 3(b) hereof and (c) the delivery by the Company to
the Registrar under the Indenture of New Senior Notes in the same aggregate
principal amount as the aggregate principal amount of Senior Notes tendered by
Holders thereof pursuant to the Exchange Offer.
Effectiveness Target Date: As defined in Section 5.
Exchange Act: The Securities Exchange Act of 1934, as amended.
3
<PAGE> 3
Exchange Offer: The registration by the Company under the Act
of the New Senior Notes pursuant to the Exchange Offer Registration Statement
pursuant to which the Company shall offer the Holders of all outstanding
Transfer Restricted Securities the opportunity to exchange all such outstanding
Transfer Restricted Securities for New Senior Notes in an aggregate principal
amount equal to the aggregate principal amount of the Transfer Restricted
Securities tendered in such exchange offer by such Holders.
Exchange Offer Registration Statement: The Registration
Statement relating to the Exchange Offer, including the related Prospectus.
Holders: As defined in Section 2 hereof.
Indenture: The Indenture, dated the Closing Date, between the
Company and SunTrust Bank, Central Florida, National Association, as trustee
(the "Trustee"), pursuant to which the Senior Notes are to be issued, as such
Indenture is amended or supplemented from time to time in accordance with the
terms thereof.
Interest Payment Date: As defined in the Indenture and the
Senior Notes.
NASD: National Association of Securities Dealers, Inc.
New Senior Notes: The Company's 8.60% New Senior Notes due
2008 to be issued pursuant to the Indenture (i) in the Exchange Offer or (ii)
upon the request of any Holder of Senior Notes covered by a Shelf Registration
Statement, in exchange for such Senior Notes.
Person: An individual, partnership, corporation, trust,
unincorporated organization, or a government or agency or political subdivision
thereof.
Prospectus: The prospectus included in a Registration
Statement at the time such Registration Statement is declared effective, as
amended or supplemented by any prospectus supplement and by all other amendments
thereto, including post-effective amendments, and all material incorporated by
reference into such Prospectus.
Registration Default: As defined in Section 5 hereof.
Registration Statement: Any registration statement of the
Company relating to (a) an offering of New Senior Notes pursuant to an Exchange
Offer or (b) the registration for resale of Transfer Restricted Securities
pursuant to the Shelf Registration Statement, in each case, (i) which is filed
pursuant to the provisions of this Agreement and (ii) including the Prospectus
included therein, all amendments and supplements thereto (including
post-effective amendments) and all exhibits and material incorporated by
reference therein.
Restricted Broker-Dealer: Any Broker-Dealer which holds
Broker-Dealer Transfer Restricted Securities.
Senior Notes: The Senior Notes and the New Senior Notes.
Shelf Registration Statement: As defined in Section 4 hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section
77aaa-77bbbb) as in effect on the date of the Indenture.
Transfer Restricted Securities: Each Senior Note until the
earliest to occur of (i) the date on which such Senior Note is exchanged by a
person other than a broker-dealer for a New Senior Note in the Exchange Offer,
(ii) following the exchange by a broker-dealer in the Exchange Offer of a Senior
Note for a New Senior Note, the date on which such New Senior Note is sold to a
purchaser who receives from such broker-dealer on or prior to the date of such
sale a copy of the prospectus contained in the Exchange Offer Registration
Statement, (iii) the date on which such Senior Note is effectively registered
under the Securities Act and disposed of in accordance with the Shelf
Registration Statement or (iv) the date on which such Senior Note may be
distributed to the public pursuant to Rule 144 under the Act.
<PAGE> 4
Underwritten Registration or Underwritten Offering: A
registration in which securities of the Company are sold to an underwriter for
reoffering to the public.
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted
Securities (each, a "Holder") whenever such Transfer Restricted Securities are
registered in such Person's name.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by
applicable federal law (after the procedures set forth in Section 6(a)(i) below
have been complied with), the Company shall (i) cause to be filed with the
Commission as soon as practicable after the Closing Date, but in no event later
than 60 days after the Closing Date, the Exchange Offer Registration Statement,
(ii) use its best efforts to cause such Exchange Offer Registration Statement to
become effective at the earliest possible time, but in no event later than 120
days after the Closing Date, (iii) in connection with the foregoing, (A) file
all pre-effective amendments to such Exchange Offer Registration Statement as
may be necessary in order to cause such Exchange Offer Registration Statement to
become effective, (B) file, if applicable, a post-effective amendment to such
Exchange Offer Registration Statement pursuant to Rule 430A under the Act and
(C) cause all necessary filings, if any, in connection with the registration and
qualification of the New Senior Notes to be made under the Blue Sky laws of such
jurisdictions as are necessary to permit Consummation of the Exchange Offer and
(iv) upon the effectiveness of such Exchange Offer Registration Statement,
commence and Consummate the Exchange Offer. The Exchange Offer shall be on the
appropriate form permitting registration of the New Senior Notes to be offered
in exchange for the Senior Notes that are Transfer Restricted Securities and to
permit sales of Broker-Dealer Transfer-Restricted Securities by Restricted
Broker-Dealers as contemplated by Section 3(c) below.
(b) The Company shall cause the Exchange Offer Registration
Statement to be effective continuously, and shall keep the Exchange Offer open,
for a period of not less than the minimum period required under applicable
federal and state securities laws to Consummate the Exchange Offer; provided,
however, that in no event shall such period be less than 20 Business Days. The
Company shall cause the Exchange Offer to comply with all applicable federal and
state securities laws. No securities other than the Senior Notes shall be
included in the Exchange Offer Registration Statement. The Company shall use its
best efforts to cause the Exchange Offer to be Consummated on the earliest
practicable date after the Exchange Offer Registration Statement has become
effective, but in no event later than 30 Business Days thereafter.
(c) The Company shall include a "Plan of Distribution" section
in the Prospectus contained in the Exchange Offer Registration Statement and
indicate therein that any Restricted Broker-Dealer who holds Senior Notes that
are Transfer Restricted Securities and that were acquired for the account of
such Broker-Dealer as a result of market-making activities or other trading
activities, may exchange such Senior Notes (other than Transfer Restricted
Securities acquired directly from the Company) pursuant to the Exchange Offer;
however, such Broker-Dealer may be deemed to be an "underwriter" within the
meaning of the Act and must, therefore, deliver a prospectus meeting the
requirements of the Act in connection with its initial sale of each New Senior
Note received by such Broker-Dealer in the Exchange Offer, which prospectus
delivery requirement may be satisfied by
5
<PAGE> 5
the delivery by such Broker-Dealer of the Prospectus contained in the Exchange
Offer Registration Statement. Such "Plan of Distribution" section shall also
contain all other information with respect to such sales of Broker-Dealer
Transfer Restricted Securities by Restricted Broker-Dealers that the Commission
may require in order to permit such sales pursuant thereto, but such "Plan of
Distribution" shall not name any such Broker-Dealer or disclose the amount of
Senior Notes held by any such Broker-Dealer except to the extent required by the
Commission as a result of a change in policy after the date of this Agreement.
The Company shall use its best efforts to keep the Exchange
Offer Registration Statement continuously effective, supplemented and amended as
required by the provisions of Section 6(c) below to the extent necessary to
ensure that it is available for sales of Broker-Dealer Transfer Restricted
Securities by Restricted Broker-Dealers, and to ensure that such Registration
Statement conforms with the requirements of this Agreement, the Act and the
policies, rules and regulations of the Commission as announced from time to
time, for a period expiring on the earlier of (i) the date that all Holders of
Transfer Restricted Securities have exchanged such securities pursuant to the
Exchange Offer and (ii) 365 days from the date on which the Exchange Offer
Registration Statement is declared effective.
The Company shall promptly provide sufficient copies of the
latest version of such Prospectus to such Restricted Broker-Dealers upon request
at any time during such 365-day period in order to facilitate such sales.
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Company is not required to
file the Exchange Offer Registration Statement with respect to the Senior Notes
or not permitted to consummate the Exchange Offer because the Exchange Offer is
not permitted by applicable law or Commission policy (after the procedures set
forth in Section 6(a)(i) below have been complied with) or (ii) any Holder of
Transfer Restricted Securities notifies the Company within 20 Business Days
following the Consummation of the Exchange Offer that (A) such Holder is
prohibited by law or Commission policy from participating in the Exchange Offer
or (B) such Holder may not resell the New Senior Notes acquired by it in the
Exchange Offer to the public without delivering a prospectus and the Prospectus
contained in the Exchange Offer Registration Statement is not appropriate or
available for such resales by such Holder or (C) such Holder is a Broker-Dealer
and holds Senior Notes acquired directly from the Company or an affiliate of the
Company, then the Company shall:
(x) cause to be filed on or prior to (1) in the case
of a Registration Statement filed pursuant to clause (i) above, 60 days
after the date on which the Company determines that it is not required
to file the Exchange Offer Registration Statement and in any event,
within 150 days after the Closing Date and (2) in the case of a
Registration Statement filed pursuant to clause (ii) above, 60 days
after the date on which the Company receives the notice specified in
clause (ii) above, a shelf registration statement pursuant to Rule 415
under the Act, (which may be an amendment to the Exchange Offer
Registration Statement (in either event, the "Shelf Registration
Statement")), relating to all Transfer Restricted Securities the
Holders of which shall have provided the information required pursuant
to Section 4(b) hereof, and
(y) use its best efforts to cause such Shelf
Registration Statement to become effective on or prior to (1) in the
case of a Registration Statement filed pursuant to clause (i) above, 90
days after the date on which the Company becomes obligated to file such
Shelf Registration Statement (and in any event, within 240 days after
the Closing Date), and (2) in the case of a Registration Statement
filed pursuant to clause (ii) above, 90 days after the date on which
the Company receives the notice specified in clause (ii) above. If,
after the Company has filed an Exchange Offer Registration Statement
which satisfies the requirements of Section 3(a) above, the Company is
required to file and make effective a Shelf Registration Statement
solely because the Exchange Offer is not permitted under applicable
federal law, then the filing of the
<PAGE> 6
Exchange Offer Registration Statement shall be deemed to satisfy the
requirements of clause (x) above. Such an event shall have no effect on
the requirements of this clause (y), or on the Effectiveness Target
Date as defined in Section 5 below.
The Company shall use its best efforts to keep the Shelf Registration Statement
discussed in this Section 4(a) continuously effective, supplemented and amended
as required by the provisions of Sections 6(b) and (c) hereof to the extent
necessary to ensure that it is available for sales of Transfer Restricted
Securities by the Holders thereof entitled to the benefit of this Section 4(a),
and to ensure that it conforms with the requirements of this Agreement, the Act
and the policies, rules and regulations of the Commission as announced from time
to time, for a period expiring on the earlier of (i) the date that all Holders
of Transfer Restricted Securities have registered such securities pursuant to
the Exchange Offer and (ii) 365 days from the date on which the Exchange Offer
Registration Statement is declared effective provided, that the Company will
have the option of suspending the effectiveness of the Shelf Registration
Statement for periods of up to an aggregate of 60 days in any calendar year if
the Board of Directors of the Company determines that compliance with the
disclosure obligations necessary to maintain the effectiveness of the Shelf
Registration Statement at such time could reasonably be expected to have a
material adverse effect on the Company or a pending corporate transaction of the
Company (a "Permitted Suspension").
(b) Provision by Holders of Certain Information in Connection
with the Shelf Registration Statement. No Holder of Transfer Restricted
Securities may include any of its Transfer Restricted Securities in any Shelf
Registration Statement pursuant to this Agreement unless and until such Holder
furnishes to the Company in writing, within 20 Business Days after receipt of a
request therefor, such information specified in item 507 of Regulation S-K under
the Act for use in connection with any Shelf Registration Statement or
Prospectus or preliminary Prospectus included therein. No Holder of Transfer
Restricted Securities shall be entitled to Liquidated Damages pursuant to
Section 5 hereof unless and until such Holder shall have provided all such
information required to be provided by such Holder for inclusion therein. Each
Holder as to which any Shelf Registration Statement is being effected agrees to
furnish promptly to the Company, for so long as the Registration Statement is
effective, all information required to be disclosed in order to make the
information previously furnished to the Company by such Holder not materially
misleading.
SECTION 5. LIQUIDATED DAMAGES
If (i) the Company fails to file any of the Registration
Statements required by this Agreement on or before the date specified for such
filing in this Agreement, (ii) any of such Registration Statements is not
declared effective by the Commission on or prior to the date specified for such
effectiveness (the "Effectiveness Target Date"), (iii) the Company fails to
Consummate the Exchange Offer within 30 business days of the Effectiveness
Target Date with respect to the Exchange Offer Registration Statement or (iv)
the Shelf Registration Statement or the Exchange Offer Registration
7
<PAGE> 7
Statement is declared effective but thereafter ceases to be effective or usable
in connection with resales of Transfer Restricted Securities during the periods
specified in this Agreement without being succeeded immediately by a post
effective amendment to such Registration Statement that cures such failure and
that is itself declared effective within such five Business Day period, provided
that such effectiveness was not suspended in connection with a Permitted
Suspension (each such event referred to in clauses (i) through (iv) above, a
"Registration Default"), then commencing on the day following the date on which
such Registration Default occurs, the Company agrees to pay to each Holder of
Transfer Restricted Securities, for the first 90-day period immediately
following the occurrence of such Registration Default, liquidated damages in an
amount equal to $.05 per week per $1,000 principal amount of Senior Notes
constituting Transfer Restricted Securities held by such Holder for each week or
pro rata for a portion of each week thereof that the Registration Default
continues. The amount of liquidated damages payable to each Holder shall
increase by an additional $.05 per week per $1,000 principal amount of Senior
Notes constituting Transfer Restricted Securities held by such Holder for each
subsequent 90-day period until all Registration Defaults have been cured, up to
a maximum of $.50 per week per $1,000 principal amount of Senior Notes
constituting Transfer Restricted Securities held by such Holder.
All accrued liquidated damages shall be paid to Cede & Co., as
nominee of the Depository Trust Company (the "Global Security Holder") by wire
transfer of immediately available funds or by federal funds check and to Holders
of Certificated Securities by mailing checks to their registered addresses by
the Company on each Interest Payment Date. All obligations of the Company set
forth in the preceding paragraph that are outstanding with respect to any
Transfer Restricted Security at the time such security ceases to be a Transfer
Restricted Security shall survive until such time as all such obligations with
respect to such security shall have been satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with
the Exchange Offer, the Company shall comply with all applicable provisions of
Section 6(c) below, shall use its best efforts to effect such exchange and to
permit the sale of Broker-Dealer Transfer Restricted Securities being sold in
accordance with the intended method or methods of distribution thereof, and
shall comply with all of the following provisions:
(i)If, following the date hereof there has been
published a change in Commission policy with respect to exchange offers
such as the Exchange Offer, such that in the reasonable opinion of
counsel to the Company there is a substantial question as to whether
the Exchange Offer is permitted by applicable federal law, the Company
hereby agrees to seek a no-action letter or other favorable decision
from the Commission allowing the Company to Consummate an Exchange
Offer for such Senior Notes. The Company hereby agrees to pursue the
issuance of such a decision to the Commission staff level. In
connection with the foregoing, the Company hereby agrees to take such
other actions as are requested by the Commission or otherwise required
in connection with the issuance of such decision, including without
limitation (A) participating in telephonic conferences with the
Commission, (B) delivering to the Commission staff an analysis prepared
by counsel to the Company setting forth the legal bases, if any, upon
which such counsel has concluded that such an Exchange Offer should be
permitted and (C) diligently pursuing a resolution by the Commission
staff of such submission.
(ii) As a condition to its participation in the Exchange
Offer pursuant to the terms of this Agreement, each Holder of Transfer
Restricted Securities shall furnish, upon the request of the Company,
prior to the Consummation of the Exchange Offer, a written
representation to the Company (which may be contained in the letter of
transmittal contemplated
<PAGE> 8
by the Exchange Offer Registration Statement) to the effect that (A) it
is not an affiliate of the Company, (B) it is not engaged in, and does
not intend to engage in, and has no arrangement or understanding with
any person to participate in, a distribution of the New Senior Notes to
be issued in the Exchange Offer and (C) it is acquiring the New Senior
Notes in its ordinary course of business. Each Holder hereby
acknowledges and agrees that any Broker-Dealer and any such Holder
using the Exchange Offer to participate in a distribution of the
securities to be acquired in the Exchange Offer (1) could not under
Commission policy as in effect on the date of this Agreement rely on
the position of the Commission enunciated in Morgan Stanley and Co.,
Inc. (available June 5, 1991) and Exxon Capital Holdings Corporation
(available May 13, 1988), as interpreted in the Commission's letter to
Shearman & Sterling dated July 2, 1993, and similar no-action letters
(including, if applicable, any no-action letter obtained pursuant to
clause (1) above), and (2) must comply with the registration and
prospectus delivery requirements of the Act in connection with a
secondary resale transaction and that such a secondary resale
transaction must be covered by an effective registration statement
containing the selling security holder information required by Item 507
or 508, as applicable, of Regulation S-K if the resales are of New
Senior Notes obtained by such Holder in exchange for Senior Notes
acquired by such Holder directly from the Company.
(iii) Prior to effectiveness of the Exchange Offer
Registration Statement, the Company shall provide a supplemental letter
to the Commission (A) stating that the Company is registering the
Exchange Offer in reliance on the position of the Commission enunciated
in Exxon Capital Holdings Corporation (available May 13, 1988), Morgan
Stanley and Co., Inc. (available June 5, 1991) and, if applicable, any
no-action letter obtained pursuant to clause (i) above, (B) including a
representation that the Company has not entered into any arrangement or
understanding with any Person to distribute the New Senior Notes to be
received in the Exchange Offer and that, to the best of the Company's
information and belief, each Holder participating in the Exchange Offer
is acquiring the New Senior Notes in its ordinary course of business
and has no arrangement or understanding with any Person to participate
in the distribution of the New Senior Notes received in the Exchange
Offer and (C) any other undertaking or representation required by the
Commission as set forth in any no-action letter obtained pursuant to
clause (i) above.
(b) Shelf Registration Statement. In connection with the Shelf
Registration Statement the Company shall comply with all the provisions of
Section 6(c) below and shall use its best efforts to effect such registration to
permit the sale of the Transfer Restricted Securities being sold in accordance
with the intended method or methods of distribution thereof (as indicated in the
information furnished to the Company pursuant to Section 4(b) hereof), and
pursuant thereto the Company will prepare and file with the Commission a
Registration Statement relating to the registration on any appropriate form
under the Act, which form shall be available for the sale of the Transfer
Restricted Securities in accordance with
9
<PAGE> 9
the intended method or methods of distribution thereof within the time periods
and otherwise in accordance with the provisions hereof.
(c) General Provisions. In connection with any Registration
Statement and any related Prospectus required by this Agreement to permit the
sale or resale of Transfer Restricted Securities (including, without limitation,
any Exchange Offer Registration Statement and the related Prospectus, to the
extent that the same are required to be available to permit sales of
Broker-Dealer Transfer Restricted Securities by Restricted Broker-Dealers), the
Company shall:
(i)use its best efforts to keep such Registration
Statement continuously effective, subject to a Permitted Suspension,
and provide all requisite financial statements for the period specified
in Section 3 or 4 of this Agreement, as applicable. Upon the occurrence
of any event that would cause any such Registration Statement or the
Prospectus contained therein (A) to contain a material misstatement or
omission or (B) not to be effective and usable for resale of Transfer
Restricted Securities during the period required by this Agreement, the
Company shall file promptly an appropriate amendment to such
Registration Statement, (1) in the case of clause (A), correcting any
such misstatement or omission, and (2) in the case of either clause (A)
or (B), use its best efforts to cause such amendment to be declared
effective and such Registration Statement and the related Prospectus to
become usable for their intended purpose(s) as soon as practicable
thereafter;
(ii) except in the event of a Permitted Suspension
prepare and file with the Commission such amendments and post-effective
amendments to the Registration Statement as may be necessary to keep
the Registration Statement effective for the applicable period set
forth in Section 3 or 4 hereof, or such shorter period as will
terminate when all Transfer Restricted Securities covered by such
Registration Statement have been sold; cause the Prospectus to be
supplemented by any required Prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 under the Act, and to
comply fully with Rules 424 and 430A, as applicable, under the Act in a
timely manner; and comply with the provisions of the Act with respect
to the disposition of all securities covered by such Registration
Statement during the applicable period in accordance with the intended
method or methods of distribution by the sellers thereof set forth in
such Registration Statement or supplement to the Prospectus;
(iii) advise the underwriters, if any, and selling
Holders promptly and, if requested by such Persons, confirm such advice
in writing, (A) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to any
Registration Statement or any post-effective amendment thereto, when
the same has become effective, (B) of any request by the Commission for
amendments to the Registration Statement or amendments or supplements
to the Prospectus or for additional information relating thereto, (C)
of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement under the Act or of the
suspension by any state securities commission of the qualification of
the Transfer Restricted Securities for offering or sale in any
jurisdiction, or the initiation of any proceeding for any of the
preceding purposes, (D) of the existence of any fact or the happening
of any event that makes any statement of a material fact made in the
Registration Statement, the Prospectus, any amendment or supplement
thereto or any document incorporated by reference therein untrue, or
that requires the making of any additions to or changes in the
Registration Statement in order to make the statements therein not
misleading, or that requires the making of any additions to or changes
in the Prospectus in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading. If at
any time the Commission shall issue any stop order suspending the
effectiveness of the
<PAGE> 10
Registration Statement, or any state securities commission or other
regulatory authority shall issue an order suspending the qualification
or exemption from qualification of the Transfer Restricted Securities
under state securities or Blue Sky laws, the Company shall use its best
efforts to obtain the withdrawal or lifting of such order at the
earliest possible time;
(iv) make available, if requested, to each selling
Holder named in any Registration Statement or Prospectus and each of
the underwriters in connection with such sale, if any, before filing
with the Commission, copies of any Registration Statement or any
Prospectus included therein or any amendments or supplements to any
such Registration Statement or Prospectus (including all documents
incorporated by reference after the initial filing of such Registration
Statement), substantially in the form to be filed, which documents will
be subject to the review and comment of such Holders and underwriters,
in connection with such sale, if any, for a period of at least five
Business Days, and the Company will not file any such Registration
Statement or Prospectus or any amendment or supplement to any such
Registration Statement or Prospectus (including all such documents
incorporated by reference) to which the selling Holders of the Transfer
Restricted Securities covered by such Registration Statement or the
underwriters, in connection with such sale, if any, shall reasonably
object within five Business Days after the receipt thereof. A selling
Holder or underwriter, if any, shall be deemed to have reasonably
objected to such filing if such Registration Statement, amendment,
Prospectus or supplement, as applicable, as proposed to be filed,
contains a material misstatement or omission or falls to comply with
the applicable requirements of the Act;
(v)promptly upon the filing of any document that is to
be incorporated by reference into a Registration Statement or
Prospectus, make available copies of such document to the selling
Holders and to the underwriter(s) in connection with such sale, if any,
make the Company's representatives available for discussion of such
document and other customary due diligence matters, and include such
information in such document prior to the filing thereof as such
selling Holders or underwriter(s), if any, reasonably may request;
(vi) make available at reasonable times for inspection
by the selling Holders, any underwriter participating in any
disposition pursuant to such Registration Statement and any attorney or
accountant retained by such selling Holders or any of such
underwriters), all financial and other records, pertinent corporate
documents and properties of the Company and cause the Company's
officers, directors and employees to supply all information reasonably
requested by any such Holder, underwriter, attorney or accountant in
connection with such Registration Statement or any post-effective
amendment thereto subsequent to the filing thereof and prior to its
effectiveness; provided that any person to whom information is provided
under this clause (vi) agrees in writing to maintain the
confidentiality of such information to the extent such information is
not in the public domain;
11
<PAGE> 11
(vii) if requested by any selling Holders or the
underwriters in connection with such sale, if any, promptly include in
any Registration Statement or Prospectus, pursuant to a supplement or
post-effective amendment if necessary, such information as such selling
Holders and underwriter(s), if any, may reasonably request to have
included therein, including, without limitation, information relating
to the "Plan of Distribution" of the Transfer Restricted Securities,
information with respect to the principal amount of Transfer Restricted
Securities being sold to such underwriters, the purchase price being
paid therefor and any other terms of the offering of the Transfer
Restricted Securities to be sold in such offering; and make all
required filings of such Prospectus supplement or post-effective
amendment as soon as practicable after the Company is notified of the
matters to be included in such Prospectus supplement or post-effective
amendment;
(viii) cause the Transfer Restricted Securities covered
by the Registration Statement to be rated with the appropriate rating
agencies, if so requested by the Holders of a majority in aggregate
principal amount of Senior Notes covered thereby or the underwriters,
if any;
(ix) furnish to each selling Holder and each of the
underwriters in connection with such sale, if any, without charge, at
least one copy of the Registration Statement, as first filed with the
Commission, and of each amendment thereto, and make available all
documents incorporated by reference therein and all exhibits (including
exhibits incorporated therein by reference);
(x)deliver to each selling Holder and each of the
underwriters, if any, without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement
thereto as such Persons reasonably may request; the Company hereby
consents to the use of the Prospectus and any amendment or supplement
thereto by each of the selling Holders and each of the underwriters, if
any, in connection with the offering and the sale of the Transfer
Restricted Securities covered by the Prospectus or any amendment or
supplement thereto;
(xi) enter into such agreements (including, unless not
required pursuant to Section 10 hereof, an underwriting agreement) and
make such representations and warranties and take all such other
actions in connection therewith in order to expedite or facilitate the
disposition of the Transfer Restricted Securities pursuant to any
Registration Statement contemplated by this Agreement as may be
reasonably requested by any Holder of Transfer Restricted Securities or
underwriter in connection with any sale or resale pursuant to any
Registration Statement contemplated by this Agreement, and in such
connection, whether or not an underwriting agreement is entered into
and whether or not the registration is an Underwritten Registration,
the Company shall:
(A) furnish to each selling Holder and each
underwriter, if any, upon the effectiveness of the Shelf
Registration Statement and to each Restricted Broker-Dealer
upon consummation of the Exchange Offer:
(1) a certificate, dated the date of effectiveness of
the Shelf Registration Statement or the date of
Consummation of the Exchange Offer, as the case may
be, signed by (x) the President or any Vice President
and (y) a principal financial or accounting officer
of the Company, confirming with respect to the
Prospectus or any purchase or underwriting agreement
and the Transfer Restricted Securities, as of the
date thereof, the matters set forth in paragraphs
<PAGE> 12
(a), (b), (c) and (d) of Section 8 of the Purchase
Agreement and such other matters as the Holders
and/or underwriter(s) may reasonably request;
(2) an opinion, dated the date of effectiveness of
the Shelf Registration Statement or the date of
Consummation of the Exchange Offer, as the case may
be, of counsel for the Company, covering (i) due
authorization and enforceability of the Senior Notes
and the New Senior Notes, (ii) a statement to the
effect that such counsel has participated in
conferences with officers and other representatives
of the Company and representatives of the independent
public accountants for the Company and have
considered the matters required to be stated therein
and the statements contained therein, although such
counsel has not independently verified the accuracy,
completeness or fairness of such statements; and that
such counsel advises that, on the basis of the
foregoing (relying as to materiality to a large
extent upon facts provided to such counsel by
officers and other representatives of the Company and
without independent check or verification), no facts
came to such counsel's attention that caused such
counsel to believe that the applicable Registration
Statement, at the time such Registration Statement or
any post-effective amendment thereto became
effective, and, in the case of the Exchange Offer
Registration Statement, as of the date of
Consummation, contained an untrue statement of a
material fact or omitted to state a material fact
required to be stated therein or necessary to make
the statements therein not misleading, or that the
Prospectus contained in such Registration Statement
as of its date and, in the case of the opinion dated
the date of Consummation of the Exchange Offer, as of
the date of Consummation, contained an untrue
statement of a material fact or omitted to state a
material fact necessary in order to make the
statements therein, in the light of the circumstances
under which they were made, not misleading and (iii)
such other matters of the type customarily covered in
opinions of counsel for an issuer in connection with
similar securities offerings, as may reasonably be
requested by such parties. Without limiting the
foregoing, such counsel may state further that such
counsel assumes no responsibility for, and has not
independently verified, the accuracy, completeness or
fairness of the financial statements, notes and
schedules and other
13
<PAGE> 13
financial, statistical and accounting data included
in any Registration Statement contemplated by this
Agreement or the related Prospectus; and
(3) if the registration is a registration in which
securities of the Company are sold to an underwriter
for reoffering to the public, obtain a customary
comfort letter, dated as of the date of effectiveness
of the Shelf Registration Statement, addressed to the
Board of Directors of the Company or any underwriter
from the Company's independent accountants, in the
customary form and covering matters of the type
customarily covered in comfort letters to boards of
directors in underwritten offerings;
(B) set forth in full or incorporate by
reference in the underwriting agreement, if any, in connection
with any sale or resale pursuant to any Shelf Registration
Statement the indemnification provisions and procedures of
Section 8 hereof with respect to all parties to be indemnified
pursuant to said Section; and
(C) deliver such other documents and
certificates as may be reasonably requested by such parties to
evidence compliance with clause (A) above and with any
customary conditions contained in the underwriting agreement
or other agreement entered into by the Company pursuant to
this clause (xi), if any.
The above shall be done at each closing under such
underwriting or similar agreement, as and to the extent required thereunder, and
if at any time the representations and warranties of the Company contemplated in
(A)(1) above cease to be true and correct, the Company shall so advise the
underwriters), if any, and selling Holders promptly and if requested by such
Persons, shall confirm such advice in writing;
(xii) prior to any public offering of Transfer
Restricted Securities, cooperate with the selling Holders, the
underwriters, if any, and their respective counsel in connection with
the registration and qualification of the Transfer Restricted
Securities under the securities or Blue Sky laws of such jurisdictions
as the selling Holders or underwriters, if any, may request and do any
and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Transfer Restricted Securities
covered by the applicable Registration Statement; provided, however,
that the Company shall not be required to register or qualify as a
foreign corporation where it is not now so qualified or to take any
action that would subject it to the service of process in suits or to
taxation, other than as to matters and transactions relating to the
Registration Statement, in any jurisdiction where it is not now so
subject;
(xiii) issue, upon the request of any Holder of Senior
Notes covered by any Shelf Registration Statement contemplated by this
Agreement, New Senior Notes having an aggregate principal amount equal
to the aggregate principal amount of Senior Notes surrendered to the
Company by such Holder in exchange therefor or being sold by such
Holder; such New Senior Notes to be registered in the name of such
Holder or in the name of the purchasers of such New Senior Notes; in
return, the Senior Notes held by such Holder shall be surrendered to
the Company for cancellation;
(xiv) in connection with any sale of Transfer Restricted
Securities that will result in such securities no longer being Transfer
Restricted Securities, cooperate with the selling Holders and the
underwriters, if any, to facilitate the timely preparation and delivery
of certificates representing Transfer Restricted Securities to be sold
and not bearing any restrictive legends; and to register such Transfer
Restricted Securities in such denominations and such names
<PAGE> 14
as the Holders or the underwriters, if any, may request at least two
Business Days prior to such sale of Transfer Restricted Securities;
(xv) use its best efforts to cause the Transfer Restricted
Securities covered by the Registration Statement to be registered with
or approved by such other governmental agencies or authorities as may
be necessary to enable the seller or sellers thereof or the
underwriters, if any, to consummate the disposition of such Transfer
Restricted Securities, subject to the proviso contained in clause (xii)
above,
(xvi) if any fact or event contemplated by Section
6(c)(iii)(D) above shall exist or have occurred, except in the event of
a Permitted Suspension, prepare a supplement or post-effective
amendment to the Registration Statement or related Prospectus or any
document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of Transfer
Restricted Securities, the Prospectus will not contain an untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(xvii) provide a CUSIP number for all Transfer Restricted
Securities not later than the effective date of a Registration
Statement covering such Transfer Restricted Securities and provide the
Trustee under the Indenture with printed certificates for the Transfer
Restricted Securities which are in a form eligible for deposit with the
Depository Trust Company;
(xviii) cooperate and assist in any filings required to be
made with the NASD and in the performance of any due diligence
investigation by any underwriter (including any "qualified independent
underwriter" as defined in the rules and regulations of the NASD) that
is required to be retained in accordance with the rules and regulations
of the NASD, and use its best efforts to cause such Registration
Statement to become effective and approved by such governmental
agencies or authorities as may be necessary to enable the Holders
selling Transfer Restricted Securities to consummate the disposition of
such Transfer Restricted Securities;
(xix) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make generally
available to its security holders with regard to any applicable
Registration Statement, as soon as practicable, a consolidated earnings
statement meeting the requirements of Rule 158 (which need not be
audited) covering a twelve-month period beginning after the effective
date of the Registration Statement (as such term is defined in
paragraph (c) of Rule 158 under the Act);
(xx) cause the Indenture to be qualified under the TIA not
later than the effective date of the first Registration Statement
required by this Agreement, and, in connection therewith cooperate with
the Trustee and the Holders of Senior Notes to effect such changes to
the Indenture as may be required for such Indenture to be so qualified
in accordance with the terms of the TIA; and execute and use its best
efforts to cause the Trustee to execute, all documents that may be
required to effect such changes and all other forms and documents
15
<PAGE> 15
required to be filed with the Commission to enable such Indenture to be
so qualified in a timely manner;
(xxi) cause all Transfer Restricted Securities covered by
the Registration Statement to be listed on each securities exchange on
which similar securities issued by the Company are then listed if
requested by the Holders of a majority in aggregate principal amount of
Senior Notes or the managing underwriters, if any; and
(xxii) provide promptly to each Holder upon written request
each document filed with the Commission pursuant to the requirements of
Section 13 or Section 15(d) of the Exchange Act.
(d) Restrictions on Holders. Each Holder agrees by acquisition
of a Transfer Restricted Security that, upon receipt of any notice from the
Company of the existence of any fact of the kind described in Section
6(c)(iii)(D) hereof, such Holder will forthwith discontinue disposition of
Transfer Restricted Securities pursuant to the applicable Registration Statement
until such Holder's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 6(c)(xvi) hereof, or until it is advised in
writing (the "Advice") by the Company that the use of the Prospectus may be
resumed, and has received copies of any additional or supplemental filings that
are incorporated by reference in the Prospectus. If so directed by the Company,
each Holder will deliver to the Company (at the Company's expense) all copies,
other than permanent file copies then in such Holder's possession, of the
Prospectus covering such Transfer Restricted Securities that was current at the
time of receipt of such notice. In the event the Company shall give any such
notice, the time period regarding the effectiveness of such Registration
Statement set forth in Section 3 or 4 hereof, as applicable, shall be extended
by the number of days during the period from and including the date of the
giving of such notice pursuant to Section 6(c)(iii)(D) hereof to and including
the date when each selling Holder covered by such Registration Statement shall
have received the copies of the supplemented or amended Prospectus contemplated
by Section 6(c)(xvi) hereof or shall have received the Advice.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's performance of or
compliance with this Agreement will be borne by the Company, regardless of
whether a Registration Statement becomes effective, including without
limitation: (i) all registration and filing fees and expenses (including filings
made with the NASD (including, if applicable, the fees and expenses of any
"qualified independent underwriter" and its counsel, as may be required by the
rules and regulations of the NASD)); (ii) all fees and expenses of compliance
with federal securities and state Blue Sky or securities laws; (iii) all
expenses of printing (including printing certificates for the Senior Notes and
printing of Prospectuses), messenger and delivery services and telephone; (iv)
all fees and disbursements of counsel for the Company and, in accordance with
Section 7(b) below, the Holders of Transfer Restricted Securities; (v) all
application and filing fees in connection with listing the Senior Notes on a
national exchange or automated quotation system if required hereunder; and (vi)
all fees and disbursements of independent certified public accountants of the
Company (including the expenses of any special audit and comfort letters
required by or incident to such performance).
The Company will, in any event, bear its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expenses of any annual
audit and the fees and expenses of any Person, including special experts,
retained by the Company.
(b) In connection with any Registration Statement required by
this Agreement, the Company will reimburse the Holders of Transfer Restricted
Securities being tendered in the
<PAGE> 16
Exchange Offer and/or resold pursuant to the "Plan of Distribution" contained in
the Exchange Offer Registration Statement or registered pursuant to the Shelf
Registration Statement, as applicable, for the reasonable fees and disbursements
of not more than one counsel chosen by the Holders of a majority in principal
amount of the Transfer Restricted Securities for whose benefit such Registration
Statement is being prepared.
SECTION 8. INDEMNIFICATION
(a) The Company agrees to indemnify and hold harmless (i) each
Holder, (ii) each person, if any, who controls a Holder within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act and (iii) the
respective officers, directors, partners, employees, representatives and agents
of any Holder or any controlling person to the fullest extent lawful, from and
against any and all losses, liabilities, claims, damages and expenses whatsoever
(including but not limited to attorneys' fees and any and all expenses
whatsoever incurred in investigating, preparing or defending against any
investigation or litigation, commenced or threatened, or any claim whatsoever,
and any and all amounts paid in settlement of any claim or litigation), joint or
several, to which they or any of them may become subject under the Act, the
Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages
or expenses (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement or the Prospectus, or in any supplement thereto or
amendment thereof, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that the Company
will not be liable in any such case to the extent, but only to the extent, that
(i) any such loss, liability, claim, damage or expense arises out of or is based
upon any such untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such Holder expressly
for use therein and (ii) the foregoing indemnity with respect to any untrue
statement contained in or omitted from a Registration Statement or the
Prospectus shall not inure to the benefit of any Holder (or any person
controlling such Holder), from whom the person asserting any such loss,
liability, claim, damage or expense purchased any of the Senior Notes which are
the subject thereof if it is finally judicially determined that such loss,
liability, claim, damage or expense resulted solely from the fact that the
Holder sold Senior Notes to a person to whom there was not sent or given, at or
prior to the written confirmation of such sale, a copy of the Registration
Statement and the Prospectus, as amended or supplemented, and (x) the Company
shall have previously and timely furnished sufficient copies of the Registration
Statement or Prospectus, as so amended or supplemented, to such Holder in
accordance with this Agreement and (y) the Registration Statement or Prospectus,
as so amended or supplemented, would have corrected such untrue statement or
omission of a material fact. This indemnity agreement will be in addition to any
liability which the Company may otherwise have, including, under this Agreement.
17
<PAGE> 17
(b) Each Holder, severally and not jointly, agrees to
indemnify and hold harmless the Company and each person, if any, who controls
the Company within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, against any losses, liabilities, claims, damages and expenses
whatsoever (including but not limited to attorneys' fees and any and all
expenses whatsoever incurred in investigating, preparing or defending against
any investigation or litigation, commenced or threatened, or any claim
whatsoever and any and all amounts paid in settlement of any claim or
litigation), joint or several, to which they or any of them may become subject
under the Act, the Exchange Act or otherwise, insofar as such losses,
liabilities, claims, damages or expenses (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or the Prospectus, or in
any amendment thereof or supplement thereto, or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, in each case to the
extent, but only to the extent, that any such loss, liability, claim, damage or
expense arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made therein in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
such Holder expressly for use therein. This indemnity will be in addition to any
liability which a Holder may otherwise have, including under this Agreement. In
no event, however, shall the liability of any selling Holder hereunder be
greater in amount than the dollar amount of the proceeds received by such Holder
upon its sale of the Senior Notes giving rise to such indemnification
obligation.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the extent that it
has been prejudiced in any material respect by such failure or from any
liability which it may otherwise have). In case any such action is brought
against any indemnified party, and it notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. Notwithstanding the foregoing, the
indemnified party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by the indemnifying parties
in connection with the defense of such action, (ii) the indemnifying parties
shall not have employed counsel to take charge of the defense of such action
within a reasonable time after notice of commencement of the action, or (iii)
such indemnified party or parties shall have reasonably concluded that there may
be defenses available to it or them which are different from or additional to
those available to one or all of the indemnifying parties (in
<PAGE> 18
which case the indemnifying party or parties shall not have the right to direct
the defense of such action on behalf of the indemnified party or parties), in
any of which events such fees and expenses of counsel shall be borne by the
indemnifying parties; provided, however, that the indemnifying party under
subsection (a) or (b) above, shall only be liable for the legal expenses of one
counsel (in addition to any local counsel) for all indemnified parties in each
jurisdiction in which any claim or action is brought. Anything in this
subsection to the contrary notwithstanding, an indemnifying party shall not be
liable for any settlement of any claim or action effected without its prior
written consent, provided, however, that such consent was not unreasonably
withheld.
(d) In order to provide for contribution in circumstances in
which the indemnification provided for in this Section 8 is for any reason held
to be unavailable from the Company or is insufficient to hold harmless a party
indemnified thereunder, the Company and each Holder shall contribute to the
aggregate losses, claims, damages, liabilities and expenses of the nature
contemplated by such indemnification provision (including any investigation,
legal and other expenses incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claims asserted, but after
deducting in the case of losses, claims, damages, liabilities and expenses
suffered by the Company, any contribution received by the Company from persons,
other than the Holders, who may also be liable for contribution, including
persons who control the Company within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act) to which the Company and any Holder may be
subject, in such proportion as is appropriate to reflect the relative benefits
received by the Company from the offering of Senior Notes and any such Holder
from its sale of Senior Notes or, if such allocation is not permitted by
applicable law or indemnification is not available as a result of the
indemnifying party not having received notice as provided in this Section 8, in
such proportion as is appropriate to reflect not only the relative benefits
referred to above but also the relative fault of the Company and the Holders in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company and any
Holder shall be deemed to be in the same proportion as (x) the total proceeds
from the offering of the Senior Notes (net of discounts but before deducting
expenses) received by the Company and (y) the total proceeds received by such
Holder upon its sale of Senior Notes which would otherwise give rise to the
indemnification obligation, respectively. The relative fault of the Company and
of the Holders shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company or the Holders and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement
19
<PAGE> 19
or omission. The Company and each Holder agree that it would not be just and
equitable if contribution pursuant to this Section 8 were determined by pro rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to above. Notwithstanding the provisions
of this Section 8, (i) no Holder shall be required to contribute, in the
aggregate, any amount in excess of the amount by which the total received by
such Holder with respect to the sale of its Senior Notes exceeds the sum of (A)
the paid by such Holder for such Senior Notes plus (B) the amount of any damages
which such Holder has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission and (ii) no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. For purposes of this Section 8, (A) each
person, if any, who controls a Holder within the meaning of Section 15 of the
Act or Section 20(a) of the Exchange Act and (B) the respective officers,
directors, partners, employees, representatives and agents of a Holder or any
controlling person shall have the same rights to contribution as such Holder,
and each person, if any, who controls the Company within the meaning of Section
15 of the Act or Section 20(a) of the Exchange Act shall have the same rights to
contribution as the Company, subject in each case to clauses (i) and (ii) of
this Section 8(d). Any party entitled to contribution will, promptly after
receipt of notice of commencement of any action, suit or proceeding against such
party in respect of which a claim for contribution may be made against another
party or parties under this Section 8, notify such party or parties from whom
contribution may be sought, but the failure to so notify such party or parties
shall not relieve the party or parties from whom contribution may be sought from
any obligation it or they may have under this Section 8 or otherwise. No party
shall be liable for contribution with respect to any action or claim settled
without its prior written consent; provided, however, that such written consent
was not unreasonably withheld.
SECTION 9. RULE 144A
The Company hereby agrees with each Holder, for so long as any Transfer
Restricted Securities remain outstanding, to make available, upon request of any
Holder of Transfer Restricted Securities, to any Holder or beneficial owner of
Transfer Restricted Securities in connection with any sale thereof and any
prospective purchaser of such Transfer Restricted Securities designated by such
Holder or beneficial owner, the information required by Rule 144A(d)(4) under
the Act in order to permit resales of such Transfer Restricted Securities
pursuant to Rule 144A.
SECTION 10. UNDERWRITTEN REGISTRATIONS
The Holders of Transfer Restricted Securities may elect to
sell their Transfer Restricted Securities pursuant to one or more Underwritten
Registrations; provided, however, that in no event shall any Holder commence any
such Underwritten Registration if a period of less than 180 days has elapsed
since the consummation of the most recent Underwritten Registration hereunder;
and provided further that in no event shall the Holders effect more than three
such Underwritten Registrations hereunder. No Holder may participate in any
Underwritten Registration hereunder unless such Holder (a) agrees to sell such
Holder's Transfer Restricted Securities on the basis provided in customary
underwriting arrangements entered into in connection therewith and (b) completes
and executes all reasonable questionnaires, powers of attorney, indemnities,
underwriting agreements, lock-up letters and other documents required under the
terms of such underwriting arrangements.
SECTION 11. SELECTION OF UNDERWRITERS
In any Underwritten Offering, the investment banker or
investment bankers and manager or managers that will administer the offering
will be selected by the Holders of a majority in aggregate principal amount of
the Transfer Restricted Securities included in such offering; provided, that
such
<PAGE> 20
investment bankers and managers must be reasonably satisfactory to the
Company. Such investment bankers and managers are referred to herein as the
"underwriters."
SECTION 12. MISCELLANEOUS
(a) Remedies. Each Holder, in addition to being entitled to
exercise all rights provided herein, in the Indenture, the Purchase Agreement or
granted by law, including recovery of liquidated or other damages, will be
entitled to specific performance of its rights under this Agreement. The Company
agrees that monetary damages (including the liquidated damages contemplated
hereby) would not be adequate compensation for any loss incurred by reason of a
breach by it of the provisions of this Agreement and hereby agrees to waive the
defense in any action for specific performance that a remedy at law would be
adequate.
(b) No Inconsistent Agreements. The Company will not on or
after the date of this Agreement enter into any agreement with respect to its
securities that conflicts with the rights granted to the Holders in this
Agreement or otherwise conflicts with the provisions hereof. The rights granted
to the Holders hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of the Company's securities
under any agreement in effect on the date hereof, except where a waiver with
respect thereto has been obtained prior to the date of effectiveness of any
registration statement required under this Agreement.
(c) Adjustments Affecting the Senior Notes. The Company will
not take any action, or permit any change to occur, with respect to the Senior
Notes that would materially adversely affect the ability of the Holders to
Consummate any Exchange Offer.
(d) Amendments and Waivers. The provisions of this Agreement
may not be amended, modified or supplemented, and waivers or consents to or
departures from the provisions hereof may not be given unless the Company has
obtained the written consent of Holders of a majority of the outstanding
principal amount of Transfer Restricted Securities. Notwithstanding the
foregoing, a waiver or consent to departure from the provisions hereof that
relates exclusively to the rights of Holders whose securities are being tendered
pursuant to the Exchange Offer and that does not affect directly or indirectly
the rights of other Holders whose securities are not being tendered pursuant to
such Exchange Offer may be given by the Holders of a majority of the outstanding
principal amount of Transfer Restricted Securities that are subject to such
Exchange Offer.
(e) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, first-class
mail (registered or certified, return receipt requested), telex, telecopier, or
air courier guaranteeing overnight delivery:
a) (i)if to a Holder, at the address set forth on the
records of the Registrar under the Indenture, with a copy to the
Registrar under the Indenture; and
b) (ii) if to the Company:
Intermedia Communications Inc.
3625 Queen Palm Drive
21
<PAGE> 21
Tampa, Florida 33619
Telecopier No.: (813) 829-2470
Attention: Chief Financial Officer
With a copy to:
Kronish, Lieb, Weiner & Hellman LLP
1114 Avenue of the Americas, 46th Floor
New York, New York 10036
Telecopier No.: (212) 997-3527
Attention: Ralph J. Sutcliffe
All such notices and communications shall be deemed to have
been duly given: at the time delivered by hand, if personally delivered; five
Business Days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt acknowledged, if telecopied; and on
the next business day, if timely delivered to an air courier guaranteeing
overnight delivery.
Copies of all such notices, demands or other communications
shall be concurrently delivered by the Person giving the same to the Trustee at
the address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders of Transfer Restricted Securities; provided,
however, that this Agreement shall not inure to the benefit of or be binding
upon a successor or assign of a Holder unless and to the extent such successor
or assign acquired Transfer Restricted Securities directly from such Holder.
(g) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO THE CONFLICT OF LAW RULES THEREOF.
(j) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
(k) Entire Agreement. This Agreement together with the other
Operative Documents (as defined in the Purchase Agreement) is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted by the Company with
respect to the Transfer Restricted Securities. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.
<PAGE> 22
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
INTERMEDIA COMMUNICATIONS INC.
By: ____________________________________
Name:
Title:
BEAR, STEARNS & CO. INC.
By: BEAR, STEARNS & CO. INC.
-----------------------------
Name:
Title:
SALOMON BROTHERS INC
By: SALOMON BROTHERS INC
-----------------------------
Name:
Title:
MERRILL LYNCH & CO.
By: MERRILL LYNCH & CO.
-----------------------------
Name:
Title:
23
<PAGE> 23
SBC WARBURG DILLON READ INC.
By: SBC WARBURG DILLON READ INC.
-----------------------------
Name:
Title:
<PAGE> 1
June 15, 1998
Intermedia Communications Inc.
3625 Queen Palm Drive
Tampa, Florida 33619
Ladies and Gentlemen:
We have acted as counsel to Intermedia Communications Inc., a Delaware
corporation (the "Company"), in connection with its Registration Statement on
Form S-4 (the "Registration Statement"), filed pursuant to the Securities Act
of 1933, as amended (the "Securities Act"), relating to the Company's proposed
offer to exchange (the "Exchange Offer") 8.60% Series B Senior Notes due 2008
of the Company (the "New Notes") for any and all outstanding 8.60% Senior Notes
due 2008 of the Company (the "Old Notes"). The Old Notes were issued and sold
on May 27, 1998 pursuant to an indenture (the "Indenture") between the Company
and SunTrust Bank, Central Florida, National Association, as trustee, in a
transaction exempt from registration under the Securities Act in reliance upon
Rule 144A and Section 4(2) of the Securities Act. The New Notes will also be
issued pursuant to the Indenture.
In that connection, we have reviewed the Indenture, the Registration
Statement and such other documents and instruments as we have deemed
appropriate. In such review, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted as originals and the conformity to
the original documents of all documents submitted to us as copies.
On the basis of such review, and having regard to such legal
consideration as we have deemed relevant, it is our opinion that:
1. The New Notes have been duly and validly authorized for
issuance by the Company and, when issued in accordance with the terms of the
Exchange Offer and the Indenture, will be the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms and entitled to the benefits of the Indenture, except
<PAGE> 2
Intermedia Communications Inc.
June , 1998
Page 2
that we express no opinion as to the validity or enforceability of rights
of indemnity or contribution, or both, and except as such enforceability
may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization or similar laws affecting the rights of creditors
generally and subject to general principles of equity.
2. The statements under the caption "Certain Federal Income
Tax Considerations" in the prospectus relating to the New Notes included
in the Registration Statement, insofar as such statements constitute
summaries of federal income tax law, fairly summarize the matters
referred to therein.
We are members of the Bar of the State of New York and do not
purport to be experts or give any opinion except as to matters involving
the laws of such state, the general corporation laws of the State of
Delaware and the federal laws of the United States.
We hereby consent to the use of our name under the caption
"Legal Matters" in the prospectus included in the Registration Statement
and to the use of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
/s/ Kronish, Lieb, Weiner & Hellman LLP
<PAGE> 1
Exhibit 12
Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends
<TABLE>
<CAPTION>
Pro
Pro forma(1) Three Three forma(1)
Year Months Months Three Months
Years ended December 31, Ended Ended Ended Ended
--------------------------------------------------- December 31, March 31, March 31, March 31,
1993 1994 1995 1996 1997 1997 1997 1998 1998
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Loan Loss before
extraordinary items (2,074) (3,067) (19,157) (57,198) (197,289) (356,219) (27,404) (173,263) (165,305)
Income tax benefit -- -- (97) -- -- 380 -- -- --
------- ------- -------- -------- --------- --------- -------- --------- ---------
Loss before income
taxes (2,074) (3,067) (19,254) (57,198) (197,289) (355,839) (27,404) (173,263) (165,305)
======= ======= ======== ======== ========= ========= ======== ========= =========
Fixed charges:
Interest expensed 844 1,219 13,355 35,213 58,744 139,740 11,089 49,301 42,229
Capitalized interest 213 257 677 2,780 4,654 4,654 778 1,968 1,968
Amortization of deferred
financing costs 78 69 412 1,252 1,918 1,918 385 948 948
Estimated interest factor
on operating losses 313 200 428 1,598 3,286 4,298 755 2,031 2,157
Dividends on redeemable
preferred stock 0 0 0 0 43,742 71,850 3,375 18,594 18,594
------- ------- -------- -------- --------- --------- -------- --------- ---------
Total fixed charges 1,448 1,745 14,872 40,843 112,343 222,460 16,382 72,842 65,896
======= ======= ======== ======== ========= ========= ======== ========= =========
Earnings:
Loss before income tax (2,074) (3,067) (19,254) (57,198) (197,289) (355,839) (27,404) (173,263) (165,305)
------- ------- -------- -------- --------- --------- -------- --------- ---------
Fixed charges excluding
capitalized interest
and preferred stock
dividends 1,235 1,488 14,195 38,063 63,948 145,956 12,229 52,280 45,334
------- ------- -------- -------- --------- --------- -------- --------- ---------
Total earnings (839) (1,579) (5,059) (19,135) (133,341) (209,883) (15,175) (120,983) (119,971)
======= ======= ======== ======== ========= ========= ======== ========= =========
Ratio of earnings to
fixed charges and
preferred stock
dividends (0.58) (0.90) (0.34) (0.47) (1.19) (0.94) (0.93) (1.66) (1.82)
======= ======= ======== ======== ========= ========= ======== ========= =========
Insufficiency of
earnings to cover
fixed charges and
preferred stock
dividends 2,287 3,324 19,931 59,978 245,685 432,343 31,557 193,825 185,867
======= ======= ======== ======== ========= ========= ======== ========= =========
</TABLE>
- --------------
(1) Gives historical and proforma effect to the Digex, STFI, LDS and National
acquisitions, as well as the March, July, October and December 1997
offerings and the application of the net proceeds therefrom.
Page 1
<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the reference to our firm under the captions "Experts", "Summary
Historical and Pro Forma Financial Data" and "Selected Historical Financial and
Other Operating Data" in the Registration Statement (Form S-4) and related
prospectus of Intermedia Communications Inc. for the registration of
$500,000,000 8.60% Series B Senior Notes due 2008 and to the incorporation by
reference therein of our report dated February 17, 1998, except for Note 15, as
to which the date is March 10, 1998, 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, 1997, filed with the
Securities and Exchange Commission.
/s/ Ernst & Young LLP
Tampa, Florida
June 10, 1998
<PAGE> 1
Exhibit 23.3
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4) and related prospectus of Intermedia
Communications Inc. for the registration of $500,000,000 8.60% Series B Senior
Notes due 2008 and to the incorporation by reference therein of our report dated
February 13, 1998, except for Note 20, as to which the date is March 10, 1998,
with respect to the consolidated financial statements of Shared Technologics
Fairchild Inc. and Subsidiaries included in Intermedia Communications Inc.'s
Annual Report (Form 10-K) for the year ended December 31, 1997, filed with the
Securities and Exchange Commission.
/s/ Ernst & Young LLP
Vienna, Virginia
June 10, 1998
<PAGE> 1
Exhibit 23.4
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4) and related prospectus of Intermedia
Communications Inc. for the registration of $500,000,000 8.60% Series B Senior
Notes due 2008 and to the incorporation by reference therein of our report dated
February 24, 1997, with respect to the consolidated financial statements of
DIGEX, Incorporated included in its Annual Report (Form 10-KSB) for the year
ended December 31, 1996, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Baltimore, Maryland
June 10, 1998
<PAGE> 1
Exhibit 23.5
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Form S-4 Registration Statement of our report dated March 7,
1997 relating to the December 31, 1996 financial statements of Shared
Technologies Fairchild Inc. included in the Intermedia Communications Inc. Form
10-K for the year ended December 31, 1997 and to all references to our Firm
included in this Form S-4 Registration Statement to register $500 million in
8.60% Series B Senior Notes due 2008.
/s/ ARTHUR ANDERSEN LLP
Washington, D.C.
June 10, 1998
<PAGE> 1
Exhibit 23.6
Consent of Independent Certified Public Accountants
We consent to the incorporation by reference in this Registration Statement on
Form S-4 of Intermedia Communications Inc. for the registration of $500,000,000
8.60% Series B Senior Notes due 2008 of our report, which contains an
explanatory paragraph relating to the changing of the method of accounting for
Shared Technologies Fairchild Inc.'s investment in one of its subsidiaries,
dated March 1, 1996, on our audit of the consolidated statements of operations,
stockholders' equity and cash flows of Shared Technologies Fairchild Inc. and
subsidiaries for the year ended December 31, 1995. We also consent to the
reference to our firm under the caption "Experts".
/s/ Rothstein, Kass & Company, P.C.
Roseland, New Jersey
June 10, 1998
<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
---------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(B)(2)_________
---------------------
SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
Not Applicable 59-1424500
(State of incorporation if (I.R.S. Employer
not a U.S. national bank) Identification Number)
200 South Orange Avenue
Post Office Box 3631
Orlando, Florida 32802
(Address of trustee's principal (Zip Code)
executive offices)
Jonathan D. Rich, Esq.
Maguire, Voorhis & Wells, P.A.
200 South Orange Avenue, Suite 3000, Orlando, FL 32801
(407) 244-1105
(Name, address and telephone number of agent for service)
---------------------
INTERMEDIA COMMUNICATIONS INC.
(Exact name of obligor as specified in its charter)
DELAWARE 59-2913586
(State of incorporation) (I.R.S. Employer
Identification No.)
3625 QUEEN PALM DRIVE 33619
TAMPA, FLORIDA (Zip Code)
(Address of principal executive offices)
--------------------------------
8.60% SERIES B SENIOR NOTES DUE 2008
INTERMEDIA COMMUNICATIONS INC.
(TITLE OF INDENTURE SECURITIES)
<PAGE> 2
Item 1. General Information. Furnish the following information
as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
<TABLE>
<CAPTION>
Name Address
---- -------
<S> <C>
Comptroller of Currency Washington, D.C.
The Board of Governors of Washington, D.C.
the Federal Reserve System
Corporation Washington, D.C.
Federal Deposit Insurance Washington, D.C.
Corporation
</TABLE>
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor. If the obligor or any
underwriter for the obligor is an affiliate of the trustee,
describe each such affiliation.
None.
Item 16. List of Exhibits.
List below all exhibits filed as a part of this statement of
eligibility.
Exhibit 1 - Copy of the articles of association of the Trustee
as now in effect (see Exhibit 1 to Form T-1 filed in
connection with Registration Statement No. 33-34738, which is
incorporated by reference).
Exhibit 2 - Copy of the certificate of authority of the
Trustee to commence business (see Exhibit 2 to Form T-1 filed
in connection with Registration Statement No. 33-34738, which
is incorporated by reference).
Exhibit 3 - Copy of the authorization of the Trustee to
exercise corporate trust powers (see Exhibit 3 to Form T-1
filed in connection with Registration Statement No. 33-34738,
which is incorporated by reference).
Exhibit 4 - Copy of the existing bylaws of the Trustee (see
Exhibit 4 to Form T-1 filed in connection with Registration
Statement No. 33-34738, which is
incorporated by reference).
Exhibit 5 - Not applicable.
- 2 -
<PAGE> 3
Exhibit 6 - Not applicable.
Exhibit 7 - Copy of the latest report of condition of the
Trustee, published pursuant to law or the requirements of its
supervising or examining authority.
Exhibit 8 - Not applicable.
Exhibit 9 - Not applicable.
- 3 -
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, SunTrust Bank, Central Florida, National Association, a national
banking association organized and existing under the laws of the United States
of America, has duly caused this statement of eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of
Orlando, State of Florida, on the 10th day of June, 1998.
SUNTRUST BANK, CENTRAL FLORIDA,
NATIONAL ASSOCIATION
By: /s/ Alice Springer
-------------------------------
Alice Springer
Corporate Trust Officer
- 3 -
<PAGE> 5
EXHIBIT 7
Report of Condition of
SunTrust Bank, Central Florida, National Association
<PAGE> 6
Board of Governors of the
Federal Reserve System
OMB Number: 7100-0036
Federal Deposit Insurance
Corporation
OMB Number: 3064-0052
Office of the Comptroller
of the Currency
OMB Number: 1557-0081
Expires March 31, 2000
Federal Financial Institutions Examination Council
- -------------------------------------------------------------------------------
[LOGO] |1|
Please refer to page i,
Table of Contents, for
the required disclosure
of estimated burden.
- -------------------------------------------------------------------------------
Consolidated Reports of Condition and Income for
A Bank With Domestic And Foreign Offices Only and
Total Assets of $300 Million or More -- FFIEC 032
(980331)
Report at the close of business March 31, 1998 --------
(RCRI 9999)
This report is required by law: 12 U.S.C. (s). 324 (State member banks); 12
U.S.C. (s). 1817 (State nonmember banks); and 12 U.S.C. (s). 161 (National
banks).
This report form is to be filed by banks with branches and domestic offices
only. Banks with foreign offices (as defined in the instructions) must file
FFIEC 031.
- -------------------------------------------------------------------------------
NOTE: The Reports of Condition and Income must be signed by an authorized
officer and the Report of Condition must be attested to by not less than two
directors (trustees) for State nonmember banks and three directors for State
member and National banks.
I, R. Todd Bowers/Senior Vice President & CFO
---------------------------------------------------
Name and Title of Officer Authorized to Sign Report
of the named bank do hereby declare that the Reports of Condition and Income
(including the supporting schedules) for this report date have been prepared in
conformance with the instructions issued by the appropriate Federal regulatory
authority and are true to the best of my knowledge and belief.
/s/ R. Todd Bowers
- -------------------------------------------------------------
Signature of Officer Authorized to Sign Report R. Todd Bowers
April 24, 1998
- -----------------------------------------------------
Date of Signature
The Reports of Condition and Income are to be prepared in accordance with
Federal regulatory authority instructions.
We, the undersigned directors (trustees), attest to the correctness of this
Report of Condition (including the supporting schedules) for this report date
and declare that it has been examined by us and to the best of our knowledge and
belief has been prepared in conformance with the instructions issued by the
appropriate Federal regulatory authority and is true and correct.
/s/ George W. Koehn George W. Koehn
- -----------------------------------------------------
Director (Trustee)
/s/ Robert L. Mellen Robert L. Mellen,
- -----------------------------------------------------
Director (Trustee)
/s/ William B. Wilson William B. Wilson
- -----------------------------------------------------
Director (Trustee)
- -------------------------------------------------------------------------------
Submission of Reports
Each bank must prepare its Reports of Condition and Income either:
(a) in electronic form and then file the computer data file directly with the
banking agencies' collection agent, Electronic Data Systems Corporation
(EDS), by modem or on computer diskette; or
(b) in hard-copy (paper) form and arrange for another party to convert
the paper report to electronic form. That party (if other than EDS) must
transmit the bank's computer data file to EDS.
To fulfill the signature and attestation requirement for the Reports of
Condition and Income for this report date, attach this signature page to the
hard-copy record of the completed report that the bank places in its files.
- -------------------------------------------------------------------------------
2 1 0 4 3
FDIC Certificate Number -----------
(RCRI 9050)
SunTrust Bank, Central Florida, N.A.
- -------------------------------------------------
Legal Title of Bank (TEXT 9010)
P.O. Box 3833
- -------------------------------------------------
City (TEXT 9130)
Orlando, Fl 32802
- -------------------------------------------------
State Abbrev. (TEXT 9200) Zip Code (TEXT 9220)
Board of Governors of the Federal Reserve System, Federal Deposit Insurance
Corporation, Office of the Comptroller of the Currency
<PAGE> 7
Yes/No
P.O. BOX 4418 CENTER 632
ATLANTA, GA 30302
Call Date: 03/31/98 State #: 12-1159 FFIEC 032
Vendor ID: D Cert#: 21043 RI-1
Transit #: 06310215 ---------
3
---------
CONSOLIDATED REPORT OF INCOME FOR THE PERIOD JANUARY 1, 1998 - MARCH 31, 1998
All Report of Income schedules are to be reported on a calendar year-to-date
basis in thousands of dollars.
Schedule RI - Income Statement
I380 <-
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Interest income:
a. Interest and fee income on loans: RIAD
---- -------
(1) Loans secured by real estate_____________________________________________________________ 4011 39,233 1.a.1
-------
(2) Loans to finance agricultural production and other loans to farmers______________________ 4024 1,317 1.a.2
-------
(3) Commercial and industrial loans__________________________________________________________ 4012 45,969 1.a.3
-------
(4) Loans to individuals for household, family, and other personal expenditures:
-------
(a) Credit cards and related plans_______________________________________________________ 4054 774 1.a.4.a
-------
(b) Other________________________________________________________________________________ 4055 11,105 1.a.4.b
-------
(5) Loans to foreign governments and offical institutions____________________________________ 4056 0 1.a.5
-------
(6) Obligations (other than securities and leases) of states and politcal subdivisions
in the U.S.:
-------
(a) Taxable obligations__________________________________________________________________ 4503 161 1.a.6.a
-------
(b) Tax-exempt obligations_______________________________________________________________ 4504 2,610 1.a.6.b
-------
(7) All other loans__________________________________________________________________________ 4058 7,193 1.a.7
-------
b. Income from lease financing receivables:
-------
(1) Taxable leases___________________________________________________________________________ 4506 2,669 1.b.1
-------
(2) Tax-exempt leases________________________________________________________________________ 4307 73 1.b.2
-------
c. Interest income on balances due from depository institutions (1)_____________________________ 4115 57 1.c
-------
d. Interest and dividend income on securities
-------
(1) U.S. Treasury securities and U.S. Government agency obligations__________________________ 4027 11,388 1.d.1
-------
(2) Securities issued by states and political subdivisions in the U.S.:
-------
(a) Taxable securities___________________________________________________________________ 4506 0 1.d.2.a
-------
(b) Tax-exempt securities________________________________________________________________ 4507 467 1.d.2.b
-------
(3) Other domestic debt securities___________________________________________________________ 3657 0 1.d.3
-------
(4) Foreign debt securities__________________________________________________________________ 3658 4 1.d.4
-------
(5) Equity securities (including investments in mutual funds)________________________________ 3659 323 1.d.5
-------
e. Interest income from trading assets__________________________________________________________ 4069 0 1.e
-------
f. Interest income on federal funds sold and securities purchased under agreements to resell____ 4020 8,398 1.f
-------
g. Total interest income (sum of items 1.a through 1.f)_________________________________________ 4107 131,741 1.g
-------
</TABLE>
- ----------
(1) Includes interest income on time certificates of deposits not held for
trading.
<PAGE> 8
SUNTRUST BANK, CENTRAL FLORIDA N.A.
P.O. BOX 4418 CENTER 632
ATLANTA, GA 30302
Call Date: 03/31/98 State #: 12-1159 FFIEC 032
Vendor ID: D Cert#: 21043 RI-2
Transit #: 06310215 ---------
4
---------
SCHEDULE RI - CONTINUED
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
2. Interest expense:
a. Interest on deposits:
RIAD YEAR-TO-DATE
(1) Transaction accounts (NOW accounts, ATS accounts, and ---- ------------
telephone and preauthorized transfer accounts)___________________________ 4508 383 2.a.1
------------
(2) Nontransaction accounts: ------------
(a) Money market deposit accounts (MMDAs)________________________________ 4509 3,518 2.a.2a
------------
(b) Other savings deposits_______________________________________________ 4511 9,355 2.a.2b
------------
(c) Time deposits of $100,000 or more____________________________________ A517 4,528 2.a.2c
------------
(d) Time deposits of less than $100,000__________________________________ A518 8,870 2.a.2d
------------
b. Expense of federal funds purchased and securities sold under ------------
agreements to repurchase_____________________________________________________ 4180 36,968 2.b
------------
c. Interest on demand notes issued to the U.S. Treasury, trading, liabilities, ------------
and on other borrowed money__________________________________________________ 4185 4,367 2.c
------------
d. Not applicable
------------
e. Interest on subordinated notes and debentures________________________________ 4200 1,744 2.e
------------
f. Total interest expense (sum of items 2.a through 2.e)________________________ 4073 69,733 RIAD 2.f
------------ ---- -------
3. Net interest income (item 1.g minus 2.f)____________________________________________________________ 4074 62,008 3.
4. Provisions: -------
a. Provision for credit losses______________________________________________________________________ 4230 1,400 4.a
-------
b. Provision for allocated transfer risk____________________________________________________________ 4243 0 4.b
5. Noninterest income: RIAD -------
---- ------------
a. Income from fiduciary activities_____________________________________________ 4070 7,309 5.a
------------
b. Service charges on deposit accounts__________________________________________ 4080 9,145 5.b
------------
c. Trading revenue (must equal Schedule RI, sum of ------------
Memorandum items 8.a through 8.d)____________________________________________ A220 0 5.c
------------
d.-e. Not applicable
f. Other noninterest income: ------------
(1) Other fee income_________________________________________________________ 5407 18,622 5.f.1
------------
(2) All other noninterest income*____________________________________________ 5408 2,687 RIAD 5.f.2
------------ ---- -------
g. Total noninterest income (sum of items 5.a through 5.f)__________________________________________ 4079 37,763 5.g
-------
6. a. Realized gains (losses) on held-to-maturity securities___________________________________________ 3521 0 6.a
-------
b. Realized gains (losses) on available-for-sale securities_________________________________________ 3196 16 6.b
-------
7. Noninterest expense: RIAD
---- ------------
a. Salaries and employee benefits_______________________________________________ 4135 18,691 7.a
------------
b. Expenses of premises and fixed assets (net of rental income) ------------
(excluding salaries and employee benefits and mortgage interest)_____________ 4217 6,038 7.b
------------
c. Other noninterest expense*___________________________________________________ 4092 33,814 RIAD 7.c
------------ ---- -------
d. Total noninterest expense (sum of item 7.a through 7.c)__________________________________________ 4093 58,543 7.d
-------
8. Income (loss) before income taxes and extraordinary items and other -------
adjustments (item 3 plus or minus items 4.a, 4.b, 5.g, 6.a, 6.b, and 7.d)___________________________ 4301 39,844 8.
-------
9. Applicable income taxes (on item 8)_________________________________________________________________ 4302 14,237 9.
-------
10. Income (loss) before extraordinary items and other adjustments (item 8 minus 9)_____________________ 4300 25,607 10.
-------
11. Extraordinary items and other adjustments, net of income taxes*_____________________________________ 4320 0 11.
-------
12. Net income (loss) (sum of items 10 and 11)__________________________________________________________ 4340 25,607 12.
-------
</TABLE>
- ----------
* Describe on Schedule RI-E - Explanations.
<PAGE> 9
SUNTRUST BANK, CENTRAL FLORIDA N.A.
P.O. BOX 4418 CENTER 632
ATLANTA, GA 30302
Call Date: 03/31/98 State #: 12-1159 FFIEC 032
Vendor ID: D Cert#: 21043 RI-3
Transit #: 06310215 ---------
5
---------
SCHEDULE RI - CONTINUED
1381 <-
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------
MEMORANDA RIAD YEAR TO DATE
---- ------------
<S> <C> <C> <C>
1. Interest expense incurred to carry tax-exempt securities, loans, and leases acquired after ------------
August 7, 1986, that is not deductible for federal income tax purposes__________________________ 4513 496 M.1
------------
2. Income from the sale and servicing of mutual funds and annuities (included in ------------
Schedule RI, item 8)____________________________________________________________________________ 8431 1,774 M.2
------------
<CAPTION>
3. Not applicable
NUMBER
4. Number of full-time equivalent employees on payroll at end of current period (round to ------------
nearest whole number)___________________________________________________________________________ 4150 1,556 M.4
------------
<CAPTION>
5.-6. Not applicable
CCYY / MM / DD
7. If the reporting bank has restated its balance sheet as a result of applying push ------------
down accounting this calendar year, report the date of the bank's acquisition___________________ 9106 N/A M.7
------------
8. Trading revenue (from cash instruments and off-balance sheet derivative instruments)
(sum of Memorandum items 8.a through 8.d must equal Schedule RI, item 5.c): ------------
a. Interest rate exposures______________________________________________________________________ 8757 0 M.8.a
------------
b. Foreign exchange exposures___________________________________________________________________ 8758 0 M.8.b
------------
c. Equity security and index exposures__________________________________________________________ 8759 0 M.8.c
------------
d. Commodity and other exposures________________________________________________________________ 8760 0 M.8.d
------------
9. Impact on income of off-balance sheet derivatives held for purposes other than trading: ------------
a. Net increase (decrease) to interest income___________________________________________________ 8761 0 M.9.a
------------
b. Net (increase) decrease to interest expense__________________________________________________ 8762 144 M.9.b
------------
c. Other (noninterest) allocations______________________________________________________________ 8763 0 M.9.c
------------
10. Credit losses on off-balance sheet derivatives (see instructions)_______________________________ A251 0 M.10
------------
YES / NO
11. Does the reporting bank have a Subchapter S election in effect for ------------
federal income tax purposes for the current tax year?___________________________________________ A530 N/A M.11
------------
12. Deferred portion of total applicable income taxes included in Schedule RI, ------------
items 9 and 11 (to be reported with the December Report of Income)______________________________ 4772 N/A M.12
------------
</TABLE>
- ----------
(1) For example, a bank acquired on June 1, 1997, would report 1997/06/01
SCHEDULE RI-A - CHANGES IN EQUITY CAPITAL
Indicate decreases and losses in parentheses.
1383 <-
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------
RIAD
<S> <C> <C> <C>
1. Total equity capital originally reported in the December 31, 1997, Reports ---- ------------
of Condition and Income_________________________________________________________________________ 3215 525,378 1.
------------
2. Equity capital adjustments from amended Reports of Income, net*_________________________________ 3216 0 2.
------------
3. Amended balance and of previous calendar year (sum of items 1 and 2)____________________________ 3217 525,378 3.
------------
4. Net income (loss) (must equal Schedule RI, item 12)_____________________________________________ 4340 25,607 4.
------------
5. Sale, conversion, acquisition, or retirement of capital stock, net______________________________ 4346 0 5.
------------
6. Changes incident to business combinations, net__________________________________________________ 4356 0 6.
------------
7. LESS: Cash dividends declared on preferred stock________________________________________________ 4470 0 7.
------------
8. LESS: Cash dividends declared on common stock___________________________________________________ 4460 6,000 8.
------------
9. Cumulative effect of changes in accounting principles from prior years* (see instructions for ------------
this schedule)__________________________________________________________________________________ 4411 0 9.
------------
10. Corrections of material accounting errors from prior years* (see instructions for this schedule) 4412 0 10.
------------
11. Change in net unrealized holding gains (losses) on available-for-sale securities________________ 8433 624 11.
------------
12. Other transactions with parent holding company* (not included in item 5, 7, or 8 above)_________ 4415 (676) 12.
------------
13. Total equity capital end of current period (sum of items 3 through 12) (must equal ------------
Schedule RC item 28)____________________________________________________________________________ 3210 544,933 13.
------------
</TABLE>
- ----------
* Describe on Schedule RI-E - Explanations.
<PAGE> 10
SUNTRUST BANK, CENTRAL FLORIDA N.A.
P.O. BOX 4418 CENTER 632
ATLANTA, GA 30302
Call Date: 03/31/98 State #: 12-1159 FFIEC 032
Vendor ID: D Cert#: 21043 RI-4
Transit #: 06310215 ---------
6
---------
SCHEDULE RI-B - CHARGE-OFFS AND RECOVERIES ON LOANS AND LEASES AND CHANGES IN
ALLOWANCE FOR CREDIT LOSSES
PART I. CHARGE-OFFS AND RECOVERIES ON LOANS AND LEASES (1)
Part I excludes charge-offs and recoveries through the allocated transfer risk
reserve.
1386 <-
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------------
----Calendar year-to-date----
(Column A) (Column B)
RIAD Charge-offs RIAD Recoveries
---- ----------- ---- ----------
<S> <C> <C> <C> <C> <C>
1. Loans secured by real estate: ----------- ----------
a. To U.S. addressees (domicile)____________________________________________ 4651 433 4661 51 1.a
----------- ----------
b. To non-U.S. addressees (domicile)________________________________________ 4652 0 4662 0 1.b
----------- ----------
2. Loans to depository institutions and acceptances of other banks: ----------- ----------
a. To U.S. banks and other U.S. depository institutions_____________________ 4653 0 4663 0 2.a
----------- ----------
b. To foreign banks_________________________________________________________ 4654 0 4664 0 2.b
----------- ----------
3. Loans to finance agricultural production and other loans to farmers_________ 4655 0 4665 0 3.
----------- ----------
4. Commercial and industrial loans: ----------- ----------
a. To U.S. addressees (domicile)____________________________________________ 4645 25 4617 699 4.a
----------- ----------
b. To non-U.S. addressees (domicile)________________________________________ 4646 0 4618 0 4.b
----------- ----------
5. Loans to individuals for household, family, and other personal expenditures: ----------- ----------
a. Credit cards and related plans___________________________________________ 4656 205 4666 28 5.a
----------- ----------
b. Other (includes single payment, installment, and all student loans)______ 4657 1,199 4667 241 5.b
----------- ----------
6. Loans to foreign governments and official institutions______________________ 4643 0 4627 0 6.
----------- ----------
7. All other loans_____________________________________________________________ 4644 80 4628 32 7.
----------- ----------
8. Lease financing receivables: ----------- ----------
a. Of U.S. addressees (domicile)____________________________________________ 4658 750 4668 3 8.a
----------- ----------
b. Of non-U.S. addressees (domicile)________________________________________ 4659 0 4669 0 8.b
----------- ----------
9. Total (sum of items 1 through 8)____________________________________________ 4635 2,692 4605 1,054 9.
----------- ----------
MEMORANDA
Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------------
----Calendar year-to-date----
(Column A) (Column B)
RIAD Charge-offs RIAD Recoveries
---- ----------- ---- ----------
1.-3. Not applicable.
4. Loans to finance commercial real estate, construction, and land
development activities (not secured by real estate) included in ----------- ----------
Schedule RI-B, part 1, items 4 and 7, above_________________________________ 5409 0 5410 0 M.4
----------- ----------
5. Loans secured by real estate (sum of Memorandum items 5.a through 5.e must
equal sum of Schedule RI-B, part 1, item 1.a and 1.b, above): ----------- ----------
a. Construction and land development________________________________________ 3582 20 3583 4 M.5.a
----------- ----------
b. Secured by farmland______________________________________________________ 3584 0 3585 0 M.5.b
----------- ----------
c. Secured by 1-4 family residential properties:
(1) Revolving, open-end loans secured by 1-4 family residential ----------- ----------
properties and extended under lines of credit________________________ 5411 20 5412 0 M.5.c1
----------- ----------
(2) All other loans secured by 1-4 family residential properties_________ 5413 36 5414 1 M.5.c2
----------- ----------
d. Secured by multifamily (5 or more) residential properties________________ 3588 0 3589 0 M.5.d
----------- ----------
e. Secured by nonfarm nonresidential properties_____________________________ 3590 357 3591 46 M.5.e
----------- ----------
</TABLE>
<PAGE> 11
SUNTRUST BANK, CENTRAL FLORIDA N.A.
P.O. BOX 4418 CENTER 632
ATLANTA, GA 30302
Call Date: 03/31/98 State #: 12-1159 FFIEC 032
Vendor ID: D Cert#: 21043 RI-5
Transit #: 06310215 ---------
7
---------
Schedule RI-B - Continued
Part II. Changes in Allowance for Credit Losses
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- -------------------------------------------------------------------------------------------------------------------------
RIAD
---- ------------
<S> <C> <C> <C>
1. Balance originally reported in the December 31, 1997, Reports of Condition and Income__________ 3124 89,443 1.
------------
2. Recoveries (must equal or exceed part I, item 9, column B above)________________________________ 2419 1,054 2.
------------
3. LESS: Charge-offs (must equal or exceed part I, item 9, column A above)_________________________ 2432 2,692 3.
------------
4. Provision for credit losses (must equal Schedule RI, item 4.a)__________________________________ 4230 1,400 4.
------------
5. Adjustments* (see instructions for this schedule)_______________________________________________ 4815 0 5.
------------
6. Balance end of current period (sum of items 1 through 5) (must equal or exceed Schedule RC, ------------
item 4.b)_______________________________________________________________________________________ A512 89,205 6.
------------
</TABLE>
- ----------
* Describe on Schedule RI-E - Explanations.
Schedule RI-E - Explanations
Schedule RI-E is to be completed each quarter on a calendar year-to-date basis.
Detail all adjustments in Schedules RI-A and RI-B, all extraordinary items and
other adjustments in Schedule RI, and all significant items of other noninterest
income and other noninterest expense in Schedule RI.
(See instructions for details)
I395 <-
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. All other noninterest income (from Schedule RI, item 5.f.(2)) RIAD Year-to-Date
Report amounts that exceed 10% of Schedule RI, item 5.f.(2): ---- ------------
a. Net gains (losses) on other real estate owned________________________________________________ 5415 321 1.a
------------
b. Net gains (losses) on sales of loans_________________________________________________________ 5416 1,064 1.b
------------
c. Net gains (losses) on sales of premises and fixed assets_____________________________________ 5417 0 1.c
------------
Itemize and describe the three largest other amounts that exceed 10% of Schedule RI,
item 5.f.(2):
TEXT
------------
d. 4461 FOREIGN EXCHG-GAIN/LOSS 4461 461 1.d
------------
e. 4462 SALE OF CUSTOMER CHECKS 4462 402 1.e
------------
f. 4463 OTHER INCOME 4463 367 1.f
------------
2. Other noninterest expense (from Schedule RI, item 7.c): RIAD Year-to-Date
---- ------------
a. Amortization expense of intangible assets____________________________________________________ 4531 0 2.a
------------
Report amounts that exceed 10% of Schedule RI, item 7.c:
------------
b. Net (gains) losses on other real estate owned________________________________________________ 5418 0 2.b
------------
c. Net (gains) losses on sales of loans_________________________________________________________ 5419 0 2.c
------------
d. Net (gains) losses on sales of premises and fixed assets_____________________________________ 5420 0 2.d
------------
Itemize and describe the three largest other amounts that exceed 10% of Schedule RI,
item 7.c:
TEXT RIAD
---- ------------
e. 4464 I/C DATA PROCESSING FEE 4464 10,999 2.e
------------
f. 4467 CR-CD-INTERCHANGE EXP 4467 7,012 2.f
------------
g. 4468 4468 0 2.g
------------
</TABLE>
<PAGE> 12
SUNTRUST BANK, CENTRAL FLORIDA N.A.
P.O. BOX 4418 CENTER 632
ATLANTA, GA 30302
Call Date: 03/31/98 State #: 12-1159 FFIEC 032
Vendor ID: D Cert#: 21043 RI-6
Transit #: 06310215 ---------
8
---------
Schedule RI-E - Continued
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
3. Extraordinary items and other adjustments (from Schedule RI, item 11.a) and applicable
income tax effect (from Schedule RI, item 11.b) (itemize and describe all extraordinary
items and other adjustments): Year-to-Date
TEXT RIAD
---- ------------
a. (1) 4469 RIAD 4469 0 3.a.1
---- ----------- ------------
(2) Applicable income tax effect_____________________________________ 4486 0 3.a.2
----------- ------------
b. (1) 4487 4487 0 3.b.1
----------- ------------
(2) Applicable income tax effect_____________________________________ 4488 0 3.b.2
----------- ------------
c. (1) 4489 4489 0 3.c.1
----------- ------------
(2) Applicable income tax effect____________________________________ 4491 0 3.c.2
-----------
4. Equity capital adjustments from amended Reports of Income (from Schedule RI-A, item 2)
(itemize and describe all adjustments):
TEXT RIAD
---- ------------
a. 4492 4492 0 4.a
------------
b. 4493 4493 0 4.b
------------
5. Cumulative effect of changes in accounting principles from prior years
(from Schedule RI-A, Item 9) (itemize and describe all changes in accounting principles):
TEXT RIAD
---- ------------
a. 4494 4494 0 5.a
------------
b. 4495 4495 0 5.b
------------
6. Corrections of material accounting errors from prior years (from Schedule RI-A, item 10)
(itemize and describe all corrections):
TEXT RIAD
---- ------------
a. 4496 4496 0 6.a
------------
b. 4497 4497 0 6.b
------------
7. Other transactions with parent holding company (from Schedule RI-A, item 12)
(itemize and describe all such transactions):
TEXT RIAD
------------------------------------------------------------------ ---- ------------
a. 4498 FIXED ASSET DIVIDEND 4498 (676) 7.a
------------------------------------------------------------------ ------------
b. 4499 4499 0 7.b
------------
8. Adjustments to allowance for credit losses (from Schedule RI-B, part II, item 5)
(itemize and describe all adjustments):
TEXT RIAD
---- ------------
a. 4521 4521 0 8.a
------------
b. 4522 4522 0 8.b
------------
9. Other explanations (the space below is provided for bank to briefly describe, at its option, I398 1399 <-
any other significant items affecting the Report RIAD --------
X = NO COMMENT - Y = COMMENT __________________________ 4769 X
Other explanations (please type or print clearly): --------
TEXT 4769 (70 characters per line)
______________________________________________________________________________________________
______________________________________________________________________________________________
______________________________________________________________________________________________
______________________________________________________________________________________________
______________________________________________________________________________________________
______________________________________________________________________________________________
______________________________________________________________________________________________
______________________________________________________________________________________________
______________________________________________________________________________________________
______________________________________________________________________________________________
</TABLE>
<PAGE> 13
SUNTRUST BANK, CENTRAL FLORIDA N.A.
P.O. BOX 4418 CENTER 632
ATLANTA, GA 30302
Call Date: 03/31/98 State #: 12-1159 FFIEC 032
Vendor ID: D Cert#: 21043 RC-1
Transit #: 06310215 ---------
9
---------
Consolidated Report Of Condition for Insured Commercial
and State-Chartered Savings Banks for March 31, 1998
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
Schedule RC - Balance Sheet
C300 <-
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions (from Schedule RC-A): RCON
---- -------------
a. Noninterest-bearing balances and currency and coin (1)____________________________________ 0081 547,696 1.a
-------------
b. Interest-bearing balances (2)_____________________________________________________________ 0071 4,167 1.b
-------------
2. Securities:
-------------
a. Held-to-maturity securities (from Schedule RC-B, column A)________________________________ 1754 0 2.a
-------------
b. Available-for-sale securities (from Schedule RC-B, column D)______________________________ 1773 725,998 2.b
-------------
3. Federal funds sold and securities purchased under agreements to resell_______________________ 1350 574,904 3
-------------
4. Loans and lease financing receivables: RCON
---- ------------
a. Loans and leases, net of unearned income (from Schedule RC-C)________ 2122 6,058,046 4.a
------------
b. LESS: Allowance for loan and lease losses____________________________ 3123 89,205 4.b
------------
c. LESS: Allocated transfer risk reserve________________________________ 3128 0 4.c
------------
d. Loans and leases, net of unearned income, RCON
---- -------------
allowance, and reserve (item 4.a minus 4.b and 4.c)_______________________________________ 2125 5,968,841 4.d
-------------
5. Trading assets (from Schedule RC-D)__________________________________________________________ 3545 0 5.
-------------
6. Premises and fixed assets (including capitalized leases)_____________________________________ 2145 52,965 6.
-------------
7. Other real estate owned (from Schedule RC-M)_________________________________________________ 2150 2,071 7.
-------------
8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M)_____ 2130 7,804 8.
-------------
9. Customers' liability to this bank on acceptances outstanding_________________________________ 2155 1,847 9.
-------------
10. Intangible assets (from Schedule RC-M)_______________________________________________________ 2143 0 10.
-------------
11. Other assets (from Schedule RC-F)____________________________________________________________ 2160 82,572 11.
-------------
12. Total assets (sum of items 1 through 11)_____________________________________________________ 2170 7,968,865 12.
-------------
</TABLE>
- ----------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
<PAGE> 14
SUNTRUST BANK, CENTRAL FLORIDA N.A.
P.O. BOX 4418 CENTER 632
ATLANTA, GA 30302
Call Date: 03/31/98 State #: 12-1159 FFIEC 032
Vendor ID: D Cert#: 21043 RC-2
Transit #: 06310215 ---------
10
---------
Schedule RC - Continued
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
LIABILITIES
13. Deposits RCON
---- ----------
a. In domestic offices (sum of totals of columns A and C from Schedule RC-E)__ CON 2200 4,184,594 13.a
--- ----------
----------
(1) Noninterest-bearing (1)_______________________________________________ 6631 1,272,935 13.a.1
----------
(2) Interest-bearing______________________________________________________ 6636 2,911,659 13.a.2
----------
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs
(1) Noninterest-bearing_________________________________________________________________________
(2) Interest-bearing____________________________________________________________________________
----------
14. Federal funds purchased and securities sold under agreements to repurchase_________________________ 2800 2,524,575 14
----------
15.a. Demand notes issued to the U.S. Treasury_________________________________________________________ 2840 0 15.a
----------
b. Trading liabilities (from Schedule RC-D)_________________________________________________________ 3548 0 15.b
----------
16. Other borrowed money (includes mortgage indebtedness and obligations under capitalized leases):
a. With a remaining maturity of one year or less___________________________________________________ 2332 502,732 16.a
----------
b. With a remaining maturity of more than one year through three years_____________________________ A547 0 16.b
----------
c. With a remaining maturity of more than three years______________________________________________ A548 0 16.c
----------
17. Not applicable
----------
18. Bank's liability on acceptances executed and outstanding___________________________________________ 2920 1,847 18
----------
19. Subordinated notes and debentures(2)_______________________________________________________________ 3200 160,000 19
----------
20. Other liabilities (from Schedule RC-G)_____________________________________________________________ 2930 50,184 20
----------
21. Total liabilities (sum of items 13 through 20)_____________________________________________________ 2948 7,423,932 21
----------
22. Not applicable
EQUITY CAPITAL ----------
23. Perpetual preferred stock and related surplus______________________________________________________ 3838 0 23
----------
24. Common stock_______________________________________________________________________________________ 3230 5,098 24
----------
25. Surplus (exclude all surplus related to preferred stock)___________________________________________ 3839 124,125 25
----------
26. a. Undivided profits and capital reserves__________________________________________________________ 3632 411,373 26.a
----------
b. Net unrealized holding gains (losses) on available-for-sale securities__________________________ 8434 4,337 26.b
----------
27. Cumulative foreign currency translation adjustments________________________________________________ 27
----------
28. Total equity capital (sum of items 23 through 27)__________________________________________________ 3210 544,933 28
----------
29. Total liabilities and equity capital (sum of items 21 and 28)______________________________________ 3300 7,968,865 29
----------
Memorandum
to be reported only with the March Report Of Condition.
1. Indicate in the box at the right the number of the statement below that best describes the
most comprehensive level of auditing work performed for the bank by independent external ----------
auditors as of any date during 1997 _______________________________________________________________ 6724 2 M.1
----------
</TABLE>
1 = Independent audit of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm which
submits a report on the bank
2 = Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified
public accounting firm which submits a report on the consolidated holding
company (but not on the bank separately)
3 = Directors' examination of the bank conducted in accordance with
generally accepted auditing standards by a certified public accounting
firm (may be required by state chartering authority)
4 = Directors' examination of the bank performed by other external auditors
(may be required by state chartering authority)
5 = Review of the bank's financial statements by external auditors
6 = Compilation of the bank's financial statements by external auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
- ----------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
(2) Includes limited-life preferred stock and related surplus.
<PAGE> 15
SUNTRUST BANK, CENTRAL FLORIDA N.A.
P.O. BOX 4418 CENTER 632
ATLANTA, GA 30302
Call Date: 03/31/98 State #: 12-1159 FFIEC 032
Vendor ID: D Cert#: 21043 RC-3
Transit #: 06310215 ---------
11
---------
Schedule RC-A - Cash And Balances Due From Depository Institutions
Exclude assets held for trading.
C305 <-
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Cash items in process of collection, unposted debits, and currency and coin: RCON
---- -------------
a. Cash items in process of collection and unposted debits___________________________________ 0020 362,625 1.a
-------------
b. Currency and coin_________________________________________________________________________ 0080 93,726 1.b
-------------
2. Balance due from depository institutions in the U.S.:
-------------
a. U.S. branches and agencies of foreign banks_______________________________________________ 0083 0 2.a
-------------
b. Other commercial banks in the U.S. and other depository institutions in the U.S.__________ 0085 23,569 2.b
-------------
3. Balances due from banks in foreign countries and foreign central banks:
-------------
a. Foreign branches of other U.S. banks______________________________________________________ 0073 0 3.a
-------------
b. Other banks in foreign countries and foreign central banks________________________________ 0074 886 3.b
-------------
4. Balances due from Federal Reserve Banks______________________________________________________ 0090 71,057 4
-------------
5. Total (sum of items 1 through 4) (must equal Schedule RC, sum of items 1.a and 1.b)__________ 0010 551,863 5
-------------
MEMORANDUM
Dollar Amounts in Thousands
__________________________________________________________________________________________________________________________
1. Noninterest-bearing balances due from commercial banks in the U.S. (included in items 2.a RCON
---- -------------
and 2.b above) ______________________________________________________________________________ 0050 19,402 M.1
-------------
<CAPTION>
Schedule RC-B - Securities
Exclude assets held for trading. C310 <-
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------
--------Held-to-maturity-------- ------Available-for-sale------
(Column A) (Column B) (Column C) (Column D)
Amortized Cost Fair Value Amortized Cost Fair Value (1)
RCON CON CON CON
---- ---------- ---- ---------- ---- ---------- ---- -----------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. U.S. Treasury securities___________ 0211 0 0213 0 1286 364,317 1287 367,892 1
---------- ---------- ---------- -----------
2. U.S. Government agency obligations
(exclude mortgage-backed securities):
---------- ---------- ---------- -----------
a. Issued by U.S. Government
agencies (2)____________________ 1289 0 1290 0 1291 0 1293 0 2.a
---------- ---------- ---------- -----------
b. Issued by U.S. Government-
sponsored agencies (3)__________ 1294 0 1295 0 1297 69,595 1298 70,837 2.b
---------- ---------- ---------- -----------
</TABLE>
- ----------
(1) Includes equity securities without readily determinable fair values at
historical cost in item 6.b, column D.
(2) Includes Small Business Administration "Guaranteed Loan Pool
Certificates", U.S. Maritime Administration obligations, and Export -
Import Bank participation certificates.
(3) Includes obligations (other than mortgage-backed securities) issued by the
Farm Credit System, the Federal Home Loan Bank System, The Federal Home
Loan Mortgage Corporation, the Federal National Mortgage Association, the
Financing Corporation, the Resolution Funding Corporation, the Student
Loan Marketing Association, and the Tennessee Valley Authority.
<PAGE> 16
SUNTRUST BANK, CENTRAL FLORIDA N.A.
P.O. BOX 4418 CENTER 632
ATLANTA, GA 30302
Call Date: 03/31/98 State #: 12-1159 FFIEC 032
Vendor ID: D Cert#: 21043 RC-4
Transit #: 06310215 ---------
12
---------
Schedule RC-B Continued
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------
--------Held-to-maturity-------- ------Available-for-sale------
(Column A) (Column B) (Column C) (Column D)
Amortized Cost Fair Value Amortized Cost Fair Value (1)
3. Securities issued by states and CON CON CON CON
political subdivisions in the U.S.: ---- ---------- ---- ---------- ---- ---------- ---- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
a. General obligations_______________ 1676 0 1677 0 1678 30,479 1679 31,517 3.a
---------- ---------- ---------- ---------
b. Revenue obligations_______________ 1681 0 1686 0 1690 3,993 1691 4,235 3.b
---------- ---------- ---------- ---------
c. Industrial development
---------- ---------- ---------- ---------
and similar obligations___________ 1694 0 1695 0 1696 0 1697 0 3.c
---------- ---------- ---------- ---------
4. Mortgage-backed securities (MBS):
a. Pass-through securities:
---------- ---------- ---------- ---------
(1) Guaranteed by GNMA____________ 1698 0 1699 0 1701 53,032 1702 53,734 4.a.(1)
---------- ---------- ---------- ---------
(2) Issued by FNMA and FHLMC______ 1703 0 1705 0 1706 74,000 1707 74,193 4.a.(2)
---------- ---------- ---------- ---------
(3) Other pass-through securities_ 1709 0 1710 0 1711 0 1713 0 4.a.(3)
---------- ---------- ---------- ---------
b. Other mortgage-backed securities (include
(CMOs, REMICs and stripped MBS):
(1) Issued or guaranteed by FNMA, CON CON CON CON
---- ---------- ---- ---------- ---- ---------- ---- ---------
FHLMC or GNMA___________________ 1714 0 1715 0 1716 90,800 1717 90,917 4.b(1)
---------- ---------- ---------- ---------
(2) Collaterized by MBS issued or guaranteed
---------- ---------- ---------- ---------
by FNMA, FHLMC, or GNMA_______ 1718 0 1719 0 1731 0 1732 0 4.b(2)
---------- ---------- ---------- ---------
(3) All other mortgage-backed
securities____________________ 1733 0 1734 0 1735 0 1736 0 4.b(3)
---------- ---------- ---------- ---------
5. Other debt securities:
---------- ---------- ---------- ---------
a. Other domestic debt securities____ 1737 0 1738 0 1739 0 1741 0 5.a
---------- ---------- ---------- ---------
b. Foreign debt securities___________ 1742 0 1743 0 1744 250 1746 250 5.b
---------- ---------- ---------- ---------
6. Equity securities:
a. Investments in mutual funds and ---------- ---------
other equity securities with
readily determinable fair values____________________________________________ A510 28,546 A511 28,546 6.a
---------- ---------
b. All other equity securities(1)______________________________________________ 1752 3,877 1753 3,877 6.b
---------- ---------
7. Total (sum of items 1 through 6)
(total of Column A must equal
Schedule RC item 2.a) (total of CON CON CON CON
column D must equal Schedule RC, ---- ---------- ---- ---------- ---- ---------- ---- ---------
item 2.b)____________________________ 1754 0 1771 0 1772 718,889 1773 725,998 7
---------- ---------- ---------- ---------
</TABLE>
_________
(1) Includes equity securities without readily determinable fair values at
historical cost in item 6.b, column D.
<PAGE> 17
SUNTRUST BANK, CENTRAL FLORIDA N.A.
P.O. BOX 4418 CENTER 632
ATLANTA, GA 30302
Call Date: 03/31/98 State #: 12-1159 FFIEC 032
Vendor ID: D Cert#: 21043 RC-5
Transit #: 06310215 ---------
13
---------
Schedule RC-B - Continued
C312 <-
<TABLE>
<CAPTION>
Memoranda Dollar Amounts in Thousands
- -------------------------------------------------------------------------------------------------------------------------------
RCON
----
<S> <C> <C> <C>
----------
1. Pledged securities (1)_________________________________________________________________________ 0416 552,145 M.1
2. Maturity and repricing data for debt securities (1,2) (excluding those in nonaccrual status): ----------
a. Securities issued by the U.S. Treasury, U.S. Government agencies, and states
and political subdivisions in the U.S.; other non-mortgage debt securities; and
mortgage pass-through securities other than those backed by closed-end
first lien 1-4 family residential mortgages with a remaining maturity or repricing
frequency of: (3,4)
(1) Three months or less___________________________________________________________________ A549 54,983 M.2.a1
----------
(2) Over three months through 12 months____________________________________________________ A550 173,145 M.2.a2
----------
(3) Over one year through three years______________________________________________________ A551 187,290 M.2.a3
----------
(4) Over three years through five years____________________________________________________ A552 43,702 M.2.a4
----------
(5) Over five years through 15 years_______________________________________________________ A553 15,611 M.2.a5
----------
(6) Over 15 years__________________________________________________________________________ A554 0 M.2.a6
----------
b. Mortgage pass-through securities backed by closed-end first lien 1-4 family
residential mortgages with a remaining maturity or repricing frequency of: (3,5)
(1) Three months or less___________________________________________________________________ A555 12,895 M.2.b1
----------
(2) Over three months through 12 months____________________________________________________ A556 102,303 M.2.b2
----------
(3) Over one year through three years______________________________________________________ A557 184 M.2.b3
----------
(4) Over three years through five years____________________________________________________ A558 8,003 M.2.b4
----------
(5) Over five years through 15 years_______________________________________________________ A559 4,396 M.2.b5
----------
(6) Over 15 years__________________________________________________________________________ A560 146 M.2.b6
----------
c. Other mortgage-backed securities (include CMOs, REMICs, and stripped MBS;
exclude mortgage pass-through securities) with an expected average life of: (6)
----------
(1) Three years or less____________________________________________________________________ A561 89,119 M.2.c1
----------
(2) Over three years_______________________________________________________________________ A562 1,798 M.2.c2
----------
d. Fixed rate AND floating rate debt securities with a REMAINING MATURITY of one ----------
year or less (included in Memorandum items 2.a through 2.c above)__________________________ A248 272,656 M.2.d
----------
3. -6. Not applicable
7. Amortized cost of held-to-maturity securities sold or transferred to available-for-sale or
trading securities during the calendar year-to-date (report the amortized cost at date ----------
of sale or transfer)___________________________________________________________________________ 1778 0 M.7
----------
8. High-risk mortgage securities (included in the held-to-maturity and available-for-sale
accounts in Schedule RC-B, item 4.b):
a. Amortized cost_____________________________________________________________________________ 8780 0 M.8.a
----------
b. Fair value_________________________________________________________________________________ 8781 0 M.8.b
----------
9. Structured notes (included in the held-to-maturity and available-for-sale
accounts in Schedule RC-B, items 2, 3, and 5): ----------
a. Amortized cost_____________________________________________________________________________ 8782 0 M.9.a
----------
b. Fair value_________________________________________________________________________________ 8783 0 M.9.b
----------
</TABLE>
- ------------------
(1) Includes held-to-maturity securities at amortized cost and
available-for-sale securities at fair value.
(2) Exclude equity securities, e.g., investments in mutual funds, Federal
Reserve stock, common stock, and preferred stock.
(3) Report fixed rate debt securities by remaining maturity and floating rate
debt securities by repricing frequency.
(4) Sum of Memorandum Items 2.a.(1) through 2.a.(6) plus any nonaccrual debt
securities in the categories of debt securities reported in Memorandum
item 2.a that are included in Schedule RC-N, item 9, column C, must equal
Schedule RC-B, sum of items 1, 2, 3, and 5, columns A and D, plus mortgage
pass-through securities other than those backed by closed-end first lien
1-4 family residential mortgages included in Schedule RC-B, item 4.a,
columns A and D.
(5) Sum of Memorandum items 2.b.(1) through 2.b.(6) plus any nonaccrual
mortgage pass-through securities backed by closed-end first lien 1-4
family residential mortgages included in Schedule RC-N, item 9, Column C,
must equal Schedule RC-B, item 4.a, sum of columns A and D, less the
amount of mortgage pass-through securities other than those backed by
closed-end first lien 1-4 family residential mortgages included in
Schedule RC-B, item 4.a, columns A and D.
(6) Sum of Memorandum items 2.c.(1) and 2.c.(2) plus any nonaccrual "Other
mortgage-backed securities" included in schedule RC-N, item 9, column C,
must equal Schedule RC-B, item 4.b, sum of columns A and D.
<PAGE> 18
SUNTRUST BANK, CENTRAL FLORIDA N.A.
P.O. BOX 4418 CENTER 632
ATLANTA, GA 30302
Call Date: 03/31/98 State #: 12-1159 FFIEC 032
Vendor ID: D Cert#: 21043 RC-6
Transit #: 06310215 ---------
14
---------
Schedule RC-C - Loans and Lease Financing Receivables
Part I. Loans and Leases
Do not deduct the allowance for loan and lease losses from amounts
reported in this schedule. Report total loans and leases, net of unearned
income. Exclude assets held for trading and commercial paper.
C315 <-
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- -------------------------------------------------------------------------------------------------------------------------------
RCON
----
<S> <C> <C> <C>
1. Loans secured by real estate:
---------
a. Construction and land development________________________________________________________ 1415 164,655 1.a
---------
b. Secured by farmland (including farm residential and other improvements)__________________ 1420 25,299 1.b
---------
c. Secured by 1-4 family residential properties:
(1) Revolving, open-end loans secured by 1-4 family residential properties and ---------
extended under lines of credit_______________________________________________________ 1797 95,842 1.c.1
---------
(2) All other loans secured by 1-4 family residential properties:
(a) Secured by first liens___________________________________________________________ 5367 1,107,288 1.c.2a
---------
(b) Secured by junior liens__________________________________________________________ 5368 104,244 1.c.2b
---------
d. Secured by multifamily (5 or more) residential properties________________________________ 1460 33,125 1.d
---------
e. Secured by nonfarm nonresidential properties_____________________________________________ 1480 429,959 1.e
---------
2. Loans to depository institutions:
a. To commercial banks in the U.S.:
(1) To U.S. branches and agencies of foreign banks_______________________________________ 1506 0 2.a1
---------
(2) To other commercial banks in the U.S.________________________________________________ 1507 218,185 2.a2
---------
b. To other depository institutions in the U.S._____________________________________________ 1517 107 2.b
---------
c. To banks in foreign countries:
(1) To foreign branches of other U.S. banks______________________________________________ 1513 0 2.c1
---------
(2) To other banks in foreign countries__________________________________________________ 1516 0 2.c2
---------
3. Loans to finance agricultural production and other loans to farmers___________________________ 1590 55,372 3.
---------
4. Commercial and industrial loans:
---------
a. To U.S. addressees (domicile)______________________________________________________________ 1763 2,684,665 4.a
---------
b. To non-U.S. addressees (domicile)__________________________________________________________ 1764 25,440 4.b
---------
5. Acceptances of other banks: ---------
a. Of U.S. banks______________________________________________________________________________ 1756 345 5.a
---------
b. Of foreign banks___________________________________________________________________________ 1757 379 5.b
---------
6. Loans to individuals for household, family, and other personal expenditures
(i.e., consumer loans)(includes purchased paper): ---------
a. Credit cards and related plans (includes check credit and other revolving credit plans)___ 2008 23,255 6.a
---------
b. Other (includes single payment, installment, and all student loans)_______________________ 2011 514,726 6.b
---------
7. Loans to foreign government and official institutions (including foreign central banks)_______ 2081 0 7
---------
8. Obligations (other than securities and leases) of states and political subdivisions
in the U.S. (includes nonrated industrial development obligations)____________________________ 2107 196,190 8
---------
9. Other Loans:
---------
a. Loans for purchasing or carrying securities (secured and unsecured)________________________ 1545 89,259 9.a
---------
b. All other loans (exclude consumer loans)___________________________________________________ 1564 133,675 9.b
---------
10. Lease financing receivables (net of unearned income):
a. Of U.S. addressees (domicile)______________________________________________________________ 2182 156,036 10.a
---------
b. Of non-U.S. addressees (domicile)__________________________________________________________ 2183 0 10.b
---------
11. LESS: Any unearned income on loans reflected in items 1-9 above_______________________________ 2123 0 11.
---------
12. Total loans and leases, net of unearned income (sum of items 1 through 10
minus item 11) (must equal Schedule RC, item 4.a)_____________________________________________ 2122 6,058,046 12
---------
</TABLE>
<PAGE> 19
SUNTRUST BANK, CENTRAL FLORIDA N.A.
P.O. BOX 4418 CENTER 632
ATLANTA, GA 30302
Call Date: 03/31/98 State #: 12-1159 FFIEC 032
Vendor ID: D Cert#: 21043 RC-7
Transit #: 06310215 ---------
15
---------
Schedule RC-C - Continued
Part I. Continued
<TABLE>
<CAPTION>
Memoranda Dollar Amounts in Thousands
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Not applicable.
2. Loans and Leases restructured and in compliance with modified terms (included in
Schedule RC-C, part I, above, and not reported as past due or nonaccrual in Schedule RC-N.
Memorandum item 1):
a. Loans secured by real estate: RCON
---- ---------
(1) To U.S. addressees (domicile)_______________________________________________________ 1687 0 M.2.a.1
---------
(2) To non-U.S. addressees (domicile)___________________________________________________ 1689 0 M.2.a.2
---------
b. All other loans and lease financing receivables (exclude loans to individuals for ---------
household, family, and other personal expenditures)_____________________________________ 8691 0 M.2.b
---------
c. Commercial and industrial loans to and lease financing receivables of ---------
non-U.S. addressees (domicile) included in Memorandum item 2.b above____________________ 8892 0 M.2.c
---------
3. Maturity and repricing data for loans and leases (excluding those in nonaccrual status):
a. Closed-end loans secured by first liens on 1-4 family residential properties
(reported in Schedule RC-C, part I, item 1.c.(2).(a)) with a remaining maturity or
repricing frequency of: (1, 2)
---------
(1) Three months or less________________________________________________________________ A564 11,043 M.3.a1
---------
(2) Over three months through 12 months_________________________________________________ A565 353,723 M.3.a2
---------
(3) Over one year through three years___________________________________________________ A566 124,647 M.3.a3
---------
(4) Over three years through five years_________________________________________________ A567 404,586 M.3.a4
---------
(5) Over five years through 15 years____________________________________________________ A568 155,402 M.3.a5
---------
(6) Over 15 years_______________________________________________________________________ A569 55,886 M.3.a6
---------
b. All loans and leases (reported in Schedule RC-C, Part I, items 1 through 10) excluding
closed-end loans secured by first liens on 1-4 family residential properties (reported
in Schedule RC-C, part I, item 1.c.(2).(a)) with a remaining maturity or repricing
frequency of: (1, 3)
---------
(1) Three months or less________________________________________________________________ A570 2,857,166 M.3.b1
---------
(2) Over three months through 12 months_________________________________________________ A571 329,074 M.3.b2
---------
(3) Over one year through three years___________________________________________________ A572 454,912 M.3.b3
---------
(4) Over three years through five years_________________________________________________ A573 777,883 M.3.b4
---------
(5) Over five years through 15 years____________________________________________________ A574 472,847 M.3.b5
---------
(6) Over 15 years_______________________________________________________________________ A575 49,386 M.3.b6
---------
c. Fixed rate AND floating rate loans and leases (reported in Schedule RC-C, part I, ---------
items 1 through 10) with a REMAINING MATURITY of one year or less ______________________ A247 1,325,544 M.3.c
---------
d. Fixed rate AND floating rate loans secured by nonfarm nonresidential properties
(reported in Schedule RC-C, part I, item 1.a) with a REMAINING MATURITY of over ---------
five years (included in Memorandum item 3.b above)______________________________________ A577 142,830 M.3.d
---------
e. Fixed rate AND floating rate commercial and industrial loans (reported in Schedule ---------
RC-C, part I, item 4) with a REMAINING MATURITY of over three years_____________________ A578 1,376,632 M.3.e
---------
</TABLE>
- ---------
(1) Report fixed rate loans and leases by remaining maturity and floating
rate loans by repricing frequency.
(2) Sum of Memorandum items 3.a.(1) through 3.a.(6) plus total nonaccrual
closed-end loans secured by first liens on 1-4 family residential
properties included in Schedule RC-N, Memorandum item 3.c.(2), column
C, must equal total closed-end loans secured by first liens on 1-4
family residential properties from Schedule RC-C, part I, item
1.c.(2)(a).
(3) Sum of Memorandum items 3.b.(1) through 3.b.(6) plus total
nonaccrual loans and leases from Schedule RC-N, sum of items 1
through 8, column C, minus nonaccrual closed-end loans secured by
first liens on 1-4 family residential properties included in
Schedule RC-N, Memorandum item 3.c.(2), column C, must equal total
loans and leases from Schedule RC-C, Part I, sum of items 1 through
10, minus total closed-end loans secured by first liens on 1-4
family residential properties in domestic offices from Schedule
RC-C, part I, item 1.c.(2)(a).
<PAGE> 20
SUNTRUST BANK, CENTRAL FLORIDA N.A.
P.O. BOX 4418 CENTER 632
ATLANTA, GA 30302
Call Date: 03/31/98 State #: 12-1159 FFIEC 032
Vendor ID: D Cert#: 21043 RC-8
Transit #: 06310215 ---------
16
---------
Schedule RC-C - Continued
Part I. Continued
<TABLE>
<CAPTION>
Memoranda Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------------------
RCON
<S> <C> <C> <C>
4. Loans to finance commercial real estate, construction, and land development activities
(not secured by real estate) included in Schedule RC-C, part I, items 4 and 9.b, ---------
page RC-6(1)___________________________________________________________________________________ 2746 66,181 M.4
---------
5. Loans and leases held for sale (included in Schedule RC-C, part 1, page RC-C)__________________ 5369 23,900 M.5
---------
6. Adjustable rate closed-end loans secured by first liens on 1-4 family residential properties
(included in Schedule RC-C, part I, item 1.c.(2)(a), page RC-6)_________________________________ 5370 908,813 M.6
---------
</TABLE>
- -----------
(1) Exclude loans secured by real estate that are included in Schedule RC-C,
part I, items 1.a through 1.e.
Schedule RC-D Trading Assets and Liabilities
Schedule RC-D is to be completed by banks with $1 billion or more in total
assets or with $2 billion or more in par/notional amount of off-balance sheet
derivative contracts (as reported in Schedule RC-L, items 14.a through 14.e.
columns A through D).
<TABLE>
<CAPTION>
C320 <-
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------
ASSETS RCON
---- ---------
<S> <C> <C> <C>
1. U.S. Treasury securities______________________________________________________________________ 3531 0 1
---------
2. U.S. Government agency obligations (exclude mortgage-backed securities)_______________________ 3532 0 2
---------
3. Securities issued by states and political subdivisions in the U.S.____________________________ 3533 0 3
---------
4. Mortgage-backed securities (MBS):
a. Pass-through securities issued or guaranteed by FNMA, FHLMC, or GNMA_______________________ 3534 0 4.a
---------
b. Other mortgage-backed securities issued or guaranteed by FNMA, FHLMC, or GNMA
(include CMOs, REMICs, and stripped MBS)__________________________________________________ 3535 0 4.b
---------
c. All other mortgage-backed securities________________________________________________________ 3536 0 4.c
---------
5. Other debt securities_________________________________________________________________________ 3537 0 5
---------
6. - 8. Not applicble
---------
9. Other trading assets__________________________________________________________________________ 3541 0 9
---------
10. Not applicable
11. Revaluation gains on interest rate, foreign exchange rate, and other commodity and equity ---------
contracts_____________________________________________________________________________________ 3543 0 11
---------
12. Total trading assets (sum of items 1 through 11) (must equal Schedule RC, item 5)_____________ 3545 0 12
---------
LIABILITIES
---------
13. Liability for short positions_________________________________________________________________ 3546 0 13
---------
14. Revaluation losses on interest rate, foreign exchange rate, and other commodity and equity
contracts_____________________________________________________________________________________ 3547 0 14
---------
15. Total trading liabilities (sum of items 13 and 14) (must equal Schedule RC, item 15.b)________ 3548 0 15
---------
</TABLE>
<PAGE> 21
SUNTRUST BANK, CENTRAL FLORIDA N.A.
P.O. BOX 4418 CENTER 632
ATLANTA, GA 30302
Call Date: 03/31/98 State #: 12-1159 FFIEC 032
Vendor ID: D Cert# : 21043 RC-9
Transit #: 06310215 ---------
17
---------
Schedule RC-E - Deposit Liabilities
C325<-
<TABLE>
<CAPTION>
----Transaction Accounts---- -Nontransaction-
Accounts
(Column A) (Column B) (Column C)
Total Memo:Total Total
Transaction Demand nontransaction
Dollar Amounts in Thousands accounts Deposits Accounts
- -------------------------------------------------------------------- (including total (included in (including
demand deposits) column A) MMDAs)
Deposits Of: RCON CON CON
---- ----------- ---- ----------- ---- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1. Individuals, partnerships and corporations______________________ 2201 1,064,892 2240 892,164 2346 2,789,783 1
----------- ----------- -----------
2. U.S. Government_________________________________________________ 2202 829 2280 829 2520 0 2
----------- ----------- -----------
3. States and political subdivisions in the U.S.___________________ 2203 32,313 2290 28,551 2530 86,949 3
----------- ----------- -----------
4. Commercial banks in the U.S.____________________________________ 2206 197,510 2310 197,510 2550 0 4
----------- ----------- -----------
5. Other depository institutions in the U.S._______________________ 2207 6,992 2312 6,992 2349 0 5
----------- ----------- -----------
6. Banks in foreign countries______________________________________ 2213 421 2320 421 2236 0 6
----------- ----------- -----------
7. Foreign governments, and official institutions ----------- ----------- -----------
(including foreign central banks)_______________________________ 2216 0 2300 0 2377 0 7
----------- ----------- -----------
8. Certified and official checks___________________________________ 2330 4,905 2330 4,905 8
----------- -----------
9. Total (sum of items 1 through 8) (sum of
columns A and C must equal Schedule RC. ----------- ----------- -----------
item 13.a)______________________________________________________ 2215 1,307,862 2210 1,131,372 2385 2,876,732 9
----------- ----------- -----------
<CAPTION>
Memoranda Dollar Amounts in Thousands
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Selected components of total deposits (i.e., sum of item 9, columns A and C): RCON
---- -----------
a. Total individual Retirement Accounts (IRAs) and Keogh Plan accounts_____________________________ 6835 141,869 M.1.a
-----------
b. Total brokered deposits_________________________________________________________________________ 2365 4,000 M.1.b
-----------
c. Fully insured brokered deposits (included in Memorandum item 1.b above):
-----------
(1) Issued in denominations of less than $100,000______________________________________________ 2343 0 M.1.c1
-----------
(2) Issued either in denominations of $100,000 or in denominations greater than -----------
$100,000 and participated out by the broker in shares of $100,000 or less___________________ 2344 0 M.1.c2
-----------
d. Maturity date for brokered deposits:
(1) Brokered deposits issued in denominations of less than $100,000 with a remaining -----------
maturity of one year or less (included in Memorandum item 1.c.(1) above)____________________ A243 0 M.1.d1
-----------
(2) Brokered deposits Issued in denominations of $100,000 or more with a remaining -----------
maturity of one year or less (included in Memorandum item 1.b above)________________________ A244 4,000 M.1.d2
-----------
e. Preferred deposits (uninsured deposits of states and political subdivisions in the U.S.
reported in item 3 above which are secured or collateralized as required under state law) -----------
(to be completed for the December report only)__________________________________________________ 5590 N/A M.1.e
-----------
2. Components of total nontransaction accounts (sum of Memorandum items 2.a through 2.d
must equal item 9, column C, above);
a. Savings deposits: -----------
(1) Money market deposit accounts (MMDAs)_______________________________________________________ 6810 871,820 M.2.a1
-----------
(2) Other savings deposits (excludes MMDAs)_____________________________________________________ 0352 995,983 M.2.a2
-----------
b. Total time deposits of less than $100,000_______________________________________________________ 6648 691,673 M.2.b
-----------
c. Total time deposits of $100,000 or more_________________________________________________________ 2604 317,256 M.2.c
-----------
3. All NOW accounts (included in column A above)______________________________________________________ 2398 176,490 M.3
-----------
4. Not applicable
</TABLE>
<PAGE> 22
SUNTRUST BANK, CENTRAL FLORIDA N.A.
P.O. BOX 4418 CENTER 632
ATLANTA, GA 30302
Call Date: 03/31/98 State #: 12-1159 FFIEC 032
Vendor ID: D Cert# : 21043 RC-10
Transit #: 06310215 ---------
18
---------
Schedule RC-E - Continued
<TABLE>
<CAPTION>
Memoranda (continued) Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
5. Maturity and repricing data for time deposits of less than $100,000:
a. Time deposits of less than $100,000 with a remaining maturity or repricing
frequency of: (1, 2) RCON
---- --------
(1) Three months or less___________________________________________________________________ A579 200,559 M.5.a1
--------
(2) Over three months through 12 months____________________________________________________ A580 295,403 M.5.a2
--------
(3) Over one year through three years______________________________________________________ A581 171,895 M.5.a3
--------
(4) Over three years_______________________________________________________________________ A582 23,816 M.5.a4
--------
b. Fixed rate AND floating rate time deposits of less than $100,000 with a REMAINING
MATURITY of one year or less (included in Memorandum items 5.a.(1) --------
through 5.a.(4) above)_____________________________________________________________________ A241 483,160 M.5.b
--------
6. Maturity and repricing data for time deposits of $100,000 or more:
a. Time deposits of $100,000 or more with a remaining maturity or repricing
frequency of: (1, 3) --------
(1) Three months or less___________________________________________________________________ A584 94,581 M.6.a1
--------
(2) Over three months through 12 months____________________________________________________ A585 119,942 M.6.a2
--------
(3) Over one year through three years______________________________________________________ A586 93,803 M.6.a3
--------
(4) Over three years_______________________________________________________________________ A587 8,930 M.6.a4
--------
b. Fixed rate AND floating rate time deposits of less than $100,000 with a REMAINING
MATURITY of one year or less (included in Memorandum items 6.a.(1) --------
through 6.a.(4) above)_____________________________________________________________________ A242 211,876 M.6.b
--------
</TABLE>
- --------------
(1) Report fixed rate time deposits by remaining maturity and floating rate
time deposits by repricing frequency.
(2) Sum of Memorandum items 5.a.(1) through 5.a.(4) must equal Schedule RC-E
Memorandum item 2.b above.
(3) Sum of Memorandum items 6.a.(1) through 6.a.(4) must equal Schedule RC-E
Memorandum item 2.c above.
<PAGE> 23
SUNTRUST BANK, CENTRAL FLORIDA N.A.
P.O. BOX 4418 CENTER 632
ATLANTA, GA 30302
Call Date: 03/31/98 State #: 12-1159 FFIEC 032
Vendor ID: D Cert# : 21043 RC-11
Transit #: 06310215 ---------
19
---------
Schedule RC-F - Other Assets
C330<-
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RCON
------------------
1. Income earned, not collected on loans______________________________________________________________ 2164 36,167 1.
------------
2. Net deferred tax assets (1)________________________________________________________________________ 2148 25,477 2.
------------
3. Interest-only strips receivable (not in the form of a security)(2) on: ------------
a. Mortgage loans__________________________________________________________________________________ A519 0 3.a
------------
b. Other financial assets__________________________________________________________________________ A520 0 3.b
------------
4. Other (itemize and describe amounts that exceed 25% of this item)__________________________________ 2168 20,928 4.
------------
TEXT RCON
-----------------------------------------------------------------------------------------
a. 3549 SECURITIES-ACCRD INC. 3549 7,422 4.a
---------------------------------------------------------------------- -----------
b. 3550 3550 0 4.b
-----------
c. 3551 3551 0 CON 4.c
----------- ------------------
5. Total (sum of items 1 through 4) (must equal Schedule RC, Item 11)_________________________________ 2160 82,572 5.
------------
<CAPTION>
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MEMORANDUM RCON
------------------
1. Deferred tax assets disallowed for regulatory capital purposes______________________________________ 5610 0 M.1
------------
</TABLE>
Schedule RC-G -- Other Liabilities
C335 <-
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RCON
------------------
1. a. Interest accrued and unpaid on deposits (3)______________________________________________________ 3645 11,414 1.a
------------
b. Other expenses accrued and unpaid (includes accrued income taxes payable)________________________ 3646 32,581 1.b
------------
2. Net deferred tax liabilities (1)____________________________________________________________________ 3049 0 2.
------------
3. Minority interest in consolidated subsidiaries______________________________________________________ 3000 0 3.
------------
4. Other (itemize and describe amounts that exceed 25% of this item)___________________________________ 2938 6,189 4.
------------
TEXT RCON
-----------------------------------------------------------------------------------------
a. 3552 ACCOUNTS PAYABLE 3552 1,955 4.a
---------------------------------------------------------------------- -----------
b. 3553 3553 0 4.b
-----------
c. 3554 3554 0 CON 4.c
----------- ------------------
5. Total (sum of items 1 through 4) (must equal Schedule RC, item 20)__________________________________ 2930 50,184 5.
------------
</TABLE>
- ----------
(1) See discussion of deferred income taxes in Glossary entry on "income
taxes."
(2) Report interest-only strips receivable in the form of a security as
available-for-sale securities in Schedule RC, item 2.b, or as trading
assets in Schedule RC, item 5, as appropriate.
(3) For savings banks, includes "dividends" accrued and unpaid on deposits.
<PAGE> 24
SUNTRUST BANK, CENTRAL FLORIDA N.A.
P.O. BOX 4418 CENTER 632
ATLANTA, GA 30302
Call Date: 03/31/98 State #: 12-1159 FFIEC 032
Vendor ID: D Cert# : 21043 RC-12
Transit #: 06310215 ---------
20
---------
Schedule RC-K - Quarterly Averages(1)
C355 <-
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS RCON
--------------------
1. Interest-bearing balances due from depository institutions___________________________________ 3381 4,166 1.
-----------
2. U.S. Treasury securities, U.S. Government agency obligations (2)____________________________ 3382 737,291 2.
-----------
3. Securities issued by states and political subdivisions in the U.S. (2)_______________________ 3383 34,750 3.
-----------
4. a. Other debt securities (2)_________________________________________________________________ 3647 250 4.a
-----------
b. Equity securities (3) (includes investments in mutual funds and Federal Reserve stock)____ 3648 26,341 4.b
-----------
5. Federal funds sold and securities purchased under agreements to resell_______________________ 3365 612,819 5
-----------
6. Loans: -----------
a. Total loans______________________________________________________________________________ 3360 5,790,884 6.a
-----------
b. Loans secured by real estate_____________________________________________________________ 3385 1,937,514 6.b
-----------
c. Loans to finance agricultural production and other loans to farmers______________________ 3386 69,766 6.c
-----------
d. Commercial and industrial loans__________________________________________________________ 3387 2,817,159 6.d
-----------
e. Loans to individuals for household, family, and other personal expenditures______________ 3388 542,685 6.e
-----------
7. Trading assets_______________________________________________________________________________ 3401 0 7.
-----------
8. Lease financing receivables (net of unearned income)_________________________________________ 3484 151,954 8.
-----------
9. Total assets (4)_____________________________________________________________________________ 3368 7,881,082 9
-----------
LIABILITIES
10. Interest-bearing transaction accounts (NOW accounts, ATS accounts, and telephone and -----------
preauthorized transfer accounts) (exclude demand deposits)___________________________________ 3485 164,922 10
-----------
11. Nontransaction accounts:
a. Money market deposit accounts (MMDAs)____________________________________________________ 3486 850,523 11.a
-----------
b. Other savings deposits___________________________________________________________________ 3487 985,337 11.b
-----------
c. Time deposits of $100,000 or more________________________________________________________ A514 331,631 11.c
-----------
d. Time deposits of less than $100,000______________________________________________________ A529 682,242 11.d
-----------
12. Federal funds purchased and securities sold under agreements to repurchase___________________ 3353 2,729,264 12
-----------
13. Other borrowed money (includes mortgage indebtedness and obligations under capitalized -----------
leases)______________________________________________________________________________________ 3355 307,044 13
-----------
</TABLE>
- ----------
(1) For all items, banks have the option of reporting either (1) an average of
daily figures for the quarter or (2) an average of weekly figures (i.e.,
the Wednesday of each week of the quarter).
(2) Quarterly averages for all debt securities should be based on amortized
cost.
(3) Quarterly averages for all equity securities should be based on historical
cost.
(4) The quarterly averages for total assets should reflect all debt securities
(not held for trading) at amortized cost, equity securities with readily
determinable fair values at the lower of cost or fair value, and equity
securities without readily determinable fair values at historical cost.
<PAGE> 25
SUNTRUST BANK, CENTRAL FLORIDA N.A.
P.O. BOX 4418 CENTER 632
ATLANTA, GA 30302
Call Date: 03/31/98 State #: 12-1159 FFIEC 032
Vendor ID: D Cert# : 21043 RC-13
Transit #: 06310215 ---------
21
---------
Schedule RC-L - Off-Balance Sheet Items
Please read carefully the instructions for the preparation of Schedule RC-L.
Some of the amounts reported in Schedule RC-L are regarded as volume indicators
and not necessarily as measures of risk.
C360 <-
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1. Unused commitments: RCON
a. Revolving, open-end lines secured by 1-4 family residential properties, -----------------
e.g., home equity lines__________________________________________________________ 3814 158,679 1.a
-----------
b. Credit card lines________________________________________________________________ 3815 0 1.b
-----------
c. Commercial real estate, construction, and land development: -----------
(1) Commitments to fund loans secured by real estate_____________________________ 3816 230,524 1.c.1
-----------
(2) Commitments to fund loans not secured by real estate_________________________ 6550 81,347 1.c.2
-----------
d. Securities underwriting__________________________________________________________ 3817 0 1.d
-----------
e. Other unused commitments_________________________________________________________ 3818 4,976,171 1.e
-----------
2. Financial standby letters of credit__________________________________ CON 3819 837,363 2.
------------- -----------
a. Amount of financial standby letters of credit conveyed to others__ 3820 293,348 2.a
------- -----------
3. Performance standby letters of credit_______________________________________________ 3821 33,291 3.
-----------
-------
a. Amount of performance standby letters of credit conveyed to others 3822 7,104 3.a
------- -----------
4. Commercial and similar letters of credit____________________________________________ 3411 10,563 4.
-----------
5. Participations in acceptances (as described in the instructions) conveyed to others -----------
by the reporting bank_______________________________________________________________ 3428 21 5
-----------
6. Participations in acceptances (as described in the instructions) acquired by the -----------
reporting (nonaccepting) bank_______________________________________________________ 3429 0 6.
-----------
7. Securities borrowed_________________________________________________________________ 3432 0 7.
-----------
8. Securities lent (including customers' securities lent where the customer is -----------
indemnified against loss by the reporting bank)_____________________________________ 3433 0 8.
-----------
9. Financial assets transferred with recourse that have been treated as
sold for Call Report purposes:
a. First lien 1-to-4 family residential mortgage loans: RCON
(1) Outstanding principal balance of mortgages transferred -----------------
as of the report date________________________________________________________ A521 0 9.a.1
-----------
(2) Amount of recourse exposure on these mortgages -----------
as of the report date________________________________________________________ A522 0 9.a.2
-----------
b. Other financial assets (excluding small business obligations
reported in item 9.a):
(1) Outstanding principal balance of assets transferred -----------
as of the report date________________________________________________________ A523 0 9.b.1
-----------
(2) Amount of recourse exposure on these assets -----------
as of the report date________________________________________________________ A524 0 9.b.2
-----------
c. Small business obligations transferred with recourse under Section 208 of the
Riegle Community Development and Regulatory Improvement Act of 1994:
(1) Outstanding principal balance of small business obligations transferred as -----------
of the report date___________________________________________________________ A249 0 9.c.1
-----------
(2) Amount of retained recourse on these obligations as of the report date_______ A250 0 9.c.2
-----------
10. Notional amount of credit derivatives: -----------
a. Credit derivatives on which the reporting bank is the guarantor__________________ A534 0 10.a
-----------
b. Credit derivatives on which the reporting bank is the beneficiary________________ A535 0 10.b
-----------
11. Spot foreign exchange contracts_____________________________________________________ 8765 0 11
-----------
12. All other off-balance sheet liabilities (exclude off-balance sheet derivatives)
(itemize and describe each component of this item over 25% of Schedule RC, item 28, -----------
"Total equity capital")_____________________________________________________________ 3430 0 12
-----------
TEXT RCON
-------------
a. 3555 3555 0 12.a
-------
b. 3556 3556 0 12.b
-------
c. 3557 3557 0 12.c
-------
d. 3558 3558 0 12.d
-------
</TABLE>
<PAGE> 26
SUNTRUST BANK, CENTRAL FLORIDA N.A.
P.O. BOX 4418 CENTER 632
ATLANTA, GA 30302
Call Date: 03/31/98 State #: 12-1159 FFIEC 032
Vendor ID: D Cert# : 21043 RC-14
Transit #: 06310215 ---------
22
---------
Schedule RC-l - Continued
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
13. All other off-balance sheet assets (exclude off-balance sheet derivatives) CON
(itemize and describe each component of this item over 25% Schedule RC, --------------
item 28, "Total equity capital")______________________________________________________________ 5591 0 13
TEXT RCON --------
------------------
a. 5592 5592 0 13.a
--------
b. 5593 5593 0 13.b
--------
c. 5594 5594 0 13.c
--------
d. 5595 5595 0 13.d
--------
C361 <-
<CAPTION>
Off-Balance Sheet Derivatives (Column A) (Column B) (Column C) (Column D)
Position Indicators Interest Foreign Equity Commodity
Rate Exchange Derivative and other
Contracts Contracts Contracts Contracts
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
14. Gross amounts (e.g., notional
amounts) (for each column, sum of
items 14.a through 14.e must equal
sum of items 15, 16.a and 16.b): CON CON CON CON
--------------- -------------- -------------- -------------
a. Futures contracts_____________ 8693 0 8694 0 8695 0 8696 0 14.a
---------- --------- --------- --------
b. Forward contracts_____________ 8697 0 8698 0 8699 0 8700 0 14.b
---------- --------- --------- --------
c. Exchange-traded option contracts: ---------- --------- --------- --------
(1) Written options___________ 8701 0 8702 0 8703 0 8704 0 14.c1
---------- --------- --------- --------
(2) Purchased Options_________ 8705 0 8706 0 8707 0 8708 0 14.c2
---------- --------- --------- --------
d. Over-the-counter options contracts: ---------- --------- --------- --------
(1) Written options___________ 8709 0 8710 0 8711 0 8712 0 14.d1
---------- --------- --------- --------
(2) Purchased options_________ 8713 0 8714 0 8715 0 8716 0 14.d2
---------- --------- --------- --------
e. Swaps_________________________ 3450 155,328 3826 0 8719 0 8720 0 14.e
---------- --------- --------- --------
15. Total gross notional amount of ---------- --------- --------- --------
derivative contracts held for trading A126 0 A127 0 8723 0 8724 0 15
---------- --------- --------- --------
16. Total gross notional amount of
derivative contracts held for
purposes other than trading: ---------- --------- --------- --------
a. Contracts marked to market____ 8725 0 8726 0 8727 0 8728 0 16.a
---------- --------- --------- --------
b. Contracts not marked to market 8729 155,328 8730 0 8731 0 8732 0 16.b
---------- --------- --------- --------
c. Interest rate swaps where the
bank has agreed to pay a fixed ----------
rate__________________________ A589 55,328 16.c
----------
</TABLE>
<PAGE> 27
SUNTRUST BANK, CENTRAL FLORIDA N.A.
P.O. BOX 4418 CENTER 632
ATLANTA, GA 30302
Call Date: 03/31/98 State #: 12-1159 FFIEC 032
Vendor ID: D Cert# : 21043 RC-15
Transit #: 06310215 ---------
23
---------
Schedule RC-l Continued
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------
Off-Balance Sheet Derivatives (Column A) (Column B) (Column C) (Column D)
Position Indicators Interest Foreign Equity Commodity
Rate Exchange Derivative and other
Contracts Contracts Contracts Contracts
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
17. Total gross fair value of derivative
contracts: CON CON CON CON
a. Contracts held for trading: -------------------- ------------------ ----------------- ----------------
(1) Gross positive fair value___ 8733 0 8734 0 8735 0 8736 0 17.a1
--------- --------- --------- ---------
(2) Gross negative fair value___ 8737 0 8738 0 8739 0 8740 0 17.a2
--------- --------- --------- ---------
b. Contracts held for purposes
other than trading that are
marked to market:
CON CON CON CON
-------------------- ------------------ ----------------- ----------------
(1) Gross positive fair value___ 8741 0 8742 0 8743 0 8744 0 17.b1
--------- --------- --------- ---------
(2) Gross negative fair value___ 8745 0 8746 0 8747 0 8748 0 17.b2
--------- --------- --------- ---------
c. Contracts held for purposes
other than trading that are not
marked to market:
CON CON CON CON
-------------------- ------------------ ----------------- ----------------
(1) Gross positive fair value___ 8749 4,575 8750 0 8751 0 8752 0 17.c1
--------- --------- --------- ---------
(2) Gross negative fair value___ 8753 1,592 8754 0 8755 0 8756 0 17.c2
--------- --------- --------- ---------
<CAPTION>
Memoranda Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1.-2. Not applicable
3. Unused commitments with an original maturity exceeding one year that are reported in RCON
Schedule RC-L, items 1.a through 1.e, above (report only the unused portions of -----------------
commitments that are fee paid or otherwise legally binding)__________________________ 3833 3,677,860 M.3
RCON ----------
a. Participations in commitments with an original maturity exceeding one year conveyed -------------
to others_________________________________________________________________________ 3834 397,744 M.3.a
--------
4. To be completed only by banks with $1 billion or more in total assets: RCON
Standby letters of credit (both financial and performance) issued to non-U.S. -----------------
addresses (domicile) included in Schedule RC-L, items 2 and 3, above_________________ 3377 1,614 M.4
5. Loans to individuals for household, family, and other personal ----------
expenditures that have been securitized and sold (with servicing retained), amounts
outstanding by type of loan:
RCON
a. Loans to purchase private passenger automobiles -----------------
(to be completed for the September report only)____________________________________ 2741 N/A M.5.a
----------
b. Credit cards and related plans (TO BE COMPLETED QUARTERLY)_________________________ 2742 0 M.5.b
----------
c. All other consumer credit (including mobile home loans) ----------
(to be completed for the September report only)____________________________________ 2743 N/A M.5.c
----------
</TABLE>
<PAGE> 28
SUNTRUST BANK, CENTRAL FLORIDA N.A.
P.O. BOX 4418 CENTER 632
ATLANTA, GA 30302
Call Date: 03/31/98 State #: 12-1159 FFIEC 032
Vendor ID: D Cert# : 21043 RC-16
Transit #: 06310215 ---------
24
---------
Schedule Rc-M - Memoranda
C365 <-
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1. Extension of credit by the reporting bank to its executive officers, directors, principal
shareholders, and their related interests as of the report date: CON
a. Aggregate amount of all extensions of credit to all executive officers, directors, -----------------
principal shareholders, and their related interests_____________________________________ 6164 111,308 1.a
----------
b. Number of executive officers, directors, and principal shareholders to whom the amount of
all extensions of credit by the reporting bank (including extensions of credit to related
interests) equals or exceeds the lesser of $500,000 or 5 percent of total capital as
defined for this purpose in agency regulations_________________ CO NUMBER
---- -----------
6165 9 1.b
------------ CON
2. Federal funds sold and securities purchased under agreements to resell with U.S. branches -----------------
and agencies of foreign banks (1) (included in Schedule RC, item 3)_________________________ 3405 0 2
----------
3. Not applicable.
4. Outstanding principal balance of 1-4 family residential mortgage loans serviced for others
(include both retained servicing and purchased servicing): ----------
a. Mortgages serviced under a GNMA contract_________________________________________________ 5500 0 4.a
----------
b. Mortgages serviced under a FHLMC contract: ----------
(1) Serviced with recourse to servicer___________________________________________________ 5501 0 4.b.1
----------
(2) Serviced without recourse to servicer________________________________________________ 5502 0 4.b.2
----------
c. Mortgages serviced under a FNMA contract: ----------
(1) Serviced under a regular option contract_____________________________________________ 5503 0 4.c.1
----------
(2) Serviced under a special option contract_____________________________________________ 5504 0 4.c.2
----------
d. Mortgages serviced under other servicing contracts_______________________________________ 5505 0 4.d
----------
5. To be completed only by banks with $1 billion or more in total assets:
Customers' liability to this bank on acceptances outstanding (sum of items 5.a and 5.b must
equal Schedule RC item 9): ----------
a. U. S. addressees (domicile)______________________________________________________________ 2103 1,847 5.a
----------
b. Non-U.S. addressees (domicile)___________________________________________________________ 2104 0 5.b
----------
6. Intangible assets: ----------
a. Mortgage servicing rights_________________________________________________________________ 3164 0 6.a
----------
(1) Estimated fair value of mortgage servicing assets____________________________________ A590 0 6.a.1
----------
b. Other identifiable intangible assets: ----------
(1) Purchased credit card relationships__________________________________________________ 5506 0 6.b.1
----------
(2) All other identifiable intangible assets_____________________________________________ 5507 0 6.b.2
----------
c. Goodwill_________________________________________________________________________________ 3163 0 6.c
----------
d. Total (sum of items 6.a, 6.b.(1), 6.b.(2), and 6.c) (must equal Schedule RC, item 10)____ 2143 0 6.d
----------
e. Amount of intangible assets (included in item 6.b.(2) above) that have been grandfathered ----------
or are otherwise qualifying for regulatory capital purposes______________________________ 6442 0 6.e
----------
7. Mandatory convertible debt, net of common or perpetual preferred stock dedicated to redeem ----------
the debt_____________________________________________________________________________________ 3295 0 7
----------
</TABLE>
- ----------
(1) Do not report federal funds sold and securities purchased under agreements
to resell with other commercial banks in the U.S. in this item.
<PAGE> 29
SUNTRUST BANK, CENTRAL FLORIDA N.A.
P.O. BOX 4418 CENTER 632
ATLANTA, GA 30302
Call Date: 03/31/98 State #: 12-1159 FFIEC 032
Vendor ID: D Cert# : 21043 RC-17
Transit #: 06310215 ---------
25
---------
Schedule RC-M - Continued
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
8. a. Other real estate owned: RCON
-----------------
(1) Direct and indirect investments in real estate ventures_______________________________ 5372 0 8.a.1
---------
(2) All other real estate owned: ---------
(a) Construction and land development_________________________________________________ 5508 0 8.a.2a
---------
(b) Farmland__________________________________________________________________________ 5509 0 8.a.2b
---------
(c) 1-4 family residential properties_________________________________________________ 5510 2,050 8.a.2c
---------
(d) Multifamily (5 or more) residential properties____________________________________ 5511 0 8.a.2d
---------
(e) Nonfarm nonresidential properties_________________________________________________ 5512 21 8.a.2e
---------
(3) Total (sum of items 8.a.(1) and 8.a.(2)) (must equal Schedule RC, item 7)_____________ 2150 2,071 8.a.3
---------
b. Investments in unconsolidated subsidiaries and associated companies: ---------
(1) Direct and indirect investments in real estate ventures_______________________________ 5374 0 8.b.1
---------
(2) All other investments in unconsolidated subsidiaries and associated companies_________ 5375 7,804 8.b.2
---------
(3) Total (sum of items 8.b.(1) and 8.b.(2)) (must equal Schedule RC, item 8)_____________ 2130 7,804 8.b.3
---------
9. Noncumulative perpetual preferred stock and related surplus included in Schedule RC, item 23, ---------
"Perpetual preferred stock and related surplus"______________________________________________ 3778 0 9
---------
10. Mutual fund and annuity sales during the quarter (including proprietary, private label, and
third party products): ---------
a. Money market funds_______________________________________________________________________ 6441 175,469 10.a
---------
b. Equity securities funds__________________________________________________________________ 8427 10,748 10.b
---------
c. Debt securities funds____________________________________________________________________ 8428 7,601 10.c
---------
d. Other mutual funds_______________________________________________________________________ 8429 10,591 10.d
---------
e. Annuities________________________________________________________________________________ 8430 3,523 10.c
---------
f. Sales of proprietary mutual funds and annuities (included in items 10.a. through 10.e ---------
above)___________________________________________________________________________________ 8784 189,641 10.f
---------
11. Net unamortized realized deferred gains (losses) on off-balance sheet derivative contracts
included in assets and liabilities reported in Schedule RC___________________________________ A525 0 11
---------
12. Amount of assets netted against nondeposit liabilities on the balance sheet (Schedule RC) ---------
in accordance with generally accepted accounting principles (1)______________________________ A526 0 12
---------
13. Outstanding principal balance of loans other than 1-4 family residential mortgage loans that
are serviced for others (to be completed if this balance is more than $10 million and exceeds ---------
ten percent of total assets)_________________________________________________________________ A591 0 13
---------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Memorandum Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Reciprocal holdings of banking organizations' capital instruments ---------
(to be completed for the December report only)_______________________________________________ 3836 N/A M.1
---------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
(1) Exclude netted on-balance sheet amounts associated with off-balance sheet
derivative contracts, deferred tax assets netted against deferred tax
liabilities, and assets netted in accounting for pensions.
<PAGE> 30
SUNTRUST BANK, CENTRAL FLORIDA N.A.
P.O. BOX 4418 CENTER 632
ATLANTA, GA 30302
Call Date: 03/31/98 State #: 12-1159 FFIEC 032
Vendor ID: D Cert# : 21043 RC-18
Transit #: 06310215 ---------
26
---------
Schedule RC-N -- Past Due and Nonaccrual Loans, Leases, and Other Assets
The FFIEC regards the information reported in all of Memorandum item 1, in
items 1 through 10, column A, and in Memorandum items 2 through 4, column A, as
confidential.
C370 <-
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------
-(Column A)- -(Column B)- -(Column C)-
Past due Past due 90 Nonaccrual
30 through 89 days or more
days and still and still
accruing accruing
<S> <C> <C> <C> <C> <C> <C> <C>
RCON CON CON
1. Loans secured by real estate: ---------------- -------------- ---------------
a. To U.S. addressees (domicile)_____________________________ 1245 23,781 1246 408 1247 7,699 1.a
--------- -------- --------
b. To non-U.S. addresses (domicile)__________________________ 1248 0 1249 0 1250 0 1.b
--------- -------- --------
2. Loans to depository institutions and acceptances of
other banks: --------- -------- --------
a. To U.S. banks and other U.S. depository institutions______ 5377 0 5378 0 5379 0 2.a
--------- -------- --------
b. To foreign banks__________________________________________ 5380 0 5381 0 5382 0 2.b
--------- -------- --------
3. Loans to finance agricultural production and other loans to --------- -------- --------
farmers_____________________________________________________ 1594 0 1597 0 1583 20 3.
--------- -------- --------
4. Commercial and industrial loans: --------- -------- --------
a. To U.S. addresses (domicile)______________________________ 1251 2,372 1252 40 1253 1,157 4.a
--------- -------- --------
b. To non-U.S. addresses (domicile)__________________________ 1254 0 1255 0 1256 0 4.b
--------- -------- --------
5. Loans to individuals for household, family, and other
personal expenditures: --------- -------- --------
a. Credit cards and related plans____________________________ 5383 28 5384 32 5385 7 5.a
--------- -------- --------
b. Other (includes single payment, installment, and all --------- -------- --------
student loans)___________________________________________ 5386 3,504 5387 414 5388 817 5.b
--------- -------- --------
6. Loans to foreign governments and official institutions_______ 5389 0 5390 0 5391 0 6
--------- -------- --------
7. All other loans______________________________________________ 5459 4,228 5460 0 5461 0 7
--------- -------- --------
8. Lease financing receivables: --------- -------- --------
a. Of U.S. addresses (domicile)______________________________ 1257 204 1258 0 1259 1,791 8.a
--------- -------- --------
b. Of non-U.S. addresses (domicile)__________________________ 1271 0 1272 0 1791 0 8.b
--------- -------- --------
9. Debt securities and other assets (exclude other real estate --------- -------- --------
owned and other repossessed assets)_________________________ 3505 0 3506 0 3507 0 9
--------- -------- --------
===================================================================================================================================
</TABLE>
Amounts reported in items 1 through 8 above include guaranteed and unguaranteed
portions of past due and nonaccrual loans and leases. Report in item 10 below
certain guaranteed loans and leases that have already been included in the
amounts reported in items 1 through 8.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
10. Loans and leases reported in items 1 through 8 above RCON CON CON
which are wholly or partially guaranteed by the U.S. ---------------- -------------- ---------------
Government_________________________________________________ 5612 83 5613 0 5614 122 10
--------- -------- --------
a. Guaranteed portion of loans and leases included in --------- -------- --------
item 10 above___________________________________________ 5615 75 5616 0 5617 91 10.a
--------- -------- --------
</TABLE>
<PAGE> 31
SUNTRUST BANK, CENTRAL FLORIDA N.A.
P.O. BOX 4418 CENTER 632
ATLANTA, GA 30302
Call Date: 03/31/98 State #: 12-1159 FFIEC 032
Vendor ID: D Cert# : 21043 RC-19
Transit #: 06310215 ---------
27
---------
Schedule RC-N Continued
C373 <-
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------
Memoranda -(Column A)- -(Column B)- -(Column C)-
Past due Past due 90 Nonaccrual
30 through 89 days or more
days and still and still
accruing accruing
<S> <C> <C> <C> <C> <C> <C> <C>
1. Restructured loans and leases included in
Schedule RC-N, items 1 through 8, above RCON CON CON
(and not reported in Schedule RC-C, -------------- ------------- -------------
Memorandum item 2)___________________________________ 1658 0 1659 0 1661 0 M.1
------ ------ ------
2. Loans to finance commercial real estate,
construction, and land development activities
(not secured by real estate) included in ------ ------ ------
Schedule RC-N, items 4 and 7, above__________________ 6558 4,210 6559 0 6560 0 M.2
------ ------ ------
3. Loans secured by real estate (sum of
Memorandum items 3.a through 3.e must
equal sum of Schedule RC-N items 1.a and
1.b above):
------ ------ ------
a. Construction and land development ________________ 2759 303 2769 0 3492 1,821 M.3a
------ ------ ------
b. Secured by farmland ______________________________ 3493 0 3494 0 3495 2,057 M.3b
------ ------ ------
c. Secured by 1-4 family residential properties:
(1) Revolving, open-end loans secured by
1-4 family residential properties and ------ ------ ------
extended under lines of credit ______________ 5398 61 5399 80 5400 227 M.3.cl
------ ------ ------
(2) All other loans secured by 1-4 family
residential properties ______________________ 5401 4,512 5402 28 5403 2,001 M.3c2
------ ------ ------
d. Secured by multifamily (5 or more) residential ------ ------ ------
properties _______________________________________ 3499 0 3500 0 3501 65 M.3d
------ ------ ------
e. Secured by nonfarm nonresidential properties _____ 3502 18,905 3503 300 3504 1,528 M.3e
------ ------ ------
<CAPTION>
-(Column A)- -(Column B)-
Past due Past due 90
30 through 89 days or more
days and still and still
accruing accruing
<S> <C> <C> <C> <C> <C>
4. Interest rate, foreign exchange rate, and other
commodity and equity contracts: RCON CON
-------------- -------------
a. Book value of amounts carried as assets _________ 3522 0 3528 0 M.4.a
------ ------
b. Replacement cost of contracts with a ------ ------
positive replacement cost _______________________ 3529 0 3530 0 M.4.b
------ ------
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
================================================================================
PERSON TO WHOM QUESTIONS ABOUT THE REPORTS OF CONDITION AND INCOME SHOULD BE
DIRECTED:
C377 <-
NAME TITLE AREA CODE/PHONE NUMBER/EXTENSION
---------- -------------- ----------------------
8901 KEN MUTELL 8901 VICE PRESIDENT 8902 (404) 724-3833
---------- -------------- --------------
Even though Call Reports must be filed
electronically, send my bank a sample CO YES/NO Fax: AREA CODE/PHONE NUMBER
set of paper Call Report for the next -- ------ ----------------------
quarter:______________________________ 9117 NO 9116
------ ----------------------
================================================================================
<PAGE> 32
SUNTRUST BANK, CENTRAL FLORIDA N.A.
P.O. BOX 4418 CENTER 632
ATLANTA, GA 30302
Call Date: 03/31/98 State #: 12-1159 FFIEC 032
Vendor ID: D Cert# : 21043 RC-20
Transit #: 06310215 ---------
28
---------
Schedule RC-O - Other Data for Deposit Insurance and FICO Assessments
C375 <-
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RCON
1. Unposted debits (see instructions): --------------
a. Actual amount of all unposted debits______________________________________________________________ 0030 107 1.a
------
OR
b. Separate amount of unposted debits: ------
(1) Actual amount of unposted debits to demand deposits___________________________________________ 0031 0 1.b.1
------
(2) Actual amount of unposted debits to time and savings deposits (1)_____________________________ 0032 0 1.b.2
------
2. Unposted credits (see instructions): ------
a. Actual amount of all unposted credits_____________________________________________________________ 3510 0 2.a
------
OR
b. Separate amount of unposted credits: ------
(1) Actual amount of unposted credits to demand deposits__________________________________________ 3512 5,909 2.b.1
------
(2) Actual amount of unposted credits to time and savings deposits (1)____________________________ 3514 0 2.b.2
------
3. Uninvested trust funds (cash) held in bank's own trust department (not included ------
in total deposits)___________________________________________________________________________________ 3520 0 3.
------
4. Deposits of consolidated subsidiaries (not included in total deposits): ------
a. Demand deposits of consolidated subsidiaries______________________________________________________ 2211 0 4.a
------
b. Time and savings deposits (1) of consolidated subsidiaries________________________________________ 2351 0 4.b
------
c. Interest accrued and unpaid on deposits of consolidated subsidiaries______________________________ 5514 0 4.c
------
5. Not applicable.
6. Reserve balances actually passed through to the Federal Reserve by the reporting bank on
behalf of its respondent depository institutions that are also reflected as deposit liabilities
of the reporting bank: RCON
a. Amount reflected in demand deposits (included in Schedule RC-E, --------------
Memorandum item 4.a)______________________________________________________________________________ 2314 121 6.a
------
b. Amount reflected in time and savings deposits (1) (included in Schedule RC-E, ------
Memorandum item 4.b)______________________________________________________________________________ 2315 0 6.b
------
7. Unamortized premiums and discounts on time and savings deposits:(1)(2) ------
a. Unamortized premiums______________________________________________________________________________ 5516 0 7.a
------
b. Unamortized discounts_____________________________________________________________________________ 5517 0 7.b
------
8. To be completed by banks with "Oakar deposits".
a. Deposits purchased or acquired from other FDIC-insured institutions during the quarter:
(1) Total deposits purchased or acquired from other FDIC-insured ------
institutions during the quarter________________________________________________________________ A531 0 8.a.1
------
(2) Amount of purchased or acquired deposits reported in item 8.a.(1) above attributable to a
secondary fund (i.e. BIF members report deposits attributable to SAIF; ------
SAIF members report deposits attributable to BIF)______________________________________________ A532 0 8.a.2
------
b. Total deposits sold or transferred to other FDIC-insured institutions during the quarter__________ A533 0 8.b
------
9. Deposits in lifeline accounts________________________________________________________________________ 5596 ------ 9.
10. Benefit-responsive "Depository Institution Investment Contracts" (included in total deposits)________ 8432 0 10.
------
</TABLE>
- ---------
(1) For FDIC insurance and FICO assessment purposes, "time and savings
deposits" consists of nontransaction accounts and nontransaction accounts
and all transaction accounts other than demand deposits.
(2) Exclude core deposit intangibles.
<PAGE> 33
SUNTRUST BANK, CENTRAL FLORIDA N.A.
P.O. BOX 4418 CENTER 632
ATLANTA, GA 30302
Call Date: 03/31/98 State #: 12-1159 FFIEC 032
Vendor ID: D Cert# : 21043 RC-21
Transit #: 06310215 ---------
29
---------
Schedule RC-O - Continued
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
11. Adjustments to demand deposits reported
in Schedule RC-E for certain reciprocal demand balances:
a. Amount by which demand deposits would be reduced if the reporting bank's
reciprocal demand balances with the domestic offices of U.S. banks and
savings associations and insured branches in Puerto Rico and U.S. territories RCON
and possessions that were reported on a gross basis in Schedule RC-E ----
had been reported on a net basis_________________________________________________ 8785 0 11.a
---------
b. Amount by which demand deposits would be increased if the reporting bank's
reciprocal demand balances with foreign banks and foreign offices of other
U.S. banks (other than insured branches in Puerto Rico and U.S.
territories and possessions) that were reported on a net basis in
Schedule RC-E had been reported on a gross basis_________________________________ A181 0 11.b
---------
c. Amount by which demand deposits would be reduced if cash items in process
of collection were included in the calculation of the reporting bank's net
reciprocal demand balances with the domestic offices of U.S. banks and
savings associations and insured branches in Puerto Rico and U.S.
territories and possessions in Schedule RC-E____________________________________ A182 0 11.c
---------
12. Amount of assets netted against deposit liabilities
on the balance sheet (Schedule RC) in accordance with generally accepted
accounting principles (exclude amounts related to reciprocal demand balances):
a. Amount of assets netted against demand deposits__________________________________ A527 0 12.a
---------
b. Amount of assets netted against time and savings deposits________________________ A528 0 12.b
---------
Memoranda (To be completed each quarter except as noted) Dollar Amounts in Thousands
- ----------------------------------------------------------------------------------------------------------------
1. Total deposits of the bank (sum of Memorandum items 1.a.(1) and 1.b.(1) must equal
Schedule RC, item 13.a): RCON
a. Deposit accounts of $100,000 or less: ---------------
(1) Amount of deposit accounts of $100,000 or less_______________________________ 2702 2,584,881 M.1.a1
---------
RCO Number
(2) Number of deposit accounts of $100,000 or less -------
(to be completed for the June report only)_________________________ 3779 N/A M.1.a2
-------
RCON
b. Deposit accounts of more than $100,000: ---------------
(1) Amount of deposit accounts of more than $100,000____________________________ 2710 1,599,713 M.1.b1
------ ---------
(2) Number of deposit accounts of more than $100,000__________________ 2722 4,803 M.1.b2
------
2. Estimated amount of uninsured deposits of the bank:
a. An estimate of your bank's uninsured deposits can be determined by multiplying
the number of deposit accounts of more than $100,000 reported in Memorandum item
1.b.(2) above by $100,000 and subtracting the result from the amount of deposit
accounts of more than $100,000 reported in Memorandum item 1.b.(1) above.
Indicate in the appropriate box at right whether your bank has a method or RCO YES/NO
procedure for determining a better estimate of uninsured deposits than the --------------
estimate described above__________________________________________________________ 6861 NO M.2.a
---------
b. If the box marked YES has been checked, report the estimate of uninsured ---------
deposits determined by using your bank's method or procedure______________________ 5597 N/A M.2.b
---------
3. Has the reporting institution been consolidated with a parent bank
or savings association in that parent bank's or parent savings association's
Call Report or Thrift Financial Report?
If so, report the legal title and FDIC Certificate Number of the RCO FDIC Cert No.
parent bank or parent savings association: ---------------
Text A545 N/A M.3
---------
</TABLE>
<PAGE> 34
SUNTRUST BANK, CENTRAL FLORIDA N.A.
P.O. BOX 4418 CENTER 632
ATLANTA, GA 30302
Call Date: 03/31/98 State #: 12-1159 FFIEC 032
Vendor ID: D Cert# : 21043 RC-22
Transit #: 06310215 ---------
30
---------
Schedule RC-R - Regulatory Capital
This schedule must be completed by all banks as follows: Banks that reported
total assets of $1 billion or more in Schedule RC item 12, for June 30, 1997,
must complete items 2 through 9 and Memoranda items 1 and 2.
BANKS WITH ASSETS OF LESS THAN $1 BILLION MUST COMPLETE ITEMS 1 THROUGH 3 BELOW
OR SCHEDULE RCR IN ITS ENTIRETY, DEPENDING ON THEIR RESPONSE TO ITEM 1 BELOW.
C380 <-
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1. Test for determining the extent to which Schedule RC-R must be completed.
To be completed only by banks with total assets of less than $1 billion. CO YES/NO
Indicate in the appropriate box at the right whether the bank has total --------------
capital greater than or equal to eight percent of adjusted total assets______________________________ 6056 NO 1.
------
</TABLE>
For purposes of this test, adjusted total assets equals total assets less
cash, U.S. Treasuries, U.S. Government agency obligations, and 80 percent of
U.S. Government-sponsored agency obligations plus the allowance for loan and
lease losses and selected off-balance sheet items as reported on Schedule RC-L
(see instructions).
If the box marked YES has been checked, then the bank only has to complete
items 2 and 3 below. If the box marked NO has been checked, the bank must
complete the remainder of this schedule.
A NO response to item 1 does not necessarily mean that the bank's actual
risk-based capital ratio is less than eight percent or that the bank is not in
compliance with the risk-based capital guidelines.
Note: all banks are required to complete items 2 and 3 below.
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
2. Portion of qualifying limited-life capital instruments (original weighted RCON
average maturity of at least five years) that is includible in Tier 2 capital: -----------------
a. Subordinated debt (1) and intermediate term preferred stock______________________________________ A515 160,000 2.a
---------
b. Other limited-life capital instruments___________________________________________________________ A516 0 2.b
---------
3. Amounts used in calculating regulatory capital ratios (report amounts determined by the bank
for its own internal regulatory capital analyses consistent with applicable capital standards): ---------
a. (1) Tier 1 capital_______________________________________________________________________________ 8274 540,596 3.a.(1)
---------
(2) Tier 2 capital_______________________________________________________________________________ 8275 249,205 3.a.(2)
---------
(3) Tier 3 capital_______________________________________________________________________________ 1395 0 3.a.(3)
---------
b. Total risk-based capital_________________________________________________________________________ 3792 789,801 3.b
---------
c. Excess allowance for loan and lease losses ---------
(amount that exceeds 1.25% of gross risk-weighted assets)________________________________________ A222 0 3.c
---------
d. (1) Net risk-weighted assets (gross risk-weighted assets less excess allowance ---------
reported in item 3.c above and all other deductions)_________________________________________ A223 7,724,420 3.d.1
---------
(2) Market risk equivalent assets________________________________________________________________ 1651 0 3.d.2
---------
e. Maximum contractual dollar amount of recourse exposure in low level recourse transactions
(to be completed only if the bank uses the "direct reduction method" to report these ---------
transactions in Schedule RC-R)___________________________________________________________________ 1727 0 3.e
---------
f. "Average total assets" (quarterly average reported in Schedule RC-K, ---------
item 9, less all assets deducted from Tier 1 capital)(2)_________________________________________ A224 7,881,082 3.f
---------
</TABLE>
Items 4-9 and Memoranda items 1 and 2 are to be completed by banks that answered
NO to item 1 above and by banks with total assets of $1 billion or more.
<TABLE>
<CAPTION>
-(Column A)- -(Column B)-
Assets Credit Equi-
Recorded valent Amount
on the of Off-Balance
Dollar Amounts in Thousands Balance Sheet Sheet Items (3)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
4. Assets and credit equivalent amount of off-balance sheet items assigned RCON
to the Zero percent risk category: ----------------
a. Assets recorded on the balance sheet__________________________________________ 5163 932,467 CON 4.a
--------- --------------
b. Credit equivalent amount of off-balance sheet items_____________________________________________ 3796 0 4.b
-------
</TABLE>
- ----------
(1) Exclude mandatory convertible debt reported in Schedule RC-M, item 7.
(2) Do not deduct excess allowance for loan and lease losses.
(3) Do not report in column B the risk-weighted amount of assets reported in
column A.
<PAGE> 35
SUNTRUST BANK, CENTRAL FLORIDA N.A.
P.O. BOX 4418 CENTER 632
ATLANTA, GA 30302
Call Date: 03/31/98 State #: 12-1159 FFIEC 032
Vendor ID: D Cert# : 21043 RC-23
Transit #: 06310215 ---------
31
---------
Schedule RC-R - Continued
<TABLE>
<CAPTION>
-(Column A)- -(Column B)-
Assets Credit Equiv-
Recorded valent Amount
on the of Off-Balance
Dollar Amounts in Thousands Balance Sheet Sheet Items(2)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
5. Assets and credit equivalent amounts of off-balance sheet items assigned to the
20 percent risk category: CON
-----------------
a. Assets recorded in the balance sheet __________________________________________ 5165 1,148,491 CON 5.a
--------- ----------------
b. Credit equivalent amount of off-balance sheet items ___________________________________________ 3801 580,068 5.b
---------
6. Assets and credit equivalent amounts of off-balance sheet items
assigned to the 50 percent risk category:
---------
a. Assets recorded on the balance sheet _________________________________________ 3802 1,298,627 6.a
--------- ---------
b. Credit equivalent amount of off-balance sheet items ___________________________________________ 3803 127,269 6.b
---------
7. Assets and credit equivalent amounts of off-balance sheet items
assigned to the 100 percent risk category:
---------
a. Assets recorded on the balance sheet _________________________________________ 3804 4,671,376 7.a
--------- ---------
b. Credit equivalent amount of off-balance sheet items ___________________________________________ 3805 1,994,384 7.b
---------
8. On-balance sheet asset values excluded from and deducted in ---------
the calculation of the risk-based capital ratio(2) _____________________________ 3806 7,109 8.
---------
9. Total assets recorded on the balance sheet (sum of
items 4.a, 5.a, 6.a, 7.a and 8, column A) (must equal Schedule RC, ---------
item 12.c plus items 4.b and 4.c) ________________________________________________ 3807 8,058,070 9.
---------
<CAPTION>
Memoranda Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Current credit exposure across all off-balance sheet derivative contracts covered by the
risk-based capital standards _____________________________________________________________________ 8764 4,575 M.1
--------
<CAPTION>
---------- With a remaining maturity of ----------
-(Column A)- -(Column B)- -(Column B)-
One Year Over Over
or less one year five years
thru five years
<S> <C> <C> <C> <C> <C> <C> <C>
2. Notional principal amounts of off-balance
sheet derivative contracts:(3) RCON CON CON
---- ----------------- --------------
a. Interest rate contracts _____________________________ 3809 0 8766 23,572 8767 131,756 M.2.a
--------- --------- --------
b. Foreign exchange contracts __________________________ 3812 0 8769 0 8770 0 M.2.b
--------- --------- --------
c. Gold contracts ______________________________________ 8771 0 8772 0 8773 0 M.2.c
--------- --------- --------
d. Other precious metals contracts _____________________ 8774 0 8775 0 8776 0 M.2.d
--------- --------- --------
e. Other commodity contracts ___________________________ 8777 0 8778 0 8779 0 M.2.e
--------- --------- --------
f. Equity derivatives contracts_________________________ A000 0 A001 0 A002 0 M.2.f
--------- --------- --------
</TABLE>
- ----------
(1) Do not report in column B the risk-weighted amount of assets reported in
column A.
(2) Include the difference between the fair value and the amortized cost of
its available-for-sale securities in item 8 and report the amortized cost
of these securities in items 4 through 7 above. Item 8 also includes
on-balance sheet asset values (or portions thereof) of off-balance sheet
interest rate, foreign exchange rate, and commodity contracts and those
contracts (e.g. future contracts) not subject to risk-based capital, item
8 margin accounts and accrued receivables not included in the calculation
of credit equivalent amounts of off-balance sheet derivatives as well as
any portion of the allowance for loan and lease losses in excess of the
amount that may be included in Tier 2 capital.
(3) Exclude foreign exchange contracts with an original maturity of 14 days or
less and all future contracts.
<PAGE> 36
SUNTRUST BANK, CENTRAL FLORIDA N.A.
P.O. BOX 4418 CENTER 632
ATLANTA, GA 30302
Call Date: 03/31/98 State #: 12-1159 FFIEC 032
Vendor ID: D Cert# : 21043 RC-24
Transit #: 06310215 ---------
32
---------
Optional Narrative Statement Concerning the Amounts
Reported in the Reports of Condition and Income
at close of business on March 31, 1998
SUNTRUST BANK CENTRAL FLORIDA N.A. ATLANTA GA
- ---------------------------------- ------- --
Legal Title of Bank City State
The management of the reporting bank may, if it wishes, submit a brief narrative
statement on the amounts reported in the Reports of Condition and Income. This
optional statement will be made available to the public, along with the publicly
available data in the Reports of Condition and Income, in response to any
request for individual bank report data. However, the information reported in
column A in all of Memorandum item 1 of Schedule RC-N is regarded as
confidential and will not be released to the public.
BANKS CHOOSING TO SUBMIT THE NARRATIVE STATEMENT SHOULD ENSURE THAT THE
STATEMENT DOES NOT CONTAIN THE NAMES OR OTHER IDENTIFICATIONS OF INDIVIDUAL BANK
CUSTOMERS, REFERENCES TO THE AMOUNTS REPORTED IN THE CONFIDENTIAL ITEMS IN
SCHEDULE RC-N, OR ANY OTHER INFORMATION THAT THEY ARE NOT WILLING TO HAVE MADE
PUBLIC OR THAT WOULD COMPROMISE THE PRIVACY OF THEIR CUSTOMERS.
All information furnished by the bank in the narrative statement must be
accurate and not misleading. Appropriate efforts shall be taken by the
submitting bank to ensure the statement's accuracy.
If, subsequent to the original submission, material changes are submitted for
the data reported in the Reports of Condition and Income, the existing narrative
statement will be deleted from the files, and from disclosure; the bank at its
option, may replace it with a statement appropriate to the amended area.
The optional narrative statement will appear in agency records and in release to
the public exactly as submitted (or amended as described in the preceding
paragraph) by the management of the bank.
THE STATEMENT WILL NOT EDITED OR SCREENED IN ANYWAY BY THE SUPERVISORY AGENCIES
FOR ACCURACY OR RELEVANCE. DISCLOSURE OF THE STATEMENT SHALL NOT SIGNIFY THAT
ANY FEDERAL SUPERVISORY AGENCY HAS VERIFIED OR CONFIRMED THE ACCURACY OF THE
INFORMATION CONTAINED THEREIN. A STATEMENT TO THIS EFFECT WILL APPEAR ON ANY
PUBLIC RELEASE OF THE OPTIONAL STATEMENT SUBMITTED BY THE MANAGEMENT OF THE
REPORTING BANK.
- --------------------------------------------------------------------------------
C371 C372 <-
<TABLE>
<CAPTION>
<S> <C> <C>
RCON
------------
No comment:______________________________________________________ 6979 X
------
</TABLE>
BANK MANAGEMENT STATEMENT (please type or print clearly):
TEXT 6980 (70 characters per line)
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
/s/ R. Todd Bowers 4/27/98
-----------------------------------------------------------
Signature of Executive Officer of Bank Date of Signature
<PAGE> 37
THIS PAGE IS TO BE COMPLETED BY ALL BANKS
- --------------------------------------------------------------------------------
-----
33
-----
SUNTRUST BANK, CENTRAL FLORIDA N.A. OMB No. for FDIC: 1557-0081
P.O. BOX 4418 CENTER 632 OMB No. for FDIC: 3064-0052
ATLANTA, GA 30302 OMB No. For Federal Reserve: 7100-0036
Expiration Date: 3/31/2000
SPECIAL REPORT
C700 <-
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ------------------------------------------------------------------------
Close of Busi-
ness Date: FDIC Cert. #
---------- ------------
<S> <C>
03/31/98 21043
-------- -----
</TABLE>
- --------------------------------------------------------------------------------
LOANS TO EXECUTIVE OFFICERS (Complete as of each call report date)
- --------------------------------------------------------------------------------
The following information is required by Public Laws 90-44 and 102-242, but does
not constitute a part of the Report of Condition. With each Report of Condition,
these Laws require all banks to furnish a report of all loans or other
extensions of credit to their executive officers made since the date of the
previous Report of Condition. Data regarding individual loans or other
extensions of credit are not required. If no such loans or other extensions of
credit were made during the period, insert "none" against subitem (a). (Exclude
the first $15,000 of indebtedness of each executive officer under bank credit
card plan.) See Section 215.2 and 215.3 of Title 12 of the Code of Federal
Regulations. (Federal Reserve Board Regulation O) for the definitions of
"executive officer" and "extension of credit," respectively. Exclude loans and
other extensions of credit to directors and principal shareholders who are not
executive officers.
The following information is required by Public Laws 90-44 and 102-242, but does
not constitute a part of the Report of
<TABLE>
<CAPTION>
<S> <C> <C> <C>
RCON
------------
a. Number of loans made to executive officers since the previous Call Report date _________________ 3561 0 a.
----
b. Total dollar amount of above loans (in thousands of dollars) ___________________________________ 3582 0 b.
----
RCO From To
----
c. Range of interest charged on above loans ---- ----
(example: 9-3/4% = 9.75)___________________________________________________ 7701 0.00% 7702 0.00% c.
---- ----
</TABLE>
/s/ R. Todd Bowers 4/27/98
- --------------------------------------------------------------------------------
SIGNATURE AND TITLE OF OFFICER DATE (Month, Day, Year)
AUTHORIZED TO SIGN REPORT:
- --------------------------------------------------------------------------------
FDIC 8040/53 (3-98)
<PAGE> 1
EXHIBIT 99
LETTER OF TRANSMITTAL
FOR
8.60% SENIOR NOTES DUE 2008
OF
INTERMEDIA COMMUNICATIONS INC.
PURSUANT TO THE EXCHANGE OFFER IN RESPECT OF
ALL OF THEIR OUTSTANDING 8.60% SENIOR NOTES DUE 2008
FOR
8.60% SERIES B SENIOR NOTES DUE 2008
PURSUANT TO THE PROSPECTUS DATED JUNE , 1998
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON JULY ,
1998, UNLESS EXTENDED. TENDERS OF OLD NOTES MAY BE WITHDRAWN AT ANY TIME PRIOR
TO 5:00 P.M., NEW YORK CITY TIME, ON THE BUSINESS DAY PRIOR TO THE EXPIRATION
DATE.
TO: SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION, EXCHANGE AGENT
<TABLE>
<S> <C>
By Mail, Hand or Overnight Courier: By Facsimile:
SunTrust Bank, Central Florida, National (407) 237-5299
Association
225 East Robinson Street, Suite 250 Confirm by Telephone:
Orlando, Florida 32801 (407) 237-5179
Attention: Alice L. Springer
</TABLE>
Delivery of this Letter of Transmittal to an address, or transmission via
telegram, telex or facsimile, other than as set forth above will not constitute
a valid delivery. The instructions contained herein should be read carefully
before this Letter of Transmittal is completed.
HOLDERS WHO WISH TO BE ELIGIBLE TO RECEIVE NEW NOTES FOR THEIR OLD NOTES
PURSUANT TO THE EXCHANGE OFFER MUST VALIDLY TENDER (AND NOT WITHDRAW) THEIR OLD
NOTES TO THE EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE.
By execution hereof, the undersigned acknowledges receipt of the Prospectus
(the "Prospectus"), dated June , 1998, of Intermedia Communications Inc. (the
"Issuer"), which, together with this Letter of Transmittal and the Instructions
hereto (the "Letter of Transmittal"), constitute the Issuer's offer (the
"Exchange Offer") to exchange $1,000 principal amount of its 8.60% Series B
Senior Notes due 2008 (the "New Notes") that have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), pursuant to a
Registration Statement of which the Prospectus constitutes a part, for each
$1,000 principal amount of its outstanding 8.60% Senior Notes due 2008 (the "Old
Notes"), upon the terms and subject to the conditions set forth in the
Prospectus.
The Company has not entered into any arrangement or understanding with any
person to distribute the New Notes to be received in the Exchange Offer and to
the best of the Company's information and belief, each person participating in
the Exchange Offer is acquiring the New Notes in its ordinary course of business
and has no arrangement or understanding with any person to participate in the
distribution of the New Notes to be received in the Exchange Offer.
This Letter of Transmittal is to be used by Holders if: (i) certificates
representing Old Notes are to be physically delivered to the Exchange Agent
herewith by Holders; (ii) tender of Old Notes is to be made by book-entry
transfer to the Exchange Agent's account at The Depository Trust Company ("DTC")
pursuant to the procedures set forth in the Prospectus under "The Exchange
Offer -- Procedures for Tendering Old Notes" by any financial institution that
is a participant in DTC and whose name appears on a security position listing as
the owner of Old Notes (such participants, acting on behalf of Holders, are
referred to herein, together with such Holders, as "Acting Holders"); or (iii)
tender of Old Notes is to be made according to the guaranteed delivery
procedures set forth in the Prospectus under "The Exchange Offer -- Procedures
for Tendering Old Notes." Delivery of documents to DTC does not constitute
delivery to the Exchange Agent.
1
<PAGE> 2
The term "Holder" with respect to the Exchange Offer means any person: (i)
in whose name Old Notes are registered on the books of the Issuer or any other
person who has obtained a properly completed bond power from the registered
Holder or (ii) whose Old Notes are held of record by DTC who desires to deliver
such Old Notes by book entry transfer at DTC.
The undersigned has completed, executed and delivered this Letter of
Transmittal to indicate the action the undersigned desires to take with respect
to the Exchange Offer. Holders who wish to tender their Old Notes must complete
this Letter of Transmittal in its entirety.
All capitalized terms used herein and not defined herein shall have the
meaning ascribed to them in the Prospectus.
The instructions included with this Letter of Transmittal must be followed.
Questions and requests for assistance or for additional copies of the
Prospectus, this Letter of Transmittal and the Notice of Guaranteed Delivery may
be directed to the Exchange Agent. See Instruction 8 herein.
HOLDERS WHO WISH TO ACCEPT THE EXCHANGE OFFER AND TENDER THEIR OLD NOTES
MUST COMPLETE THIS LETTER OF TRANSMITTAL IN ITS ENTIRETY.
List below the Old Notes to which this Letter of Transmittal relates. If
the space provided below is inadequate, list the certificate numbers and
principal amounts on a separately executed schedule and affix the schedule to
this Letter of Transmittal. Tenders of Old Notes will be accepted only in
principal amounts equal to $1,000 or integral multiples thereof.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
DESCRIPTION OF OLD NOTES
- ----------------------------------------------------------------------------------------------------------
CERTIFICATE AGGREGATE
NUMBER(S)* PRINCIPAL
(ATTACH SIGNED AMOUNT
NAME(S) AND ADDRESS(ES) OF HOLDER(S) LIST IF TENDERED (IF LESS
(PLEASE FILL IN, IF BLANK) NECESSARY) THAN ALL)**
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
------------------------------------------
------------------------------------------
------------------------------------------
------------------------------------------
------------------------------------------
------------------------------------------
------------------------------------------
------------------------------------------
------------------------------------------
------------------------------------------
------------------------------------------
------------------------------------------
- ----------------------------------------------------------------------------------------------------------
TOTAL PRINCIPAL AMOUNT OF OLD NOTES TENDERED
- ----------------------------------------------------------------------------------------------------------
* Need not be completed by Holders tendering by book-entry transfer.
** Need not be completed by Holders who wish to tender with respect to all Old Notes listed. See
Instruction 2.
- ----------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 3
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY DTC TO THE EXCHANGE
AGENT'S ACCOUNT AT DTC AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
-------------------------------------------------------------------------------
DTC Book-Entry Account No.:
-------------------------------------------------------------------------------
Transaction Code No.:
----------------------------------------------------------------------------
If Holders desire to tender Old Notes pursuant to the Exchange Offer and
(i) certificates representing such Old Notes are not lost but are not
immediately available, (ii) time will not permit this Letter of Transmittal,
certificates representing such Old Notes or other required documents to reach
the Exchange Agent prior to the Expiration Date or (iii) the procedures for
book-entry transfer cannot be completed prior to the Expiration Date, such
Holders may effect a tender of such Old Notes in accordance with the guaranteed
delivery procedures set forth in the Prospectus under "The Exchange
Offer -- Procedures for Tendering Old Notes."
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY PREVIOUSLY DELIVERED TO THE EXCHANGE AGENT AND
COMPLETE THE FOLLOWING:
Name(s) of Holder(s) of Old Notes:
-------------------------------------------------------------------------
Window Ticket No. (if any):
----------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
--------------------------------------------------------
Name of Eligible Institution that Guaranteed Delivery:
------------------------------------------------------
DTC Book-Entry Account No.:
-------------------------------------------------------------------------------
If Delivered by Book-Entry Transfer,
Name of Tendering Institution:
-------------------------------------------------------------------------------
Transaction Code No.:
----------------------------------------------------------------------------
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name:
----------------------------------------------------------------------------
Address:
----------------------------------------------------------------------------
- --------------------------------------------------------------------------------
LADIES AND GENTLEMEN:
Subject to the terms of the Exchange Offer, the undersigned hereby tenders
to the Issuer the principal amount of Old Notes indicated above. Subject to and
effective upon the acceptance for exchange of the principal amount of Old Notes
tendered in accordance with this Letter of Transmittal, the undersigned sells,
assigns and transfers to, or upon the order of, the Issuer all right, title and
interest in and to the Old Notes tendered hereby. The undersigned hereby
irrevocably constitutes and appoints the Exchange Agent its agent and
attorney-in-fact (with full knowledge that the Exchange Agent also acts as the
agent of the Issuer and as Trustee under the Indenture for the Old Notes and the
New Notes) with respect to the tendered Old Notes with full power of
substitution to (i) deliver certificates for such Old Notes to the Issuer, or
transfer ownership of such Old Notes on the account books maintained by DTC,
together, in either such case, with all accompanying evidences of transfer and
authenticity to, or upon the order of, the Issuer and (ii) present such Old
Notes for transfer on the books of the Issuer and receive all benefits and
otherwise exercise all rights of beneficial ownership of such Old Notes, all in
accordance with the terms of the Exchange Offer. The power of attorney granted
in this paragraph shall be deemed irrevocable and coupled with an interest.
The undersigned hereby represents and warrants that he or she has full
power and authority to tender, sell, assign and transfer the Old Notes tendered
hereby and that the Issuer will acquire good and unencumbered title thereto,
free and clear of all liens, restrictions, charges and encumbrances and not
subject to any adverse claim, when the same are acquired by the Issuer. The
undersigned also acknowledges that this Exchange Offer is being made in reliance
upon an interpretation by the staff of the Securities and Exchange Commission
that the New Notes issued in exchange for the Old Notes pursuant to the Exchange
Offer may
3
<PAGE> 4
be offered for resale, resold and otherwise transferred by Holders thereof
(other than any such Holder that is an "affiliate" of the Issuer within the
meaning of Rule 405 under the Securities Act) without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that such New Notes are acquired in the ordinary course of such Holders'
business and such Holders have no arrangement with any person to participate in
the distribution of such New Notes. The undersigned acknowledges that if he or
she is participating in the Exchange Offer for the purpose of distributing the
New Notes, the undersigned must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with a secondary
resale transaction. If the undersigned is not a broker-dealer, the undersigned
represents that it is not engaged in, and does not intend to engage in, a
distribution of the New Notes. If the undersigned is a broker-dealer that will
receive New Notes for its own account in exchange for Old Notes, the undersigned
represents that such Old Notes were acquired as a result of market-making
activities or other trading activities and acknowledges that it will deliver a
prospectus in connection with any resale of such New Notes; however, by so
acknowledging and by delivering a prospectus, the undersigned will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
The undersigned represents that (i) the New Notes acquired pursuant to the
Exchange Offer are being obtained in the ordinary course of such Holder's
business, (ii) such Holder has no arrangements with any person to participate in
the distribution of such New Notes and (iii) such Holder is not an "affiliate,"
as defined under Rule 405 of the Securities Act, of the Issuer or, if such
Holder is an affiliate, that such Holder will comply with the registration and
prospectus delivery requirements of the Securities Act to the extent applicable.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Exchange Agent or the Issuer to be necessary or
desirable to complete the assignment and transfer of the Old Notes tendered
hereby.
For purposes of the Exchange Offer, the Issuer shall be deemed to have
accepted validly tendered Old Notes when, as and if the Issuer has given oral or
written notice thereof to the Exchange Agent. If any tendered Old Notes are not
accepted for exchange pursuant to the Exchange Offer for any reason,
certificates for any such unaccepted Old Notes will be returned (except as noted
below with respect to tenders through DTC), without expense, to the undersigned
at the address shown below or at a different address shown below or at a
different address as may be indicated under "Special Issuance Instructions" as
promptly as practicable after the Expiration Date.
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall survive the death, incapacity or dissolution of the
undersigned and every obligation under this Letter of Transmittal shall be
binding upon the undersigned's heirs, personal representatives, successors and
assigns.
The undersigned understands that tenders of Old Notes pursuant to the
procedures described under the caption "The Exchange Offer -- Procedures for
Tendering Old Notes" in the Prospectus and in the instructions hereto will
constitute a binding agreement between the undersigned and the Issuer upon the
terms and subject to the conditions of the Exchange Offer.
Unless otherwise indicated under "Special Issuance Instructions," please
issue the certificates representing the New Notes issued in exchange for the Old
Notes accepted for exchange and return any Old Notes not tendered or not
exchanged, in the name(s) of the undersigned (or in either such event in the
case of Old Notes tendered by DTC, by credit to the account at DTC). Similarly,
unless otherwise indicated under "Special Delivery Instructions," please send
the certificates representing the New Notes issued in exchange for the Old Notes
accepted for exchange and any certificates for Old Notes not tendered or not
exchanged (and accompanying documents, as appropriate) to the undersigned at the
address shown below the undersigned's signatures, unless, in either event,
tender is being made through DTC. In the event that both "Special Issuance
Instructions" and "Special Delivery Instructions" are completed, please issue
the certificates representing the New Notes issued in exchange for the Old Notes
accepted for exchange and return any Old Notes not tendered or not exchanged in
the name(s) of, and send said certificates to, the person(s) so indicated. The
undersigned recognizes that the Issuer has no obligation pursuant to the
"Special Issuance Instructions" and "Special Delivery Instructions" to transfer
any Old Notes from the name of the registered Holder(s) thereof if the Issuer
does not accept for exchange any of the Old Notes so tendered.
4
<PAGE> 5
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS OF OLD NOTES REGARDLESS
OF WHETHER OLD NOTES ARE BEING PHYSICALLY DELIVERED HEREWITH)
This Letter of Transmittal must be signed by the Holder(s) of Old Notes
exactly as their name(s) appear(s) on certificate(s) for Old Notes or, if
tendered by a participant in DTC, exactly as such participant's name appears on
a security position listing as the owner of Old Notes, or by person(s)
authorized to become registered Holder(s) by endorsements and documents
transmitted with this Letter of Transmittal. If signature is by a trustee,
executor, administrator, guardian, attorney-in-fact, officer or other person
acting in a fiduciary or representative capacity, such person must set forth his
or her full title below under "Capacity" and submit evidence satisfactory to the
Issuer of such person's authority to so act. See Instruction 3 herein.
If the signature appearing below is not of the registered Holder(s) of the
Old Notes, then the registered Holder(s) must sign a valid proxy.
<TABLE>
<S> <C>
X -------------------------------- Date: -----------------------------
X -------------------------------- Date: -----------------------------
SIGNATURE(S) OF HOLDER(S) OR
AUTHORIZED SIGNATORY
Name(s): -------------------------------- Address
-------------------------------------------------------
- -------------------------------- ----------------------------------------------
(PLEASE PRINT) (INCLUDING ZIP CODE)
Capacity: -------------------------------- Area Code and Telephone No.:
--------------------------------
Social Security No.: ---------------------
</TABLE>
SIGNATURE GUARANTEE (SEE INSTRUCTION 3 HEREIN)
CERTAIN SIGNATURES MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION
- --------------------------------------------------------------------------------
(NAME OF ELIGIBLE INSTITUTION GUARANTEEING SIGNATURES)
- --------------------------------------------------------------------------------
(ADDRESS (INCLUDING ZIP CODE) AND TELEPHONE NUMBER (INCLUDING AREA CODE) OF
FIRM)
- --------------------------------------------------------------------------------
(AUTHORIZED SIGNATURE)
- --------------------------------------------------------------------------------
(PRINTED NAME)
- --------------------------------------------------------------------------------
(TITLE)
DATE:
- ------------------------------
5
<PAGE> 6
------------------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4 HEREIN)
To be completed ONLY if certificates for Old Notes in a principal
amount not tendered are to be issued in the name of, or the New Notes
issued pursuant to the Exchange Offer are to be issued to the order of,
someone other than the person or persons whose signature(s) appear(s)
within this Letter of Transmittal or issued to an address different from
that shown in the box entitled "Description of Old Notes" within this
Letter of Transmittal, or if Old Notes tendered by book-entry transfer
that are not accepted for purchase are to be credited to an account
maintained at DTC.
Name:
----------------------------------------------------
(PLEASE PRINT)
Address:
--------------------------------------------------
(PLEASE PRINT)
------------------------------------------------------------
ZIP CODE
------------------------------------------------------------
TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER
============================================================
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4 HEREIN)
To be completed ONLY if certificates for Old Notes in a principal
amount not tendered or not accepted for purchase or the New Notes issued
pursuant to the Exchange Offer are to be sent to someone other than the
person or persons whose signature(s) appear(s) within this Letter of
Transmittal or to an address different from that shown in the box entitled
"Description of Old Notes" within this Letter of Transmittal.
Name:
----------------------------------------------------
(PLEASE PRINT)
Address:
--------------------------------------------------
(PLEASE PRINT)
------------------------------------------------------------
ZIP CODE
------------------------------------------------------------
TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER
------------------------------------------------------------
6
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS
OF THE EXCHANGE OFFER AND THE SOLICITATION
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND OLD NOTES. The certificates
for the tendered Old Notes (or a confirmation of a book-entry into the Exchange
Agent's account at DTC of all Old Notes delivered electronically), as well as a
properly completed and duly executed copy of this Letter of Transmittal or
facsimile hereof and any other documents required by this Letter of Transmittal
must be received by the Exchange Agent at its address set forth herein prior to
5:00 p.m., New York City time, on the Expiration Date. The method of delivery of
the tendered Old Notes, this Letter of Transmittal and all other required
documents to the Exchange Agent is at the election and risk of the Holder and,
except as otherwise provided below, the delivery will be deemed made only when
actually received by the Exchange Agent. Instead of delivery by mail, it is
recommended that the Holder use an overnight or hand delivery service. In all
cases, sufficient time should be allowed to assure timely delivery. No Letter of
Transmittal or Old Notes should be sent to the Issuer.
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available or (ii) who cannot deliver their Old Notes, this Letter of
Transmittal or any other documents required hereby to the Exchange Agent prior
to the Expiration Date, must tender their Old Notes and follow the guaranteed
delivery procedures set forth in the Prospectus. Pursuant to such procedures:
(i) such tender must be made by or through an Eligible Institution; (ii) prior
to the Expiration Date, the Exchange Agent must have received from the Eligible
Institution a properly completed and duly executed Notice of Guaranteed Delivery
(by facsimile transmission, mail or hand delivery) setting forth the name and
address of the Holder of the Old Notes, the certificate number or numbers of
such Old Notes and the principal amount of Old Notes tendered, stating that the
tender is being made thereby and guaranteeing that, within five business days
after the Expiration Date, this Letter of Transmittal (or facsimile thereof)
together with the certificate(s) representing the Old Notes (or a confirmation
of electronic delivery of book-entry delivery into the Exchange Agent's account
at DTC) and any of the required documents will be deposited by the Eligible
Institution with the Exchange Agent; and (iii) such properly completed and
executed Letter of Transmittal (or facsimile hereof), as well as all other
documents required by this Letter of Transmittal and the certificate(s)
representing all tendered Old Notes in proper form for transfer (or a
confirmation of electronic mail delivery of book-entry delivery into the
Exchange Agent's account at DTC), must be received by the Exchange Agent within
five business days after the Expiration Date, all as provided in the Prospectus
under the caption "Guaranteed Delivery Procedures." Any Holder of Old Notes who
wishes to tender his Old Notes pursuant to the guaranteed delivery procedures
described above must ensure that the Exchange Agent receives the Notice of
Guaranteed Delivery prior to 5:00 p.m., New York City time, on the Expiration
Date.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Old Notes will be determined by
the Issuer in its sole discretion, which determination will be final and
binding. The Issuer reserves the absolute right to reject any and all Old Notes
not properly tendered or any Old Notes the Issuer's acceptance of which would,
in the opinion of counsel for the Issuer, be unlawful. The Issuer also reserves
the right to waive any irregularities or conditions of tender as to particular
Old Notes. The Issuer's interpretation of the terms and conditions of the
Exchange Offer (including the instructions in this Letter of Transmittal) will
be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of Old Notes must be cured within such
time as the Issuer shall determine. Neither the Issuer, the Exchange Agent nor
any other person shall be under any duty to give notification of defects or
irregularities with respect to tenders of Old Notes, nor shall any of them incur
any liability for failure to give such notification. Tenders of Old Notes will
not be deemed to have been made until such defects or irregularities have been
cured or waived. Any Old Notes received by the Exchange Agent that are not
properly tendered and as to which the defects or irregularities have not been
cured or waived will be returned without cost by the Exchange Agent to the
tendering Holders of Old Notes, unless otherwise provided in this Letter of
Transmittal, as soon as practicable following the Expiration Date.
7
<PAGE> 8
2. PARTIAL TENDERS. Tenders of Old Notes will be accepted in all
denominations of $1,000 and integral multiples in excess thereof. If less than
the entire principal amount of any Old Notes is tendered, the tendering Holders
should fill in the principal amount tendered in the third column of the chart
entitled "Description of Old Notes." The entire principal amount of Old Notes
delivered to the Exchange Agent will be deemed to have been tendered unless
otherwise indicated. If the entire principal amount of all Old Notes is not
tendered, Old Notes for the principal amount of Old Notes delivered to the
Exchange Agent will be deemed to have been tendered unless otherwise indicated.
If the entire principal amount of all Old Notes is not tendered, Old Notes for
the principal amount of Old Notes not tendered and a certificate or certificates
representing New Notes issued in exchange of any Old Notes accepted will be sent
to the Holder at his or her registered address, unless a different address is
provided in the appropriate box on this Letter of Transmittal or unless tender
is made through DTC, promptly after the Old Notes are accepted for exchange.
3. SIGNATURES ON THE LETTER OF TRANSMITTAL; BOND POWERS AND ENDORSEMENTS;
GUARANTEE OF SIGNATURES. If this Letter of Transmittal (or facsimile hereof) is
signed by the registered Holder(s) of the Old Notes tendered hereby, the
signature must correspond with the name(s) as written on the face of the Old
Notes without alteration, enlargement or any change whatsoever.
If this Letter of Transmittal (or facsimile hereof) is signed by the
registered Holder(s) of Old Notes tendered and the certificate(s) for New Notes
issued in exchange therefor is to be issued (or any untendered principal amount
of Old Notes is to be reissued) to the registered Holder, such Holder need not
and should not endorse any tendered Old Note, nor provide a separate bond power.
In any other case, such Holder must either properly endorse the Old Notes
tendered or transmit a properly completed separate bond power with this Letter
of Transmittal, with the signatures on the endorsement or bond power guaranteed
by an Eligible Institution.
If this Letter of Transmittal (or facsimile hereof) is signed by a person
other than the registered Holder(s) of any Old Notes listed, such Old Notes must
be endorsed or accompanied by appropriate bond powers signed as the name of the
registered Holder(s) appears on the Old Notes.
If this Letter of Transmittal (or facsimile hereof) or any Old Notes or
bond powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, or officers of corporations or others acting in a fiduciary
or representative capacity, such persons should so indicate when signing, and
unless waived by the Issuer, evidence satisfactory to the Issuer of their
authority so to act must be submitted with this Letter of Transmittal.
Endorsements on Old Notes or signatures on bond powers required by this
Instruction 3 must be guaranteed by an Eligible Institution.
Signatures on this Letter of Transmittal (or facsimile hereof) must be
guaranteed by an Eligible Institution unless the Old Notes tendered pursuant
thereto are tendered (i) by a registered Holder (including any participant in
DTC whose name appears on a security position listing as the owner of Old Notes)
who has not completed the box set forth herein entitled "Special Issuance
Instructions" or the box entitled "Special Delivery Instructions" or (ii) for
the account of an Eligible Institution.
4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. Tendering Holders should
indicate, in the applicable spaces, the name and address to which New Notes or
substitute Old Notes for principal amounts not tendered or not accepted for
exchange are to be issued or sent, if different from the name and address of the
person signing this Letter of Transmittal (or in the case of tender of the Old
Notes through DTC, if different from DTC). In the case of issuance in a
different name, the taxpayer identification or social security number of the
person named must also be indicated.
5. TRANSFER TAXES. The Issuer will pay all transfer taxes, if any,
applicable to the exchange of Old Notes pursuant to the Exchange Offer. If,
however, certificates representing New Notes or Old Notes for principal amounts
not tendered or accepted for exchange are to be delivered to, or are to be
registered or issued in the name of, any person other than the registered Holder
of the Old Notes tendered hereby, or if tendered Old Notes are registered in the
name of any person other than the person signing this Letter of Transmittal, or
if a transfer tax is imposed for any reason other than the exchange of Old Notes
pursuant to
8
<PAGE> 9
the Exchange Offer, then the amount of any such transfer taxes (whether imposed
on the registered Holder or any other person) will be payable by the tendering
Holder. If satisfactory evidence of payment of such taxes or exemption therefrom
is not submitted with this Letter of Transmittal, the amount of such transfer
taxes will be billed directly to such tendering Holder.
Except as provided in this Instruction 5, it will not be necessary for
transfer tax stamps to be affixed to the Old Notes listed in this Letter of
Transmittal.
6. WAIVER OF CONDITIONS. The Issuer reserves the absolute right to amend,
waive or modify specified conditions in the Exchange Offer in the case of any
Old Notes tendered.
7. MUTILATED, LOST, STOLEN OR DESTROYED OLD NOTES. Any tendering Holder
whose Old Notes have been mutilated, lost, stolen or destroyed should contact
the Exchange Agent at the address indicated herein for further instruction.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests
for assistance and requests for additional copies of the Prospectus or this
Letter of Transmittal may be directed to the Exchange Agent at the address
specified on the cover page of this Letter of Transmittal. Holders may also
contact their broker, dealer, commercial bank, trust company or other nominee
for assistance concerning the Exchange Offer.
(DO NOT WRITE IN SPACE BELOW)
<TABLE>
<S> <C> <C>
CERTIFICATE SURRENDERED OLD NOTES TENDERED OLD NOTES ACCEPTED
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
Delivery Prepared by
- ----------------------------------------------------------------------------------------------- Checked
by
----------------------------------------------------------------------------------------------------- Date
-----------------------------------------------------------------------------------------------------------
</TABLE>
9
