<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 15, 1999
REGISTRATION NO. 33-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
INTERMEDIA COMMUNICATIONS INC.
(Exact name of registrant as specified in its charter)
---------------------
<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. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
-----------
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
-----------
---------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF SECURITIES TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
9 1/2% Series B Senior Notes due 2009........ $300,000,000 $1,000 $300,000,000 $83,400
- ---------------------------------------------------------------------------------------------------------------------------------
12 1/4% Series B Senior Subordinated
Discount Notes due 2009.................... $364,000,000 $557.35(1) $202,875,400 $56,400
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</TABLE>
(1) Calculated pursuant to Rule 457(f)(2) based upon the book value on March 31,
1999 of the securities to be received by the registrant in the exchange.
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
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED APRIL 15, 1999
OFFER TO EXCHANGE
9 1/2% SERIES B SENIOR NOTES DUE 2009
FOR ANY AND ALL OUTSTANDING 9 1/2% SENIOR NOTES DUE 2009
AND
12 1/4% SERIES B SENIOR SUBORDINATED DISCOUNT NOTES DUE 2009
FOR ANY AND ALL OUTSTANDING 12 1/4% SENIOR SUBORDINATED DISCOUNT NOTES DUE 2009
OF
INTERMEDIA COMMUNICATIONS INC.
THE EXCHANGE OFFERS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON , 1999, UNLESS EXTENDED
---------------------
- On February 24, 1999, we completed private offerings of $300,000,000
aggregate principal amount of 9 1/2% Senior Notes and $364,000,000
aggregate principal amount at maturity of 12 1/4% Senior Subordinated
Notes (collectively, the "Old Notes"). The Offerings were exempt from
registration under the Securities Act of 1933.
- In the Exchange Offers, we are offering to exchange, for all outstanding
9 1/2% Senior Notes that are validly tendered and not validly withdrawn
before the expiration of the Exchange Offers, an equal amount of 9 1/2%
Series B Senior Notes which are registered under the Securities Act of
1933 and for all outstanding 12 1/4% Senior Subordinated Notes that are
validly tendered and not validly withdrawn before the expiration of the
Exchange Offers, an equal amount of 12 1/4% Series B Senior Subordinated
Notes which are registered under the Securities Act of 1933.
- The exchange of notes will not be a taxable exchange for U.S. federal
income tax purposes.
- The terms of the 9 1/2% Series B Senior Notes to be issued are
substantially identical to the terms of the 9 1/2% Senior Notes, except
for some of the transfer restrictions and registration rights relating to
the 9 1/2% Senior Notes, and the terms of the 12 1/4% Series B Senior
Subordinated Notes to be issued are substantially identical to the terms
of the 12 1/4% Senior Subordinated Notes, except for some of the transfer
restrictions and registration rights relating to the 12 1/4% Senior
Subordinated Notes.
- We will not receive any proceeds from the Exchange Offers.
- You may tender Old Notes only in denominations of $1,000 and multiples of
$1,000.
- The Exchange Offers are subject to customary conditions, including the
condition that the Exchange Offers not violate applicable law or any
applicable interpretation of the Staff of the Securities and Exchange
Commission.
- You may withdraw tenders of Old Notes at any time prior to the expiration
of the Exchange Offers.
THIS PROSPECTUS INCORPORATES IMPORTANT BUSINESS AND FINANCIAL INFORMATION
ABOUT INTERMEDIA THAT IS NOT INCLUDED IN OR DELIVERED WITH THIS PROSPECTUS. THIS
INFORMATION IS AVAILABLE TO YOU WITHOUT CHARGE UPON YOUR WRITTEN OR ORAL
REQUEST. TO REQUEST SUCH INFORMATION PLEASE CONTACT INTERMEDIA COMMUNICATIONS
INC., 3625 QUEEN PALM DRIVE, TAMPA, FLORIDA 33619 (TELEPHONE 813-829-0011)
ATTENTION: INVESTOR RELATIONS. IN ORDER TO ENSURE TIMELY DELIVERY OF THE
DOCUMENTS, ANY REQUEST SHOULD BE MADE BY , 1999.
---------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 8 FOR A DESCRIPTION OF CERTAIN FACTORS THAT
SHOULD BE
CONSIDERED BY PARTICIPANTS IN THE EXCHANGE OFFERS.
---------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------
The date of this Prospectus is April , 1999
<PAGE> 3
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents or information have been filed by Intermedia with
the SEC and are incorporated herein by reference:
Intermedia's Annual Report on Form 10-K for the year ended December 31,
1998.
The portions of the Proxy Statement for the Annual Meeting of Stockholders
of Intermedia to be held on May 20, 1999 that have been incorporated by
reference into Intermedia's Annual Report on Form 10-K for the year ended
December 31, 1998.
All documents subsequently filed by Intermedia with the SEC pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 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.
Intermedia will provide without charge 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, to each person, including any
beneficial owner, to whom a copy of this Prospectus has been delivered, upon
written or oral request made to Intermedia Communications Inc., 3625 Queen Palm
Drive, Tampa, Florida 33619 (telephone 813-829-0011), Attention: Investor
Relations.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed a Registration Statement on Form S-4 with the SEC covering
the New Notes, and this Prospectus is part of our Registration Statement. For
further information on Intermedia and the New Notes, you should refer to our
Registration Statement and its exhibits. This Prospectus summarizes material
provisions of contracts and other documents that we refer you to. Since the
Prospectus may not contain all the information that you may find important, you
should review the full text of these documents. We have included copies of these
documents as exhibits to our Registration Statement.
We are currently subject to the periodic reporting and other informational
requirements of the Securities Exchange Act. The reports and other information
that we file with the SEC can be inspected and copied at prescribed rates at the
public reference facilities maintained by the SEC at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and will also be available for
inspection and copying at the regional offices of the SEC located at 7 World
Trade Center, Suite 1300, New York, New York 10048 and the Citicorp Center at
500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. You may
obtain information on the operation of the public reference facilities by
calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet Web Site
at http://www.sec.gov that contains reports, proxy and information statements
and other information. You can also obtain copies of such materials from us upon
request. Our common stock is listed on the Nasdaq National Market under the
symbol "ICIX". Reports, proxy statements and other information concerning
Intermedia 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 we cease to be subject to the informational reporting
requirements of the Exchange Act, we have agreed that, whether or not we are
required to do so by the rules and regulations of the SEC, for so long as any of
the New Notes remain outstanding, we will furnish to the holders of the
securities and file with the SEC (unless the SEC will not accept such a filing)
(a) all quarterly and annual financial information that would be required to be
contained in a filing with the SEC on Forms 10-Q and 10-K if we 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 our certified independent public accountants and (b)
all reports that would be required to be filed with the SEC on Form 8-K if we
were required to file such reports. In addition, for so long as any of the New
Notes remain outstanding, we have agreed to make available to any prospective
purchaser of the New Notes or beneficial owner of the New Notes in connection
with any sale thereof the information required by Rule 144A(d)(4) under the
Securities Act.
i
<PAGE> 4
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this Prospectus.
Because it is a summary, it does not contain all the information you should
consider before participating in the Exchange Offers. You should read the entire
Prospectus carefully, including the section titled "Risk Factors." In addition
you should review the Consolidated Financial Statements and the notes relating
to those statements which are incorporated into this Prospectus by Reference.
Except where the context otherwise requires, when we say "we," "us," "the
Company" or "Intermedia," we mean the combined business of Intermedia
Communications Inc. and its subsidiaries. Except where the context otherwise
requires, when we say the "Old Notes" we mean the 9 1/2% Senior Notes and the
12 1/4% Senior Subordinated Notes, when we say the "New Notes" we mean the
9 1/2% Series B Senior Notes and the 12 1/4% Series B Senior Subordinated Notes,
when we say the "Senior Notes" we mean the 9 1/2% Senior Notes and the 9 1/2%
Series B Senior Notes, when we say the "Senior Subordinated Notes" we mean the
12 1/4% Senior Subordinated Notes and the 12 1/4% Series B Senior Subordinated
Notes and when we say the "Notes" we mean the Senior Notes and the Senior
Subordinated Notes.
This Prospectus contains certain "forward-looking statements" concerning
the Company's operations, economic performance and financial condition. You can
identify these statements by looking for the words "estimate," "project,"
"anticipate," "expect," "intend," "believe" and similar expressions. These
statements reflect our plans, expectations and beliefs. As a result,
forward-looking statements are subject to certain risks and uncertainties,
including those identified under "Risk Factors." Actual results could differ
materially from those anticipated in this Prospectus.
THE COMPANY
We provide integrated communications services to business and government
customers. Our integrated communications services include local, long distance,
high speed data and Internet services. We serve approximately 90,000 business
customers throughout the United States and in selected international markets
through a combination of owned and leased network facilities. We are:
- the largest domestic, independent company among those companies
generally referred to as competitive local exchange carriers (based
upon fiscal 1998 telecommunications services revenues of $712.8
million);
- the largest provider of shared tenant telecommunications services in
the United States;
- a tier-one Internet service provider;
- the fourth largest nationwide frame relay provider in the United
States (based on frame relay revenues); and
- a rapidly growing provider of Web hosting services and applications.
We were incorporated in the state of Delaware on November 9, 1987, as the
successor to a Florida corporation that was founded in 1986. Our principal
offices are located at 3625 Queen Palm Drive, Tampa, Florida 33619, and our
telephone number is (813) 829-0011.
THE EXCHANGE OFFERS
Securities Offered............ Up to $300,000,000 principal amount of our
9 1/2% Series B Senior Notes due 2009 and up to
$364,000,000 principal amount at maturity of
our 12 1/4% Series B Senior Subordinated
Discount Notes due 2009. The terms of the
9 1/2% Series B Senior Notes and the 9 1/2%
Senior Notes are substantially identical in all
material respects, except for certain transfer
restrictions and registration rights relating
to the 9 1/2% Senior Notes which do not apply
to the 9 1/2% Series B Senior Notes. The terms
of the 12 1/4% Series B Senior Subordinated
Notes and the 12 1/4% Senior Subordinated
1
<PAGE> 5
Notes are substantially identical in all
material respects, except for certain transfer
restrictions and registration rights relating
to the 12 1/4% Senior Subordinated Notes which
do not apply to the 12 1/4% Series B Senior
Subordinated Notes. See "Description of the
Senior Notes" and "Description of Senior
Subordinated Notes."
The Exchange Offer............ We are offering to exchange $1,000 principal
amount of 9 1/2% Series B Senior Notes for each
$1,000 principal amount of 9 1/2% Senior Notes
and to exchange $1,000 principal amount at
maturity of 12 1/4% Series B Senior
Subordinated Notes for each $1,000 principal
amount at maturity of 12 1/4% Senior
Subordinated Notes. See "The Exchange Offers"
for a description of the procedures for
tendering Old Notes. The Exchange Offers
satisfy our registration obligations under the
registration rights agreements relating to the
Old Notes. When the Exchange Offers are
completed, holders of Old Notes that were not
prohibited from participating in the Exchange
Offers and did not tender their Old Notes will
not have any registration rights under the
registration rights agreements with respect to
the non-tendered Old Notes and, therefore, the
Old Notes will continue to be subject to
certain transfer restrictions.
Tenders, Expiration Date;
Withdrawal.................... Unless extended, the Exchange Offers will
expire at 5:00 p.m., New York City time, on
, 1999. Tenders of Old Notes pursuant
to the Exchange Offers may be withdrawn and
retendered at any time prior to the expiration
of the Exchange Offers. Any Old Notes not
accepted for exchange for any reason will be
returned without expense to the tendering
holder after the expiration or termination of
the Exchange Offers.
Federal Income Tax
Considerations................ The Exchange Offers will not result in any
income, gain or loss to the holders or to us
for federal income tax purposes. See "Certain
Federal Income Tax Considerations."
Use of Proceeds............... We will receive no proceeds from the exchange
of the Old Notes for the New Notes pursuant to
the Exchange Offers.
Exchange Agent................ SunTrust Bank, Central Florida, National
Association, the trustee under the indentures
governing the Notes, is serving as Exchange
Agent in connection with the Exchange Offers.
CONSEQUENCES OF EXCHANGING OLD NOTES PURSUANT TO THE EXCHANGE OFFER
Generally, holders of Old Notes, other than any holder who is our
"affiliate" within the meaning of Rule 405 under the Securities Act, who
exchange their Old Notes for New Notes pursuant to the Exchange Offers may offer
their New Notes for resale, resell their New Notes, and otherwise transfer their
New Notes without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided:
- the New Notes are acquired in the ordinary course of the holders'
business,
- the holders have no arrangement with any person to participate in a
distribution of the New Notes, and
- neither the holder nor any other person is engaging in or intends to
engage in a distribution of the New Notes.
2
<PAGE> 6
Each broker-dealer that receives New 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 New Notes. Broker-dealers may not exchange Old Notes
which are part of an unsold original allotment in the Exchange Offers. See "Plan
of Distribution." To comply with the securities laws of certain jurisdictions,
it may be necessary to qualify for sale or register the New Notes prior to
offering or selling such New Notes. We are required, under the registration
rights agreements, to register the New Notes in any jurisdiction reasonably
requested by the holders, subject to certain limitations. When the Exchange
Offers are completed, holders that were not prohibited from participating in the
Exchange Offers and did not tender their Old Notes will not have any
registration rights under the registration rights agreements with respect to
non-tendered Old Notes and, therefore, the Old Notes will continue to be subject
to certain transfer restrictions. 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
Offers -- Consequences of Failure to Exchange."
THE NOTES
SENIOR NOTES:
SENIOR NOTES OFFERED.......... We are offering up to $300.0 million in
principal amount of 9 1/2% Series B Senior
Notes due 2009. The terms of the 9 1/2%
Series B Senior Notes and the 9 1/2% Senior
Notes are substantially identical in all
material respects, except for certain
transfer restrictions and registration rights
relating to the 9 1/2% Senior Notes which do
not apply to 9 1/2% Series B Senior Notes.
ISSUE PRICE................... We are offering to exchange $1,000 stated
principal amount of the 9 1/2% Senior Notes
for $1,000 stated principal amount of the
9 1/2% Series B Senior Notes.
MATURITY DATE................. The Senior Notes will mature on March 1,
2009.
INTEREST...................... We will pay interest on the Senior Notes at
an annual rate of 9 1/2%. We will pay the
interest due on the Senior Notes in cash
every six months on March 1 and September 1.
We will make the first payment on September
1, 1999.
RANKING....................... The Senior Notes are unsecured senior debt of
Intermedia:
- The 9 1/2% Senior Notes rank, and the
9 1/2% Series B Senior Notes will
rank, equal to all of our existing and
future senior unsecured debt.
- The 9 1/2% Senior Notes rank, and the
9 1/2% Series B Senior Notes will
rank, ahead of all of our future debts
that expressly provide that they are
subordinated to the Senior Notes,
including the Senior Subordinated
Notes.
- The 9 1/2% Senior Notes are
effectively subordinated to, and the
9 1/2% Series B Senior Notes will be
effectively subordinated to, existing
and future senior secured debt, if
any, to the extent of such security
and to all indebtedness and other
liabilities of our subsidiaries.
As of December 31, 1998, assuming we had
issued the Old Notes on that date, there
would have been approximately:
- $1.8 billion of outstanding debt,
excluding capital lease obligations,
ranking equally with the Senior Notes.
3
<PAGE> 7
- No senior secured debt, excluding
capital lease obligations, ranking
effectively senior to the Senior
Notes.
- No outstanding debt ranking behind the
Senior Notes, other than the Senior
Subordinated Notes.
SENIOR SUBORDINATED NOTES:
SENIOR SUBORDINATED NOTES
OFFERED....................... We are offering up to $364.0 million in
principal amount at maturity of 12 1/4%
Series B Senior Subordinated Discount Notes
due 2009. The terms of the 12 1/4% Series B
Senior Subordinated Notes and the 12 1/4%
Senior Subordinated Notes are substantially
identical in all material respects, except
for certain transfer restrictions and
registration rights relating to the 12 1/4%
Senior Subordinated Notes which do not apply
to the 12 1/4% Series B Senior Subordinated
Notes.
ISSUE PRICE................... We are offering to exchange $1,000 stated
principal amount at maturity of the 12 1/4%
Senior Subordinated Notes for $1,000 stated
principal amount at maturity of the 12 1/4%
Series B Senior Subordinated Notes.
MATURITY DATE................. The Senior Subordinated Notes will mature on
March 1, 2009.
INTEREST...................... The 12 1/4% Senior Subordinated Notes were
issued at a substantial discount to their
principal amount at maturity. The Senior
Subordinated Notes will accrete in value
through March 1, 2004 at an annual rate of
12 1/4%, compounded every six months. Cash
interest will not be payable on the Senior
Subordinated Notes until March 1, 2004. After
March 1, 2004, the Senior Subordinated Notes
will accrue interest at an annual interest
rate of 12 1/4%, payable in cash every six
months on March 1 and September 1 beginning
September 1, 2004.
RANKING....................... The Senior Subordinated Notes are unsecured
senior subordinated debt of Intermedia:
- The 12 1/4% Senior Subordinated Notes
rank, and the 12 1/4% Series B Senior
Subordinated Notes will rank, behind
all of our existing debts and all
future debts that do not expressly
provide that they rank equally with,
or are subordinated to, the Senior
Subordinated Notes.
- The 12 1/4% Senior Subordinated Notes
rank, and the 12 1/4% Series B Senior
Subordinated Notes will rank, ahead of
all of our future debts that expressly
provide that they are subordinated to
the Senior Subordinated Notes.
As of December 31, 1998, assuming we had
issued the Old Notes on that date, there
would have been approximately:
- $2.1 billion of outstanding debt,
excluding capital lease obligations,
ranking ahead of the Senior
Subordinated Notes.
- No debt ranking equally with the
Senior Subordinated Notes.
4
<PAGE> 8
- No debt ranking behind the Senior
Subordinated Notes.
OPTIONAL REDEMPTION............. We may redeem some or all of the Notes at our
option at any time at the redemption prices
described under "Description of the Senior
Notes" and "Description of the Senior
Subordinated Notes," as applicable, plus any
interest that is due and unpaid on the date
we redeem the Notes.
MANDATORY REPURCHASE............ Following certain changes of control, we must
offer to repurchase the Notes at the prices
set forth under "Description of the Senior
Notes" and "Description of the Senior
Subordinated Notes," as applicable.
CERTAIN COVENANTS............... We will issue the 9 1/2% Series B Senior
Notes and the 12 1/4% Series B Senior
Subordinated Notes under separate indentures
with SunTrust Bank, Central Florida, National
Association, as trustee under each indenture.
The indentures, among other things, restrict
our ability to:
- make certain restricted payments;
- incur additional indebtedness;
- 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 our assets or assets of our
subsidiaries;
- conduct certain lines of business; and
- enter into mergers and consolidations.
RISK FACTORS
You should carefully consider all the information in this Prospectus. In
particular, you should evaluate the specific risk factors set forth under "Risk
Factors," beginning on page 8, for a discussion of certain risks involved in
participating in the Exchange Offers and making an investment in the Notes.
5
<PAGE> 9
SUMMARY HISTORICAL FINANCIAL AND OTHER DATA
The following table sets forth selected historical consolidated financial
information and other data of Intermedia for the three years ended December 31,
1998 which have been derived from the consolidated financial statements of
Intermedia, which financial statements have been audited by Ernst & Young LLP,
independent certified public accountants.
<TABLE>
<CAPTION>
HISTORICAL
---------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------
1996 1997 1998
-------- --------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.................................................... $103,397 $ 247,899 $ 712,783
Costs and Expenses:
Network expenses, facilities administration and
maintenance costs....................................... 81,105 199,139 468,780
Selling, general and administrative....................... 36,610 98,598 215,109
Depreciation and amortization............................. 19,836 53,613 229,747
Charge for in-process R&D(1).............................. -- 60,000 63,000
Business restructuring, integration and other charges..... -- -- 53,453
-------- --------- ----------
137,551 411,350 1,030,089
-------- --------- ----------
Loss from operations........................................ (34,154) (163,451) (317,306)
Interest expense............................................ (35,213) (60,662) (205,760)
Interest and other income................................... 12,168 26,824 35,837
-------- --------- ----------
Loss before extraordinary item.............................. (57,199) (197,289) (487,229)
Extraordinary loss on early extinguishment of debt.......... -- (43,834) --
-------- --------- ----------
Net loss.................................................... (57,199) (241,123) (487,229)
Preferred stock dividends................................... -- (43,742) (90,344)
-------- --------- ----------
Net loss attributable to common stockholders................ $(57,199) $(284,865) $ (577,573)
======== ========= ==========
OTHER DATA:
EBITDA before certain charges(2)............................ $(14,318) $ (49,838) $ 28,894
Insufficiency of earnings to cover combined fixed charges
and preferred stock dividends(3).......................... 59,978 245,685 584,762
Capital expenditures........................................ 130,590 260,105 473,197
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1996 1997 1998
------ ------ -------
<S> <C> <C> <C>
LOCAL AND LONG DISTANCE SERVICES:
Voice switches in operation............................... 5 16 23
Long distance billable minutes(4)......................... 69.1 139.4 460.6
Access line equivalents................................... 7,106 81,349 347,584
ENHANCED DATA SERVICES:
Nodes(5).................................................. 9,777 20,209 35,268
Switches.................................................. 89 136 177
NETWORK DATA:
Buildings connected(6).................................... 487 3,005 4,342
Route miles............................................... 655 757 839
Fiber miles............................................... 24,122 34,956 41,398
EMPLOYEES................................................... 874 2,036 3,931
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
1998
------------------------
AS
ACTUAL ADJUSTED(9)
---------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents(7)................................ $ 387,615 $ 876,213
Working capital(8).......................................... 394,463 883,061
Total assets................................................ 3,049,019 3,548,079
Long-term debt (including current maturities)............... 2,372,386 2,871,446
Redeemable preferred stock.................................. 371,678 371,678
Convertible preferred stock................................. 490,610 490,610
Total stockholders' deficiency.............................. (370,648) (370,648)
</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, Incorporated in 1997 and Shared Technologies Fairchild, Inc. in the
first half of 1998.
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(2) EBITDA before certain charges consists of earnings (loss) before interest
expense, interest and other income, income tax (provision) benefit,
depreciation, amortization and charges for in-process research and
development and business restructuring, integration and other charges
associated with our restructuring program. EBITDA before certain charges
does not represent funds available for management's discretionary use and
is not intended to represent cash flow from operations. EBITDA before
certain charges should not be considered as an alternative to net loss as
an indicator of the Company's operating performance or to cash flows as a
measure of liquidity. In addition, EBITDA before certain charges is not a
term defined by generally acceptable accounting principles and as a result
the measure of EBITDA before certain charges presented herein may not be
comparable to similarly titled measures used by other companies. The
Company believes that EBITDA before certain charges is often reported and
widely used by analysts, investors and other interested parties in the
telecommunications industry. Accordingly, this information has been
disclosed herein to permit a more complete comparative analysis of the
Company's operating performance relative to other companies in the
industry.
(3) For purposes of calculating the insufficiency of earnings to cover combined
fixed charges: (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 and a
portion of rent expense under operating leases deemed by the Company to
represent an interest factor.
(4) Represents long distance billable minutes for most recent fiscal quarter in
period indicated (in millions).
(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) 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.
(7) Cash and cash equivalents excludes investments of $7.9 million at December
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 issuance of the 9 1/2% Senior Notes and the
12 1/4% Senior Subordinated Notes on February 24, 1999, as if it occurred
on December 31, 1998.
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RISK FACTORS
In addition to other information set forth elsewhere in this Prospectus,
before tendering your Old Notes for New Notes, you should consider carefully the
following factors which, other than "Consequences of Failure to Exchange" and
"Resale of Notes", are generally applicable to the Old Notes as well as to the
New Notes.
CONSEQUENCES OF FAILURE TO EXCHANGE
If you do not exchange your Old Notes for New Notes pursuant to the
Exchange Offers, you will not be able to resell, offer to resell or otherwise
transfer the Old Notes unless they are registered under the Securities Act or
unless you resell them, offer to resell or otherwise transfer them under an
exemption from the registration requirements of, or in a transaction not subject
to, the Securities Act. In addition, you will no longer be able to obligate us
to register the Old Notes under the Securities Act except in the limited
circumstances provided under the registration rights agreements. In addition, if
you want to exchange your Old Notes in the Exchange Offers for the purpose of
participating in a distribution of the New Notes, you may be deemed to have
received restricted securities, and, if so, will be required to comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction.
RESALE OF NOTES
Based on certain no-action letters issued by the staff of the SEC, we
believe that the New Notes may be offered for resale, resold or otherwise
transferred by you without compliance with the registration and prospectus
delivery requirements of the Securities Act provided that:
- you are acquiring the New Notes in the ordinary course of your
business,
- you are not participating, do not intend to participate, and have no
arrangement or understanding with any person to participate, in the
distribution of the New Notes within the meaning of the Securities
Act, and
- you are not an affiliate of the Company within the meaning of Rule 405
of the Securities Act.
If any of the foregoing are not true and you transfer any New Note without
delivering a prospectus meeting the requirements of the Securities Act or
without an exemption from registration of your New Notes under the Securities
Act, you may incur liability under the Securities Act. We do not and will not
assume or indemnify you against such liability.
Each broker-dealer that receives New Notes for its own account in exchange
for Old Notes which were acquired by such broker-dealer as a result of market
making or other trading activities may be deemed to be an "underwriter" within
the meaning of the Securities Act and must acknowledge that it will deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resale of such New 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 New 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 Offers. We have agreed that, for a period of 365 days after the
completion of the Exchange Offers, we will make this Prospectus available to any
broker-dealer for use in connection with any such resale of the New Notes. See
"Plan of Distribution." The New Notes may not be offered or sold unless they
have been registered or qualified for sale under applicable state securities
laws or an exemption from registration or qualification is available and is
complied with. The registration rights agreements require us to register or
qualify the New Notes for resale in any state reasonably requested by a holder,
subject to certain limitations.
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SUBSTANTIAL DEBT
Substantial Debt. We have a significant amount of debt. Assuming we had
issued the Old Notes on December 31, 1998, we would have had outstanding
approximately $3.1 billion of debt and other liabilities, including trade
payables, and approximately $862.3 million of obligations with respect to four
outstanding series of preferred stock. As a result, we are required to pay cash
interest of approximately $128.6 million in 1999 on our outstanding notes. This
amount will increase in 2001, 2002 and 2004 when certain of our outstanding debt
which does not currently pay cash interest begins to pay cash interest.
Insufficient Cash Flow. We do not generate enough cash flow to cover our
operating and investing expenses. Our historical earnings have been insufficient
to cover combined fixed charges and dividends on preferred stock by $584.8
million for the year ended December 31, 1998. Combined fixed charges and
dividends include interest and dividends, whether paid or accrued. Assuming we
had acquired Shared Technologies Fairchild, Inc. ("Shared"), the affiliated
entities known as Long Distance Savers (collectively, "LDS") and the affiliated
entities known as National Tel (collectively, "National") and completed each of
our 1998 debt and equity offerings on January 1, 1998, our earnings would be
insufficient to cover combined fixed charges and dividends on preferred stock by
$602.3 million for the year ended December 31, 1998. Assuming we had issued the
Old Notes and completed the transactions referred to in the preceding sentence
on January 1, 1998, our earnings would have been insufficient to cover combined
fixed charges and dividends on preferred stock by $655.2 million for the year
ended December 31, 1998. We expect this situation will continue for the next
several years. Therefore, unless we develop additional sources of cash flow, we
may not be able to pay interest on our debt and dividends on our preferred stock
or repay our obligations at maturity. As an alternative, we may refinance all or
a portion of our outstanding debt. We cannot assure you that we will be able to
refinance our debt or develop additional sources of cash flow.
Additional Debt. While the terms of our outstanding debt, limit the
additional debt we may incur, they do not prohibit us from incurring more debt.
We may incur substantial additional debt during the next few years to finance
the construction of networks and purchase of network electronics, including
local/long distance voice and data switches, or for general corporate purposes,
including to fund working capital and operating losses. Any additional debt may
rank equal to the Senior Notes and senior to the Senior Subordinated Notes or
equal to the Senior Subordinated Notes. See "Description of the Senior Notes"
and "Description of the Senior Subordinated Notes."
Effective Subordination of the Notes. The Notes are not secured. Holders
of secured debt will have claims that are prior to your claims as a holder of
Notes to the extent of the assets securing such other debt. Under the terms of
the Notes, as well as the terms of our outstanding debt, we are permitted to
incur certain secured debt. We may in the future incur secured bank debt.
Our subsidiaries have not guaranteed the Notes. Therefore, our subsidiaries
are not directly obligated under the Notes. At December 31, 1998, our
subsidiaries had outstanding approximately $88.1 million of debt and other
liabilities and commitments, including trade payables. Earnings generated by any
of our subsidiaries, as well as the existing assets of such subsidiaries, must
be used by such subsidiaries to fulfill their debt service requirements before
we can use them to repay our outstanding debt. In the event of a bankruptcy,
liquidation or reorganization of any of our subsidiaries, holders of their debt
and their trade creditors will generally be entitled to payment of their claims
from the assets of those subsidiaries before any assets are made available for
distribution to us. Therefore, your claims as a holder of the Notes will be
effectively subordinated to the obligations of our subsidiaries.
Consequences of Debt. Our level of debt could have important consequences
to you as a holder of the Notes. For example, it could:
- make it more difficult for us to satisfy our obligations under the
Notes;
- require us to dedicate a substantial portion of our future cash flow
from operations to the payment of the principal and interest on our debt,
and dividends on and the redemption of our preferred stock, thereby
reducing the funds available for other business purposes;
- make us more vulnerable if there is a downturn in our business;
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- limit our ability to obtain additional financing for working
capital, capital expenditures, acquisitions or other purposes; and
- place us at a competitive disadvantage compared to competitors who
have less debt than we do.
SUBORDINATION OF THE SENIOR SUBORDINATED NOTES
The Senior Subordinated Notes rank behind all of our other existing debt,
other than trade payables, and all of our future borrowings, other than trade
payables, except any future debt that expressly provides that it ranks equal
with, or is subordinated in right of payment to, the Senior Subordinated Notes.
As a result, upon any distribution to our creditors in a bankruptcy, liquidation
or reorganization or similar proceeding relating to us or our property, the
holders of our senior debt will be entitled to be paid in full in cash before
any payment may be made with respect to the Senior Subordinated Notes.
In the event of a bankruptcy, liquidation or reorganization or similar
proceeding relating to us, holders of the Senior Subordinated Notes will
participate with trade creditors and all other holders of our subordinated debt
in the assets remaining after we have paid all of the senior debt. However,
because the Senior Subordinated Note Indenture requires that amounts otherwise
payable to holders of the Senior Subordinated Notes in a bankruptcy or similar
proceeding be paid to holders of senior debt instead, holders of the Senior
Subordinated Notes may receive less, ratably, than holders of trade payables in
any such proceeding. In any of these cases, we may not have sufficient funds to
pay all of our creditors and holders of Senior Subordinated Notes may receive
less, ratably, than the holders of senior debt.
Assuming we had completed the issuance of the Old Notes on December 31,
1998, the Senior Subordinated Notes would have been subordinated to $2.1 billion
of senior debt, excluding capital lease obligations. In addition, we will be
permitted to incur substantial additional debt, including senior debt, in the
future under the terms of the Senior Subordinated Note Indenture. See
"-- Substantial Debt" and "Description of the Senior Subordinated
Notes -- Subordination."
HISTORY OF NET LOSSES; LIMITED OPERATIONS OF CERTAIN SERVICES; NEED FOR
ADDITIONAL CAPITAL
History of Net Losses. We have incurred significant operating losses
during the past several years while we have developed our business and expanded
our networks. Although our revenues have increased in each of the last three
years, we have incurred net losses attributable to common stockholders of
approximately $57.2 million for the year ended December 31, 1996, $284.9 million
for the year ended December 31, 1997, and $577.6 million for the year ended
December 31, and 1998. We expect net losses to continue for the next several
years.
Limited Operations of Certain Services. We began operations in 1986.
Substantially all of our revenues are derived from local, long distance,
enhanced data and integration services. We have recently initiated many of these
services or expanded their availability in new market areas. We also expect to
substantially increase the size of our operations in the near future. Therefore,
you have limited historical financial information upon which to base your
evaluation of our performance and our ability to compete successfully in the
telecommunications business.
Need for Additional Capital. We require significant amounts of capital to
expand our existing networks and services and to develop new networks and
services. In addition, we may need additional capital in order to repay our
outstanding debts when they become due. See "-- Substantial Debt." We expect to
fund our capital needs by using available cash, joint ventures, debt or equity
financing, credit availability and internally generated funds. We expect that
during the second half of 2000 we will need to raise additional capital to
continue expanding our business. However, our future capital needs depend upon a
number of factors, certain of which we can control, such as marketing expenses,
staffing levels and customer growth, and others which we cannot control, such as
competitive conditions, government regulation and capital costs. Moreover, our
outstanding debt and preferred stock restrict our ability to incur additional
debt or issue additional preferred stock. Depending on market conditions, we may
decide to raise additional capital earlier. However, we cannot assure you that
we will be successful in raising sufficient debt or equity on terms that we will
consider
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acceptable. If we cannot generate sufficient funds we may be required to delay
or abandon some of our planned expansion or expenditures. This likely would
affect our growth and our ability to repay our outstanding debt as well as the
Notes at maturity.
RISKS ASSOCIATED WITH ACQUISITIONS AND EXPANSION
Recent Acquisitions. In 1998, we acquired Shared, LDS and National. These
acquisitions diverted our resources and management time and require further
integration with our existing networks and services. We recorded a restructuring
charge during the second quarter of 1998 of approximately $32.3 million, which
was reduced in the third and fourth quarters by $13.5 million, upon
renegotiation of a contract and other changes in estimates. We also expensed
$34.7 million of other business restructuring, integration and other charges
during 1998. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations" in our most recent Annual Report on Form 10-K. We
cannot assure you we will successfully integrate the operations of these
acquired entities into our operations; all of the anticipated benefits from the
restructuring program will be realized; or the restructuring program will not be
more expensive or take longer than anticipated. If we cannot successfully
integrate the acquisitions and realize the benefits of the restructuring
program, we may have difficulty generating sufficient funds to repay the Notes.
Possible Future Acquisitions or Dispositions. Consistent with our
strategy, we are currently evaluating and often engage in discussions regarding
various acquisition or disposition opportunities. However, we have not reached
any agreement or agreement in principle to effect any material acquisition or
disposition. We cannot assure you that we will be able to identify suitable
acquisition opportunities or finance and complete any such acquisitions on
acceptable terms. Any future acquisitions could be funded with cash on hand
and/or by issuing additional securities. It is possible that one or more of such
possible future acquisitions or dispositions, if completed, could adversely
affect our funds from operations or cash available for distribution, in the
short term, in the long term or both, or increase our debt, or could be followed
by a decline in the market value of our outstanding securities, including the
Notes.
Failure to Obtain Third Party Consents in Connection with an Acquisition or
Merger. We consummated a number of acquisitions over the past two years,
including the acquisitions of Shared, LDS and National. We 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. While the
failure to obtain required third party consents does not give rise to an action
to rescind the acquisition or merger, the third party could assert a breach of
the acquired contract. We believe the failure to obtain any such third party
consents should not result in any material adverse consequences. However, we
cannot assure you that no material adverse consequences will result from any
such breach of contract claims.
Expansion Risk. We have expanded rapidly and expect this rapid expansion
to continue in the near future. This growth has increased our operating
complexity, as well as the level of responsibility for both existing and new
management personnel. In order to manage our expansion effectively, we must
continue to implement and improve our operational and financial systems and
expand, train and manage our employee base.
Need to Obtain Permits and Rights-of-Way to Implement Network
Expansion. We are continuing to expand our existing networks to pursue market
opportunities. To expand our networks requires us, among other things, to
acquire rights-of-way, pole attachment agreements and any required permits and
to finance such expansion. We cannot assure you we will be able to obtain the
necessary permits, agreements or financing to expand our existing networks on a
timely basis. If we cannot expand our existing networks in accordance with our
plans, the growth of our business could be materially adversely affected.
Risk of New Service Acceptance by Customers. We have recently introduced
and will continue to introduce new services, primarily local exchange services,
which we believe are important to our long-term growth. The success of these
services will be dependent upon, among other things, the willingness of
customers to accept us as the provider of such services. The lack of such
acceptance could have a material adverse effect on the growth of our business.
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Potential Diminishing Rate of Growth. During the period from 1994 through
1998, our revenues grew at a compound annual growth rate of approximately 166%
(including the effect of acquisitions). While we expect to continue to grow, as
our size increases, it is likely our rate of growth will decrease.
RISKS RELATED TO INTERNET SERVICES
Maintenance of Peering Relationships. The Internet is comprised of many
Internet service providers who operate their own networks and interconnect with
other Internet service providers at various peering points. Our peering
relationships with other Internet service providers permit us to exchange
traffic with other Internet service providers without having to pay settlement
charges. Although we meet the industry's current standards for peering, we
cannot guarantee that other national Internet service providers will maintain
peering relationships with us. In addition, the requirements associated with
maintaining peering relationships with the major national Internet service
providers may change. We cannot assure you that we will be able to expand or
adapt our network infrastructure to meet any new requirements 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 Internet
service providers for information carried on, disseminated through, or hosted on
their systems is currently unsettled. If liability for materials carried on or
disseminated through their systems is imposed on Internet service providers, we
would likely implement measures to reduce our exposure to such liability. Such
measures could require us to expend substantial resources or discontinue certain
product or service offerings. In addition, increased attention on liability
issues, as a result of lawsuits, legislation and legislative proposals, could
adversely affect the growth of Internet use.
DEPENDENCE UPON NETWORK INFRASTRUCTURE
To successfully market our services to business and government users, our
network infrastructure must provide superior reliability, capacity and security.
Our 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 our customers.
Interruptions in service, capacity limitations or security breaches could have a
material adverse effect on our business, financial condition, results of
operations and prospects.
RAPID TECHNOLOGICAL CHANGES
Communications technology is changing rapidly. While we believe, for the
foreseeable future, these changes will not materially affect the continued use
of our fiber optic networks or materially hinder our ability to acquire
necessary technologies, the effect of technological changes, such as changes
relating to emerging wire-line and wireless transmission technologies, including
software protocols, on our business cannot be predicted.
COMPETITION
In each of our markets, when selling local services, we compete with
incumbent local exchange carriers ("ILECs"), which currently dominate their
local telecommunications markets. ILECs have longstanding relationships with
their customers which may create competitive barriers. ILECs also may have the
potential to subsidize their competitive services from revenues they earn from
their monopoly services. We also face competition in most markets in which we
operate from one or more integrated communications providers or competitive
local exchange carriers ("CLECs"). Through acquisitions, AT&T and MCI WorldCom
have entered the local services market, and other long distance carriers have
announced their intent to enter the local services market. A continuing trend
toward business combinations and alliances in the telecommunications industry
may create significant new or larger competitors. The recent mergers of MCI and
WorldCom and of AT&T with Teleport Communications Group, Inc. and
Tele-Communications, Inc. as well as the proposed mergers of Bell Atlantic and
GTE, and Ameritech and SBC Communications, Inc. are examples of this trend.
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Recent legislative initiatives, including the Telecommunications Act of
1996 (the "Telecommunications Act"), have removed many of the remaining
legislative barriers to local competition. Rules adopted to carry out the
provisions of the Telecommunications Act, however, remain subject to pending
administrative and judicial proceedings. We cannot predict the impact future
regulatory developments may have on our ability to compete. However, if ILECs
are permitted to substantially lower their rates or offer significant volume or
term discount pricing, our net income and/or cash flow could be materially
adversely affected.
Our enhanced data services (including Internet) compete with services
offered by ILECs, long distance carriers, very small aperture terminal
(satellite dish) providers, Internet service providers and others. In
particular, the market for Internet services is extremely competitive, and there
are limited barriers to entry. When offering long distance services, we compete
with AT&T, MCI WorldCom, Sprint and others. The Telecommunications Act permits
the regional Bell operating companies ("RBOCs") to provide long distance
services in the same areas where they now provide local service once certain
criteria are met. Once the RBOCs begin to provide such services, they will be in
a position to offer single source local and long distance service similar to
that being offered by us. Our integration services compete with those offered by
equipment manufacturers, RBOCs and other ILECs, long distance carriers and
systems integrators.
We cannot predict the number of competitors that will emerge as a result of
existing or new federal and state regulatory or legislative actions, but
increased competition from existing and new entities could have a material
adverse effect on our business. Many of our existing and potential competitors
have financial, personnel and other resources significantly greater than ours
which could effect our ability to compete.
REGULATION
We are subject to federal, state and local regulation of our
telecommunications business as more fully described below. See
"Business -- Government Regulation" in our most recent Annual Report on Form
10-K. In general, regulation of the telecommunications industry is in a state of
flux. With the passage of the Telecommunications Act, Congress sought to foster
competition in the telecommunications industry. The Telecommunications Act
attempted to create a framework for companies, such as ours, to offer local
exchange service for business and residential customers in competition with
existing local telephone companies. The Telecommunications Act also sought to
open up the long distance market to additional competition by permitting RBOCs
to engage in the long distance business, under certain conditions, in the same
regions where they now offer local service. These and many other regulations are
the subject of ongoing administrative proceedings at the state and federal
levels, litigation in federal and state courts, and legislation in Congress and
state legislatures. The outcome of the various proceedings, litigation and
legislation cannot be predicted and might adversely affect our business and
operations.
The Telecommunications Act and the issuance by the Federal Communication
Commission ("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 January 25, 1999, the Supreme
Court largely reversed earlier decisions of the Eighth Circuit Court of Appeals
and held that the FCC has general jurisdiction to implement the local
competition provisions of the Telecommunications Act. The Supreme Court stated
that the FCC has authority to set pricing guidelines for CLECs to use various
portions of the ILEC's network necessary for the CLECs to provide service. These
portions of the ILEC's network are called "Unbundled Network Elements" or
"UNEs." The Supreme Court also affirmed the FCC's authority to prevent ILECs
from refusing to sell to CLECs the ILECs existing combinations of network
elements. The Supreme Court approved the FCC's establishment of "pick and
choose" rules regarding interconnection agreements between ILECs and CLECs
(which would permit a CLEC to "pick and choose" among various terms of service
in different interconnection agreements between the ILEC and other CLECs). The
Supreme Court's decision reestablishes the validity of many of the FCC rules
vacated by the Eighth Circuit. Although the Supreme Court affirmed the FCC's
authority to develop pricing guidelines, the Court did not evaluate the specific
pricing methodology adopted by the FCC and has remanded the case to the Eighth
Circuit for further consideration. In its decision, the Supreme Court also
vacated the FCC's rule that identifies the unbundled network elements that ILECs
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must provide to CLECs. The Supreme Court found that the FCC had not adequately
considered certain statutory criteria for requiring ILECs to make those network
elements available to CLECs. Thus, while the Supreme Court resolved many issues,
including the FCC's jurisdictional authority, other issues remain subject to
further consideration by the courts and the FCC, and we cannot predict the
ultimate disposition of these matters. The possible impact of this decision,
including the portion dealing with unbundled network elements, on existing
interconnection agreements between ILECs and CLECs or on agreements that may be
negotiated in the future also can not be determined at this time.
Although the passage of the Telecommunications 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 us.
We believe we are entitled to receive reciprocal compensation from ILECs
for the transport and termination of Internet traffic pursuant to various
interconnection agreements. Some ILECs have not paid and/or have disputed these
charges, arguing the Internet service provider traffic is not local traffic as
defined by the various agreements. Both state and federal regulators currently
are considering the proper treatment of calls placed to an Internet service
provider, and whether Internet service provider calling triggers an obligation
to pay reciprocal compensation. All of the 31 states addressing the question to
date have ruled that Internet traffic is subject to reciprocal compensation
under the interconnection agreements then before them. On February 25, 1999, the
FCC ruled that Internet traffic is primarily interstate, rather than local, for
jurisdictional purposes and that Section 25(b)(5) of the Telecommunications Act,
requiring reciprocal compensation for local traffic, would not apply. But the
FCC specifically disavowed any intent to overturn prior state interpretations of
interconnection agreements as requiring reciprocal compensation for Internet
traffic or to prevent states from requiring reciprocal compensation for such
traffic in the future. Indeed, in a rulemaking initiated at the time of its
decision, the FCC has tentatively concluded that inter-carrier compensation for
Internet traffic should be governed in the future by interconnection agreements
negotiated and arbitrated as provided in the Telecommunications Act. Various
parties have challenged the FCC ruling and some of the ILECs have requested
state authorities to reconsider their prior rulings requiring reciprocal
compensation for Internet traffic in light of the FCC's determination that such
traffic is jurisdictionally interstate. All three of the states addressing
compensation for Internet traffic subsequent to the FCC's February 25 ruling,
Alabama, Nevada and Florida, have required ILECs to pay reciprocal compensation
for Internet traffic. There can be no assurance, however, that these issues will
be resolved by the FCC or all of the states or that any such resolution will be
favorable to us. We account for reciprocal compensation with the ILECs,
including activity associated with Internet traffic, as local traffic pursuant
to the terms of our interconnection agreements. Accordingly, revenue is
recognized in the period that the traffic is terminated. The circumstances
surrounding the disputes, including the status of cases that have arisen by
reason of similar disputes, is considered by management periodically in
determining whether reserves against unpaid balances are warranted. As of
December 31, 1998, provisions for reserves have not been considered necessary by
management. However, we cannot assure you that management will not determine
that a reserve is necessary at some point in the future or that ultimately these
receivables will be collected. Approximately $46.0 million of our receivables,
as of December 31, 1998, are related to such reciprocal compensation. As our
Internet service provider traffic grows, these amounts are expected to increase
and will be accounted for in the manner described above, subject to any changes
in our interconnection agreements.
The regulatory status of telephone service over the Internet is presently
uncertain. We are 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 our business. Specific statutes and
regulations addressing this service have not been adopted at this time and 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 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
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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 our business.
REGULATORY APPROVAL OF THE OFFERING
Certain of the states where we are authorized to provide local services
require us to obtain approval prior to issuing securities. Because of time
constraints, we may not have obtained all these approvals prior to consummating
the Exchange Offers. These requirements may have been pre-empted by the National
Securities Market Improvement Act of 1996, although there is no case law on this
point. We will seek the necessary approvals prior to or promptly following the
closing of the Exchange Offers. After consulting with counsel, we believe the
approvals will be granted and that seeking such approvals after the closing of
the Exchange Offers should not result in any material adverse consequences.
However, we cannot assure you that no adverse consequences will result.
RISK OF TERMINATION, CANCELLATION OR NON-RENEWAL OF INTEREXCHANGE AGREEMENTS,
NETWORK AGREEMENTS, LICENSES AND PERMITS
We lease and/or purchase agreements for rights-of-way, utility pole
attachments, conduits and dark fiber for our fiber optic networks. Although we
do not believe any of these agreements will be canceled in the near future,
cancellation or non-renewal of certain of such agreements could materially
adversely affect our business in the affected metropolitan area. In addition, we
have certain licenses and permits from local government authorities. The
Telecommunications Act requires local government authorities to treat
telecommunications carriers and most utilities, including most ILECs and
electric companies, in a competitively neutral, non-discriminatory manner to
afford alternative carriers access to their poles, conduits and rights-of-way at
reasonable rates on non-discriminatory terms and conditions. We cannot assure
you we will be able to maintain our existing franchises, permits and rights or
to obtain and maintain the other franchises, permits and rights needed to
implement our strategy on acceptable terms. In March 1998, we acquired a 20 year
indefeasible right of use from Williams Telecommunications Group ("Williams")
that provides us with high capacity transport for our integrated voice and data
services, connecting major markets throughout the continental United States. The
indefeasible right of use may be terminated by Williams if we fail to make the
required payments and, in the event of a bankruptcy of Williams, the
indefeasible right of use may be rejected by Williams in a bankruptcy
proceeding.
DEPENDENCE ON KEY PERSONNEL
Our continued success depends on the continued employment of certain
members of our senior management team and on our continued ability to attract
and retain highly skilled and qualified personnel. We do not have long-term
employment agreements with any of our key employees. The loss of the services of
key personnel or the inability to attract additional qualified personnel could
have a material adverse impact on our business, financial condition, results of
operations and prospects.
BUSINESS COMBINATIONS
We have from time to time held, and continue to hold, preliminary
discussions with (i) potential strategic investors who have expressed an
interest in making an investment in or acquiring us and (ii) potential joint
venture partners looking toward the formation of strategic alliances that would
expand the reach of our networks or services without necessarily requiring an
additional investment in us. In addition to providing additional growth capital,
we believe that an alliance with an appropriate strategic investor would provide
operating synergy to, and enhance the competitive positions of, both Intermedia
and the investor within the rapidly consolidating telecommunications industry.
We cannot assure you that agreements for any of the foregoing will be reached.
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<PAGE> 19
FINANCING CHANGE OF CONTROL OFFER
Upon the occurrence of certain specific kinds of change of control events,
we will be required to offer to repurchase all of our outstanding debt,
including the Notes. However, it is possible that we will not have sufficient
funds at the time of the change of control to make the required repurchase. In
addition, certain important corporate events, such as leveraged
recapitalizations that would increase the level of our indebtedness, would not
constitute a change of control. See "-- Subordination of the Senior Subordinated
Notes," "Description of the Senior Notes -- Offer to Purchase Upon Change of
Control" and "Description of the Senior Subordinated Notes -- Offer to Purchase
Upon Change of Control."
NO PRIOR MARKET FOR THE NOTES
The New Notes are new issues of securities. We do not intend to apply for
listing of the New Notes on any securities exchange or on Nasdaq. We have been
informed by Bear, Stearns & Co. Inc., Merrill Lynch & Co., Salomon Smith Barney
Inc., NationsBanc-Montgomery Securities LLC and Warburg Dillon Read LLC, the
initial purchasers of the Old Notes, that they intend to make a market in the
New Notes after the Exchange Offers are completed. However, the initial
purchasers may cease their market-making at any time. In addition, the liquidity
of the trading market in the New Notes, and the market price quoted for the New
Notes, may be adversely affected by changes in the overall market for high yield
securities and by changes in our financial performance or prospects or in the
prospects for companies in our industry generally. As a result, we cannot assure
you that an active trading market will develop for the New Notes.
ORIGINAL ISSUE DISCOUNT
The 12 1/4% Senior Subordinated Notes were issued at a substantial discount
from their principal amount. Consequently, after completion of the Exchange
Offers, the 12 1/4% Series B Senior Subordinated Notes will have "original issue
discount" for United States federal income tax purposes, and holders of the
Senior Subordinated Notes will be required to include amounts in gross income in
advance of receipt of any cash payment on the Senior Subordinated Notes to which
the income is attributable.
Under the Senior Subordinated Note Indenture, in the event of an
acceleration of the maturity of the Senior Subordinated Notes upon the
occurrence of an Event of Default, the holders of Senior Subordinated Notes may
be entitled to recover only the amount that may be declared due and payable
pursuant to the Senior Subordinated Note Indenture, which may be less than the
principal amount at maturity of such Senior Subordinated Notes. See "Description
of the Senior Subordinated Notes -- Events of Default."
If a bankruptcy case is commenced by or against us under the United States
Bankruptcy Code after the issuance of the Senior Subordinated Notes, the claim
of a holder of Senior Subordinated Notes with respect to the principal amount of
such Senior Subordinated Notes will likely be limited to an amount equal to the
sum of (1) the issue price of the Senior Subordinated Notes as of the date of
issuance of the Senior Subordinated Notes and (2) that portion of the original
issue discount that is not deemed to constitute "unmatured interest" for
purposes of the Bankruptcy Code. Accordingly, holders of the Senior Subordinated
Notes under such circumstances may, even if sufficient funds are available,
receive a lesser amount than they would be entitled to under the express terms
of the Senior Subordinated Note Indenture. In addition, there can be no
assurance that a bankruptcy court would compute the accrual of interest under
the same rules as those used for the calculation of original issue discount
under United States federal income tax law and, accordingly, a holder might be
required to recognize gain or loss in the event of a distribution related to
such bankruptcy case.
YEAR 2000 DATE CONVERSION
To ensure that our computer systems and applications will function properly
beyond 1999, we have implemented a Year 2000 program. However, there can be no
assurance that the Year 2000 program will be successfully completed.
If we cannot operate effectively after December 31, 1999, we could, among
other things, face substantial claims by our customers or loss of revenue due to
service interruptions, the inability to fulfill contractual
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<PAGE> 20
obligations or to bill customers accurately and on a timely basis, increased
expenses associated with litigation, stabilization of operations following
critical system failures and the execution of contingency plans and the
inability by customers and others to pay, on a timely basis or at all,
obligations owed to us. Under these circumstances, the adverse effects, although
not quantifiable at this time, would be material to our business, results of
operations, financial condition and prospects. For a more complete discussion of
Intermedia's Year 2000 program and the associated risks, see "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Impact of Year 2000" in Intermedia's most recent periodic report.
FORWARD-LOOKING STATEMENTS
Some of the statements 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). Forward-looking statements can be identified by
the use of words such as "estimates," "projects," "anticipates," "expects,"
"intends," "believes" or the negative thereof or other variations thereon or by
discussions of strategy that involve risks and uncertainties. Examples of
forward-looking statements include discussions of our plans to expand our
existing networks, introduce new products, build and acquire networks in new
areas, install switches or provide local services, the estimate of market sizes
and addressable markets for our services and products, the market opportunity
presented by larger metropolitan areas, anticipated revenues from designated
markets during 1999 and statements regarding the development of our businesses,
anticipated capital expenditures and regulatory reform.
Management wishes to caution you that all forward-looking statements
contained in this Prospectus are only estimates and predictions. Actual results
could differ materially from those anticipated in this Prospectus as a result of
risks facing us or actual events differing from the assumptions underlying such
statements. Such risks and assumptions include, but are not limited to, those
discussed above.
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<PAGE> 21
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
We originally issued and sold the Old Notes on February 24, 1999 in
reliance upon the exemptions from registration under Rule 144A and Section 4(2)
of the Securities Act. In connection with the sale of the Old Notes, we entered
into registration rights agreements. Pursuant to the registration rights
agreements, we agreed to register with the SEC a series of notes with
substantially identical terms as 9 1/2% Senior Notes to be offered in exchange
for the 9 1/2% Senior Notes and a series of notes with substantially identical
terms as the 12 1/4% Senior Subordinated Notes to be offered in exchange for the
12 1/4% Senior Subordinated Notes. The purpose of the Exchange Offers is to
satisfy our obligations under the registration rights agreements. Holders that
are not prohibited from participating in the Exchange Offers and do not tender
all of their Old Notes will no longer have any registration rights under the
registration rights agreements.
TERMS OF THE EXCHANGE
We are offering 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 New Notes for the Old Notes tendered for exchange. The
terms of the New Notes are substantially identical to the Old Notes in all
material respects, including interest rate and maturity, except that:
- the New 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
- holders of New Notes will not be entitled to certain rights of holders
of Old Notes under the registration rights agreements.
The New Notes will evidence the same debt as the Old Notes and will be
entitled to the benefits of the respective indentures. See "Description of the
Senior Notes and "Description of the Senior Subordinated Notes." The Exchange
Offers are not conditioned upon any minimum aggregate principal amount of Old
Notes being tendered for exchange.
We believe that New 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 our "affiliate" 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 New 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 New Notes, and
- neither the holder nor any other person is engaging in or intends to
engage in a distribution of the New Notes.
Any holder who tenders in the Exchange Offers for the purpose of
participating in a public distribution of the New 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 Offers.
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 Offers.
EXPIRATION DATE; EXTENSIONS; TERMINATION; AMENDMENT
The Exchange Offers will expire at 5:00 p.m., New York City time, on
, 1999 unless extended by us, in our sole discretion. We may extend
the expiration time and date, or otherwise amend the terms of the Exchange
Offers, 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 making a release to the Dow
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<PAGE> 22
Jones News Service on or before 9:00 a.m. of the next business day following the
expiration date. We may terminate the Exchange Offers at any time prior to 5:00
p.m., New York City time on the date the Exchange Offers expire, by giving
notice as described in the preceding sentence. During any extensions of the
Exchange Offers, all Old Notes tendered for exchange will remain subject to the
Exchange Offers. In connection with the Exchange Offers, we will comply with all
applicable requirements of the federal securities laws, including, but not
limited to, Rule 14e-1 under the Exchange Act.
We expressly reserve the right to:
- terminate the Exchange Offers and not accept for exchange any Old
Notes if any event described under "Conditions to the Exchange Offers"
has occurred and not been waived by us and
- amend the terms of the Exchange Offers in any manner which, in our
good faith judgment, is advantageous to the holders of the Old Notes,
whether before or after any tender of the Old Notes.
Unless we terminate the Exchange Offers prior to 5:00 p.m., New York City
time, on the expiration date, we will exchange the New Notes for the Old Notes
on the first business day following the expiration date.
PROCEDURES FOR TENDERING OLD NOTES
The Exchange Offers are 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:
- the certificate or certificates representing the Old Notes being
tendered and any required signature guarantees,
- 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
"Depository") pursuant to the procedure for book-entry transfer
described below, or
- the completion of the procedures for guaranteed delivery set forth
below. See "Guaranteed Delivery Procedures."
If the New 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 New 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 US.
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.
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<PAGE> 23
We will determine in our sole discretion all questions as to the validity,
form, eligibility, including time of receipt, and acceptance for exchange of any
tender of Old Notes, which determination will be final and binding. We reserve
the right to reject any or all tenders not in proper form or the acceptance for
exchange of which may, in the opinion of our counsel, be unlawful. We also
reserve 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 we, 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 Offers.
The holder tendering Old Notes exchanges, assigns and transfers the Old
Notes to us and irrevocably constitutes and appoints the Exchange Agent as the
holder's agent and attorney-in-fact to cause the Old Notes to be assigned,
transferred and exchanged. All authority conferred by the holder will survive
the death or incapacity of the holder and every obligation of the holder will be
binding upon the heirs, legal representatives, successors assigns, executors and
administrators of the holder.
By participating in the Exchange Offers, the holder represents and warrants
that:
- it has full power and authority to tender, exchange, assign and
transfer the Old Notes and to acquire New Notes in exchange for the
Old Notes,
- is not an "affiliate" within the meaning of Rule 405 under the
Securities Act or that, if it is our "affiliate," it will comply with
the registration and prospectus delivery requirements of the
Securities Act to the extent applicable,
- when the Old Notes are accepted for exchange, we 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
- it will, upon request, execute and deliver any additional documents
deemed by us to be necessary or desirable to complete the exchange,
assignment and transfer of tendered Old Notes,
- it is acquiring the New Notes offered in the ordinary course of its
business, and
- it has no arrangement with any person to participate in the
distribution of the New Notes.
WITHDRAWAL RIGHTS
Old Notes tendered pursuant to the Exchange Offers may be withdrawn at any
time prior to the expiration date of the Exchange Offers.
To be effective, the Exchange Agent must receive at its address set forth
in this Prospectus by mail, courier, telegraphic, telex or facsimile
transmission a written notice of withdrawal. 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
Depository to be credited with the withdrawn Old Notes and otherwise comply with
the procedures of the Depository. We will determine all questions as to the
validity of notices of withdrawals, including time of
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<PAGE> 24
receipt, 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 without cost as soon as practicable after withdrawal,
rejection of tender or termination of the Exchange Offers. Properly withdrawn
Old Notes may be re-tendered at any time on or prior to the expiration of the
Exchange Offer. Any Old Notes withdrawn and not re-tendered will not be
exchanged for New Notes under the Exchange Offers.
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF SENIOR NOTES
Old Notes validly tendered and not withdrawn will be accepted for exchange,
subject to the conditions of the Exchange Offers, and issuance of the New Notes
will be issued on the first business day following the expiration of the
Exchange Offers. We will be deemed to have accepted for exchange validly
tendered Old Notes when we give oral or written notice to the Exchange Agent of
our acceptance of the Old Notes for exchange.
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 New Notes. Upon the terms and subject to the conditions of the
Exchange Offers, the Exchange Agent will deliver New Notes in exchange for Old
Notes promptly after our acceptance of the tendered Old Notes. Tendered Old
Notes which we do not accept for exchange will be returned without expense to
the tendering holders promptly following the expiration of the Exchange Offers
or, if we terminate the Exchange Offers prior to the expiration date, promptly
after the Exchange Offers are terminated.
BOOK-ENTRY TRANSFER
The Exchange Agent will establish an account at the Depository for purposes
of the Exchange Offers within two business days after the date of this
Prospectus. Any financial institution that is a participant in the Depository's
systems may make book-entry delivery of Old Notes by causing the Depository to
transfer the Old Notes into the Exchange Agent's account at the Depository in
accordance with the Depository's procedure for transfer.
EVEN THOUGH THE OLD NOTES ARE BEING DELIVERED BY A BOOK ENTRY TRANSFER THE
LETTER OF TRANSMITTAL WITH ANY REQUIRED SIGNATURE GUARANTEES AND ANY OTHER
REQUIRED DOCUMENTS MUST BE PHYSICALLY RECEIVED BY THE EXCHANGE AGENT ON OR PRIOR
TO THE TIME THE EXCHANGE OFFERS EXPIRE.
CONDITIONS TO THE EXCHANGE OFFERS
Notwithstanding any other provision of the Exchange Offers, we will not be
required to issue New Notes in exchange for properly tendered Old Notes and may
terminate the Exchange Offers or, at our option, modify or otherwise amend the
Exchange Offers, if any event has occurred which, in our sole judgment and
regardless of the circumstances giving rise to any such event, including any
action by us, makes it unlawful or inadvisable to proceed with the Exchange
Offers and/or with the acceptance of Old Notes for exchange or with the
exchange.
We expressly reserve the right to:
- terminate the Exchange Offers 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 us of
properly tendered Old Notes),
- amend the Exchange Offers at any time prior to their expiration if any
of the conditions set forth above occur, and
- regardless of whether any of such conditions has occurred, amend the
Exchange Offers in any manner which, in our good faith judgment, is
advantageous to holders of the Old Notes.
These conditions are for our sole benefit and may be waived by us, in whole
or in part, in our sole discretion. Any determination made by us that any of
these conditions has occurred will be final and binding on all holders, absent
manifest error.
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<PAGE> 25
In addition, we will not accept for exchange any Old Notes tendered, and no
New Notes will be issued in exchange for Old Notes, if any stop order has been
threatened or is 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.
EXCHANGE AGENT
SunTrust Bank, Central Florida, National Association, the Trustee under the
indentures governing the Senior Note and the Senior Subordinated Notes, has been
appointed as the Exchange Agent for the Exchange Offers. 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: Holly Arencibia
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.
SOLICITATION OF TENDERS; EXPENSES
We have not retained any dealer-manager or similar agent in connection with
the Exchange Offers and will not make any payments to brokers, dealers or others
for soliciting acceptances of the Exchange Offers.
We have not authorized any dealer, salesperson or other person to give any
information or represent anything not contained in this Prospectus and the
Letter of Transmittal. You must not rely on any unauthorized information. The
information in this Prospectus is current as of the date set forth on the front
cover. The Exchange Offers are not being made, nor will tenders be accepted from
or on behalf of, holders of Old Notes in any jurisdiction where the making of
the Exchange Offers or the acceptance of tender would not be in compliance with
the laws of the jurisdiction. We may, however, at the reasonable request of any
holder, take the actions we deem necessary to make the Exchange Offers in any
jurisdiction and extend the Exchange Offers to holders of Old Notes in that
jurisdiction.
TRANSFER TAXES
Holders who tender their Old Notes in exchange for New Notes will not be
obligated to pay any transfer taxes except that holders who instruct us to
register New Notes in the name of, or request that Old Notes not tendered or not
accepted in the Exchange Offers be returned to, a person other than the
registered tendering holder will be responsible for the payment of any
applicable transfer tax.
CONSEQUENCES OF FAILURE TO EXCHANGE
The Old Notes were not registered under the Securities Act or under the
Securities laws of any state and may not be resold, offered for resale or
otherwise transferred unless they are subsequently registered or resold pursuant
to exemption from the registration requirements of the Securities Act and
applicable state securities laws. If you do not exchange your Old Notes for New
Notes pursuant to the Exchange Offers, you will not be able to resell, offer to
resell or otherwise transfer the Old Notes unless they are registered under the
Securities Act or unless you resell them, offer to resell or otherwise transfer
them under an exemption from the registration requirements of, or in a
transaction not subject to, the Securities Act. In addition, you will no longer
be able to obligate us to register the Old Notes under the Securities Act except
in the limited circumstances provided under the registration rights agreements.
In addition, if you want to exchange your Old Notes in the Exchange Offers for
the purpose of participating in a distribution of the New Notes, you may
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<PAGE> 26
be deemed to have received restricted securities, and, if so, will be required
to comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction. We do not intend to
register the Old Notes under the Securities Act.
Based on certain no-action letters issued by the staff of the SEC, we
believe that the New Notes may be offered for resale, resold or otherwise
transferred by you without compliance with the registration and prospectus
delivery requirements of the Securities Act provided that:
- you are acquiring the New Notes in the ordinary course of your
business,
- you are not participating, do not intend to participate, and have no
arrangement or understanding with any person to participate, in the
distribution of the New Notes within the meaning of the Securities
Act, and
- you are not an affiliate of the Company within the meaning of Rule 405
of the Securities Act.
If any of the foregoing are not true and you transfer any New Note without
delivering a prospectus meeting the requirements of the Securities Act or
without an exemption from registration of your New Notes under the Securities
Act, you may incur liability under the Securities Act. We do not and will not
assume or indemnify you against such liability.
Each broker-dealer that receives New Notes for its own account in exchange
for Old Notes which were acquired by such broker-dealer as a result of market
making or other trading activities may be deemed to be an "Underwriter" within
the meaning of the Securities Act and must acknowledge that it will deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resale of such New 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.
See "Plan of Distribution." In addition, to comply with the securities laws of
certain jurisdictions, if applicable, the New 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. We have agreed to register or qualify the New Notes for resale in any
jurisdictions reasonably requested by any holder, subject to certain
limitations.
OTHER
Participation in the Exchange Offers 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.
When the Exchange Offers are completed, holders of Old Notes that were not
prohibited from participating in the Exchange Offers and did not tender their
Old Notes will not have any registration rights under the registration rights
agreements with respect to non-tendered Old Notes and, therefore, such Old Notes
will continue to be subject to certain transfer restrictions.
We have not entered into any arrangement or understanding with any person
to distribute the New Notes to be received in the Exchange Offers and to the
best of our information and belief, each person participating in the Exchange
Offers 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 Offers. In this regard, we will
make each person participating in the Exchange Offers aware, through this
Prospectus or otherwise, that if the Exchange Offers are being accepted for the
purpose of secondary resale, any holder using the Exchange Offers to participate
in a distribution of New Notes to be acquired in the registered Exchange Offers
(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.
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<PAGE> 27
ACCOUNTING TREATMENT
The New Notes will be recorded at the same carrying value as the Old Notes,
as reflected in our accounting records on the date the Exchange Offers are
consummated. Accordingly, we will recognize no gain or loss for accounting
purposes. The expenses of the Exchange Offers will be amortized over the term of
the New Notes.
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USE OF PROCEEDS
We will receive no proceeds from the Exchange Offers.
CAPITALIZATION
The following table sets forth as of December 31, 1998, the historical
consolidated capitalization of Intermedia and the capitalization as adjusted to
give effect to the issuance of the Senior Notes and the Senior Subordinated
Notes. This table should be read in conjunction with the Consolidated Financial
Statements of Intermedia and the notes relating to those statements included in
Intermedia's Annual Report on Form 10-K.
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1998
-------------------------
HISTORICAL AS ADJUSTED
---------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents................................... $ 387,615 $ 876,213
========== ==========
Long-term debt (including current maturities):
12.50% Senior Discount Notes due 2006..................... $ 247,524 $ 247,524
11.25% Senior Discount Notes due 2007..................... 440,069 440,069
8.875% Senior Notes due 2007.............................. 260,250 260,250
8.50% Senior Notes due 2008............................... 400,000 400,000
8.60% Senior Notes due 2008............................... 500,000 500,000
9.50% Senior Notes due 2009............................... -- 298,653
12.25% Senior Subordinated Discount Notes due 2009........ -- 200,407
Other long-term debt...................................... 676 676
Capital lease obligations................................. 523,867 523,867
---------- ----------
Total long-term debt.............................. 2,372,386 2,871,446
13.50% Series B redeemable exchangeable preferred stock
due 2009............................................... 371,678 371,678
7% Series D junior convertible preferred stock............ 133,686 133,686
7% Series E junior convertible preferred stock............ 160,086 160,086
7% Series F junior convertible preferred stock............ 196,838 196,838
Total stockholders' deficiency............................ (370,648) (370,648)
---------- ----------
Total capitalization.............................. $2,864,026 $3,363,086
========== ==========
</TABLE>
25
<PAGE> 29
DESCRIPTION OF THE SENIOR NOTES
You can find the definitions of certain terms used in this description
under the subheading "Certain Definitions." In this description, the word
"Company" refers only to Intermedia Communications Inc. and not to any of its
subsidiaries and the term Senior Notes refers to the 9 1/2% Senior Notes and the
9 1/2% Series B Senior Notes and not the Senior Subordinated notes.
The Company will issue the 9 1/2% Series B Senior Notes under an indenture
(the "Senior Note Indenture") between itself and SunTrust Bank, Central Florida,
National Association, as trustee (the "Trustee"). The terms of the Senior Notes
include those stated in the Senior Note Indenture and those made part of the
Senior Note Indenture by reference to the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"). Certain rights of the holders of the Senior
Notes are also set forth in registration rights agreement between Intermedia and
the initial purchasers of the Senior Notes (the "Senior Notes Registration
Rights Agreement").
The following description is a summary of the material provisions of the
Senior Note Indenture and the Senior Note Registration Rights Agreement. It does
not restate those agreements in their entirety. We urge you to read the Senior
Note Indenture and the Senior Note Registration Rights Agreement because they,
and not this description, define your rights as holders of the Senior Notes.
Copies of the Senior Note Indenture and the Senior Note Registration Rights
Agreement are available as set forth below under the subheading "Additional
Information." Certain defined terms used in this description but not defined
below under the subheading "Certain Definitions" have the meanings assigned to
them in the Senior Note Indenture.
BRIEF DESCRIPTION OF THE SENIOR NOTES
The Senior Notes:
- are general unsecured obligations of the Company;
- are pari passu in right of payment with all existing and future
senior borrowings, including the Existing Senior 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
9 1/2% Senior Notes are, and the 9 1/2% Series B 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 December 31, 1998, on a pro
forma basis after giving effect to the offering of the Senior Notes and the
Senior Subordinated Notes, the Company would have had approximately $3.1 billion
of total indebtedness outstanding, including trade payables and approximately
$88.1 million of indebtedness and other liabilities of the Company's
Subsidiaries. Senior indebtedness would have accounted for approximately $2.1
billion of such total indebtedness.
PRINCIPAL, MATURITY AND INTEREST
The Senior Note Indenture provides for the issuance by the Company of
Senior Notes with a maximum aggregate principal amount of $300.0 million. The
Company will issue 9 1/2% Series B Senior Notes in denominations of $1,000 and
integral multiples of $1,000. The 9 1/2% Series B Senior Notes will mature on
March 1, 2009.
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<PAGE> 30
Interest on the Senior Notes will accrue at the rate of 9 1/2% per annum
and will be payable semi-annually in cash in arrears on March 1 and September 1,
commencing on September 1, 1999. The Company will make each interest payment to
the Holders of record on the immediately preceding February 15 and August 15.
Interest on the Senior Notes will accrue from February 24, 1999 or, if
interest has already been paid, from the date it was most recently paid.
Interest will be computed on the basis of a 360-day year comprised of twelve
30-day months.
PAYING AGENT AND REGISTRAR FOR THE SENIOR NOTES
The Trustee will initially act as Paying Agent and Registrar. The Company
may change the Paying Agent or Registrar without prior notice to the Holders,
and the Company or any of its Subsidiaries may act as Paying Agent or Registrar.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange Senior Notes in accordance with the
Senior Note 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 Senior Note 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.
OPTIONAL REDEMPTION
Prior to March 1, 2004, the 9 1/2% Series B 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 March 1, 2004, the 9 1/2% Series B 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 March 1 of the
years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2004........................................................ 104.750%
2005........................................................ 103.167%
2006........................................................ 101.583%
2007 and thereafter......................................... 100.000%
</TABLE>
In the event of the sale by the Company prior to March 1, 2002 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 Senior 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
109.50% of the principal amount thereof plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the redemption date, provided that:
(1) at least 75% of the aggregate principal amount of the Senior Notes
originally issued remains outstanding immediately after the occurrence of
such redemption; and
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<PAGE> 31
(2) such redemption occurs within 90 days of the date of the closing
of each such sale.
MANDATORY REDEMPTION
Except as set forth below under the captions "Offer to Purchase Upon Change
of Control" and "Offer to Purchase with Excess Asset Sale Proceeds," 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 Senior
Note Indenture will not contain provisions that permit the holders of the Senior
Notes to require that the Company repurchase or redeem the Senior Notes in the
event of a takeover, recapitalization or similar transaction.
Due to the leveraged structure of the Company and the effective
subordination of the Senior Notes to secured Indebtedness of the Company and
Indebtedness of the Company's Subsidiaries, the Company may not have sufficient
funds available to purchase the Senior Notes tendered in response to a Change of
Control Offer. In addition, the Existing Senior Notes or other agreements
relating to Indebtedness of the Company's Subsidiaries may contain prohibitions
or restrictions on the Company's ability to effect a Change of Control Payment.
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 the
subheading "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 and/or
accreted value as applicable of Senior Notes and Pari Passu Notes that may be
purchased out of such Excess Proceeds, at an offer price in cash in an amount
equal to 100% of the outstanding principal amount of the Senior Notes and 100%
of the accreted value or 100% of the outstanding principal amount, as
applicable, of the Pari Passu Notes, plus accrued and unpaid interest and
Liquidated Damages thereon, if any, to the date fixed for the closing of such
offer, in accordance with the procedures specified in the Senior Note Indenture.
If the aggregate principal amount and/or accreted value, as the case may
be, of Senior Notes and Pari Passu Notes surrendered by holders thereof exceeds
the amount of Excess Proceeds, the Trustee will select the Senior Notes and Pari
Passu Notes to be purchased on a pro rata basis. To the extent that the
aggregate amount of Senior Notes and Pari Passu Notes tendered pursuant to an
Excess Proceeds Offer is less than the amount of Excess Proceeds, the Company
may use such deficiency for general purposes. Upon completion of an Excess
Proceeds Offer, the amount of Excess Proceeds will be reset at zero.
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<PAGE> 32
SELECTION OF SENIOR NOTES FOR REDEMPTION OR OFFERS TO PURCHASE
If less than all of the Senior Notes are to be redeemed at any time, the
Trustee will select Senior Notes for redemption as follows:
(1) if the Senior Notes are listed, in compliance with the
requirements of the principal national securities exchange on which the
Senior Notes are listed; or
(2) 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.
No Senior Notes of $1,000 or less shall be redeemed in part. Notices 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. Notices of redemption may not be conditional.
If any Senior Note is to be redeemed in part only, the notice of redemption
that relates to that Senior Note shall state the portion of the principal amount
thereof to be redeemed. A new Senior Note in principal amount equal to the
unredeemed portion of the original Senior Note will be issued in the name of the
Holder thereof upon cancellation of the original Senior Note. Senior Notes
called for redemption become due on the date fixed for redemption. On and after
the redemption date, interest ceases to accrue on the Senior Notes or portions
of them called for redemption.
CERTAIN COVENANTS
Restricted Payments
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 the subheading "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
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<PAGE> 33
quarter for which internal financial statements are available at the
time of such Restricted Payment (or, if such Consolidated Net Income
for such period is a deficit, less 100% of such deficit), plus
(x) 100% of the aggregate net cash proceeds received by the
Company from the issue or sale of Equity Interests of the Company or
of debt securities or Disqualified Stock of the Company that have
been converted into such Equity Interests (other than Equity
Interests (or convertible debt securities) sold to a Subsidiary of
the Company and other than Disqualified Stock or debt securities that
have been converted into Disqualified Stock) after June 30, 1996
(other than any such Equity Interests, the proceeds of which were
used as set forth in clauses (ii) and (viii) below) plus
(y) 100% of the sum of, without duplication, (1) aggregate
dividends or distributions received by the Company or any Subsidiary
from any Joint Venture (other than dividends or distributions to pay
any obligations of such Joint Venture to Persons other than the
Company or any Subsidiary, such as income taxes), with non-cash
distributions to be valued at the lower of book value or fair market
value as determined by the Board of Directors, (2) the amount of the
principal and interest payments received since the Issue Date by the
Company or any Subsidiary from any Joint Venture and (3) the net
proceeds from the sale of an Investment in a Joint Venture received
by the Company or any Subsidiary; provided that there is no
obligation to return any such amounts to the Joint Venture, and
excluding any such dividend, distribution, interest payment or net
proceeds that constitutes a return of capital invested pursuant to
clause (vi) of the next succeeding paragraph, plus
(z) $10.0 million.
The foregoing provisions will not prohibit:
(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at such date of declaration such payment would have
complied with the provisions of the Senior Note 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 subheading "Incurrence of Indebtedness and
Issuance of Disqualified Stock" and (A) is subordinated in right of payment
to the Senior Notes at least to the same extent as, (B) has a Weighted
Average Life to Maturity at least as long as, and (C) 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 subheading "Incurrence of Indebtedness and Issuance of
Disqualified Stock" and only to the extent that such Indebtedness (A) is
not secured by any assets of the Company or any Subsidiary to a greater
extent than the Retired Indebtedness was so secured, (B) has a Weighted
Average Life to Maturity at least as long as the Retired Indebtedness and
(C) 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;
30
<PAGE> 34
(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 (A) $25.0 million and (B) 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 the
Senior Note 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.
A Permitted Investment that ceases to be a Permitted Investment pursuant to
the definition of that term, 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 described under the subheading "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 described under the subheading "Restricted Payments"
were computed, which calculations may be based upon the Company's latest
available financial statements.
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<PAGE> 35
Incurrence of Indebtedness and Issuance of Disqualified Stock
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 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 incurrence or issuance occurs
after June 1, 1999, in each case, determined on a pro forma basis
(including a pro forma application of the net proceeds therefrom), as if
the additional Indebtedness had been incurred, or the Disqualified Stock
had been issued, as the case may be, at the beginning of such four-quarter
period.
If the Company incurs any Indebtedness or issues or redeems any Preferred
Stock subsequent to the commencement of the period for which such ratio is being
calculated but prior to the event for which the calculation of the ratio is
made, then the ratio will be calculated giving pro forma effect to any such
incurrence of Indebtedness, or such issuance or redemption of Preferred Stock,
as if the same had occurred at the beginning of the applicable period. In making
such calculation on a pro forma basis, interest attributable to Indebtedness
bearing a floating interest rate shall be computed as if the rate in effect on
the date of computation had been the applicable rate for the entire period.
The foregoing limitation will not apply to (with each exception to be given
independent effect):
(a) the incurrence by the Company and/or any of its Subsidiaries of
Indebtedness under a 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 subheading "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;
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<PAGE> 36
(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;
(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 Senior Note Indenture to
be outstanding; and
(i) the incurrence by the Company of Indebtedness represented by the
Senior Notes and the Senior Subordinated Notes, in each case, issued on the
Issue Date.
For purposes of determining compliance with this covenant, in the event
that an item of Indebtedness or Disqualified Stock meets the criteria of more
than one of the categories described in clauses (a) through (i) 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 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
subheading "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 subheading "Merger, Consolidation or Sale of Assets;" or
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(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 of the Company;
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) except with respect to an Asset Sale constituting the issuance
or sale of Equity Interests in the Web Hosting Subsidiary, at least 75%
of the consideration therefor received by the Company or such Subsidiary
is in the form of cash, provided, however, that:
(A) the amount of:
(x) any liabilities (as shown on the Company's or such
Subsidiary's most recent balance sheet or in the notes thereto),
of the Company or any Subsidiary of the Company (other than
liabilities that are by their terms subordinated to the Senior
Notes) that are assumed by the transferee of any such assets; and
(y) any notes, obligations or other securities received by
the Company or any such Subsidiary from such transferee that are
immediately converted by the Company or such Subsidiary into
cash,
shall be deemed to be cash (to the extent of the cash received in
the case of subclause (y)) for purposes of this clause (c); and
(B) an amount equal to the Fair Market Value (determined as set
forth in clause (b) above) of (1) Telecommunications Related Assets
received by the Company or any such Subsidiary from the transferee
that will be used by the Company or any such Subsidiary in the
operation of a Telecommunications Business in the United States and
(2) the Voting Stock of any Person engaged in the Telecommunications
Business in the United States received by the Company or any such
Subsidiary (provided that such Voting Stock is converted to cash
within 270 days or such Person concurrently becomes or is a
Subsidiary of the Company) will be deemed to be cash for purposes of
this clause (c).
The foregoing provisions will not apply to a sale, lease, conveyance or
other disposition of all or substantially all of the assets of the Company,
which will be governed by the provisions of the Senior Note Indenture described
below under the subheading "Merger, Consolidation or Sale of Assets."
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, at its option, 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); or
(iii) in the case of net cash proceeds realized upon the issuance or
sale of Equity Interests in the Web Hosting Subsidiary, fund cash operating
losses, provide working capital and for general corporate purposes.
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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 the subheading "Offer to
Purchase with Excess Asset Sale Proceeds."
Liens
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 Company and its Subsidiaries may not, directly or indirectly, create or
otherwise cause to become effective any consensual encumbrance or restriction on
the ability of any Subsidiary to:
(i) pay dividends or make any other distributions to the Company or
any of its Subsidiaries on its Capital Stock or with respect to any other
interest or participation in, or measured by, its profits, or pay any
Indebtedness owed to the Company or any of its Subsidiaries;
(ii) make loans or advances to the Company or any of its Subsidiaries;
or
(iii) transfer any of its properties or assets to the Company or any
of its Subsidiaries; except for such encumbrances or restrictions existing
as of the Issue Date or under or by reason of:
(a) Existing Indebtedness;
(b) applicable law;
(c) any instrument governing Acquired Debt as in effect at the time
of acquisition (except to the extent such Indebtedness was incurred in
connection with, or in contemplation of, such acquisition), which
encumbrance or restriction is not applicable to any Person, or the
properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired;
(d) by reason of customary non-assignment provisions in leases
entered into in the ordinary course of business and consistent with past
practices;
(e) Indebtedness in respect of a Permitted Refinancing, provided
that the restrictions contained in the agreements governing such
Refinancing Indebtedness are not materially more restrictive than those
contained in the agreements governing the Indebtedness being refinanced;
(f) with respect to clause (iii) above, purchase money obligations
for property acquired in the ordinary course of business, Vendor
Indebtedness incurred in connection with the purchase or lease of
Telecommunications Related Assets or performance bonds or similar
security for performance which liens securing such obligations do not
cover any asset other than the asset acquired or, in the case of
performance bonds or similar security for performance, the assets
associated with the Company's performance;
(g) Indebtedness incurred under clause (a) of the covenant
described under the subheading "Incurrence of Indebtedness and Issuance
of Disqualified Stock;"
(h) the Senior Note Indenture and the Senior Notes or future
Indebtedness with substantially similar restrictions, if any, to the
Senior Notes;
(i) the Senior Subordinated Note Indenture and the Senior
Subordinated Notes or future Indebtedness with substantially similar
restrictions, if any, to the Senior Subordinated Notes; or
(j) in the case of clauses (a), (c), (e), (g), (h) and (i) above,
any amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings thereof, provided
that such amendments, modifications, restatements, renewals, increases,
supple-
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ments, 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 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 Senior Note 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 the subheading "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 Company and its Subsidiaries may not sell, lease, transfer or otherwise
dispose of any of their respective properties or assets to, or purchase any
property or assets from, or enter into any contract, agreement, understanding,
loan, advance or guarantee with, or for the benefit of, any Affiliate (each of
the foregoing, an "Affiliate Transaction"), unless:
(i) such Affiliate Transaction is on terms that are no less favorable
to the Company or the relevant Subsidiary than those that would have been
obtained in a comparable transaction by the Company or such Subsidiary with
an unrelated Person;
(ii) such Affiliate Transaction is approved by a majority of the
disinterested directors on the Board of Directors of the Company; and
(iii) the Company delivers to the Trustee, with respect to any
Affiliate Transaction involving aggregate payments in excess of $1.0
million, a resolution of a committee of independent directors of the
Company set forth in an Officers' Certificate certifying that such
Affiliate Transaction complies with clauses (i) and (ii) above;
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<PAGE> 40
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 Senior Note
Indenture described above under the subheading "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 Company may 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 or to pay regularly scheduled interest on the
Senior Notes pursuant to their terms.
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 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 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 the subheadings "Incurrence of Indebtedness
and Issuance of Disqualified Stock" and "Liens" to incur secured
Indebtedness in an amount equal to the Attributable Debt with respect to
such transaction;
(ii) the consideration received by the Company or such Subsidiary from
such transaction is at least equal to the Fair Market Value of the property
being transferred; and
(iii) the Net Proceeds received by the Company or such Subsidiary from
such transaction are applied in accordance with the covenant described
above under the subheading "Asset Sales."
Reports
The Company will file with the Trustee within 15 days after it files them
with the SEC copies of the annual and quarterly reports and the information,
documents, and other reports that the Company is required to file with the SEC
pursuant to Section 13(a) or 15(d) of the Exchange Act ("SEC Reports"). In the
event the Company is not required or shall cease to be required to file SEC
Reports, pursuant to the Exchange Act,
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<PAGE> 41
the Company will nevertheless continue to file such reports with the SEC (unless
the SEC will not accept such a filing) and the Trustee. Whether or not required
by the Exchange Act to file SEC Reports with the SEC, 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
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 Senior Note 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.
EVENTS OF DEFAULT AND REMEDIES
Each of the following constitutes an Event of Default:
(i) default for 30 days in the payment when due of interest or
Liquidated Damages, if any, on the Senior Notes;
(ii) default in payment when due of principal or premium, if any, on
the Senior Notes at maturity, upon redemption or otherwise;
(iii) failure by the Company to perform or comply with the provisions
of the covenants described above under the subheadings "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 Senior Notes then
outstanding to comply with its other agreements in the Senior Note
Indenture or the Senior Notes;
(v) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Subsidiaries
(or the payment of which is guaranteed by the Company or any of its
Subsidiaries), whether such Indebtedness or Guarantee now exists, or is
created after the Issue Date, which default (x) is caused by a failure to
pay when due principal, premium, if any, or interest on such Indebtedness
within the grace period provided in such Indebtedness (a "Payment
Default"), and the principal amount of any such Indebtedness, together with
the principal amount of any other such Indebtedness of the Company or any
Significant Subsidiary under which there has been a Payment Default or the
maturity of which has been accelerated as provided in clause (y),
aggregates $5.0 million or more or (y) results in the acceleration (which
acceleration has not been rescinded) of such Indebtedness prior to its
express maturity and the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness under
which there has been a Payment Default or the maturity of which has been so
accelerated, aggregates $5.0 million or more;
(vi) failure by the Company or any of its Significant Subsidiaries to
pay final judgments (other than any judgment as to which a reputable
insurance company has accepted full liability in writing) aggregating in
excess of $5.0 million which judgments are not paid, discharged or stayed
within 45 days after their entry; and
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(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 Senior Note
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 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 Senior Note 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
Senior Note Indenture or the Senior Notes except as provided in the Senior Note
Indenture. Subject to certain limitations, holders of a majority in principal
amount of the then outstanding Senior 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 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 Senior Note 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.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Senior Note 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 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 Senior Note Indenture or for any claim based on, in respect
of, or by reason of such obligations or their creation. Each holder of Senior
Notes by accepting a Senior Note waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the Senior
Notes. Such waiver may not be effective to waive liabilities under the federal
securities laws and it is the view of the Commission that such a waiver is
against public policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have its
obligations discharged with respect to the outstanding Senior Notes ("Legal
Defeasance"). Such Legal Defeasance means that the Company shall be deemed to
have paid and discharged the entire indebtedness represented by the outstanding
Senior Notes, except for:
(a) the rights of holders of outstanding Senior Notes to receive from
the trust described below payments in respect of the principal of, premium,
if any, and interest on and Liquidated Damages with respect to such Senior
Notes when such payments are due, or on the redemption date, as the case
may be;
(b) the Company's obligations with respect to the Senior Notes
concerning issuing temporary Senior Notes, registration of Senior Notes,
mutilated, destroyed, lost or stolen Senior Notes and the maintenance of an
office or agency for payment and money for security payments held in trust;
(c) the rights, powers, trust, duties and immunities of the Trustee,
and the Company's obligations in connection therewith; and
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<PAGE> 43
(d) the Legal Defeasance provisions of the Senior Note 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 Senior Note 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 the subheading "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 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;
(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 Senior Note Indenture) to which the
Company or any of its Subsidiaries is a party or by which the Company or
any of its Subsidiaries is bound;
(vi) the Company must have delivered to the Trustee an opinion of
counsel to the effect that after the 91st day (or such other applicable
date) following the deposit, the trust funds will not be subject to the
effect of any applicable bankruptcy, insolvency, reorganization or similar
laws affecting creditors' rights generally;
(vii) the Company must deliver to the Trustee an Officers' Certificate
stating that the deposit was not made by the Company with the intent of
preferring the holders of Senior Notes over the other creditors of the
Company with the intent of defeating, hindering, delaying or defrauding
creditors of the Company or others; and
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<PAGE> 44
(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.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next succeeding paragraph, the Senior Note
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 Senior Note 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 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 Senior 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
subheadings "Offer to Purchase upon Change of Control" and "Offer to
Purchase with Excess Asset Sale Proceeds");
(iii) reduce the rate of or change the time for payment of interest on
any Senior Notes;
(iv) waive a Default or Event of Default in the payment of principal
of or premium, if any, or interest on the Senior Notes (except a rescission
of acceleration of the Senior Notes by the holders of at least a majority
in aggregate principal amount of the Senior Notes and a waiver of the
payment default that resulted from such acceleration);
(v) make any Senior Note payable in money other than that stated in
the Senior Notes;
(vi) make any change in the provisions of the Senior Note 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 subheadings "Offer to Purchase upon Change of Control" and "Offer
to Purchase with Excess Asset Sale Proceeds"); or
(viii) make any change in the foregoing amendment and waiver
provisions.
Notwithstanding the foregoing, without the consent of any holder of Senior
Notes, the Company and the Trustee may amend or supplement the Senior Note
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 Senior Note Indenture of any such
holder; or
(e) to comply with requirements of the Commission in order to
effect or maintain the qualification of the Senior Note Indenture under
the Trust Indenture Act.
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CONCERNING THE TRUSTEE
If the Trustee becomes a creditor of the Company, the Senior Note Indenture
limits its rights 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 will be 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
Senior 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 Senior Note 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 Senior
Note 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 Senior Note 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 Senior 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 Senior Note 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 Senior Note
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.
ADDITIONAL INFORMATION
Anyone who receives this Prospectus may obtain a copy of the Senior Note
Indenture and Senior Note Registration Rights Agreement without charge by
writing to Intermedia Communications Inc., 3625 Queen Palm Drive, Tampa, Florida
33619.
REGISTRATION RIGHTS; LIQUIDATED DAMAGES
The following description is a summary of the material provisions of the
Senior Note Registration Rights Agreement. It does not restate that agreement in
its entirety. We urge you to read the Senior Note Registration Rights Agreement
in its entirety because it, and not this description, defines your registration
rights as Holders of these Senior Notes. See "Additional Information."
Pursuant to the Senior Note Registration Rights Agreement, the Company
agreed to file with the SEC a registration statement (the "Senior Exchange Offer
Registration Statement") on the appropriate form under the Securities Act with
respect to an offer to exchange (the "Senior Exchange Offer") the 9 1/2% Senior
Notes for 9 1/2% Series B Senior Notes. Upon the effectiveness of the Senior
Exchange Offer
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Registration Statement, the Company will offer to the holders of Transfer
Restricted Securities pursuant to the Senior Exchange Offer who are able to make
certain representations the opportunity to exchange their Transfer Restricted
Securities for a new issue of senior notes of the Company (the "9 1/2% Series B
Senior Notes") registered under the Securities Act, with terms substantially
identical to those of the 9 1/2% Senior Notes.
If:
(i) the Company is not:
(a) required to file the Senior Exchange Offer Registration
Statement; or
(b) permitted to consummate the Senior Exchange Offer because the
Senior 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 Senior Exchange Offer,
(b) it may not resell the 9 1/2% Series B Senior Notes acquired by
it in the Senior Exchange Offer to the public without delivering a
prospectus and the prospectus contained in the Senior Exchange Offer
Registration Statement is not appropriate or available for such resales;
or
(c) it is a broker-dealer and owns 9 1/2% Senior Notes acquired
directly from the Company or an affiliate of the Company,
the Company will file with the Commission a shelf registration
statement (the "Senior Notes Shelf Registration Statement") to cover
resales of the Senior Notes by the Holders thereof who satisfy certain
conditions relating to the provision of information in connection with the
Senior Notes 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
9 1/2% Senior Note until:
(i) the date on which such 9 1/2% Senior Note has been exchanged by a
Person other than a broker-dealer for a 9 1/2% Series B Senior Note in the
Senior Exchange Offer;
(ii) following the exchange by a broker-dealer in the Senior Exchange
Offer of a 9 1/2% Senior Note for a 9 1/2% Series B Senior Note, the date
on which such 9 1/2% Series B 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 Senior Exchange Offer Registration
Statement;
(iii) the date on which such 9 1/2% Senior Note has been effectively
registered under the Securities Act and disposed of in accordance with the
Senior Notes Shelf Registration Statement; or
(iv) the date on which such 9 1/2% Senior Note may be distributed to
the public pursuant to Rule 144 under the Securities Act.
The Senior Note Registration Rights Agreement provides that:
(i) unless the Senior Exchange Offer would not be permitted by
applicable law or Commission policy, the Company will file a Senior
Exchange Offer Registration Statement with the Commission on or prior to 60
days after the Issue Date;
(ii) unless the Senior Exchange Offer would not be permitted by
applicable law or Commission policy, the Company will use its best efforts
to have the Senior Exchange Offer Registration Statement declared effective
by the Commission on or prior to 180 days after the Issue Date;
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(iii) unless the Senior Exchange Offer would not be permitted by
applicable law or Commission policy, the Company will
(a) upon the effectiveness of the Senior Exchange Offer
Registration Statement, commence the Senior Exchange Offer and
(b) use its best efforts to issue on or prior to 30 business days
after the date on which the Senior Exchange Offer Registration Statement
was declared effective by the Commission, 9 1/2% Series B Senior Notes
in exchange for all 9 1/2% Senior Notes tendered prior thereto in the
Senior Exchange Offer; and
(iv) if obligated to file the Senior Notes Shelf Registration
Statement, the Company will use its best efforts to file the Senior Notes
Shelf Registration Statement with the Commission on or prior to 60 days
after such filing obligation arises (and, if the Senior Exchange Offer is
not permitted by applicable law or Commission policy, in any event within
150 days after the Issue Date) and to cause the Senior Notes Shelf
Registration Statement to be declared effective by the Commission on or
prior to 180 days after such obligation arises (and, if the Senior Exchange
Offer is not be permitted by applicable law or Commission policy, in any
event within 270 days after the Issue Date).
If:
(a) the Company fails to file any of the registration statements
required by the Senior 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 "Senior Note Effectiveness Target Date");
(c) the Company fails to consummate the Senior Exchange Offer
within 30 business days of the Senior Note Effectiveness Target Date
with respect to the Senior Exchange Offer Registration Statement; or
(d) the Senior Notes Shelf Registration Statement or the Senior
Exchange Offer 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
Senior Note Registration Rights Agreement, provided, that the Company
will have the option of suspending the effectiveness of the Senior Notes
Shelf Registration Statement or the Senior Exchange Offer 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 Senior Notes
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 "Senior Note 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 Senior Note
Registration Default, in an amount equal to $.05 per week per $1,000
principal amount of Senior 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 Senior Notes constituting Transfer
Restricted Securities with respect to each subsequent 90-day period until all
Senior Note Registration Defaults have been cured, up to a maximum amount of
Liquidated Damages of $.50 per week per $1,000 principal amount of Senior Notes
constituting Transfer Restricted Securities.
All accrued Liquidated Damages will be paid by the Company on each Interest
Payment Date to the Global Senior Note 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.
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Following the cure of all Senior Note Registration Defaults, the accrual of
Liquidated Damages will cease.
Holders of Senior Notes will be required to make certain representations to
the Company (as described in the Senior Note Registration Rights Agreement) in
order to participate in the Senior Exchange Offer and will be required to
deliver information to be used in connection with the Senior Notes Shelf
Registration Statement and to provide comments on the Senior Notes Shelf
Registration Statement within the time periods set forth in the Senior Note
Registration Rights Agreement in order to have their Senior Notes included in
the Senior Notes 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 9 1/2% Series B Senior Notes
may be issued in the form of one or more global certificates (the "Global Senior
Notes"). The Global Senior Notes will be deposited 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 Senior Note Holder").
Senior Notes that are issued as described below under the subheading
"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 all Global Senior Notes
have previously been exchanged for Certificated Securities, be exchanged for an
interest in the Global Senior Note representing the principal amount of Senior
Notes being transferred, subject to the transfer restrictions set forth in the
Senior Note Indenture.
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 Senior Notes, the Depositary will
credit the accounts of Participants designated by the initial purchasers
with portions of the principal amount of the Global Senior Notes; and
(ii) ownership of the Senior Notes evidenced by the Global Senior
Notes 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 Senior Note will be limited to such extent.
So long as the Global Senior Note Holder is the registered owner of any
Senior Notes, the Global Senior Note Holder will be considered the sole Holder
under the Senior Note Indenture of any Senior Notes evidenced by the Global
Senior Notes. Beneficial owners of Senior Notes evidenced by the Global Senior
Notes will not be considered the owners or Holders thereof under the Senior Note
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
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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 Senior Note Holder on the applicable record date will be payable by the
Trustee to or at the direction of the Global Senior Note Holder in its capacity
as the registered Holder under the Senior Note Indenture. Under the terms of the
Senior Note Indenture, the Company and the Trustee may treat the persons in
whose names Senior Notes, including the Global Senior Notes, are registered as
the owners thereof for the purpose of receiving such payments. Consequently,
neither the Company nor the Trustee has or will have any responsibility or
liability for the payment of such amounts to beneficial owners of Senior Notes.
The Company believes, however, that it is currently the policy of the Depositary
to immediately credit the accounts of the relevant Participants with such
payments, in amounts proportionate to their respective holdings of beneficial
interests in the relevant security as shown on the records of the Depositary.
Payments by the Depositary's Participants and the Depositary's Indirect
Participants to the beneficial owners of 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 a
Global Senior Note 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 a successor depositary
is not appointed by the Company within 120 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 Senior Note Indenture,
then, upon surrender by the Global Senior Note Holder of its Global
Senior Note, Senior Notes in such form will be issued to each person that
the Global Senior Note 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 Senior Note 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 Senior Note Holder
or the Depositary for all purposes.
SAME DAY SETTLEMENT AND PAYMENT
The Company will make payments in respect of the Senior Notes represented
by the Global Senior Notes (including principal, premium, if any, interest and
Liquidated Damages, if any) by wire transfer of immediately available funds to
the accounts specified by the Global Senior Note Holder. With respect to Senior
Notes 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 Senior Notes are
expected to be eligible to trade in the Depository'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
Senior Notes will also be settled in immediately available funds.
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CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Senior Note
Indenture. Reference is made to the Senior Note Indenture for a full disclosure
of all such terms, as well as any other capitalized terms used herein for which
no definition is provided.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise, provided, however,
that beneficial ownership of 25% or more of the voting securities of a Person
shall be deemed to be control.
"Attributable Debt" means, with respect to any Sale and Leaseback
Transaction, the present value at the time of determination (discounted at a
rate consistent with accounting guidelines, as determined in good faith by the
Company) of the payments during the remaining term of the lease (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended) or until the earliest date on which the lessee may
terminate such lease without penalty or upon payment of a penalty (in which case
the rental payments shall include such penalty), after excluding all amounts
required to be paid on account of maintenance and repairs, insurance, taxes,
assessments, water, utilities and similar charges.
"Beneficial Owner" means a beneficial owner as defined in Rules 13d-3 and
13d-5 under the Exchange Act (or any successor rules), including the provision
of such Rules that a Person shall be deemed to have beneficial ownership of all
securities that such Person has a right to acquire within 60 days; provided that
a Person will not be deemed a beneficial owner of, or to own beneficially, any
securities if such beneficial ownership (1) arises solely as a result of a
revocable proxy delivered in response to a proxy or consent solicitation made
pursuant to, and in accordance with, the Exchange Act and (2) is not also then
reportable on Schedule 13D or Schedule 13G (or any successor schedule) under the
Exchange Act.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be so required to be capitalized on the balance sheet in accordance
with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock and (iii) in the case of a partnership, partnership interests
(whether general or limited) and any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, such partnership.
"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
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(iv) the first day on which a majority of the members of the Board of
Directors of the Company are not Continuing Directors.
"Closing Price" on any Trading Day with respect to the per share price of
any shares of Capital Stock means the last reported sale price regular way or,
in case no such reported sale takes place on such day, the average of the
reported closing bid and asked prices regular way, in either case on the New
York Stock Exchange or, if such shares of Capital Stock are not listed or
admitted to trading on such exchange, on the principal national securities
exchange on which such shares are listed or admitted to trading or, if not
listed or admitted to trading on any national securities exchange, on the Nasdaq
National Market or, if such shares are not listed or admitted to trading on any
national securities exchange or quoted on Nasdaq National Market but the issuer
is a Foreign Issuer (as defined in Rule 3b-4(b) under the Exchange Act) and the
principal securities exchange on which such shares are listed or admitted to
trading is a Designated Offshore Securities Market (as defined in Rule 902(a)
under the Securities Act), the average of the reported closing bid and asked
prices regular way on such principal exchange, or, if such shares are not listed
or admitted to trading on any national securities exchange or quoted on Nasdaq
National Market and the issuer and principal securities exchange do not meet
such requirements, the average of the closing bid and asked prices in the
over-the-counter market as furnished by any New York Stock Exchange member firm
that is selected from time to time by the Company for that purpose and is
reasonably acceptable to the Trustee.
"Common Stock" of any Person means Capital Stock of such Person that does
not rank prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding up
of such Person, to shares of Capital Stock of any other class of such Person.
"Consolidated Cash Flow Leverage Ratio" with respect to any Person means
the ratio of the Consolidated Indebtedness of such Person to the Consolidated
EBITDA of such Person for the relevant period; provided, however, that:
(1) if the Company or any Subsidiary of the Company has incurred any
Indebtedness (including Acquired Debt) or if the Company has issued any
Disqualified Stock or if any Subsidiary of the Company has issued any
Preferred Stock since the beginning of such period that remains outstanding
on the date of such determination or if the transaction giving rise to the
need to calculate the Consolidated Cash Flow Leverage Ratio is an
incurrence of Indebtedness (including Acquired Debt) or the issuance of
Disqualified Stock by the Company, Consolidated EBITDA and Consolidated
Indebtedness for such period will be calculated after giving effect on a
pro forma basis to:
(A) such Indebtedness, Disqualified Stock or Preferred Stock, as
applicable, as if such Indebtedness had been incurred or such stock had
been issued on the first day of such period;
(B) the discharge of any other Indebtedness repaid, repurchased,
defeased or otherwise discharged with the proceeds of such new
Indebtedness or sale of stock as if such discharge had occurred on the
first day of such period; and
(C) the interest income realized by the Company or its Subsidiaries
on the proceeds of such Indebtedness or of such stock sale, to the
extent not yet applied at the date of determination, assuming such
proceeds earned interest at the rate in effect on the date of
determination from the first day of such period through such date of
determination;
(2) if since the beginning of such period the Company or any
Subsidiary of the Company has made any sale of assets (including, without
limitation, any Asset Sales or pursuant to any Sale and Leaseback
Transaction), Consolidated EBITDA for such period will be:
(A) reduced by an amount equal to Consolidated EBITDA (if positive)
directly attributable to the assets which are the subject of such sale
of assets for such period; or
(B) increased by an amount equal to Consolidated EBITDA (if
negative) directly attributable thereto for such period; and
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(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 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
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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.
"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 there-
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with, 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 the subheading "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 the subheading "Offer to
Purchase Upon Change of Control."
"Eligible Institution" means a commercial banking institution that has
combined capital and surplus of not less than $500.0 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, the Company's 8 1/2% Senior Notes due 2008 and the
Company's 8.60% 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 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.
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"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
(i) borrowed money;
(ii) evidenced by bonds, notes, debentures or similar instruments or
letters of credit (or reimbursement agreements in respect thereof);
(iii) the balance deferred and unpaid of the purchase price of any
property (including pursuant to capital leases); or
(iv) 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 Senior Note
Indenture.
"Issue Date" means February 24, 1999.
"Joint Venture" means a Person in the Telecommunications Business in which
the Company holds less than a majority of the shares of Voting Stock or an
Unrestricted Subsidiary in the Telecommunications Business.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
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"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 March 1, 2004, 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 March 1, 2004.
"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 March 1, 2004.
"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.
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"Pari Passu Notes" means any notes issued by the Company which, by their
terms and the terms of any indenture governing such notes, have an obligation to
be repurchased by the Company upon the occurrence of an Asset Sale.
"Permitted Investment" means:
(a) any Investments in the Company or any Subsidiary of the Company;
(b) any Investments in Marketable Securities;
(c) Investments by the Company or any Subsidiary of the Company in a
Person, if as a result of such Investment:
(i) such Person becomes a Subsidiary of the Company; or
(ii) such Person is merged, consolidated or amalgamated with or
into, or transfers or conveys substantially all of its assets to, or is
liquidated into, the Company or a Subsidiary of the Company;
(d) any Investments in property or assets to be used in:
(i) any line of business in which the Company or any of its
Subsidiaries was engaged on the Issue Date; or
(ii) 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:
(i) such Person becomes a Subsidiary of the Company or any of its
Subsidiaries; or
(ii) 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
described under the subheading "Incurrence of Indebtedness and Issuance of
Preferred Stock;"
(i) bonds, notes, debentures or other securities received as a result
of Asset Sales permitted under the covenant described under the subheading
"Asset Sales;" and
(j) the Investment deemed to have been made by the Company at such
time as the Web Hosting Subsidiary ceases to be a Subsidiary of the Company
by reason of the issuance or sale of Equity Interests in the Web Hosting
Subsidiary to the extent that the book value of such Investment at the time
such Investment is deemed to have been made does not exceed $200.0 million
in the aggregate.
"Permitted Liens" means:
(i) Liens securing Indebtedness (including Capital Lease Obligations)
permitted to be incurred pursuant to clauses (a), (b) and (d) of the third
paragraph of the covenant described under the subheading "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
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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 described under the subheading "Incurrence of
Indebtedness and Issuance of Preferred Stock," but only to the extent that
the outstanding amount of the Indebtedness secured by such Liens would not
represent more than 80% of Eligible Receivables; and
(xi) Liens to secure any Permitted Refinancing of any Indebtedness
secured by Liens referred to in the foregoing clauses (i), (iii), (v) or
(x); but only to the extent that such Liens do not extend to any other
property or assets and the principal amount of the Indebtedness secured by
such Liens is not increased.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof or any other entity.
"Preferred Stock" as applied to the Capital Stock of any Person, means
Capital Stock of such Person of any class or classes (however designated) that
ranks prior, as to payment of dividends or as to the distribution of assets upon
any voluntary or involuntary liquidation, dissolution or winding up of such
Person, to shares of Capital Stock of any other class of such Person.
"Public Offering" means an underwritten offering of Common Stock of the
Company registered under the Securities Act.
"Receivables" means, with respect to any Person, all of the following
property and interests in property of such person or entity, whether now
existing or existing in the future or hereafter acquired or arising:
(i) accounts;
(ii) accounts receivable, including, without limitation, all rights to
payment created by or arising from sales of goods, leases of goods or the
rendition of services no matter how evidenced, whether or not earned by
performance;
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(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 Senior Note 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 Senior Note
Indenture.
"Senior Note Registration Rights Agreement" means the Registration Rights
Agreement between the Company and the initial purchasers in respect of the
Senior Notes.
"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
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connection with such sale). For purposes of this definition, the term parent
means any Person of which the referent Strategic Investor is a Subsidiary.
"Subsidiary" of any Person means:
(i) any corporation, association or business entity of which more than
50% of the total voting power of shares of Capital Stock entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the other
Subsidiaries of such Person or a combination thereof; and
(ii) any partnership:
(a) the sole general partner or the managing general partner of
which is such Person or a Subsidiary of such Person; or
(b) the only general partners of which are such Person or one or
more Subsidiaries of such Person or any combination thereof;
provided that any Unrestricted Subsidiary shall be excluded from this
definition of "Subsidiary."
"Telecommunications Business" means, when used in reference to any Person,
that such Person is engaged primarily in the business of:
(i) transmitting, or providing services relating to the transmission
of, voice, video or data through owned or leased transmission facilities;
(ii) creating, developing or marketing communications related network
equipment, software and other devices for use in a Telecommunications
Business; or
(iii) evaluating, participating or pursuing any other activity or
opportunity that is related to those identified in (i) or (ii) above;
provided that the determination of what constitutes a Telecommunications
Business shall be made in good faith by the Board of Directors of the
Company.
"Telecommunications Related Assets" means all assets, rights (contractual
or otherwise) and properties, whether tangible or intangible, used in connection
with a Telecommunications Business.
"Total Common Equity" of any Person means, as of any date of determination,
the product of:
(i) the aggregate number of outstanding primary shares of Common Stock
of such Person on such day (which shall not include any options or warrants
on, or securities convertible or exchangeable into, shares of Common Stock
of such Person); and
(ii) the average Closing Price of such Common Stock over the 20
consecutive Trading Days immediately preceding such day. If no such Closing
Price exists with respect to shares of any such class, the value of such
shares for purposes of clause (ii) of the preceding sentence shall be
determined by the Board of Directors of the Company in good faith and
evidenced by a resolution of the Board of Directors filed with the Trustee.
"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
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(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.
"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 (i) in connection with the acquisition or construction of
Telecommunications Related Assets and (ii) to pay regularly scheduled interest
on such Indebtedness pursuant to the terms thereof.
"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.
"Web Hosting Subsidiary" means the Subsidiary of the Company substantially
all of the assets of which consist of assets used exclusively in the conduct of
the Company's Internet Web hosting business.
"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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DESCRIPTION OF THE SENIOR SUBORDINATED NOTES
You can find the definitions of certain terms used in this description
under the subheading "Certain Definitions." In this description, the word
"Company" refers only to Intermedia Communications Inc. and not to any of its
subsidiaries and term Senior Subordinated Notes refers only to the 12 1/4%
Senior Subordinated Notes and 12 1/4% Series B Senior Subordinated Notes and not
the Senior Notes.
The Company will issue the 12 1/4% Series B Senior Subordinated Notes under
an indenture (the "Senior Subordinated Note Indenture") between itself and
SunTrust Bank, Central Florida, National Association, as trustee (the
"Trustee"). The terms of the Senior Subordinated Notes include those stated in
the Senior Subordinated Note Indenture and those made part of the Senior
Subordinated Note Indenture by reference to the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"). Certain rights of the holders of the Senior
Subordinated Notes are all set forth in a registration rights agreement between
the Company and the initial purchasers of the Senior Subordinated Notes (the
"Senior Subordinated Note Registration Rights Agreement").
The following description is a summary of the material provisions of the
Senior Subordinated Note Indenture and the Senior Subordinated Note Registration
Rights Agreement. It does not restate those agreements in their entirety. We
urge you to read the Senior Subordinated Note Indenture and the Senior
Subordinated Note Registration Rights Agreement because they, and not this
description, define your rights as holders of the Senior Subordinated Notes.
Copies of the Senior Subordinated Note Indenture and the Senior Subordinated
Note Registration Rights Agreement are available as set forth below under the
subheading "Additional Information." Certain defined terms used in this
description but not defined below under the subheading "Certain Definitions"
have the meanings assigned to them in the Senior Subordinated Note Indenture.
BRIEF DESCRIPTION OF THE SENIOR SUBORDINATED NOTES
The Senior Subordinated Notes:
- are general unsecured obligations of the Company;
- are subordinated in right of payment to all existing and future
Senior Debt of the Company, including, without limitation, the
Existing Senior Notes and the Senior Notes; and
- are pari passu in right of payment with any future senior
subordinated Indebtedness of the Company.
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 Subordinated
Notes. The 12 1/4% Senior Subordinated Notes are, and the 12 1/4% Series B
Senior Subordinated 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
Subordinated 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 December 31, 1998, on a pro forma basis after giving
effect to the offering of the Senior Notes and the Senior Subordinated Notes,
the Company would have had approximately $3.1 billion of total indebtedness
outstanding, including trade payables and approximately $88.1 million of
indebtedness and other liabilities of the Company's Subsidiaries. Senior
indebtedness would have accounted for approximately $2.1 billion of such total
indebtedness.
PRINCIPAL, MATURITY AND INTEREST
The Senior Subordinated Note Indenture provides for the issuance by the
Company of Senior Subordinated Notes with a maximum aggregate principal amount
at maturity of $364.0 million. The Company
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will issue 12 1/4% Series B Senior Subordinated Notes in denominations of $1,000
and integral multiples of $1,000. The 12 1/4% Series B Senior Subordinated Notes
will mature on March 1, 2009.
The 12 1/4% Senior Subordinated Notes were issued at a substantial discount
from their principal amount at maturity, to generate gross proceeds of
approximately $200.4 million. Until March 1, 2004, interest will not accrue or
be payable on the Senior Subordinated Notes, but the Accreted Value will accrete
(representing the amortization of original issue discount) between the date of
issuance and March 1, 2004, on a semi-annual bond equivalent basis using a
360-day year composed of twelve 30-day months such that the Accreted Value shall
be equal to the full principal amount at maturity of the Senior Subordinated
Notes on March 1, 2004. After March 1, 2004, interest on the Senior Subordinated
Notes will accrue at the rate of 12 1/4% per annum and will be payable
semi-annually in cash in arrears on March 1 and September 1, commencing on
September 1, 2004. The Company will make each interest payment to the Holders of
record on the immediately preceding February 15 and August 15.
Interest on the Senior Subordinated Notes will accrue from March 1, 2004
or, if interest has already been paid, from the date it was most recently paid.
Interest will be computed on the basis of a 360-day year comprised of twelve
30-day months.
PAYING AGENT AND REGISTRAR FOR THE SENIOR SUBORDINATED NOTES
The Trustee will initially act as Paying Agent and Registrar. The Company
may change the Paying Agent or Registrar without prior notice to the Holders,
and the Company or any of its Subsidiaries may act as Paying Agent or Registrar.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange Senior Subordinated Notes in accordance
with the Senior Subordinated Note 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 Senior Subordinated Note Indenture. The
Company is not required to transfer or exchange any Senior Subordinated Note
selected for redemption. Also, the Company is not required to transfer or
exchange any Senior Subordinated Note for a period of 15 days before a selection
of Senior Subordinated Notes to be redeemed.
The registered Holder of a Senior Subordinated Note will be treated as the
owner of it for all purposes.
SUBORDINATION
The payment of principal, interest and premium and Liquidated Damages, if
any, on the Senior Subordinated Notes will be subordinated to the prior payment
in full of all Senior Debt of the Company, including Senior Debt incurred after
the date of the Senior Subordinated Note Indenture.
The holders of Senior Debt will be entitled to receive payment in full of
all Obligations due in respect of Senior Debt (including interest after the
commencement of any bankruptcy proceeding at the rate specified in the
applicable Senior Debt) before the Holders of Senior Subordinated Notes will be
entitled to receive any payment with respect to the Senior Subordinated Notes
(except that Holders of Senior Subordinated Notes may receive and retain
Permitted Junior Securities and payments made from the trust described under the
subheading "Legal Defeasance and Covenant Defeasance"), in the event of any
distribution to creditors of the Company:
(1) in a liquidation or dissolution of the Company;
(2) in a bankruptcy, reorganization, insolvency, receivership or
similar proceeding relating to the Company or its property;
(3) in an assignment for the benefit of creditors; or
(4) in any marshaling of the Company's assets and liabilities.
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The Company also may not make any payment in respect of the Senior
Subordinated Notes (except in Permitted Junior Securities or from the trust
described under the subheading "Legal Defeasance and Covenant Defeasance") if:
(1) a payment default on Designated Senior Debt occurs and is
continuing beyond any applicable grace period; or
(2) any other default occurs and is continuing on any series of
Designated Senior Debt that permits holders of that series of Designated
Senior Debt to accelerate its maturity and the Trustee receives a notice of
such default (a "Payment Blockage Notice") from the Company or the holders
of any Designated Senior Debt.
Payments on the Senior Subordinated Notes may and shall be resumed:
(1) in the case of a payment default, upon the date on which such
default is cured or waived; and
(2) in case of a nonpayment default, the earlier of the date on which
such nonpayment default is cured or waived or 179 days after the date on
which the applicable Payment Blockage Notice is received, unless the
maturity of any Designated Senior Debt has been accelerated.
No new Payment Blockage Notice may be delivered unless and until:
(1) 360 days have elapsed since the delivery of the immediately prior
Payment Blockage Notice; and
(2) all scheduled payments of principal, interest and premium and
Liquidated Damages, if any, on the Senior Subordinated Notes that have come
due have been paid in full in cash.
No nonpayment default that existed or was continuing on the date of
delivery of any Payment Blockage Notice to the Trustee shall be, or be made, the
basis for a subsequent Payment Blockage Notice unless such default shall have
been cured or waived for a period of not less than 90 days.
If the Trustee or any Holder of the Senior Subordinated Notes receives a
payment in respect of the Senior Subordinated Notes (except in Permitted Junior
Securities or from the trust described under the subheading "Legal Defeasance
and Covenant Defeasance") when:
(1) the payment is prohibited by these subordination provisions; and
(2) the Trustee or the Holder has actual knowledge that the payment is
prohibited;
the Trustee or the Holder, as the case may be, shall hold the payment
in trust for the benefit of the holders of Senior Debt. Upon the proper
written request of the holders of Senior Debt, the Trustee or the Holder,
as the case may be, shall deliver the amounts in trust to the holders of
Senior Debt or their proper representative.
The Company must promptly notify holders of Senior Debt if payment of the
Senior Subordinated Notes is accelerated because of an Event of Default.
As a result of the subordination provisions described above, in the event
of a bankruptcy, liquidation or reorganization of the Company, Holders of Senior
Subordinated Notes may recover less ratably than creditors of the Company who
are holders of Senior Debt. See "Risk Factors -- Subordination of the Senior
Subordinated Notes."
"Designated Senior Debt" means:
(1) any Indebtedness outstanding under a Credit Facility; and
(2) after payment in full of all Obligations under any Credit
Facility, any other Senior Debt permitted under the Senior Subordinated
Note Indenture the principal amount of which is $25.0 million or more.
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"Permitted Junior Securities" means:
(1) Equity Interests in the Company; or
(2) debt securities that are subordinated to all Senior Debt and any
debt securities issued in exchange for Senior Debt to substantially the
same extent as, or to a greater extent than, the Senior Subordinated Notes
are subordinated to Senior Debt under the Senior Subordinated Note
Indenture.
"Senior Debt" means:
(1) all Indebtedness of the Company outstanding under any Credit
Facility and all Hedging Obligations with respect thereto;
(2) any other Indebtedness of the Company permitted to be incurred
under the terms of the Senior Subordinated Note Indenture, unless the
instrument under which such Indebtedness is incurred expressly provides
that it is on a parity with or subordinated in right of payment to the
Senior Subordinated Notes; and
(3) all Obligations with respect to the items listed in the preceding
clauses (1) and (2).
Notwithstanding anything to the contrary in the preceding, Senior Debt will
not include:
(1) any liability for federal, state, local or other taxes owed or
owing by the Company;
(2) any Indebtedness of the Company to any of its Subsidiaries or
other Affiliates;
(3) any trade payables; or
(4) the portion of any Indebtedness that is incurred in violation of
the Senior Subordinated Note Indenture.
OPTIONAL REDEMPTION
Prior to March 1, 2004, the 12 1/4% Series B Senior Subordinated 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 March 1, 2004, the 12 1/4% Series B Senior Subordinated 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 March 1
of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---- ----------
<S> <C>
2004........................................................ 106.125%
2005........................................................ 104.083%
2006........................................................ 102.041%
2007 and thereafter......................................... 100.000%
</TABLE>
In the event of the sale by the Company prior to March 1, 2002 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 at maturity of the Senior
Subordinated 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
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Stock, so sold) at a redemption price equal to 112.25% of the Accreted Value
thereof plus accrued and unpaid Liquidated Damages, if any, thereon to the
redemption date, provided that:
(1) at least 75% of the aggregate principal amount at maturity of the
Senior Subordinated Notes originally issued remains outstanding immediately
after the occurrence of such redemption; and
(2) such redemption occurs within 90 days of the date of the closing
of each such sale.
MANDATORY REDEMPTION
Except as set forth below under the captions "Offer to Purchase Upon Change
of Control" and "Offer to Purchase with Excess Asset Sale Proceeds," the Company
will not be required to make mandatory redemption or sinking fund payments with
respect to the Senior Subordinated 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
Subordinated Notes to repurchase all or any part (equal to $1,000 or an integral
multiple thereof) of such holder's Senior Subordinated Notes at a purchase price
equal to 101% of the Accreted Value thereof on the date of purchase (if such
date of purchase is prior to March 1, 2004) or 101% of the aggregate principal
amount thereof (if such date of purchase is on or after March 1, 2004) 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 Senior
Subordinated Note Indenture will not contain provisions that permit the holders
of the Senior Subordinated Notes to require that the Company repurchase or
redeem the Senior Subordinated Notes in the event of a takeover,
recapitalization or similar transaction.
Due to the leveraged structure of the Company, the subordination of the
Senior Subordinated Notes to the Existing Senior Notes and the Senior Notes and
the effective subordination of the Senior Subordinated Notes to secured
Indebtedness of the Company and Indebtedness of the Company's Subsidiaries, the
Company may not have sufficient funds available to purchase the Senior
Subordinated 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 Subordinated Notes to require the Company to repurchase such
Senior Subordinated 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.
Prior to complying with any of the provisions of this "Change of Control"
covenant, but in any event within 90 days following a Change of Control, the
Company will either repay all outstanding Senior Debt or obtain the requisite
consents, if any, under all agreements governing outstanding Senior Debt to
permit the repurchase of Senior Subordinated Notes required by this covenant.
OFFER TO PURCHASE WITH EXCESS ASSET SALE PROCEEDS
When the cumulative amount of Excess Proceeds (as defined below under the
subheading "Certain Covenants -- Asset Sales") exceeds $10.0 million, the
Company will make an offer to all holders of Senior Subordinated Notes and Pari
Passu Notes (an "Excess Proceeds Offer"), to purchase the maximum principal
amount and/or accreted value as applicable of Senior Subordinated 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 Accreted
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Value (if such date of purchase is prior to March 1, 2004) or 100% of the
outstanding principal amount (if such date of purchase is on or after March 1,
2004) of the Senior Subordinated 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 Senior Subordinated Note Indenture.
If the aggregate principal amount and/or accreted value, as the case may
be, of Senior Subordinated Notes and Pari Passu Notes surrendered by holders
thereof exceeds the amount of Excess Proceeds, the Trustee will select the
Senior Subordinated Notes and Pari Passu Notes to be purchased on a pro rata
basis. To the extent that the aggregate amount of Senior Subordinated 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 SENIOR SUBORDINATED NOTES FOR REDEMPTION OR OFFERS TO PURCHASE
If less than all of the Senior Subordinated Notes are to be redeemed at any
time, the Trustee will select Senior Subordinated Notes for redemption as
follows:
(1) if the Senior Subordinated Notes are listed, in compliance with
the requirements of the principal national securities exchange on which the
Senior Subordinated Notes are listed; or
(2) if the Senior Subordinated Notes are not so listed, on a pro rata
basis, by lot or by such method as the Trustee shall deem fair and
appropriate.
No Senior Subordinated Notes of $1,000 or less shall be redeemed in part.
Notices 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
Subordinated Notes to be redeemed at its registered address. Notices of
redemption may not be conditional.
If any Senior Subordinated Note is to be redeemed in part only, the notice
of redemption that relates to that Senior Subordinated Note shall state the
portion of the principal amount thereof to be redeemed. A new Senior
Subordinated Note in principal amount equal to the unredeemed portion of the
original Senior Subordinated Note will be issued in the name of the Holder
thereof upon cancellation of the original Senior Subordinated Note. Senior
Subordinated Notes called for redemption become due on the date fixed for
redemption. On and after the redemption date, interest ceases to accrete or
accrue on the Senior Subordinated Notes or portions of them called for
redemption.
CERTAIN COVENANTS
Restricted Payments
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 Subordinated 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
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(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 the subheading "Incurrence of
Indebtedness and Issuance of Disqualified Stock;" and
(c) such Restricted Payment, together with the aggregate of all
other Restricted Payments made by the Company and its Subsidiaries after
the Issue Date (including any Restricted Payments made pursuant to
clauses (i), (v) and (vi) of the next paragraph), is less than the sum
of
(w) 50% of the Consolidated Net Income of the Company for the
period (taken as one accounting period) from June 30, 1996 to the end
of the Company's most recently ended fiscal quarter for which
internal financial statements are available at the time of such
Restricted Payment (or, if such Consolidated Net Income for such
period is a deficit, less 100% of such deficit), plus
(x) 100% of the aggregate net cash proceeds received by the
Company from the issue or sale of Equity Interests of the Company or
of debt securities or Disqualified Stock of the Company that have
been converted into such Equity Interests (other than Equity
Interests (or convertible debt securities) sold to a Subsidiary of
the Company and other than Disqualified Stock or debt securities that
have been converted into Disqualified Stock) after June 30, 1996
(other than any such Equity Interests, the proceeds of which were
used as set forth in clauses (ii) and (viii) below) plus
(y) 100% of the sum of, without duplication, (1) aggregate
dividends or distributions received by the Company or any Subsidiary
from any Joint Venture (other than dividends or distributions to pay
any obligations of such Joint Venture to Persons other than the
Company or any Subsidiary, such as income taxes), with non-cash
distributions to be valued at the lower of book value or fair market
value as determined by the Board of Directors, (2) the amount of the
principal and interest payments received since the Issue Date by the
Company or any Subsidiary from any Joint Venture and (3) the net
proceeds from the sale of an Investment in a Joint Venture received
by the Company or any Subsidiary; provided that there is no
obligation to return any such amounts to the Joint Venture, and
excluding any such dividend, distribution, interest payment or net
proceeds that constitutes a return of capital invested pursuant to
clause (vi) of the next succeeding paragraph, plus
(z) $10.0 million.
The foregoing provisions will not prohibit:
(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at such date of declaration such payment would have
complied with the provisions of the Senior Subordinated Note 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 Subordinated 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);
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(iii) the Retirement of any Indebtedness of the Company subordinated
in right of payment to the Senior Subordinated 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 subheading "Incurrence of
Indebtedness and Issuance of Disqualified Stock" and (A) is subordinated in
right of payment to the Senior Subordinated Notes at least to the same
extent as, (B) has a Weighted Average Life to Maturity at least as long as,
and (C) 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 subheading "Incurrence of Indebtedness and Issuance of
Disqualified Stock" and only to the extent that such Indebtedness (A) is
not secured by any assets of the Company or any Subsidiary to a greater
extent than the Retired Indebtedness was so secured, (B) has a Weighted
Average Life to Maturity at least as long as the Retired Indebtedness and
(C) if such Retired Indebtedness was an obligation of the Company, is pari
passu or subordinated in right of payment to the Senior Subordinated 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 (A) $25.0 million and (B) 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 the
Senior Subordinated Note 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.
A Permitted Investment that ceases to be a Permitted Investment pursuant to
the definition of that term, 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
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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 described under the subheading "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 described under the subheading "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 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 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 incurrence or issuance occurs
after June 1, 1999, in each case, determined on a pro forma basis
(including a pro forma application of the net proceeds therefrom), as if
the additional Indebtedness had been incurred, or the Disqualified Stock
had been issued, as the case may be, at the beginning of such four-quarter
period.
If the Company incurs any Indebtedness or issues or redeems any Preferred
Stock subsequent to the commencement of the period for which such ratio is being
calculated but prior to the event for which the calculation of the ratio is
made, then the ratio will be calculated giving pro forma effect to any such
incurrence of Indebtedness, or such issuance or redemption of Preferred Stock,
as if the same had occurred at the beginning of the applicable period. In making
such calculation on a pro forma basis, interest attributable to Indebtedness
bearing a floating interest rate shall be computed as if the rate in effect on
the date of computation had been the applicable rate for the entire period.
The foregoing limitation will not apply to (with each exception to be given
independent effect):
(a) the incurrence by the Company and/or any of its Subsidiaries of
Indebtedness under a 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 subheading "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);
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(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
Subordinated 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 Subordinated Notes, the Refinancing
Indebtedness shall be subordinated in right of payment to the Senior
Subordinated Notes on terms at least as favorable to the holders of
Senior Subordinated 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;
(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 Senior Subordinated Note
Indenture to be outstanding; and
(i) the incurrence by the Company of Indebtedness represented by the
Senior Subordinated Notes and the Senior Notes, in each case, issued on the
Issue Date.
For purposes of determining compliance with this covenant, in the event
that an item of Indebtedness or Disqualified Stock meets the criteria of more
than one of the categories described in clauses (a) through (i) 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.
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No Senior Subordinated Debt
The Company will not incur, create, issue, assume, guarantee or otherwise
become liable for any Indebtedness that is subordinate or junior in right of
payment to any Senior Debt of the Company and senior in any respect in right of
payment to the Senior Subordinated Notes.
Asset Sales
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
subheading "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 subheading "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 of the Company;
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) except with respect to an Asset Sale constituting the
issuance or sale of Equity Interests in the Web Hosting Subsidiary,
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 Subordinated 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
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(B) an amount equal to the Fair Market Value (determined as
set forth in clause (b) above) of (1) Telecommunications Related
Assets received by the Company or any such Subsidiary from the
transferee that will be used by the Company or any such
Subsidiary in the operation of a Telecommunications Business in
the United States and (2) the Voting Stock of any Person engaged
in the Telecommunications Business in the United States received
by the Company or any such Subsidiary (provided that such Voting
Stock is converted to cash within 270 days or such Person
concurrently becomes or is a Subsidiary of the Company) will be
deemed to be cash for purposes of this clause (c).
The foregoing provisions will not apply to a sale, lease, conveyance or
other disposition of all or substantially all of the assets of the Company,
which will be governed by the provisions of the Senior Subordinated Note
Indenture described below under the subheading "Merger, Consolidation or Sale of
Assets."
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, at its option, to:
(i) repay Senior Debt or permanently reduce the amounts permitted to
be borrowed by the Company under the terms of any of its Senior Debt; 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); or
(iii) in the case of net cash proceeds realized upon the issuance or
sale of Equity Interests in the Web Hosting Subsidiary, fund cash operating
losses, provide working capital and for general corporate purposes.
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 the subheading "Offer to
Purchase with Excess Asset Sale Proceeds."
Liens
The Company and its Subsidiaries may not, directly or indirectly, create,
incur, assume or suffer to exist any Lien securing Indebtedness or trade
payables 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 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
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acquisition), which encumbrance or restriction is not applicable to any
Person, or the properties or assets of any Person, other than the
Person, or the property or assets of the Person, so acquired;
(d) by reason of customary non-assignment provisions in leases
entered into in the ordinary course of business and consistent with past
practices;
(e) Indebtedness in respect of a Permitted Refinancing, provided
that the restrictions contained in the agreements governing such
Refinancing Indebtedness are not materially more restrictive than those
contained in the agreements governing the Indebtedness being refinanced;
(f) with respect to clause (iii) above, purchase money obligations
for property acquired in the ordinary course of business, Vendor
Indebtedness incurred in connection with the purchase or lease of
Telecommunications Related Assets or performance bonds or similar
security for performance which liens securing such obligations do not
cover any asset other than the asset acquired or, in the case of
performance bonds or similar security for performance, the assets
associated with the Company's performance;
(g) Indebtedness incurred under clause (a) of the covenant
described under the subheading "Incurrence of Indebtedness and Issuance
of Disqualified Stock;"
(h) the Senior Subordinated Note Indenture and the Senior
Subordinated Notes or future Indebtedness with substantially similar
restrictions, if any, to the Senior Subordinated Notes;
(i) the Senior Note Indenture and the Senior Notes or future
Indebtedness with substantially similar restrictions, if any, to the
Senior Notes; or
(j) in the case of clauses (a), (c), (e), (g), (h) and (i) 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 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 Subordinated Notes and the Senior Subordinated Note 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
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test described under the subheading "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 Company and its Subsidiaries may not sell, lease, transfer or otherwise
dispose of any of their respective properties or assets to, or purchase any
property or assets from, or enter into any contract, agreement, understanding,
loan, advance or guarantee with, or for the benefit of, any Affiliate (each of
the foregoing, an "Affiliate Transaction"), unless:
(i) such Affiliate Transaction is on terms that are no less favorable
to the Company or the relevant Subsidiary than those that would have been
obtained in a comparable transaction by the Company or such Subsidiary with
an unrelated Person;
(ii) such Affiliate Transaction is approved by a majority of the
disinterested directors on the Board of Directors of the Company; and
(iii) the Company delivers to the Trustee, with respect to any
Affiliate Transaction involving aggregate payments in excess of $1.0
million, a resolution of a committee of independent directors of the
Company set forth in an Officers' Certificate certifying that such
Affiliate Transaction complies with clauses (i) and (ii) above;
provided that:
(a) transactions pursuant to any employment, stock option or stock
purchase agreement entered into by the Company or any of its
Subsidiaries, or any grant of stock, in the ordinary course of business
that are approved by the Board of Directors of the Company;
(b) transactions between or among the Company and its Subsidiaries;
(c) transactions permitted by the provisions of the Senior
Subordinated Note Indenture described above under the subheading
"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.
Business Activities
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 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 the subheadings "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;
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(ii) the consideration received by the Company or such Subsidiary from
such transaction is at least equal to the Fair Market Value of the property
being transferred; and
(iii) the Net Proceeds received by the Company or such Subsidiary from
such transaction are applied in accordance with the covenant described
above under the subheading "Asset Sales."
Reports
The Company will file with the Trustee within 15 days after it files them
with the Commission copies of the annual and quarterly reports and the
information, documents, and other reports that the Company is required to file
with the Commission pursuant to Section 13(a) or 15(d) of the Exchange Act ("SEC
Reports"). In the event the Company is not required or shall cease to be
required to file SEC Reports, pursuant to the Exchange Act, the Company will
nevertheless continue to file such reports with the Commission (unless the
Commission will not accept such a filing) and the Trustee. Whether or not
required by the Exchange Act to file SEC Reports with the Commission, so long as
any Senior Subordinated Notes are outstanding, the Company will furnish copies
of the SEC Reports to the holders of Senior Subordinated 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 Subordinated 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
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 Subordinated Notes for
or as an inducement to any consent, waiver or amendment of any of the terms or
provisions of the Senior Subordinated Note Indenture or the Senior Subordinated
Notes unless such consideration is offered to be paid or agreed to be paid to
all holders of the Senior Subordinated 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
Each of the following constitutes an Event of Default:
(i) default for 30 days in the payment when due of interest or
Liquidated Damages, if any, on the Senior Subordinated Notes, whether or
not prohibited by the subordination provisions of the Senior Subordinated
Note Indenture;
(ii) default in payment when due of principal or premium, if any, on
the Senior Subordinated Notes at maturity, upon redemption or otherwise,
whether or not prohibited by the subordination provisions of the Senior
Subordinated Note Indenture;
(iii) failure by the Company to perform or comply with the provisions
of the covenants described above under the subheadings "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 Senior
Subordinated Notes then outstanding to comply with its other agreements in
the Senior Subordinated Note Indenture or the Senior Subordinated 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 results in the acceleration
(which acceleration has not been rescinded) of such Indebtedness prior to
its
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express maturity and the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness 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 Senior
Subordinated Note Indenture, the Trustee or the holders of at least 25% in
principal amount of the then outstanding Senior Subordinated Notes may declare
all the Senior Subordinated Notes to be due and payable immediately. Upon such
declaration, the principal of (or, if prior to March 1, 2004, the Accreted Value
of), premium, if any, and accrued and unpaid interest and Liquidated Damages, if
any, on the Senior Subordinated 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 Subordinated 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 Subordinated Notes contained in the Senior
Subordinated Note Indenture or the Senior Subordinated Notes. The amount
declared due and payable will include the premium that would have been
applicable on a voluntary prepayment of the Senior Subordinated Notes. Holders
of the Senior Subordinated Notes may not enforce the Senior Subordinated Note
Indenture or the Senior Subordinated Notes except as provided in the Senior
Subordinated Note Indenture. Subject to certain limitations, holders of a
majority in principal amount of the then outstanding Senior Subordinated Notes
may direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from holders of the Senior Subordinated 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 Senior
Subordinated Notes then outstanding, by notice to the Trustee, may on behalf of
the holders of all of the Senior Subordinated Notes, waive any existing Default
or Event of Default and its consequences under the Senior Subordinated Note
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
Subordinated Notes.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Senior Subordinated Note 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 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 Subordinated Notes or the Senior Subordinated Note Indenture or for any
claim based on, in respect of, or by reason of such obligations or their
creation. Each holder of Senior Subordinated Notes by accepting a Senior
Subordinated Note waives and releases all such liability. The waiver and release
are part of the consideration for issuance of the Senior Subordinated 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.
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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 Subordinated 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 Subordinated Notes, except for:
(a) the rights of holders of outstanding Senior Subordinated 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 Subordinated 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 Subordinated
Notes concerning issuing temporary Senior Subordinated Notes, registration
of Senior Subordinated Notes, mutilated, destroyed, lost or stolen Senior
Subordinated 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 Senior Subordinated Note
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 Senior Subordinated Note 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 Subordinated Notes. In the event Covenant Defeasance occurs,
certain events (not including non payment, bankruptcy, receivership,
rehabilitation and insolvency events) described under the subheading
"Events of Default" will no longer constitute an Event of Default with
respect to the Senior Subordinated 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 Subordinated 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 and Liquidated Damages, if
any, and interest on the outstanding Senior Subordinated 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
Subordinated 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
Subordinated 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 Subordinated 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;
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(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 Senior Subordinated Note Indenture)
to which the Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries is bound;
(vi) the Company must have delivered to the Trustee an opinion of
counsel to the effect that after the 91st day (or such other applicable
date) following the deposit, the trust funds will not be subject to the
effect of any applicable bankruptcy, insolvency, reorganization or similar
laws affecting creditors' rights generally;
(vii) the Company must deliver to the Trustee an Officers' Certificate
stating that the deposit was not made by the Company with the intent of
preferring the holders of Senior Subordinated 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.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next succeeding paragraph, the Senior
Subordinated Note Indenture or the Senior Subordinated Notes may be amended or
supplemented with the consent of the holders of at least a majority in principal
amount of the Senior Subordinated Notes then outstanding (including consents
obtained in connection with a tender offer or exchange offer for Senior
Subordinated Notes), and any existing default or compliance with any provision
of the Senior Subordinated Note Indenture or the Senior Subordinated Notes may
be waived with the consent of the holders of a majority in principal amount of
the then outstanding Senior Subordinated Notes (including consents obtained in
connection with a tender offer or exchange offer for Senior Subordinated Notes).
Without the consent of each holder affected, however, an amendment or
waiver may not (with respect to any Senior Subordinated Note held by a
non-consenting holder):
(i) reduce the principal amount of Senior Subordinated Notes whose
holders must consent to an amendment, supplement or waiver;
(ii) reduce the principal or change the fixed maturity of any Senior
Subordinated Note or alter the provisions with respect to the redemption of
the Senior Subordinated Notes (other than provisions relating to the
covenants described under the subheadings "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 Subordinated Notes;
(iv) waive a Default or Event of Default in the payment of principal
of or premium, if any, or interest on the Senior Subordinated Notes (except
a rescission of acceleration of the Senior Subordinated Notes by the
holders of at least a majority in aggregate principal amount of the Senior
Subordinated Notes and a waiver of the payment default that resulted from
such acceleration);
(v) make any Senior Subordinated Note payable in money other than that
stated in the Senior Subordinated Notes;
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(vi) make any change in the provisions of the Senior Subordinated Note
Indenture relating to waivers of past Defaults or the rights of holders of
Senior Subordinated Notes to receive payments of principal of, premium, if
any, or interest on the Senior Subordinated Notes;
(vii) waive a redemption payment with respect to any Senior
Subordinated Note (other than a payment required by one of the covenants
described above under the subheadings "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.
In addition, any amendment to, or waiver of, the provisions of the
Senior Subordinated Note Indenture relating to subordination that adversely
affects the rights of the Holders of Senior Subordinated Notes will require
the consent of the Holders of at least 75% in aggregate principal amount of
Senior Subordinated Notes then outstanding.
Notwithstanding the foregoing, without the consent of any holder of Senior
Subordinated Notes, the Company and the Trustee may amend or supplement the
Senior Subordinated Note Indenture or the Senior Subordinated Notes:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Senior Subordinated Notes in
addition to or in place of certificated Senior Subordinated Notes;
(c) to provide for the assumption of the Company's obligations to
holders of the Senior Subordinated 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 Subordinated Notes or that does
not adversely affect the legal rights under the Senior Subordinated Note
Indenture of any such holder; or
(e) to comply with requirements of the Commission in order to
effect or maintain the qualification of the Senior Subordinated Note
Indenture under the Trust Indenture Act.
CONCERNING THE TRUSTEE
If the Trustee becomes a creditor of the Company, the Senior Subordinated
Note Indenture limits its rights 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 will be 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
Senior Subordinated 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 Senior Subordinated Note 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 Senior Subordinated Note Indenture at the request of
any holder of Senior Subordinated 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 Subordinated Note will have any right to institute
any proceeding with respect to the Senior Subordinated Note 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 Senior Subordinated Notes make a written request to pursue the
remedy;
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(iii) such holders of the Senior Subordinated Notes provide to the
Trustee satisfactory indemnity; and
(iv) the Trustee does not comply within 60 days. Otherwise, no holder
of any Senior Subordinated Note will have any right to institute any
proceeding with respect to the Senior Subordinated Note Indenture or for
any remedy thereunder,
except:
(i) a holder of a Senior Subordinated Note may institute suit for
enforcement of payment of the principal of and premium, if any, or interest
on such Senior Subordinated Note on or after the respective due dates
expressed in such Senior Subordinated Note (including upon acceleration
thereof); or
(ii) the institution of any proceeding with respect to the Senior
Subordinated Note Indenture or any remedy thereunder, including without
limitation acceleration, by the Holders of a majority in principal amount
of the outstanding Senior Subordinated Notes, provided that, upon
institution of any proceeding or exercise of any remedy such Holders
provide the Trustee with prompt notice thereof.
ADDITIONAL INFORMATION
Anyone who receives this Prospectus may obtain a copy of the Senior
Subordinated Note Indenture and Senior Subordinated Note Registration Rights
Agreement without charge by writing to Intermedia Communications Inc., 3625
Queen Palm Drive, Tampa, Florida 33619.
REGISTRATION RIGHTS; LIQUIDATED DAMAGES
The following description is a summary of the material provisions of the
Senior Subordinated Note Registration Rights Agreement. It does not restate that
agreement in its entirety. We urge you to read the Senior Subordinated Note
Registration Rights Agreement in its entirety because it, and not this
description, defines your registration rights as Holders of these Senior
Subordinated Notes. See "Additional Information."
Pursuant to the Senior Subordinated Note Registration Rights Agreement, the
Company agreed to file with the Commission a registration statement (the "Senior
Subordinated Exchange Offer Registration Statement") on the appropriate form
under the Securities Act with respect to an offer to exchange (the "Senior
Subordinated Exchange Offer") the 12 1/4% Senior Subordinated Notes for 12 1/4%
Series B Senior Subordinated Notes. Upon the effectiveness of the Senior
Subordinated Exchange Offer Registration Statement, the Company will offer to
the holders of Transfer Restricted Securities pursuant to the Senior
Subordinated Exchange Offer who are able to make certain representations the
opportunity to exchange their Transfer Restricted Securities for a new issue of
senior notes of the Company (the "12 1/4% Series B Senior Subordinated Notes")
registered under the Securities Act, with terms substantially identical to those
of the 12 1/4% Senior Subordinated Notes.
If:
(i) the Company is not:
(a) required to file the Senior Subordinated Exchange Offer
Registration Statement; or
(b) permitted to consummate the Senior Subordinated Exchange Offer
because the Senior Subordinated 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 Senior Subordinated Exchange Offer,
(b) it may not resell the 12 1/4% Series B Senior Subordinated
Notes acquired by it in the Senior Subordinated Exchange Offer to the
public without delivering a prospectus and the
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prospectus contained in the Senior Subordinated Exchange Offer
Registration Statement is not appropriate or available for such resales;
or
(c) it is a broker-dealer and owns 12 1/4% Senior Subordinated
Notes acquired directly from the Company or an affiliate of the Company,
the Company will file with the Commission a shelf registration
statement (the "Senior Subordinated Notes Shelf Registration Statement") to
cover resales of the 12 1/4% Senior Subordinated Notes by the Holders
thereof who satisfy certain conditions relating to the provision of
information in connection with the Senior Subordinated Notes 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
12 1/4% Senior Subordinated Note until:
(i) the date on which such 12 1/4% Senior Subordinated Note has been
exchanged by a Person other than a broker-dealer for a 12 1/4% Series B
Senior Subordinated Note in the Senior Subordinated Exchange Offer;
(ii) following the exchange by a broker-dealer in the Senior
Subordinated Exchange Offer of a 12 1/4% Senior Subordinated Note for a
12 1/4% Series B Senior Subordinated Note, the date on which such 12 1/4%
Series B Senior Subordinated 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 Senior Subordinated Exchange Offer Registration
Statement;
(iii) the date on which such 12 1/4% Senior Subordinated Note has been
effectively registered under the Securities Act and disposed of in
accordance with the Senior Subordinated Notes Shelf Registration Statement;
or
(iv) the date on which such 12 1/4% Senior Subordinated Note may be
distributed to the public pursuant to Rule 144 under the Securities Act.
The Senior Subordinated Note Registration Rights Agreement will provide
that:
(i) unless the Senior Subordinated Exchange Offer would not be
permitted by applicable law or Commission policy, the Company will file a
Senior Subordinated Exchange Offer Registration Statement with the
Commission on or prior to 60 days after the Issue Date;
(ii) unless the Senior Subordinated Exchange Offer would not be
permitted by applicable law or Commission policy, the Company will use its
best efforts to have the Senior Subordinated Exchange Offer Registration
Statement declared effective by the Commission on or prior to 180 days
after the Issue Date;
(iii) unless the Senior Subordinated Exchange Offer would not be
permitted by applicable law or Commission policy, the Company will
(a) upon the effectiveness of the Senior Subordinated Exchange
Offer Registration Statement, commence the Senior Subordinated Exchange
Offer and
(b) use its best efforts to issue on or prior to 30 business days
after the date on which the Senior Subordinated Exchange Offer
Registration Statement was declared effective by the Commission, 12 1/4%
Series B Senior Subordinated Notes in exchange for all 12 1/4% Senior
Subordinated Notes tendered prior thereto in the Senior Subordinated
Exchange Offer; and
(iv) if obligated to file the Senior Subordinated Notes Shelf
Registration Statement, the Company will use its best efforts to file the
Senior Subordinated Notes Shelf Registration Statement with the Commission
on or prior to 60 days after such filing obligation arises (and, if the
Senior Subordinated Exchange Offer is not permitted by applicable law or
Commission policy, in any event within 150 days
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after the Issue Date) and to cause the Senior Subordinated Notes Shelf
Registration Statement to be declared effective by the Commission on or
prior to 180 days after such obligation arises (and, if the Senior
Subordinated Exchange Offer is not permitted by applicable law or
Commission policy, in any event within 270 days after the Issue Date).
If:
(a) the Company fails to file any of the registration statements
required by the Senior Subordinated 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 "Senior Subordinated Note Effectiveness Target Date");
(c) the Company fails to consummate the Senior Subordinated Exchange
Offer within 30 business days of the Senior Subordinated Note Effectiveness
Target Date with respect to the Senior Subordinated Exchange Offer
Registration Statement; or
(d) the Senior Subordinated Notes Shelf Registration Statement or the
Senior Subordinated Exchange Offer 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 Senior Subordinated Note Registration Rights Agreement, provided,
that the Company will have the option of suspending the effectiveness of
the Senior Subordinated Notes Shelf Registration Statement or the Senior
Subordinated Exchange Offer 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 Senior Subordinated Notes 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 "Senior Subordinated Note 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 Senior
Subordinated Note Registration Default, in an amount equal to $.05 per week
per $1,000 principal amount of Senior Subordinated 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 Senior Subordinated Notes constituting
Transfer Restricted Securities with respect to each subsequent 90-day period
until all Senior Subordinated Note Registration Defaults have been cured, up to
a maximum amount of Liquidated Damages of $.50 per week per $1,000 principal
amount of Senior Subordinated Notes constituting Transfer Restricted Securities.
All accrued Liquidated Damages will be paid by the Company on each Interest
Payment Date to the Global Senior Subordinated Note 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.
Following the cure of all Senior Subordinated Note Registration Defaults,
the accrual of Liquidated Damages will cease.
Holders of Senior Subordinated Notes will be required to make certain
representations to the Company (as described in the Senior Subordinated Note
Registration Rights Agreement) in order to participate in the Senior
Subordinated Exchange Offer and will be required to deliver information to be
used in connection with the Senior Subordinated Notes Shelf Registration
Statement and to provide comments on the Senior Subordinated Notes Shelf
Registration Statement within the time periods set forth in the Senior
Subordinated Note Registration Rights Agreement in order to have their Senior
Subordinated Notes included in the Senior Subordinated Notes Shelf Registration
Statement and benefit from the provisions regarding Liquidated Damages set forth
above.
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BOOK-ENTRY, DELIVERY AND FORM
Except as set forth in the next paragraph, the 12 1/4% Series B Senior
Subordinated Notes to be resold as set forth herein will initially be issued in
the form of one or more global certificates (the "Global Senior Subordinated
Notes"). The Global Senior Subordinated Notes 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 Subordinated Notes that are issued as described below under the
subheading "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 all Global
Senior Subordinated Notes have previously been exchanged for Certificated
Securities, be exchanged for an interest in the Global Senior Subordinated Note
representing the principal amount of Senior Subordinated Notes being
transferred, subject to the transfer restrictions set forth in the Senior
Subordinated Note Indenture.
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 Senior Subordinated Notes, the
Depositary will credit the accounts of Participants designated by the
initial purchasers with portions of the principal amount of the Global
Senior Subordinated Notes; and
(ii) ownership of the Senior Subordinated Notes evidenced by the
Global Senior Subordinated Notes 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 Subordinated Notes
evidenced by the Global Senior Subordinated Note will be limited to such extent.
So long as the Global Senior Subordinated Note Holder is the registered
owner of any Senior Subordinated Notes, the Global Senior Subordinated Note
Holder will be considered the sole Holder under the Senior Subordinated Note
Indenture of any Senior Subordinated Notes evidenced by the Global Senior
Subordinated Notes. Beneficial owners of Senior Subordinated Notes evidenced by
the Global Senior Subordinated Notes will not be considered the owners or
Holders thereof under the Senior Subordinated Note 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 Subordinated Notes.
Payments in respect of the principal of, premium, if any, interest and
Liquidated Damages, if any, on any Senior Subordinated Notes registered in the
name of the Global Senior Subordinated Note Holder on the applicable record date
will be payable by the Trustee to or at the direction of the Global Senior
Subordinated Note Holder in its capacity as the registered Holder under the
Senior Subordinated Note Indenture. Under the terms of the Senior Subordinated
Note Indenture, the Company and the Trustee may treat the persons in whose names
Senior Subordinated Notes, including the Global Senior Subordinated Notes, are
registered as
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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
Subordinated Notes. The Company believes, however, that it is currently the
policy of the Depositary to immediately credit the accounts of the relevant
Participants with such payments, in amounts proportionate to their respective
holdings of beneficial interests in the relevant security as shown on the
records of the Depositary. Payments by the Depositary's Participants and the
Depositary's Indirect Participants to the beneficial owners of the Senior
Subordinated 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 a
Global Senior Subordinated Note may, upon request to the Trustee, exchange such
beneficial interest for Senior Subordinated 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 a successor depositary
is not appointed by the Company within 120 days; or
(ii) the Company, at its option, notifies the Trustee in writing that
it elects to cause the issuance of Senior Subordinated Notes in the form of
Certificated Securities under the Senior Subordinated Note Indenture,
then, upon surrender by the Global Senior Subordinated Note Holder of its
Global Senior Subordinated Note, Senior Subordinated Notes in such form will be
issued to each person that the Global Senior Subordinated Note Holder and the
Depositary identify as being the beneficial owner of the related Senior
Subordinated Notes.
Neither the Company nor the Trustee will be liable for any delay by the
Global Senior Subordinated Note Holder or the Depositary in identifying the
beneficial owners of Senior Subordinated Notes and the Company and the Trustee
may conclusively rely on, and will be protected in relying on, instructions from
the Global Senior Subordinated Note Holder or the Depositary for all purposes.
SAME DAY SETTLEMENT AND PAYMENT
The Company will make payments in respect of the Senior Subordinated Notes
represented by the Global Senior Subordinated Notes (including principal,
premium, if any, interest and Liquidated Damages, if any) by wire transfer of
immediately available funds to the accounts specified by the Global Senior
Subordinated Note Holder. With respect to Senior Subordinated Notes 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 Subordinated Notes represented by the Global Senior
Subordinated Notes 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 Subordinated Notes will, therefore, be required by the
Depositary to be settled in immediately available funds. The Company expects
that secondary trading in any certificated Senior Subordinated Notes will also
be settled in immediately available funds.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Senior Subordinated
Note Indenture. Reference is made to the Senior Subordinated Note Indenture for
a full disclosure of all such terms, as well as any other capitalized terms used
herein for which no definition is provided.
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"Accreted Value" means, for each $1,000 face amount of Senior Subordinated
Notes, as of any date of determination prior to March 1, 2004, the sum of (i)
the initial offering price of each Senior Subordinated Note and (ii) that
portion of the excess of the principal amount of each Senior Subordinated Note
over such initial offering price which shall have been accreted thereon through
such date, such amount to be so accreted on a daily basis and compounded
semi-annually on each March 1 and September 1 at the rate of 12 1/4% per year
from the date of issuance of the Senior Subordinated Notes through the date of
determination. The Accreted Value of any Senior Subordinated Note on or after
March 1, 2004 shall be 100% of the principal amount thereof.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise, provided, however,
that beneficial ownership of 25% or more of the voting securities of a Person
shall be deemed to be control.
"Attributable Debt" means, with respect to any Sale and Leaseback
Transaction, the present value at the time of determination (discounted at a
rate consistent with accounting guidelines, as determined in good faith by the
Company) of the payments during the remaining term of the lease (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended) or until the earliest date on which the lessee may
terminate such lease without penalty or upon payment of a penalty (in which case
the rental payments shall include such penalty), after excluding all amounts
required to be paid on account of maintenance and repairs, insurance, taxes,
assessments, water, utilities and similar charges.
"Beneficial Owner" means a beneficial owner as defined in Rules 13d-3 and
13d-5 under the Exchange Act (or any successor rules), including the provision
of such Rules that a Person shall be deemed to have beneficial ownership of all
securities that such Person has a right to acquire within 60 days; provided that
a Person will not be deemed a beneficial owner of, or to own beneficially, any
securities if such beneficial ownership (1) arises solely as a result of a
revocable proxy delivered in response to a proxy or consent solicitation made
pursuant to, and in accordance with, the Exchange Act and (2) is not also then
reportable on Schedule 13D or Schedule 13G (or any successor schedule) under the
Exchange Act.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be so required to be capitalized on the balance sheet in accordance
with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock and (iii) in the case of a partnership, partnership interests
(whether general or limited) and any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, such partnership.
"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;
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(iii) any Person or group (as defined above) is or becomes the
Beneficial Owner, directly or indirectly, of more than 50% of the total
Voting Stock or Total Common Equity of the Company, including by way of
merger, consolidation or otherwise; or
(iv) the first day on which a majority of the members of the Board of
Directors of the Company are not Continuing Directors.
"Closing Price" on any Trading Day with respect to the per share price of
any shares of Capital Stock means the last reported sale price regular way or,
in case no such reported sale takes place on such day, the average of the
reported closing bid and asked prices regular way, in either case on the New
York Stock Exchange or, if such shares of Capital Stock are not listed or
admitted to trading on such exchange, on the principal national securities
exchange on which such shares are listed or admitted to trading or, if not
listed or admitted to trading on any national securities exchange, on the Nasdaq
National Market or, if such shares are not listed or admitted to trading on any
national securities exchange or quoted on Nasdaq National Market but the issuer
is a Foreign Issuer (as defined in Rule 3b-4(b) under the Exchange Act) and the
principal securities exchange on which such shares are listed or admitted to
trading is a Designated Offshore Securities Market (as defined in Rule 902(a)
under the Securities Act), the average of the reported closing bid and asked
prices regular way on such principal exchange, or, if such shares are not listed
or admitted to trading on any national securities exchange or quoted on Nasdaq
National Market and the issuer and principal securities exchange do not meet
such requirements, the average of the closing bid and asked prices in the
over-the-counter market as furnished by any New York Stock Exchange member firm
that is selected from time to time by the Company for that purpose and is
reasonably acceptable to the Trustee.
"Common Stock" of any Person means Capital Stock of such Person that does
not rank prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding up
of such Person, to shares of Capital Stock of any other class of such Person.
"Consolidated Cash Flow Leverage Ratio" with respect to any Person means
the ratio of the Consolidated Indebtedness of such Person to the Consolidated
EBITDA of such Person for the relevant period; provided, however, that:
(1) if the Company or any Subsidiary of the Company has incurred any
Indebtedness (including Acquired Debt) or if the Company has issued any
Disqualified Stock or if any Subsidiary of the Company has issued any
Preferred Stock since the beginning of such period that remains outstanding
on the date of such determination or if the transaction giving rise to the
need to calculate the Consolidated Cash Flow Leverage Ratio is an
incurrence of Indebtedness (including Acquired Debt) or the issuance of
Disqualified Stock by the Company, Consolidated EBITDA and Consolidated
Indebtedness for such period will be calculated after giving effect on a
pro forma basis to:
(A) such Indebtedness, Disqualified Stock or Preferred Stock, as
applicable, as if such Indebtedness had been incurred or such stock had
been issued on the first day of such period;
(B) the discharge of any other Indebtedness repaid, repurchased,
defeased or otherwise discharged with the proceeds of such new
Indebtedness or sale of stock as if such discharge had occurred on the
first day of such period; and
(C) the interest income realized by the Company or its Subsidiaries
on the proceeds of such Indebtedness or of such stock sale, to the
extent not yet applied at the date of determination, assuming such
proceeds earned interest at the rate in effect on the date of
determination from the first day of such period through such date of
determination;
(2) if since the beginning of such period the Company or any
Subsidiary of the Company has made any sale of assets (including, without
limitation, any Asset Sales or pursuant to any Sale and Leaseback
Transaction), Consolidated EBITDA for such period will be:
(A) reduced by an amount equal to Consolidated EBITDA (if positive)
directly attributable to the assets which are the subject of such sale
of assets for such period; or
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(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 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.
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"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.
"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.
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"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 Subordinated
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 Subordinated 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 Subordinated Notes contained in the covenant described under the
subheading "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 Subordinated Notes as are required to be repurchased pursuant to the
covenant described under the subheading "Offer to Purchase Upon Change of
Control."
"Eligible Institution" means a commercial banking institution that has
combined capital and surplus of not less than $500.0 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, the Company's 8 1/2% Senior Notes due 2008 and the
Company's 8.60% 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 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.
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"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
(i) borrowed money;
(ii) evidenced by bonds, notes, debentures or similar instruments or
letters of credit (or reimbursement agreements in respect thereof);
(iii) the balance deferred and unpaid of the purchase price of any
property (including pursuant to capital leases); or
(iv) 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 Senior
Subordinated Note Indenture.
"Issue Date" means February 24, 1999.
"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.
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"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 Subordinated 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 Subordinated
Note if such Senior Subordinated Note were redeemed on March 1, 2004,
computed using a discount rate equal to the Treasury Rate plus 50 basis
points;
over
(ii) the Accreted Value of such Senior Subordinated Note.
"Make-Whole Average Life" means, with respect to any date of redemption of
Senior Subordinated Notes, the number of years (calculated to the nearest
one-twelfth) from such redemption date to March 1, 2004.
"Make-Whole Price" means, with respect to any Senior Subordinated Note, the
greater of (i) the sum of the principal amount of such Senior Subordinated Note
and the Make-Whole Amount with respect to such Senior Subordinated Note and (ii)
the redemption price of such Senior Subordinated Note on March 1, 2004.
"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,
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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.
"Pari Passu Notes" means any notes issued by the Company which, by their
terms and the terms of any indenture governing such notes, have an obligation to
be repurchased by the Company upon the occurrence of an Asset Sale.
"Permitted Investment" means:
(a) any Investments in the Company or any Subsidiary of the Company;
(b) any Investments in Marketable Securities;
(c) Investments by the Company or any Subsidiary of the Company in a
Person, if as a result of such Investment:
(i) such Person becomes a Subsidiary of the Company; or
(ii) such Person is merged, consolidated or amalgamated with or
into, or transfers or conveys substantially all of its assets to, or is
liquidated into, the Company or a Subsidiary of the Company;
(d) any Investments in property or assets to be used in:
(i) any line of business in which the Company or any of its
Subsidiaries was engaged on the Issue Date; or
(ii) 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:
(i) such Person becomes a Subsidiary of the Company or any of its
Subsidiaries; or
(ii) 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
described under the subheading "Incurrence of Indebtedness and Issuance of
Preferred Stock;"
(i) bonds, notes, debentures or other securities received as a result
of Asset Sales permitted under the covenant described under the subheading
"Asset Sales;" and
(j) the Investment deemed to have been made by the Company at such
time as the Web Hosting Subsidiary ceases to be a Subsidiary of the Company
by reason of the issuance or sale of Equity Interests in the Web Hosting
Subsidiary to the extent that the book value of such Investment at the time
such Investment is deemed to have been made does not exceed $200.0 million
in the aggregate.
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"Permitted Liens" means:
(i) Liens securing Senior Debt (including Capital Lease Obligations)
permitted to be incurred pursuant to the covenant described under the
subheading "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 described under the subheading "Incurrence of
Indebtedness and Issuance of Preferred Stock," but only to the extent that
the outstanding amount of the Indebtedness secured by such Liens would not
represent more than 80% of Eligible Receivables; and
(xi) Liens to secure any Permitted Refinancing of any Indebtedness
secured by Liens referred to in the foregoing clauses (i), (iii), (v) or
(x); but only to the extent that such Liens do not extend to any other
property or assets and the principal amount of the Indebtedness secured by
such Liens is not increased.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof or any other entity.
"Preferred Stock" as applied to the Capital Stock of any Person, means
Capital Stock of such Person of any class or classes (however designated) that
ranks prior, as to payment of dividends or as to the distribution of assets upon
any voluntary or involuntary liquidation, dissolution or winding up of such
Person, to shares of Capital Stock of any other class of such Person.
"Public Offering" means an underwritten offering of Common Stock of the
Company registered under the Securities Act.
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"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 Subordinated Note Registration Rights Agreement" means the
Registration Rights Agreement between the Company and the initial purchasers in
respect of the Senior Subordinated Notes.
"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.
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"Subsidiary" of any Person means:
(i) any corporation, association or business entity of which more than
50% of the total voting power of shares of Capital Stock entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the other
Subsidiaries of such Person or a combination thereof; and
(ii) any partnership:
(a) the sole general partner or the managing general partner of
which is such Person or a Subsidiary of such Person; or
(b) the only general partners of which are such Person or one or
more Subsidiaries of such Person or any combination thereof;
provided that any Unrestricted Subsidiary shall be excluded from this
definition of "Subsidiary."
"Telecommunications Business" means, when used in reference to any Person,
that such Person is engaged primarily in the business of:
(i) transmitting, or providing services relating to the transmission
of, voice, video or data through owned or leased transmission facilities;
(ii) creating, developing or marketing communications related network
equipment, software and other devices for use in a Telecommunications
Business; or
(iii) evaluating, participating or pursuing any other activity or
opportunity that is related to those identified in (i) or (ii) above;
provided that the determination of what constitutes a Telecommunications
Business shall be made in good faith by the Board of Directors of the
Company.
"Telecommunications Related Assets" means all assets, rights (contractual
or otherwise) and properties, whether tangible or intangible, used in connection
with a Telecommunications Business.
"Total Common Equity" of any Person means, as of any date of determination,
the product of:
(i) the aggregate number of outstanding primary shares of Common Stock
of such Person on such day (which shall not include any options or warrants
on, or securities convertible or exchangeable into, shares of Common Stock
of such Person); and
(ii) the average Closing Price of such Common Stock over the 20
consecutive Trading Days immediately preceding such day. If no such Closing
Price exists with respect to shares of any such class, the value of such
shares for purposes of clause (ii) of the preceding sentence shall be
determined by the Board of Directors of the Company in good faith and
evidenced by a resolution of the Board of Directors filed with the Trustee.
"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
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(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.
"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 (i) in connection with the acquisition or construction of
Telecommunications Related Assets and (ii) to pay regularly scheduled interest
on such Indebtedness pursuant to the terms thereof.
"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.
"Web Hosting Subsidiary" means the Subsidiary of the Company substantially
all of the assets of which consist of assets used exclusively in the conduct of
the Company's Internet Web hosting business.
"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 exchange of Old Notes for New 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 New Notes. The New Notes will have the
same issue date and issue price as the Old Notes. A holder's initial tax basis
in the New Notes will be the same as the holder's basis in the Old Notes
exchanged therefor. Holders will be considered to have held the New Notes from
the time of their original acquisition of the Old Notes.
The following is a summary of the anticipated material United States
federal income tax consequences of the purchase, ownership and disposition of
the Notes. It does not purport to be a complete analysis of all potential
consequences. The summary is based on the Internal Revenue Code of 1986, as
amended (the "Code"), its legislative history, existing and proposed regulations
thereunder, published rulings and court decisions, all as in effect on the date
of this Prospectus and all of which are subject to change at any time. Any such
change may be applied retroactively in a manner that could adversely affect a
holder. This summary applies only to those persons who are the initial holders
of the Notes and who hold the Notes as "capital assets" (generally, assets held
for investment). It does not address the tax consequences to taxpayers who are
subject to special rules (such as financial institutions, tax-exempt
organizations, insurance companies and persons holding Notes as part of a
straddle, hedge or conversion transaction) or aspects of federal income taxation
that may be relevant to a prospective investor based on such investor's
particular tax situation. Moreover, the effect of any applicable state, local or
foreign tax laws is not discussed. Accordingly, purchasers of Notes should
consult their own tax advisors with respect to the particular consequences to
them of the purchase, ownership and disposition of the Notes and the
applicability of any state, local or foreign tax laws, as well as with respect
to the possible effects of changes in federal and other tax laws.
INTEREST ON THE SENIOR NOTES
Interest paid on the Senior Notes will generally be taxable to a holder as
ordinary interest income at the time it is accrued or is received in accordance
with the holder's method of accounting for federal income tax purposes. The
9 1/2% Senior Notes were issued with a de minimus amount of original issue
discount ("OID"). Unless a holder elects to include all interest that accrues on
a Senior Note in gross income using the constant yield method, the Senior Notes
will not give rise to OID income for federal income tax purposes.
ORIGINAL ISSUE DISCOUNT ON THE SENIOR SUBORDINATED NOTES
General. For federal income tax purposes, the 12 1/4% Series B Senior
Subordinated Notes will have the same issue date and issue price as the 12 1/4%
Senior Subordinated Notes. Because the 12 1/4% Senior Subordinated Notes were
issued with OID for federal income tax purposes, holders of the 12 1/4% Series B
Senior Subordinated Notes will be required to include OID in income periodically
over the term of the 12 1/4% Series B Senior Subordinated Notes before receipt
of the cash to which such income is attributable.
The amount of OID on a 12 1/4% Series B Senior Subordinated Note will be
the excess of the stated redemption price at maturity of the 12 1/4% Series B
Senior Subordinated Note over its issue price. The issue price of a 12 1/4%
Series B Senior Subordinated Note will be the first price at which a substantial
amount of 12 1/4% Senior Subordinated Notes was sold to the public for money
(excluding sales to bond houses, brokers or others acting in the capacity of
underwriters, placement agents or wholesalers, etc.). The stated redemption
price at maturity of a 12 1/4% Series B Senior Subordinated Note will be the sum
of all payments to be made on such 12 1/4% Series B Senior Subordinated Note,
whether denominated as principal or interest. Accordingly, each 12 1/4% Series B
Senior Subordinated Note will have a substantial amount of OID.
In general, a holder must include in gross income for federal income tax
purposes the sum of the daily portions of OID with respect to a Senior
Subordinated Note for each day during the taxable year or portion of a taxable
year on which such holder holds the Senior Subordinated Note ("Accrued OID").
The daily portion is determined by allocating to each day of any accrual period
a pro rata portion of the OID allocable to that accrual period. The OID
allocable to a full accrual period is an amount equal to the adjusted issue
price of the Senior Subordinated Note at the beginning of the accrual period
multiplied by the yield to maturity of the Senior Subordinated Note. For
purposes of computing OID, Intermedia will use six-month accrual periods
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that end on the days in the calendar year corresponding to the day before the
maturity date of the Senior Subordinated Notes and the date six months prior to
such day, with the exception of an initial short accrual period. The adjusted
issue price of a Senior Subordinated Note at the beginning of any accrual period
is the issue price of the Senior Subordinated Note increased by the Accrued OID
for all prior accrual periods, less any cash payments on the Senior Subordinated
Note made on or before the first day of that accrual period. Under these rules,
holders will generally be required to include in gross income increasingly
greater amounts of OID in each successive accrual period until cash interest is
payable.
Intermedia is required to furnish certain information to the Internal
Revenue Service (the "IRS"), and will furnish annually to record holders of
Senior Subordinated Notes information with respect to OID accruing during the
calendar year. That information will be based on the adjusted issue price of the
Senior Subordinated Notes as if the holders were the original holders of the
Senior Subordinated Notes. Holders who purchase Senior Subordinated Notes for an
amount other than the adjusted issue price and/or on a date other than the last
day of an accrual period will be required to determine for themselves the amount
of OID, if any, they are required to include in gross income for federal income
tax purposes.
Certain Consequences to the Company and to Corporate Holders. The 12 1/4%
Senior Subordinated Notes constitute "applicable high yield discount
obligations" ("AHYDOs") for federal income tax purposes. Therefore, a portion of
the tax deductions that would otherwise be available to Intermedia in respect of
the Senior Subordinated Notes will be deferred or disallowed, which, in turn,
may reduce the after-tax cash flows of Intermedia. More particularly, Intermedia
will not be entitled to deduct OID that accrues with respect to the Senior
Subordinated Notes until amounts attributable to OID are paid in cash. In
addition, the "disqualified portion" of the OID accruing on the Senior
Subordinated Notes will be characterized as a non-deductible dividend with
respect to Intermedia and will also be treated as a dividend distribution solely
for purposes of the dividends received deduction of Sections 243, 246 and 246A
of the Code with respect to holders that are U.S. corporations. In general, the
"disqualified portion" of OID for any accrual period will be equal to the
product of (i) a percentage determined by dividing the "excess yield" (i.e., the
excess of the yield to maturity of the Senior Subordinated Notes over 11.17% by
the yield to maturity and (ii) the OID for the accrual period. Subject to
otherwise applicable limitations, a U.S. corporate holder will be entitled to a
dividends received deduction (generally at a 70 percent rate) with respect to
the disqualified portion of the Accrued OID if Intermedia has sufficient current
or accumulated "earnings and profits." To the extent that the Company's earnings
and profits are insufficient, any portion of the OID that otherwise would have
been recharacterized as a dividend for purposes of the dividends received
deduction will continue to be taxed as ordinary OID income in accordance with
the rules described above in "Original Issue Discount on the Senior Subordinated
Notes -- General."
EXCHANGE OFFER; REGISTRATION RIGHTS; LIQUIDATED DAMAGES
Neither the exchange of Old Notes for new Notes in the Exchange Offers nor
the registration of the old Notes or new Notes pursuant to a shelf registration
statement should be a taxable event for United States federal income tax
purposes.
Intermedia intends to take the position that Liquidated Damages payable as
the result of a Registration Default, if any, will be taxable to a holder as
ordinary income in accordance with such holder's method of accounting for tax
purposes. The IRS, however, may take a different position, which could affect
the timing of both a holder's income and Intermedia's deduction with respect to
such Liquidated Damages.
DISPOSITION OF THE NOTES
Generally, any sale, redemption or other taxable disposition of a Note will
result in taxable gain or loss equal to the difference between the sum of the
amount of cash and the fair market value of property received (other than
amounts attributable to accrued but unpaid stated interest on a Senior Note) and
the holder's adjusted tax basis in the Note. An initial holder's adjusted tax
basis for determining gain or loss on a sale or other disposition of a Senior
Subordinated Note will equal the cost of the Senior Subordinated Note to such
holder, increased by any Accrued OID includible in such holder's gross income
and decreased by the amount
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<PAGE> 100
of any cash payments received by such holder (regardless of whether such
payments are denominated as principal or interest). Any gain or loss upon a sale
or other disposition of a Note will generally be capital gain or loss, and will
be long-term capital gain or loss if the Note has been held by the holder for
more than one year.
Holders should be aware that the resale of a Note may be affected by the
"market discount" rules of the Code, under which a subsequent purchaser
acquiring a Note at a market discount generally would be required to include as
ordinary income a portion of gain realized upon the disposition or retirement of
such Note to the extent of the market discount that accrued while the Note was
held by such purchaser.
BACKUP WITHHOLDING
A holder may be subject, under certain circumstances, to backup withholding
at a 31 percent rate with respect to payments of interest and OID received on,
and proceeds from the sale (through a broker) of, a Note. Backup withholding
generally applies only if the holder (i) fails to furnish his or her social
security or other taxpayer identification number ("TIN") to Intermedia in the
required manner, (ii) furnishes an incorrect TIN and the IRS so notifies
Intermedia, (iii) is notified by the IRS that he or she has failed to report
properly payments of interest or dividends and the IRS has notified Intermedia
that he or she is subject to withholding, or (iv) fails, under certain
circumstances, to provide a certified statement, signed under penalty of
perjury, that the TIN provided is his or her correct number and that he or she
is not subject to backup withholding.
Any amount withheld from a payment to a holder under the backup withholding
rules is allowable as a credit against such holder's federal income tax
liability, provided that the required information is furnished to the IRS.
Certain holders (including, among others, corporations) are not subject to
backup withholding. Holders should consult their tax advisors as to their
qualification for exemption from backup withholding and the procedure for
obtaining such an exemption.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offers must acknowledge that it will deliver a prospectus in
connection with any resale of the New 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 New Notes received in exchange for Old Notes acquired
as a result of market-making activities or other trading activities. We have
agreed that for a period expiring on the earlier of (a) the date that all
Transfer Restricted Securities cease to be Transfer Restricted Securities and
(b) 365 days after the date the Exchange Offers are completed we will make this
Prospectus, as amended or supplemented, available to any broker-dealer for use
in connection with any such resale.
We will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offers 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 on the New 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 New Notes. Any broker-dealer that
resells New Notes that were received by it for its own account pursuant to the
Exchange Offers and any broker-dealer that participates in a distribution of New
Notes may be deemed to be an "underwriter" within the meaning of the Securities
Act and any profit on any resale of New 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.
We have not entered into any arrangement or understanding with any person
to distribute the New Notes to be received in the Exchange Offers and to the
best of our information and belief, each person participating
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<PAGE> 101
in the Exchange Offers 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 Offers.
LEGAL MATTERS
The legality of the securities offered hereby will be passed upon for
Intermedia 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.
EXPERTS
The consolidated financial statements of Intermedia appearing in
Intermedia's Annual Report (Form 10-K) at December 31, 1998 and 1997, and for
each of the three years in the period ended December 31, 1998, have been audited
by Ernst & Young LLP, independent certified public accountants, as set forth in
their report thereon included therein and incorporated therein by reference.
Such consolidated financial statements are incorporated herein by reference in
reliance upon such report and the authority of such firm as experts in
accounting and auditing.
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- ------------------------------------------------------
- ------------------------------------------------------
WE HAVE NOT AUTHORIZED ANY DEALER, SALESPERSON OR OTHER PERSON TO GIVE ANY
INFORMATION OR REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS. YOU MUST NOT
RELY ON ANY UNAUTHORIZED INFORMATION. THIS PROSPECTUS DOES NOT OFFER TO SELL OR
BUY ANY SECURITIES IN ANY JURISDICTION WHERE IT IS UNLAWFUL. THE INFORMATION IN
THIS PROSPECTUS IS CURRENT AS OF APRIL , 1999.
--------------------------------
TABLE OF CONTENTS
--------------------------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Incorporation of Certain Documents
by Reference...................... i
Where You can Find Additional
Information....................... i
Prospectus Summary.................. 1
Risk Factors........................ 8
The Exchange Offer.................. 18
Use of Proceeds..................... 25
Capitalization...................... 25
Description of the Senior Notes..... 26
Description of the Senior
Subordinated Notes................ 59
Certain Federal Income Tax
Considerations.................... 95
Plan of Distribution................ 97
Legal Matters....................... 98
Experts............................. 98
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
$664,000,000
(INTERMEDIA COMMUNICATIONS LOGO)
$300,000,000
9 1/2% SERIES B SENIOR NOTES
DUE 2009
$364,000,000
12 1/4% SERIES B
SENIOR SUBORDINATED
DISCOUNT NOTES DUE 2009
--------------------
PROSPECTUS
--------------------
APRIL , 1999
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 103
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Our Restated Certificate of Incorporation, as amended, provides that we
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 we may indemnify pursuant thereto. Our Bylaws contain a similar
provision requiring indemnification of our 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 to 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, our Restated Certificate of Incorporation, as amended,
contains a provision limiting the personal liability of our directors for
monetary damages for certain breaches of their fiduciary duty. We have
indemnification insurance under which directors and officers are insured against
certain liability that may occur in their capacity as such.
ITEM 21. EXHIBITS.
(a) Exhibits
<TABLE>
<C> <C> <S>
1.1 -- Senior Note Purchase Agreement, dated as of February 19,
1999, among Intermedia and Bear, Stearns & Co. Inc., Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Salomon Smith
Barney Inc., NationsBanc Montgomery Securities LLC and
Warburg Dillon Read LLC (the "Initial Purchasers").
1.2 -- Senior Subordinated Note Purchase Agreement, dated as of
February 19, 1999, among Intermedia and the Initial
Purchasers.
2.1 -- Agreement and Plan of Merger, dated as of June 4, 1997,
among Intermedia, Daylight Acquisition Corp. and DIGEX.
Exhibit 99(c)(1) to Intermedia's Schedule 14D-1 filed with
the SEC on June 11, 1997 is incorporated herein by
reference.
2.2 -- Agreement and Plan of Merger, dated as of November 20, 1997,
among Intermedia, Moonlight Acquisition Corp. and Shared
Technologies Fairchild Inc. Exhibit 99(c)(1) to Intermedia's
Schedule 14D-1 and Schedule 13D filed with the SEC on
November 26, 1997 is incorporated herein by reference.
</TABLE>
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2.3 -- Acquisition Agreement, dated as of December 17, 1997, among
Intermedia and the holders of interests in the Long Distance
Savers companies. Exhibit 2.3 to Amendment No. 1 to
Intermedia's Registration Statement on Form S-3 filed with
the SEC 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 Intermedia, Sumter One Acquisition, Inc., Sumter Two
Acquisition, Inc., National Telecommunications of Florida,
Inc., NTC, Inc. and the stockholders of National. Exhibit
2.4 to Intermedia's Registration Statement on Form S-3 filed
with the SEC on February 13, 1998 (No. 333-46369) is
incorporated herein by reference.
3.1 -- Restated Certificate of Incorporation of Intermedia,
together with all amendments thereto. Exhibit 3.1 to
Intermedia's Registration Statement on Form S-4 filed with
the SEC on June 16, 1998 (No. 333-56939) is incorporated
herein by reference.
3.2 -- By-laws of Intermedia, together with all amendments thereto.
Exhibit 3.2 to Intermedia's Registration Statement on Form
S-1 filed with the SEC on November 8, 1993 (No. 33-69052) is
incorporated herein by reference.
4.1 -- Indenture, dated as of June 2, 1995, between Intermedia and
SunBank National Association, as trustee. Exhibit 4.1 to
Intermedia's Registration Statement on Form S-4 filed with
the SEC 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 Intermedia's 13 1/2% Series B Senior Notes due
2005, between Intermedia and SunTrust Bank, Central Florida,
National Association, as trustee. Exhibit 4.1 to
Intermedia's Current Report on Form 8-K filed with the SEC
on April 29, 1996 is incorporated herein by reference.
4.2 -- Indenture, dated as of May 14, 1996, between Intermedia and
SunTrust Bank, Central Florida, National Association, as
trustee. Exhibit 4.1 to Amendment No. 1 to Intermedia's
Registration Statement on Form S-3 (SEC File No. 33-34738)
filed with the SEC on April 18, 1996 is incorporated herein
by reference.
4.3 -- Indenture, dated as of July 9, 1997, between Intermedia and
SunTrust Bank, Central Florida, National Association, as
trustee. Exhibit 4.1 to Intermedia's Current Report on Form
8-K filed with the SEC on July 17, 1997 is incorporated
herein by reference.
4.4 -- Indenture, dated as of October 30, 1997, between Intermedia
and SunTrust Bank, Central Florida, National Association, as
trustee. Exhibit 4.1 to Intermedia's Current Report on Form
8-K filed with the SEC on November 6, 1997 is incorporated
herein by reference.
4.5 -- Indenture, dated as of December 23, 1997, between Intermedia
and SunTrust Bank, Central Florida, National Association, as
trustee. Exhibit 4.5 to Intermedia's Registration Statement
on Form S-4 filed with the SEC on February 11, 1998 (No.
333-44875) is incorporated herein by reference.
4.6 -- Indenture, dated as of May 27, 1998, between Intermedia and
SunTrust Bank, Central Florida, National Association, as
trustee. Exhibit 4.6 to Intermedia's Registration Statement
on Form S-4 filed with the SEC on June 16, 1998 (No.
333-56939) is incorporated herein by reference.
4.7 -- Senior Note Indenture, dated as of February 24, 1999,
between Intermedia and SunTrust Bank, Central Florida,
National Association, as trustee.
4.8 -- Senior Subordinated Note Indenture, dated as of February 24,
1999 between Intermedia and SunTrust Bank, Central Florida,
National Association, as trustee.
4.9 -- Senior Note Registration Rights Agreement, dated as of
February 24, 1999, among Intermedia and the Initial
Purchasers.
4.10 -- Senior Subordinated Note Registration Rights Agreement,
dated as of February 24, 1999, among Intermedia and the
Initial Purchasers.
5 -- Opinion of Kronish, Lieb, Weiner & Hellman LLP.
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.
</TABLE>
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<C> <C> <S>
24 -- Power of Attorney is set forth on the signature page of this
Registration Statement.
25.1 -- Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 on Form T-1 with respect to the Senior
Notes.
25.2 -- Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 on Form T-1 with respect to the Senior
Subordinated Notes.
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 SEC.
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 SEC 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
had been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this registration statement or any
material change to such information in this registration statement;
provided, however, that paragraphs (i) and (ii) above do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Company pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in this registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) For purposes of determining any liability under the Securities Act,
each filing of the 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 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.
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(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
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 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 registration statement when it
became effective.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Tampa, state of Florida,
on this 15 day of April, 1999.
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, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated. Each person whose signature appears below
authorizes David C. Ruberg and Robert M. Manning, or either of them, as
attorney-in-fact to sign and file in each capacity stated below, all amendments
and post-effective amendments to this Registration Statement.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ DAVID C. RUBERG Chairman of the Board, President April 15, 1999
- ----------------------------------------------------- and Chief Executive Officer
David C. Ruberg
Principal Financial and Accounting Officers:
/s/ ROBERT M. MANNING Chief Financial Officer, April 15, 1999
- ----------------------------------------------------- Secretary and Senior Vice
Robert M. Manning President
/s/ JEANNE M. WALTER Controller and Chief Accounting April 15, 1999
- ----------------------------------------------------- Officer
Jeanne M. Walter
Other Directors:
/s/ JOHN C. BAKER Director April 15, 1999
- -----------------------------------------------------
John C. Baker
/s/ GEORGE F. KNAPP Director April 15, 1999
- -----------------------------------------------------
George F. Knapp
/s/ PHILLIP A. CAMPBELL Director April 15, 1999
- -----------------------------------------------------
Phillip A. Campbell
/s/ PIERCE JACKSON ROBERTS, JR. Director April 15, 1999
- -----------------------------------------------------
Pierce Jackson Roberts, Jr.
</TABLE>
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EXHIBIT INDEX
<TABLE>
<C> <C> <S>
1.1 -- Senior Note Purchase Agreement, dated as of February 19,
1999, among Intermedia and Bear, Stearns & Co. Inc., Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Salomon Smith
Barney Inc., NationsBanc Montgomery Securities LLC and
Warburg Dillon Read LLC (the "Initial Purchasers").
1.2 -- Senior Subordinated Note Purchase Agreement, dated as of
February 19, 1999, among Intermedia and the Initial
Purchasers.
2.1 -- Agreement and Plan of Merger, dated as of June 4, 1997,
among Intermedia, Daylight Acquisition Corp. and DIGEX.
Exhibit 99(c)(1) to Intermedia's Schedule 14D-1 filed with
the SEC on June 11, 1997 is incorporated herein by
reference.
2.2 -- Agreement and Plan of Merger, dated as of November 20, 1997,
among Intermedia, Moonlight Acquisition Corp. and Shared
Technologies Fairchild Inc. Exhibit 99(c)(1) to Intermedia's
Schedule 14D-1 and Schedule 13D filed with the SEC on
November 26, 1997 is incorporated herein by reference.
2.3 -- Acquisition Agreement, dated as of December 17, 1997, among
Intermedia and the holders of interests in the Long Distance
Savers companies. Exhibit 2.3 to Amendment No. 1 to
Intermedia's Registration Statement on Form S-3 filed with
the SEC 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 Intermedia, Sumter One Acquisition, Inc., Sumter Two
Acquisition, Inc., National Telecommunications of Florida,
Inc., NTC, Inc. and the stockholders of National. Exhibit
2.4 to Intermedia's Registration Statement on Form S-3 filed
with the SEC on February 13, 1998 (No. 333-46369) is
incorporated herein by reference.
3.1 -- Restated Certificate of Incorporation of Intermedia,
together with all amendments thereto. Exhibit 3.1 to
Intermedia's Registration Statement on Form S-4 filed with
the SEC on June 16, 1998 (No. 333-56939) is incorporated
herein by reference.
3.2 -- By-laws of Intermedia, together with all amendments thereto.
Exhibit 3.2 to Intermedia's Registration Statement on Form
S-1 filed with the SEC on November 8, 1993 (No. 33-69052) is
incorporated herein by reference.
4.1 -- Indenture, dated as of June 2, 1995, between Intermedia and
SunBank National Association, as trustee. Exhibit 4.1 to
Intermedia's Registration Statement on Form S-4 filed with
the SEC 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 Intermedia's 13 1/2% Series B Senior Notes due
2005, between Intermedia and SunTrust Bank, Central Florida,
National Association, as trustee. Exhibit 4.1 to
Intermedia's Current Report on Form 8-K filed with the SEC
on April 29, 1996 is incorporated herein by reference.
4.2 -- Indenture, dated as of May 14, 1996, between Intermedia and
SunTrust Bank, Central Florida, National Association, as
trustee. Exhibit 4.1 to Amendment No. 1 to Intermedia's
Registration Statement on Form S-3 (SEC File No. 33-34738)
filed with the SEC on April 18, 1996 is incorporated herein
by reference.
4.3 -- Indenture, dated as of July 9, 1997, between Intermedia and
SunTrust Bank, Central Florida, National Association, as
trustee. Exhibit 4.1 to Intermedia's Current Report on Form
8-K filed with the SEC on July 17, 1997 is incorporated
herein by reference.
4.4 -- Indenture, dated as of October 30, 1997, between Intermedia
and SunTrust Bank, Central Florida, National Association, as
trustee. Exhibit 4.1 to Intermedia's Current Report on Form
8-K filed with the SEC on November 6, 1997 is incorporated
herein by reference.
4.5 -- Indenture, dated as of December 23, 1997, between Intermedia
and SunTrust Bank, Central Florida, National Association, as
trustee. Exhibit 4.5 to Intermedia's Registration Statement
on Form S-4 filed with the SEC on February 11, 1998 (No.
333-44875) is incorporated herein by reference.
</TABLE>
<PAGE> 109
<TABLE>
<C> <C> <S>
4.6 -- Indenture, dated as of May 27, 1998, between Intermedia and
SunTrust Bank, Central Florida, National Association, as
trustee. Exhibit 4.6 to Intermedia's Registration Statement
on Form S-4 filed with the SEC on June 16, 1998 (No.
333-56939) is incorporated herein by reference.
4.7 -- Senior Note Indenture, dated as of February 24, 1999,
between Intermedia and SunTrust Bank, Central Florida,
National Association, as trustee.
4.8 -- Senior Subordinated Note Indenture, dated as of February 24,
1999 between Intermedia and SunTrust Bank, Central Florida,
National Association, as trustee.
4.9 -- Senior Note Registration Rights Agreement, dated as of
February 24, 1999, among Intermedia and the Initial
Purchasers.
4.10 -- Senior Subordinated Note Registration Rights Agreement,
dated as of February 24, 1999, among Intermedia and the
Initial Purchasers.
5 -- Opinion of Kronish, Lieb, Weiner & Hellman LLP.
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.
24 -- Power of Attorney is set forth on the signature page of this
Registration Statement.
25.1 -- Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 on Form T-1 with respect to the Senior
Notes.
25.2 -- Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 on Form T-1 with respect to the Senior
Subordinated Notes.
99 -- Form of Letter of Transmittal.
</TABLE>
<PAGE> 1
EXHIBIT 1.1
EXECUTION COPY
- --------------------------------------------------------------------------------
INTERMEDIA COMMUNICATIONS INC.
$300,000,000
9 1/2% Senior Notes due 2009
Senior Note Purchase Agreement
February 19, 1999
BEAR, STEARNS & CO. INC.
MERRILL LYNCH & CO.
SALOMON SMITH BARNEY
NATIONSBANC MONTGOMERY SECURITIES LLC
WARBURG DILLON READ LLC
- --------------------------------------------------------------------------------
<PAGE> 2
INTERMEDIA COMMUNICATIONS INC.
$300,000,000
9 1/2% Senior Notes Due 2009
SENIOR NOTE PURCHASE AGREEMENT
February 19, 1998
New York, New York
BEAR, STEARNS & CO. INC.
MERRILL LYNCH & CO.
SALOMON SMITH BARNEY
NATIONSBANC MONTGOMERY SECURITIES LLC
WARBURG DILLON READ LLC
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., Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Salomon Smith Barney Inc.,
NationsBanc Montgomery Securities LLC and Warburg Dillon Read LLC (each, an
"Initial Purchaser" and collectively, the "Initial Purchasers") $300,000,000
aggregate principal amount of 9 1/2% Senior Notes due 2009 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 $300,000,000 aggregate principal amount of 9 1/2% Senior
Notes due 2009 (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 Schedules 1 and 2 hereto. The Subsidiaries listed on Schedule 2 are in
the process of being merged with and into the Company. 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 the
acquisition or construction of Telecommunications Related Assets (as described
in the Offering Memorandum) and, subject to certain conditions, may be used to
pay interest on the Senior Notes.
Upon original issuance thereof, and until such time as the
same is no longer required under the applicable requirements of the Securities
Act of 1933, as amended (the "Act"), the Senior Notes shall bear the following
legend:
<PAGE> 3
"THE SECURITY (OR ITS PREDECESSORS) EVIDENCED HEREBY
HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT
OF 1933 (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED
HEREBY OR ANY INTEREST OR PARTICIPATION HEREIN MAY NOT BE
OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
REGISTRATION. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE
HEREOF AGREES (A) TO OFFER, SELL, PLEDGE OR OTHERWISE TRANSFER
THIS SECURITY ONLY (1) TO THE COMPANY, (2) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER
THE SECURITIES ACT, (3) TO A PERSON IT REASONABLY BELIEVES IS
A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (4)
PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR
OUTSIDE THE UNITED STATES IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT, (5) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT OR (6) PURSUANT TO ANY OTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE
SECURITIES ACT (AND IN THE CASE OF A TRANSFER PURSUANT TO
CLAUSE (5) OR (6), 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) THAT IT
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 Act. The Company has prepared a preliminary offering
memorandum, dated February 8, 1999 (the "Preliminary Offering Memorandum"), and
a final offering memorandum, dated February 19, 1999 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 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 99.551% 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
2
<PAGE> 4
Agreement"), 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 9 1/2% Senior Notes
due 2009 (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 3
hereto. The purchase price for the Senior Notes shall be 97.750% of the
principal amount thereof.
(b) Delivery to the Initial Purchasers of, and
payment by the Initial Purchasers for, the Senior Notes shall be made at the
offices of Latham & Watkins, 885 Third Avenue, New York, NY 10022, or such other
location as may be mutually acceptable. Such delivery and payment shall be made
at 9:00 a.m. New York time, on February 24, 1999 or at such other time as shall
be agreed upon by the Initial Purchasers and the Company. The time and date of
such delivery and payment are herein called the "Closing Date."
(c) One or more Senior Notes in global form,
(the "Global Securities"), registered in the name of Cede & Co. (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
3
<PAGE> 5
Offering Memorandum untrue or that requires the making of any additions to or
changes in the Preliminary Offering Memorandum or the Offering Memorandum in
order to make the statements therein, in the light of the circumstances under
which they are made, not misleading. The Company shall use its best efforts to
prevent the issuance of any stop order or order suspending the qualification or
exemption of any Senior Notes under any state securities or Blue Sky laws and,
if at any time any state securities commission or other regulatory authority
shall issue an order suspending the qualification or exemption of any Senior
Notes under any state securities or Blue Sky laws, the Company shall use its
best efforts to obtain the withdrawal or lifting of such order at the earliest
possible time.
(b) To furnish the Initial Purchasers and those
persons identified by the Initial Purchasers to the Company, without charge, as
many copies of the Preliminary Offering Memorandum and the Offering Memorandum,
and any amendments or supplements thereto, as the Initial Purchasers may
reasonably request. The Company consents to the use of the Preliminary Offering
Memorandum and the Offering Memorandum, and any amendments and supplements
thereto required pursuant hereto, by the Initial Purchasers in connection with
Exempt Resales.
(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,
4
<PAGE> 6
duplication costs) and delivery of all preliminary and final Blue Sky memoranda
prepared and delivered in connection herewith and with the Exempt Resales, (iii)
the issuance, transfer and delivery by the Company of the Senior Notes to the
Initial Purchasers, (iv) the qualification or registration of the Senior Notes
for offer and sale under the securities or Blue Sky laws of the several states
(including, without limitation, the cost of printing and mailing a preliminary
and final Blue Sky Memorandum and the reasonable fees and disbursements of
counsel to the Initial Purchasers relating thereto), (v) furnishing such copies
of the Preliminary Offering Memorandum and the Offering Memorandum, and all
amendments and supplements thereto, as may be requested for use in connection
with Exempt Resales, (vi) the preparation of certificates for the Senior Notes
(including, without limitation, printing and engraving thereof), (vii) the fees,
disbursements and expenses of the Company's counsel and accountants, (viii) all
expenses and listing fees in connection with the application for quotation of
the Senior Notes in the National Association of Securities Dealers, Inc.
("NASD") Automated Quotation System - 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) In accordance with the terms of the
Registration Rights Agreement, 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.
5
<PAGE> 7
(m) To comply with all of its agreements set
forth in the Registration Rights Agreement and all agreements set forth in the
representation letters of the Company to DTC relating to the approval of the
Senior Notes by DTC for "book-entry" transfer.
(n) To use its best efforts to effect the
inclusion of the Senior Notes in PORTAL and to obtain approval of the Senior
Notes by DTC for "book-entry" transfer.
(o) During a period of five years following the
Closing Date, to deliver without charge to each of the Initial Purchasers, as
they may reasonably request, promptly upon their becoming available, copies of
(i) all reports or other publicly available information that the Company shall
mail or otherwise make available to its stockholders and (ii) all reports,
financial statements and proxy or information statements filed by the Company
with the Commission or any national securities exchange and such other publicly
available information concerning the Company or its Subsidiaries, including
without limitation, press releases.
(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
6
<PAGE> 8
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 listed on Schedule 1 (A) has been duly organized and is validly
existing as a corporation in good standing under the laws of its respective
jurisdiction of incorporation, (B) has all requisite corporate power and
authority to carry on its business as it is currently being conducted and as
described in the Offering Memorandum and to own, lease and operate its
properties, and (C) is duly qualified and in good standing as a foreign
corporation authorized to do business in each jurisdiction in which the nature
of its business or its ownership or leasing of property requires such
qualification except, with respect to clauses (A) (as it relates to good
standing) and (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").
(iv) Each of the Subsidiaries listed on
Schedule 2 (A) has been duly organized and is validly existing as a corporation
in good standing under the laws of its respective jurisdiction of incorporation,
(B) has all requisite corporate power and authority to carry on its business as
it is currently being conducted and as described in the Offering Memorandum and
to own, lease and operate its properties, and (C) is duly qualified and in good
standing as a foreign corporation authorized to do business in each jurisdiction
in which the nature of its business or its ownership or leasing of property
requires such qualification except, with respect to clauses (A) and (C), where
the failure to be validly existing, qualified or in good standing does not and
could not reasonably be expected to individually or in the aggregate, result in
a Material Adverse Effect.
(v) The Company has no direct or
indirect subsidiaries as of the Closing Date other than the Subsidiaries. No
Subsidiary listed on Schedule 2 hereto is material to the business and
operations of the Company or is 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.
(vi) 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. As of the dates specified in the Offering Memorandum under
the caption "Capitalization," 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 therein.
7
<PAGE> 9
(vii) All of the outstanding capital
stock of, or other ownership interests in, 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 or instruments convertible into or exchangeable for, any
capital stock or other equity interest of the Company or any Subsidiary (other
than options issued pursuant to the Company's stock option plans, the 153,500
warrants each to purchase 4.38 shares of Common Stock, a warrant to purchase
200,000 shares of Common Stock, the 7% Series D Junior Convertible Preferred
Stock (the "Series D Preferred Stock"), the 7% Series E Junior Convertible
Preferred Stock (the "Series E Preferred Stock") and the 7% Series F Junior
Convertible Preferred Stock (the "Series F Preferred Stock"), and noting that at
present rights trade with the Common Stock).
(viii) 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.
(ix) 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 the Company 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.
(x) The Indenture has been duly and
validly authorized by the Company and, when duly executed and delivered by the
Company, will be the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization or
similar laws affecting the rights of creditors generally and subject to general
principles of equity. The Offering Memorandum contains a fair summary of the
terms of the Indenture.
(xi) 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.
(xii) 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.
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<PAGE> 10
(xiii) 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.
(xiv) None of the Company or any
Subsidiary is and, after giving effect to the Offering, will not be (A) in
violation of its charter or bylaws, (B) in default in the performance of any
bond, debenture, note, indenture, mortgage, deed of trust or other agreement or
instrument to which it is a party or by which it is bound or to which any of its
properties is subject, or (C) in violation of any local, state or Federal law,
statute, ordinance, rule, regulation, requirement, judgment or court decree
(including, without limitation, the Communications Act and the rules and
regulations of the FCC and environmental laws, statutes, ordinances, rules,
regulations, judgments or court decrees) applicable to the Company or any
Subsidiary or any of their assets or properties (whether owned or leased) other
than, in the case of clauses (B) and (C), any default or violation that (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.
(xv) 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) the
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 any Subsidiary 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) 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.
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<PAGE> 11
(xvi) 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 Subsidiary 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.
(xvii) 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.
(xviii) Except as set forth in the Offering
Memorandum, there is (i) no significant unfair labor practice complaint pending
against the Company or any Subsidiary nor, to the best knowledge of the Company,
threatened against any of them, before the National Labor Relations Board, any
state or local labor relations board or any foreign labor relations board, and
no significant grievance or significant arbitration proceeding arising out of or
under any collective bargaining agreement is so pending against the Company or
any Subsidiary nor, 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 any
Subsidiary. 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.
(xix) 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.
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(xx) 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 it 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 it 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 any
Subsidiary 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.
(xxi) Each of the Company and the
Subsidiaries owns, possesses or has the right to employ all patents, patent
rights, licenses (including all FCC, state, local or other jurisdictional
regulatory licenses), inventions, copyrights, know-how (including trade secrets
and other unpatented and/or unpatentable proprietary or confidential
information, software, systems or procedures), trademarks, service marks and
trade names, inventions, computer programs, technical data and information
(collectively, the "Intellectual Property") presently employed by it or its
subsidiaries in connection with the businesses now operated by it or which are
proposed to be operated by it or its subsidiaries free and clear of and without
violating any right, claimed right, charge, encumbrance, pledge, security
interest, restriction or lien of any kind of any other person and none of the
Company or any Subsidiary has received any notice of infringement of or conflict
with asserted rights of others with respect to any of the foregoing, 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.
(xxii) 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
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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.
(xxiii) 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.
(xxiv) None of the Company or any
Subsidiary is (i) an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended (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.
(xxv) Except as disclosed in the Offering
Memorandum, there are no holders of securities of the Company or any Subsidiary
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 Subsidiary registers under the Act or analogous
foreign laws and regulations securities held by them.
(xxvi) 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.
(xxvii) 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.
(xxviii) 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) other than to the Initial Purchasers in
connection with the transactions contemplated hereby, 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
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<PAGE> 14
or agreed to pay to any person any compensation for soliciting another to
purchase any other securities of the Company.
(xxix) 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.
(xxx) Set forth on Schedule 4 hereto is a
list of each employee pension plan with respect to which the Company, or any
corporation considered an affiliate of the Company within the meaning of Section
407(d)(7) of ERISA (an "ERISA Affiliate"), is a party in interest or
disqualified person. The execution and delivery of this Agreement, the other
Operative Documents and the sale of the Senior Notes to be purchased by the
Eligible Purchasers will not involve any prohibited transaction within the
meaning of Section 406 of ERISA or Section 4975 of the Internal Revenue Code of
1986. The representation made by the Company in the preceding sentence is made
in reliance upon, and subject to the accuracy of and compliance with, the
representations and covenants made or deemed made by the Eligible Purchasers as
set forth in the Offering Memorandum under the caption "Notice to Investors."
(xxxi) 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.
(xxxii) 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, that 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, that 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 that 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 Subsidiary on any class of its capital stock, except for
dividends paid in respect of the Series B Redeemable Exchangeable Preferred
Stock due 2009 (the "Series B Preferred Stock") the Series D Preferred Stock,
the Series E Preferred Stock or the Series F Preferred Stock.
(xxxiii) 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 T, U or X promulgated by the Board
of Governors of the Federal Reserve System or analogous foreign laws and
regulations.
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(xxxiv) 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 and the other Operative Documents; and such pro
forma financial statements comply as to form in all material respects with the
requirements applicable to pro forma financial statements included in
registration statements on Form S-1 under the Act. The other financial and
statistical information and data included in the Offering Memorandum, historical
and pro forma, are accurately presented in all material respects and prepared on
a basis consistent with the financial statements, historical and pro forma,
included in the Offering Memorandum and the books and records of the Company and
its Subsidiaries, as applicable.
(xxxv) 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.
(xxxvi) 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 any Initial Purchaser for a brokerage commission, finder's fee or
like payment in connection with the issuance, purchase and sale of the Senior
Notes.
(xxxvii) 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.
(xxxviii) Each of the Company and the
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 the Subsidiaries' Year
2000 date conversion programs to be completed on a timely basis.
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<PAGE> 16
(xxxix) The Company acknowledges that each
Initial Purchaser 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 Initial Purchaser severally and not
jointly represents, warrants and covenants to the Company and agrees that:
(i) Such Initial Purchaser is a QIB,
with such knowledge and experience in financial and business matters as are
necessary in order to evaluate the merits and risks of an investment in the
Senior Notes.
(ii) Such Initial Purchaser (A) is not
acquiring the Senior Notes with a view to any distribution thereof that would
violate the Act or the securities laws of any state of the United States or any
other applicable jurisdiction and (B) will be reoffering and reselling the
Senior Notes only to QIBs in reliance on the exemption from the registration
requirements of the Act provided by Rule 144A.
(iii) No form of general solicitation or
general advertising has been or will be used by any Initial Purchaser 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 Initial Purchaser 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. Each Initial Purchaser further agrees that (A) it 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, (B) such Eligible Purchasers
will 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 that has been declared
effective under the Act, (iii) to a person it reasonably believes is a QIB in a
transaction meeting the requirements of Rule 144A under the Act, (iv) to an
institutional "accredited investor" (as defined in Rule 501(a) (1), (2), (3) or
(7) of Regulation D under the 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 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) 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 Initial Purchaser
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.
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(v) Each Initial Purchaser 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 Initial Purchaser, (ii) each person, if any, who controls any
Initial Purchaser 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 Initial Purchaser or any
controlling person to the fullest extent lawful, from and against any and all
losses, liabilities, claims, damages and expenses whatsoever (including, but not
limited to, attorneys' fees and any and all expenses whatsoever incurred in
investigating, preparing or defending against any investigation or litigation,
commenced or threatened, or any claim whatsoever, and any and all amounts paid
in settlement of any claim or litigation), joint or several, to which they or
any of them may become subject under the Act, the Exchange Act or otherwise,
insofar as such losses, liabilities, claims, damages or expenses (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in the Preliminary Offering
Memorandum or the Offering Memorandum, or in any supplement thereto or amendment
thereof, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that the Company will not be liable in
any such case to the extent, but only to the extent, that (i) any such loss,
liability, claim, damage or expense arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written information
furnished to the Company by or on behalf of the Initial Purchasers expressly for
use therein and (ii) the foregoing indemnity with respect to any untrue
statement contained in or omitted from a preliminary offering memorandum shall
not inure to the benefit of any Initial Purchaser (or any person controlling
such Initial Purchaser), from whom the person asserting any such loss,
liability, claim, damage or expense purchased any of the Senior Notes which are
the subject thereof if it is finally judicially determined that such loss,
liability, claim, damage or expense resulted solely from the fact that the
Initial Purchaser sold Senior Notes to a person to whom there was not sent or
given, at or prior to the written confirmation of such sale, a copy of the
Offering Memorandum, as amended or supplemented, and (x) the Company shall have
previously and timely furnished sufficient copies of the Offering Memorandum, as
so amended or supplemented, to such Initial Purchaser in accordance with this
Agreement and (y) the Offering Memorandum, as so amended or supplemented, would
have corrected such untrue statement or omission of a material fact. This
indemnity agreement will be in addition to any liability which the Company may
otherwise have, including under this Agreement.
(b) Each Initial Purchaser, severally and not
jointly, agrees to indemnify and hold harmless the Company and each person, if
any, who controls the Company within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act, against any losses, liabilities, claims,
damages and expenses whatsoever (including, but not limited to, attorneys' fees
and any and all expenses whatsoever incurred in investigating, preparing or
defending against any investigation or litigation, commenced or threatened, or
any claim whatsoever and any and all amounts paid in settlement of any claim or
litigation), joint or several, to which they or any of them may become subject
under the Act, the Exchange Act or otherwise, insofar as such losses,
liabilities, claims, damages or expenses (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Preliminary Offering Memorandum or the Offering
Memorandum, or in
16
<PAGE> 18
any amendment thereof or supplement thereto, or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, in each case to the
extent, but only to the extent, that any such loss, liability, claim, damage or
expense arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made therein in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
any Initial Purchaser expressly for use therein; provided, however, that in no
case shall any Initial Purchaser be liable or responsible for any amount in
excess of the discounts and commissions received by such Initial Purchaser, as
set forth on the cover page of the Offering Memorandum. This indemnity will be
in addition to any liability which any Initial Purchaser may otherwise have,
including under this Agreement.
(c) Promptly after receipt by an indemnified
party under subsection (a) or (b) above of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party under such subsection, notify each party
against whom indemnification is to be sought in writing of the commencement
thereof (but the failure so to notify an indemnifying party shall not relieve it
from any liability which it may have under this Section 6 except to the extent
that it has been prejudiced in any material respect by such failure or from any
liability which it may otherwise have). In case any such action is brought
against any indemnified party, and it notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. Notwithstanding the foregoing, the
indemnified party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by 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
17
<PAGE> 19
the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act) to
which the Company and any Initial Purchaser 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 discounts received by the Initial Purchasers, respectively. The
relative fault of the Company and of the Initial Purchasers shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company or the Initial
Purchasers and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Company
and the Initial Purchasers agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
or by any other method of allocation which does not take into account the
equitable considerations referred to above. Notwithstanding the provisions of
this Section 7, (i) in no case shall any Initial Purchaser 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 any Initial Purchaser 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 Initial
Purchaser 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:
(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.
18
<PAGE> 20
(b) The Offering Memorandum shall have been
printed and copies distributed to the Initial Purchasers not later than 10:00
a.m., New York City time, on the day following the date of this Agreement or at
such later date and time as to which the Initial Purchasers may agree, and no
stop order suspending the qualification or exemption from qualification of the
Senior Notes in any jurisdiction referred to in Section 4(e) shall have been
issued and no proceeding for that purpose shall have been commenced or shall be
pending or threatened.
(c) No action shall have been taken and no
statute, rule, regulation or order shall have been enacted, adopted or issued by
any governmental agency which would, as of the Closing Date, prevent the
issuance of the Senior Notes; no action, suit or proceeding shall have been
commenced and be pending against or affecting or, to the best knowledge of the
Company, threatened against, the Company 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 dividends paid in respect of the Series B Preferred
Stock, the Series D Preferred Stock, the Series E Preferred Stock or the Series
F 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 M. Manning, Senior Vice President and Chief Financial Officer,
in form and substance reasonably satisfactory to the Initial Purchasers,
confirming, as of the Closing Date, the matters set forth in paragraphs (a),
(b), (c) and (d) of this Section 8 and that, as of the Closing Date, the
obligations of the Company to be performed hereunder on or prior thereto have
been duly performed in all material respects.
(f) The Initial Purchasers shall have received
on the Closing Date an opinion, dated the Closing Date, in form and substance
satisfactory to the Initial Purchasers and counsel to the Initial Purchasers, of
Kronish, Lieb, Weiner & Hellman LLP, counsel for the Company, to the effect set
forth in Exhibit A 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 B hereto.
19
<PAGE> 21
(h) The Initial Purchasers shall have received
an opinion, dated the Closing Date, in form and substance reasonably
satisfactory to the Initial Purchasers, of Latham & Watkins, counsel to the
Initial Purchasers, covering such matters as are customarily covered in such
opinions.
(i) At the time this Agreement is executed and
at the Closing Date the Initial Purchasers shall have received from Ernst &
Young LLP, independent public accountants for the Company and its Subsidiaries,
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 two sentences of the second
paragraph and the sixth 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 or any controlling person thereof or by
or on behalf of the Company or any controlling person thereof, and shall survive
delivery of and payment for the 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.
20
<PAGE> 22
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 telexed, telegraphed or
telecopied and confirmed in writing to the Initial Purchasers, c/o Bear, Stearns
&
21
<PAGE> 23
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 pages to follow]
22
<PAGE> 24
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:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:
-------------------------------
Name:
Title:
SALOMON SMITH BARNEY INC.
By:
-------------------------------
Name:
Title:
<PAGE> 25
NATIONSBANC MONTGOMERY SECURITIES LLC
By:
-------------------------------
Name:
Title:
WARBURG DILLON READ LLC
By:
-------------------------------
Name:
Title:
<PAGE> 26
SCHEDULE 1
Intermedia Communications Inc., a Virginia corporation
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.
Netwave Systems, Inc.
Express Communications, Inc.
National Telecommunications of Florida, Inc.
NTC, Inc.
S-1
<PAGE> 27
SCHEDULE 2
Long Distance Savers of the Metroplex, Inc.
LDS of Tulsa (Limited Partnership)
S-2
<PAGE> 28
SCHEDULE 3
<TABLE>
<CAPTION>
Amount of
Senior
Notes to
Initial Purchaser be Purchased
- ----------------- --------------
<S> <C>
Bear, Stearns & Co. Inc. $180,000,000
Merrill Lynch, Pierce, Fenner & Smith 60,000,000
Incorporated
Salomon Smith Barney Inc. 30,000,000
NationsBanc Montgomery Securities LLC 15,000,000
Warburg Dillon Read LLC 15,000,000
------------
Total $300,000,000
</TABLE>
S-3
<PAGE> 29
SCHEDULE 4
1. Intermedia Communications Inc. 401(k) Profit Sharing Plan
S-4
<PAGE> 30
EXHIBIT A
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 or in good standing would not, singly or in the
aggregate, have a Material Adverse Effect.
2. All of the outstanding shares of capital stock of the
Company have been duly authorized, validly issued, and are fully paid and
nonassessable and were not issued in violation of any preemptive or similar
rights 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. All of the issued and outstanding capital stock of,
or other ownership interests in, 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,
are owned by the Company of record and, to our knowledge, after reasonable
inquiry, free and clear of any security interest, claim, lien, limitation on
voting rights or encumbrance. 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 or instruments
convertible into or exchangeable for, any capital stock or other equity interest
of the Company or any Subsidiary (other than options issued pursuant to the
Company's stock option plans, the 153,500 warrants each to purchase 4.38 shares
of Common Stock, a warrant to purchase 200,000 shares of Common Stock, the
Series D Preferred Stock, the Series E Preferred Stock and the Series F
Preferred Stock, and noting that at present rights trade with the Common Stock).
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.
A-1
<PAGE> 31
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), (xxviii), (xxix) (other than
with respect to the first sentence) and (xxxi) 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.
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.
A-2
<PAGE> 32
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) the consummation by the Company and
the Subsidiaries of the transactions described in the Offering Memorandum under
the caption "Use of Proceeds" violates, conflicts with or constitutes a breach
of any of the terms or provisions of, or a default under (or an event that with
notice or the lapse of time, or both, would constitute a default), or requires
consent under, or will 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, except that
we express no opinion as to the matters addressed by the opinion of Kelley, Drye
& Warren LLP.
15. None of the Company or any Subsidiary is (i) an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended, or (ii) a
"holding company" or a "subsidiary company" or an "affiliate" of a holding
company within the meaning of the Public Utility Holding Company Act of 1935, as
amended.
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.
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
A-3
<PAGE> 33
Notes and the consummation of the transactions contemplated thereby as set forth
in the Offering Memorandum, will violate Regulations 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).
For purposes of this opinion, Subsidiaries means the
subsidiaries of the Company listed on Schedule 1 to this Agreement.
A-4
<PAGE> 34
EXHIBIT B
Form of Opinion of Kelley, Drye & Warren
B-1
<PAGE> 1
EXHIBIT 1.2
EXECUTION COPY
- --------------------------------------------------------------------------------
INTERMEDIA COMMUNICATIONS INC.
$364,000,000
12 1/4% Senior Subordinated Discount Notes due 2009
Senior Subordinated Note Purchase Agreement
February 19, 1999
BEAR, STEARNS & CO. INC.
MERRILL LYNCH & CO.
SALOMON SMITH BARNEY
NATIONSBANC MONTGOMERY SECURITIES LLC
WARBURG DILLON READ LLC
- --------------------------------------------------------------------------------
<PAGE> 2
INTERMEDIA COMMUNICATIONS INC.
$364,000,000
12 1/4% Senior Subordinated Discount Notes Due 2009
SENIOR SUBORDINATED NOTE PURCHASE AGREEMENT
February 19, 1998
New York, New York
BEAR, STEARNS & CO. INC.
MERRILL LYNCH & CO.
SALOMON SMITH BARNEY
NATIONSBANC MONTGOMERY SECURITIES LLC
WARBURG DILLON READ LLC
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., Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Salomon Smith Barney Inc.,
NationsBanc Montgomery Securities LLC and Warburg Dillon Read LLC (each, an
"Initial Purchaser" and collectively, the "Initial Purchasers") $364,000,000
aggregate principal amount at maturity of 12 1/4% Senior Subordinated Discount
Notes due 2009 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 Subordinated Notes. The Company proposes
to, upon the terms and subject to the conditions set forth herein, issue and
sell to the Initial Purchasers $364,000,000 aggregate principal amount at
maturity of 12 1/4% Senior Subordinated Discount Notes due 2009 (the "Senior
Subordinated Notes"). The Senior Subordinated 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 Schedules 1 and 2 hereto. The Subsidiaries listed on Schedule 2 are
in the process of being merged with and into the Company. 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 Subordinated Notes will be used for general corporate purposes,
including working capital and operating losses, and to fund a portion of the
cost of the 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 Securities Act of
1933, as amended (the "Act"), the Senior Subordinated Notes shall bear the
following legend:
<PAGE> 3
"THE SECURITY (OR ITS PREDECESSORS) EVIDENCED HEREBY
HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES
ACT OF 1933 (THE "SECURITIES ACT"), AND THE SECURITY
EVIDENCED HEREBY OR ANY INTEREST OR PARTICIPATION HEREIN MAY
NOT BE OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR
NOT SUBJECT TO, REGISTRATION. THE HOLDER OF THIS SECURITY BY
ITS ACCEPTANCE HEREOF AGREES (A) TO OFFER, SELL, PLEDGE OR
OTHERWISE TRANSFER THIS SECURITY ONLY (1) TO THE COMPANY, (2)
PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (3) TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS
DEFINED IN RULE 144A IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (4) PURSUANT TO OFFERS AND SALES
TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE
SECURITIES ACT, (5) TO AN INSTITUTIONAL "ACCREDITED INVESTOR"
(AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144 UNDER THE SECURITIES ACT OR (6) PURSUANT TO ANY
OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
UNDER THE SECURITIES ACT (AND IN THE CASE OF A TRANSFER
PURSUANT TO CLAUSE (5) OR (6), 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)
THAT IT 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 Subordinated Notes will be offered and
sold to the Initial Purchasers pursuant to an exemption from the registration
requirements under the Act. The Company has prepared a preliminary offering
memorandum, dated February 8, 1999 (the "Preliminary Offering Memorandum"), and
a final offering memorandum, dated February 19, 1999 the "Offering Memorandum"),
relating to the Company and the Senior Subordinated Notes.
The Initial Purchasers have advised the Company that the Initial
Purchasers will make offers (the "Exempt Resales") of the Senior Subordinated
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 referred to herein as the "Eligible
Purchasers." The Initial Purchasers will offer the Senior Subordinated Notes to
such Eligible Purchasers initially at a purchase price of 55.057% of the
principal amount at maturity of such Senior Subordinated Notes. Such price may
be changed at any time without notice.
2
<PAGE> 4
Holders (including subsequent transferees) of the Senior Subordinated
Notes will have the registration rights set forth in the registration rights
agreement relating thereto (the "Registration Rights Agreement"), to be dated
the Closing Date, for so long as such Senior Subordinated 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 Subordinated Notes for a new issue of 12 1/4%
Senior Subordinated Discount Notes due 2009 (the "Exchange Notes") to be
offered in exchange for the Senior Subordinated 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 Subordinated 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 Subordinated 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 Subordinated Notes set forth opposite its name
on Schedule 3 hereto. The purchase price for the Senior Subordinated Notes
shall be 53.818% of the principal amount at maturity thereof.
(b) Delivery to the Initial Purchasers of, and payment
by the Initial Purchasers for, the Senior Subordinated Notes shall be made at
the offices of Latham & Watkins, 885 Third Avenue, New York, NY 10022, or such
other location as may be mutually acceptable. Such delivery and payment shall
be made at 9:00 a.m. New York time, on February 24, 1999 or at such other time
as shall be agreed upon by the Initial Purchasers and the Company. The time and
date of such delivery and payment are herein called the "Closing Date."
(c) One or more Senior Subordinated Notes in global
form, (the "Global Securities"), registered in the name of Cede & Co. (the
"Global Security Holder"), as nominee of the Depository Trust Company ("DTC"),
having an aggregate principal amount at maturity corresponding to the aggregate
principal amount at maturity of the Senior Subordinated 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 Subordinated
3
<PAGE> 5
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 Subordinated 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 Subordinated Notes
under any state securities or Blue Sky laws, the Company shall use its best
efforts to obtain the withdrawal or lifting of such order at the earliest
possible time.
(b) To furnish the Initial Purchasers and those persons
identified by the Initial Purchasers to the Company, without charge, as many
copies of the Preliminary Offering Memorandum and the Offering Memorandum, and
any amendments or supplements thereto, as the Initial Purchasers may reasonably
request. The Company consents to the use of the Preliminary Offering Memorandum
and the Offering Memorandum, and any amendments and supplements thereto
required pursuant hereto, by the Initial Purchasers in connection with Exempt
Resales.
(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 Subordinated 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.
4
<PAGE> 6
(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
Subordinated Notes to the Initial Purchasers, (iv) the qualification or
registration of the Senior Subordinated 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 Subordinated Notes
(including, without limitation, printing and engraving thereof), (vii) the
fees, disbursements and expenses of the Company's counsel and accountants,
(viii) all expenses and listing fees in connection with the application for
quotation of the Senior Subordinated 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
Subordinated Notes by DTC for "book-entry" transfer, (x) rating the Senior
Subordinated Notes by rating agencies, (xi) the reasonable fees and expenses of
the Trustee and its counsel in connection with the Indenture and the Senior
Subordinated 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 Subordinated 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
Subordinated 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 Subordinated 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
Subordinated 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 Subordinated 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 Subordinated 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 Subordinated 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
Subordinated Notes in connection with any sale thereof and any prospective
purchaser
5
<PAGE> 7
of such Senior Subordinated Notes from such QIB or beneficial owner,
the information required by Rule 144A(d)(4) under the Act.
(l) In accordance with the terms of the Registration
Rights Agreement, to cause the Exchange Offer to be made in the appropriate
form to permit registered Senior Subordinated Notes to be offered in exchange
for the Senior Subordinated 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 Subordinated Notes by DTC for "book-entry" transfer.
(n) To use its best efforts to effect the inclusion of
the Senior Subordinated Notes in PORTAL and to obtain approval of the Senior
Subordinated Notes by DTC for "book-entry" transfer.
(o) During a period of five years following the Closing
Date, to deliver without charge to each of the Initial Purchasers, as they may
reasonably request, promptly upon their becoming available, copies of (i) all
reports or other publicly available information that the Company shall mail or
otherwise make available to its stockholders and (ii) all reports, financial
statements and proxy or information statements filed by the Company with the
Commission or any national securities exchange and such other publicly
available information concerning the Company or its Subsidiaries, including
without limitation, press releases.
(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
Subordinated 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
Subordinated 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 Subordinated 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:
6
<PAGE> 8
(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 Subordinated Notes are
issued and delivered pursuant to this Agreement, no Senior Subordinated 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
listed on Schedule 1 (A) has been duly organized and is validly existing as a
corporation in good standing under the laws of its respective jurisdiction of
incorporation, (B) has all requisite corporate power and authority to carry on
its business as it is currently being conducted and as described in the
Offering Memorandum and to own, lease and operate its properties, and (C) is
duly qualified and in good standing as a foreign corporation authorized to do
business in each jurisdiction in which the nature of its business or its
ownership or leasing of property requires such qualification except, with
respect to clauses (A) (as it relates to good standing) and (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 Subordinated 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").
(iv) Each of the Subsidiaries listed on Schedule
2 (A) has been duly organized and is validly existing as a corporation in good
standing under the laws of its respective jurisdiction of incorporation, (B)
has all requisite corporate power and authority to carry on its business as it
is currently being conducted and as described in the Offering Memorandum and to
own, lease and operate its properties, and (C) is duly qualified and in good
standing as a foreign corporation authorized to do business in each
jurisdiction in which the nature of its business or its ownership or leasing of
property requires such qualification except, with respect to clauses (A) and
(C), where the failure to be validly existing, qualified or in good standing
does not and could not reasonably be expected to individually or in the
aggregate, result in a Material Adverse Effect.
(v) The Company has no direct or indirect
subsidiaries as of the Closing Date other than the Subsidiaries. No Subsidiary
listed on Schedule 2 hereto is material to the
7
<PAGE> 9
business and operations of the Company or is 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.
(vi) 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. As of the dates specified in the Offering Memorandum under the
caption "Capitalization," on a combined basis, after giving effect to the
issuance and sale of the Senior Subordinated Notes pursuant hereto and to the
events stated therein, the Company had an authorized and outstanding
consolidated capitalization as set forth therein.
(vii) All of the outstanding capital stock of, or
other ownership interests in, 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 or instruments convertible into or exchangeable for, any capital stock
or other equity interest of the Company or any Subsidiary (other than options
issued pursuant to the Company's stock option plans, the 153,500 warrants each
to purchase 4.38 shares of Common Stock, a warrant to purchase 200,000 shares
of Common Stock, the 7% Series D Junior Convertible Preferred Stock (the
"Series D Preferred Stock"), the 7% Series E Junior Convertible Preferred Stock
(the "Series E Preferred Stock") and the 7% Series F Junior Convertible
Preferred Stock (the "Series F Preferred Stock"), and noting that at present
rights trade with the Common Stock).
(viii) 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 Subordinated Notes as provided herein and
therein.
(ix) 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 the Company 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.
(x) The Indenture has been duly and validly
authorized by the Company and, when duly executed and delivered by the Company,
will be the legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization or similar laws
affecting the rights of creditors generally and subject to general principles
of equity. The Offering Memorandum contains a fair summary of the terms of the
Indenture.
(xi) The Senior Subordinated 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
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<PAGE> 10
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 Subordinated Notes.
(xii) 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.
(xiii) 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.
(xiv) None of the Company or any Subsidiary is
and, after giving effect to the Offering, will not be (A) in violation of its
charter or bylaws, (B) in default in the performance of any bond, debenture,
note, indenture, mortgage, deed of trust or other agreement or instrument to
which it is a party or by which it is bound or to which any of its properties
is subject, or (C) in violation of any local, state or Federal law, statute,
ordinance, rule, regulation, requirement, judgment or court decree (including,
without limitation, the Communications Act and the rules and regulations of the
FCC and environmental laws, statutes, ordinances, rules, regulations, judgments
or court decrees) applicable to the Company or any Subsidiary or any of their
assets or properties (whether owned or leased) other than, in the case of
clauses (B) and (C), any default or violation that (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.
(xv) 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 Subordinated Notes and (C) the
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 any Subsidiary 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) are disclosed
in the Offering Memorandum. Other than as described in the Offering Memorandum,
no consent, approval, authorization or order of, or
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<PAGE> 11
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 Subordinated 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.
(xvi) 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
Subsidiary 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.
(xvii) 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 Subordinated 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
Subordinated Notes or prevents or suspends the sale of the Senior Subordinated
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.
(xviii) Except as set forth in the Offering
Memorandum, there is (i) no significant unfair labor practice complaint pending
against the Company or any Subsidiary nor, to the best knowledge of the
Company, threatened against any of them, before the National Labor Relations
Board, any state or local labor relations board or any foreign labor relations
board, and no significant grievance or significant arbitration proceeding
arising out of or under any collective bargaining agreement is so pending
against the Company or any Subsidiary nor, 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 any Subsidiary. 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
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<PAGE> 12
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.
(xix) 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.
(xx) 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 it 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 it
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 any Subsidiary 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.
(xxi) Each of the Company and the Subsidiaries
owns, possesses or has the right to employ all patents, patent rights, licenses
(including all FCC, state, local or other jurisdictional regulatory licenses),
inventions, copyrights, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, software, systems
or procedures), trademarks, service marks and trade names, inventions, computer
programs, technical data and information (collectively, the "Intellectual
Property") presently employed by it or its subsidiaries in connection with the
businesses now operated by it or which are proposed to be operated by it or its
subsidiaries free and clear of and without violating any right, claimed right,
charge, encumbrance, pledge, security interest, restriction or lien of any kind
of any other person and none of the Company or any Subsidiary has received any
notice of infringement of or conflict with asserted rights of others with
respect to any of the foregoing, 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.
(xxii) 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
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<PAGE> 13
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.
(xxiii) 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.
(xxiv) None of the Company or any Subsidiary is
(i) an "investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940, as amended
(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.
(xxv) Except as disclosed in the Offering
Memorandum, there are no holders of securities of the Company or any Subsidiary
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 Subsidiary registers under the Act or analogous
foreign laws and regulations securities held by them.
(xxvi) 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.
(xxvii) 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
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<PAGE> 14
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.
(xxviii) 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 Subordinated Notes or (ii) other than to the Initial Purchasers in
connection with the transactions contemplated hereby, 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 Subordinated Notes or
(B) paid or agreed to pay to any person any compensation for soliciting another
to purchase any other securities of the Company.
(xxix) No registration under the Act of the Senior
Subordinated 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 Subordinated 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 Subordinated 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
Subordinated 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.
(xxx) Set forth on Schedule 4 hereto is a list of
each employee pension 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 Subordinated Notes to be
purchased by the Eligible Purchasers will not involve any prohibited
transaction within the meaning of Section 406 of ERISA or Section 4975 of the
Internal Revenue Code of 1986. The representation made by the Company in the
preceding sentence is made in reliance upon, and subject to the accuracy of and
compliance with, the representations and covenants made or deemed made by the
Eligible Purchasers as set forth in the Offering Memorandum under the caption
"Notice to Investors."
(xxxi) 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.
(xxxii) 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, that 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, that 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 that could
reasonably be expected to result in a
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<PAGE> 15
Material Adverse Effect and (iv) there has been no dividend or distribution of
any kind declared, paid or made by the Company or any Subsidiary on any class
of its capital stock, except for dividends paid in respect of the Series B
Redeemable Exchangeable Preferred Stock due 2009 (the "Series B Preferred
Stock") the Series D Preferred Stock, the Series E Preferred Stock or the
Series F Preferred Stock.
(xxxiii) None of the execution, delivery and
performance of this Agreement, the issuance and sale of the Senior Subordinated
Notes, the application of the proceeds from the issuance and sale of the Senior
Subordinated Notes and the consummation of the transactions contemplated thereby
as set forth in the Offering Memorandum will violate Regulations T, U or X
promulgated by the Board of Governors of the Federal Reserve System or analogous
foreign laws and regulations.
(xxxiv) 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 and the other Operative
Documents; and such pro forma financial statements comply as to form in all
material respects with the requirements applicable to pro forma financial
statements included in registration statements on Form S-1 under the Act. The
other financial and statistical information and data included in the Offering
Memorandum, historical and pro forma, are accurately presented in all material
respects and prepared on a basis consistent with the financial statements,
historical and pro forma, included in the Offering Memorandum and the books and
records of the Company and its Subsidiaries, as applicable.
(xxxv) 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 Subordinated 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 Subordinated 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.
(xxxvi) 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 any Initial Purchaser for a brokerage
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<PAGE> 16
commission, finder's fee or like payment in connection with the issuance,
purchase and sale of the Senior Subordinated Notes.
(xxxvii) 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.
(xxxviii)Each of the Company and the 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 the Subsidiaries' Year 2000 date
conversion programs to be completed on a timely basis.
(xxxix) The Company acknowledges that each Initial
Purchaser 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 Initial Purchaser 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
Subordinated Notes.
(ii) Such Initial Purchaser (A) is not acquiring
the Senior Subordinated Notes with a view to any distribution thereof that
would violate the Act or the securities laws of any state of the United States
or any other applicable jurisdiction and (B) will be reoffering and reselling
the Senior Subordinated 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 any Initial Purchaser or any of their
representatives in connection with the offer and sale of any of the Senior
Subordinated 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 Initial Purchaser agrees that, in
connection with the Exempt Resales, it will solicit offers to buy the Senior
Subordinated Notes only from, and will offer to sell the Senior Subordinated
Notes only to, Eligible Purchasers. Each Initial Purchaser further agrees that
(A) it will offer to sell the Senior Subordinated Notes only to, and will
solicit offers to buy the Senior Subordinated Notes only from, QIBs who in
purchasing such Senior Subordinated Notes will be deemed to have represented
and agreed that they are purchasing the Senior Subordinated Notes for their own
accounts or accounts with respect to which they exercise sole investment
discretion and that they or such accounts are QIBs, (B) such Eligible
Purchasers will acknowledge and agree that such Senior Subordinated 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
that has been declared effective under the Act, (iii) to a person it reasonably
believes is a QIB in a transaction meeting the
15
<PAGE> 17
requirements of Rule 144A under the Act, (iv) to an institutional "accredited
investor" (as defined in Rule 501(a) (1), (2), (3) or (7) of Regulation D under
the 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 Subordinated 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 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) 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 Initial Purchaser 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 Subordinated 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 Initial Purchaser 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 Initial Purchaser, (ii) each person, if any, who controls any Initial
Purchaser 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 Initial Purchaser or any controlling person
to the fullest extent lawful, from and against any and all losses, liabilities,
claims, damages and expenses whatsoever (including, but not limited to,
attorneys' fees and any and all expenses whatsoever incurred in investigating,
preparing or defending against any investigation or litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid in settlement
of any claim or litigation), joint or several, to which they or any of them may
become subject under the Act, the Exchange Act or otherwise, insofar as such
losses, liabilities, claims, damages or expenses (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Preliminary Offering Memorandum
or the Offering Memorandum, or in any supplement thereto or amendment thereof,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that the Company will not be liable in
any such case to the extent, but only to the extent, that (i) any such loss,
liability, claim, damage or expense arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written information
furnished to the Company by or on behalf of the Initial Purchasers expressly
for use therein and (ii) the foregoing indemnity with respect to any untrue
statement contained in or omitted from a preliminary offering memorandum shall
not inure to the benefit of any Initial Purchaser (or any person controlling
such Initial Purchaser), from whom the person asserting any such loss,
liability, claim, damage or expense purchased any of the Senior Subordinated
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 Subordinated 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
16
<PAGE> 18
accordance with this Agreement and (y) the Offering Memorandum, as so amended
or supplemented, would have corrected such untrue statement or omission of a
material fact. This indemnity agreement will be in addition to any liability
which the Company may otherwise have, including under this Agreement.
(b) Each Initial Purchaser, severally and not jointly,
agrees to indemnify and hold harmless the Company and each person, if any, who
controls the Company within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, against any losses, liabilities, claims, damages and
expenses whatsoever (including, but not limited to, attorneys' fees and any and
all expenses whatsoever incurred in investigating, preparing or defending
against any investigation or litigation, commenced or threatened, or any claim
whatsoever and any and all amounts paid in settlement of any claim or
litigation), joint or several, to which they or any of them may become subject
under the Act, the Exchange Act or otherwise, insofar as such losses,
liabilities, claims, damages or expenses (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Preliminary Offering Memorandum or the Offering
Memorandum, or in any amendment thereof or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
in each case to the extent, but only to the extent, that any such loss,
liability, claim, damage or expense arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information furnished
to the Company by or on behalf of any Initial Purchaser expressly for use
therein; provided, however, that in no case shall any Initial Purchaser be
liable or responsible for any amount in excess of the discounts and commissions
received by such Initial Purchaser, as set forth on the cover page of the
Offering Memorandum. This indemnity will be in addition to any liability which
any Initial Purchaser may otherwise have, including under this Agreement.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 6 except to the extent that it
has been prejudiced in any material respect by such failure or from any
liability which it may otherwise have). In case any such action is brought
against any indemnified party, and it notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. Notwithstanding the foregoing, the
indemnified party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by 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
17
<PAGE> 19
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 any Initial Purchaser 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 Subordinated
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 Subordinated Notes (net of discounts but
before deducting expenses) received by the Company and (y) the discounts
received by the Initial Purchasers, respectively. The relative fault of the
Company and of the Initial Purchasers shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Initial Purchasers and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The Company and the Initial
Purchasers agree that it would not be just and equitable if contribution
pursuant to this Section 7 were determined by pro rata allocation or by any
other method of allocation which does not take into account the equitable
considerations referred to above. Notwithstanding the provisions of this
Section 7, (i) in no case shall any Initial Purchaser be required to contribute
any amount in excess of the amount by which the discount applicable to the
Senior Subordinated 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 any Initial Purchaser 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 Initial
Purchaser 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
18
<PAGE> 20
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
Subordinated Notes, as provided herein, shall be subject to the satisfaction of
the following conditions:
(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 Subordinated Notes in any jurisdiction referred to in Section 4(e) shall
have been issued and no proceeding for that purpose shall have been commenced
or shall be pending or threatened.
(c) No action shall have been taken and no statute,
rule, regulation or order shall have been enacted, adopted or issued by any
governmental agency which would, as of the Closing Date, prevent the issuance
of the Senior Subordinated 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 dividends paid in respect of the Series B Preferred
Stock, the Series D Preferred Stock, the Series E Preferred Stock or the Series
F 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.
19
<PAGE> 21
(e) The Initial Purchasers shall have received a
certificate, dated the Closing Date, signed on behalf of the Company by (i)
David C. Ruberg, Chairman of the Board, President and Chief Executive Officer
and (ii) Robert M. Manning, Senior Vice President and Chief Financial Officer,
in form and substance reasonably satisfactory to the Initial Purchasers,
confirming, as of the Closing Date, the matters set forth in paragraphs (a),
(b), (c) and (d) of this Section 8 and that, as of the Closing Date, the
obligations of the Company to be performed hereunder on or prior thereto have
been duly performed in all material respects.
(f) The Initial Purchasers shall have received on the
Closing Date an opinion, dated the Closing Date, in form and substance
satisfactory to the Initial Purchasers and counsel to the Initial Purchasers,
of Kronish, Lieb, Weiner & Hellman LLP, counsel for the Company, to the effect
set forth in Exhibit A 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 B hereto.
(h) The Initial Purchasers shall have received an
opinion, dated the Closing Date, in form and substance reasonably satisfactory
to the Initial Purchasers, of Latham & Watkins, counsel to the Initial
Purchasers, covering such matters as are customarily covered in such opinions.
(i) At the time this Agreement is executed and at the
Closing Date the Initial Purchasers shall have received from Ernst & Young LLP,
independent public accountants for the Company and its Subsidiaries, 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
20
<PAGE> 22
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 Subordinated Notes set forth in the last two sentences
of the second paragraph and the sixth 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 or any controlling
person thereof or by or on behalf of the Company or any controlling person
thereof, and shall survive delivery of and payment for the Senior Subordinated
Notes to and by the Initial Purchasers. The representations contained in
Section 5 and the agreements contained in Sections 4(f), 6, 7 and 11(d) shall
survive the termination of this Agreement, including any termination pursuant
to Section 11.
11. Effective Date of Agreement; Termination.
(a) This Agreement shall become effective upon execution
and delivery of a counterpart hereof by each of the parties hereto.
(b) The Initial Purchasers shall have the right to
terminate this Agreement at any time prior to the Closing Date by notice to the
Company from the Initial Purchasers, without liability (other than with respect
to Sections 6 and 7) on the Initial Purchasers' part to the Company if, on or
prior to such date, (i) the Company shall have failed, refused or been unable
to perform in any material respect any agreement on its part to be performed
hereunder, (ii) any other condition to the obligations of the Initial
Purchasers hereunder as provided in Section 8 is not fulfilled when and as
required in any material respect, (iii) in the reasonable judgment of the
Initial Purchasers any material adverse change shall have occurred, since the
respective dates as of which information is given in the Offering Memorandum,
in the condition (financial or otherwise), business, properties, assets,
liabilities, prospects, net worth, results of operations or cash flows of the
Company and the Subsidiaries taken as a whole, other than as set forth in the
Offering Memorandum, or (iv)(A) any domestic or international event or act or
occurrence has materially disrupted, or, in the opinion of the Initial
Purchasers, will in the immediate future materially disrupt, the market for the
Company's securities or for securities in general; or (B) trading in securities
generally on the New York or American Stock Exchanges shall have been suspended
or materially limited, or minimum or maximum prices for trading shall have been
established, or maximum ranges for prices for securities shall have been
required, on such exchange, or by such exchange or other regulatory body or
governmental authority having jurisdiction; or (C) a banking moratorium shall
have been declared by Federal or state authorities, or a moratorium in foreign
exchange trading by major international banks or persons shall have been
declared; or (D) there is an outbreak or escalation of armed hostilities
involving the United States on or after the date hereof, or if there has been a
declaration by the United States of a national emergency or war, the effect of
which shall be , in the Initial Purchasers' judgment, to make it inadvisable or
impracticable to proceed with the offering or delivery of the Senior
Subordinated 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
21
<PAGE> 23
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 Subordinated 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 Subordinated 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 telexed, telegraphed or
telecopied and confirmed in writing to 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 Subordinated 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 pages to follow]
22
<PAGE> 24
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:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:
--------------------------------
Name:
Title:
SALOMON SMITH BARNEY INC.
By:
--------------------------------
Name:
Title:
<PAGE> 25
NATIONSBANC MONTGOMERY SECURITIES LLC
By:
--------------------------------
Name:
Title:
WARBURG DILLON READ LLC
By:
--------------------------------
Name:
Title:
<PAGE> 26
SCHEDULE 1
Intermedia Communications Inc., a Virginia corporation
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.
Netwave Systems, Inc.
Express Communications, Inc.
National Telecommunications of Florida, Inc.
NTC, Inc.
<PAGE> 27
SCHEDULE 2
Long Distance Savers of the Metroplex, Inc.
LDS of Tulsa (Limited Partnership)
S-2
<PAGE> 28
SCHEDULE 3
<TABLE>
<CAPTION>
Principal Amount at
Maturity of
Senior Subordinated
Initial Purchaser Notes to
- ----------------- be Purchased
-------------------
<S> <C>
Bear, Stearns & Co. Inc. $ 218,400,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated 72,800,000
Salomon Smith Barney Inc. 36,400,000
NationsBanc Montgomery Securities LLC 18,200,000
Warburg Dillon Read LLC 18,200,000
-------------
Total $ 364,000,000
</TABLE>
S-3
<PAGE> 29
SCHEDULE 4
1. Intermedia Communications Inc. 401(k) Profit Sharing Plan
<PAGE> 30
EXHIBIT A
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 or in good standing would not, singly or in the
aggregate, have a Material Adverse Effect.
2. All of the outstanding shares of capital stock of the Company
have been duly authorized, validly issued, and are fully paid and nonassessable
and were not issued in violation of any preemptive or similar rights 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. All of the issued and outstanding capital stock of, or other
ownership interests in, 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, are
owned by the Company of record and, to our knowledge, after reasonable inquiry,
free and clear of any security interest, claim, lien, limitation on voting
rights or encumbrance. 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 or instruments convertible
into or exchangeable for, any capital stock or other equity interest of the
Company or any Subsidiary (other than options issued pursuant to the Company's
stock option plans, the 153,500 warrants each to purchase 4.38 shares of Common
Stock, a warrant to purchase 200,000 shares of Common Stock, the Series D
Preferred Stock, the Series E Preferred Stock and the Series F Preferred Stock,
and noting that at present rights trade with the Common Stock).
4. When the Senior Subordinated Notes are issued and delivered
pursuant to this Agreement, no Senior Subordinated 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 Subordinated 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.
A-1
<PAGE> 31
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 Subordinated 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 Subordinated Notes, the Indenture, and the Registration Rights
Agreement.
11. No registration under the Act of the Senior Subordinated
Notes is required for the sale of the Senior Subordinated 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
Subordinated 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 Subordinated 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),
(xxviii), (xxix) (other than with respect to the first sentence) and (xxxi) 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.
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.
A-2
<PAGE> 32
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 Subordinated Notes or (C) the consummation by the
Company and the Subsidiaries of the transactions described in the Offering
Memorandum under the caption "Use of Proceeds" violates, conflicts with or
constitutes a breach of any of the terms or provisions of, or a default under
(or an event that with notice or the lapse of time, or both, would constitute a
default), or requires consent under, or will 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 Subordinated 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 Subordinated Notes,
other than such consents and waivers as have been obtained or are being applied
for, except that we express no opinion as to the matters addressed by the
opinion of Kelley, Drye & Warren LLP.
15. None of the Company or any Subsidiary is (i) an "investment
company" or a company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended, or (ii) a "holding
company" or a "subsidiary company" or an "affiliate" of a holding company
within the meaning of the Public Utility Holding Company Act of 1935, as
amended.
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.
17. None of the execution, delivery and performance of this
Agreement, the issuance and sale of
A-3
<PAGE> 33
the Senior Subordinated Notes, the application of the proceeds from the
issuance and sale of the Senior Subordinated Notes and the consummation of the
transactions contemplated thereby as set forth in the Offering Memorandum, will
violate Regulations 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 Subordinated 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).
For purposes of this opinion, Subsidiaries means the subsidiaries of
the Company listed on Schedule 1 to this Agreement.
A-4
<PAGE> 34
EXHIBIT B
Form of Opinion of Kelley, Drye & Warren
B-1
<PAGE> 1
EXHIBIT 4.7
EXECUTION COPY
===============================================================================
INTERMEDIA COMMUNICATIONS INC.
$300,000,000
9 1/2% SENIOR NOTES DUE 2009
-----------------------------
--------------------
SENIOR NOTE INDENTURE
Dated as of February 24, 1999
--------------------
--------------------
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)................................................................................. 7.03; 7.10
(c)................................................................................. N.A.
311(a)................................................................................. 7.03; 7.11
(b)................................................................................. 7.03; 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; 4.04; 10.05
(b)................................................................................. N.A.
(c)(1).............................................................................. 10.04
(c)(2).............................................................................. 10.04
(c)(3).............................................................................. N.A.
(d)................................................................................. N.A.
(e)................................................................................. 10.05
(f)................................................................................. N.A.
315(a)................................................................................. 7.01; 7.02
(b)................................................................................. 7.05; 10.02
(c)................................................................................. 7.01
(d)................................................................................. 7.01
(e)................................................................................. 6.11
316(a)(last sentence).................................................................. 2.09
(a)(1)(A)........................................................................... 6.05
(a)(2).............................................................................. 6.04
(b)................................................................................. 6.06; 9.02
(c)................................................................................. 2.13; 9.04
317(a)(1).............................................................................. 6.08
(a)(2).............................................................................. 6.09
(b)................................................................................. 2.04
318(a)................................................................................. 10.01
(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> <C>
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE.............................................................1
SECTION 1.01. DEFINITIONS.........................................................................................1
SECTION 1.02. OTHER DEFINITIONS..................................................................................15
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT..................................................16
SECTION 1.04. RULES OF CONSTRUCTION..............................................................................16
ARTICLE 2. THE SENIOR NOTES......................................................................................17
SECTION 2.01. FORM AND DATING....................................................................................17
SECTION 2.02. EXECUTION AND AUTHENTICATION.......................................................................17
SECTION 2.03. REGISTRAR AND PAYING AGENT.........................................................................18
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST................................................................18
SECTION 2.05. HOLDER LISTS.......................................................................................19
SECTION 2.06. TRANSFER AND EXCHANGE..............................................................................19
SECTION 2.07. REPLACEMENT NOTES..................................................................................30
SECTION 2.08. OUTSTANDING NOTES..................................................................................31
SECTION 2.09. TREASURY NOTES.....................................................................................31
SECTION 2.10. TEMPORARY NOTES....................................................................................31
SECTION 2.11. CANCELLATION.......................................................................................32
SECTION 2.12. DEFAULTED INTEREST.................................................................................32
SECTION 2.13. RECORD DATE........................................................................................32
SECTION 2.14. CUSIP NUMBER.......................................................................................32
ARTICLE 3. REDEMPTION AND CERTAIN REPURCHASES....................................................................32
SECTION 3.01. NOTICES TO TRUSTEE.................................................................................32
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED..................................................................33
SECTION 3.03. NOTICE OF REDEMPTION...............................................................................33
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.....................................................................34
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE........................................................................34
SECTION 3.06. SENIOR NOTES REDEEMED IN PART......................................................................34
SECTION 3.07. OPTIONAL REDEMPTION................................................................................35
SECTION 3.08. MANDATORY REDEMPTION...............................................................................35
SECTION 3.09. OFFER TO PURCHASE WITH EXCESS ASSET SALE PROCEEDS..................................................35
ARTICLE 4. COVENANTS.............................................................................................37
SECTION 4.01. PAYMENT OF NOTES...................................................................................37
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY....................................................................38
SECTION 4.03. REPORTS............................................................................................38
SECTION 4.04. COMPLIANCE CERTIFICATE.............................................................................39
SECTION 4.05. TAXES..............................................................................................39
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.....................................................................40
SECTION 4.07. RESTRICTED PAYMENTS................................................................................40
</TABLE>
i
<PAGE> 4
<TABLE>
<CAPTION>
Page
<S> <C> <C>
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING
SUBSIDIARIES....................................................................................43
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED STOCK......................................44
SECTION 4.10. ASSET SALES........................................................................................46
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.......................................................................47
SECTION 4.12. LIENS..............................................................................................48
SECTION 4.13. LIMITATIONS ON SALE AND LEASEBACK TRANSACTIONS.....................................................48
SECTION 4.14. CORPORATE EXISTENCE................................................................................48
SECTION 4.15. OFFER TO PURCHASE UPON CHANGE OF CONTROL...........................................................48
SECTION 4.16. BUSINESS ACTIVITIES................................................................................49
SECTION 4.17. PAYMENTS FOR CONSENT...............................................................................49
SECTION 4.18. USE OF PROCEEDS....................................................................................50
ARTICLE 5. SUCCESSORS............................................................................................50
SECTION 5.01. MERGER, CONSOLIDATION OR SALE OF ASSETS............................................................50
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED..................................................................51
ARTICLE 6. DEFAULTS AND REMEDIES.................................................................................51
SECTION 6.01. EVENTS OF DEFAULT..................................................................................51
SECTION 6.02. ACCELERATION.......................................................................................53
SECTION 6.03. OTHER REMEDIES.....................................................................................53
SECTION 6.04. WAIVER OF PAST DEFAULTS............................................................................53
SECTION 6.05. CONTROL BY MAJORITY................................................................................54
SECTION 6.06. LIMITATION ON SUITS................................................................................54
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT......................................................54
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.........................................................................55
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM...................................................................55
SECTION 6.10. PRIORITIES.........................................................................................55
SECTION 6.11. UNDERTAKING FOR COSTS..............................................................................56
ARTICLE 7. TRUSTEE...............................................................................................56
SECTION 7.01. DUTIES OF TRUSTEE..................................................................................56
SECTION 7.02. RIGHTS OF TRUSTEE..................................................................................57
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.......................................................................57
SECTION 7.04. TRUSTEE'S DISCLAIMER...............................................................................58
SECTION 7.05. NOTICE OF DEFAULTS.................................................................................58
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE SENIOR NOTES..................................................58
SECTION 7.07. COMPENSATION AND INDEMNITY.........................................................................58
SECTION 7.08. REPLACEMENT OF TRUSTEE.............................................................................59
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC...................................................................60
SECTION 7.10. ELIGIBILITY, DISQUALIFICATION......................................................................60
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY..................................................60
ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE..............................................................60
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE...........................................60
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
Page
<S> <C> <C>
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.....................................................................60
SECTION 8.03. COVENANT DEFEASANCE................................................................................61
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...............................................................................63
SECTION 8.07. REINSTATEMENT......................................................................................63
ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER......................................................................64
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF SENIOR NOTES.........................................................64
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............................................................66
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC....................................................................66
ARTICLE 10. MISCELLANEOUS........................................................................................66
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 DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS....................................................................................68
SECTION 10.08. GOVERNING LAW.....................................................................................68
SECTION 10.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.....................................................69
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
</TABLE>
EXHIBITS
Exhibit A FACE OF NOTE
Exhibit B FORM OF CERTIFICATE OF TRANSFER
Exhibit C FORM OF CERTIFICATE OF EXCHANGE
Exhibit D FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL ACCREDITED
INVESTOR
<PAGE> 6
INDENTURE dated as of February 24, 1999 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 9 1/2% Senior
Notes due 2009 (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> 7
"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 which such shares are listed or
admitted to
2
<PAGE> 8
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 had been owned by the
Company since the first day of such period. If any Indebtedness (including,
without
3
<PAGE> 9
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> 10
(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.
"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
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<PAGE> 11
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 $500.0 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 Senior Notes issued in Exchange Offer
pursuant to Section 2.06(f) hereof.
"Exchange Offer" has the meaning set forth in the Senior Note
Registration Rights Agreement.
"Exchange Offer Registration Statement" has the meaning set forth in
the Senior 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, the Company's 8 1/2% Senior Notes due
2008 and the Company's 8.60% 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.
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<PAGE> 12
"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: (i) borrowed money; (ii)
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof); (iii) the balance
deferred and unpaid of the purchase price of any property (including pursuant
to capital leases); or (iv) 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
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<PAGE> 13
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 Senior Note 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., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Salomon Smith Barney Inc., NationsBanc
Montgomery Securities LLC and Warburg Dillon Read LLC, 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 February 24, 1999.
"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 Senior Note Registration Rights Agreement.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease
in the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or
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<PAGE> 14
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 March 1, 2004, 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 March 1, 2004.
"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 March 1, 2004.
"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
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<PAGE> 15
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.
"Offering" means the offering of the Senior Notes pursuant to the
Offering Memorandum.
"Offering Memorandum" means the offering memorandum of the Company,
dated February 19, 1999, 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 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
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<PAGE> 16
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; (i)
bonds, notes, debentures or other securities received as a result of Asset
Sales permitted under Section 4.10 hereof; and (j) the Investment deemed to
have been made by the Company at such time as the Web Hosting Subsidiary ceases
to be a Subsidiary of the Company by reason of the issuance or sale of Equity
Interests in the Web Hosting Subsidiary to the extent that the book value of
such Investment at the time such Investment is deemed to have been made does
not exceed $200.0 million in the aggregate.
"Permitted Liens" means (i) Liens securing Indebtedness (including
Capital Lease Obligations) permitted to be incurred pursuant to Sections
4.09(b)(i), 4.09(b)(ii) and 4.09(b)(iv) hereof; (ii) Liens in favor of the
Company; (iii) Liens on property of a Person existing at the time such Person
is merged into or consolidated with the Company or any Subsidiary of the
Company; provided that such Liens were in existence prior to the contemplation
of such merger or consolidation and do not extend to any assets other than
those of the Person merged into or consolidated with the Company; (iv) Liens on
property existing at the time of acquisition thereof by the Company or any
Subsidiary of the Company, provided that such Liens were in existence prior to
the contemplation of such acquisition; (v) Liens to secure the performance of
statutory obligations, surety or appeal bonds, performance bonds or other
obligations of a like nature incurred in the ordinary course of business; (vi)
Liens existing on the Issue Date; (vii) Liens for taxes, assessments or
governmental charges or claims that are not yet delinquent or that are being
contested in good faith by appropriate proceedings timely instituted and
diligently concluded, provided that any reserve or other appropriate provision
as shall be required in conformity with GAAP shall have been made therefor;
(viii) Liens incurred in the ordinary course of business of the Company or any
Subsidiary of the Company with respect to obligations that do not exceed $5.0
million at any one time outstanding and that (a) are not incurred in connection
with the borrowing of money or the obtaining of advances or credit (other than
trade credit in the ordinary course of business) and (b) do not in the
aggregate materially detract from the value of the property or materially
impair the use thereof in the operation of business by the Company or such
Subsidiary; (ix) Liens on Telecommunications Related Assets existing during the
time of the construction thereof; (x) Liens on Receivables to secure
Indebtedness permitted to be incurred pursuant to Section 4.09(b) hereof, but
only to the extent that the outstanding amount of the Indebtedness secured by
such Liens would not represent more than 80% of Eligible Receivables; and (xi)
Liens to secure any Permitted Refinancing of any Indebtedness secured by Liens
referred to in the foregoing clauses (i), (iii), (v) or (x); but only to the
extent that such Liens do not extend to any other property or assets and the
principal amount of the Indebtedness secured by such Liens is not increased.
"Person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity.
"Preferred Stock" as applied to the Capital Stock of any Person, means
Capital Stock of such Person of any class or classes (however designated) that
ranks prior, as to payment of dividends or as to the distribution of assets
upon any voluntary or involuntary liquidation, dissolution or winding up of
such Person, to shares of Capital Stock of any other class of such Person.
"Private Placement Legend" means the legend set forth in Section
2.06(g)(i) to be placed on all Notes issued under this Indenture except where
otherwise permitted by the provisions of this Indenture.
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<PAGE> 17
"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.
"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.
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"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.
"Senior Note Registration Rights Agreement" means the Senior Note
Registration Rights Agreement dated as of the date hereof between the Company
and the Initial Purchasers in respect of the Senior Notes.
"Senior Subordinated Note Indenture" means the indenture governing the
Senior Subordinated Notes, as amended or supplemented from time to time.
"Senior Subordinated Notes" means the Company's 12 1/4% Senior
Subordinated Discount Notes due 2009.
"Shelf Registration Statement" means the Shelf Registration Statement
as defined in the Senior 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> 19
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. ss.ss.
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 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
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<PAGE> 20
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: (i) in connection with the acquisition or construction of
Telecommunications Related Assets; and (ii) to pay regularly scheduled interest
on such Indebtedness pursuant to the terms thereof.
"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.
"Web Hosting Subsidiary" means the Subsidiary of the Company
substantially all of the assets of which consist of assets used exclusively in
the conduct of the Company's Internet Web hosting business.
"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
</TABLE>
15
<PAGE> 21
<TABLE>
<CAPTION>
Defined in
Term Section
<S> <C>
"Commission"............................................... 4.03
"Covenant Defeasance"...................................... 8.03
"Event of Default"......................................... 6.01
"Excess Proceeds".......................................... 4.10
"Excess Proceeds Offer".................................... 3.09
"incur".................................................... 4.09
"Legal Defeasance"......................................... 8.02
"Offer Amount"............................................. 3.09
"Offer Period"............................................. 3.09
"Paying Agent"............................................. 2.03
"Payment Default".......................................... 6.01
"Permitted Refinancing".................................... 4.09
"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 Senior 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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(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.
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.
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<PAGE> 23
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.
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
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<PAGE> 24
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 ss.
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 ss. 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Global Securities. A Global Security may
not be transferred as a whole except by the Depositary to a nominee of the
Depositary, by a nominee of the Depositary to the Depositary or to another
nominee of the Depositary, or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary. All Global
Securities will be exchanged by the Company for Certificated Securities if (i)
the Company delivers to the Trustee notice from the Depositary that it is
unwilling or unable to continue to act as Depositary or that it is no longer a
clearing agency registered under the Exchange Act and, in either case, a
successor Depositary is not appointed by the Company within 120 days after the
date of such notice from the Depositary or (ii) the Company in its sole
discretion determines that the Global Securities (in whole but not in part)
should be exchanged for Certificated Securities and delivers a written notice
to such effect to the Trustee. Upon the occurrence of either of the preceding
events in (i) or (ii) above, Certificated Securities shall be issued in such
names as the Depositary shall instruct the Trustee. Global Securities also may
be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and
2.10 hereof. Every Senior Note authenticated and delivered in exchange for, or
in lieu of, a Global Security or any portion thereof, pursuant to this Section
2.06 or Section 2.07 or 2.10 hereof, shall be authenticated and delivered in
the form of, and shall be, a Global Security. A Global Security may not be
exchanged for another Senior Note other than as provided in this Section
2.06(a), however beneficial interests in a Global Security may be transferred
and exchanged as provided in Section 2.06(b), (c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global
Securities. The transfer and exchange of beneficial interests in the Global
Securities shall be effected through the Depositary, in accordance with the
provisions of this Indenture and the Applicable Procedures. Beneficial
interests in the Restricted Global Securities shall be subject to restrictions
on transfer comparable to those set forth herein to the extent required by the
Securities Act. The Trustee shall have no obligation to ascertain the
Depositary's compliance with any such restrictions on transfer. Transfers of
beneficial interests in the 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
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<PAGE> 25
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 Senior 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
(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.
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<PAGE> 26
(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 Senior 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 Senior 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 Senior 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.
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.
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<PAGE> 27
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 that listed in subparagraph (B) 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,
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
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<PAGE> 28
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 Senior 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 Senior 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 Senior 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 Senior 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.
(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
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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 Senior
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 Senior 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 Senior 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 that listed in subparagraph (B)
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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(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 appropriate Global Security.
(ii) A holder of Restricted Certificated Securities may
exchange such Senior 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 Senior 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 Senior 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 Senior Note Registration
Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such Certificated Securities
proposes to exchange such Senior 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 (l)(c)
thereof;
(2) if the holder of such Certificated Securities
proposes to transfer such Senior 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
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Securities are being exchanged or transferred in
compliance with any applicable blue sky securities
laws of any State of the United States.
Upon satisfaction of the conditions of any of the subparagraphs in
this Section 2.06(d)(ii), the Trustee shall cancel the Certificated
Securities and increase or cause to be increased the aggregate
principal amount of the Unrestricted Global Security.
(iii) A holder of Unrestricted Certificated Securities may
exchange such Senior 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.
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(ii) Restricted Certificated Securities may be exchanged by any
holder thereof for an Unrestricted Certificated Security or
transferred to Persons who take delivery thereof in the form of an
Unrestricted Certificated Security if:
(A) such exchange or transfer is effected pursuant to
the Exchange Offer in accordance with the Senior 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 Senior 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 Senior Note Registration
Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such Restricted Certificated
Securities proposes to exchange such Senior 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 Senior 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 Senior 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 Senior 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
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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) Unrestricted 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 Senior Notes, the Trustee shall cause the aggregate
principal amount of the applicable Restricted Global Securities to be reduced
accordingly, and the Company shall execute and the Trustee shall authenticate
and deliver to the Persons designated by the holders of Certificated Securities
so accepted Certificated Securities in the appropriate principal amount.
(g) Legends. The following legends shall appear on the face of all
Global Securities and Certificated Securities issued under this Indenture
unless specifically stated otherwise in the applicable provisions of this
Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (b) below, each
Global Security and each Certificated Security (and all Senior
Notes issued in exchange therefor or substitution thereof)
shall bear the legend in substantially the following form:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY HAS
NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE
SECURITY EVIDENCED HEREBY OR ANY INTEREST OR
PARTICIPATION HEREIN MAY NOT BE OFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED
OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
REGISTRATION. THE HOLDER OF THIS SECURITY BY ITS
ACCEPTANCE HEREOF AGREES (A) TO OFFER, SELL, PLEDGE OR
OTHERWISE TRANSFER THIS SECURITY ONLY (1) TO THE
COMPANY, (2) PURSUANT TO A REGISTRATION STATEMENT WHICH
HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT,
(3) TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (4)
PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT
OCCUR OUTSIDE THE UNITED STATES IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT,
(5) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501 (a)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT) OR (6) PURSUANT TO ANY OTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE
SECURITIES ACT (AND IN THE CASE OF A TRANSFER PURSUANT
TO CLAUSE (5) OR (6), BASED ON AN OPINION OF COUNSEL IF
THE COMPANY SO
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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) THAT IT WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE
SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS
SET FORTH IN (A) ABOVE."
(B) Notwithstanding the foregoing, any Global Security
or Certificated Security issued pursuant to subparagraphs
(b)(iv), (c)(ii), (c)(iii), (d)(ii), (d)(iii), (e)(ii),
(e)(iii) or (f) to this Section 2.06 (and all Senior Notes
issued in exchange therefor or substitution thereof) shall not
bear the Private Placement Legend.
(ii) Global Security Legend. Each Global Security shall bear a
legend in substantially the following form:
"THIS GLOBAL SECURITY IS HELD BY THE DEPOSITARY (AS
DEFINED IN THE INDENTURE GOVERNING THIS SENIOR 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.
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(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Global
Securities and Certificated Securities upon the Company's order or at
the Registrar's request.
(ii) No service charge shall be made to a holder of a
beneficial interest in a Global Security or to a holder of a
Certificated Security for any registration of transfer or exchange,
but the Company may require payment of a sum sufficient to cover any
transfer tax or similar governmental charge payable in connection
therewith (other than any such transfer taxes or similar governmental
charge payable upon exchange or transfer pursuant to Sections 2.10,
3.06, 4.10, 4.15 and 9.05 hereof).
(iii) The Registrar shall not be required to register the
transfer of or exchange any Senior Note selected for redemption in
whole or in part, except the unredeemed portion of any Senior Note
being redeemed in part.
(iv) All Global Securities and Certificated Securities issued
upon any registration of transfer or exchange of Global Securities or
Certificated Securities shall be the valid obligations of the Company,
evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Global Securities or Certificated Securities
surrendered upon such registration of transfer or exchange.
(v) The Company shall not be required (A) to issue, to register
the transfer of or to exchange Senior Notes during a period beginning
at the opening of business 15 days before the day of any selection of
Senior Notes for redemption under Section 3.02 hereof and ending at
the close of business on the day of selection, (B) to register the
transfer of or to exchange any Senior Note so selected for redemption
in whole or in part, except the unredeemed portion of any Senior Note
being redeemed in part or (C) to register the transfer of or to
exchange a Senior Note between a record date and the next succeeding
Interest Payment Date.
(vi) Prior to due presentment for the registration of a
transfer of any Senior Note, the Trustee, any Agent and the Company
may deem and treat the Person in whose name any Senior 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 Senior Note, the Company shall issue and the Trustee, upon
the written order of the Company signed by one Officer 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
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<PAGE> 36
agent from any loss that any of them may suffer if a Senior Note is replaced.
The Company may charge for its expenses in replacing a Senior Note.
Every replacement Senior 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 Senior Note does not
cease to be outstanding because the Company or an Affiliate of the Company
holds the Senior Note.
If a Senior Note is replaced pursuant to Section 2.07 hereof, it
ceases to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced Senior Note is held by a bona fide purchaser.
If the principal amount of any Senior Note is considered paid under
Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to
accrue.
If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) segregates and holds in trust, in accordance with
this Indenture, on a redemption date or maturity date, money sufficient to pay
all principal and interest, if any, payable on that date with respect to the
Senior Notes (or the portion thereof to be redeemed or maturing, as the case
may be), then on and after that date such Senior Notes (or portions thereof)
shall be deemed to be no longer outstanding and shall cease to accrue interest.
SECTION 2.09. TREASURY NOTES.
In determining whether the holders of the required principal amount of
Senior Notes have concurred in any direction, waiver or consent, Senior Notes
owned by the Company, or an Affiliate of the Company, shall be considered as
though not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Senior Notes that a Trustee knows are so owned shall be so disregarded.
SECTION 2.10. TEMPORARY NOTES.
Until definitive Senior Notes are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Senior Notes upon a
written order of the Company signed by one Officer 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.
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SECTION 2.11. CANCELLATION.
The Company at any time may deliver Senior Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Senior Notes surrendered to them for registration of transfer, exchange or
payment. The Trustee and no one else shall cancel all Senior Notes surrendered
for registration of transfer, exchange, payment, replacement or cancellation
and shall destroy cancelled Senior Notes (subject to the record retention
requirement of the Exchange Act), unless the Company directs cancelled Senior
Notes to be returned to it. Certification of the destruction of all cancelled
Senior Notes shall be delivered to the Company for all certificates so
destroyed. The Company may not issue new Senior Notes to replace Senior Notes
that it has redeemed, paid or delivered to the Trustee for cancellation.
SECTION 2.12. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Senior Notes,
it shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
holders on a subsequent special record date, which date shall be at the
earliest practicable date but in all events at least five Business Days prior
to the payment date, in each case at the rate provided in the Senior Notes and
in Section 4.01 hereof. The Company shall fix or cause to be fixed each such
special record date and payment date, provided that the Company shall fix or
cause to be fixed each such special record date as early as practicable prior
to the payment date, and the Company shall mail or cause to be mailed as early
as practicable to each holder a notice that states the special record date, the
related payment date and the amount of defaulted interest to be paid.
SECTION 2.13. RECORD DATE.
The record date for purposes of determining the identity of holders of
the Senior Notes entitled to vote or consent to any action by vote or consent
authorized or permitted under this Indenture shall be determined as provided
for in TIA 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.
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SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED.
If less than all of the Senior Notes are to be redeemed at any time,
except as provided in Section 3.09, the Trustee shall select the Senior Notes
to be redeemed or purchased in compliance with the requirements of the
principal national securities exchange, if any, on which the Senior Notes are
listed, or, if the Senior Notes are not so listed, on a pro rata basis, by lot
or in accordance with any other method the Trustee considers fair and
appropriate (and in such manner as complies with applicable legal and stock
exchange requirements, if any), provided that no Senior Notes with a principal
amount of $1,000 or less shall be redeemed or purchased in part. A new Senior
Note in principal amount equal to the unredeemed or unpurchased portion shall
be issued in the name of the holder thereof upon cancellation of the original
Senior 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 Senior 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 Senior Note is being redeemed in part, the portion of
the principal amount of such Senior Note to be redeemed and that,
after the redemption date upon surrender of such Senior Note, a new
Senior 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;
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<PAGE> 39
(f) that, unless the Company defaults in making such redemption
payment, interest on Senior Notes (or portions thereof) called for
redemption ceases to accrue on and after the redemption date;
(g) the paragraph of the Senior Notes and/or section of this
Indenture pursuant to which the Senior Notes called for redemption are
being redeemed; and
(h) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed on
the Senior Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that
the Company shall have delivered to the Trustee, at least 45 days (unless,
except as set forth above, a shorter period is acceptable to the Trustee) prior
to the redemption date, an Officers' Certificate requesting that the Trustee
give such notice and setting forth the information to be stated in such notice
as provided in the preceding paragraph.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Senior Notes called for redemption become due and payable on the
redemption date at the redemption price stated in such notice. A notice of
redemption may not be conditional.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.
On or prior to the redemption date, the Company shall deposit with the
Trustee or with the Paying Agent (or, if the Company or a Subsidiary is the
Paying Agent, shall segregate and hold in trust) immediately available funds
sufficient to pay the redemption price of and accrued interest, if any, on all
Senior Notes to be redeemed on that date. The Trustee or the Paying Agent shall
promptly return to the Company any funds deposited with the Trustee or the
Paying Agent by the Company in excess of the amounts necessary to pay the
redemption price of, and accrued interest, if any, on, all Senior Notes to be
redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Senior Notes or the portions of Senior Notes called for redemption. If a
Senior 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 Senior Note was registered at the
close of business on such record date. If any Senior 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.
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SECTION 3.07. OPTIONAL REDEMPTION.
(a) Except as set forth in Section 3.07(b) below, prior to March 1,
2004, 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 March 1, 2004, 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, 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 March 1 of the
years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2004.................................................................... 104.750%
2005.................................................................... 103.167%
2006.................................................................... 101.583%
2007 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 March 1, 2002 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 109.50% of the principal amount thereof
plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the
redemption date, provided that: (1) at least 75 % of the aggregate principal
amount of the Senior Notes originally issued remains outstanding immediately
after the occurrence of such redemption; and (2) 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 and/or accreted value, as applicable, 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
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<PAGE> 41
interest and Liquidated Damages thereon, if any, to the date fixed for the
closing of such offer, in accordance with the procedures specified below.
The Excess Proceeds Offer shall remain open for a period of 20
Business Days following its commencement and no longer, except to the extent
that a longer period is required by applicable law (the "Offer Period"). No
later than five Business Days after the termination of the Offer Period (the
"Purchase Date"), the Company shall purchase the maximum accreted value or
principal amount, as the case may be, of Senior Notes and Pari Passu Notes that
may be purchased with such Excess Proceeds (on a pro rata basis if Senior Notes
and Pari Passu Notes tendered is in excess of the Excess Proceeds) (which
maximum principal amount of Senior Notes shall be the "Offer Amount") or, if
less than the Offer Amount has been tendered, all Senior Notes and Pari Passu
Notes tendered in response to the Excess Proceeds Offer, subject to the
provisions of Section 4.10 hereof.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued interest on the Senior
Notes shall be paid to the Person in whose name a Senior Note is registered at
the close of business on such record date, and no additional interest shall be
payable to holders who tender Senior Notes pursuant to the Excess Proceeds
Offer on the portion of the tendered Senior Notes purchased pursuant to the
Excess Proceeds Offer.
Upon the commencement of any Excess Proceeds Offer, the Company shall
send, by first class mail, a notice to the Trustee and each of the holders of
the Senior Notes, with a copy to the Trustee. The notice shall contain all
instructions and materials necessary to enable such holders to tender Senior
Notes pursuant to the Excess Proceeds Offer. The Excess Proceeds Offer shall be
made to all holders. The notice, which shall govern the terms of the Excess
Proceeds Offer, shall state:
(a) that the Excess Proceeds Offer is being made pursuant to Sections
3.09 and 4.10 hereof and the length of time the Excess Proceeds Offer
shall remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Senior Note or portion thereof not tendered or accepted
for payment shall continue to accrue interest;
(d) that any Senior Note or portion thereof accepted for payment
pursuant to the Excess Proceeds Offer shall cease to accrue interest after
the Purchase Date;
(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
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<PAGE> 42
Amount, the Trustee shall select the Senior Notes to be purchased on a
pro rata basis as described above (with such adjustments as may be
deemed appropriate by the Trustee so that only Senior Notes in
denominations of $1,000, or integral multiples thereof, shall be
purchased); and
(h) that holders whose Senior Notes were purchased only in part shall
be issued new Senior Notes equal in principal amount to the unpurchased
portion of the Senior Notes surrendered (or transferred by book-entry
transfer).
On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a pro rata basis (as described above) to the
extent necessary, the Offer Amount of Senior Notes, Pari 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, Pari Passu Notes or
portions thereof tendered, and deliver to the Trustee an Officers' Certificate
stating that such Senior Notes, Pari 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 3.09 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 Senior 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
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<PAGE> 43
(without regard to any applicable grace period) at the same rate to the extent
lawful until such overdue installments of interest are paid.
The term "Bankruptcy Law" means title 11, U.S. Code or any similar
federal or state law for the relief of debtors.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain an office or agency (which may be an office
of the Trustee or an affiliate of the Trustee, Registrar or co-registrar) where
Senior Notes may be surrendered for registration of transfer or exchange and
where notices and demands to or upon the Company in respect of the Senior Notes
and this Indenture may be served. The Company shall give prompt written notice
to the Trustee of the location, and any change in the location, of such office
or agency. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at
the Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Senior Notes may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency for such
purposes. The Company shall give prompt written notice to the Trustee of any
such designation or rescission and of any change in the location of any such
other office or agency.
The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.03 hereof.
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> 44
(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> 45
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 (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:
(1) no Default or Event of Default has occurred and is
continuing or would occur as a consequence thereof;
(2) after giving effect to such Restricted Payment on a
pro forma basis as if such Restricted Payment had been made at
the beginning of the applicable four-quarter period, the
Company could incur at least $1.00 of additional Indebtedness
pursuant to the Consolidated Cash Flow Leverage Ratio test set
forth in Section 4.09(a) hereof; and
(3) such Restricted Payment, together with the aggregate
of all other Restricted Payments made by the Company and its
Subsidiaries after the Issue Date (including any Restricted
Payments made pursuant to clauses (i), (v) and (vi) of Section
4.07(b)), is less than the sum of
(w) 50% of the Consolidated Net Income of the
Company for the period (taken as one accounting period)
from June 30, 1996 to the end of the Company's most
recently ended fiscal quarter for which internal
financial statements are
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<PAGE> 46
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, and (3) has
no scheduled principal payments due in any amount earlier than, any
equivalent amount of principal under the Indebtedness so Retired;
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(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 of that term set forth in Section 1.01 hereof, shall
become a Restricted Investment, deemed to have been made on the date that it
ceases to be a Permitted Investment.
(d) The Board of Directors may designate any Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Default or an
Event of Default pursuant to Article 6 hereof. For purposes of making such
determination, all outstanding Investments by the Company and its Subsidiaries
(except to the extent repaid in cash) in such Subsidiary so designated shall be
deemed to be Restricted Payments at the time of such designation and shall
reduce the amount available for Restricted Payments under paragraph (a) of this
Section 4.07. All such outstanding Investments will be deemed to constitute
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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;
(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
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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;
(i) the Senior Subordinated Note Indenture and the Senior Subordinated
Notes or future Indebtedness with substantially similar restrictions, if
any, to the Senior Subordinated Notes; or
(j) in the case of clauses (a), (c), (e), (g), (h) and (i) 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
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 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 incurrence or issuance occurs after June 1, 1999, in each case,
determined on a pro forma basis (including a pro forma application of the net
proceeds therefrom), as if the additional Indebtedness had been incurred, or
the Disqualified Stock had been issued, as the case may be, at the beginning of
such four-quarter period. If the Company incurs any Indebtedness or issues or
redeems any Preferred Stock subsequent to the commencement of the period for
which such ratio is being calculated but prior to the event for which the
calculation of the ratio is made, then the ratio will be calculated giving pro
forma effect to any such incurrence of Indebtedness, or such issuance or
redemption of Preferred Stock, as if the same had occurred at the beginning of
the applicable period. In making such calculation on a pro forma basis,
interest attributable to Indebtedness bearing a floating interest rate shall be
computed as if the rate in effect on the date of computation had been the
applicable rate for the entire period.
(b) The foregoing limitation in Section 4.09(a) shall not apply to
(with each exception to be given independent effect):
(i) the incurrence by the Company and/or any of its
Subsidiaries of Indebtedness under a 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
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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 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;
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(vii) the incurrence by the Company or any of its Subsidiaries
of intercompany Indebtedness between or among the Company and any of
its Subsidiaries;
(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; and
(ix) the incurrence by the Company of Indebtedness represented
by the Senior Notes and the Senior Subordinated Notes, in each case,
issued on the Issue Date.
For purposes of determining compliance with this Section 4.09, in the
event that an item of Indebtedness or Disqualified Stock meets the criteria of
more than one of the categories described in clauses (i) through (ix) 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 of the Company),
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
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(c) except with respect to an Asset Sale constituting the
issuance or sale of Equity Interests in the Web Hosting Subsidiary, 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, at its option, 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); or (iii) in the case of net cash proceeds realized upon the
issuance or sale of Equity Interests in the Web Hosting Subsidiary, fund cash
operating losses, provide working capital and for general corporate purposes.
Any Net Proceeds from any Asset Sales that are not so applied or invested as
provided in the preceding sentence, shall constitute "Excess Proceeds." When
the aggregate amount of Excess Proceeds exceeds $10.0 million, the Company
shall be required to make an Excess Proceeds Offer in accordance with the terms
of Section 3.09 hereof.
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its Subsidiaries
to, sell, lease, transfer or otherwise dispose of any of their respective
properties or assets to, or purchase any property or assets from, or enter into
any contract, agreement, understanding, loan, advance or guarantee with, or for
the benefit of, any Affiliate (each of the foregoing, an "Affiliate
Transaction"), unless: (i) such Affiliate Transaction is on terms that are no
less favorable to the Company or the relevant Subsidiary than those that would
have been obtained in a comparable transaction by the Company or such
Subsidiary with an unrelated Person; (ii) such Affiliate Transaction is
approved by a majority of the disinterested directors on the Board of Directors
of the Company; and (iii) the Company delivers to the Trustee, with respect to
any Affiliate Transaction involving aggregate payments in excess of $1.0
million, a resolution of a committee of independent directors of the Company
set forth in an Officers' Certificate certifying that such Affiliate
Transaction complies with clauses (i) and (ii) above; provided that: (a)
transactions pursuant to any employment, stock option or stock purchase
agreement entered into by the Company or any of its Subsidiaries, or any grant
of stock, in the ordinary course of business that are approved by the Board of
Directors of the Company; (b) transactions between or among the Company and its
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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 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
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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.
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
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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 or to pay regularly scheduled interest on the Senior
Notes pursuant to their terms.
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 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
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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;
(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
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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;
(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.
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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 Senior Note in exercising any
right or remedy accruing upon an Event of Default shall not impair the right or
remedy or constitute a waiver of or acquiescence in the Event of Default. All
remedies are cumulative to the extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
Holders of 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.
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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 Senior Note gives to the Trustee written notice
of a continuing Event of Default;
(ii) the holders of at least 25% in principal amount of the then
outstanding Senior Notes make a written request to the Trustee to pursue
the remedy;
(iii) such holder of a Senior Note or holders of the Senior Notes
offer and, if requested, provide to the Trustee indemnity satisfactory to
the Trustee against any loss, liability or expense; and
(iv) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer and, if requested, the
provision of indemnity.
Otherwise, no holder of any Senior Note shall have any right to
institute any proceeding with respect to this Indenture or the Senior Notes or
for any remedy thereunder, except:
(x) a holder of a Senior Note may institute suit for enforcement of
payment of the principal of and premium, if any, or interest on such Senior
Note on or after the respective due dates expressed in such Senior Note
(including upon acceleration thereof) or
(y) the institution of any proceeding with respect to this Indenture
or the Senior Notes or any remedy thereunder, including without limitation
acceleration, by the holders of a majority in principal amount of the
outstanding Senior Notes; provided that, upon institution of any proceeding or
exercise of any remedy such holders provide the Trustee with prompt written
notice thereof.
A holder of a Senior Note may not use this Indenture to prejudice the
rights of another holder of a Senior Note or to obtain a preference or priority
over another holder of a Senior Note.
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of
any holder of a Senior Note to receive payment of principal, premium and
Liquidated Damages, if any, and interest on the Senior 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.
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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 Senior 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 Senior Note any
plan of reorganization, arrangement, adjustment or composition affecting the
Senior Notes or the rights of any holder of a Senior Note thereof, or to
authorize the Trustee to vote in respect of the claim of any holder of a Senior
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
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Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any such
payment to holders of Senior Notes.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to a suit by the Trustee, a suit by a holder
of a Senior Note pursuant to Section 6.07 hereof, or a suit by holders of more
than 10% in principal amount of the then outstanding Senior Notes.
ARTICLE 7.
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture,
and shall use the same degree of care and skill in their exercise as a prudent
man would exercise or use under the circumstances in the conduct of his own
affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform only
those duties that are specifically set forth in this Indenture and no
others, and no implied covenants or obligations shall be read into
this Indenture against the Trustee, and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture. However, the Trustee shall examine the certificates
and opinions to determine whether or not they conform to the
requirements of this Indenture.
(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
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(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), and (c) of this Section 7.01.
(e) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any holders of Senior Notes, unless such holder shall have provided
to the Trustee security and indemnity satisfactory to the Trustee against any
loss, liability or expense.
(f) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company. Money held
in trust by the Trustee need not be segregated from other funds except to the
extent required by law.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any document believed by it
to be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the advice of such counsel or any Opinion of Counsel shall be full
and complete authorization and protection from liability in respect of any
action taken, suffered or omitted by it hereunder in good faith and in reliance
thereon.
(c) The Trustee may act through its attorneys and agents and shall not
be responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights
or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(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.
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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 Senior Note, the
Trustee may withhold the notice if and so long as a committee of its
Responsible Officers in good faith determines that withholding the notice is in
the interests of the holders of the Senior Notes.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE SENIOR NOTES.
Within 60 days after each May 15th beginning with the May 15th
following the date of this Indenture, the Trustee shall mail to the holders of
the Senior Notes a brief report dated as of such reporting date that complies
with TIA 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 if 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
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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's payment obligations in this Section 7.07, the
Trustee shall have a Lien prior to the Senior Notes on all money or property
held or collected by the Trustee, except that held in trust to pay principal,
premium, if any, interest and Liquidated Damages, if any, on particular Senior
Notes. Such Lien shall survive the satisfaction and discharge of this
Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(g) or (h) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents
and counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section 7.08.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The holders of a majority
in principal amount of the then outstanding Senior Notes may remove the Trustee
by so notifying the Trustee and the Company in writing. The Company may remove
the Trustee if:
(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.
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A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to holders of the Senior Notes. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee, provided
all sums owing to the Trustee hereunder have been paid and subject to the Lien
provided for in Section 7.07 hereof. Notwithstanding replacement of the Trustee
pursuant to this Section 7.08, the Company's obligations under Section 7.07
hereof shall continue for the benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee.
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,
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which shall thereafter be deemed to be "outstanding" only for the purposes of
Section 8.05 hereof and the other sections of this Indenture referred to in (a)
and (b) below, and to have satisfied all of its other obligations under such
Senior Notes and this Indenture (and the Trustee, on demand of and at the
expense of the Company, shall execute proper instruments acknowledging the
same), except for the following which shall survive until otherwise terminated
or discharged hereunder: (a) the rights of holders of outstanding Senior Notes
to receive from the trust described below payments in respect of the principal
of, premium, if any, and interest on and Liquidated Damages with respect to
such Senior Notes when such payments are due, or on the redemption date, as the
case may be; (b) the Company's obligations with respect to the Senior Notes
concerning issuing temporary Senior Notes, registration of Senior Notes,
mutilated, destroyed, lost or stolen Senior Notes and the maintenance of an
office or agency for payment and money for security 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(c) 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
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principal of, premium, if any, or interest on or Liquidated Damages
with respect to the outstanding Senior Notes;
(b) In the case of Legal Defeasance, the Company shall have delivered
to the Trustee an opinion of counsel in the United States reasonably
acceptable to the Trustee confirming that (i) the Company has received
from, or there has been published by, the Internal Revenue Service a
ruling or (ii) since the Issue Date, there has been a change in the
applicable federal income tax law, in either case to the effect that, and
based thereon such opinion of counsel shall confirm that, the holders of
the outstanding Senior Notes will not recognize income, gain or loss for
federal income 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
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<PAGE> 68
8.05, the "Trustee") pursuant to Section 8.04 hereof in respect of the
outstanding Senior Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Senior Notes and this Indenture, to the
payment, either directly or through any Paying Agent (including the Company
acting as Paying Agent) as the Trustee may determine, to the holders of such
Senior Notes of all sums due and to become due thereon in respect of principal,
premium, if any, and interest, but such money and Government Securities
(including any proceeds thereof) need not be segregated from other funds except
to the extent required by law.
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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<PAGE> 69
ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF SENIOR NOTES.
Notwithstanding Section 9.02 hereof, the Company and the Trustee may
amend or supplement this Indenture or the Senior Notes without the consent of
any holder of Senior Notes:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Senior Notes in addition to or in
place of certificated Senior Notes;
(c) to provide for the assumption of the Company's obligations to
holders of the Senior Notes in the case of a merger or
consolidation;
(d) to make any change that would provide any additional rights or
benefits to the holders of the Senior Notes or that does not
adversely affect the legal rights under this Indenture of any
such holder; or
(e) to comply with requirements of the Commission in order to effect
or maintain the qualification of this Indenture under the Trust
Indenture Act.
Upon the request of the Company accompanied by a resolution of the
Board of Directors of the Company authorizing the execution of any such amended
or supplemental Indenture, and upon receipt by the Trustee of the documents
described in Section 9.06 hereof, the Trustee shall join with the Company in
the execution of any amended or supplemental Indenture authorized or permitted
by the terms of this Indenture and to make any further appropriate agreements
and stipulations which may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supplemental Indenture which affects
its own rights, duties or immunities under this Indenture or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF SENIOR NOTES.
The Company and the Trustee may amend or supplement this Indenture or
the Senior Notes or any amended or supplemental Indenture with the written
consent of the holders of Senior Notes of at least a majority in aggregate
principal amount of the Senior Notes then outstanding (including consents
obtained in connection with a tender offer or exchange offer for the Senior
Notes), and any existing Default and its consequences or compliance with any
provision of this Indenture or the Senior Notes may be waived with the consent
of the holders of a majority in principal amount of the then outstanding Senior
Notes (including consents obtained in connection with a tender offer or
exchange offer for the Senior Notes).
Upon the request of the Company accompanied by a resolution of the
Board of Directors of the Company authorizing the execution of any such amended
or supplemental Indenture, and upon the filing with the Trustee of evidence
satisfactory to the Trustee of the consent of the holders of Senior Notes as
aforesaid, and upon receipt by the Trustee of the documents described in
Section 9.06 hereof, the Trustee shall join with the Company in the execution
of such amended or supplemental Indenture unless such amended or supplemental
Indenture affects the Trustee's own rights, duties or immunities under this
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.
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<PAGE> 70
It shall not be necessary for the consent of the holders of Senior
Notes under this Section 9.02 to approve the particular form of any proposed
amendment or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Company shall mail to the holders of Senior Notes
affected thereby a notice briefly describing the amendment, supplement or
waiver. Any failure of the Company to mail such notice, or any defect therein,
shall not, however, in any way impair or affect the validity of any such
amended or supplemental Indenture or waiver. Subject to Sections 6.04 and 6.07
hereof, the holders of a majority in aggregate principal amount of the Senior
Notes then outstanding may waive compliance in a particular instance by the
Company with any provision of this Indenture or the Senior Notes. However,
without the consent of each holder affected, an amendment or waiver may not
(with respect to any Senior Notes held by a non-consenting holder of Senior
Notes):
(i) reduce the principal amount of Senior Notes whose holders must
consent to an amendment, supplement or waiver;
(ii) reduce the principal of or change the fixed maturity of any
Senior 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 Senior 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.
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 Senior
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
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<PAGE> 71
Senior Note or subsequent holder of a Senior 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 meeting
the requirements of this Article 9, provided that, in the judgment of the
Trustee, the amendment or supplement does not adversely affect the rights,
duties, liabilities or immunities of the Trustee or the holders of Senior
Notes. The Company may not sign an amendment or supplemental Indenture until
the Board of Directors approves it.
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:
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<PAGE> 72
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.
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 3 12(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:
67
<PAGE> 73
(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 3 14(a)(4)) shall include:
(a) a statement that the Person making such certificate or opinion has
read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
satisfied; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.
SECTION 10.06. RULES BY TRUSTEE AND AGENTS.
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 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.
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<PAGE> 74
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.
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]
69
<PAGE> 75
SIGNATURES
Dated as of February 24, 1999 INTERMEDIA COMMUNICATIONS INC.
By:
--------------------------
Name:
Title:
Attest:
- --------------------------------------
Name:
Title:
Dated as of February 24, 1999 SUNTRUST BANK, CENTRAL FLORIDA,
NATIONAL ASSOCIATION
Trustee
By:
----------------------------
Name:
Title:
Attest:
- ---------------------------------------
Name:
Title:
<PAGE> 76
EXHIBIT A
(Face of Note)
9 1/2% Senior Note due 2009
No. $__________
CUSIP No.
INTERMEDIA COMMUNICATIONS INC.
promises to pay to Cede & Co.
or its registered assigns,
the principal sum of $_____________
on March 1, 2009.
Interest Payment Dates: March 1 and September 1, commencing September 1, 1999.
Record Dates: February 15 and August 15 (whether or not a Business Day).
Dated: February 24, 1999 INTERMEDIA COMMUNICATIONS INC.
By:
---------------------------
Title:
Trustee's Certification of Authentication
Dated: February 24, 1999
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> 77
Back of Note
9 1/2% Senior Note due 2009
THIS GLOBAL SECURITY IS HELD BY THE DEPOSITARY (AS DEFINED IN
THE INDENTURE GOVERNING THIS SENIOR 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 HAS NOT
BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY OR
ANY INTEREST OR PARTICIPATION HEREIN MAY NOT BE OFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT
FROM, OR NOT SUBJECT TO, REGISTRATION. THE HOLDER OF THIS SECURITY BY
ITS ACCEPTANCE HEREOF AGREES (A) TO OFFER, SELL, PLEDGE OR OTHERWISE
TRANSFER THIS SECURITY ONLY (1) TO THE COMPANY, (2) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (3) TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144A, (4) PURSUANT TO OFFERS AND SALES TO
NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT, (5) TO
AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501 (a)(1),
(2), (3) OR (7) UNDER THE SECURITIES ACT) OR (6) PURSUANT TO ANY OTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE
SECURITIES ACT (AND IN THE CASE OF A TRANSFER PURSUANT TO CLAUSE (5)
OR (6), 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) THAT IT 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.
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 9 1/2% and will be payable semi-annually, in arrears, on
A-2
<PAGE> 78
March 1 and September 1 of each year, commencing on September 1, 1999 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 February 15 and August 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 Senior Note. The
Company may act in any such capacity.
4. Indenture. The Company issued the Senior Notes under a Senior Note
Indenture, dated as of February 24, 1999 (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 $300,000,000 in aggregate
principal amount of Senior Notes.
5. Optional Redemption. Prior to March 1, 2004, 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 March 1, 2004, 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 March 1 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2004.................................................................... 104.750%
2005.................................................................... 103.167%
2006.................................................................... 101.583%
2007.................................................................... 100.000%
</TABLE>
A-3
<PAGE> 79
Notwithstanding the provisions of Section 3.07(a) of the Indenture, in
the event of the sale by the Company prior to March 1, 2002 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 109.50% of the principal amount thereof
plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the
redemption date; provided that (i) at least 75% of the aggregate principal
amount of the Senior Notes originally issued remains outstanding immediately
after the occurrence of such redemption; and (ii) 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 and/or accreted value, as applicable, of Senior Notes
and Pari Passu Notes that may be purchased out of the Excess Proceeds, at an
offer price in cash in an amount equal to 100% of the outstanding principal
amount of the Senior Notes and 100% of the accreted value or 100% of the
outstanding principal amount, as applicable, of the Pari Passu Notes, plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the date
fixed for the closing of such accordance with the procedures set forth in
Section 3.09 of the Indenture. If the principal amount and/or aggregate
accreted value, as the case may be, of Senior Notes and Pari Passu Notes
surrendered by holders thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the Senior Notes and Pari Passu Notes to be purchased on a
pro rata basis (with such adjustments as may be deemed appropriate by the
Company so that only Senior Notes and Pari Passu Notes in denominations of
$1,000, or integral multiples thereof shall be purchased). Holders of Senior
Notes that are the subject of an offer to purchase will receive an Excess
Proceeds Offer from the Company prior to any related purchase date and may
elect to have such Senior Notes purchased by completing the form entitled
"Option of Holder to Elect Purchase" appearing below.
8. Notice of Redemption. Notice of redemption shall be mailed by first
class mail at least 30 days but not more than 60 days before the redemption
date to each holder of Senior Notes to be redeemed 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.
A-4
<PAGE> 80
9. Denominations, Transfer, Exchange. The Senior Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Senior Notes may be registered and Senior
Notes may be exchanged as provided in the Indenture. The Registrar and the
Trustee may require a holder of a Senior Note, among other things, to furnish
appropriate endorsements and transfer documents and the Company may require a
holder of a Senior Note to pay any taxes and fees required by law or permitted
by the Indenture. Neither the Company nor the Registrar need exchange or
register the transfer of any Senior Note or portion of a Senior Note selected
for redemption. Also, neither the Company nor the Registrar need exchange or
register the transfer of any Senior Notes for a period of 15 days before a
selection of Senior Notes to be redeemed.
10. Persons Deemed Owners. Prior to due presentment to the Trustee for
registration of the transfer of this Senior Note, the Trustee, any Agent and
the Company shall deem and treat the Person in whose name this Senior Note is
registered as its absolute owner for the purpose of receiving payment of
principal of, premium, Liquidated Damages, if any, and interest on this Senior
Note and for all other purposes whatsoever, whether or not this Senior Note is
overdue, and neither the Trustee, any Agent nor the Company shall be affected
by notice to the contrary. The registered holder of a Senior Note shall be
treated as its owner for all purposes.
11. Amendments, Supplement and Waivers. Subject to certain exceptions,
the Indenture or the Senior Notes may be amended or supplemented with the
consent of the holders of at least a majority in principal amount of the Senior
Notes then outstanding (including consents obtained in connection with a tender
offer or exchange offer for Senior Notes), and any existing default or
compliance with any provision of the Indenture or the Senior Notes may be
waived with the consent of the holders of a majority in principal amount of the
then outstanding Senior Notes (including consents obtained in connection with a
tender offer or exchange offer for Senior Notes). Without the consent of any
holder of a Senior Note, the Indenture or the Senior Notes may be amended or
supplemented to cure any ambiguity, defect or inconsistency; to provide for
uncertificated Senior Notes in addition to or in place of certificated Senior
Notes; to provide for the assumption of the Company's obligations to holders of
the Senior Notes in case of a merger or consolidation; to make any change that
would provide any additional rights or benefits to the holders of the Senior
Notes or that does not adversely affect the legal rights under the Indenture of
any such holder; or to comply with the requirements of the Commission in order
to effect or maintain the qualification of the Indenture under the Trust
Indenture Act. However, without the consent of each holder affected, an
amendment or waiver may not (with respect to any Senior Notes held by a
non-consenting holder of Senior Notes) reduce the principal amount of Senior
Notes whose holders must consent to an amendment, supplement or waiver; reduce
the principal of or change the fixed maturity of any Senior Note or alter the
provisions with respect to the redemption of the Senior Notes (other than a
payment required by Section 3.09 or Section 4.15 of the Indenture); reduce the
rate of or change the time for payment of interest on any Senior Notes; waive a
Default or Event of Default in the payment of principal of or premium, if any,
or interest on the Senior Notes (except a rescission of acceleration of the
Senior Notes by the holders of at least a majority in aggregate principal
amount of the Senior Notes and a waiver of the payment default that resulted
from such acceleration); make any Senior Note payable in money other than that
stated in the Senior Notes; make any change in the provisions of the Indenture
relating to waivers of past Defaults or the rights of holders of Senior Notes
to receive payments of principal of, premium, if any, or interest on the Senior
Notes; waive a redemption payment with respect to any Senior Note (other than a
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
A-5
<PAGE> 81
Senior Notes at maturity, upon redemption or otherwise; failure by the Company
to perform or comply with the provisions described under Sections 4.07, 4.09,
4.10, 4.15 or 5.01 of the Indenture; failure by the Company for 30 days after
notice from the Trustee or the holders of at least 25% in principal amount of
the Senior Notes then outstanding to comply with its other agreements in the
Indenture or the Senior Notes; default under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any of its
Subsidiaries (or the payment of which is guaranteed by the Company or any of its
Subsidiaries), whether such Indebtedness or Guarantee now exists, or is created
after the Issue Date, which default (x) is caused by a Payment Default, and the
principal amount of any such Indebtedness, together with the principal amount of
any other such Indebtedness of the Company or any Significant Subsidiary under
which there has been a Payment Default or the maturity of which has been
accelerated as provided in clause (y), aggregates $5.0 million or more or (y)
results in the acceleration (which acceleration has not been rescinded) of such
Indebtedness prior to its express maturity and the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $5.0 million or more; failure by the Company or any
of its Subsidiaries to pay final judgments (other than any judgment as to which
a reputable insurance company has accepted full liability in writing)
aggregating in excess of $5.0 million which judgments are not paid, discharged
or stayed within 45 days after their entry; and certain events of bankruptcy or
insolvency with respect to the Company or any of its Significant Subsidiaries.
If any Event of Default occurs and is continuing, the Trustee or the holders of
at least 25 % in principal amount of the then outstanding Senior Notes may
declare all the Senior Notes to be due and payable immediately. Upon such
declaration, the principal of, premium, if any, and accrued and unpaid interest
and Liquidated Damages, if any, on the Senior Notes shall be due and payable
immediately. Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency with respect to the
Company or any of its Significant Subsidiaries, the foregoing amount shall ipso
facto become due and payable without further action or notice. Holders of the
Senior Notes may not enforce the Indenture or the Senior Notes except as
provided in the Indenture. The holders of a majority in aggregate principal
amount of the Senior Notes then outstanding, by notice to the Trustee, may on
behalf of the holders of all of the Senior Notes, waive any existing Default or
Event of Default and its consequences under the Indenture, except a continuing
Default or Event of Default in the payment of interest or Liquidated Damages or
premium on, or the principal of, the Senior Notes.
13. Trustee Dealings with Company. The Trustee under the Indenture, in
its individual or any other capacity, may make loans to, accept deposits from,
and perform services for the Company or its Affiliates, and may otherwise deal
with the Company or its Affiliates, as if it were not Trustee; however, if the
Trustee acquires any conflicting interest, it must eliminate such conflict
within 90 days, apply to the Commission for permission to continue as Trustee
or resign.
14. No Personal Liabilities of Directors, Officers, Employees and
Stockholders. No director, officer, employee, incorporator or stockholder of
the Company, as such, shall have any liability for any obligations of the
Company under the Senior Notes or the Indenture or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each holder of
the Senior Notes by accepting a Senior Note waives and releases all such
liability. The waiver and release are part of the consideration for issuance of
the Senior Notes.
15. Authentication. This Senior Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
A-6
<PAGE> 82
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 Senior Note Registration Rights Agreement.
18. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Senior Notes and has directed the Trustee to
use CUSIP numbers in notices of redemption as a convenience to holders of
Senior Notes. No representation is made as to the accuracy of such numbers
either as printed on the Senior Notes or as contained in any notice of
redemption and reliance may be placed only on the other identification numbers
placed thereon.
The Company will furnish to any holder of a Senior Note upon written
request and without charge a copy of the Indenture. Request may be made to:
Intermedia Communications Inc.
3625 Queen Palm Drive
Tampa, Florida 33619
Attention: Chief Financial Officer
A-7
<PAGE> 83
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> 84
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> 85
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL SECURITY
The following exchanges of a part of this Global Security for an
interest in another Global Security or for a Certificated Security, or
exchanges of a part of another Global Security or Certificated Security for an
interest in this Global Security, have been made:
<TABLE>
<CAPTION>
Principal Amount
of
Amount of decrease Amount of increase in this Global Security Signature of
in Principal Amount Principal Amount following such authorized officer
of of decrease (or of Trustee or Note
Dated of Exchange this Global Security this Global Security increase) Custodian
----------------- -------------------- -------------------- --------- ---------
<S> <C> <C> <C> <C>
</TABLE>
<PAGE> 86
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: 9 1/2% Senior Notes due 2009
Reference is hereby made to the Senior Note Indenture, dated as of
February 24, 1999 (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):
B-1
<PAGE> 87
(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 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
B-2
<PAGE> 88
printed on the Restricted Global Security or Certificated Securities bearing the
Private Placement Legend and in the Indenture.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
----------------------------
[NAME OF TRANSFEROR]
By:
----------------------------------
Name:
Title:
Dated:_______________, _____
B-3
<PAGE> 89
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> 90
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: 9 1/2% Senior Notes due 2009
(CUSIP ____________
Reference is hereby made to the Senior Note Indenture, dated as of
February 24, 1999 (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
C-1
<PAGE> 91
Legend are not 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] [ ] 144A Global Security, [ ] IAI Global Security, (i) the
Restricted Book-Entry Interests 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> 92
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> 93
EXHIBIT D
FORM OF CERTIFICATE OF
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: 9 1/2% Senior Notes due 2009
Reference is hereby made to the Senior Note Indenture, dated as of
February 24, 1999 (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 any other available exemption from the registration requirements
under the Securities Act, provided that, prior to such transfer, we furnish 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 or (E)
pursuant to an effective registration statement under the Securities Act, and
we
D-1
<PAGE> 94
further agree to provide to any person purchasing the Certificated Securities or
Book-Entry 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.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(l), (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 4.8
EXECUTION COPY
================================================================================
INTERMEDIA COMMUNICATIONS INC.
$364,000,000
12 1/4% SENIOR SUBORDINATED DISCOUNT NOTES DUE 2009
------------------------------------------
--------------------
SENIOR SUBORDINATED NOTE INDENTURE
Dated as of February 24, 1999
--------------------
--------------------
SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION
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Trustee
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<PAGE> 2
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Trust Indenture
Act Section Indenture Section
<S> <C> <C>
310 (a)(1).............................................................................. 7.10
(a)(2).............................................................................. 7.10
(a)(3).............................................................................. N.A.
(a)(4).............................................................................. N.A.
(a)(5).............................................................................. 7.10
(b)................................................................................. 7.03; 7.10
(c)................................................................................. N.A.
311 (a)................................................................................. 7.03; 7.11
(b)................................................................................. 7.03; 7.11
(c)................................................................................. N.A.
312 (a)................................................................................. 2.05
(b)................................................................................. 11.03
(c)................................................................................. 11.03
313 (a)................................................................................. 7.06
(b)(1).............................................................................. N.A.
(b)(2).............................................................................. 7.06
(c)................................................................................. 7.06; 11.02
(d)................................................................................. 7.06
314 (a)................................................................................. 4.03; 4.04; 11.05
(b)................................................................................. N.A.
(c)(1).............................................................................. 11.04
(c)(2).............................................................................. 11.04
(c)(3).............................................................................. N.A.
(d)................................................................................. N.A.
(e)................................................................................. 11.05
(f)................................................................................. N.A.
315 (a)................................................................................. 7.01; 7.02
(b)................................................................................. 7.05; 11.02
(c)................................................................................. 7.01
(d)................................................................................. 7.01
(e)................................................................................. 6.11
316 (a)(last sentence).................................................................. 2.09
(a)(1)(A)........................................................................... 6.05
(a)(2).............................................................................. 6.04
(b)................................................................................. 6.06; 9.02
(c)................................................................................. 2.13; 9.04
317 (a)(1).............................................................................. 6.08
(a)(2).............................................................................. 6.09
(b)................................................................................. 2.04
318 (a)................................................................................. 11.01
(b)................................................................................. N.A.
(c)................................................................................. 11.01
</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 1
SECTION 1.01. DEFINITIONS.....................................................1
SECTION 1.02. OTHER DEFINITIONS..............................................18
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT..............19
SECTION 1.04. RULES OF CONSTRUCTION..........................................19
ARTICLE 2. THE SENIOR SUBORDINATED NOTES 20
SECTION 2.01. FORM AND DATING................................................20
SECTION 2.02. EXECUTION AND AUTHENTICATION...................................20
SECTION 2.03. REGISTRAR AND PAYING AGENT.....................................21
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST............................22
SECTION 2.05. HOLDER LISTS...................................................22
SECTION 2.06. TRANSFER AND EXCHANGE..........................................22
SECTION 2.07. REPLACEMENT NOTES..............................................36
SECTION 2.08. OUTSTANDING NOTES..............................................36
SECTION 2.09. TREASURY NOTES.................................................36
SECTION 2.10. TEMPORARY NOTES................................................37
SECTION 2.11. CANCELLATION...................................................37
SECTION 2.12. DEFAULTED INTEREST.............................................37
SECTION 2.13. RECORD DATE....................................................38
SECTION 2.14. CUSIP NUMBER...................................................38
ARTICLE 3. REDEMPTION AND CERTAIN REPURCHASES 38
SECTION 3.01. NOTICES TO TRUSTEE.............................................38
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED..............................38
SECTION 3.03. NOTICE OF REDEMPTION...........................................39
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.................................40
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE....................................40
SECTION 3.06. SENIOR SUBORDINATED NOTES REDEEMED IN PART.....................40
SECTION 3.07. OPTIONAL REDEMPTION............................................41
SECTION 3.08. MANDATORY REDEMPTION...........................................41
SECTION 3.09. OFFER TO PURCHASE WITH EXCESS ASSET SALE PROCEEDS..............42
ARTICLE 4. COVENANTS 44
SECTION 4.01. PAYMENT OF NOTES...............................................44
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY................................44
SECTION 4.03. REPORTS .......................................................45
SECTION 4.04. COMPLIANCE CERTIFICATE.........................................46
SECTION 4.05. TAXES .........................................................46
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.................................47
SECTION 4.07. RESTRICTED PAYMENTS............................................47
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES.50
</TABLE>
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<TABLE>
<S> <C>
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED STOCK..52
SECTION 4.10. ASSET SALES....................................................54
SECTION 4.11. TRANSACTIONS WITH AFFILIATES...................................56
SECTION 4.12. LIENS .........................................................56
SECTION 4.13. LIMITATIONS ON SALE AND LEASEBACK TRANSACTIONS.................56
SECTION 4.14. CORPORATE EXISTENCE............................................57
SECTION 4.15. OFFER TO PURCHASE UPON CHANGE OF CONTROL.......................57
SECTION 4.16. BUSINESS ACTIVITIES............................................58
SECTION 4.17. PAYMENTS FOR CONSENT...........................................58
SECTION 4.18. NO SENIOR SUBORDINATED DEBT....................................58
ARTICLE 5. SUCCESSORS 59
SECTION 5.01. MERGER, CONSOLIDATION OR SALE OF ASSETS........................59
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED..............................60
ARTICLE 6. DEFAULTS AND REMEDIES 60
SECTION 6.01. EVENTS OF DEFAULT..............................................60
SECTION 6.02. ACCELERATION...................................................62
SECTION 6.03. OTHER REMEDIES.................................................62
SECTION 6.04. WAIVER OF PAST DEFAULTS........................................62
SECTION 6.05. CONTROL BY MAJORITY............................................63
SECTION 6.06. LIMITATION ON SUITS............................................63
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT..................64
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.....................................64
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM...............................64
SECTION 6.10. PRIORITIES.....................................................65
SECTION 6.11. UNDERTAKING FOR COSTS..........................................65
ARTICLE 7. TRUSTEE 66
SECTION 7.01. DUTIES OF TRUSTEE..............................................66
SECTION 7.02. RIGHTS OF TRUSTEE..............................................67
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE...................................67
SECTION 7.04. TRUSTEE'S DISCLAIMER...........................................67
SECTION 7.05. NOTICE OF DEFAULTS.............................................68
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE SENIOR SUBORDINATED NOTES.68
SECTION 7.07. COMPENSATION AND INDEMNITY.....................................68
SECTION 7.08. REPLACEMENT OF TRUSTEE.........................................69
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC...............................70
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION..................................70
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY..............70
ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE 71
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.......71
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.................................71
SECTION 8.03. COVENANT DEFEASANCE............................................71
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.....................72
</TABLE>
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<TABLE>
<S> <C>
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN
TRUST; OTHER MISCELLANEOUS PROVISIONS ........................73
SECTION 8.06. REPAYMENT TO COMPANY...........................................74
SECTION 8.07. REINSTATEMENT..................................................74
ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER 75
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF SENIOR SUBORDINATED NOTES........75
SECTION 9.02. WITH CONSENT OF HOLDERS OF SENIOR SUBORDINATED NOTES...........75
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT............................77
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS..............................77
SECTION 9.05. NOTATION ON OR EXCHANGE OF SENIOR SUBORDINATED NOTES...........77
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC................................78
ARTICLE 10. SUBORDINATION 78
SECTION 10.01. AGREEMENT TO SUBORDINATE......................................78
SECTION 10.02. LIQUIDATION; DISSOLUTION; BANKRUPTCY..........................78
SECTION 10.03. DEFAULT ON DESIGNATED SENIOR DEBT.............................78
SECTION 10.04. ACCELERATION OF SENIOR SUBORDINATED NOTES.....................79
SECTION 10.05. WHEN DISTRIBUTION MUST BE PAID OVER...........................79
SECTION 10.06. NOTICE BY COMPANY.............................................80
SECTION 10.07. SUBROGATION...................................................80
SECTION 10.08. RELATIVE RIGHTS...............................................80
SECTION 10.09. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY..................81
SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE......................81
SECTION 10.11. RIGHTS OF TRUSTEE AND PAYING AGENT............................81
SECTION 10.12. AUTHORIZATION TO EFFECT SUBORDINATION.........................82
SECTION 10.13. AMENDMENTS....................................................82
ARTICLE 11. MISCELLANEOUS 82
SECTION 11.01. TRUST INDENTURE ACT CONTROLS..................................82
SECTION 11.02. NOTICES.......................................................82
SECTION 11.03. COMMUNICATION BY HOLDERS OF SENIOR SUBORDINATED NOTES WITH
OTHER HOLDERS OF SENIOR SUBORDINATED NOTES ..................83
SECTION 11.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT............83
SECTION 11.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.................84
SECTION 11.06. RULES BY TRUSTEE AND AGENTS...................................84
SECTION 11.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS ................................................84
SECTION 11.08. GOVERNING LAW.................................................85
SECTION 11.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.................85
SECTION 11.10. SUCCESSORS....................................................85
SECTION 11.11. SEVERABILITY..................................................85
SECTION 11.12. COUNTERPART ORIGINALS.........................................85
SECTION 11.13. TABLE OF CONTENTS, HEADINGS, ETC..............................85
</TABLE>
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EXHIBITS
Exhibit A FORM OF NOTE
Exhibit B FORM OF CERTIFICATE OF TRANSFER
Exhibit C FORM OF CERTIFICATE OF EXCHANGE
Exhibit D FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL
ACCREDITED INVESTOR
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<PAGE> 7
INDENTURE dated as of February 24, 1999 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 12
1/4% Senior Subordinated Discount Notes due 2009 (the "Senior Subordinated
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 at maturity of the Senior Subordinated Notes sold in reliance on Rule
144A.
"Accreted Value" means, for each $1,000 face amount of Senior
Subordinated Notes, as of any date of determination prior to March 1, 2004, the
sum of (i) the initial offering price of each Senior Subordinated Note and (ii)
that portion of the excess of the principal amount of each Senior Subordinated
Note over such initial offering price which shall have been accreted thereon
through such date, such amount to be so accreted on a daily basis and compounded
semi-annually on each March 1 and September 1 at the rate of 12 1/4% per year
from the date of issuance of the Senior Subordinated Notes through the date of
determination. The Accreted Value of any Senior Subordinated Note on or after
March 1, 2004 shall be 100% of the principal amount at maturity thereof.
"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.
<PAGE> 8
"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.
"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
Subordinated 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 Subordinated Note shall not bear the
2
<PAGE> 9
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 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
3
<PAGE> 10
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.
4
<PAGE> 11
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:
(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;
5
<PAGE> 12
(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 11.02 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.
"Designated Senior Debt" means: (1) Any Indebtedness
outstanding under a Credit Facility; and (2) after payment in full of all
Obligations under any Credit Facility, any other Senior Debt permitted under
this Indenture the principal amount of which is $25.0 million or more.
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<PAGE> 13
"Depositary" means, with respect to the Senior Subordinated
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
Subordinated 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
Subordinated 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 Subordinated 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 Subordinated 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 Subordinated 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 $500.0 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 Senior Subordinated Notes issued in
Exchange Offer pursuant to Section 2.06(f) hereof.
"Exchange Offer" has the meaning set forth in the Senior
Subordinated Note Registration Rights Agreement.
"Exchange Offer Registration Statement" has the meaning set
forth in the Senior Subordinated Note Registration Rights Agreement.
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<PAGE> 14
"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, the Company's 8 1/2% Senior Notes due
2008 and the Company's 8.60% 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 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 Subordinated 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 at maturity of the Senior Subordinated Notes sold to Institutional
Accredited Investors.
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<PAGE> 15
"Indebtedness" means, with respect to any Person, any
indebtedness of such Person, whether or not contingent, in respect of: (i)
borrowed money; (ii) evidenced by bonds, notes, debentures or similar
instruments or letters of credit (or reimbursement agreements in respect
thereof); (iii) the balance deferred and unpaid of the purchase price of any
property (including pursuant to capital leases); or (iv) 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.
"Indenture" means this Senior Subordinated Note 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., Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Salomon Smith Barney Inc.,
NationsBanc Montgomery Securities LLC and Warburg Dillon Read LLC, 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
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<PAGE> 16
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 February 24, 1999.
"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 Subordinated 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 Senior Subordinated Note Registration Rights
Agreement.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset, whether or not filed, recorded or otherwise perfected under applicable
law (including any conditional sale or other title retention agreement, any
lease in the nature thereof, any option or other agreement to sell or give a
security interest in and any filing of or agreement to give any financing
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"Make-Whole Amount" means, with respect to any Senior
Subordinated 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 Subordinated Note if such Senior
Subordinated Note were redeemed on March 1, 2004, computed using a discount rate
equal to the Treasury Rate plus 50 basis points; over (ii) the Accreted Value of
such Senior Subordinated Note.
"Make-Whole Average Life" means, with respect to any date of
redemption of Senior Subordinated Notes, the number of years (calculated to the
nearest one-twelfth) from such redemption date to March 1, 2004.
"Make-Whole Price" means, with respect to any Senior
Subordinated Note, the greater of (i) the sum of the principal amount of such
Senior Subordinated Note and the Make-Whole Amount with respect to such Senior
Subordinated Note and (ii) the redemption price of such Senior Subordinated Note
on March 1, 2004.
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<PAGE> 17
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-l" (or higher) according to S&P or
"P-l" (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 Custodian" means the Trustee, as custodian with respect
to the Senior Subordinated Notes in global form, or any successor entity
thereto.
"Offering" means the offering of the Senior Subordinated Notes
pursuant to the Offering Memorandum.
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<PAGE> 18
"Offering Memorandum" means the offering memorandum of the
Company, dated February 19, 1999, 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 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; (i) bonds, notes, debentures or other
securities received as a result of Asset Sales permitted under Section 4.10
hereof; and (j) the
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<PAGE> 19
Investment deemed to have been made by the Company at such time as the Web
Hosting Subsidiary ceases to be a Subsidiary of the Company by reason of the
issuance or sale of Equity Interests in the Web Hosting Subsidiary to the extent
that the book value of such Investment at the time such Investment is deemed to
have been made does not exceed $200.0 million in the aggregate.
"Permitted Junior Securities" means : (1) Equity Interests in
the Company; or (2) debt securities that are subordinated to all Senior Debt and
any debt securities issued in exchange for the Senior Debt to substantially the
same extent as, or to a greater extent than, the Senior Subordinated Notes are
subordinated to Senior Debt under this Indenture.
"Permitted Liens" means (i) Liens securing Senior Debt
(including Capital Lease Obligations) permitted to be incurred pursuant to
Section 4.09 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
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<PAGE> 20
of dividends or as to the distribution of assets upon any voluntary or
involuntary liquidation, dissolution or winding up of such Person, to shares of
Capital Stock of any other class of such Person.
"Private Placement Legend" means the legend set forth in
Section 2.06(g)(i) to be placed on all Notes issued under this Indenture except
where otherwise permitted by the provisions of this Indenture.
"Public Offering" means an underwritten offering of Common
Stock of the Company registered under the Securities Act.
"QIB" means a "qualified institutional buyer" as defined in
Rule 144A.
"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.
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<PAGE> 21
"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.
"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 Debt" means: (1) all Indebtedness of the Company
outstanding under any Credit Facility and all Hedging Obligations with respect
thereto; (2) any other Indebtedness of the Company permitted to be incurred
under the terms of this Indenture, unless the instrument under which such
Indebtedness is incurred expressly provides that it is on a parity with or
subordinated in right of payment to the Senior Subordinated Notes; and (3) all
Obligations with respect to the items listed in the preceding clauses (1) and
(2). Notwithstanding anything to the contrary in the preceding sentence, Senior
Debt will not include: (1) any liability for federal, state, local or other
taxes owed or owing by the Company; (2) any Indebtedness of the Company to any
of its Subsidiaries or other Affiliates; (3) any trade payables; or (4) the
portion of any Indebtedness that is incurred in violation of this Indenture.
"Senior Note Indenture" means the indenture governing the
Senior Notes, as amended or supplemented from time to time.
"Senior Notes" means the Company's 9 1/2% Senior Notes due
2009.
"Senior Subordinated Note Registration Rights Agreement" means
the Senior Subordinated Note Registration Rights Agreement dated as of the date
hereof between the Company and the Initial Purchasers in respect of the Senior
Subordinated Notes.
"Shelf Registration Statement" means the Shelf Registration
Statement as defined in the Senior Subordinated 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.
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<PAGE> 22
"Strategic Investor" means, with respect to any sale of the
Company's Capital Stock, any Person which, both as of the Trading Day
immediately before the day of such sale and the Trading Day immediately after
the day of such sale, has, or whose parent has, a Total Market Capitalization of
at least $1.0 billion on a consolidated basis. In calculating Total Market
Capitalization for the purpose of this definition, the consolidated Indebtedness
of such Person, solely when calculated as of the Trading Day immediately after
the day of such sale, will be calculated after giving effect to such sale
(including any Indebtedness incurred in connection with such sale). For purposes
of this definition, the term "parent" means any Person of which the referent
Strategic Investor is a Subsidiary.
"Subsidiary" of any Person means: (i) any corporation,
association or business entity of which more than 50% of the total voting power
of shares of Capital Stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by such Person or
one or more of the other Subsidiaries of such Person or a combination thereof;
and (ii) any partnership: (a) the sole general partner or the managing general
partner of which is such Person or a Subsidiary of such Person; or (b) the only
general partners of which are such Person or one or more Subsidiaries of such
Person or any combination thereof: provided that any Unrestricted Subsidiary
shall be excluded from this definition of "Subsidiary."
"Telecommunications Business" means, when used in reference to
any Person, that such Person is engaged primarily in the business of: (i)
transmitting, or providing services relating to the transmission of, voice,
video or data through owned or leased transmission facilities; (ii) creating,
developing or marketing communications related network equipment, software and
other devices for use in a Telecommunications Business; or (iii) evaluating,
participating or pursuing any other activity or opportunity that is related to
those identified in (i) or (ii) above; provided that the determination of what
constitutes a Telecommunications Business shall be made in good faith by the
Board of Directors of the Company.
"Telecommunications Related Assets" means all assets, rights
(contractual or otherwise) and properties, whether tangible or intangible, used
in connection with a Telecommunications Business.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 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
16
<PAGE> 23
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 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
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<PAGE> 24
the name of the Depositary, representing a series of Senior Subordinated 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: (i) in connection with the acquisition or construction
of Telecommunications Related Assets; and (ii) to pay regularly scheduled
interest on such Indebtedness pursuant to the terms thereof.
"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.
"Web Hosting Subsidiary" means the Subsidiary of the Company
substantially all of the assets of which consist of assets used exclusively in
the conduct of the Company's Internet Web hosting business.
"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
"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 Blockage Notice"..................... 10.03
"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>
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<PAGE> 25
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 Subordinated Notes;
"indenture security holder" means a holder of a Senior
Subordinated Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee;
"obligor" on the Senior Subordinated Notes means the Company
and any successor obligor upon the Senior Subordinated Notes.
All other terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule under
the TIA have the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a capitalized term has the meaning assigned to it
under this Article 1;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
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<PAGE> 26
(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 SUBORDINATED NOTES
SECTION 2.01. FORM AND DATING.
The Senior Subordinated 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
Subordinated Notes may have notations, legends or endorsements required by law,
stock exchange rule or usage. Each Senior Subordinated Note shall be dated the
date of its authentication. The Senior Subordinated Notes shall be in
denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Senior Subordinated
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 Subordinated Note conflicts
with the express provisions of this Indenture, the provisions of this Indenture
shall govern and be controlling.
Senior Subordinated 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 Subordinated 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 Subordinated Notes as shall be specified therein and each
shall provide that it shall represent the aggregate principal amount at maturity
of outstanding Senior Subordinated Notes from time to time endorsed thereon and
that the aggregate principal amount at maturity of outstanding Senior
Subordinated 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 at maturity of outstanding Senior Subordinated 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 Subordinated
Notes for the Company by manual or facsimile signature.
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<PAGE> 27
If an Officer whose signature is on a Senior Subordinated Note
no longer holds that office at the time a Senior Subordinated Note is
authenticated, the Senior Subordinated Note shall nevertheless be valid. In
addition, if a Person is not an Officer at the time a Senior Subordinated Note
is authenticated, but becomes an Officer on or prior to the delivery of the
Senior Subordinated Note, the Senior Subordinated Note shall nevertheless be
valid.
A Senior Subordinated 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
Subordinated 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 Subordinated Notes for
original issue up to the aggregate principal amount at maturity stated in
paragraph 4 of the Senior Subordinated Notes. The aggregate principal amount at
maturity of Senior Subordinated 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 Subordinated Notes. Unless limited by the
terms of such appointment, an authenticating agent may authenticate Senior
Subordinated 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
Subordinated Notes may be presented for registration of transfer or for exchange
("Registrar") and an office or agency where Senior Subordinated Notes may be
presented for payment ("Paying Agent"). The Registrar shall keep a register of
the Senior Subordinated 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 Subordinated 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.
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<PAGE> 28
The Company initially appoints The Depository Trust Company
("DTC") to act as Depositary with respect to the Global Securities.
The Company initially appoints the Trustee to act as the
Registrar and Paying Agent and to act as Note Custodian with respect to the
Global Securities. Except as otherwise specifically provided herein, (i) all
references in this Indenture to the Trustee shall be deemed to refer to the
Trustee in its capacity as Trustee and in its capacities as Registrar and Paying
Agent and (ii) every provision of this Indenture relating to the conduct of or
affecting the liability of or offering protection, immunity or indemnity to the
Trustee shall be deemed to apply with the same force and effect to the Trustee
acting in its capacities as Paying Agent and Registrar.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the
Trustee to agree in writing that the Paying Agent shall hold in trust for the
benefit of holders or the Trustee all money held by the Paying Agent for the
payment of principal, premium or Liquidated Damages, if any, or interest on the
Senior Subordinated 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
Subordinated 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 Subordinated 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
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<PAGE> 29
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 Subordinated 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 Subordinated Note other
than as provided in this Section 2.06(a), however beneficial interests in a
Global Security may be transferred and exchanged as provided in Section 2.06(b),
(c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the
Global Securities. The transfer and exchange of beneficial interests in the
Global Securities shall be effected through the Depositary, in accordance with
the provisions of this Indenture and the Applicable Procedures. Beneficial
interests in the Restricted Global Securities shall be subject to restrictions
on transfer comparable to those set forth herein to the extent required by the
Securities Act. The Trustee shall have no obligation to ascertain the
Depositary's compliance with any such restrictions on transfer. Transfers of
beneficial interests in the 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
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<PAGE> 30
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 Senior Subordinated Notes
and otherwise applicable under the Securities Act, the Trustee shall
adjust the principal amount at maturity 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
(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:
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<PAGE> 31
(A) such exchange or transfer is effected
pursuant to the Exchange Offer in accordance with the Senior
Subordinated 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 Senior
Subordinated 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 Senior
Subordinated 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 (l)(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.
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 at maturity
equal to the principal amount at maturity 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.
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<PAGE> 32
(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 that listed in subparagraph (B)
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,
the Trustee shall cause the aggregate principal amount at maturity 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 at maturity. Certificated Securities issued in exchange for
beneficial interests in a
26
<PAGE> 33
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 Senior Subordinated 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 Senior
Subordinated 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 Senior
Subordinated 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 Senior
Subordinated 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
27
<PAGE> 34
restrictions on transfer contained herein and in the Private
Placement Legend are not required in order to maintain
compliance with the Securities Act, and such beneficial
interest in a Restricted Global Security is being exchanged or
transferred in compliance with any applicable blue sky
securities laws of any State of the United States.
(iii) If any holder of a beneficial interest in an
Unrestricted Global Security proposes to exchange such beneficial
interest for a Certificated Security or to transfer such beneficial
interest to a Person who takes delivery thereof in the form of a
Certificated Security, then, upon satisfaction of the conditions set
forth in Section 2.06(b)(ii), the Trustee shall cause the aggregate
principal amount at maturity 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 at maturity. 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 Senior Subordinated 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 Senior Subordinated 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 Senior
Subordinated 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
28
<PAGE> 35
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 that listed in subparagraph (B)
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;
(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 at maturity 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 appropriate Global Security.
(ii) A holder of Restricted Certificated Securities may
exchange such Senior Subordinated 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 Senior
Subordinated 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 Senior
Subordinated 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 Senior
Subordinated Note Registration Rights Agreement; or
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(D) the Registrar receives the following:
(1) if the holder of such Certificated
Securities proposes to exchange such Senior Subordinated 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 Senior Subordinated 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.
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 at maturity of the Unrestricted Global Security.
(iii) A holder of Unrestricted Certificated Securities may
exchange such Senior Subordinated 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 at maturity 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 at maturity
equal to the principal amount at maturity 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
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<PAGE> 37
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:
(A) such exchange or transfer is effected
pursuant to the Exchange Offer in accordance with the Senior
Subordinated 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 Senior
Subordinated 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 Senior
Subordinated Note Registration Rights Agreement; or
(D) the Registrar receives the following:
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(1) if the holder of such Restricted
Certificated Securities proposes to exchange such Senior
Subordinated Notes for an Unrestricted Certificated Security,
a certificate from such holder in the form of Exhibit C
hereto, including the certifications in item (l)(a) thereof;
(2) if the holder of such Restricted
Certificated Securities proposes to transfer such Senior
Subordinated 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 Senior Subordinated 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 Senior Subordinated 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 at maturity
equal to the principal amount at maturity 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) Unrestricted
Certificated Securities in an aggregate principal amount at maturity equal to
the principal amount at maturity of the Restricted Certificated Securities
accepted for exchange in the Exchange Offer. Concurrent with the issuance of
such Senior Subordinated Notes, the Trustee shall cause the aggregate principal
amount at maturity of the applicable Restricted Global Securities to be reduced
accordingly, and the Company shall execute and the Trustee shall authenticate
and deliver to the Persons designated by the holders of Certificated Securities
so accepted Certificated Securities in the appropriate principal amount at
maturity.
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(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
HAS NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND THE SECURITY EVIDENCED HEREBY OR ANY
INTEREST OR PARTICIPATION HEREIN MAY NOT BE OFFERED,
SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT
FROM, OR NOT SUBJECT TO, REGISTRATION. THE HOLDER OF
THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES (A) TO
OFFER, SELL, PLEDGE OR OTHERWISE TRANSFER THIS
SECURITY ONLY (1) TO THE COMPANY, (2) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (3) TO A PERSON
IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" AS DEFINED IN RULE 144A IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (4) PURSUANT
TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR
OUTSIDE THE UNITED STATES IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES
ACT, (5) TO AN INSTITUTIONAL "ACCREDITED INVESTOR"
(AS DEFINED IN RULE 501 (a)(1), (2), (3) OR (7) UNDER
THE SECURITIES ACT) OR (6) PURSUANT TO ANY OTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS UNDER THE SECURITIES ACT (AND IN THE
CASE OF A TRANSFER PURSUANT TO CLAUSE (5) OR (6),
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)
THAT IT 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."
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(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
Subordinated Notes issued in exchange therefor or substitution
thereof) shall not bear the Private Placement Legend.
(ii) Global Security Legend. Each Global Security shall
bear a legend in substantially the following form:
"THIS GLOBAL SECURITY IS HELD BY THE DEPOSITARY (AS
DEFINED IN THE INDENTURE GOVERNING THIS SENIOR
SUBORDINATED 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."
(iii) Original Issue Discount Legend. Each Senior
Subordinated Note shall bear a legend in substantially the following
form:
"FOR THE PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, THIS
NOTE IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT;
FOR EACH $1,000 PRINCIPAL AMOUNT OF THIS NOTE, THE
ISSUE PRICE IS $550.57, THE AMOUNT OF ORIGINAL ISSUE
DISCOUNT IS $449.43, THE ISSUE DATE IS FEBRUARY 24,
1999 AND THE YIELD TO MATURITY IS 12 1/4% PER ANNUM."
(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 at
maturity of Senior Subordinated Notes represented by such Global Security shall
be reduced accordingly and an endorsement shall be made on such Global
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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 Subordinated Note selected for
redemption in whole or in part, except the unredeemed portion of any
Senior Subordinated Note being redeemed in part.
(iv) All Global Securities and Certificated Securities
issued upon any registration of transfer or exchange of Global
Securities or Certificated Securities shall be the valid obligations of
the Company, evidencing the same debt, and entitled to the same
benefits under this Indenture, as the Global Securities or Certificated
Securities surrendered upon such registration of transfer or exchange.
(v) The Company shall not be required (A) to issue, to
register the transfer of or to exchange Senior Subordinated Notes
during a period beginning at the opening of business 15 days before the
day of any selection of Senior Subordinated 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
Subordinated Note so selected for redemption in whole or in part,
except the unredeemed portion of any Senior Subordinated Note being
redeemed in part or (C) to register the transfer of or to exchange a
Senior Subordinated 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 Subordinated Note, the Trustee, any Agent and
the Company may deem and treat the Person in whose name any Senior
Subordinated Note is registered as the absolute owner of such Senior
Subordinated Note for the purpose of receiving payment of principal of
and interest on such Senior Subordinated Notes and for all other
purposes, and none of the Trustee, any Agent or the Company shall be
affected by notice to the contrary.
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(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 Senior Subordinated Note, the Company shall
issue and the Trustee, upon the written order of the Company signed by one
Officer of the Company, shall authenticate a replacement Senior Subordinated
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 Senior Subordinated Note is replaced. The Company may charge for its
expenses in replacing a Senior Subordinated 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 Subordinated Notes outstanding at any time are all
the Senior Subordinated 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 Senior Subordinated Note does not cease to be outstanding because the
Company or an Affiliate of the Company holds the Senior Subordinated Note.
If a Senior Subordinated 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 Subordinated Note is held by a bona
fide purchaser.
If the principal amount of any Senior Subordinated 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 Subordinated Notes (or the portion thereof to be redeemed or maturing, as
the case may be), then on and after that date such Senior Subordinated 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 Subordinated Notes have concurred in any direction, waiver or
consent, Senior Subordinated Notes owned by the Company, or an Affiliate of the
Company, shall be considered as though not
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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 Subordinated Notes that a Trustee knows are so owned shall be so
disregarded.
SECTION 2.10. TEMPORARY NOTES.
Until definitive Senior Subordinated Notes are ready for
delivery, the Company may prepare and the Trustee shall authenticate temporary
Senior Subordinated Notes upon a written order of the Company signed by one
Officer of the Company. Temporary Senior Subordinated Notes shall be
substantially in the form of definitive Senior Subordinated Notes but may have
variations that the Company considers appropriate for temporary Senior
Subordinated Notes and as shall be reasonably acceptable to the Trustee. Without
unreasonable delay, the Company shall prepare and the Trustee shall authenticate
definitive Senior Subordinated Notes and deliver them in exchange for temporary
Senior Subordinated Notes.
Holders of temporary Senior Subordinated Notes shall be
entitled to all of the benefits of this Indenture.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Senior Subordinated Notes
to the Trustee for cancellation. The Registrar and Paying Agent shall forward to
the Trustee any Senior Subordinated Notes surrendered to them for registration
of transfer, exchange or payment. The Trustee and no one else shall cancel all
Senior Subordinated Notes surrendered for registration of transfer, exchange,
payment, replacement or cancellation and shall destroy cancelled Senior
Subordinated Notes (subject to the record retention requirement of the Exchange
Act), unless the Company directs cancelled Senior Subordinated Notes to be
returned to it. Certification of the destruction of all cancelled Senior
Subordinated Notes shall be delivered to the Company for all certificates so
destroyed. The Company may not issue new Senior Subordinated Notes to replace
Senior Subordinated 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
Subordinated Notes, it shall pay the defaulted interest in any lawful manner
plus, to the extent lawful, interest payable on the defaulted interest, to the
Persons who are holders on a subsequent special record date, which date shall be
at the earliest practicable date but in all events at least five Business Days
prior to the payment date, in each case at the rate provided in the Senior
Subordinated 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.
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SECTION 2.13. RECORD DATE.
The record date for purposes of determining the identity of
holders of the Senior Subordinated 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 Subordinated 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 Subordinated
Notes and that reliance may be placed only on the other identification numbers
printed on the Senior Subordinated 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 Subordinated 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 Subordinated 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 Subordinated Notes are to be
redeemed at any time, except as provided in Section 3.09, the Trustee shall
select the Senior Subordinated Notes to be redeemed or purchased in compliance
with the requirements of the principal national securities exchange, if any, on
which the Senior Subordinated Notes are listed, or, if the Senior Subordinated
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 Subordinated Notes with a principal amount at maturity
of $1,000 or less shall be redeemed or purchased in part. A new Senior
Subordinated Note in principal amount at maturity equal to the unredeemed or
unpurchased portion shall be issued in the name of the holder thereof upon
cancellation of the original Senior Subordinated Note. On and after the
redemption or purchase date, interest shall cease to accrete or accrue on the
Senior Subordinated Notes or portions of them called for redemption or purchase.
In the event of partial redemption by lot, the particular Senior Subordinated
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 Subordinated Notes not previously called for
redemption.
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The Trustee shall promptly notify the Company in writing of
the Senior Subordinated Notes selected for redemption and, in the case of any
Senior Subordinated Note selected for partial redemption, the principal amount
at maturity thereof to be redeemed. Senior Subordinated 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 Subordinated Notes of a holder are to be
redeemed, the entire outstanding amount of Senior Subordinated 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 Subordinated Notes called for redemption also apply to portions of Senior
Subordinated 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 Subordinated 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 Subordinated Notes to be
redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Senior Subordinated Note is being redeemed in
part, the portion of the principal amount at maturity of such Senior
Subordinated Note to be redeemed and that, after the redemption date
upon surrender of such Senior Subordinated Note, a new Senior
Subordinated Note or Senior Subordinated Notes in principal amount at
maturity equal to the unredeemed portion shall be issued;
(d) the name and address of the Paying Agent;
(e) that Senior Subordinated 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 Subordinated Notes (or portions
thereof) called for redemption ceases to accrue on and after the
redemption date;
(g) the paragraph of the Senior Subordinated Notes and/or
section of this Indenture pursuant to which the Senior Subordinated
Notes called for redemption are being redeemed; and
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(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 Subordinated Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall have delivered to the Trustee, at least 45 days (unless, except as
set forth above, a shorter period is acceptable to the Trustee) prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section
3.03 hereof, Senior Subordinated 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 Subordinated 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 Subordinated
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 Subordinated Notes or the portions of Senior Subordinated Notes
called for redemption. If a Senior Subordinated 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
Senior Subordinated Note was registered at the close of business on such record
date. If any Senior Subordinated 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 Subordinated Notes and in Section 4.01 hereof.
SECTION 3.06. SENIOR SUBORDINATED NOTES REDEEMED IN PART.
Upon surrender of a Senior Subordinated Note that is redeemed
in part, the Company shall issue and the Trustee shall authenticate for the
holder of the Senior Subordinated Notes at the expense of the Company a new
Senior Subordinated Note equal in principal amount at maturity to the unredeemed
portion of the Senior Subordinated Note surrendered.
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<PAGE> 47
SECTION 3.07. OPTIONAL REDEMPTION.
(a) Except as set forth in Section 3.07(b) below, prior
to March 1, 2004, the Senior Subordinated 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 March 1, 2004, the Senior Subordinated 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, 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 March 1 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2004..................................... 106.125%
2005..................................... 104.083%
2006..................................... 102.041%
2007 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 March 1, 2002 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 at maturity
of the Senior Subordinated 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 112.25%
of the Accreted Value thereof plus accrued and unpaid Liquidated Damages, if
any, thereon to the redemption date, provided that: (1) at least 75% of the
aggregate principal amount at maturity of the Senior Subordinated Notes
originally issued remains outstanding immediately after the occurrence of such
redemption; and (2) 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 Subordinated Notes.
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<PAGE> 48
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 Subordinated Notes and Pari Passu Notes (an "Excess Proceeds
Offer"), to purchase the maximum principal amount and/or accreted value, as
applicable, of Senior Subordinated 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 Accreted Value (if such date of purchase is prior to March
1, 2004) or 100% of the outstanding principal amount (if such date of purchase
is on or after March 1,2004) of the Senior Subordinated Notes and 100% of the
outstanding principal amount or accreted value, as applicable, of the Pari Passu
Notes, plus accrued and unpaid interest and Liquidated Damages thereon, if any,
to the date fixed for the closing of such offer, in accordance with the
procedures specified below.
The Excess Proceeds Offer shall remain open for a period of 20
Business Days following its commencement and no longer, except to the extent
that a longer period is required by applicable law (the "Offer Period"). No
later than five Business Days after the termination of the Offer Period (the
"Purchase Date"), the Company shall purchase the maximum accreted value or
principal amount, as the case may be, of Senior Subordinated Notes and Pari
Passu Notes that may be purchased with such Excess Proceeds (on a pro rata basis
if Senior Subordinated Notes and Pari Passu Notes tendered is in excess of the
Excess Proceeds) (which maximum principal amount of Senior Subordinated Notes
shall be the "Offer Amount") or, if less than the Offer Amount has been
tendered, all Senior Subordinated 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 Subordinated Notes shall be paid to the Person in whose name a Senior
Subordinated Note is registered at the close of business on such record date,
and no additional interest shall be payable to holders who tender Senior
Subordinated Notes pursuant to the Excess Proceeds Offer on the portion of the
tendered Senior Subordinated 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 Subordinated Notes, with a copy to the Trustee. The notice
shall contain all instructions and materials necessary to enable such holders to
tender Senior Subordinated 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;
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<PAGE> 49
(c) that any Senior Subordinated Note or portion thereof
not tendered or accepted for payment shall continue to accrue interest;
(d) that any Senior Subordinated 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 Subordinated
Note or portion thereof purchased pursuant to any Excess Proceeds Offer
shall be required to surrender the Senior Subordinated Note, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of
the Senior Subordinated 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 Subordinated
Note or portion thereof the holder delivered for purchase and a
statement that such holder is withdrawing his election to have the
Senior Subordinated 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 Subordinated
Notes and Pari Passu Notes tendered by holders of such notes exceeds
the Offer Amount, the Trustee shall select the Senior Subordinated
Notes to be purchased on a pro rata basis as described above (with such
adjustments as may be deemed appropriate by the Trustee so that only
Senior Subordinated Notes in denominations of $1,000, or integral
multiples thereof, shall be purchased); and
(h) that holders whose Senior Subordinated Notes were
purchased only in part shall be issued new Senior Subordinated Notes
equal in principal amount to the unpurchased portion of the Senior
Subordinated 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 Subordinated Notes, Pari Passu
Notes or portions thereof tendered pursuant to the Excess Proceeds Offer, or if
less than the Offer Amount has been tendered, all Senior Subordinated Notes,
Pari Passu Notes or portions thereof tendered, and deliver to the Trustee an
Officers' Certificate stating that such Senior Subordinated Notes, Pari 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 Subordinated Note or portion thereof tendered by
such holder and accepted by the Company for purchase, and the Company shall
promptly issue a new Senior Subordinated Note, and the Trustee shall
authenticate and mail or deliver such new Senior
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<PAGE> 50
Subordinated Note to such holder equal in principal amount at maturity to any
unpurchased portion of the Senior Subordinated Note surrendered. Any Senior
Subordinated 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 Subordinated 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 Subordinated Notes
under this Section 3.09 shall be deemed to be a redemption of Senior
Subordinated 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 Subordinated Notes on the dates and
in the manner provided in the Senior Subordinated 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 Senior Subordinated
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 Subordinated Notes
to the extent lawful until such overdue principal is paid; it shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law) on
overdue installments of interest (without regard to any applicable grace period)
at the same rate to the extent lawful until such overdue installments of
interest are paid.
The term "Bankruptcy Law" means title 11, U.S. Code or any
similar federal or state law for the relief of debtors.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain an office or agency (which may be
an office of the Trustee or an affiliate of the Trustee, Registrar or
co-registrar) where Senior Subordinated 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 Subordinated Notes and this Indenture may
be served. The Company shall give prompt written notice to the Trustee of the
location, and any change in
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<PAGE> 51
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 Subordinated 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 Subordinated 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 Subordinated Notes are outstanding, the Company shall furnish copies
of the SEC Reports to the holders of Senior Subordinated 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 Subordinated 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).
(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 Subordinated Notes under this Section
4.03.
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<PAGE> 52
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 Subordinated 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
Subordinated 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 Subordinated Notes.
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<PAGE> 53
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 Subordinated
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:
(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
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<PAGE> 54
(3) such Restricted Payment, together with the
aggregate of all other Restricted Payments made by the Company
and its Subsidiaries after the Issue Date (including any
Restricted Payments made pursuant to clauses (i), (v) and (vi)
of Section 4.07(b)), is less than the sum of
(w) 50% of the Consolidated Net Income
of the Company for the period (taken as one
accounting period) from June 30, 1996 to the end of
the Company's most recently ended fiscal quarter for
which internal financial statements are available at
the time of such Restricted Payment (or, if such
Consolidated Net Income for such period is a deficit,
less 100% of such deficit), plus
(x) 100% of the aggregate net cash
proceeds received by the Company from the issue or
sale of Equity Interests of the Company or of debt
securities or Disqualified Stock of the Company that
have been converted into such Equity Interests (other
than Equity Interests (or convertible debt
securities) sold to a Subsidiary of the Company and
other than Disqualified Stock or debt securities that
have been converted into Disqualified Stock) after
June 30, 1996 (other than any such Equity Interests,
the proceeds of which were used as set forth in
clauses (b)(ii) and (b)(viii) below), plus
(y) 100% of the sum of, without
duplication, (1) aggregate dividends or distributions
received by the Company or any Subsidiary from any
Joint Venture (other than dividends or distributions
to pay any obligations of such Joint Venture to
Persons other than the Company or any Subsidiary,
such as income taxes), with non-cash distributions to
be valued at the lower of book value or fair market
value as determined by the Board of Directors, (2)
the amount of the principal and interest payments
received since the Issue Date by the Company or any
Subsidiary from any Joint Venture and (3) the net
proceeds from the sale of an Investment 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;
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<PAGE> 55
(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 Subordinated 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 Subordinated 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 Subordinated Notes at
least to the same extent as, (2) has a Weighted Average Life to
Maturity at least as long as, and (3) has no scheduled principal
payments due in any amount earlier than, any equivalent amount of
principal under the Indebtedness so Retired;
(iv) the Retirement of any Indebtedness of a Subsidiary of
the Company in exchange for, or out of the proceeds of the
substantially concurrent incurrence of Indebtedness of the Company or
any Subsidiary but only to the extent that such incurrence is permitted
under Section 4.09 hereof and only to the extent that such Indebtedness
(1) is not secured by any assets of the Company or any Subsidiary to a
greater extent than the Retired Indebtedness was so secured, (2) has a
Weighted Average Life to Maturity at least as long as the Retired
Indebtedness and (3) if such Retired Indebtedness was an obligation of
the Company, is pari passu or subordinated in right of payment to the
Senior Subordinated 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)
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<PAGE> 56
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 of that term set forth in Section 1.01
hereof, shall become a Restricted Investment, deemed to have been made on the
date that it ceases to be a Permitted Investment.
(d) The Board of Directors may designate any Subsidiary
to be an Unrestricted Subsidiary if such designation would not cause a Default
or an Event of Default pursuant to Article 6 hereof. For purposes of making such
determination, all outstanding Investments by the Company and its Subsidiaries
except to the extent repaid in cash) in such Subsidiary so designated shall be
deemed to be Restricted Payments at the time of such designation and shall
reduce the amount available for Restricted Payments under paragraph (a) of this
Section 4.07. All such outstanding Investments will be deemed to constitute
Investments in an amount equal to the greatest of (x) the net book value of such
Investments at the time of such designation, (y) the fair market value of such
Investments at the time of such designation and (z) the original fair market
value of such Investments at the time they were made. Such designation will only
be permitted if such Restricted Payment would be permitted at such time.
(e) The Board of Directors of the Company may at any time
designate any Unrestricted Subsidiary to be a Subsidiary; provided that such
designation shall be deemed to be an incurrence of Indebtedness by a Subsidiary
of the Company of any outstanding Indebtedness of such Unrestricted Subsidiary
and such designation shall only be permitted if (i) such Indebtedness is
permitted under Section 4.09 hereof and (ii) no Default or Event of Default
pursuant to Article 6 hereof would be in existence following such designation.
(f) Not later than the date of making any Restricted
Payment, the Company shall deliver to the Trustee an Officers' Certificate
stating that such Restricted Payment is permitted and setting forth the basis
upon which the calculations required by this Section 4.07 were computed, which
calculations may be based upon the Company's latest available financial
statements.
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:
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(i) pay dividends or make any other distributions to the
Company or any of its Subsidiaries on its Capital Stock or with respect
to any other interest or participation in, or measured by, its profits,
or pay any Indebtedness owed to the Company or any of its Subsidiaries;
(ii) make loans or advances to the Company or any of its
Subsidiaries; or
(iii) transfer any of its properties or assets to the
Company or any of its Subsidiaries; except for such encumbrances or
restrictions existing as of the Issue Date or under or by reason of:
(a) Existing Indebtedness;
(b) applicable law;
(c) any instrument governing Acquired Debt as in effect
at the time of acquisition (except to the extent such Indebtedness was
incurred in connection with, or in contemplation of, such acquisition),
which encumbrance or restriction is not applicable to any Person, or
the properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired;
(d) by reason of customary non-assignment provisions in
leases entered into in the ordinary course of business and consistent
with past practices;
(e) Indebtedness in respect of a Permitted Refinancing,
provided that the restrictions contained in the agreements governing
such Refinancing Indebtedness are not materially more restrictive than
those contained in the agreements governing the Indebtedness being
refinanced;
(f) with respect to clause (iii) above, purchase money
obligations for property acquired in the ordinary course of business,
Vendor Indebtedness incurred in connection with the purchase or lease
of Telecommunications Related Assets or performance bonds or similar
security for performance which liens securing such obligations do not
cover any asset other than the asset acquired or, in the case of
performance bonds or similar security for performance, the assets
associated with the Company's performance;
(g) Indebtedness incurred under Section 4.09(b)(i)
hereof;
(h) this Indenture and the Senior Subordinated Notes or
future Indebtedness with substantially similar restrictions, if any, to
the Senior Subordinated Notes;
(i) the Senior Note Indenture and the Senior Notes or
future Indebtedness with substantially similar restrictions, if any, to
the Senior Notes; or
(j) in the case of clauses (a), (c), (e), (g), (h) and
(i) above, any amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings
thereof; provided that such amendments, modifications, restatements,
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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 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 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 incurrence or issuance occurs after June 1, 1999, in each case, determined
on a pro forma basis (including a pro forma application of the net proceeds
therefrom), as if the additional Indebtedness had been incurred, or the
Disqualified Stock had been issued, as the case may be, at the beginning of such
four-quarter period. If the Company incurs any Indebtedness or issues or redeems
any Preferred Stock subsequent to the commencement of the period for which such
ratio is being calculated but prior to the event for which the calculation of
the ratio is made, then the ratio will be calculated giving pro forma effect to
any such incurrence of Indebtedness, or such issuance or redemption of Preferred
Stock, as if the same had occurred at the beginning of the applicable period. In
making such calculation on a pro forma basis, interest attributable to
Indebtedness bearing a floating interest rate shall be computed as if the rate
in effect on the date of computation had been the applicable rate for the entire
period.
(b) The foregoing limitation in Section 4.09(a) shall not
apply to (with each exception to be given independent effect):
(i) the incurrence by the Company and/or any of its
Subsidiaries of Indebtedness under a 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
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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 Subordinated 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 Subordinated 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 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
Subordinated Notes, the Refinancing Indebtedness shall be
subordinated in right of payment to the Senior Subordinated
Notes on terms at least as favorable to the holders of Senior
Subordinated Notes as those contained in the documentation
governing the Indebtedness being so Refinanced;
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(vii) the incurrence by the Company or any of its
Subsidiaries of intercompany Indebtedness between or among the Company
and any of its Subsidiaries;
(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; and
(ix) the incurrence by the Company of Indebtedness
represented by the Senior Subordinated Notes and the Senior
Subordinated Notes, in each case, issued on the Issue Date.
For purposes of determining compliance with this Section 4.09,
in the event that an item of Indebtedness or Disqualified Stock meets the
criteria of more than one of the categories described in clauses (i) through
(ix) 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 of the Company),
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
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(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) except with respect to an Asset Sale constituting the
issuance or sale of Equity Interests in the Web Hosting Subsidiary, 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 Subordinated 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, at its option, to: (i) repay Senior Debt
or permanently reduce the amounts permitted to be borrowed by the Company under
the terms of any of its Senior Debt; 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); or (iii) in the case of net cash proceeds realized
upon the issuance or sale of Equity Interests in the Web Hosting Subsidiary,
fund cash operating losses, provide working capital and for general corporate
purposes. Any Net Proceeds from any Asset Sales that are not so applied or
invested as provided in the preceding sentence, shall constitute
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"Excess Proceeds." When the aggregate amount of Excess Proceeds exceeds $10.0
million, the Company shall be required to make an Excess Proceeds Offer in
accordance with the terms of Section 3.09 hereof.
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its
Subsidiaries to, sell, lease, transfer or otherwise dispose of any of their
respective properties or assets to, or purchase any property or assets from, or
enter into any contract, agreement, understanding, loan, advance or guarantee
with, or for the benefit of, any Affiliate (each of the foregoing, an "Affiliate
Transaction"), unless: (i) such Affiliate Transaction is on terms that are no
less favorable to the Company or the relevant Subsidiary than those that would
have been obtained in a comparable transaction by the Company or such Subsidiary
with an unrelated Person; (ii) such Affiliate Transaction is approved by a
majority of the disinterested directors on the Board of Directors of the
Company; and (iii) the Company delivers to the Trustee, with respect to any
Affiliate Transaction involving aggregate payments in excess of $1.0 million, a
resolution of a committee of independent directors of the Company set forth in
an Officers' Certificate certifying that such Affiliate Transaction complies
with clauses (i) and (ii) above; provided that: (a) transactions pursuant to any
employment, stock option or stock purchase agreement entered into by the Company
or any of its Subsidiaries, or any grant of stock, in the ordinary course of
business that are approved by the Board of Directors of the Company; (b)
transactions between or among the Company and its Subsidiaries; (c) transactions
permitted by Section 4.07 hereof; and (d) loans and advances to employees and
officers of the Company or any of its Subsidiaries in the ordinary course of
business in an aggregate principal amount not to exceed $1.0 million at any one
time outstanding, shall not be deemed Affiliate Transactions.
SECTION 4.12. LIENS.
The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien securing Indebtedness or trade payables 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.
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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 Subordinated 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 Subordinated Notes to repurchase all or any part (equal to $1,000 or an
integral multiple thereof) of such holder's Senior Subordinated Notes at a
purchase price equal to 101 % of the Accreted Value thereof on the date of
purchase (if such date of purchase is prior to March 1, 2004) or 101% of the
aggregate principal amount thereof (if such date of purchase is on or after
March 1, 2004) 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 Subordinated 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 Subordinated 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 Subordinated 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 Subordinated 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 Subordinated 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 Subordinated Notes or portions thereof
purchased pursuant to a Change of Control Offer will be required to surrender
the Senior Subordinated Notes, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Senior Subordinated 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
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transmission or letter setting forth the name of the holder, the principal
amount of Senior Subordinated Notes or portions thereof delivered for purchase,
and a statement that such holder is withdrawing his election to have such Senior
Subordinated Notes or portions thereof purchased; and (7) that holders whose
Senior Subordinated Notes are being purchased only in part will be issued new
Senior Subordinated Notes equal in principal amount to the unpurchased portion
of the Senior Subordinated 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-l 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
Subordinated 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 Subordinated 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 Subordinated Notes or portions thereof so tendered and
(iii) deliver or cause to be delivered to the Trustee the Senior Subordinated
Notes so accepted together with an Officers' Certificate stating the Senior
Subordinated Notes or portions thereof tendered to the Company. The Paying Agent
shall promptly mail to each holder of Senior Subordinated Notes so accepted
payment in an amount equal to the purchase price for such Senior Subordinated
Notes or portions thereof, and the Trustee shall promptly authenticate and mail
to each holder a new Senior Subordinated Note equal in principal amount to any
unpurchased portion of the Senior Subordinated Notes surrendered, if any;
provided, that each such new Senior Subordinated Note shall be in a principal
amount of $1,000 or an integral multiple thereof. The Company shall publicly
announce the results of the Change of Control Offer on or as soon as practicable
after the Change of Control Payment Date.
SECTION 4.16. BUSINESS ACTIVITIES.
The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, engage in any business other than the
Telecommunications Business.
SECTION 4.17. PAYMENTS FOR CONSENT.
The Company shall not, and shall not permit any of its
Affiliates to, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any holder of
any Senior Subordinated 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
Subordinated Notes unless such consideration is offered to be paid or agreed to
be paid to all holders of the Senior Subordinated 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. NO SENIOR SUBORDINATED DEBT.
The Company shall not incur, create, issue, assume, guarantee
or otherwise become liable for any Indebtedness that is subordinate or junior in
right of payment to any Senior Debt of the Company and senior in any respect in
right of payment to the Senior Subordinated Notes.
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ARTICLE 5.
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION OR SALE OF ASSETS.
The Company shall not consolidate or merge with or into
(whether or not the Company is the surviving entity), or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of its properties
or assets in one or more related transactions to another corporation, Person or
entity unless:
(i) the Company is the surviving entity or the entity or
Person formed by or surviving any such consolidation or merger (if
other than the Company) or to which such sale, assignment, transfer,
lease, conveyance or other disposition has been made is a corporation
organized or existing under the laws of the United States, any state
thereof or the District of Columbia;
(ii) the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company) or the entity or
Person to which such sale, assignment, transfer, lease, conveyance or
other disposition has been made assumes all the obligations of the
Company under the Senior Subordinated 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.
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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 Subordinated 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
Subordinated Notes, whether or not prohibited by
Article 10 of this Indenture;
(b) default in payment when due of principal or premium,
if any, on the Senior Subordinated Notes at maturity,
upon redemption or otherwise, whether or not
prohibited by Article 10 of this Indenture;
(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 Subordinated Notes
then outstanding to comply with its other agreements
in this Indenture or the Senior Subordinated 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 results in the
acceleration (which acceleration has not been
rescinded) of such Indebtedness prior to its express
maturity and the principal amount of any
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such Indebtedness, together with the principal amount
of any other such Indebtedness 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;
(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.
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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 Subordinated Notes may declare all the Senior
Subordinated Notes to be due and payable immediately. Upon such declaration, the
principal of (or, if prior to March 1, 2004, the Accreted Value of), premium, if
any, and accrued and unpaid interest and Liquidated Damages, if any, on the
Senior Subordinated 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 Subordinated 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 Subordinated Notes contained in this Indenture or the Senior Subordinated
Notes, the amount declared due and payable shall include the premium that would
have been applicable on a voluntary prepayment of the Senior Subordinated Notes.
Holders of the Senior Subordinated Notes may not enforce this Indenture or the
Senior Subordinated 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
Subordinated 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 Subordinated Notes
or to enforce the performance of any provision of the Senior Subordinated Notes
or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Senior Subordinated Notes or does not produce any of them in
the proceeding. A delay or omission by the Trustee or any holder of a Senior
Subordinated Note in exercising any right or remedy accruing upon an Event of
Default shall not impair the right or remedy or constitute a waiver of or
acquiescence in the Event of Default. All remedies are cumulative to the extent
permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
Holders of a majority in aggregate principal amount of the
Senior Subordinated Notes then outstanding, by notice to the Trustee, may on
behalf of the holders of all of the Senior
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Subordinated 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
Subordinated 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 Subordinated 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 Subordinated Notes or that may involve the
Trustee in personal liability.
SECTION 6.06. LIMITATION ON SUITS.
No holder of any Senior Subordinated Note shall have any right
to institute any proceeding with respect to this Indenture or the Senior
Subordinated Notes or for any remedy thereunder, unless:
(i) the holder of a Senior Subordinated 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 Subordinated Notes make a written request
to the Trustee to pursue the remedy;
(iii) such holder of a Senior Subordinated Note or holders
of the Senior Subordinated 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 Subordinated Note shall
have any right to institute any proceeding with respect to this Indenture or the
Senior Subordinated Notes or for any remedy thereunder, except:
(x) a holder of a Senior Subordinated Note may institute
suit for enforcement of payment of the principal of and premium, if any, or
interest on such Senior Subordinated Note on or after the respective due dates
expressed in such Senior Subordinated Note (including upon acceleration thereof)
or
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(y) the institution of any proceeding with respect to
this Indenture or the Senior Subordinated Notes or any remedy thereunder,
including without limitation acceleration, by the holders of a majority in
principal amount of the outstanding Senior Subordinated 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 Subordinated Note may not use this
Indenture to prejudice the rights of another holder of a Senior Subordinated
Note or to obtain a preference or priority over another holder of a Senior
Subordinated 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 Subordinated Note to receive payment of
principal, premium and Liquidated Damages, if any, and interest on the Senior
Subordinated Note, on or after the respective due dates expressed in the Senior
Subordinated 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 Subordinated 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 Subordinated 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 Subordinated Notes allowed in any judicial proceedings
relative to the Company (or any other obligor upon the Senior Subordinated
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 Senior Subordinated 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
Subordinated 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
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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
Subordinated 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 Senior
Subordinated Note any plan of reorganization, arrangement, adjustment or
composition affecting the Senior Subordinated Notes or the rights of any holder
of a Senior Subordinated Note thereof, or to authorize the Trustee to vote in
respect of the claim of any holder of a Senior Subordinated 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 Subordinated Notes, for
amounts due and unpaid on such Senior Subordinated Notes for interest, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Senior Subordinated Notes for interest, and (ii) second, to the
extent any other monies are available, to holders of all Senior Subordinated
Notes for amounts due and unpaid on all such Senior Subordinated 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 Subordinated 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 Subordinated 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 Subordinated Note pursuant to Section 6.07 hereof, or a suit
by holders of more than 10% in principal amount of the then outstanding Senior
Subordinated Notes.
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ARTICLE 7.
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture, and shall use the same degree of care and skill in their
exercise as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely
by the express provisions of this Indenture and the Trustee need
perform only those duties that are specifically set forth in this
Indenture and no others, and no implied covenants or obligations shall
be read into this Indenture against the Trustee, and
(ii) in the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements
of this Indenture.
(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 Subordinated Notes, unless
such holder shall have provided to the Trustee security and indemnity
satisfactory to the Trustee against any loss, liability or expense.
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(f) The Trustee shall not be liable for interest on any
money received by it except as the Trustee may agree in writing with the
Company. Money held in trust by the Trustee need not be segregated from other
funds except to the extent required by law.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any document
believed by it to be genuine and to have been signed or presented by the proper
Person. The Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Trustee acts or refrains from acting, it
may require an Officers' Certificate or an Opinion of Counsel or both. The
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on such Officers' Certificate or Opinion of Counsel. The
Trustee may consult with counsel and the advice of such counsel or any Opinion
of Counsel shall be full and complete authorization and protection from
liability in respect of any action taken, suffered or omitted by it hereunder in
good faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents
and shall not be responsible for the misconduct or negligence of any agent
appointed with due care.
(d) The Trustee shall not be liable for any action it
takes or omits to take in good faith which it believes to be authorized or
within its rights or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this
Indenture, any demand, request, direction or notice from the Company shall be
sufficient if signed by an Officer of the Company.
(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 Subordinated 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
Subordinated Notes, it shall not be
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accountable for the Company's use of the proceeds from the Senior Subordinated
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 Subordinated Notes or any other document in connection
with the sale of the Senior Subordinated 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 Subordinated 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
Senior Subordinated 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
Subordinated Notes.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE SENIOR
SUBORDINATED 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 Subordinated 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 Subordinated Notes shall be mailed to the Company and filed
with the Commission and each stock exchange on which the Senior Subordinated
Notes are listed. The Company shall promptly notify the Trustee if the Senior
Subordinated 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
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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's payment obligations in this Section
7.07, the Trustee shall have a Lien prior to the Senior Subordinated 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 Subordinated Notes. Such Lien shall survive the
satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(g) or (h) hereof occurs, the expenses
and the compensation for the services (including the fees and expenses of its
agents and counsel) are intended to constitute expenses of administration under
any Bankruptcy Law.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section 7.08.
The Trustee may resign in writing at any time and be
discharged from the trust hereby created by so notifying the Company. The
holders of a majority in principal amount of the then outstanding Senior
Subordinated 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
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outstanding Senior Subordinated 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 Subordinated Notes of at least 10% in
principal amount of the then outstanding Senior Subordinated 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
Subordinated Note who has been a holder of a Senior Subordinated Note for at
least six months fails to comply with Section 7.10 hereof, such holder of a
Senior Subordinated 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 Subordinated Notes. The retiring Trustee
shall promptly transfer all property held by it as Trustee to the successor
Trustee, provided all sums owing to the Trustee hereunder have been paid and
subject to the Lien provided for in Section 7.07 hereof. Notwithstanding
replacement of the Trustee pursuant to this Section 7.08, the Company's
obligations under Section 7.07 hereof shall continue for the benefit of the
retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
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.
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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 Subordinated Notes, elect to have either Section 8.02
or 8.03 hereof be applied to all outstanding Senior Subordinated 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
Subordinated 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 Subordinated
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 Subordinated 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 Subordinated 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 Subordinated
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 Subordinated Notes
concerning issuing temporary Senior Subordinated Notes, registration of Senior
Subordinated Notes, mutilated, destroyed, lost or stolen Senior Subordinated
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 Subordinated Notes on and after
the date the conditions set forth in Section 8.04 are satisfied (hereinafter,
"Covenant Defeasance"), and the Senior Subordinated 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
Subordinated Notes shall not be deemed outstanding for accounting purposes). For
this purpose,
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such Covenant Defeasance means that, with respect to the outstanding Senior
Subordinated 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 Subordinated 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(c) 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
Subordinated 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 Subordinated 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 Subordinated 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 Subordinated Notes;
(b) In the case of Legal Defeasance, the Company shall
have delivered to the Trustee an opinion of counsel in the United States
reasonably acceptable to the Trustee confirming that (i) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (ii) since the Issue Date, there has been a change in the applicable
federal income tax law, in either case to the effect that, and based thereon
such opinion of counsel shall confirm that, the holders of the outstanding
Senior Subordinated 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 Subordinated Notes will not recognize income, gain or loss
for federal income tax purposes as a result of such Covenant Defeasance and
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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 Subordinated 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
Subordinated Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Senior Subordinated 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 Subordinated Notes of all sums due and to become due
thereon in respect of principal, premium, if any, and interest, but such money
and Government Securities (including any proceeds thereof) need not be
segregated from other funds except to the extent required by law.
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
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tax, fee or other charge which by law is for the account of the holders of the
outstanding Senior Subordinated 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 Subordinated 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
Subordinated 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
Subordinated 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
Subordinated Note following the reinstatement of its obligations, the Company
shall be subrogated to the rights of the holders of such Senior Subordinated
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 SUBORDINATED
NOTES.
Notwithstanding Section 9.02 hereof, the Company and the
Trustee may amend or supplement this Indenture or the Senior Subordinated Notes
without the consent of any holder of Senior Subordinated Notes:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Senior Subordinated
Notes in addition to or in place of certificated
Senior Subordinated Notes;
(c) to provide for the assumption of the Company's
obligations to holders of the Senior Subordinated
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
Subordinated 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 SUBORDINATED NOTES.
The Company and the Trustee may amend or supplement this
Indenture or the Senior Subordinated Notes or any amended or supplemental
Indenture with the written consent of the holders of Senior Subordinated Notes
of at least a majority in aggregate principal amount of the Senior Subordinated
Notes then outstanding (including consents obtained in connection with a tender
offer or exchange offer for the Senior Subordinated Notes), and any existing
Default and its consequences or compliance with any provision of this Indenture
or the Senior Subordinated Notes may be waived with the consent of the holders
of a majority in principal amount of the then outstanding Senior Subordinated
Notes (including consents obtained in connection with a tender offer or exchange
offer for the Senior Subordinated Notes).
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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
Subordinated Notes as aforesaid, and upon receipt by the Trustee of the
documents described in Section 9.06 hereof, the Trustee shall join with the
Company in the execution of such amended or supplemental Indenture unless such
amended or supplemental Indenture affects the Trustee's own rights, duties or
immunities under this 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 Subordinated 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
Subordinated 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 Subordinated Notes then outstanding may waive compliance in a particular
instance by the Company with any provision of this Indenture or the Senior
Subordinated Notes. However, without the consent of each holder affected, an
amendment or waiver may not (with respect to any Senior Subordinated Notes held
by a non-consenting holder of Senior Subordinated Notes):
(i) reduce the principal amount of Senior Subordinated
Notes whose holders must consent to an amendment,
supplement or waiver;
(ii) reduce the principal of or change the fixed maturity
of any Senior Subordinated Note or alter the
provisions with respect to the redemption of the
Senior Subordinated 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 Subordinated Notes;
(iv) waive a Default or Event of Default in the payment of
principal of or premium, if any, or interest on the
Senior Subordinated Notes (except a rescission of
acceleration of the Senior Subordinated Notes by the
holders of at least a majority in aggregate principal
amount of the Senior Subordinated Notes and a waiver
of the payment default that resulted from such
acceleration);
(v) make any Senior Subordinated Note payable in money
other than that stated in the Senior Subordinated
Notes;
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(vi) make any change in the provisions of this Indenture
relating to waivers of past Defaults or the rights of
holders of Senior Subordinated Notes to receive
payments of principal of, premium, if any, or
interest on the Senior Subordinated Notes;
(vii) waive a redemption payment with respect to any Senior
Subordinated 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
Subordinated Notes shall be set forth in a amended or supplemental Indenture
that complies with the TIA as then in effect.
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 Subordinated Note is a continuing consent
by the holder of a Senior Subordinated Note and every subsequent holder of a
Senior Subordinated Note or portion of a Senior Subordinated Note that evidences
the same debt as the consenting holder's Senior Subordinated Note, even if
notation of the consent is not made on any Senior Subordinated Note. However,
any such holder of a Senior Subordinated Note or subsequent holder of a Senior
Subordinated Note may revoke the consent as to its Senior Subordinated 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 Subordinated Note.
The Company may fix a record date for determining which
holders of the Senior Subordinated 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 Subordinated
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 SUBORDINATED NOTES.
The Trustee may place an appropriate notation about an
amendment, supplement or waiver on any Senior Subordinated Note thereafter
authenticated. The Company in exchange for all Senior Subordinated Notes may
issue and the Trustee shall authenticate new Senior Subordinated Notes that
reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Senior
Subordinated Note shall not affect the validity and effect of such amendment,
supplement or waiver.
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SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture
meeting the requirements of this Article 9, provided that, in the judgment of
the Trustee, the amendment or supplement does not adversely affect the rights,
duties, liabilities or immunities of the Trustee or the holders of Senior
Subordinated Notes. The Company may not sign an amendment or supplemental
Indenture until the Board of Directors approves it.
ARTICLE 10.
SUBORDINATION
SECTION 10.01. AGREEMENT TO SUBORDINATE.
The Company agrees, and each Holder by accepting a Senior
Subordinated Note agrees, that the Indebtedness evidenced by the Senior
Subordinated Notes is subordinated in right of payment, to the extent and in the
manner provided in this Article 10, to the prior payment in full of all Senior
Debt (whether outstanding on the date hereof or hereafter created, incurred,
assumed or guaranteed), and that the subordination is for the benefit of the
holders of Senior Debt.
SECTION 10.02. LIQUIDATION; DISSOLUTION; BANKRUPCTY.
Upon any distribution to creditors of the Company in a
liquidation or dissolution of the Company or in a bankruptcy, reorganization,
insolvency, receivership or similar proceeding relating to the Company or its
property, in an assignment for the benefit of creditors or any marshaling of the
Company's assets and liabilities:
(i) holders of Senior Debt shall be entitled to receive
payment in full of all Obligations due in respect of such Senior Debt
(including interest after the commencement of any such proceeding at
the rate specified in the applicable Senior Debt) before Holders of the
Senior Subordinated Notes shall be entitled to receive any payment with
respect to the Senior Subordinated Notes (except that Holders may
receive and retain (A) Permitted Junior Securities and (B) payments and
other distributions made from any defeasance trust created pursuant to
Section 8.01 hereof); and
(ii) until all Obligations with respect to Senior Debt (as
provided in clause (i) above) are paid in full, any distribution to
which Holders would be entitled but for this Article 10 shall be made
to holders of Senior Debt (except that Holders of Senior Subordinated
Notes may receive and retain (A) Permitted Junior Securities and (B)
payments and other distributions made from any defeasance trust created
pursuant to Section 8.01 hereof), as their interests may appear.
SECTION 10.03. DEFAULT ON DESIGNATED SENIOR DEBT.
(a) The Company may not make any payment or distribution
to the Trustee or any Holder in respect of Obligations with respect to the
Senior Subordinated Notes and may not
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acquire from the Trustee or any Holder any Senior Subordinated Notes for cash or
property (other than (A) Permitted Junior Securities and (B) payments and other
distributions made from any defeasance trust created pursuant to Section 8.01
hereof) until all principal and other Obligations with respect to the Senior
Debt have been paid in full if:
(i) a default in the payment of any principal or other
Obligations with respect to Designated Senior Debt occurs and is
continuing beyond any applicable grace period in the agreement,
indenture or other document governing such Designated Senior Debt; or
(ii) a default, other than a payment default, on
Designated Senior Debt occurs and is continuing that then permits
holders of the Designated Senior Debt to accelerate its maturity and
the Trustee receives a notice of the default (a "Payment Blockage
Notice") from a Person who may give it pursuant to Section 10.11
hereof. If the Trustee receives any such Payment Blockage Notice, no
subsequent Payment Blockage Notice shall be effective for purposes of
this Section unless and until (A) at least 360 days shall have elapsed
since the effectiveness of the immediately prior Payment Blockage
Notice and (B) all scheduled payments of principal, premium, if any,
and interest on the Senior Subordinated Notes that have come due have
been paid in full in cash. No nonpayment default that existed or was
continuing on the date of delivery of any Payment Blockage Notice to
the Trustee shall be, or be made, the basis for a subsequent Payment
Blockage Notice unless such default shall have been cured or waived for
a period of not less than 90 days.
(b) The Company may and shall resume payments on and
distributions in respect of the Senior Subordinated Notes and may
acquire them upon the earlier of:
(i) the date upon which the default is cured or waived;
or
(ii) in the case of a default referred to in clause (ii)
of Section 10.04(a) hereof, 179 days pass after the applicable Payment
Blockage Notice is received if the maturity of such Designated Senior
Debt has not been accelerated,
if this Article 10 otherwise permits the payment, distribution or acquisition at
the time of such payment or acquisition.
SECTION 10.04. ACCELERATION OF SENIOR SUBORDINATED NOTES.
If payment of the Senior Subordinated Notes is accelerated
because of an Event of Default, the Company shall promptly notify holders of
Senior Debt of the acceleration.
SECTION 10.05. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder receives any
payment of any Obligations with respect to the Senior Subordinated Notes at a
time when the Trustee or such Holder, as applicable, has actual knowledge that
such payment is prohibited by Section 10.04
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hereof, such payment shall be held by the Trustee or such Holder, in trust for
the benefit of, and shall be paid forthwith over and delivered, upon written
request, to, the holders of Senior Debt as their interests may appear or their
Representative under the indenture or other agreement (if any) pursuant to which
Senior Debt may have been issued, as their respective interests may appear, for
application to the payment of all Obligations with respect to Senior Debt
remaining unpaid to the extent necessary to pay such Obligations in full in
accordance with their terms, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Debt.
With respect to the holders of Senior Debt, the Trustee
undertakes to perform only such obligations on the part of the Trustee as are
specifically set forth in this Article 10, and no implied covenants or
obligations with respect to the holders of Senior Debt shall be read into this
Indenture against the Trustee. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Senior Debt, and shall not be liable to any
such holders if the Trustee shall pay over or distribute to or on behalf of
Holders or the Company or any other Person money or assets to which any holders
of Senior Debt shall be entitled by virtue of this Article 10, except if such
payment is made as a result of the willful misconduct or gross negligence of the
Trustee.
SECTION 10.06. NOTICE BY COMPANY.
The Company shall promptly notify the Trustee and the Paying
Agent of any facts known to the Company that would cause a payment of any
Obligations with respect to the Senior Subordinated Notes to violate this
Article 10, but failure to give such notice shall not affect the subordination
of the Senior Subordinated Notes to the Senior Debt as provided in this Article
10.
SECTION 10.07. SUBROGATION.
After all Senior Debt is paid in full and until the Senior
Subordinated Notes are paid in full, Holders of Senior Subordinated Notes shall
be subrogated (equally and ratably with all other Indebtedness pari passu with
the Senior Subordinated Notes) to the rights of holders of Senior Debt to
receive distributions applicable to Senior Debt to the extent that distributions
otherwise payable to the Holders of Senior Subordinated Notes have been applied
to the payment of Senior Debt. A distribution made under this Article 10 to
holders of Senior Debt that otherwise would have been made to Holders of Senior
Subordinated Notes is not, as between the Company and Holders, a payment by the
Company on the Senior Subordinated Notes.
SECTION 10.08. RELATIVE RIGHTS.
This Article 10 defines the relative rights of Holders of
Senior Subordinated Notes and holders of Senior Debt. Nothing in this Indenture
shall:
(i) impair, as between the Company and Holders of Senior
Subordinated Notes, the obligation of the Company, which is absolute
and unconditional, to pay principal of and interest on the Senior
Subordinated Notes in accordance with their terms;
(ii) affect the relative rights of Holders of Senior
Subordinated Notes and creditors of the Company other than their rights
in relation to holders of Senior Debt; or
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(iii) prevent the Trustee or any Holder of Senior
Subordinated Notes from exercising its available remedies upon a
Default or Event of Default, subject to the rights of holders and
owners of Senior Debt to receive distributions and payments otherwise
payable to Holders of Senior Subordinated Notes.
If the Company fails because of this Article 10 to pay
principal of or interest on a Senior Subordinated Note on the due date, the
failure is still a Default or Event of Default.
SECTION 10.09. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY.
No right of any holder of Senior Debt to enforce the
subordination of the Indebtedness evidenced by the Senior Subordinated Notes
shall be impaired by any act or failure to act by the Company or any Holder or
by the failure of the Company or any Holder to comply with this Indenture.
SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to
holders of Senior Debt, the distribution may be made and the notice given to
their Representative.
Upon any payment or distribution of assets of the Company
referred to in this Article 10, the Trustee and the Holders of Senior
Subordinated Notes shall be entitled to rely upon any order or decree made by
any court of competent jurisdiction or upon any certificate of such
Representative or of the liquidating trustee or agent or other Person making any
distribution to the Trustee or to the Holders of Senior Subordinated Notes for
the purpose of ascertaining the Persons entitled to participate in such
distribution, the holders of the Senior Debt and other Indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article 10.
SECTION 10.11. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 10 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Senior Subordinated Notes, unless the Trustee shall have
received at its Corporate Trust Office at least five Business Days prior to the
date of such payment written notice of facts that would cause the payment of any
Obligations with respect to the Senior Subordinated Notes to violate this
Article 10. Only the Company or a Representative may give the notice. Nothing in
this Article 10 shall impair the claims of, or payments to, the Trustee under or
pursuant to Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold
Senior Debt with the same rights it would have if it were not Trustee. Any Agent
may do the same with like rights.
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SECTION 10.12. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of Senior Subordinated Notes, by the Holder's
acceptance thereof, authorizes and directs the Trustee on such Holder's behalf
to take such action as may be necessary or appropriate to effectuate the
subordination as provided in this Article 10, and appoints the Trustee to act as
such Holder's attorney-in-fact for any and all such purposes. If the Trustee
does not file a proper proof of claim or proof of debt in the form required in
any proceeding referred to in Section 6.09 hereof at least 30 days before the
expiration of the time to file such claim, the Representatives are hereby
authorized to file an appropriate claim for and on behalf of the Holders of the
Senior Subordinated Notes.
SECTION 10.13. AMENDMENTS.
Any amendment to, or waiver of, the provisions of this Article
10 shall require the consent of the Holders of at least 75% in aggregate
principal amount of Senior Subordinated Notes then outstanding if such amendment
would adversely affect the legal rights of Holders. The provisions of this
Article 10 shall not be amended or modified without the written consent of the
holders of all Senior Debt.
ARTICLE 11.
MISCELLANEOUS
SECTION 11.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or
conflicts with the duties imposed by TIA ss. 318(c), the imposed duties shall
control.
SECTION 11.02. 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
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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 Subordinated 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
Subordinated 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 ss. 313(c), to the extent required by the
TIA. Failure to mail a notice or communication to a holder of a Senior
Subordinated Note or any defect in it shall not affect its sufficiency with
respect to other holders of Senior Subordinated Notes.
If a notice or communication is mailed in the manner provided
above within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to holders of
Senior Subordinated Notes, it shall mail a copy to the Trustee and each Agent at
the same time.
SECTION 11.03. COMMUNICATION BY HOLDERS OF SENIOR SUBORDINATED NOTES
WITH OTHER HOLDERS OF SENIOR SUBORDINATED NOTES.
Holders of the Senior Subordinated Notes may communicate
pursuant to TIA ss. 312(B) with other holders of Senior Subordinated Notes with
respect to their rights under this Indenture or the Senior Subordinated Notes.
The Company, the Trustee, the Registrar and anyone else shall have the
protection of TIA ss. 312(c).
SECTION 11.04. 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:
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(a) an Officers' Certificate in form and substance
reasonably satisfactory to the Trustee (which shall include the
statements set forth in Section 11.05 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 11 .05 hereof) stating that, in the
opinion of such counsel, all such conditions precedent and covenants
have been satisfied.
SECTION 11.05. 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.
SECTION 11.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a
meeting of holders of Senior Subordinated Notes. The Registrar or Paying Agent
may make reasonable rules and set reasonable requirements for its functions.
SECTION 11.07. NO PERSONAL LIABILITY 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 Subordinated 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 Subordinated Notes by accepting a Senior Subordinated
Note waives and releases all such liability. The waiver and release are part of
the consideration for issuance of the Senior Subordinated Notes. Such waiver may
not be effective
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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 11.08. GOVERNING LAW.
The internal law of the State of New York shall govern and be
used to construe this Indenture and the Senior Subordinated Notes.
SECTION 11.09. 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 11.10. SUCCESSORS.
All agreements of the Company in this Indenture and the Senior
Subordinated Notes shall bind its successors. All agreements of the Trustee in
this Indenture shall bind its successor.
SECTION 11.11. SEVERABILITY.
In case any provision in this Indenture or in the Senior
Subordinated 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 11.12. 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.
SECTION 11.13. 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]
85
<PAGE> 92
SIGNATURES
<TABLE>
<CAPTION>
<S> <C>
Dated as of February 24, 1999 INTERMEDIA COMMUNICATIONS INC.
By:
---------------------------------
Name:
Title:
Attest:
- -------------------------------------------
Name:
Title:
Dated as of February 24, 1999 SUNTRUST BANK, CENTRAL FLORIDA,
NATIONAL ASSOCIATION
Trustee
By:
--------------------------------
Name:
Title:
Attest:
- --------------------------------------------
Name:
Title:
</TABLE>
<PAGE> 93
(Face of Note) EXHIBIT A
FOR THE PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED, THIS NOTE IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT; FOR
EACH $1,000 PRINCIPAL AMOUNT OF THIS NOTE, THE ISSUE PRICE IS $550.57, THE
AMOUNT OF ORIGINAL ISSUE DISCOUNT IS $449.43, THE ISSUE DATE IS FEBRUARY 24,
1999 AND THE YIELD TO MATURITY IS 12 1/4% PER ANNUM.
12 1/4% Senior Subordinated Discount Note due 2009
No.
$____________
CUSIP No.
INTERMEDIA COMMUNICATIONS INC.
promises to pay to Cede & Co or its registered assigns,
the principal sum of $__________
on March 1, 2009.
Interest Payment Dates: March 1 and September 1, commencing September 1, 2004.
Record Dates: February 15 and August 15 (whether or not a Business Day).
Dated: February 24, 1999 INTERMEDIA COMMUNICATIONS INC.
By:
----------------------------
Title:
Trustee's Certification of Authentication
Dated: February 24, 1999
This is one of the Senior Subordinated Notes
referred to in the within-mentioned Indenture:
SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION
as Trustee
By:
-----------------------------------------
(Authorized Signatory)
Additional provisions of this Senior Subordinated Note are set forth on
the other side of this Senior Subordinated Note.
A-1
<PAGE> 94
(Back of Note)
12 1/4% Senior Subordinated Discount Note due 2009
THIS GLOBAL SECURITY IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS SENIOR SUBORDINATED 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 HAS NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY OR ANY INTEREST OR
PARTICIPATION HEREIN MAY NOT BE OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION. THE
HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES (A) TO OFFER, SELL,
PLEDGE OR OTHERWISE TRANSFER THIS SECURITY ONLY (1) TO THE COMPANY, (2) PURSUANT
TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (3) TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (4) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS
THAT OCCUR OUTSIDE THE UNITED STATES IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 904 UNDER THE SECURITIES ACT, (5) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501 (a)(1), (2), (3) OR (7) UNDER THE SECURITIES
ACT) OR (6) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS UNDER THE SECURITIES ACT (AND IN THE CASE OF A TRANSFER PURSUANT TO
CLAUSE (5) OR (6), 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) THAT IT
WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF
THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE.
A-2
<PAGE> 95
Capitalized terms used herein have the meanings assigned to
them in the Indenture (as defined below) unless otherwise indicated.
1. Interest. Intermedia Communications Inc., a Delaware
corporation (the "Company"), promises to pay interest on the principal amount of
this Senior Subordinated Note at the rate of 12 1/4% per annum from March 1,
2004 until maturity and shall pay Liquidated Damages, if any, payable pursuant
to the Senior Subordinated Note Registration Rights Agreement referred to below.
The Company will pay interest and Liquidated Damages, if any, semi-annually, on
March 1 and September 1 of each year, 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 Subordinated Notes at the close of business on the
immediately preceding February 15 and August 15, whether or not a Business Day.
The Senior Subordinated Notes will accrete at a rate of 12 1/4% per annum,
compounded semiannually to an aggregate principal amount of $364.0 million at
March 1, 2004. Thereafter, interest on the Senior Subordinated Notes will accrue
from the most recent date to which interest has been paid or, if no interest has
been paid, from March 1, 2004. No cash interest will be payable on the Senior
Subordinated Notes prior to March 1, 2004. 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 Subordinated 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 Subordinated Notes (except defaulted interest) to the Persons who are
registered holders of Senior Subordinated Notes at the close of business on the
record date next preceding the Interest Payment Date, even if such Senior
Subordinated Notes are cancelled after such record date and on or before such
Interest Payment Date. The holder hereof must surrender this Senior Subordinated
Note to a Paying Agent to collect principal payments. Principal, premium,
Liquidated Damages, if any, and interest on the Senior Subordinated 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 Subordinated 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 Senior
Subordinated Note. The Company may act in any such capacity.
4. Indenture. The Company issued the Senior Subordinated
Notes under a Senior Subordinated Note Indenture, dated as of February 24, 1999
(the "Indenture"), between the Company and the Trustee. The terms of the Senior
Subordinated 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.
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<PAGE> 96
The Senior Subordinated Notes are subject to all such terms, and holders of
Senior Subordinated 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 Subordinated Notes. The
Senior Subordinated Notes are obligations of the Company limited to the sum of
$364,000,000 in aggregate principal amount at maturity of Senior Subordinated
Notes.
5. Optional Redemption. Prior to March 1, 2004, the
Senior Subordinated 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 March 1, 2004, the Senior Subordinated 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 March 1 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2004......................................................................... 106.125%
2005......................................................................... 104.083%
2006......................................................................... 102.041%
2007......................................................................... 100.000%
</TABLE>
Notwithstanding the provisions of Section 3.07(a) of the
Indenture, in the event of the sale by the Company prior to March 1, 2002 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 at maturity
of the Senior Subordinated 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 112.25%
of the Accreted Value thereof plus accrued and unpaid Liquidated Damages, if
any, thereon to the redemption date; provided that: (i) at least 75% of the
aggregate principal amount at maturity of the Senior Subordinated Notes
originally issued remains outstanding immediately after the occurrence of such
redemption; and (ii) 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
Subordinated 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
A-4
<PAGE> 97
Senior Subordinated Notes at a purchase price equal to 101% of the Accreted
Value thereof on the date of purchase (if such date of purchase is prior to
March 1, 2004) or 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 (if such date of purchase is on or after March 1, 2004).
Holders of Senior Subordinated 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 Subordinated
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 and/or accreted value, as applicable, of Senior
Subordinated 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 Subordinated 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 Subordinated
Notes and Pari Passu Notes surrendered by holders thereof exceeds the amount of
Excess Proceeds, the Trustee shall select the Senior Subordinated 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 Subordinated Notes and
Pari Passu Notes in denominations of $1,000, or integral multiples thereof shall
be purchased). Holders of Senior Subordinated 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 Subordinated
Notes purchased by completing the form entitled "Option of Holder to Elect
Purchase" appearing below.
8. Notice of Redemption. Notice of redemption shall be
mailed by first class mail at least 30 days but not more than 60 days before the
redemption date to each holder of Senior Subordinated Notes to be redeemed at
its registered address. Senior Subordinated Notes may be redeemed in part but
only in whole multiples of $1,000, unless all of the Senior Subordinated Notes
held by a holder of Senior Subordinated Notes are to be redeemed. If any Senior
Subordinated Note is to be redeemed in part only, the notice of redemption that
relates to such Senior Subordinated Note shall state the portion of the
principal amount to be redeemed. On and after the redemption date, interest
ceases to accrue on Senior Subordinated Notes or portions of them called for
redemption.
9. Denominations, Transfer, Exchange. The Senior
Subordinated Notes are in registered form without coupons in denominations of
$1,000 and integral multiples of $1,000. The transfer of Senior Subordinated
Notes may be registered and Senior Subordinated Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a holder of
a Senior Subordinated Note, among other things, to furnish appropriate
endorsements and transfer documents and the Company may require a holder of a
Senior Subordinated Note to pay any taxes and fees required by law or permitted
by the Indenture. Neither the Company nor the
A-5
<PAGE> 98
Registrar need exchange or register the transfer of any Senior Subordinated Note
or portion of a Senior Subordinated Note selected for redemption. Also, neither
the Company nor the Registrar need exchange or register the transfer of any
Senior Subordinated Notes for a period of 15 days before a selection of Senior
Subordinated Notes to be redeemed.
10. Persons Deemed Owners. Prior to due presentment to
the Trustee for registration of the transfer of this Senior Subordinated Note,
the Trustee, any Agent and the Company shall deem and treat the Person in whose
name this Senior Subordinated 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 Subordinated Note and for all other purposes
whatsoever, whether or not this Senior Subordinated 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 Subordinated Note shall be treated
as its owner for all purposes.
11. Amendments, Supplement and Waivers. Subject to
certain exceptions, the Indenture or the Senior Subordinated Notes may be
amended or supplemented with the consent of the holders of at least a majority
in principal amount of the Senior Subordinated Notes then outstanding (including
consents obtained in connection with a tender offer or exchange offer for Senior
Subordinated Notes), and any existing default or compliance with any provision
of the Indenture or the Senior Subordinated Notes may be waived with the consent
of the holders of a majority in principal amount of the then outstanding Senior
Subordinated Notes (including consents obtained in connection with a tender
offer or exchange offer for Senior Subordinated Notes). Without the consent of
any holder of a Senior Subordinated Note, the Indenture or the Senior
Subordinated Notes may be amended or supplemented to cure any ambiguity, defect
or inconsistency; to provide for uncertificated Senior Subordinated Notes in
addition to or in place of certificated Senior Subordinated Notes; to provide
for the assumption of the Company's obligations to holders of the Senior
Subordinated 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
Subordinated 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
Subordinated Notes held by a non-consenting holder of Senior Subordinated Notes)
reduce the principal amount of Senior Subordinated Notes whose holders must
consent to an amendment, supplement or waiver; reduce the principal of or change
the fixed maturity of any Senior Subordinated Note or alter the provisions with
respect to the redemption of the Senior Subordinated 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 Subordinated Notes;
waive a Default or Event of Default in the payment of principal of or premium,
if any, or interest on the Senior Subordinated Notes (except a rescission of
acceleration of the Senior Subordinated Notes by the holders of at least a
majority in aggregate principal amount of the Senior Subordinated Notes and a
waiver of the payment default that resulted from such acceleration); make any
Senior Subordinated Note payable in money other than that stated in the Senior
Subordinated Notes; make any change in the provisions of the Indenture relating
to waivers of past Defaults or the rights of holders of Senior Subordinated
Notes to receive
A-6
<PAGE> 99
payments of principal of, premium, if any, or interest on the Senior
Subordinated Notes; waive a redemption payment with respect to any Senior
Subordinated 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
Subordinated Notes, whether or not prohibited by Article 10 of the Indenture;
default in payment when due of principal or premium, if any, on the Senior
Subordinated Notes at maturity, upon redemption or otherwise, whether or not
prohibited by Article 10 of the Indenture; 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
Subordinated Notes then outstanding to comply with its other agreements in the
Indenture or the Senior Subordinated 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 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 the maturity of which has been
accelerated as provided 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 Subordinated
Notes may declare all the Senior Subordinated Notes to be due and payable
immediately. Upon such declaration, the principal of (or, if prior to March 1,
2004, the Accreted Value of), premium, if any, and accrued and unpaid interest
and Liquidated Damages, if any, on the Senior Subordinated 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 Subordinated Notes may not enforce the Indenture or the
Senior Subordinated Notes except as provided in the Indenture. The holders of a
majority in aggregate principal amount of the Senior Subordinated Notes then
outstanding, by notice to the Trustee, may on behalf of the holders of all of
the Senior Subordinated 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 Subordinated 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
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<PAGE> 100
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 Subordinated 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 Subordinated Notes by accepting a
Senior Subordinated Note waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Senior Subordinated
Notes.
15. Authentication. This Senior Subordinated 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 Subordinated 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 Subordinated
Notes under the Indenture, holders of Transfer Restricted Securities shall have
all the rights set forth in the Senior Subordinated 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 Subordinated Notes
and has directed the Trustee to use CUSIP numbers in notices of redemption as a
convenience to holders of Senior Subordinated Notes. No representation is made
as to the accuracy of such numbers either as printed on the Senior Subordinated
Notes or as contained in any notice of redemption and reliance may be placed
only on the other identification numbers placed thereon.
19. Subordination. Payment of principal, interest and
premium and Liquidated Damages, if any, on the Senior Subordinated Notes is
subordinated to the prior payment of Senior Debt on the terms provided in the
Indenture.
The Company will furnish to any holder of a Senior
Subordinated 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> 101
ASSIGNMENT FORM
To assign this Senior Subordinated Note, fill in the form
below: (I) or (we) assign and transfer this Senior Subordinated 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 Subordinated 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> 102
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have all or any part of this Senior
Subordinated 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 Subordinated
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> 103
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL SECURITY
The following exchanges of a part of this Global Security for
an interest in another Global Security or for a Certificated Security, or
exchanges of a part of another Global Security or Certificated Security for an
interest in this Global Security, have been made:
<TABLE>
<CAPTION>
Principal Amount
of
Amount of decrease Amount of increase in this Global Security Signature of
in Principal Amount Principal Amount following such authorized officer of
of of decrease Trustee or Note
Date of Exchange this Global Security this Global Security (or increase) Custodian
---------------- -------------------- -------------------- ------------- ---------
<S> <C> <C> <C> <C>
</TABLE>
<PAGE> 104
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: 12 1/4% Senior Subordinated Discount Notes due 2009
Reference is hereby made to the Senior Subordinated Note
Indenture, dated as of February 24, 1999 (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 Subordinated Note[s] or interest in such Senior Subordinated
Note[s] specified in Annex A hereto, in the principal amount of $_____________
in such Senior Subordinated 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
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<PAGE> 105
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):
(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 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
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<PAGE> 106
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.
This certificate and the statements contained herein are made
for your benefit and the benefit of the Company.
------------------------
[NAME OF TRANSFEROR]
By:
------------------------------------
Name:
Title:
Dated ____________, ____
B-3
<PAGE> 107
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> 108
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: 12 1/4% Senior Subordinated Discount Notes due 2009
(CUSIP ____________)
Reference is hereby made to the Senior Subordinated Note
Indenture, dated as of February 24, 1999 (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 Subordinated Note[s] or interest in such Senior Subordinated Note[s]
specified herein, in the principal amount of $ _____________ in such Senior
Subordinated 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
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<PAGE> 109
the Exchange of the Holder's Restricted Book-Entry Interests for Certificated
Securities that do not bear the Private Placement Legend, the Holder hereby
certifies (i) the Certificated Securities are being acquired for the Holder's
own account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to the Restricted Global Security and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required 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 Subordinated 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
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<PAGE> 110
transfer enumerated in the Private Placement Legend printed on the Restricted
Certificated Securities and in the Indenture and the Securities Act.
(b) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED CERTIFICATED
SECURITIES TO RESTRICTED BOOK-ENTRY INTERESTS. In connection with the Exchange
of the Holder's Restricted Certificated Security for Restricted Book-Entry
Interests in the [CHECK ONE] 144A Global Security, IAI Global Security, (i) the
Restricted Book-Entry Interests 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.
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:
--------------, -----
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<PAGE> 111
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: 12 1/4% Senior Subordinated Discount Notes due 2009
Reference is hereby made to the Senior Subordinated Note
Indenture, dated as of February 24, 1999 (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 Subordinated 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 Subordinated 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
D-1
<PAGE> 112
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 any other available exemption from the registration requirements under the
Securities Act, provided that, prior to such transfer, we furnish 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 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 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 Subordinated 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 Subordinated Notes purchased by us will bear a legend to the
foregoing effect.
4. We are an institutional "accredited investor" (as
defined in Rule 501(a)(l), (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
Subordinated 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 Subordinated 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 4.9
EXECUTION COPY
================================================================================
SENIOR NOTE REGISTRATION RIGHTS AGREEMENT
$300,000,000
9 1/2% Senior Notes due 2009
Dated as of February 24, 1999
by and among
INTERMEDIA COMMUNICATIONS INC.,
BEAR, STEARNS & CO. INC.,
MERRILL LYNCH & CO.
SALOMON SMITH BARNEY
NATIONSBANC MONTGOMERY SECURITIES LLC
and
WARBURG DILLON READ LLC
===============================================================================
<PAGE> 2
This Senior Note Registration Rights Agreement (this
"Agreement") is made and entered into as of February 24, 1999 by and among
Intermedia Communications Inc., a Delaware corporation (the "Company"), and
Bear, Stearns & Co. Inc., Merrill Lynch Pierce, Fenner & Smith Incorporated,
Salomon Smith Barney Inc., NationsBanc Montgomery Securities LLC and Warburg
Dillon Read LLC (each, an "Initial Purchaser" and together, the "Initial
Purchasers"), each of whom have agreed to purchase the Company's 9 1/2% Senior
Notes due 2009 (the "Senior Notes") pursuant to the Purchase Agreement (as
defined below).
This Agreement is made pursuant to the Senior Note Purchase
Agreement in respect to the Senior Notes, dated February 19, 1999 (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.
2
<PAGE> 3
Effectiveness Target Date: As defined in Section 5.
Exchange Act: The Securities Exchange Act of 1934, as
amended.
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 Senior Note 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 Senior Note 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 9 1/2% New Senior Notes due
2009 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.
3
<PAGE> 4
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 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.
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
180 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 use its best efforts to 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
4
<PAGE> 5
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 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 Transfer
Restricted Securities cease to be Transfer Restricted Securities 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.
5
<PAGE> 6
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 as promptly as possible on
or prior to (1) in the case of a Registration Statement filed pursuant
to clause (i) above, 180 days after the date on which the Company
becomes obligated to file such Shelf Registration Statement (and in
any event, within 270 days after the Closing Date), and (2) in the
case of a Registration Statement filed pursuant to clause (ii) above,
180 days after the date on which the Company receives the notice
specified in clause (ii) above. If, after the Company has filed an
Exchange Offer Registration Statement which satisfies the requirements
of Section 3(a) above, the Company is required to file and make
effective a Shelf Registration Statement solely because the Exchange
Offer is not permitted under applicable federal law, then the filing
of the Exchange Offer Registration Statement shall be deemed to
satisfy the requirements of clause (x) above. Such an event shall have
no effect on the requirements of this clause (y), or on the
Effectiveness Target Date as defined in Section 5 below.
The Company shall use its best efforts to keep the Shelf Registration Statement
discussed in this Section 4(a) continuously effective, supplemented and amended
as required by the provisions of Sections 6(b) and (c) hereof to the extent
necessary to ensure that it is available for sales of Transfer Restricted
Securities by the Holders thereof entitled to the benefit of this Section 4(a),
and to ensure that it conforms with the requirements of this Agreement, the Act
and the policies, rules and regulations of the Commission as announced from
time to time, for a period expiring on the earlier of (i) the date that all
Holders of Transfer Restricted Securities have sold such securities pursuant to
the Shelf Registration Statement and (ii) 365 days from the date on which the
Shelf 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
6
<PAGE> 7
the Company determines that compliance with the disclosure obligations
necessary to maintain the effectiveness of the Registration Statement at such
time could reasonably be expected to have a material adverse effect on the
Company or a pending corporate transaction of the Company (a "Permitted
Suspension").
(b) Provision by Holders of Certain Information in
Connection with the Shelf Registration Statement. No Holder of Transfer
Restricted Securities may include any of its Transfer Restricted Securities in
any Shelf Registration Statement pursuant to this Agreement unless and until
such Holder furnishes to the Company in writing, within 20 Business Days after
receipt of a request therefor, such information specified in item 507 of
Regulation S-K under the Act for use in connection with any Shelf Registration
Statement or Prospectus or preliminary Prospectus included therein. No Holder
of Transfer Restricted Securities shall be entitled to Liquidated Damages
pursuant to Section 5 hereof unless and until such Holder shall have provided
all such information required to be provided by such Holder for inclusion
therein. Each Holder as to which any Shelf Registration Statement is being
effected agrees to furnish promptly to the Company, for so long as the
Registration Statement is effective, all information required to be disclosed
in order to make the information previously furnished to the Company by such
Holder not materially misleading.
SECTION 5. LIQUIDATED DAMAGES
If (i) the Company fails to file any of the Registration
Statements required by this Agreement on or before the date specified for such
filing in this Agreement, (ii) any of such Registration Statements is not
declared effective by the Commission on or prior to the date specified for such
effectiveness (the "Effectiveness Target Date"), (iii) the Company fails to
Consummate the Exchange Offer within 30 business days of the Effectiveness
Target Date with respect to the Exchange Offer Registration Statement or (iv)
the Shelf Registration Statement or the Exchange Offer Registration Statement
is declared effective but thereafter ceases to be effective or usable in
connection with resales 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.
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SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection
with the Exchange Offer, the Company shall comply with all applicable
provisions of Section 6(c) below, shall use its best efforts to effect such
exchange and to permit the sale of Broker-Dealer Transfer Restricted Securities
being sold in accordance with the intended method or methods of distribution
thereof, and shall comply with all of the following provisions:
(i) If, following the date hereof there has
been published a change in Commission policy with respect to exchange
offers such as the Exchange Offer, such that in the reasonable opinion
of counsel to the Company there is a substantial question as to
whether the Exchange Offer is permitted by applicable federal law, the
Company hereby agrees to seek a no-action letter or other favorable
decision from the Commission allowing the Company to Consummate an
Exchange Offer for such Senior Notes. The Company hereby agrees to
pursue the issuance of such a decision to the Commission staff level.
In connection with the foregoing, the Company hereby agrees to take
such other actions as are requested by the Commission or otherwise
required in connection with the issuance of such decision, including
without limitation (A) participating in telephonic conferences with
the Commission, (B) delivering to the Commission staff an analysis
prepared by counsel to the Company setting forth the legal bases, if
any, upon which such counsel has concluded that such an Exchange Offer
should be permitted and (C) diligently pursuing a resolution by the
Commission staff of such submission.
(ii) As a condition to its participation in the
Exchange Offer pursuant to the terms of this Agreement, each Holder of
Transfer Restricted Securities shall furnish, upon the request of the
Company, prior to the Consummation of the Exchange Offer, a written
representation to the Company (which may be contained in the letter of
transmittal contemplated by the Exchange Offer Registration Statement)
to the effect that (A) it is not an affiliate of the 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)
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<PAGE> 9
above, (B) including a representation that the Company has not entered
into any arrangement or understanding with any Person to distribute
the New Senior Notes to be received in the Exchange Offer and that, to
the best of the Company's information and belief, each Holder
participating in the Exchange Offer is acquiring the New Senior Notes
in its ordinary course of business and has no arrangement or
understanding with any Person to participate in the distribution of
the New Senior Notes received in the Exchange Offer and (C) any other
undertaking or representation required by the Commission as set forth
in any no-action letter obtained pursuant to clause (i) above.
(b) Shelf Registration Statement. In connection with the
Shelf Registration Statement the Company shall comply with all the provisions
of Section 6(c) below and shall use its best efforts to effect such
registration to permit the sale of the Transfer Restricted Securities being
sold in accordance with the intended method or methods of distribution thereof
(as indicated in the information furnished to the Company pursuant to Section
4(b) hereof), and pursuant thereto the Company will prepare and file with the
Commission a Registration Statement relating to the registration on any
appropriate form under the Act, which form shall be available for the sale of
the Transfer Restricted Securities in accordance with the intended method or
methods of distribution thereof within the time periods and otherwise in
accordance with the provisions hereof.
(c) General Provisions. In connection with any
Registration Statement and any related Prospectus required by this Agreement to
permit the sale or resale of Transfer Restricted Securities (including, without
limitation, any Exchange Offer Registration Statement and the related
Prospectus, to the extent that the same are required to be available to permit
sales of Broker-Dealer Transfer Restricted Securities by Restricted
Broker-Dealers), the Company shall:
(i) use its best efforts to keep such
Registration Statement continuously effective, subject to a Permitted
Suspension, and provide all requisite financial statements for the
period specified in Section 3 or 4 of this Agreement, as applicable.
Upon the occurrence of any 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;
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(iii) advise the underwriters, if any, and
selling Holders promptly and, if requested by such Persons, confirm
such advice in writing, (A) when the Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and, with
respect to any Registration Statement or any post-effective amendment
thereto, when the same has become effective, (B) of any request by the
Commission for amendments to the Registration Statement or amendments
or supplements to the Prospectus or for additional information
relating thereto, (C) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement under
the Act or of the suspension by any state securities commission of the
qualification of the Transfer Restricted Securities for offering or
sale in any jurisdiction, or the initiation of any proceeding for any
of the preceding purposes, (D) of the existence of any fact or the
happening of any event that makes any statement of a material fact
made in the Registration Statement, the Prospectus, any amendment or
supplement thereto or any document incorporated by reference therein
untrue, or that requires the making of any additions to or changes in
the Registration Statement in order to make the statements therein not
misleading, or that requires the making of any additions to or changes
in the Prospectus in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
If at any time the Commission shall issue any stop order suspending
the effectiveness of the Registration Statement, or any state
securities commission or other regulatory authority shall issue an
order suspending the qualification or exemption from qualification of
the Transfer Restricted Securities under state securities or Blue Sky
laws, the Company shall use its best efforts to obtain the withdrawal
or lifting of such order at the earliest possible time;
(iv) make available, if requested, to each
selling Holder named in any Registration Statement or Prospectus and
each of the underwriters in connection with such sale, if any, before
filing with the Commission, copies of any Registration Statement or
any Prospectus included therein or any amendments or supplements to
any such Registration Statement or Prospectus (including all documents
incorporated by reference after the initial filing of such
Registration Statement), substantially in the form to be filed, which
documents will be subject to the review and comment of such Holders
and underwriters, in connection with such 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
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<PAGE> 11
attorney or accountant retained by such selling Holders or any of such
underwriters), all financial and other records, pertinent corporate
documents and properties of the Company and cause the Company's
officers, directors and employees to supply all information reasonably
requested by any such Holder, underwriter, attorney or accountant in
connection with such Registration Statement or any post-effective
amendment thereto subsequent to the filing thereof and prior to its
effectiveness; provided that any person to whom information is
provided under this clause (vi) agrees in writing to maintain the
confidentiality of such information to the extent such information is
not in the public domain;
(vii) if requested by any selling Holders or the
underwriters in connection with such sale, if any, promptly include in
any Registration Statement or Prospectus, pursuant to a supplement or
post-effective amendment if necessary, such information as such
selling Holders and underwriter(s), if any, may reasonably request to
have included therein, including, without limitation, information
relating to the "Plan of Distribution" of the Transfer Restricted
Securities, information with respect to the principal amount of
Transfer Restricted Securities being sold to such underwriters, the
purchase price being paid therefor and any other terms of the offering
of the Transfer Restricted Securities to be sold in such offering; and
make all required filings of such Prospectus supplement or
post-effective amendment as soon as practicable after the Company is
notified of the matters to be included in such Prospectus supplement
or post-effective amendment;
(viii) cause the Transfer Restricted Securities
covered by the Registration Statement to be rated with the appropriate
rating agencies, if so requested by the Holders of a majority in
aggregate principal amount of Senior Notes covered thereby or the
underwriters, if any;
(ix) furnish to each selling Holder and each of
the underwriters in connection with such sale, if any, without charge,
at least one copy of the Registration Statement, as first filed with
the Commission, and of each amendment thereto, and make available all
documents incorporated by reference therein and all exhibits
(including exhibits incorporated therein by reference);
(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
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Registration, the Company, if requested by any Holder of Transfer
Restricted Securities or underwriter, shall:
(A) furnish to each selling Holder and
each underwriter, if any, upon the effectiveness of the Shelf
Registration Statement and to each Restricted Broker-Dealer
upon consummation of the Exchange Offer:
(1) a certificate, dated the date of
effectiveness of the Shelf Registration Statement or
the date of Consummation of the Exchange Offer, as
the case may be, signed by (x) the President or any
Vice President and (y) a principal financial or
accounting officer of the Company, confirming with
respect to the Prospectus or any purchase or
underwriting agreement and the Transfer Restricted
Securities, as of the date thereof, the matters set
forth in paragraphs (a), (b), (c) and (d) of Section
8 of the Purchase Agreement and such other matters
as the Holders and/or underwriter(s) may reasonably
request;
(2) an opinion, dated the date of effectiveness
of the Shelf Registration Statement or the date of
Consummation of the Exchange Offer, as the case may
be, of counsel for the Company, covering (i) due
authorization and enforceability of the Senior Notes
and the New Senior Notes, (ii) a statement to the
effect that such counsel has participated in
conferences with officers and other representatives
of the Company and representatives of the
independent public accountants for the Company and
have considered the matters required to be stated
therein and the statements contained therein,
although such counsel has not independently verified
the accuracy, completeness or fairness of such
statements; and that such counsel advises that, on
the basis of the foregoing (relying as to
materiality to a large extent upon facts provided to
such counsel by officers and other representatives
of the Company and without independent check or
verification), no facts came to such counsel's
attention that caused such counsel to believe that
the applicable Registration Statement, at the time
such Registration Statement or any post-effective
amendment thereto became effective, and, in the case
of the Exchange Offer Registration Statement, as of
the date of Consummation, contained an untrue
statement of a material fact or omitted to state a
material fact required to be stated therein or
necessary to make the statements therein not
misleading, or that the Prospectus contained in such
Registration Statement as of its date and, in the
case of the opinion dated the date of Consummation
of the Exchange Offer, as of the date of
Consummation, contained an untrue statement of a
material fact or omitted to state a material fact
necessary in order to make the statements therein,
in the light of the circumstances under which they
were made, not misleading and (iii) such other
matters of the type customarily covered in opinions
of counsel for an issuer in connection with similar
securities offerings, as may reasonably be requested
by such parties. Without limiting the foregoing,
such counsel may state further that such counsel
assumes no responsibility for, and has not
independently verified, the accuracy, completeness
or fairness of the financial statements, notes and
schedules and other financial, statistical and
accounting data included in any Registration
Statement contemplated by this Agreement or the
related Prospectus; and
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(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 as the Holders or the underwriters, if
any, may request at least two Business Days prior to such sale of
Transfer Restricted Securities;
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(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 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
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(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 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.
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SECTION 8. INDEMNIFICATION
(a) The Company agrees to indemnify and hold harmless
(i) each Holder, (ii) each person, if any, who controls a Holder within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act and (iii)
the respective officers, directors, partners, employees, representatives and
agents of any Holder or any controlling person to the fullest extent lawful,
from and against any and all losses, liabilities, claims, damages and expenses
whatsoever (including but not limited to attorneys' fees and any and all
expenses whatsoever incurred in investigating, preparing or defending against
any investigation or litigation, commenced or threatened, or any claim
whatsoever, and any and all amounts paid in settlement of any claim or
litigation), joint or several, to which they or any of them may become subject
under the Act, the Exchange Act or otherwise, insofar as such losses,
liabilities, claims, damages or expenses (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or the Prospectus, or in
any supplement thereto or amendment thereof, or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided,
however, that the Company will not be liable in any such case to the extent,
but only to the extent, that (i) any such loss, liability, claim, damage or
expense arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with written information furnished to the Company by or on
behalf of such Holder expressly for use therein and (ii) the foregoing
indemnity with respect to any untrue statement contained in or omitted from a
Registration Statement or the Prospectus shall not inure to the benefit of any
Holder (or any person controlling such Holder), from whom the person asserting
any such loss, liability, claim, damage or expense purchased any of the Senior
Notes which are the subject thereof if it is finally judicially determined that
such loss, liability, claim, damage or expense resulted solely from the fact
that the Holder sold Senior Notes to a person to whom there was not sent or
given, at or prior to the written confirmation of such sale, a copy of the
Registration Statement and the Prospectus, as amended or supplemented, and (x)
the Company shall have previously and timely furnished sufficient copies of the
Registration Statement or Prospectus, as so amended or supplemented, to such
Holder in accordance with this Agreement and (y) the Registration Statement or
Prospectus, as so amended or supplemented, would have corrected such untrue
statement or omission of a material fact. This indemnity agreement will be in
addition to any liability which the Company may otherwise have, including,
under this Agreement.
(b) Each Holder, severally and not jointly, agrees to
indemnify and hold harmless the Company and each person, if any, who controls
the Company within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, against any losses, liabilities, claims, damages and expenses
whatsoever (including but not limited to attorneys' fees and any and all
expenses whatsoever incurred in 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
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<PAGE> 17
indemnity will be in addition to any liability which a Holder may otherwise
have, including under this Agreement. In no event, however, shall the liability
of any selling Holder hereunder be greater in amount than the dollar amount of
the proceeds received by such Holder upon its sale of the Senior Notes giving
rise to such indemnification obligation.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the extent that it
has been prejudiced in any material respect by such failure or from any
liability which it may otherwise have). In case any such action is brought
against any indemnified party, and it notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. Notwithstanding the foregoing, the
indemnified party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by the indemnifying parties
in connection with the defense of such action, (ii) the indemnifying parties
shall not have employed counsel to take charge of the defense of such action
within a reasonable time after notice of commencement of the action, or (iii)
such indemnified party or parties shall have reasonably concluded that there
may be defenses available to it or them which are different from or additional
to those available to one or all of the indemnifying parties (in which case the
indemnifying party or parties shall not have the right to direct the defense of
such action on behalf of the indemnified party or parties), in any of which
events such fees and expenses of counsel shall be borne by the indemnifying
parties; provided, however, that the indemnifying party under subsection (a) or
(b) above, shall only be liable for the legal expenses of one counsel (in
addition to any local counsel) for all indemnified parties in each jurisdiction
in which any claim or action is brought. Anything in this subsection to the
contrary notwithstanding, an indemnifying party shall not be liable for any
settlement of any claim or action effected without its prior written consent,
provided, however, that such consent was not unreasonably withheld.
(d) In order to provide for contribution in
circumstances in which the indemnification provided for in this Section 8 is
for any reason held to be unavailable from the Company or is insufficient to
hold harmless a party indemnified thereunder, the Company and each Holder shall
contribute to the aggregate losses, claims, damages, liabilities and expenses
of the nature contemplated by such indemnification provision (including any
investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claims
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
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<PAGE> 18
received by the Company and any Holder shall be deemed to be in the same
proportion as (x) the total proceeds from the offering of the Senior Notes (net
of discounts but before deducting expenses) received by the Company and (y) the
total proceeds received by such Holder upon its sale of Senior Notes which
would otherwise give rise to the indemnification obligation, respectively. The
relative fault of the Company and of the Holders shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company or the Holders and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The Company and each Holder
agree that it would not be just and equitable if contribution pursuant to this
Section 8 were determined by pro rata allocation or by any other method of
allocation which does not take into account the equitable considerations
referred to above. Notwithstanding the provisions of this Section 8, (i) no
Holder shall be required to contribute, in the aggregate, any amount in excess
of the amount by which the total received by such Holder with respect to the
sale of its Senior Notes exceeds the sum of (A) the paid by such Holder for
such Senior Notes plus (B) the amount of any damages which such Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission and (ii) no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8, (A) each person,
if any, who controls a Holder within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act and (B) the respective officers, directors,
partners, employees, representatives and agents of a Holder or any controlling
person shall have the same rights to contribution as such Holder, and each
person, if any, who controls the Company within the meaning of Section 15 of
the Act or Section 20(a) of the Exchange Act shall have the same rights to
contribution as the Company, subject in each case to clauses (i) and (ii) of
this Section 8(d). Any party entitled to contribution will, promptly after
receipt of notice of commencement of any action, suit or proceeding against
such party in respect of which a claim for contribution may be made against
another party or parties under this Section 8, notify such party or parties
from whom contribution may be sought, but the failure to so notify such party
or parties shall not relieve the party or parties from whom contribution may be
sought from any obligation it or they may have under this Section 8 or
otherwise. No party shall be liable for contribution with respect to any action
or claim settled without its prior written consent; provided, however, that
such written consent was not unreasonably withheld.
SECTION 9. RULE 144A
The Company hereby agrees with each Holder, for so long as any Transfer
Restricted Securities remain outstanding, to make available, upon request of
any Holder of Transfer Restricted Securities, to any Holder or beneficial owner
of Transfer Restricted Securities in connection with any sale thereof and any
prospective purchaser of such Transfer Restricted Securities designated by such
Holder or beneficial owner, the information required by Rule 144A(d)(4) under
the Act in order to permit resales of such Transfer Restricted Securities
pursuant to Rule 144A.
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
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<PAGE> 19
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 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:
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<PAGE> 20
(i) if to a Holder, at the address set forth on
the records of the Registrar under the
Indenture, with a copy to the Registrar
under the Indenture; and
(ii) if to the Company:
Intermedia Communications Inc.
3625 Queen Palm Drive
Tampa, Florida 33619
Telecopier No.: (813) 829-2470
Attention: Chief Financial Officer
With a copy to:
Kronish, Lieb, Weiner & Hellman LLP
1114 Avenue of the Americas, 46th Floor
New York, New York 10036
Telecopier No.: (212) 997-3527
Attention: Ralph J. Sutcliffe
All such notices and communications shall be deemed to have
been duly given: at the time delivered by hand, if personally delivered; five
Business Days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt acknowledged, if telecopied; and
on the next business day, if timely delivered to an air courier guaranteeing
overnight delivery.
Copies of all such notices, demands or other communications
shall be concurrently delivered by the Person giving the same to the Trustee at
the address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure
to the benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders of Transfer Restricted Securities; provided,
however, that this Agreement shall not inure to the benefit of or be binding
upon a successor or assign of a Holder unless and to the extent such successor
or assign acquired Transfer Restricted Securities directly from such Holder.
(g) Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO THE CONFLICT OF LAW RULES THEREOF.
(j) Severability. In the event that any one or more of
the provisions contained herein, or the application thereof in any
circumstance, is held invalid, illegal or unenforceable, the validity, legality
and enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired
thereby.
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(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.
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<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:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
-------------------------------------------------
Name:
Title:
SALOMON SMITH BARNEY INC.
By: SALOMON SMITH BARNEY INC.
-------------------------------------------------
Name:
Title:
<PAGE> 23
NATIONSBANC MONTGOMERY SECURITIES LLC
By: NATIONSBANC MONTGOMERY SECURITIES LLC
-------------------------------------------------
Name:
Title:
WARBURG DILLON READ LLC
By: WARBURG DILLON READ LLC
-------------------------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 4.10
EXECUTION COPY
================================================================================
SENIOR SUBORDINATED NOTE REGISTRATION RIGHTS AGREEMENT
$364,000,000
12 1/4% Senior Subordinated Discount Notes due 2009
Dated as of February 24, 1999
by and among
INTERMEDIA COMMUNICATIONS INC.,
BEAR, STEARNS & CO. INC.,
MERRILL LYNCH & CO.
SALOMON SMITH BARNEY
NATIONSBANC MONTGOMERY SECURITIES LLC
and
WARBURG DILLON READ LLC
================================================================================
<PAGE> 2
This Senior Subordinated Note Registration Rights Agreement (this
"Agreement") is made and entered into as of February 24, 1999 by and among
Intermedia Communications Inc., a Delaware corporation (the "Company"), and
Bear, Stearns & Co. Inc., Merrill Lynch Pierce, Fenner & Smith Incorporated,
Salomon Smith Barney Inc., NationsBanc Montgomery Securities LLC and Warburg
Dillon Read LLC (each, an "Initial Purchaser" and together, the "Initial
Purchasers"), each of whom have agreed to purchase the Company's 12 1/4% Senior
Subordinated Discount Notes due 2009 (the "Senior Subordinated Notes") pursuant
to the Purchase Agreement (as defined below).
This Agreement is made pursuant to the Senior Subordinated Note
Purchase Agreement in respect to the Senior Subordinated Notes, dated February
19, 1999 (the "Purchase Agreement"), by and among the Company and the Initial
Purchasers. In order to induce the Initial Purchasers to purchase the Senior
Subordinated 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 Subordinated
Notes that are acquired by a Broker-Dealer in the Exchange Offer in exchange
for Senior Subordinated Notes that such Broker-Dealer acquired for its own
account as a result of market making activities or other trading activities
(other than Senior Subordinated 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 Subordinated 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
Subordinated Notes in the same aggregate principal amount at maturity as the
aggregate principal
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<PAGE> 3
amount at maturity of Senior Subordinated 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.
Exchange Offer: The registration by the Company under the Act of the
New Senior Subordinated 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 Subordinated Notes in
an aggregate principal amount at maturity equal to the aggregate principal
amount at maturity 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 Senior Subordinated Note Indenture, dated the Closing
Date, between the Company and SunTrust Bank, Central Florida, National
Association, as trustee (the "Trustee"), pursuant to which the Senior
Subordinated Notes are to be issued, as such Senior Subordinated Note 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
Subordinated Notes.
NASD: National Association of Securities Dealers, Inc.
New Senior Subordinated Notes: The Company's 12 1/4% New Senior
Subordinated Notes due 2009 to be issued pursuant to the Indenture (i) in the
Exchange Offer or (ii) upon the request of any Holder of Senior Subordinated
Notes covered by a Shelf Registration Statement, in exchange for such Senior
Subordinated 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 Subordinated 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.
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<PAGE> 4
Restricted Broker-Dealer: Any Broker-Dealer which holds Broker-Dealer
Transfer Restricted Securities.
Senior Subordinated Notes: The Senior Subordinated Notes and the New
Senior Subordinated 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 Subordinated Note until
the earliest to occur of (i) the date on which such Senior Subordinated Note is
exchanged by a person other than a broker-dealer for a New Senior Subordinated
Note in the Exchange Offer, (ii) following the exchange by a broker-dealer in
the Exchange Offer of a Senior Subordinated Note for a New Senior Subordinated
Note, the date on which such New Senior Subordinated 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 Subordinated Note is effectively
registered under the Act and disposed of in accordance with the Shelf
Registration Statement or (iv) the date on which such Senior Subordinated Note
may be distributed to the public pursuant to Rule 144 under the Act.
Underwritten Registration or Underwritten Offering: A registration in
which securities of the Company are sold to an underwriter for reoffering to
the public.
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities
(each, a "Holder") whenever such Transfer Restricted Securities are registered
in such Person's name.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by
applicable federal law (after the procedures set forth in Section 6(a)(i) below
have been complied with), the Company shall (i) cause to be filed with the
Commission as soon as practicable after the Closing Date, but in no event later
than 60 days after the Closing Date, the Exchange Offer Registration Statement,
(ii) use its best efforts to cause such Exchange Offer Registration Statement
to become effective at the earliest possible time, but in no event later than
180 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 Subordinated 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 use its best efforts to
Consummate the Exchange Offer. The Exchange Offer shall be on the appropriate
form permitting registration of the New Senior Subordinated Notes to be offered
in exchange for the Senior Subordinated 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.
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<PAGE> 5
(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 Subordinated
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
Subordinated 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 Subordinated
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 Subordinated Note received
by such Broker-Dealer in the Exchange Offer, which prospectus delivery
requirement may be satisfied by the delivery by such Broker-Dealer of the
Prospectus contained in the Exchange Offer Registration Statement. Such "Plan
of Distribution" section shall also contain all other information with respect
to such sales of Broker-Dealer Transfer Restricted Securities by Restricted
Broker-Dealers that the Commission may require in order to permit such sales
pursuant thereto, but such "Plan of Distribution" shall not name any such
Broker-Dealer or disclose the amount of Senior Subordinated 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 Transfer
Restricted Securities cease to be Transfer Restricted Securities 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
Subordinated 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
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<PAGE> 6
Senior Subordinated 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
Subordinated 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 as promptly as possible on
or prior to (1) in the case of a Registration Statement filed pursuant
to clause (i) above, 180 days after the date on which the Company
becomes obligated to file such Shelf Registration Statement (and in
any event, within 270 days after the Closing Date), and (2) in the
case of a Registration Statement filed pursuant to clause (ii) above,
180 days after the date on which the Company receives the notice
specified in clause (ii) above. If, after the Company has filed an
Exchange Offer Registration Statement which satisfies the requirements
of Section 3(a) above, the Company is required to file and make
effective a Shelf Registration Statement solely because the Exchange
Offer is not permitted under applicable federal law, then the filing
of the Exchange Offer Registration Statement shall be deemed to
satisfy the requirements of clause (x) above. Such an event shall have
no effect on the requirements of this clause (y), or on the
Effectiveness Target Date as defined in Section 5 below.
The Company shall use its best efforts to keep the Shelf Registration Statement
discussed in this Section 4(a) continuously effective, supplemented and amended
as required by the provisions of Sections 6(b) and (c) hereof to the extent
necessary to ensure that it is available for sales of Transfer Restricted
Securities by the Holders thereof entitled to the benefit of this Section 4(a),
and to ensure that it conforms with the requirements of this Agreement, the Act
and the policies, rules and regulations of the Commission as announced from
time to time, for a period expiring on the earlier of (i) the date that all
Holders of Transfer Restricted Securities have sold such securities pursuant to
the Shelf Registration Statement and (ii) 365 days from the date on which the
Shelf 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
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
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<PAGE> 7
with any Shelf Registration Statement or Prospectus or preliminary Prospectus
included therein. No Holder of Transfer Restricted Securities shall be entitled
to Liquidated Damages pursuant to Section 5 hereof unless and until such Holder
shall have provided all such information required to be provided by such Holder
for inclusion therein. Each Holder as to which any Shelf Registration Statement
is being effected agrees to furnish promptly to the Company, for so long as the
Registration Statement is effective, all information required to be disclosed
in order to make the information previously furnished to the Company by such
Holder not materially misleading.
SECTION 5. LIQUIDATED DAMAGES
If (i) the Company fails to file any of the Registration Statements
required by this Agreement on or before the date specified for such filing in
this Agreement, (ii) any of such Registration Statements is not declared
effective by the Commission on or prior to the date specified for such
effectiveness (the "Effectiveness Target Date"), (iii) the Company fails to
Consummate the Exchange Offer within 30 business days of the Effectiveness
Target Date with respect to the Exchange Offer Registration Statement or (iv)
the Shelf Registration Statement or the Exchange Offer Registration Statement
is declared effective but thereafter ceases to be effective or usable in
connection with resales 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 at
maturity of Senior Subordinated 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 at maturity of Senior Subordinated 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 at maturity of Senior
Subordinated 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:
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<PAGE> 8
(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 Subordinated Notes. The Company hereby
agrees to pursue the issuance of such a decision to the Commission
staff level. In connection with the foregoing, the Company hereby
agrees to take such other actions as are requested by the Commission
or otherwise required in connection with the issuance of such
decision, including without limitation (A) participating in telephonic
conferences with the Commission, (B) delivering to the Commission
staff an analysis prepared by counsel to the Company setting forth the
legal bases, if any, upon which such counsel has concluded that such
an Exchange Offer should be permitted and (C) diligently pursuing a
resolution by the Commission staff of such submission.
(ii) As a condition to its participation in the Exchange
Offer pursuant to the terms of this Agreement, each Holder of Transfer
Restricted Securities shall furnish, upon the request of the Company,
prior to the Consummation of the Exchange Offer, a written
representation to the Company (which may be contained in the letter of
transmittal contemplated by the Exchange Offer Registration Statement)
to the effect that (A) it is not an affiliate of the 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 Subordinated Notes to be issued in the
Exchange Offer and (C) it is acquiring the New Senior Subordinated
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 Subordinated Notes obtained by such Holder in exchange for
Senior Subordinated 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 Subordinated 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
Subordinated 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 Subordinated Notes received in the
Exchange
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<PAGE> 9
Offer and (C) any other undertaking or representation required by the
Commission as set forth in any no-action letter obtained pursuant to
clause (i) above.
(b) Shelf Registration Statement. In connection with the Shelf
Registration Statement the Company shall comply with all the provisions of
Section 6(c) below and shall use its best efforts to effect such registration
to permit the sale of the Transfer Restricted Securities being sold in
accordance with the intended method or methods of distribution thereof (as
indicated in the information furnished to the Company pursuant to Section 4(b)
hereof), and pursuant thereto the Company will prepare and file with the
Commission a Registration Statement relating to the registration on any
appropriate form under the Act, which form shall be available for the sale of
the Transfer Restricted Securities in accordance with the intended method or
methods of distribution thereof within the time periods and otherwise in
accordance with the provisions hereof.
(c) General Provisions. In connection with any Registration
Statement and any related Prospectus required by this Agreement to permit the
sale or resale of Transfer Restricted Securities (including, without
limitation, any Exchange Offer Registration Statement and the related
Prospectus, to the extent that the same are required to be available to permit
sales of Broker-Dealer Transfer Restricted Securities by Restricted
Broker-Dealers), the Company shall:
(i) use its best efforts to keep such Registration
Statement continuously effective, subject to a Permitted Suspension,
and provide all requisite financial statements for the period
specified in Section 3 or 4 of this Agreement, as applicable. Upon the
occurrence of any 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)
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<PAGE> 10
of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement under the Act or of the
suspension by any state securities commission of the qualification of
the Transfer Restricted Securities for offering or sale in any
jurisdiction, or the initiation of any proceeding for any of the
preceding purposes, (D) of the existence of any fact or the happening
of any event that makes any statement of a material fact made in the
Registration Statement, the Prospectus, any amendment or supplement
thereto or any document incorporated by reference therein untrue, or
that requires the making of any additions to or changes in the
Registration Statement in order to make the statements therein not
misleading, or that requires the making of any additions to or changes
in the Prospectus in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
If at any time the Commission shall issue any stop order suspending
the effectiveness of the Registration Statement, or any state
securities commission or other regulatory authority shall issue an
order suspending the qualification or exemption from qualification of
the Transfer Restricted Securities under state securities or Blue Sky
laws, the Company shall use its best efforts to obtain the withdrawal
or lifting of such order at the earliest possible time;
(iv) make available, if requested, to each selling Holder
named in any Registration Statement or Prospectus and each of the
underwriters in connection with such sale, if any, before filing with
the Commission, copies of any Registration Statement or any Prospectus
included therein or any amendments or supplements to any such
Registration Statement or Prospectus (including all documents
incorporated by reference after the initial filing of such
Registration Statement), substantially in the form to be filed, which
documents will be subject to the review and comment of such Holders
and underwriters, in connection with such 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
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<PAGE> 11
(vi) agrees in writing to maintain the confidentiality of such
information to the extent such information is not in the public
domain;
(vii) if requested by any selling Holders or the
underwriters in connection with such sale, if any, promptly include in
any Registration Statement or Prospectus, pursuant to a supplement or
post-effective amendment if necessary, such information as such
selling Holders and underwriter(s), if any, may reasonably request to
have included therein, including, without limitation, information
relating to the "Plan of Distribution" of the Transfer Restricted
Securities, information with respect to the principal amount at
maturity 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 at maturity of Senior Subordinated 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, if requested by any Holder of Transfer Restricted
Securities or underwriter, 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:
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<PAGE> 12
(1) a certificate, dated the date of
effectiveness of the Shelf Registration Statement or
the date of Consummation of the Exchange Offer, as
the case may be, signed by (x) the President or any
Vice President and (y) a principal financial or
accounting officer of the Company, confirming with
respect to the Prospectus or any purchase or
underwriting agreement and the Transfer Restricted
Securities, as of the date thereof, the matters set
forth in paragraphs (a), (b), (c) and (d) of Section
8 of the Purchase Agreement and such other matters
as the Holders and/or underwriter(s) may reasonably
request;
(2) an opinion, dated the date of effectiveness
of the Shelf Registration Statement or the date of
Consummation of the Exchange Offer, as the case may
be, of counsel for the Company, covering (i) due
authorization and enforceability of the Senior
Subordinated Notes and the New Senior Subordinated
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 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;
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(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
Subordinated Notes covered by any Shelf Registration Statement
contemplated by this Agreement, New Senior Subordinated Notes having
an aggregate principal amount at maturity equal to the aggregate
principal amount at maturity of Senior Subordinated Notes surrendered
to the Company by such Holder in exchange therefor or being sold by
such Holder; such New Senior Subordinated Notes to be registered in
the name of such Holder or in the name of the purchasers of such New
Senior Subordinated Notes; in return, the Senior Subordinated Notes
held by such Holder shall be surrendered to the Company for
cancellation;
(xiv) in connection with any sale of Transfer Restricted
Securities that will result in such securities no longer being
Transfer Restricted Securities, cooperate with the selling Holders and
the underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Transfer Restricted Securities
to be sold and not bearing any restrictive legends; and to register
such Transfer Restricted Securities in such denominations and such
names as the Holders or the underwriters, if any, may request at least
two Business Days prior to such sale of Transfer Restricted
Securities;
(xv) use its best efforts to cause the Transfer Restricted
Securities covered by the Registration Statement to be registered with
or approved by such other governmental agencies or authorities as may
be necessary to enable the seller or sellers thereof or the
underwriters, if any, to consummate the disposition of such Transfer
Restricted Securities, subject to the proviso contained in clause
(xii) above;
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<PAGE> 14
(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 Subordinated Notes to
effect such changes to the Indenture as may be required for such
Indenture to be so qualified in accordance with the terms of the TIA;
and execute and use its best efforts to cause the Trustee to execute,
all documents that may be required to effect such changes and all
other forms and documents required to be filed with the Commission to
enable such Indenture to be so qualified in a timely manner;
(xxi) cause all Transfer Restricted Securities covered by
the Registration Statement to be listed on each securities exchange on
which similar securities issued by the Company are then listed if
requested by the Holders of a majority in aggregate principal amount
at maturity of Senior Subordinated 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
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<PAGE> 15
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
Subordinated 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 Subordinated 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 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 at maturity 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
15
<PAGE> 16
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
Subordinated 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 Subordinated Notes to a person to
whom there was not sent or given, at or prior to the written confirmation of
such sale, a copy of the Registration Statement and the Prospectus, as amended
or supplemented, and (x) the Company shall have previously and timely furnished
sufficient copies of the Registration Statement or Prospectus, as so amended or
supplemented, to such Holder in accordance with this Agreement and (y) the
Registration Statement or Prospectus, as so amended or supplemented, would have
corrected such untrue statement or omission of a material fact. This indemnity
agreement will be in addition to any liability which the Company may otherwise
have, including, under this Agreement.
(b) Each Holder, severally and not jointly, agrees to indemnify
and hold harmless the Company and each person, if any, who controls the Company
within the meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act, against any losses, liabilities, claims, damages and expenses whatsoever
(including but not limited to attorneys' fees and any and all expenses
whatsoever incurred in 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 Subordinated Notes giving rise to such
indemnification obligation.
16
<PAGE> 17
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the extent that it
has been prejudiced in any material respect by such failure or from any
liability which it may otherwise have). In case any such action is brought
against any indemnified party, and it notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. Notwithstanding the foregoing, the
indemnified party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by the indemnifying parties
in connection with the defense of such action, (ii) the indemnifying parties
shall not have employed counsel to take charge of the defense of such action
within a reasonable time after notice of commencement of the action, or (iii)
such indemnified party or parties shall have reasonably concluded that there
may be defenses available to it or them which are different from or additional
to those available to one or all of the indemnifying parties (in which case the
indemnifying party or parties shall not have the right to direct the defense of
such action on behalf of the indemnified party or parties), in any of which
events such fees and expenses of counsel shall be borne by the indemnifying
parties; provided, however, that the indemnifying party under subsection (a) or
(b) above, shall only be liable for the legal expenses of one counsel (in
addition to any local counsel) for all indemnified parties in each jurisdiction
in which any claim or action is brought. Anything in this subsection to the
contrary notwithstanding, an indemnifying party shall not be liable for any
settlement of any claim or action effected without its prior written consent,
provided, however, that such consent was not unreasonably withheld.
(d) In order to provide for contribution in circumstances in
which the indemnification provided for in this Section 8 is for any reason held
to be unavailable from the Company or is insufficient to hold harmless a party
indemnified thereunder, the Company and each Holder shall contribute to the
aggregate losses, claims, damages, liabilities and expenses of the nature
contemplated by such indemnification provision (including any investigation,
legal and other expenses incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claims 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 Subordinated Notes and any
such Holder from its sale of Senior Subordinated 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 Subordinated 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 Subordinated
Notes which would otherwise give rise to the indemnification obligation,
respectively. The relative fault of the Company and of the Holders shall be
17
<PAGE> 18
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company or the
Holders and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
each Holder agree that it would not be just and equitable if contribution
pursuant to this Section 8 were determined by pro rata allocation or by any
other method of allocation which does not take into account the equitable
considerations referred to above. Notwithstanding the provisions of this
Section 8, (i) no Holder shall be required to contribute, in the aggregate, any
amount in excess of the amount by which the total received by such Holder with
respect to the sale of its Senior Subordinated Notes exceeds the sum of (A) the
paid by such Holder for such Senior Subordinated 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.
18
<PAGE> 19
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 at maturity
of the Transfer Restricted Securities included in such offering; provided, that
such investment bankers and managers must be reasonably satisfactory to the
Company. Such investment bankers and managers are referred to herein as the
"underwriters."
SECTION 12. MISCELLANEOUS
(a) Remedies. Each Holder, in addition to being entitled to
exercise all rights provided herein, in the Indenture, the Purchase Agreement
or granted by law, including recovery of liquidated or other damages, will be
entitled to specific performance of its rights under this Agreement. The
Company agrees that monetary damages (including the liquidated damages
contemplated hereby) would not be adequate compensation for any loss incurred
by reason of a breach by it of the provisions of this Agreement and hereby
agrees to waive the defense in any action for specific performance that a
remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company will not on or after
the date of this Agreement enter into any agreement with respect to its
securities that conflicts with the rights granted to the Holders in this
Agreement or otherwise conflicts with the provisions hereof. The rights granted
to the Holders hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of the Company's securities
under any agreement in effect on the date hereof, except where a waiver with
respect thereto has been obtained prior to the date of effectiveness of any
registration statement required under this Agreement.
(c) Adjustments Affecting the Senior Subordinated Notes. The
Company will not take any action, or permit any change to occur, with respect
to the Senior Subordinated 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 at maturity 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 at maturity of Transfer Restricted Securities
that are subject to such Exchange Offer.
(e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the
records of the Registrar under the Indenture, with a copy to the
Registrar under the Indenture; and
19
<PAGE> 20
(ii) if to the Company:
Intermedia Communications Inc.
3625 Queen Palm Drive
Tampa, Florida 33619
Telecopier No.: (813) 829-2470
Attention: Chief Financial Officer
With a copy to:
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.
20
<PAGE> 21
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:
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
By: MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
-----------------------------
Name:
Title:
SALOMON SMITH BARNEY INC.
By: SALOMON SMITH BARNEY INC.
-----------------------------
Name:
Title:
<PAGE> 22
NATIONSBANC MONTGOMERY SECURITIES LLC
By: NATIONSBANC MONTGOMERY SECURITIES LLC
-----------------------------
Name:
Title:
WARBURG DILLON READ LLC
By: WARBURG DILLON READ LLC
-----------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 5
April 15, 1999
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
offers to exchange (the "Exchange Offers") 9 1/2% Series B Senior Notes due 2009
and 12 1/4% Series B Senior Subordinated Discount Notes due 2009 of the Company
(the "New Notes") for any and all outstanding 9 1/2% Senior Notes due 2009 and
12 1/4% Senior Subordinated Discount Notes due 2009 of the Company (the "Old
Notes"). The Old Notes were issued and sold on February 24, 1999 pursuant to
indentures (the "Indentures") 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
Indentures.
In that connection, we have reviewed the Indentures, 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 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 Offers and the Indentures,
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 Indentures, except
<PAGE> 2
Intermedia Communications Inc.
April 15, 1999
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.
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 Fixed C
Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends
Intermedia Communications Inc.--Registration Statement
April - 99
<TABLE>
<CAPTION>
Pro forma as
Years ended December 31, Pro forma (1) adjusted(2)
--------------------------------------------------------------------------------------------
1993 1994 1995 1996 1997 1998 1999 1998
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Loss before extraordinary items (2,074) (3,067) (19,157) (57,198) (197,289) (487,229) (496,107) (548,998)
Income tax benefit (provision) -- -- (97) -- -- -- -- --
--------------------------------------------------------------------------------------------
Loss before income taxes (2,074) (3,067) (19,254) (57,198) (197,289) (487,229) (496,107) (548,998)
============================================================================================
Fixed charges:
Interest exercised 844 1,219 13,355 35,213 58,744 201,039 210,298 262,143
Capitalized interest 213 257 677 2,780 4,654 7,169 7,169 7,189
Amortization of deferred
financing costs 78 69 412 1,252 1,918 4,721 5,226 6,272
Estimated interest factor on
operating leases 313 200 428 1,598 3,286 12,091 12,217 12,217
Dividends and accretions on
redeemable preferred stock 0 0 0 0 43,742 90,344 99,032 99,032
-------------------------------------------------------------------------------------------
Total fixed charges 1,448 1,745 14,872 40,843 112,344 315,384 333,962 386,853
============================================================================================
Earnings:
Loss before income tax (2,074) (3,067) (19,254) (57,198) (197,289) (487,229) (496,107) (548,998)
--------------------------------------------------------------------------------------------
Fixed charges excluding
capitalized interest and preferred
stock dividends 1,235 1,488 14,195 38,063 63,948 217,851 227,741 280,632
--------------------------------------------------------------------------------------------
Total earnings (839) (1,579) (5,059) (19,135) (133,341) (269,378) (268,366) 268,366
============================================================================================
Ratio of earnings to fixed
charges (0.58) (0.90) (0.34) (0.47) (1.19) (0.85) (0.80) (0.69)
============================================================================================
Insufficiency of earnings to cover
fixed charge 2,287 3,324 19,931 59,978 245,685 584,782 602,328 655,218
============================================================================================
</TABLE>
(1) Gives historical and proforma effect to the LDS and National acquisitions,
as well as the 1999 offerings and the application of the net proceed
therefrom.
(2) Gives effect to the 9.5% Senior Notes and the 12.25% Senior Subordinated
Discount Notes offerings and this application of the net proceeds therefrom.
These offerings are not contingent upon each other for completion.
Page 1
<PAGE> 1
EXHIBIT 23.2
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 $300,000,000 9 1/8% Series B Senior
Notes due 2009 and $364,000,000 12 1/4% Series B Senior Subordinated Discount
Notes due 2009 and to the incorporation by reference therein of our report
dated February 8, 1999, with respect to the consolidated financial statements
and schedule of Intermedia Communications Inc. and Subsidiaries included in
its Annual Report (Form 10-K) for the year ended December 31, 1998 filed with
the Securities and Exchange Commission.
/s/ Ernest & Young LLP
Tampa, Florida
April 13, 1999
<PAGE> 1
===============================================================================
EXHIBIT 25.1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(B)(2)_________
---------------------
SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
Not Applicable 59-1424500
(State of incorporation if (I.R.S. Employer
not a U.S. national bank) Identification Number)
200 South Orange Avenue
Post Office Box 3631
Orlando, Florida 32802
(Address of trustee's principal (Zip Code)
executive offices)
Jonathan D. Rich, Esq.
Holland & Knight LLP
200 South Orange Avenue, Suite 2600, 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)
---------------------
9 1/2% SENIOR NOTES DUE 2009
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.
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.
2
<PAGE> 3
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 5th day of March, 1999.
SUNTRUST BANK, CENTRAL FLORIDA,
NATIONAL ASSOCIATION
By: /s/ Holly Arencibia
----------------------------------
Holly Arencibia
Vice President
3
<PAGE> 4
Board of Governors of the Federal Reserve System
OMB Number: 7100-0038
Federal Deposit Insurance Corporation
OMB Number: 3084-0052
Office of the Comptroller of the Currency
OMB Number: 1559-0081
Expires March 31, 2001
FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL
- --------------------------------------------------------------------------------
[1]
[LOGO] Please refer to page 1,
Table of Contents,
for the required disclosure
of estimated burden.
- --------------------------------------------------------------------------------
CONSOLIDATED REPORTS OF CONDITION AND INCOME FOR
A BANK WITH DOMESTIC OFFICES ONLY AND
TOTAL ASSETS OF $300 MILLION OR MORE -- FFIEC 032
REPORT AT THE CLOSE OF BUSINESS DECEMBER 31, 1998 (19981231)
----------
(NCM 1999)
This report is required by law: 12 U.S.C. section 324 (State member banks);
12 U.S.C. Section 1817 (State nonmember banks); and 12 U.S.C. Section 161
(National banks).
This report form is to be filed by banks with domestic offices only. Banks with
foreign offices (as defined in the instructions) must file FFIEC 031.
- --------------------------------------------------------------------------------
NOTE: The Reports of Condition and Income must be signed by an authorized
officer and the Report of Condition must be attested to by not less than two
directors (trustees) for State nonmember banks and three directors for State
member and National banks.
I, R. Todd Bowers/Senior Vice President & CFO
---------------------------------------------------
Name and Title of Officer Authorized to Sign Report
of the named bank do hereby declare that the Reports of Condition and Income
(including the supporting schedules) for this report date have been prepared in
conformance with the instructions issued by the appropriate Federal regulatory
authority and are true to the best of my knowledge and belief.
/s/ R. Todd Bowers
- ----------------------------------------------
Signature of Officer Authorized to Sign Report
January 28, 1999
- ----------------------------------------------
Date of Signature
The Reports of Condition and Income are to be prepared in accordance with
Federal regulatory authority instructions.
We, the undersigned directors (trustees), attest to the correctness of the
Report of Condition (including the supporting schedules) for this report date
and declare that it has been examined by us and to the best 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
- ----------------------------------------------
Director (Trustee) George W. Koehn
/s/ Robert L. Mellen, III
- ----------------------------------------------
Director (Trustee) Robert L. Mellen, III
/s/ William B. Wilson
- ----------------------------------------------
Director (Trustee) William B. Wilson
- -------------------------------------------------------------------------------
SUBMISSION OF REPORTS
Each bank must prepare its Reports of Condition and Income either:
(a) in 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.
For electronic filing assistance, contact EDS Call Report Services, 2160 N.
Prospect Ave., Milwaukee, WI 53202, telephone (800) 256-1571.
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.
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FDIC Certificate Number 21043
---------
(NCM 1999)
SunTrust Bank Central Florida N.A.
- ----------------------------------------------
Legal Title of Bank
Atlanta,
- ----------------------------------------------
City
GA 30302
- ----------------------------------------------
State Abbrev. Zip Code
Board of Governors of the Federal Reserve System, Federal Deposit Insurance
Corporation, Office of the Comptroller of the Currency
<PAGE> 5
Consolidated Reports of Condition and Income for
A Bank With Domestic Offices Only and Total Assets of $300 Million or More
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<TABLE>
<CAPTION>
Table of Contents
Signature Page Cover
<S> <C>
Report of Income
Schedule RI--Income Statement ............................................. RI-1,2,3
Schedule RI-A--Changes in Equity Capital .................................. RI-3
Schedule RI-B--Charge-offs and Recoveries on
Loans and Leases and Changes in Allowance
for Credit Losses ....................................................... RI-4,5
Schedule RI-E--Explanations ............................................... RI-5,6
</TABLE>
Disclosure of Estimated Burden
The estimated average burden associated with this information collection is 34.1
hours per respondent and is estimated to vary from 15 to 400 hours per response
depending on individual circumstances. Burden estimates include the time for
reviewing instructions, gathering and maintaining data in the required form, and
completing the information collection, but exclude the time for compiling
and maintaining business records in the normal course of a respondent's
activities. A Federal agency may not conduct or sponsor, and an organization (or
a person) is not required to respond to a collection of information, unless it
displays a currently valid OMB control number. Comments concerning the accuracy
of this burden estimate and suggestions for reducing this burden should be
directed to the Office of Information and Regulatory Affairs, Office of
Management and Budget, Washington, D.C. 20503 and to one of the following:
Secretary
Board of Governors of the Federal Reserve System
Washington, D.C. 20581
Legislative and Regulatory Analysis Division
Office of the Comptroller of the Currency
Washington, D.C. 20219
Assistant Executive Secretary
Federal Deposit Insurance Corporation
Washington, D.C. 20428
<TABLE>
<CAPTION>
Report of Condition
<S> <C>
Schedule RC--Balance Sheet ............................................... RC-1,2
Schedule RC-A--Cash and Balance Due
From Depository Institutions ........................................... RC-3
Schedule RC-B--Securities ................................................ RC-3,4,5
Schedule RC-C--Loans and Lease Financing
Receivables:
Part I. Loans and Leases ............................................... RC-8,7,8
Part II. Loans to Small Businesses and
Small Farms (to be completed for the June report only) ............... RC-8a,8b
Schedule RC-D--Trading Assets and Liabilities
(to be completed only by selected banks) ............................... RC-8
Schedule RC-E--Deposit Liabilities ....................................... RC-9,10
Schedule RC-F--Other Assets .............................................. RC-11
Schedule RC-G--Other Liabilities ......................................... RC-11
Schedule RC-K--Quarterly Averages ........................................ RC-12
Schedule RC-L--Off Balance Sheet Items ................................... RC-13,14,15
Schedule RC-M--Memoranda ................................................. RC-16,17
Schedule RC-N--Past Due and Nonaccrual
Loans, Leases, and Other Assets ........................................ RC-18,19
Schedule RC-O--Other Data for Deposit
Insurance and FICO Assessments ......................................... RC-20,21
Schedule RC-R--Regulatory Capital ........................................ RC-22,23
Optional Narrative Statement Concerning
the Amounts Reported in the Reports
of Condition and Income ................................................ RC-24
Special Report (to be completed by all banks)
</TABLE>
For information or assistance, national and state nonmember banks should contact
the FDIC's Call Reports Analysis Section, 550 17th Street, NW, Washington, D.C.
20429, toll free on (800) 888-FDIC (3342), Monday through Friday between 8:00
a.m. and 5:00 p.m., Eastern time. State member banks should contact their
Federal Reserve District Bank.
<PAGE> 6
<TABLE>
<S> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA, N.A. Call Date: 12/31/1998 State #: 12-1169 FFIEC 032
P.O. Box 4418 Center 632 Vendor ID: D Cert #: 21043 RI-1
Atlanta, GA 30302 Transit #: 06310216
3
</TABLE>
Consolidated Report of Income
For the Period January 1, 1998 - December 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 1380
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Interest Income:
a. Interest and fee income on loans: RIAD
----
(1) Loans secured by real estate........................................... 4011 157,055 1.a.1
-------
(2) Loans to finance agricultural production and other loans to farmers.... 4024 3,901 1.a.2
-------
(3) Commercial and industrial loans........................................ 4012 198,346 1.a.3
-------
(4) Loans to individuals for household, family, and other personal
expenditures:
(a) Credit cards and related plans..................................... 4054 2,751 1.a.4.a
-------
(b) Other.............................................................. 4065 48,811 1.a.4.b
-------
(5) Loans to foreign governments and official institutions................. 4058 0 1.a.5
-------
(6) Obligations (other than securities and leases) of states and political
subdivisions in the U.S.:
(a) Taxable obligations................................................ 4509 276 1.a.6.a
-------
(b) Tax-exempt obligations............................................. 4504 8,869 1.a.6.b
-------
(7) All other loans........................................................ 4058 32,610 1.a.7
-------
b. Income from lease financing receivables:
(1) Taxable leases......................................................... 4506 10,294 1.b.1
-------
(2) Tax-exempt leases...................................................... 4307 315 1.b.2
-------
c. Interest Income on balances due from depository institutions (1)........... 4115 246 1.c
-------
d. Interest and dividend income on securities
(1) U.S. Treasury securities and U.S. Government agency obligations........ 4027 36,480 1.d.1
-------
(2) Securities issued by states and political subdivisions in the U.S.:
(a) Taxable securities................................................. 4506 29 1.d.2.a
-------
(b) Tax-exempt securities.............................................. 4507 1,759 1.d.2.b
-------
(3) Other domestic debt securities......................................... 3657 0 1.d.3
-------
(4) Foreign debt securities................................................ 3658 18 1.d.4
-------
(5) Equity securities (including investments in mutual funds).............. 3659 2,695 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 33,568 1.f
-------
g. Total interest income (sum of items 1.a through 1.f)....................... 4107 537,025 1.g
-------
</TABLE>
- -----------------
(1) Includes interest income on time certificates of deposits not held for
trading.
<PAGE> 7
<TABLE>
<S> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 12/31/1998 State#: 12-1159 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert #: 21043 RI-2
ATLANTA, GA 30302 Transit #: 06310215
4
</TABLE>
SCHEDULE RI - Continued
<TABLE>
<CAPTION> Dollar Amounts in Thousands
-------------------------------------------------------------------------------------------------------------------------
<S> <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 1,880 2.a.1
------------
(2) Nontransaction accounts:
(a) Money market deposit accounts (MMDAs).................................... 4509 14,200 2.a.2a
------------
(b) Other savings deposits................................................... 4511 38,034 2.a.2b
------------
(c) Time deposits of $100,000 or more........................................ A517 18,955 2.a.2c
------------
(d) Time deposits of less than $100,000...................................... A518 38,495 2.a.2d
------------
b. Expense of federal funds purchased and securities sold under
agreements to repurchase......................................................... 4180 143,989 2.b
------------
c. Interest on demand notes issued to the U.S. Treasury, trading liabilities
and on other borrowed money...................................................... 4185 18,876 2.c
------------
d. Not applicable
e. Interest on subordinated notes and debentures.................................... 4200 5,824 2.e
------------
f. Total interest expense (sum of items 2.a through 2.e)............................ 4073 280,738 RIAD 2.f
------------ ----
3. Net interest income (item 1.g minus 2.f).............................................................. 4074 286,287 a.
---------
4. Provisions:
a. Provision for credit losses........................................................................ 4230 10.005 4.a
---------
b. Provision for allocated transfer risk.............................................................. 4243 0 4.b
---------
5. Noninterest income: RIAD
----
a. Income from fiduciary activities................................................. 4070 30,203 5.a
------------
b. Service charges on deposit accounts.............................................. 4080 36,487 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 50,367 5.f.1
------------
(2) All other noninterest income*................................................ 5408 14,025 RIAD 5.f.2
----
g. Total noninterest income (sum of items 5.a through 5.f)............................................ 4076 133,082 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........................................... 3198 15 6.b
---------
7. Noninterest expense: RIAD
----
a. Salaries and employee benefits................................................... 78,203 7.a
------------
b. Expenses of premises and fixed assets (net of rental income)
(excluding salaries and employee benefits and mortgage interest)................. 4217 22,715 7.b
------------
c. Other noninterest expense*....................................................... 4082 109,503 RIAD 7.c
------------ ----
d. Total noninterest expense (sum of items 7.a through 7.c)........................................... 4083 210,421 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 168,939 8.
---------
9. Application income taxes (on item 8).................................................................. 4302 81,256 9.
---------
10. Income (loss) before extraordinary items and other adjustments (item 8 minus 9)....................... 4300 107,873 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 107,673 12.
---------
</TABLE>
- -------
* Describe on Schedule RI-E - Explanations.
<PAGE> 8
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 12/31/1998 State #: 12-1169 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert #: 21043 RI-3
ATLANTA, GA 30302 Transit #: 06310215
</TABLE>
5
SCHEDULE RI - CONTINUED
I381
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------
Memoranda
<S> <C>
1. Interest expense incurred to carry tax-exempt securities, loans, and leases acquired after RIAD Year to Date
August 7, 1986, that is not deductible for federal income tax purposes________________________ 4813 1,469 M.1
____________
2. Income from the sale and servicing of mutual funds and annuities (included in
Schedule RI, item 6)__________________________________________________________________________ 6431 7,520 M.2
____________
3. Not applicable
4. Number of full-time equivalent employees on payroll at end of current period (round to Number
nearest whole number)_________________________________________________________________________ 4150 1,611 M.4
____________
5.-6. Not applicable
7. If the reporting bank has restated its balance sheet as a result of applying push CCYY / MM / DD
down accounting this calendar year, report the date of the bank's acquisition (1)_____________ 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____________________________________________________________________ 8767 0 M.8.a
____________
b. Foreign exchange exposures_________________________________________________________________ 8768 0 M.8.b
____________
c. Equity security and index exposures________________________________________________________ 8769 0 M.8.c
____________
d. Commodity and other exposures______________________________________________________________ 8780 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 (408) M.9.a
____________
b. Net (increase) decrease to interest expense________________________________________________ 8762 (35) 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
____________
11. Does the reporting bank have a Subchapter 5 election in effect for Yes/No
federal income tax purposes for the current tax year?________________________________________ A630 NO M.11
____________
12. Deferred portion of total applicable income taxes included in Schedule RI,
items 9 and 11 (to be reported with the December Report of Income)___________________________ 4772 0 M.12
____________
</TABLE>
__________
(1) For example, a bank acquired on June 1, 1997, would report 1997/08/01
SCHEDULE RI-A - CHANGES IN EQUITY CAPITAL
Indicate decreases and losses in parentheses. I383
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------------
<S> <C>
RIAD
______________
1. Total equity capital originally reported in the December 31, 1997, Reports of Condition and Income__ 3215 525,376 1.
__________
2. Equity capital adjustments from amended Reports of Income, net*_____________________________________ 3216 0 2.
__________
3. Amended balance end of previous calendar year (sum of items 1 and 2)________________________________ 3217 528,378 3.
__________
4. Net income (loss) (must equal Schedule RI, item 12)_________________________________________________ 4340 107,673 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_______________________________________________________ 4480 24,000 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 form prior years * (see instructions for this schedule)___ 4412 0 10.
__________
11. Change in net unrealized holding gains (losses) on available-for-sale securities____________________ 6433 381 11.
__________
12. Other transactions with parent holding company * (not included in item 5, 7, or 8 above)____________ 4416 49,324 12.
__________
13. Total equity capital end of current period (sum of items 3 through 12) (must equal
Schedule RC item 28)________________________________________________________________________________ 3210 656,756 13.
__________
</TABLE>
__________
* Describe on Schedule RI-E - Explanations.
<PAGE> 9
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Data: 12/31/1998 State #: 12-1159 FFIEC 032
P. O. BOX 4418 CENTER 632 Vendor ID: D Cart #: 21043 RI-4
ATLANTA, GA 30302 Transit #: 08310215
6
</TABLE>
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)............................................ 4861 563 4661 876 1,a
--------- -------
b. To non-U.S. addressees (domicile)........................................ 4862 0 4682 0 1,b
--------- -------
2. Loans to depository institutions and acceptances of other banks:
a. To U.S. banks and other U.S. depository institutions..................... 4863 0 4863 0 2,a
--------- -------
b. To foreign banks......................................................... 4854 0 4864 0 2,b
--------- -------
3. Loans to finance agricultural production and other loans to farmers......... 4855 0 4865 0 3
--------- -------
4. Commercial and industrial loans:
a. To U.S. addressees (domicile)............................................ 4645 17,840 4517 1,105 4,a
--------- -------
b. To non-U.S. addressees (domicile)........................................ 4848 6 4618 0 4,b
--------- -------
5. Loans to individuals for household, family, and other personal
expenditures:
a. Credit cards and related plans........................................... 4656 857 4886 148 5,a.
--------- -------
b. Other (includes single payment, installment, and all student loans)...... 4857 3,725 4667 921 5,b.
--------- -------
6. Loans to foreign governments and official institutions...................... 4843 0 4627 0 6
--------- -------
7. All other loans............................................................. 4644 376 4628 127 7
--------- -------
8. Lease financing receivables:
a. Of U.S. addressees (domicile)............................................ 4856 750 4686 8 8,a.
--------- -------
b. Of non-U.S. addressees (domicile)........................................ 4869 0 4689 0 8,b.
--------- -------
9. Total (sum of items 1 through 8)............................................ 4835 24,117 4805 3,183 9
--------- -------
</TABLE>
MEMORANDA
<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.-3. Not applicable.
4. Loans to finance commercial real estate, construction, and land
development activities (not secured by real estate) included in
Schedule RI-8, part 1, items 4 and 7, above................................. 3108 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 18 M.5.a
--------- -------
b. Secured by farmland...................................................... 3584 0 3586 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 64 5412 5 M.5.c1
--------- -------
(2) All other loans secured by 1-4 family residential properties......... 5413 121 6414 4 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 358 3581 851 M.5.e
</TABLE>
<PAGE> 10
<TABLE>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK CENTRAL FLORIDA, N.A. Call Date: 12/31/1998 State #: 12-1169 FFIEC 032
P.O. Box 4418 CENTER 632 Vendor ID: D Cert#: 21043 RI-5
Atlanta, GA 30302 Transit #: 08310216
7
</TABLE>
Schedule RI-B - Continued
Part II. Changes in Allowance for Credit Losses
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
---------------------------
<S> <C> <C> <C>
RIAD
----
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 6 above).................................. 2418 3,183 2.
------
3. LESS: (Charge-offs (must equal or exceed part I, Item 9, column A above).......................... 2482 24,117 3.
------
4. Provision for credit losses (must equal Schedule RI, Item 4, a)................................... 4230 10,005 4.
------
5. Adjustments* (see instructions for this schedule)................................................. 4816 0 5.
------
6. Balance end of current period (sum of Items 1 through 5)
(must equal or exceed Schedule RC, Item 4.b....................................................... A612 78,514 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)
<TABLE>
<CAPTION>
1395
Dollar Amounts in Thousands
---------------------------
<S> <C> <C> <C>
RIAD Year to Date
---- ------------
1. All other noninterest income from Schedule RI, Item 5.f(2)
Report amounts that exceed 10% of Schedule RI, Item 5.f(2):
a. Net gains (losses) on other real estate owned.................................................. 5416 2,268 1.a
------
b. Net gains (losses) on sales of loans........................................................... 5418 6,108 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. 4481 Other Income 4461 2,562 1.d
------
e. 4452 Foreign exchg-Gain/Loss 4482 1,609 1.e
------
f. 4483 4465 0 1.f
------
</TABLE>
<TABLE>
<CAPTION> RIAD Year to Date
<S> <C> <C> <C>
---- -------------
2. Other noninterest expense (from Schedule RI, Item 7,c):
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 sale 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
e. 4464 I/C Data Processing Fee 4464 45,121 2.e
------
f. 4467 4467 0 2.f
------
g. 4468 4468 0 2.g
------
</TABLE>
<PAGE> 11
<TABLE>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 12/31/1998 State #: 12-1169 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert. #: 21D43 RI-G
ATLANTA, GA 30302 Transit #: 08310216
8
----------
</TABLE>
Schedule RI-E - Continued
<TABLE>
<C> <C> <S> <C> <C> <C> <C> <C>
Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------------
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
--------------------------
RIAD
----
TEXT
a. (1) 4489 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);
RIAD
TEXT ----
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 8) (itemize and describe all changes in
accounting principles);
RIAD
TEXT ----
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
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);
RIAD
TEXT ----
a. 4498 Fixed Asset Dividend 4498 (676) 7.a
--------
b. 4499 Capital Contribution 4499 50,000 7.b
--------
8. Adjustments to allowance for credit (from Schedule RI-B, part II, item
5) (itemize and describe all adjustments);
RIAD
TEXT ----
a. 4521 4521 0 8.a
--------
b. 4522 4522 0 8.b
--------
1398 1399
9. Other explanations (the space below is provided for bank to briefly
describe, at its option, any other significant items affecting the
Report RIAD
X = NO COMMENT - Y = COMMENT 4789 X
-------- --------------
Other explanations (please type or print clearly):
</TABLE>
TEXT 4769 (70 characters per line)
-------------------------------------------------------------------------
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-------------------------------------------------------------------------
-------------------------------------------------------------------------
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<PAGE> 12
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA, N.A. Call Date: 12/31/1998 State#: 12-1159 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert#: 21043 RC-1
ATLANTA, GA 30302 Transit #: 08310216 9
</TABLE>
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR DECEMBER 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>
ASSETS
1. Cash and balances due from depositary institutions (from Schedule RC-A): RCON
----
a. Noninterest-bearing balances and currency and coin(1)............................................. 0081 747,702 1.a
---------
b. Interest-bearing balances(2)...................................................................... 0071 4,066 1.b
---------
2. Securities:
a. Held-to-maturity securities (from Schedule RC-B, column A)........................................ 1764 0 2.a
---------
b. Available-for-sale securities (from Schedule RC-B, column D)...................................... 1773 598,399 2.b
---------
3. Federal funds sold and securities purchased under agreement to resell.................................. 1350 507,548 3
---------
4. Loans and lease financing receivables: RCON
----
a. Loans and leases, net of unearned income (from Schedule RC-C)............... 2122 6,792,345 4.a
---------
b. LESS: Allowance for loan and lease losses................................... 3123 78,514 4.b
---------
c. LESS: Allocated transfer risk reserve....................................... 3128 0 4.c
---------
RCON
d. Loans and leases, net of unearned income, allowance, and reserve ----
(item 4.a minus 4.b and 4.c).................................................................. 2125 6,713,831 4.d
---------
5. Trading assets (from Schedule RC-D)................................................................... 3545 0 5.
---------
6. Premises and fixed assets (including capitalized leases).............................................. 2146 52,222 6.
---------
7. Other real estate owned (from Schedule RC-M).......................................................... 2180 1,497 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.......................................... 2165 1,081 9.
---------
10. Intangible assets (from schedule RC-M)................................................................ 2143 0 10.
---------
11. Other assets (from Schedule RC-F)..................................................................... 2180 85,703 11.
---------
12. Total assets (sum of items 1 through 11).............................................................. 2170 8,719,863 12.
---------
</TABLE>
- ----------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
<PAGE> 13
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 12/31/1998 State #: 12-1159 FFIEC 032
P. O. Box 4418 Center 632 Vendor ID: D Cert #: 21043 RC-2
Atlanta, GA 30302 Transit #: 06310216 10
Schedule RC - Continued
Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
<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 4,721,035 13.a
--- ---------
(1) Noninterest-bearing (1) .................................................. 0031 1,547,568 13.a.1
---------
(2) Interest-bearing ......................................................... 0036 3,073,466 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 purchase ......................... 2800 2,850,307 14
---------
15. a. Demand notes issued to the U.S. Treasury ...................................................... 2540 0 10.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 ................................................. 2838 185,110 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 100,000 16.c
---------
17. Not applicable
18. Bank's liability on acceptances executed and outstanding ......................................... 2020 1,081 18
---------
19. Subordinated notes and debentures (2) ............................................................ 3200 160,000 19
---------
20. Other liabilities (from Schedule RC-G) ........................................................... 2930 42,563 20
---------
21. Total liabilities (sum of items 13 through 20) ................................................... 2948 6,061,097 21
---------
22. Not applicable
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus .................................................... 3636 0 23
---------
24. Common stock ..................................................................................... 3230 5,098 24
---------
25. Surplus (exclude all surplus related to preferred stock) ......................................... 3839 174,126 25
---------
26. a. Undivided profits and capital reserves ........................................................ 3692 475,440 26.a
---------
b. Net unrealized holding gains (losses) on available-for-sale securities ........................ 8494 4,092 26.b
---------
27. Cumulative foreign currency translation adjustments .............................................. 27
28. Total equity capital (sum of items 23 through 27) ................................................ 3210 658,756 28
---------
29. Total liabilities and equity capital (sum of items 21 and 28) .................................... 3300 8,719,863 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 N/A M.1
---------
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
1 = independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed by other
with generally accepted auditing standards by a certified external auditors (may be required by state chartering
public accounting firm which submits a report on the bank authority)
2 = independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by
submits a report on the consolidated holding company (but external auditors
not on the bank separately) 7 = Other audit procedures (excluding tax preparation work)
3 = Directors' examination of the bank conducted in accordance 8 = No external audit work
with generally accepted auditing standards by a certified
public accounting firm (may be required by state chartering
authority)
- -----------------
(1) Includes total demand deposits and noninterest-bearing time and savings deposits.
(2) Includes limited-life preferred stock and related surplus.
</TABLE>
<PAGE> 14
<TABLE>
<S> <C> <C> <C> <C> <C>
TRUST BANK, CENTRAL FLORIDA N.A. Call Date: 12/31/1998 State #: 12-1159 FFIEC 032
Box 4418 Center 632 Vendor ID: D Cert #: 21043 RC-3
ATLANTA, GA 30302 Transit # 06310218
</TABLE>
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 459,828 1.a
-------
b. Currency and coin.................................................................. 0080 105,002 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. ... 0086 186,844 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 1,094 3.b
-------
4. Balances due from Federal Reserve Banks................................................ 0080 0 4
-------
5. Total (sum of items 1 through 4) (must equal Schedule RC, sum of items 1.a and 1.b) 0010 751,768 5
-------
</TABLE>
MEMORANDUM
<TABLE>
<CAPTION>
Dollar Amounts
in Thousands
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Noninterest-bearing balances due from commercial banks in the U.S. (included in CON
----
2.a and 2.b above)................................................................... 0050 181,778 M.1
-------
</TABLE>
SCHEDULE RC-B -- SECURITIES
Exclude assets held for trading.
C310 <-
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------------------
Hold-to-maturity Available-for-sale
--------------------------- ---------------------------------
(Column A) (Column B) (Column C) (Column D)
Amortized Cost Fair Value Amortized Cost Fair Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
RCON CON CON CON
---- --- --- ---
1. U.S. Treasury securities.................................. 0211 0 0213 0 1288 225,712 1287 229,784 1
--- ---- --- ---- ------- ---- -------
2. U.S. Government agency obligations
(exclude mortgage-backed securities);
(a) Issued by U.S. Government agencies (2)............... 1289 0 1290 0 1281 0 1290 0 2.a
--- ---- --- ---- ------- ---- -------
(b) Issued by U.S. Government-sponsored agencies (3)..... 1294 0 1295 0 1287 49,997 1295 50,059 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> 15
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Data: 12/31/1998 State#: 12-1159 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert#: 21043 RC-4
ATLANTA, GA 30302 Transit #: 08310215
</TABLE>
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)
<S> <C> <C> <C> <C>
3. Securities issued by states and political Amortized Cost Fair Value Amortized Cost Fair Value(1)
subdivisions in the U.S.: CON CON CON CON
--- --- --- ---
a. General obligations--------------------- 1676 0 1677 0 1678 27,320 1679 28,520 3.a
----------- --------- ----------- ---------
b. Revenue obligations--------------------- 1681 0 1688 0 1690 4,884 1691 5,122 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 33,976 1702 34,262 4.1.(1)
----------- --------- ----------- ---------
(2) Issued by FNMA and FHLMC------------ 1703 0 1705 0 1706 22,915 1707 24,345 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
(CMO's REMICs and stripped MBS):
(1) Issued or guaranteed by FNMA, CON CON CON CON
--- --- --- ---
FHLMC, or GNMA---------------------- 1714 0 1715 0 1716 94,104 1717 93,545 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 1749 250 5.b
----------- --------- ----------- ---------
6. Equity securities:
a. Investments in mutual funds and
other equity securities with
readily determinable fair values---------------------------------------------- A610 103,839 A611 103,839 6.a
----------- ---------
b. All other equity securities(1)------------------------------------------------ 1752 27,783 1753 27,783 6.b
----------- ---------
7. Total (sum of items 1 through 6)(total of
Column A must equal Schedule RC item 2.a)
(total of column D must equal Schedule RC, CON CON CON CON
--- --- --- ---
item 2.b)--------------------------------- 1764 0 1771 0 1772 591,692 1773 598,399 7
----------- --------- ----------- ---------
</TABLE>
- ----------
(1) Includes equity securities without readily determinable fair values at
historical cost in item 6.b, column D.
<PAGE> 16
<TABLE>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA, N.A. Call Date: 12/31/1998 State #: 12-1159 FFIEC 032
P.O. Box 4418 CENTER 632 Vendor ID: D Cert#: 21043 RC-5
Atlanta, GA 30302 Transit #: 08310216
</TABLE>
13
Schedule RC-B - Continued
<TABLE>
<CAPTION>
C312
Memoranda Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RCON
----
1. Pledged securities(1)............................................................................. 0416 444,345 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...................................................................... A540 65,138 M.2.a1
-------
(2) Over three months through 12 months....................................................... A560 79,537 M.2.a2
-------
(3) Over one year through three years......................................................... A561 127,027 M.2.a3
-------
(4) Over three years through five years....................................................... A562 26,543 M.2.a4
-------
(5) Over five years through 15 years.......................................................... A563 14,208 M.2.a5
-------
(6) Over 15 years............................................................................. A564 2,182 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:(3,6)
(1) Three months or less...................................................................... A555 11,227 M.2.b1
-------
(2) Over three months through 12 months....................................................... A556 37,635 M.2.b2
-------
(3) Over one year through three years......................................................... A557 445 M.2.b3
-------
(4) Over three years through five years....................................................... A558 4,340 M.2.b4
-------
(5) Over five years through 15 years.......................................................... A559 3,296 M.2.b5
-------
(6) Over 15 years............................................................................. A560 1,653 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 42,040 M.2.c1
-------
(2) Over three years.......................................................................... A562 51,505 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 147,144 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-8, 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, sum of 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> 17
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 12/31/1998 State #: 12-1159 FFIEC 032
P. O. Box 4418 Center 632 Vendor ID: D Cert. #: 21045 RC-6
Atlanta, GA 30302 Transit #: 06310218
14
Schedule RC-C - Loans and Lease Financing Receivables
Part 1. 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.
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1. Loans secured by real estate: RCON
a. Construction and land development ---------------------------------------------- 1415 210,029 1.a
---------
b. Secured by farmland (including farm residential and other improvements) -------- 1420 19,948 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 94,125 1.c.1
---------
(2) All other loans secured by 1-4 family residential properties:
(a) Secured by first liens ------------------------------------------------- 5387 1,088,095 1.c.2a
---------
(b) Secured by junior liens ------------------------------------------------ 5388 124,742 1.c.2b
---------
d. Secured by multifamily (5 or more) residential properties ---------------------- 1480 32,852 1.d
---------
e. Secured by nonfarm nonresidential properties ----------------------------------- 1480 430,131 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 204,819 2.a2
---------
b. To other depository institutions in the U.S. ----------------------------------- 1517 89 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 --------------- 1690 48,485 3.
---------
4. Commercial and industrial loans:
a. To U.S. addressees (domicile) -------------------------------------------------- 1763 3,174,800 4.a
---------
b. To non-U.S. addressees (domicile) ---------------------------------------------- 1764 487 4.b
---------
5. Acceptances of other banks:
a. Of U.S. banks ------------------------------------------------------------------ 1756 270 5.a
---------
b. Of foreign banks --------------------------------------------------------------- 1757 287 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) ------------------------------------------------------------------ 2006 21,907 6.a
---------
b. Other (includes single payment, installment, and all student loans) ------------ 2011 625,053 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. ---------------------------------------------------------- 2107 188,100 8
---------
9. Other Loans:
a. Loans for purchasing or carrying securities (secured and unsecured) ------------ 1546 73,340 9.a
---------
b. All other loans (exclude consumer loans) --------------------------------------- 1564 340,787 9.b
10. Lease financing receivables (net of unearned income):
---------
a. Of U.S. addressees (domicile) -------------------------------------------------- 2182 134,558 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 ------------------- 2125 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 6,792,346 12
---------
</TABLE>
<PAGE> 18
<TABLE>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 12/31/1998 State #: 12-1169 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert #: 21043 RC-7
ATLANTA, GA 30302 Transit #: 06310215
15
</TABLE>
SCHEDULE RC-C - CONTINUED
Part 1. Continued
<TABLE>
<CAPTION>
Memoranda Dollar Amounts in Thousands
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C>
1. Not applicable
2. Loans and Leases restructured and in compliance with modified terms (included in
Schedule RC-C, part 1, 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)--................................................ B691 0 M.2.b
-----------
c. Commercial and industrial loans to and lease financing receivables of
non-U.S. addresses (domicile) included in Memorandum item 2.b above--................................ B692 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 1, item 1.c.(2).(a)) with a remaining maturity or repricing frequency of: (1, 2)
(1) Three months or less............................................................................. A564 46,737 M.3.a1
-----------
(2) Over three months through 12 months.............................................................. A565 263,017 M.3.a2
-----------
(3) Over one year through three years................................................................ A566 127,851 M.3.a3
-----------
(4) Over three years through five years.............................................................. A567 426,797 M.3.a4
-----------
(5) Over five years through 15 years................................................................. A568 151,376 M.3.a5
-----------
(6) Over 15 years.................................................................................... A569 48,030 M.3.a6
-----------
b. All loans and leases (reported in Schedule RC-C, part 1, items 1 through 10) excluding closed-end
loans secured by first liens on 1-4 family residential properties (reported in Schedule RC-C, part 1,
item 1.c.(2).(a)) with a remaining maturity or repricing frequency at: (1, 3)
(1) Three months or less............................................................................. A570 3,182,590 M.3.b1
-----------
(2) Over three months through 12 months.............................................................. A571 673,799 M.3.b2
-----------
(3) Over one year through three years................................................................ A572 549,496 M.3.b3
-----------
(4) Over three years through five years.............................................................. A573 712,731 M.3.b4
-----------
(5) Over five years through 15 years................................................................. A574 551,524 M.3.b5
-----------
(6) Over 15 years.................................................................................... A575 27,946 M.3.b6
-----------
c. Fixed rate AND floating rate loans and leases (reported in Schedule RC-C, part 1,
items 1 through 10) with a REMAINING MATURITY of one year or less.................................... A247 1,652,602 M.3.c
-----------
d. Fixed rate AND floating rate loans secured by nonfarm nonresidential properties (reported in
Schedule RC-C, part 1, item 1.a) with a REMAINING MATURITY of over five years
(included in Memorandum item 3.b above).............................................................. A577 161,676 M.3.d
-----------
e. Fixed rate AND floating rate commercial and industrial loans (reported in Schedule RC-C, part 1, item 4)
with a REMAINING MATURITY of over three years......................................................... A578 1,496,261 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 1, 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 1, sum of items 1
through 10, minus total closed-end loans secured by first liens on 1-4
family residential properties in domestic offset from Schedule RC-C, part
1, item 1.c(2)(a).
<PAGE> 19
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 12/31/1998 State #: 12-1158 FFIEC 032
P.O. Box 4418 CENTER 632 Vendor ID: D Cert#: 21043 RC-8
Atlanta, GA 30302 Transit #: 08310215
</TABLE>
16
Schedule RC-C - Continued
Part I. Continued
<TABLE>
<CAPTION>
MEMORANDA Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------------
<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)...................................................................................... 2748 112,063 M.4
-------
5. Loans and leases held for sale (include in Schedule RC-C, part I, page RC-C)...................... 5369 49,978 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-8).................................... 5370 854,616 M.8
-------
- ------
(1) Exclude loans secured by real estate that are included in Schedule
RC-C part I, items 1.a through 1.e.
</TABLE>
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
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS RCON
----
1. U.S. Treasury securities.......................................................................... 3531 0 1
------
2. U.S. Government agency obligations (excluded 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 applicable
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 6)................. 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 15b)............. 3548 0 15
------
</TABLE>
<PAGE> 20
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 12/31/1998 State # 12-1150 FFIEC 032
P.O. BOX 4413 CENTER 632 Vendor ID: D Cent # 21043 RC-8
ATLANTA, GA 30302 Transit #: 06310215 17
---------
</TABLE>
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)
RCON CON CON
---- ---- ----
<S> <C> <C> <C> $ <C> <C>
DEPOSITS OF:
1. Individuals, partnerships and corporations................. 2201 1,365,825 2240 1,117,938 2346 2,918,078 1
--------- --------- ---------
2. U.S. Government............................................ 2202 3,359 2280 3,358 2520 0 2
--------- --------- ---------
3. States and political subdivisions in the U.S............... 2203 47,723 2290 44,508 2530 58,482 3
--------- --------- ---------
4. Commercial banks in the U.S................................ 2208 314,087 2310 314,087 2580 0 4
--------- --------- ---------
5. Other depository institutions in the U.S................... 2207 8,983 2312 8,893 2340 0 5
--------- --------- ---------
6. Banks in foreign countries................................. 2213 308 2320 308 2236 0 6
--------- --------- ---------
7. Foreign governments, and official institutions
(including foreign central banks).......................... 2218 0 2300 0 2377 0 7
--------- --------- ---------
8. Certified and official checks.............................. 2330 4,403 2330 4,403 8
--------- ---------
9. Total (sum of items 1 through 8) (sum of columns
A and C must equal Schedule RC, item 13.a)................. 2215 1,742,498 2210 1,491,692 2385 2,878,538 9
MEMORANDA
Dollar Amounts in Thousands
---------------------------
RCON
1. Selected components of total deposits (i.e., sum of item 9, columns A and C): ----
a. Total Individual Retirement Accounts (IRAs) and Keogh Plan accounts............................. 6835 138,842 M.1.a
---------
b. Total brokered deposits......................................................................... 2368 0 M.1.b
---------
c. Fully insured brokered deposits (included in Memorandum item 1.b above):
(1) Issued in denominations of less than $100,000............................................... 2345 0 M.1.c1
---------
(2) Issued either in denominations of $100,000 or in denominations greater than
$100,000 and participated out by the broker in shares of $100,000 or less................... 2344 0 M.1.c2
---------
d. Maturity data for brokered deposits:
(1) Brokered deposits issued in denominations of less than $100,000 with a remaining
maturity of one year or less (included in Memorandum item 1.c.(1) above).................... A243 0 M.1.d1
---------
(2) Brokered deposits issued in denominations of $100,000 or more with a remaining
maturity of one year or less (included in Memorandum item 1.b above)........................ A244 0 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).................................................. 5680 96,710 M.1.e
---------
2. Components of total nontransaction accounts (sum of Memorandum items 2.a through 2.d
must equal item 8 column C, above):
a. Savings deposits:
(1) Money market deposit accounts (MMDAs)....................................................... 8810 884,408 M.2.a1
---------
(2) Other savings deposits (excludes MMDAs)..................................................... 0352 1,087,837 M.2.a2
---------
b. Total time deposit of less than $100,000........................................................ 6548 690,567 M.2.b
---------
c. Total time deposits of $100,000 or more......................................................... 2804 335,926 M.2.o
---------
3. All NOW accounts (included in column A above)...................................................... 2398 250,906 M.3
---------
4. Not applicable
</TABLE>
<PAGE> 21
<TABLE>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 12/31/1998 State #: 12-1159 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert #: 21043 RC-10
ATLANTA, GA 30302 Transit #: 06310218
18
</TABLE>
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.................................................................... A679 179,205 M.5.a1
-------
(2) Over three months through 12 months..................................................... A580 399,424 M.5.a2
-------
(3) Over one year through three years....................................................... A581 19,267 M.5.a3
-------
(4) Over three years........................................................................ A562 20,671 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 561,241 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 96,043 M.6.a1
-------
(2) Over three months through 12 months..................................................... A595 204,545 M.6.a2
-------
(3) Over one year through three years....................................................... A598 26,181 M.6.a3
-------
(4) Over three years........................................................................ A587 9,156 M.6.a4
-------
b. Fixed rate AND floating rate time deposits of $100,000 or more with a REMAINING
MATURITY of one year or less (included in Memorandum items 6.a.(1)
through 6.a.(4) above)...................................................................... A242 290,208 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.b.(4) must equal Schedule RC-E
Memorandum item 2.c above.
<PAGE> 22
<TABLE>
<CAPTION>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 12/31/1998 State #: 12/1169 FFIEC 03Z
P.O.Box 4418 CENTER 632 Vendor ID: D Cert #: 21049 RC-11
Atlanta, GA 30302 Transit #: 05310216
19
SCHEDULE RC-F - OTHER ASSETS
C330 <-
Dollar Amounts in thousands
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RCON
1. Income earned, net collected on loans ................................................................. 2164 38,186 1.
2. Net deferred tax assets (1) ........................................................................... 2148 26,573 2.
3. Interest-only strips receivable (not in the form of a security)(2) on:
a. Mortgage loans ..................................................................................... A510 0 3.a
b. Other financial assets ............................................................................. A520 0 3.b
4. Other (itemize and describe amounts that exceed 25% of this item)...................................... 2168 22,872 4.
TEXT RCON
a. 3548 Securities-Accrd Inc. 3548 8,548 4.a
b. 3550 3550 0 4.b
c. 3581 3581 0 CON 4.c
5. Total (sum of items 1 through 4) (must equal Schedule RC, item 11) .................................... 2160 85,703 5.
Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------------------------------
Memorandum RCON
1. Deferred tax assets disallowed for regulatory capital purposes ........................................ 5610 0 M.1
SCHEDULE RC-G - OTHER LIABILITIES
C335 <-
Dollar Amount in Thousands
- -----------------------------------------------------------------------------------------------------------------------------------
RCON
1. a. Interest accrued and unpaid on deposits (3) ........................................................ 3846 11,110 1.a
b. Other expenses accrued and unpaid (includes accrued income taxes payable) .......................... 2848 26,093 1.b
2. Net deferred tax liabilities (1) ...................................................................... 3040 0 2.
3. Minority interest in consolidated subsidiaries ........................................................ 3000 0 3.
4. Other (itemize and describe amounts that exceed 25% of this item) ..................................... 2938 5,380 4.
TEXT RCON
a. 3652 Unearned I/C Insurance 3582 1,367 4.a
b. 3653 3552 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 42,563 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> 23
<TABLE>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA, N.A. Call Date: 12/31/1998 State #: 12-1169 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert #: 21043 RC-12
ATLANTA, GA 30302 Transit #: 06310215
20
</TABLE>
SCHEDULE RC-K - QUARTERLY AVERAGES (1)
C355
<TABLE>
<CAPTION>
DOLLAR AMOUNTS IN THOUSANDS
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
RCON
----
ASSETS
1. Interest-bearing balances due from depository institutions.................................. 3381 5,233 1.
---------
2. U.S. Treasury securities, U.S. Government agency obligations (2)............................ 3382 433,459 2.
---------
3. Securities issued by states and political subdivisions in the U.S. (2)...................... 3383 32,592 3.
---------
4. a. Other debt securities (2)................................................................ 3847 250 4.a
---------
b. Equity securities (3) (includes investments in mutual funds and Federal Reserve stock)... 3648 89,458 4.b
---------
5. Federal funds sold and securities purchased under agreements to resell...................... 3385 607,935 5.
---------
6. Loans:
a. Total loans............................................................................. 3360 6,611,632 6.a
---------
b. Loans secured by real estate............................................................ 3365 1,963,017 6.b
---------
c. Loans to finance agricultural production and other loans to farmers..................... 3386 44,074 6.c
---------
d. Commercial and industrial loans......................................................... 3387 3,538,453 6.d
---------
e. Loans to individuals for household, family, and other personal expenditures............. 3388 633,275 6.e
---------
7. Trading assets.............................................................................. 3401 0 7.
---------
8. Lease financing receivables (net of unearned income)........................................ 3484 142,936 8.
---------
9. Total assets (4)............................................................................ 3385 8,600,172 9.
---------
LIABILITIES
10. Interest-bearing transaction accounts (NOW accounts, ATS accounts, and telephone and
preauthorized transfer accounts) (exclude demand deposits)................................ 3485 176,620 10
---------
11. Nontransaction accounts:
a. Money market deposit accounts (MMDAs)................................................... 3486 901,274 11.a
---------
b. Other savings deposits.................................................................. 3487 1,037,225 11.b
---------
c. Time deposits of $100,000 or more....................................................... A514 342,032 11.c
---------
d. Time deposits of less than $100,000..................................................... A529 699,205 11.d
---------
12. Federal funds purchased and securities sold under agreements to repurchase.................. 3353 2,910,693 12
---------
13. Other borrowed money (includes mortgage indebtedness and obligations under
capitalized leases)....................................................................... 3368 390,812 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> 24
<TABLE>
<S> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 12/31/1998 State #: 12-1159 FFIEC 032
P. O. BOX 4418 CENTER 632 Vendor ID: D Cert. #: 21043 RC-13
ATLANTA, GA 30302 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
Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
1. Unused commitments:
a. Revolving, open-end lines secured by 1-4 family residential properties.
e.g., home equity lines -------------------------------------------------------------------- 3614 169,886 1.a
b. Credit card lines -------------------------------------------------------------------------- 3615 0 1.b
c. Commercial real estate, construction, and land development:
(1) Commitments to fund loans secured by real estate --------------------------------------- 3616 256,031 1.c.1
(2) Commitments to fund loans not secured by real estate ----------------------------------- 6550 50,178 1.c.2
d. Securities underwriting -------------------------------------------------------------------- 3817 0 1.d
e. Other unused commitments ------------------------------------------------------------------- 3818 4,589,301 1.e
2. Financial standby letters of credit ----------------------------------------CON 3819 895,581 2.
a. Amount of financial standby letters of credit conveyed to others ------- 3820 332,095 2.a
3. Performance standby letters of credit --------------------------------------------------------- 3821 51,892 3.
a. Amount of performance standby letters of credit conveyed to others ----- 3822 3,104 3.a
4. Commercial and similar letters of credit ------------------------------------------------------ 3411 13,687 4.
5. Participations in acceptances (as described in the instructions) conveyed to others by the
reporting bank -------------------------------------------------------------------------------- 3428 0 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.c):
(1) Outstanding principal balance of assets transferred as of the report date -------------- A523 0 9.b.1
(2) Amount of recourse exposure on these assets as of the report date ---------------------- A524 0 9.b.2
c. Small business obligations transferred with recourse under Section 208 of the Riegio
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 -------------------------- A538 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. 3556 3655 0 12.a
b. 3556 3966 0 12.b
c. 3557 3557 0 12.c
d. 3658 3658 0 12.d
</TABLE>
<PAGE> 25
<TABLE>
<S> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 12/31/1998 State #: 12-1189 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert #: 21043 RC-14
ATLANTA, GA 30302 Transit #: 06310215
</TABLE>
22
SCHEDULE RC-L CONTINUED
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------
<S> <C>
13. All other off-balance sheet assets (exclude off-balance sheet derivatives)(itemize and describe CON
each component of this item over 25% Schedule RC, item 28., 'Total equity capital')---------------- S591 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
-----------
</TABLE>
C361 <-
<TABLE>
<CAPTION>
(Column A) (Column B) (Column C) (Column D)
OFF-BALANCE SHEET DERIVATIVES Interest Foreign Equity Commodity
POSITION INDICATORS Rate Exchange Derivative and other
Contracts Contracts Contracts Contracts
<S> <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------------------------ 5693 0 5694 0 5695 0 5696 0 14.a
---------- ---------- ----------- ----------
b. Forward contracts------------------------ 5697 0 5698 0 5699 0 5700 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 165,802 3628 0 8719 0 8720 0 14.e
---------- ---------- ----------- ----------
15. Total gross notional amount of
derivative contracts held for trading------- A126 0 A127 0 B723 0 B724 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----------- 8728 165,802 8730 0 8731 0 8732 0 16.b
---------- ---------- ----------- ----------
c. Interest rate swaps where the bank
has agreed to pay a fixed rate----------- A589 68,802 16.c
----------
</TABLE>
<PAGE> 26
<TABLE>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA, N.A. Call Date: 12/31/1998 State#: 12-1159 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert#: 21043 RC-16
ATLANTA, GA 30302 Transit #: 06310218 23
</TABLE>
SCHEDULE RC-L - CONTINUED
C362
<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>
17. Total gross fair value of derivative contracts:
a. Contracts held for trading: CON CON CON CON
------------- ------------- --------------- ------------
(1) Gross positive fair value.................. 8733 0 8734 0 8735 0 8736 0 17.a1
------- ------- -------- -------
(2) Gross negative fair value.................. 8737 0 8738 0 8730 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: RCON CON CON CON
------------- ------------- --------------- ------------
(1) Gross positive fair value................. 8749 9,192 8750 0 8761 0 8752 0 17.c1
------- ------- -------- -------
(2) Gross negative fair value................. 8753 3,534 8754 0 8755 0 8756 0 17.c2
------- ------- -------- -------
MEMORANDA Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------
1.-2. Not applicable
3. Unused commitments with an original maturity
exceeding one year that are reported in Schedule RC-L Items 1.a through 1.e, RCON
above (report only the unused portions of commitments -------------------
that are fee paid or otherwise legally binding)............................................. 3833 3,624,381 M.3
--------
a. Participations in commitments with an original RCON
maturity exceeding one year conveyed to -------------------
others................................................................ 3834 593,031
-------
4. To be completed only by banks with $1 billion or more in total assets:
Standby letters of credit (both financial and performance) issued RCON
to non-U.S. addresses (domicile) included in Schedule RC-L, Items -------------------
2 and 3 above................................................................................ 337 300 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:
a. Loans to purchase private passenger automobiles RCON
(to be completed for the September report -------------------
only)........................................................................................ 2741 N/A M.5.a
-------
b. Credit cards and related plan (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)....................................................................... 2748 N/A M.6.c
-------
</TABLE>
<PAGE> 27
<TABLE>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 12/31/1998 State #: 12-1159 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert #: 21043 RC-16
ATLANTA, GA 30302 Transit #: 06310215
24
</TABLE>
SCHEDULE RC-M-MEMORANDA
C355
<TABLE>
<CAPTION>
DOLLAR AMOUNTS
IN THOUSANDS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Extensions of credit by the reporting bank to its executive officers, directors, principal
shareholders, and their related interests as of the report date:
a. Aggregate amount of all extensions of credit to all executive officers, directors, principal CON
----
shareholders, and their related interests........................................................... 6164 183,529 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 CO NUMBER
---- ------
this purpose in agency regulations.................................................... 6185 7 1.b
------
2. Federal funds sold and securities purchased under agreements to resell with U.S. branches and agencies CON
----
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............................................................ 5800 0 4.a
-------
b. Mortgages serviced under a FHLMC contract:
(1) Serviced with recourse to servicer............................................................. 5601 0 4.b.1
-------
(2) Serviced without recourse to servicer.......................................................... 6502 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.................................................. 5605 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 1,081 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.............................................. A580 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............................................................................................ 3103 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> 28
<TABLE>
<S> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 12/31/1998 State #: 12-1169 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert #: 21043 RC-17
ATLANTA, GA 30302 Transit #: 06310216
</TABLE>
------
25
------
SCHEDULE RC-M - CONTINUED
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------------
<S> <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 9 8.a.2b
-----------
(c) 1-4 family residential properties-------------------------------------------------- 5510 1,486 8.a.2c
-----------
(d) Multifamily (5 or more) residential properties------------------------------------- 5511 0 8.a.2d
-----------
(e) Nonfarm nonresidential properties-------------------------------------------------- 5512 0 8.a.2e
-----------
(3) Total (sum of items 8.a(1) and 8.a.(2)) (*must equal Schedule RC, item 7)-------------- 2150 1,497 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"-------------------------------------- 3776 0 9
10. Mutual fund and annuity sales during the quarter (including proprietary, private label,
and third party products):
a. Money market funds------------------------------------------------------------------------ 8441 258,100 10.a
-----------
b. Equity securities funds------------------------------------------------------------------- 8427 10,062 10.b
-----------
c. Debt securities funds--------------------------------------------------------------------- 8428 12,361 10.c
-----------
d. Other mutual funds------------------------------------------------------------------------ 8429 4,897 10.d
-----------
e. Annuities--------------------------------------------------------------------------------- 8430 2,317 10.e
-----------
f. Sales of proprietary mutual funds and annuities (included in items 10.a through
10.e above)------------------------------------------------------------------------------- 8784 268,042 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)------------------------------- A528 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
-----------
- -----------------------------------------------------------------------------------------------------------------
Memorandum Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------------
1. Reciprocal holdings of banking organizations' capital instruments
(to be completed for the December report only)------------------------------------------------ 3838 0 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> 29
<TABLE>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK CENTRAL FLORIDA, N.A. Call Date: 12/31/1998 State #: 12-1159 FFIEC 032
P.O. Box 4418 CENTER 632 Vendor ID: D Cert #: 21043 RC-18
Atlanta, GA 30302 Transit #: 06310218 26
</TABLE>
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 80 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 4,681 1248 494 1247 7,248 1.a
------ --- ------
b. To non-U.S. addressees (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 1598 0 3.
------ --- ------
4. Commercial and industrial loans:
a. To U.S. addressees (domicile)........................... 1251 44,793 1252 207 1253 20,529 4.a
------ --- ------
b. To non-U.S. addressees (domicile)....................... 1254 0 1256 0 1258 0 4.b
------ --- ------
5. Loans to individuals for household, family, and
other personal expenditures:
a. Credit cards and related plans.......................... 5383 356 5384 175 5385 188 5.a
------ --- ------
b. Other (includes single payment, installment,
and all student loans).................................. 5386 4,930 5387 75 5385 788 6.b
------ --- ------
6. Loans to foreign governments and official
institutions............................................... 5388 0 5390 0 5391 0 6
------ --- ------
7. All other loans............................................ 5469 0 5480 0 5481 0 7
------ --- ------
8. Lease financing receivables:
a. Of U.S. addresses (domicile)............................ 1267 112 1258 14 1260 1,727 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>
RCON CON CON
---- ---- ----
10. Loans and leases reported in Items 1
through 8 above which are wholly or partially
guaranteed by the U.S. Government.............................. 5812 0 5813 0 5814 133 10
------ --- ------
a. Guaranteed portion of loans and leases
included in Item 10 above................................... 5815 0 5816 0 5817 102 10.a
------ --- ------
</TABLE>
<PAGE> 30
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 12/31/1998 State #: 12-1169 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert #: 21043 RC-19
ATLANTA, GA 30302 Transit #: 08310215 27
SCHEDULE RC-N CONTINUED C373<-
Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------
-(Column A)- -(Column B)- -(Column C)-
MEMORANDA Past due Past due 90 Nonaccrual
30 through 89 days or more
days and still and still
accruing accruing
1. Restructured loans and leases included in
Schedule RC-N, items 1 through 8, above
(and not reported in Schedule RC-C, RCON CON CON
---- --- ---
Memorandum item 2).................................. 1659 0 1859 0 1881 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................. 6858 0 6559 0 6580 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 802 2768 63 3492 515 M.3a
---------- ---------- -----------
b. Secured by farmland.............................. 3493 0 3484 0 3495 700 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............... 6396 259 5389 418 5400 444 M.3.c1
---------- ---------- -----------
(2) All other loans secured by 1-4 family
residential properties....................... 5401 3,489 5402 25 5403 4,258 M.3.c2
---------- ---------- -----------
d. Secured by multifamily (6 or more) residential
properties....................................... 3489 0 3600 0 3601 113 M.3d
---------- ---------- -----------
e. Secured by nonfarm nonresidential properties..... 3502 141 3502 0 3504 1,189 M.3e
---------- ---------- -----------
-(Column A)- -(Column B)-
Past due Past due 90
30 through 89 days or more
days and still and still
accruing accruing
4. Interest rate, foreign exchange rate, and other
commodity and equity contracts: RCON CON
---- ---
a. Book value of amounts carried as assets........... 3522 0 3526 0 M.4.a
---------- ----------
b. Replacement cost of contracts with a
positive replacement cost......................... 3629 0 3520 0 M.4.b
---------- ----------
- -------------------------------------------------------------------------------------------------------------------
PERSON TO WHOM QUESTIONS ABOUT THE REPORTS OF CONDITION AND INCOME SHOULD BE DIRECTED: C377<-
TELEPHONE:
NAME TITLE AREA CODE/PHONE NUMBER/EXTENSION
8901 Todd Bailey 5901 Assistant VP 8902 404-724-3835
----------------------------------- ----------------------- ----------------------
Even though Call Reports must be filed electronically,
send my bank a sample set of paper Call Report CO YES/NO FAX: AREA CODE/PHONE NUMBER
--
for the next quarter. B117 NO 9116 404-827-6501
------------------------- ------ ----------------------
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 31
<TABLE>
<S> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 12/31/1998 State #: 12-1169 FFIEC 032
P. O. Box 4418 Center 632 Vendor ID: D Cert. #: 21043 RC-20
Atlanta, GA 30302 Transit #: 06310215 28
Schedule RC-O - Other Data for Deposit Insurance and FICO Assessments
C376
Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------------
1. Unposted debits (see instructions): RCON
a. Actual amount of all unposted debits ------------------------------------ 0030 1,186 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 14,519 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 ---- 6514 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:
a. Amount reflected in demand deposits (included in Schedule RC-E. RCON
Memorandum item 4.a) ---------------------------------------------------- 2314 0 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 BIP) ---------- 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 ---------------------------------------------- 5598 9
10. Benefit-responsive 'Depository Institution Investment Contracts'
(included in total deposits) ----------------------------------------------- 6432 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> 32
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA, N.A. Call Date: 12/31/1998 State#: 12-1159 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert#: 21043 RC-21
ATLANTA, GA 30302 Transit #: 06310215 29
</TABLE>
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
banks reciprocal demand balances with the domestic offices of U.S.
banks and savings associations and insured branches in Puerto Rico RCON
and U.S. territories and possessions that were reported on a gross ----
basis in Schedule RC-E had been reported on a net basis ...................... 5785 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 2,657,464 M.1.a1
RCO NUMBER ---------
(2) Number of deposit accounts of $100,00 or less --- ------
(to be completed for the June report only)....................... 3778 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 2,063,572 M.1.b1
---------
(2) Number of deposit accounts of more than $100,000................ 2722 5,417 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 RCO YES / NO
method or procedure for determining a better estimate --- --------
of uninsured deposits than the estimate described above................................. 6861 NO M.2.a
--------
b. If the box marked YES has been checked, report the estimate of uninsured
deposits determined by using your bank's method of procedure............................ 5567 0 M.2.b
--------
3. Has the reporting institution been consolidated with a parent bank
or savings association in that parent bank's or parent savings association's
Cell 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 00000 M.3
A549 -------------
</TABLE>
<PAGE> 33
<TABLE>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. CALL DATE: 12/31/1998 STATE #: 12-1169 FFIEC 032
P.O. BOX 4418 CENTER 832 VENDOR ID: D CERT #: 21043 RC-22
ATLANTA, GA 30302 TRANSIT #: 06310215 30
</TABLE>
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.
<TABLE>
<CAPTION>
<S> <C> <C>
1. Test for determining the extent to which Schedule RC-R must be completed. C380 <.
To be completed only by banks with total assets of less than $1 billion.
Indicate in the appropriate box at the right whether the bank has total capital greater than or CO
---- YES/NO
equal to eight percent of adjusted total assets.................................................... 0088 YES 1.
------
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.
Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------------------
2. Portion of qualifying limited-life capital instruments (original weighted
average maturity of at least five years) that is includible in Tier 2 capital: RCON
a. Subordinated debt (1) and intermediate term preferred stock..................................... A516 180,000 2.a
---------
b. Other limited-life capital instruments.......................................................... A518 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 654,554 3.a(1)
---------
(2) Tier 2 capital.............................................................................. 8275 238,514 3.a(2)
---------
(3) Tier 3 capital.............................................................................. 1386 0 3.a(3)
---------
b. Total risk-based capital........................................................................ 3782 893,178 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 8,555,638 3.d.1
---------
(2) Market risk equivalent assets............................................................... 1851 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 8,600,172 3.f
---------
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.
-(Column A)- -(Column B)-
Assets Credit Equiv-
Recorded alent Amount
on the of Off-Balance
Dollar Amounts in Thousands Balance Sheet Sheet Items (3)
- ---------------------------------------------------------------------------------------------------------------------------
4. Assets and credit equivalent amount of off-balance sheet items assigned
to the Zero percent risk category: RCON
----
a. Assets recorded on the balance sheet.......................................... 5183 530,820 CON 4.a
------- ---
b. Credit equivalent amount of off-balance sheet items............................................ 3798 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> 34
<TABLE>
<CAPTION>
SUNTRUST BANK CENTRAL FLORIDA N.A. Call Date: 12/31/1998 State #: 12/1159 FFIEC 03Z
P.O.Box 4418 CENTER 632 Vendor ID: D Cert #: Z1043 RC-23
Atlanta, GA 30302 Transit #: 06310216
31
Schedule RC-R - Continued
-(Column A)- (Column B)-
Assets Credit Equi-
Recorded valent Amount
on the of Off-Balance
Dollar Amounts in Thousands Balance Sheet Sheet Items(2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
5. Assets and credit equivalent amounts of off-balance items assigned to the
20 percent risk category: RCO
----
a. Assets recorded on the balance sheet ........................................ 5186 1,450,584 CON 5.a
---------
b. Credit equivalent amount of off-balance sheet items ......................... 3801 722,223 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 1,282,680 6.a
---------
b. Credit equivalent amount of off-balance sheet items ......................... 3803 151,131 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 5,527,578 7.a
---------
b. Credit equivalent amount of off-balance sheet items ......................... 3805 1,876,595 7.b
---------
8. On-balance sheet asset values excluded from and deducted in
the calculation of the risk-based capital ratio(2) ............................. 3808 6,707 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 8,788,387 9.
---------
Memoranda Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------------------------------
1. Current credit exposure across all off-balance sheet derivative contracts covered by the
risk-based capital standards ................................................... 8784 9,192 M.1
</TABLE>
<TABLE>
<CAPTION>
---------With a remaining maturity of---------
<S> <C> <C> <C>
-(Column A)- -(Column B)- -(Column c)-
One Year Over Over
or less One year five years
thru five years
2. National principal amounts of off-balance
sheet derivative contracts:(3) RCON CON CON
a. Interest rate contracts ............................................. 3809 0 8768 33,572 8787 132,230 M.2.a
------ ------ -------
b. Foreign exchange contracts .......................................... 3812 0 8789 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 9 and report
the amortized cost of these securities in item 4 through 7 above. Item 8
also includes on-balance sheet asset values (or portions thereof) of
off-balance sheet interest rate, foreign exchange rate, and commodity
contracts and those contracts (e.g. future contracts) not subject to
risk-based capital, item 8 margin accounts and accrued receivables not
included in the calculation of credit equivalent amounts of off-balance
sheet derivatives as well as any portion of the allowance for loan and lease
losses in excess of the amount that may be included in Tier 2 capital.
(3) Exclude foreign exchange contracts with an original maturity of 14 days or
less and all futures contracts.
<PAGE> 35
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 12/31/1998 State #: 12-1159 FFIEC 032
P. O. Box 4418 Center 632 Vendor ID: D Cert. #: 21043 RC-24
Atlanta, GA 30302 Transit #: 06310216 32
</TABLE>
OPTIONAL NARRATIVE STATEMENT CONCERNING THE AMOUNTS
REPORTED IN THE REPORTS OF CONDITION AND INCOME
at close of business on December 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 and 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 CUSTOM.
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 BE EDITED OR SCREENED IN ANY WAY 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 <-
RCON
----
X = NO COMMENT Y = COMMENT -------------------------------- 6979 X
BANK MANAGEMENT STATEMENT (please type or print clearly):
TEXT 6980 (70 characters per line)
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
/s/ R. Todd Bowers
---------------------------------------------------------------
Signature of Executive Officer of Bank Date of Signature
<PAGE> 36
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: 3064-0082
ATLANTA, GA 30302 OMB No. For Federal Reserve: 7100-0036
Expiration Date: 3/31/2001
SPECIAL REPORT
C700
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------
Close of Busi-
ness Date: FDIC Cert. #
12/31/1998 21043
- --------------------------------------------------------------------------------
LOANS TO EXECUTIVE OFFICERS (Complete as of each Call Report Date)
- --------------------------------------------------------------------------------
The following information is required by Public Laws 90-44 and 102-242, but
does not constitute a part of the Report of Condition. With each Report of
Condition, these Laws require all banks to furnish a report of all loans or
other extensions of credit to their executive officers made since the date of
the previous Report of Condition. Data regarding individual loans or other
extensions of credit are not required. If no such loans or other extensions of
credit were made during the period. Insert "none" against subitem (a). (Exclude
the first $15,000 of Indebtedness of each executive officer under bank credit
card plan.) See Section 215.2 and 215.3 of Title 12 of the Code of Federal
Regulations. (Federal Reserve Board Regulation O) for the definitions of
"executive officer" and "extension of credit", respectively. Exclude loans and
other extensions of credit to directors and principal shareholders who are not
executive officers.
The following information is required by Public Laws 90-44 and 102-242, but does
not constitute a part of the Report of
<TABLE>
<CAPTION>
RCON
----
<S> <C>
a. Number of loans made to executive officers since the previous Call Report date................ 3581 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>
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------------------
SIGNATURE AND TITLE OF OFFICER AUTHORIZED TO SIGN REPORT: DATE (Month, Day, Year):
- -------------------------------------------------------------------------------------------
FDIC 8040/53 (3-93)
</TABLE>
<PAGE> 1
- ----------------================================================================
EXHIBIT 25.2
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.
Holland & Knight LLP
200 South Orange Avenue, Suite 2600, 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)
---------------------
12 1/4% SENIOR SUBORDINATED DISCOUNT NOTES DUE 2009
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.
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.
2
<PAGE> 3
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 5th day of March, 1999.
SUNTRUST BANK, CENTRAL FLORIDA,
NATIONAL ASSOCIATION
By: /s/ Holly Arencibia
----------------------------------
Holly Arencibia
Vice President
3
<PAGE> 4
Board of Governors of the Federal Reserve System
OMB Number: 7100-0038
Federal Deposit Insurance Corporation
OMB Number: 3084-0052
Office of the Comptroller of the Currency
OMB Number: 1559-0081
Expires March 31, 2001
FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL
- --------------------------------------------------------------------------------
[1]
[LOGO] Please refer to page 1,
Table of Contents,
for the required disclosure
of estimated burden.
- --------------------------------------------------------------------------------
CONSOLIDATED REPORTS OF CONDITION AND INCOME FOR
A BANK WITH DOMESTIC OFFICES ONLY AND
TOTAL ASSETS OF $300 MILLION OR MORE -- FFIEC 032
REPORT AT THE CLOSE OF BUSINESS DECEMBER 31, 1998 (19981231)
----------
(NCM 1999)
This report is required by law: 12 U.S.C. section 324 (State member banks);
12 U.S.C. Section 1817 (State nonmember banks); and 12 U.S.C. Section 161
(National banks).
This report form is to be filed by banks with domestic offices only. Banks with
foreign offices (as defined in the instructions) must file FFIEC 031.
- --------------------------------------------------------------------------------
NOTE: The Reports of Condition and Income must be signed by an authorized
officer and the Report of Condition must be attested to by not less than two
directors (trustees) for State nonmember banks and three directors for State
member and National banks.
I, R. Todd Bowers/Senior Vice President & CFO
---------------------------------------------------
Name and Title of Officer Authorized to Sign Report
of the named bank do hereby declare that the Reports of Condition and Income
(including the supporting schedules) for this report date have been prepared in
conformance with the instructions issued by the appropriate Federal regulatory
authority and are true to the best of my knowledge and belief.
/s/ R. Todd Bowers
- ----------------------------------------------
Signature of Officer Authorized to Sign Report
January 28, 1999
- ----------------------------------------------
Date of Signature
The Reports of Condition and Income are to be prepared in accordance with
Federal regulatory authority instructions.
We, the undersigned directors (trustees), attest to the correctness of the
Report of Condition (including the supporting schedules) for this report date
and declare that it has been examined by us and to the best 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
- ----------------------------------------------
Director (Trustee) George W. Koehn
/s/ Robert L. Mellen, III
- ----------------------------------------------
Director (Trustee) Robert L. Mellen, III
/s/ William B. Wilson
- ----------------------------------------------
Director (Trustee) William B. Wilson
- -------------------------------------------------------------------------------
SUBMISSION OF REPORTS
Each bank must prepare its Reports of Condition and Income either:
(a) in 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.
For electronic filing assistance, contact EDS Call Report Services, 2160 N.
Prospect Ave., Milwaukee, WI 53202, telephone (800) 256-1571.
To fulfill the signature and attestation requirement for the Reports of
Condition and Income for this report date, attach this signature page to the
hard-copy record of the completed report that the bank places in its files.
- -------------------------------------------------------------------------------
FDIC Certificate Number 21043
---------
(NCM 1999)
SunTrust Bank Central Florida N.A.
- ----------------------------------------------
Legal Title of Bank
Atlanta,
- ----------------------------------------------
City
GA 30302
- ----------------------------------------------
State Abbrev. Zip Code
Board of Governors of the Federal Reserve System, Federal Deposit Insurance
Corporation, Office of the Comptroller of the Currency
<PAGE> 5
Consolidated Reports of Condition and Income for
A Bank With Domestic Offices Only and Total Assets of $300 Million or More
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Table of Contents
Signature Page Cover
<S> <C>
Report of Income
Schedule RI--Income Statement ............................................. RI-1,2,3
Schedule RI-A--Changes in Equity Capital .................................. RI-3
Schedule RI-B--Charge-offs and Recoveries on
Loans and Leases and Changes in Allowance
for Credit Losses ....................................................... RI-4,5
Schedule RI-E--Explanations ............................................... RI-5,6
</TABLE>
Disclosure of Estimated Burden
The estimated average burden associated with this information collection is 34.1
hours per respondent and is estimated to vary from 15 to 400 hours per response
depending on individual circumstances. Burden estimates include the time for
reviewing instructions, gathering and maintaining data in the required form, and
completing the information collection, but exclude the time for compiling
and maintaining business records in the normal course of a respondent's
activities. A Federal agency may not conduct or sponsor, and an organization (or
a person) is not required to respond to a collection of information, unless it
displays a currently valid OMB control number. Comments concerning the accuracy
of this burden estimate and suggestions for reducing this burden should be
directed to the Office of Information and Regulatory Affairs, Office of
Management and Budget, Washington, D.C. 20503 and to one of the following:
Secretary
Board of Governors of the Federal Reserve System
Washington, D.C. 20581
Legislative and Regulatory Analysis Division
Office of the Comptroller of the Currency
Washington, D.C. 20219
Assistant Executive Secretary
Federal Deposit Insurance Corporation
Washington, D.C. 20428
<TABLE>
<CAPTION>
Report of Condition
<S> <C>
Schedule RC--Balance Sheet ............................................... RC-1,2
Schedule RC-A--Cash and Balance Due
From Depository Institutions ........................................... RC-3
Schedule RC-B--Securities ................................................ RC-3,4,5
Schedule RC-C--Loans and Lease Financing
Receivables:
Part I. Loans and Leases ............................................... RC-8,7,8
Part II. Loans to Small Businesses and
Small Farms (to be completed for the June report only) ............... RC-8a,8b
Schedule RC-D--Trading Assets and Liabilities
(to be completed only by selected banks) ............................... RC-8
Schedule RC-E--Deposit Liabilities ....................................... RC-9,10
Schedule RC-F--Other Assets .............................................. RC-11
Schedule RC-G--Other Liabilities ......................................... RC-11
Schedule RC-K--Quarterly Averages ........................................ RC-12
Schedule RC-L--Off Balance Sheet Items ................................... RC-13,14,15
Schedule RC-M--Memoranda ................................................. RC-16,17
Schedule RC-N--Past Due and Nonaccrual
Loans, Leases, and Other Assets ........................................ RC-18,19
Schedule RC-O--Other Data for Deposit
Insurance and FICO Assessments ......................................... RC-20,21
Schedule RC-R--Regulatory Capital ........................................ RC-22,23
Optional Narrative Statement Concerning
the Amounts Reported in the Reports
of Condition and Income ................................................ RC-24
Special Report (to be completed by all banks)
</TABLE>
For information or assistance, national and state nonmember banks should contact
the FDIC's Call Reports Analysis Section, 550 17th Street, NW, Washington, D.C.
20429, toll free on (800) 888-FDIC (3342), Monday through Friday between 8:00
a.m. and 5:00 p.m., Eastern time. State member banks should contact their
Federal Reserve District Bank.
<PAGE> 6
<TABLE>
<S> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA, N.A. Call Date: 12/31/1998 State #: 12-1169 FFIEC 032
P.O. Box 4418 Center 632 Vendor ID: D Cert #: 21043 RI-1
Atlanta, GA 30302 Transit #: 06310216
3
</TABLE>
Consolidated Report of Income
For the Period January 1, 1998 - December 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 1380
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Interest Income:
a. Interest and fee income on loans: RIAD
----
(1) Loans secured by real estate........................................... 4011 157,055 1.a.1
-------
(2) Loans to finance agricultural production and other loans to farmers.... 4024 3,901 1.a.2
-------
(3) Commercial and industrial loans........................................ 4012 198,346 1.a.3
-------
(4) Loans to individuals for household, family, and other personal
expenditures:
(a) Credit cards and related plans..................................... 4054 2,751 1.a.4.a
-------
(b) Other.............................................................. 4065 48,811 1.a.4.b
-------
(5) Loans to foreign governments and official institutions................. 4058 0 1.a.5
-------
(6) Obligations (other than securities and leases) of states and political
subdivisions in the U.S.:
(a) Taxable obligations................................................ 4509 276 1.a.6.a
-------
(b) Tax-exempt obligations............................................. 4504 8,869 1.a.6.b
-------
(7) All other loans........................................................ 4058 32,610 1.a.7
-------
b. Income from lease financing receivables:
(1) Taxable leases......................................................... 4506 10,294 1.b.1
-------
(2) Tax-exempt leases...................................................... 4307 315 1.b.2
-------
c. Interest Income on balances due from depository institutions (1)........... 4115 246 1.c
-------
d. Interest and dividend income on securities
(1) U.S. Treasury securities and U.S. Government agency obligations........ 4027 36,480 1.d.1
-------
(2) Securities issued by states and political subdivisions in the U.S.:
(a) Taxable securities................................................. 4506 29 1.d.2.a
-------
(b) Tax-exempt securities.............................................. 4507 1,759 1.d.2.b
-------
(3) Other domestic debt securities......................................... 3657 0 1.d.3
-------
(4) Foreign debt securities................................................ 3658 18 1.d.4
-------
(5) Equity securities (including investments in mutual funds).............. 3659 2,695 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 33,568 1.f
-------
g. Total interest income (sum of items 1.a through 1.f)....................... 4107 537,025 1.g
-------
</TABLE>
- -----------------
(1) Includes interest income on time certificates of deposits not held for
trading.
<PAGE> 7
<TABLE>
<S> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 12/31/1998 State#: 12-1159 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert #: 21043 RI-2
ATLANTA, GA 30302 Transit #: 06310215
4
</TABLE>
SCHEDULE RI - Continued
<TABLE>
<CAPTION> Dollar Amounts in Thousands
-------------------------------------------------------------------------------------------------------------------------
<S> <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 1,880 2.a.1
------------
(2) Nontransaction accounts:
(a) Money market deposit accounts (MMDAs).................................... 4509 14,200 2.a.2a
------------
(b) Other savings deposits................................................... 4511 38,034 2.a.2b
------------
(c) Time deposits of $100,000 or more........................................ A517 18,955 2.a.2c
------------
(d) Time deposits of less than $100,000...................................... A518 38,495 2.a.2d
------------
b. Expense of federal funds purchased and securities sold under
agreements to repurchase......................................................... 4180 143,989 2.b
------------
c. Interest on demand notes issued to the U.S. Treasury, trading liabilities
and on other borrowed money...................................................... 4185 18,876 2.c
------------
d. Not applicable
e. Interest on subordinated notes and debentures.................................... 4200 5,824 2.e
------------
f. Total interest expense (sum of items 2.a through 2.e)............................ 4073 280,738 RIAD 2.f
------------ ----
3. Net interest income (item 1.g minus 2.f).............................................................. 4074 286,287 a.
---------
4. Provisions:
a. Provision for credit losses........................................................................ 4230 10.005 4.a
---------
b. Provision for allocated transfer risk.............................................................. 4243 0 4.b
---------
5. Noninterest income: RIAD
----
a. Income from fiduciary activities................................................. 4070 30,203 5.a
------------
b. Service charges on deposit accounts.............................................. 4080 36,487 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 50,367 5.f.1
------------
(2) All other noninterest income*................................................ 5408 14,025 RIAD 5.f.2
----
g. Total noninterest income (sum of items 5.a through 5.f)............................................ 4076 133,082 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........................................... 3198 15 6.b
---------
7. Noninterest expense: RIAD
----
a. Salaries and employee benefits................................................... 78,203 7.a
------------
b. Expenses of premises and fixed assets (net of rental income)
(excluding salaries and employee benefits and mortgage interest)................. 4217 22,715 7.b
------------
c. Other noninterest expense*....................................................... 4082 109,503 RIAD 7.c
------------ ----
d. Total noninterest expense (sum of items 7.a through 7.c)........................................... 4083 210,421 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 168,939 8.
---------
9. Application income taxes (on item 8).................................................................. 4302 81,256 9.
---------
10. Income (loss) before extraordinary items and other adjustments (item 8 minus 9)....................... 4300 107,873 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 107,673 12.
---------
</TABLE>
- -------
* Describe on Schedule RI-E - Explanations.
<PAGE> 8
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 12/31/1998 State #: 12-1169 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert #: 21043 RI-3
ATLANTA, GA 30302 Transit #: 06310215
</TABLE>
5
SCHEDULE RI - CONTINUED
I381
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------
Memoranda
<S> <C>
1. Interest expense incurred to carry tax-exempt securities, loans, and leases acquired after RIAD Year to Date
August 7, 1986, that is not deductible for federal income tax purposes________________________ 4813 1,469 M.1
____________
2. Income from the sale and servicing of mutual funds and annuities (included in
Schedule RI, item 6)__________________________________________________________________________ 6431 7,520 M.2
____________
3. Not applicable
4. Number of full-time equivalent employees on payroll at end of current period (round to Number
nearest whole number)_________________________________________________________________________ 4150 1,611 M.4
____________
5.-6. Not applicable
7. If the reporting bank has restated its balance sheet as a result of applying push CCYY / MM / DD
down accounting this calendar year, report the date of the bank's acquisition (1)_____________ 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____________________________________________________________________ 8767 0 M.8.a
____________
b. Foreign exchange exposures_________________________________________________________________ 8768 0 M.8.b
____________
c. Equity security and index exposures________________________________________________________ 8769 0 M.8.c
____________
d. Commodity and other exposures______________________________________________________________ 8780 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 (408) M.9.a
____________
b. Net (increase) decrease to interest expense________________________________________________ 8762 (35) 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
____________
11. Does the reporting bank have a Subchapter 5 election in effect for Yes/No
federal income tax purposes for the current tax year?________________________________________ A630 NO M.11
____________
12. Deferred portion of total applicable income taxes included in Schedule RI,
items 9 and 11 (to be reported with the December Report of Income)___________________________ 4772 0 M.12
____________
</TABLE>
__________
(1) For example, a bank acquired on June 1, 1997, would report 1997/08/01
SCHEDULE RI-A - CHANGES IN EQUITY CAPITAL
Indicate decreases and losses in parentheses. I383
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------------
<S> <C>
RIAD
______________
1. Total equity capital originally reported in the December 31, 1997, Reports of Condition and Income__ 3215 525,376 1.
__________
2. Equity capital adjustments from amended Reports of Income, net*_____________________________________ 3216 0 2.
__________
3. Amended balance end of previous calendar year (sum of items 1 and 2)________________________________ 3217 528,378 3.
__________
4. Net income (loss) (must equal Schedule RI, item 12)_________________________________________________ 4340 107,673 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_______________________________________________________ 4480 24,000 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 form prior years * (see instructions for this schedule)___ 4412 0 10.
__________
11. Change in net unrealized holding gains (losses) on available-for-sale securities____________________ 6433 381 11.
__________
12. Other transactions with parent holding company * (not included in item 5, 7, or 8 above)____________ 4416 49,324 12.
__________
13. Total equity capital end of current period (sum of items 3 through 12) (must equal
Schedule RC item 28)________________________________________________________________________________ 3210 656,756 13.
__________
</TABLE>
__________
* Describe on Schedule RI-E - Explanations.
<PAGE> 9
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Data: 12/31/1998 State #: 12-1159 FFIEC 032
P. O. BOX 4418 CENTER 632 Vendor ID: D Cart #: 21043 RI-4
ATLANTA, GA 30302 Transit #: 08310215
6
</TABLE>
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)............................................ 4861 563 4661 876 1,a
--------- -------
b. To non-U.S. addressees (domicile)........................................ 4862 0 4682 0 1,b
--------- -------
2. Loans to depository institutions and acceptances of other banks:
a. To U.S. banks and other U.S. depository institutions..................... 4863 0 4863 0 2,a
--------- -------
b. To foreign banks......................................................... 4854 0 4864 0 2,b
--------- -------
3. Loans to finance agricultural production and other loans to farmers......... 4855 0 4865 0 3
--------- -------
4. Commercial and industrial loans:
a. To U.S. addressees (domicile)............................................ 4645 17,840 4517 1,105 4,a
--------- -------
b. To non-U.S. addressees (domicile)........................................ 4848 6 4618 0 4,b
--------- -------
5. Loans to individuals for household, family, and other personal
expenditures:
a. Credit cards and related plans........................................... 4656 857 4886 148 5,a.
--------- -------
b. Other (includes single payment, installment, and all student loans)...... 4857 3,725 4667 921 5,b.
--------- -------
6. Loans to foreign governments and official institutions...................... 4843 0 4627 0 6
--------- -------
7. All other loans............................................................. 4644 376 4628 127 7
--------- -------
8. Lease financing receivables:
a. Of U.S. addressees (domicile)............................................ 4856 750 4686 8 8,a.
--------- -------
b. Of non-U.S. addressees (domicile)........................................ 4869 0 4689 0 8,b.
--------- -------
9. Total (sum of items 1 through 8)............................................ 4835 24,117 4805 3,183 9
--------- -------
</TABLE>
MEMORANDA
<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.-3. Not applicable.
4. Loans to finance commercial real estate, construction, and land
development activities (not secured by real estate) included in
Schedule RI-8, part 1, items 4 and 7, above................................. 3108 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 18 M.5.a
--------- -------
b. Secured by farmland...................................................... 3584 0 3586 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 64 5412 5 M.5.c1
--------- -------
(2) All other loans secured by 1-4 family residential properties......... 5413 121 6414 4 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 358 3581 851 M.5.e
</TABLE>
<PAGE> 10
<TABLE>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK CENTRAL FLORIDA, N.A. Call Date: 12/31/1998 State #: 12-1169 FFIEC 032
P.O. Box 4418 CENTER 632 Vendor ID: D Cert#: 21043 RI-5
Atlanta, GA 30302 Transit #: 08310216
7
</TABLE>
Schedule RI-B - Continued
Part II. Changes in Allowance for Credit Losses
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
---------------------------
<S> <C> <C> <C>
RIAD
----
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 6 above).................................. 2418 3,183 2.
------
3. LESS: (Charge-offs (must equal or exceed part I, Item 9, column A above).......................... 2482 24,117 3.
------
4. Provision for credit losses (must equal Schedule RI, Item 4, a)................................... 4230 10,005 4.
------
5. Adjustments* (see instructions for this schedule)................................................. 4816 0 5.
------
6. Balance end of current period (sum of Items 1 through 5)
(must equal or exceed Schedule RC, Item 4.b....................................................... A612 78,514 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)
<TABLE>
<CAPTION>
1395
Dollar Amounts in Thousands
---------------------------
<S> <C> <C> <C>
RIAD Year to Date
---- ------------
1. All other noninterest income from Schedule RI, Item 5.f(2)
Report amounts that exceed 10% of Schedule RI, Item 5.f(2):
a. Net gains (losses) on other real estate owned.................................................. 5416 2,268 1.a
------
b. Net gains (losses) on sales of loans........................................................... 5418 6,108 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. 4481 Other Income 4461 2,562 1.d
------
e. 4452 Foreign exchg-Gain/Loss 4482 1,609 1.e
------
f. 4483 4465 0 1.f
------
</TABLE>
<TABLE>
<CAPTION> RIAD Year to Date
<S> <C> <C> <C>
---- -------------
2. Other noninterest expense (from Schedule RI, Item 7,c):
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 sale 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
e. 4464 I/C Data Processing Fee 4464 45,121 2.e
------
f. 4467 4467 0 2.f
------
g. 4468 4468 0 2.g
------
</TABLE>
<PAGE> 11
<TABLE>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 12/31/1998 State #: 12-1169 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert. #: 21D43 RI-G
ATLANTA, GA 30302 Transit #: 08310216
8
----------
</TABLE>
Schedule RI-E - Continued
<TABLE>
<C> <C> <S> <C> <C> <C> <C> <C>
Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------------
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
--------------------------
RIAD
----
TEXT
a. (1) 4489 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);
RIAD
TEXT ----
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 8) (itemize and describe all changes in
accounting principles);
RIAD
TEXT ----
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
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);
RIAD
TEXT ----
a. 4498 Fixed Asset Dividend 4498 (676) 7.a
--------
b. 4499 Capital Contribution 4499 50,000 7.b
--------
8. Adjustments to allowance for credit (from Schedule RI-B, part II, item
5) (itemize and describe all adjustments);
RIAD
TEXT ----
a. 4521 4521 0 8.a
--------
b. 4522 4522 0 8.b
--------
1398 1399
9. Other explanations (the space below is provided for bank to briefly
describe, at its option, any other significant items affecting the
Report RIAD
X = NO COMMENT - Y = COMMENT 4789 X
-------- --------------
Other explanations (please type or print clearly):
</TABLE>
TEXT 4769 (70 characters per line)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
<PAGE> 12
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA, N.A. Call Date: 12/31/1998 State#: 12-1159 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert#: 21043 RC-1
ATLANTA, GA 30302 Transit #: 08310216 9
</TABLE>
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR DECEMBER 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>
ASSETS
1. Cash and balances due from depositary institutions (from Schedule RC-A): RCON
----
a. Noninterest-bearing balances and currency and coin(1)............................................. 0081 747,702 1.a
---------
b. Interest-bearing balances(2)...................................................................... 0071 4,066 1.b
---------
2. Securities:
a. Held-to-maturity securities (from Schedule RC-B, column A)........................................ 1764 0 2.a
---------
b. Available-for-sale securities (from Schedule RC-B, column D)...................................... 1773 598,399 2.b
---------
3. Federal funds sold and securities purchased under agreement to resell.................................. 1350 507,548 3
---------
4. Loans and lease financing receivables: RCON
----
a. Loans and leases, net of unearned income (from Schedule RC-C)............... 2122 6,792,345 4.a
---------
b. LESS: Allowance for loan and lease losses................................... 3123 78,514 4.b
---------
c. LESS: Allocated transfer risk reserve....................................... 3128 0 4.c
---------
RCON
d. Loans and leases, net of unearned income, allowance, and reserve ----
(item 4.a minus 4.b and 4.c).................................................................. 2125 6,713,831 4.d
---------
5. Trading assets (from Schedule RC-D)................................................................... 3545 0 5.
---------
6. Premises and fixed assets (including capitalized leases).............................................. 2146 52,222 6.
---------
7. Other real estate owned (from Schedule RC-M).......................................................... 2180 1,497 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.......................................... 2165 1,081 9.
---------
10. Intangible assets (from schedule RC-M)................................................................ 2143 0 10.
---------
11. Other assets (from Schedule RC-F)..................................................................... 2180 85,703 11.
---------
12. Total assets (sum of items 1 through 11).............................................................. 2170 8,719,863 12.
---------
</TABLE>
- ----------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
<PAGE> 13
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 12/31/1998 State #: 12-1159 FFIEC 032
P. O. Box 4418 Center 632 Vendor ID: D Cert #: 21043 RC-2
Atlanta, GA 30302 Transit #: 06310216 10
Schedule RC - Continued
Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
<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 4,721,035 13.a
--- ---------
(1) Noninterest-bearing (1) .................................................. 0031 1,547,568 13.a.1
---------
(2) Interest-bearing ......................................................... 0036 3,073,466 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 purchase ......................... 2800 2,850,307 14
---------
15. a. Demand notes issued to the U.S. Treasury ...................................................... 2540 0 10.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 ................................................. 2838 185,110 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 100,000 16.c
---------
17. Not applicable
18. Bank's liability on acceptances executed and outstanding ......................................... 2020 1,081 18
---------
19. Subordinated notes and debentures (2) ............................................................ 3200 160,000 19
---------
20. Other liabilities (from Schedule RC-G) ........................................................... 2930 42,563 20
---------
21. Total liabilities (sum of items 13 through 20) ................................................... 2948 6,061,097 21
---------
22. Not applicable
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus .................................................... 3636 0 23
---------
24. Common stock ..................................................................................... 3230 5,098 24
---------
25. Surplus (exclude all surplus related to preferred stock) ......................................... 3839 174,126 25
---------
26. a. Undivided profits and capital reserves ........................................................ 3692 475,440 26.a
---------
b. Net unrealized holding gains (losses) on available-for-sale securities ........................ 8494 4,092 26.b
---------
27. Cumulative foreign currency translation adjustments .............................................. 27
28. Total equity capital (sum of items 23 through 27) ................................................ 3210 658,756 28
---------
29. Total liabilities and equity capital (sum of items 21 and 28) .................................... 3300 8,719,863 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 N/A M.1
---------
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
1 = independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed by other
with generally accepted auditing standards by a certified external auditors (may be required by state chartering
public accounting firm which submits a report on the bank authority)
2 = independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by
submits a report on the consolidated holding company (but external auditors
not on the bank separately) 7 = Other audit procedures (excluding tax preparation work)
3 = Directors' examination of the bank conducted in accordance 8 = No external audit work
with generally accepted auditing standards by a certified
public accounting firm (may be required by state chartering
authority)
- -----------------
(1) Includes total demand deposits and noninterest-bearing time and savings deposits.
(2) Includes limited-life preferred stock and related surplus.
</TABLE>
<PAGE> 14
<TABLE>
<S> <C> <C> <C> <C> <C>
TRUST BANK, CENTRAL FLORIDA N.A. Call Date: 12/31/1998 State #: 12-1159 FFIEC 032
Box 4418 Center 632 Vendor ID: D Cert #: 21043 RC-3
ATLANTA, GA 30302 Transit # 06310218
</TABLE>
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 459,828 1.a
-------
b. Currency and coin.................................................................. 0080 105,002 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. ... 0086 186,844 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 1,094 3.b
-------
4. Balances due from Federal Reserve Banks................................................ 0080 0 4
-------
5. Total (sum of items 1 through 4) (must equal Schedule RC, sum of items 1.a and 1.b) 0010 751,768 5
-------
</TABLE>
MEMORANDUM
<TABLE>
<CAPTION>
Dollar Amounts
in Thousands
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Noninterest-bearing balances due from commercial banks in the U.S. (included in CON
----
2.a and 2.b above)................................................................... 0050 181,778 M.1
-------
</TABLE>
SCHEDULE RC-B -- SECURITIES
Exclude assets held for trading.
C310 <-
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------------------
Hold-to-maturity Available-for-sale
--------------------------- ---------------------------------
(Column A) (Column B) (Column C) (Column D)
Amortized Cost Fair Value Amortized Cost Fair Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
RCON CON CON CON
---- --- --- ---
1. U.S. Treasury securities.................................. 0211 0 0213 0 1288 225,712 1287 229,784 1
--- ---- --- ---- ------- ---- -------
2. U.S. Government agency obligations
(exclude mortgage-backed securities);
(a) Issued by U.S. Government agencies (2)............... 1289 0 1290 0 1281 0 1290 0 2.a
--- ---- --- ---- ------- ---- -------
(b) Issued by U.S. Government-sponsored agencies (3)..... 1294 0 1295 0 1287 49,997 1295 50,059 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> 15
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Data: 12/31/1998 State#: 12-1159 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert#: 21043 RC-4
ATLANTA, GA 30302 Transit #: 08310215
</TABLE>
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)
<S> <C> <C> <C> <C>
3. Securities issued by states and political Amortized Cost Fair Value Amortized Cost Fair Value(1)
subdivisions in the U.S.: CON CON CON CON
--- --- --- ---
a. General obligations--------------------- 1676 0 1677 0 1678 27,320 1679 28,520 3.a
----------- --------- ----------- ---------
b. Revenue obligations--------------------- 1681 0 1688 0 1690 4,884 1691 5,122 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 33,976 1702 34,262 4.1.(1)
----------- --------- ----------- ---------
(2) Issued by FNMA and FHLMC------------ 1703 0 1705 0 1706 22,915 1707 24,345 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
(CMO's REMICs and stripped MBS):
(1) Issued or guaranteed by FNMA, CON CON CON CON
--- --- --- ---
FHLMC, or GNMA---------------------- 1714 0 1715 0 1716 94,104 1717 93,545 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 1749 250 5.b
----------- --------- ----------- ---------
6. Equity securities:
a. Investments in mutual funds and
other equity securities with
readily determinable fair values---------------------------------------------- A610 103,839 A611 103,839 6.a
----------- ---------
b. All other equity securities(1)------------------------------------------------ 1752 27,783 1753 27,783 6.b
----------- ---------
7. Total (sum of items 1 through 6)(total of
Column A must equal Schedule RC item 2.a)
(total of column D must equal Schedule RC, CON CON CON CON
--- --- --- ---
item 2.b)--------------------------------- 1764 0 1771 0 1772 591,692 1773 598,399 7
----------- --------- ----------- ---------
</TABLE>
- ----------
(1) Includes equity securities without readily determinable fair values at
historical cost in item 6.b, column D.
<PAGE> 16
<TABLE>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA, N.A. Call Date: 12/31/1998 State #: 12-1159 FFIEC 032
P.O. Box 4418 CENTER 632 Vendor ID: D Cert#: 21043 RC-5
Atlanta, GA 30302 Transit #: 08310216
</TABLE>
13
Schedule RC-B - Continued
<TABLE>
<CAPTION>
C312
Memoranda Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RCON
----
1. Pledged securities(1)............................................................................. 0416 444,345 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...................................................................... A540 65,138 M.2.a1
-------
(2) Over three months through 12 months....................................................... A560 79,537 M.2.a2
-------
(3) Over one year through three years......................................................... A561 127,027 M.2.a3
-------
(4) Over three years through five years....................................................... A562 26,543 M.2.a4
-------
(5) Over five years through 15 years.......................................................... A563 14,208 M.2.a5
-------
(6) Over 15 years............................................................................. A564 2,182 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:(3,6)
(1) Three months or less...................................................................... A555 11,227 M.2.b1
-------
(2) Over three months through 12 months....................................................... A556 37,635 M.2.b2
-------
(3) Over one year through three years......................................................... A557 445 M.2.b3
-------
(4) Over three years through five years....................................................... A558 4,340 M.2.b4
-------
(5) Over five years through 15 years.......................................................... A559 3,296 M.2.b5
-------
(6) Over 15 years............................................................................. A560 1,653 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 42,040 M.2.c1
-------
(2) Over three years.......................................................................... A562 51,505 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 147,144 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-8, 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, sum of 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> 17
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 12/31/1998 State #: 12-1159 FFIEC 032
P. O. Box 4418 Center 632 Vendor ID: D Cert. #: 21045 RC-6
Atlanta, GA 30302 Transit #: 06310218
14
Schedule RC-C - Loans and Lease Financing Receivables
Part 1. 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.
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1. Loans secured by real estate: RCON
a. Construction and land development ---------------------------------------------- 1415 210,029 1.a
---------
b. Secured by farmland (including farm residential and other improvements) -------- 1420 19,948 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 94,125 1.c.1
---------
(2) All other loans secured by 1-4 family residential properties:
(a) Secured by first liens ------------------------------------------------- 5387 1,088,095 1.c.2a
---------
(b) Secured by junior liens ------------------------------------------------ 5388 124,742 1.c.2b
---------
d. Secured by multifamily (5 or more) residential properties ---------------------- 1480 32,852 1.d
---------
e. Secured by nonfarm nonresidential properties ----------------------------------- 1480 430,131 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 204,819 2.a2
---------
b. To other depository institutions in the U.S. ----------------------------------- 1517 89 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 --------------- 1690 48,485 3.
---------
4. Commercial and industrial loans:
a. To U.S. addressees (domicile) -------------------------------------------------- 1763 3,174,800 4.a
---------
b. To non-U.S. addressees (domicile) ---------------------------------------------- 1764 487 4.b
---------
5. Acceptances of other banks:
a. Of U.S. banks ------------------------------------------------------------------ 1756 270 5.a
---------
b. Of foreign banks --------------------------------------------------------------- 1757 287 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) ------------------------------------------------------------------ 2006 21,907 6.a
---------
b. Other (includes single payment, installment, and all student loans) ------------ 2011 625,053 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. ---------------------------------------------------------- 2107 188,100 8
---------
9. Other Loans:
a. Loans for purchasing or carrying securities (secured and unsecured) ------------ 1546 73,340 9.a
---------
b. All other loans (exclude consumer loans) --------------------------------------- 1564 340,787 9.b
10. Lease financing receivables (net of unearned income):
---------
a. Of U.S. addressees (domicile) -------------------------------------------------- 2182 134,558 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 ------------------- 2125 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 6,792,346 12
---------
</TABLE>
<PAGE> 18
<TABLE>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 12/31/1998 State #: 12-1169 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert #: 21043 RC-7
ATLANTA, GA 30302 Transit #: 06310215
15
</TABLE>
SCHEDULE RC-C - CONTINUED
Part 1. Continued
<TABLE>
<CAPTION>
Memoranda Dollar Amounts in Thousands
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C>
1. Not applicable
2. Loans and Leases restructured and in compliance with modified terms (included in
Schedule RC-C, part 1, 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)--................................................ B691 0 M.2.b
-----------
c. Commercial and industrial loans to and lease financing receivables of
non-U.S. addresses (domicile) included in Memorandum item 2.b above--................................ B692 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 1, item 1.c.(2).(a)) with a remaining maturity or repricing frequency of: (1, 2)
(1) Three months or less............................................................................. A564 46,737 M.3.a1
-----------
(2) Over three months through 12 months.............................................................. A565 263,017 M.3.a2
-----------
(3) Over one year through three years................................................................ A566 127,851 M.3.a3
-----------
(4) Over three years through five years.............................................................. A567 426,797 M.3.a4
-----------
(5) Over five years through 15 years................................................................. A568 151,376 M.3.a5
-----------
(6) Over 15 years.................................................................................... A569 48,030 M.3.a6
-----------
b. All loans and leases (reported in Schedule RC-C, part 1, items 1 through 10) excluding closed-end
loans secured by first liens on 1-4 family residential properties (reported in Schedule RC-C, part 1,
item 1.c.(2).(a)) with a remaining maturity or repricing frequency at: (1, 3)
(1) Three months or less............................................................................. A570 3,182,590 M.3.b1
-----------
(2) Over three months through 12 months.............................................................. A571 673,799 M.3.b2
-----------
(3) Over one year through three years................................................................ A572 549,496 M.3.b3
-----------
(4) Over three years through five years.............................................................. A573 712,731 M.3.b4
-----------
(5) Over five years through 15 years................................................................. A574 551,524 M.3.b5
-----------
(6) Over 15 years.................................................................................... A575 27,946 M.3.b6
-----------
c. Fixed rate AND floating rate loans and leases (reported in Schedule RC-C, part 1,
items 1 through 10) with a REMAINING MATURITY of one year or less.................................... A247 1,652,602 M.3.c
-----------
d. Fixed rate AND floating rate loans secured by nonfarm nonresidential properties (reported in
Schedule RC-C, part 1, item 1.a) with a REMAINING MATURITY of over five years
(included in Memorandum item 3.b above).............................................................. A577 161,676 M.3.d
-----------
e. Fixed rate AND floating rate commercial and industrial loans (reported in Schedule RC-C, part 1, item 4)
with a REMAINING MATURITY of over three years......................................................... A578 1,496,261 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 1, 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 1, sum of items 1
through 10, minus total closed-end loans secured by first liens on 1-4
family residential properties in domestic offset from Schedule RC-C, part
1, item 1.c(2)(a).
<PAGE> 19
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 12/31/1998 State #: 12-1158 FFIEC 032
P.O. Box 4418 CENTER 632 Vendor ID: D Cert#: 21043 RC-8
Atlanta, GA 30302 Transit #: 08310215
</TABLE>
16
Schedule RC-C - Continued
Part I. Continued
<TABLE>
<CAPTION>
MEMORANDA Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------------
<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)...................................................................................... 2748 112,063 M.4
-------
5. Loans and leases held for sale (include in Schedule RC-C, part I, page RC-C)...................... 5369 49,978 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-8).................................... 5370 854,616 M.8
-------
- ------
(1) Exclude loans secured by real estate that are included in Schedule
RC-C part I, items 1.a through 1.e.
</TABLE>
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
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS RCON
----
1. U.S. Treasury securities.......................................................................... 3531 0 1
------
2. U.S. Government agency obligations (excluded 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 applicable
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 6)................. 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 15b)............. 3548 0 15
------
</TABLE>
<PAGE> 20
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 12/31/1998 State # 12-1150 FFIEC 032
P.O. BOX 4413 CENTER 632 Vendor ID: D Cent # 21043 RC-8
ATLANTA, GA 30302 Transit #: 06310215 17
---------
</TABLE>
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)
RCON CON CON
---- ---- ----
<S> <C> <C> <C> $ <C> <C>
DEPOSITS OF:
1. Individuals, partnerships and corporations................. 2201 1,365,825 2240 1,117,938 2346 2,918,078 1
--------- --------- ---------
2. U.S. Government............................................ 2202 3,359 2280 3,358 2520 0 2
--------- --------- ---------
3. States and political subdivisions in the U.S............... 2203 47,723 2290 44,508 2530 58,482 3
--------- --------- ---------
4. Commercial banks in the U.S................................ 2208 314,087 2310 314,087 2580 0 4
--------- --------- ---------
5. Other depository institutions in the U.S................... 2207 8,983 2312 8,893 2340 0 5
--------- --------- ---------
6. Banks in foreign countries................................. 2213 308 2320 308 2236 0 6
--------- --------- ---------
7. Foreign governments, and official institutions
(including foreign central banks).......................... 2218 0 2300 0 2377 0 7
--------- --------- ---------
8. Certified and official checks.............................. 2330 4,403 2330 4,403 8
--------- ---------
9. Total (sum of items 1 through 8) (sum of columns
A and C must equal Schedule RC, item 13.a)................. 2215 1,742,498 2210 1,491,692 2385 2,878,538 9
MEMORANDA
Dollar Amounts in Thousands
---------------------------
RCON
1. Selected components of total deposits (i.e., sum of item 9, columns A and C): ----
a. Total Individual Retirement Accounts (IRAs) and Keogh Plan accounts............................. 6835 138,842 M.1.a
---------
b. Total brokered deposits......................................................................... 2368 0 M.1.b
---------
c. Fully insured brokered deposits (included in Memorandum item 1.b above):
(1) Issued in denominations of less than $100,000............................................... 2345 0 M.1.c1
---------
(2) Issued either in denominations of $100,000 or in denominations greater than
$100,000 and participated out by the broker in shares of $100,000 or less................... 2344 0 M.1.c2
---------
d. Maturity data for brokered deposits:
(1) Brokered deposits issued in denominations of less than $100,000 with a remaining
maturity of one year or less (included in Memorandum item 1.c.(1) above).................... A243 0 M.1.d1
---------
(2) Brokered deposits issued in denominations of $100,000 or more with a remaining
maturity of one year or less (included in Memorandum item 1.b above)........................ A244 0 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).................................................. 5680 96,710 M.1.e
---------
2. Components of total nontransaction accounts (sum of Memorandum items 2.a through 2.d
must equal item 8 column C, above):
a. Savings deposits:
(1) Money market deposit accounts (MMDAs)....................................................... 8810 884,408 M.2.a1
---------
(2) Other savings deposits (excludes MMDAs)..................................................... 0352 1,087,837 M.2.a2
---------
b. Total time deposit of less than $100,000........................................................ 6548 690,567 M.2.b
---------
c. Total time deposits of $100,000 or more......................................................... 2804 335,926 M.2.o
---------
3. All NOW accounts (included in column A above)...................................................... 2398 250,906 M.3
---------
4. Not applicable
</TABLE>
<PAGE> 21
<TABLE>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 12/31/1998 State #: 12-1159 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert #: 21043 RC-10
ATLANTA, GA 30302 Transit #: 06310218
18
</TABLE>
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.................................................................... A679 179,205 M.5.a1
-------
(2) Over three months through 12 months..................................................... A580 399,424 M.5.a2
-------
(3) Over one year through three years....................................................... A581 19,267 M.5.a3
-------
(4) Over three years........................................................................ A562 20,671 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 561,241 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 96,043 M.6.a1
-------
(2) Over three months through 12 months..................................................... A595 204,545 M.6.a2
-------
(3) Over one year through three years....................................................... A598 26,181 M.6.a3
-------
(4) Over three years........................................................................ A587 9,156 M.6.a4
-------
b. Fixed rate AND floating rate time deposits of $100,000 or more with a REMAINING
MATURITY of one year or less (included in Memorandum items 6.a.(1)
through 6.a.(4) above)...................................................................... A242 290,208 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.b.(4) must equal Schedule RC-E
Memorandum item 2.c above.
<PAGE> 22
<TABLE>
<CAPTION>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 12/31/1998 State #: 12/1169 FFIEC 03Z
P.O.Box 4418 CENTER 632 Vendor ID: D Cert #: 21049 RC-11
Atlanta, GA 30302 Transit #: 05310216
19
SCHEDULE RC-F - OTHER ASSETS
C330 <-
Dollar Amounts in thousands
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RCON
1. Income earned, net collected on loans ................................................................. 2164 38,186 1.
2. Net deferred tax assets (1) ........................................................................... 2148 26,573 2.
3. Interest-only strips receivable (not in the form of a security)(2) on:
a. Mortgage loans ..................................................................................... A510 0 3.a
b. Other financial assets ............................................................................. A520 0 3.b
4. Other (itemize and describe amounts that exceed 25% of this item)...................................... 2168 22,872 4.
TEXT RCON
a. 3548 Securities-Accrd Inc. 3548 8,548 4.a
b. 3550 3550 0 4.b
c. 3581 3581 0 CON 4.c
5. Total (sum of items 1 through 4) (must equal Schedule RC, item 11) .................................... 2160 85,703 5.
Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------------------------------
Memorandum RCON
1. Deferred tax assets disallowed for regulatory capital purposes ........................................ 5610 0 M.1
SCHEDULE RC-G - OTHER LIABILITIES
C335 <-
Dollar Amount in Thousands
- -----------------------------------------------------------------------------------------------------------------------------------
RCON
1. a. Interest accrued and unpaid on deposits (3) ........................................................ 3846 11,110 1.a
b. Other expenses accrued and unpaid (includes accrued income taxes payable) .......................... 2848 26,093 1.b
2. Net deferred tax liabilities (1) ...................................................................... 3040 0 2.
3. Minority interest in consolidated subsidiaries ........................................................ 3000 0 3.
4. Other (itemize and describe amounts that exceed 25% of this item) ..................................... 2938 5,380 4.
TEXT RCON
a. 3652 Unearned I/C Insurance 3582 1,367 4.a
b. 3653 3552 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 42,563 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> 23
<TABLE>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA, N.A. Call Date: 12/31/1998 State #: 12-1169 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert #: 21043 RC-12
ATLANTA, GA 30302 Transit #: 06310215
20
</TABLE>
SCHEDULE RC-K - QUARTERLY AVERAGES (1)
C355
<TABLE>
<CAPTION>
DOLLAR AMOUNTS IN THOUSANDS
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
RCON
----
ASSETS
1. Interest-bearing balances due from depository institutions.................................. 3381 5,233 1.
---------
2. U.S. Treasury securities, U.S. Government agency obligations (2)............................ 3382 433,459 2.
---------
3. Securities issued by states and political subdivisions in the U.S. (2)...................... 3383 32,592 3.
---------
4. a. Other debt securities (2)................................................................ 3847 250 4.a
---------
b. Equity securities (3) (includes investments in mutual funds and Federal Reserve stock)... 3648 89,458 4.b
---------
5. Federal funds sold and securities purchased under agreements to resell...................... 3385 607,935 5.
---------
6. Loans:
a. Total loans............................................................................. 3360 6,611,632 6.a
---------
b. Loans secured by real estate............................................................ 3365 1,963,017 6.b
---------
c. Loans to finance agricultural production and other loans to farmers..................... 3386 44,074 6.c
---------
d. Commercial and industrial loans......................................................... 3387 3,538,453 6.d
---------
e. Loans to individuals for household, family, and other personal expenditures............. 3388 633,275 6.e
---------
7. Trading assets.............................................................................. 3401 0 7.
---------
8. Lease financing receivables (net of unearned income)........................................ 3484 142,936 8.
---------
9. Total assets (4)............................................................................ 3385 8,600,172 9.
---------
LIABILITIES
10. Interest-bearing transaction accounts (NOW accounts, ATS accounts, and telephone and
preauthorized transfer accounts) (exclude demand deposits)................................ 3485 176,620 10
---------
11. Nontransaction accounts:
a. Money market deposit accounts (MMDAs)................................................... 3486 901,274 11.a
---------
b. Other savings deposits.................................................................. 3487 1,037,225 11.b
---------
c. Time deposits of $100,000 or more....................................................... A514 342,032 11.c
---------
d. Time deposits of less than $100,000..................................................... A529 699,205 11.d
---------
12. Federal funds purchased and securities sold under agreements to repurchase.................. 3353 2,910,693 12
---------
13. Other borrowed money (includes mortgage indebtedness and obligations under
capitalized leases)....................................................................... 3368 390,812 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> 24
<TABLE>
<S> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 12/31/1998 State #: 12-1159 FFIEC 032
P. O. BOX 4418 CENTER 632 Vendor ID: D Cert. #: 21043 RC-13
ATLANTA, GA 30302 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
Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
1. Unused commitments:
a. Revolving, open-end lines secured by 1-4 family residential properties.
e.g., home equity lines -------------------------------------------------------------------- 3614 169,886 1.a
b. Credit card lines -------------------------------------------------------------------------- 3615 0 1.b
c. Commercial real estate, construction, and land development:
(1) Commitments to fund loans secured by real estate --------------------------------------- 3616 256,031 1.c.1
(2) Commitments to fund loans not secured by real estate ----------------------------------- 6550 50,178 1.c.2
d. Securities underwriting -------------------------------------------------------------------- 3817 0 1.d
e. Other unused commitments ------------------------------------------------------------------- 3818 4,589,301 1.e
2. Financial standby letters of credit ----------------------------------------CON 3819 895,581 2.
a. Amount of financial standby letters of credit conveyed to others ------- 3820 332,095 2.a
3. Performance standby letters of credit --------------------------------------------------------- 3821 51,892 3.
a. Amount of performance standby letters of credit conveyed to others ----- 3822 3,104 3.a
4. Commercial and similar letters of credit ------------------------------------------------------ 3411 13,687 4.
5. Participations in acceptances (as described in the instructions) conveyed to others by the
reporting bank -------------------------------------------------------------------------------- 3428 0 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.c):
(1) Outstanding principal balance of assets transferred as of the report date -------------- A523 0 9.b.1
(2) Amount of recourse exposure on these assets as of the report date ---------------------- A524 0 9.b.2
c. Small business obligations transferred with recourse under Section 208 of the Riegio
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 -------------------------- A538 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. 3556 3655 0 12.a
b. 3556 3966 0 12.b
c. 3557 3557 0 12.c
d. 3658 3658 0 12.d
</TABLE>
<PAGE> 25
<TABLE>
<S> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 12/31/1998 State #: 12-1189 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert #: 21043 RC-14
ATLANTA, GA 30302 Transit #: 06310215
</TABLE>
22
SCHEDULE RC-L CONTINUED
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------
<S> <C>
13. All other off-balance sheet assets (exclude off-balance sheet derivatives)(itemize and describe CON
each component of this item over 25% Schedule RC, item 28., 'Total equity capital')---------------- S591 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
-----------
</TABLE>
C361 <-
<TABLE>
<CAPTION>
(Column A) (Column B) (Column C) (Column D)
OFF-BALANCE SHEET DERIVATIVES Interest Foreign Equity Commodity
POSITION INDICATORS Rate Exchange Derivative and other
Contracts Contracts Contracts Contracts
<S> <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------------------------ 5693 0 5694 0 5695 0 5696 0 14.a
---------- ---------- ----------- ----------
b. Forward contracts------------------------ 5697 0 5698 0 5699 0 5700 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 165,802 3628 0 8719 0 8720 0 14.e
---------- ---------- ----------- ----------
15. Total gross notional amount of
derivative contracts held for trading------- A126 0 A127 0 B723 0 B724 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----------- 8728 165,802 8730 0 8731 0 8732 0 16.b
---------- ---------- ----------- ----------
c. Interest rate swaps where the bank
has agreed to pay a fixed rate----------- A589 68,802 16.c
----------
</TABLE>
<PAGE> 26
<TABLE>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA, N.A. Call Date: 12/31/1998 State#: 12-1159 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert#: 21043 RC-16
ATLANTA, GA 30302 Transit #: 06310218 23
</TABLE>
SCHEDULE RC-L - CONTINUED
C362
<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>
17. Total gross fair value of derivative contracts:
a. Contracts held for trading: CON CON CON CON
------------- ------------- --------------- ------------
(1) Gross positive fair value.................. 8733 0 8734 0 8735 0 8736 0 17.a1
------- ------- -------- -------
(2) Gross negative fair value.................. 8737 0 8738 0 8730 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: RCON CON CON CON
------------- ------------- --------------- ------------
(1) Gross positive fair value................. 8749 9,192 8750 0 8761 0 8752 0 17.c1
------- ------- -------- -------
(2) Gross negative fair value................. 8753 3,534 8754 0 8755 0 8756 0 17.c2
------- ------- -------- -------
MEMORANDA Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------
1.-2. Not applicable
3. Unused commitments with an original maturity
exceeding one year that are reported in Schedule RC-L Items 1.a through 1.e, RCON
above (report only the unused portions of commitments -------------------
that are fee paid or otherwise legally binding)............................................. 3833 3,624,381 M.3
--------
a. Participations in commitments with an original RCON
maturity exceeding one year conveyed to -------------------
others................................................................ 3834 593,031
-------
4. To be completed only by banks with $1 billion or more in total assets:
Standby letters of credit (both financial and performance) issued RCON
to non-U.S. addresses (domicile) included in Schedule RC-L, Items -------------------
2 and 3 above................................................................................ 337 300 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:
a. Loans to purchase private passenger automobiles RCON
(to be completed for the September report -------------------
only)........................................................................................ 2741 N/A M.5.a
-------
b. Credit cards and related plan (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)....................................................................... 2748 N/A M.6.c
-------
</TABLE>
<PAGE> 27
<TABLE>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 12/31/1998 State #: 12-1159 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert #: 21043 RC-16
ATLANTA, GA 30302 Transit #: 06310215
24
</TABLE>
SCHEDULE RC-M-MEMORANDA
C355
<TABLE>
<CAPTION>
DOLLAR AMOUNTS
IN THOUSANDS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Extensions of credit by the reporting bank to its executive officers, directors, principal
shareholders, and their related interests as of the report date:
a. Aggregate amount of all extensions of credit to all executive officers, directors, principal CON
----
shareholders, and their related interests........................................................... 6164 183,529 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 CO NUMBER
---- ------
this purpose in agency regulations.................................................... 6185 7 1.b
------
2. Federal funds sold and securities purchased under agreements to resell with U.S. branches and agencies CON
----
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............................................................ 5800 0 4.a
-------
b. Mortgages serviced under a FHLMC contract:
(1) Serviced with recourse to servicer............................................................. 5601 0 4.b.1
-------
(2) Serviced without recourse to servicer.......................................................... 6502 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.................................................. 5605 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 1,081 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.............................................. A580 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............................................................................................ 3103 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> 28
<TABLE>
<S> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 12/31/1998 State #: 12-1169 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert #: 21043 RC-17
ATLANTA, GA 30302 Transit #: 06310216
</TABLE>
------
25
------
SCHEDULE RC-M - CONTINUED
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------------
<S> <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 9 8.a.2b
-----------
(c) 1-4 family residential properties-------------------------------------------------- 5510 1,486 8.a.2c
-----------
(d) Multifamily (5 or more) residential properties------------------------------------- 5511 0 8.a.2d
-----------
(e) Nonfarm nonresidential properties-------------------------------------------------- 5512 0 8.a.2e
-----------
(3) Total (sum of items 8.a(1) and 8.a.(2)) (*must equal Schedule RC, item 7)-------------- 2150 1,497 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"-------------------------------------- 3776 0 9
10. Mutual fund and annuity sales during the quarter (including proprietary, private label,
and third party products):
a. Money market funds------------------------------------------------------------------------ 8441 258,100 10.a
-----------
b. Equity securities funds------------------------------------------------------------------- 8427 10,062 10.b
-----------
c. Debt securities funds--------------------------------------------------------------------- 8428 12,361 10.c
-----------
d. Other mutual funds------------------------------------------------------------------------ 8429 4,897 10.d
-----------
e. Annuities--------------------------------------------------------------------------------- 8430 2,317 10.e
-----------
f. Sales of proprietary mutual funds and annuities (included in items 10.a through
10.e above)------------------------------------------------------------------------------- 8784 268,042 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)------------------------------- A528 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
-----------
- -----------------------------------------------------------------------------------------------------------------
Memorandum Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------------
1. Reciprocal holdings of banking organizations' capital instruments
(to be completed for the December report only)------------------------------------------------ 3838 0 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> 29
<TABLE>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK CENTRAL FLORIDA, N.A. Call Date: 12/31/1998 State #: 12-1159 FFIEC 032
P.O. Box 4418 CENTER 632 Vendor ID: D Cert #: 21043 RC-18
Atlanta, GA 30302 Transit #: 06310218 26
</TABLE>
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 80 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 4,681 1248 494 1247 7,248 1.a
------ --- ------
b. To non-U.S. addressees (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 1598 0 3.
------ --- ------
4. Commercial and industrial loans:
a. To U.S. addressees (domicile)........................... 1251 44,793 1252 207 1253 20,529 4.a
------ --- ------
b. To non-U.S. addressees (domicile)....................... 1254 0 1256 0 1258 0 4.b
------ --- ------
5. Loans to individuals for household, family, and
other personal expenditures:
a. Credit cards and related plans.......................... 5383 356 5384 175 5385 188 5.a
------ --- ------
b. Other (includes single payment, installment,
and all student loans).................................. 5386 4,930 5387 75 5385 788 6.b
------ --- ------
6. Loans to foreign governments and official
institutions............................................... 5388 0 5390 0 5391 0 6
------ --- ------
7. All other loans............................................ 5469 0 5480 0 5481 0 7
------ --- ------
8. Lease financing receivables:
a. Of U.S. addresses (domicile)............................ 1267 112 1258 14 1260 1,727 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>
RCON CON CON
---- ---- ----
10. Loans and leases reported in Items 1
through 8 above which are wholly or partially
guaranteed by the U.S. Government.............................. 5812 0 5813 0 5814 133 10
------ --- ------
a. Guaranteed portion of loans and leases
included in Item 10 above................................... 5815 0 5816 0 5817 102 10.a
------ --- ------
</TABLE>
<PAGE> 30
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 12/31/1998 State #: 12-1169 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert #: 21043 RC-19
ATLANTA, GA 30302 Transit #: 08310215 27
SCHEDULE RC-N CONTINUED C373<-
Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------
-(Column A)- -(Column B)- -(Column C)-
MEMORANDA Past due Past due 90 Nonaccrual
30 through 89 days or more
days and still and still
accruing accruing
1. Restructured loans and leases included in
Schedule RC-N, items 1 through 8, above
(and not reported in Schedule RC-C, RCON CON CON
---- --- ---
Memorandum item 2).................................. 1659 0 1859 0 1881 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................. 6858 0 6559 0 6580 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 802 2768 63 3492 515 M.3a
---------- ---------- -----------
b. Secured by farmland.............................. 3493 0 3484 0 3495 700 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............... 6396 259 5389 418 5400 444 M.3.c1
---------- ---------- -----------
(2) All other loans secured by 1-4 family
residential properties....................... 5401 3,489 5402 25 5403 4,258 M.3.c2
---------- ---------- -----------
d. Secured by multifamily (6 or more) residential
properties....................................... 3489 0 3600 0 3601 113 M.3d
---------- ---------- -----------
e. Secured by nonfarm nonresidential properties..... 3502 141 3502 0 3504 1,189 M.3e
---------- ---------- -----------
-(Column A)- -(Column B)-
Past due Past due 90
30 through 89 days or more
days and still and still
accruing accruing
4. Interest rate, foreign exchange rate, and other
commodity and equity contracts: RCON CON
---- ---
a. Book value of amounts carried as assets........... 3522 0 3526 0 M.4.a
---------- ----------
b. Replacement cost of contracts with a
positive replacement cost......................... 3629 0 3520 0 M.4.b
---------- ----------
- -------------------------------------------------------------------------------------------------------------------
PERSON TO WHOM QUESTIONS ABOUT THE REPORTS OF CONDITION AND INCOME SHOULD BE DIRECTED: C377<-
TELEPHONE:
NAME TITLE AREA CODE/PHONE NUMBER/EXTENSION
8901 Todd Bailey 5901 Assistant VP 8902 404-724-3835
----------------------------------- ----------------------- ----------------------
Even though Call Reports must be filed electronically,
send my bank a sample set of paper Call Report CO YES/NO FAX: AREA CODE/PHONE NUMBER
--
for the next quarter. B117 NO 9116 404-827-6501
------------------------- ------ ----------------------
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 31
<TABLE>
<S> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 12/31/1998 State #: 12-1169 FFIEC 032
P. O. Box 4418 Center 632 Vendor ID: D Cert. #: 21043 RC-20
Atlanta, GA 30302 Transit #: 06310215 28
Schedule RC-O - Other Data for Deposit Insurance and FICO Assessments
C376
Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------------
1. Unposted debits (see instructions): RCON
a. Actual amount of all unposted debits ------------------------------------ 0030 1,186 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 14,519 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 ---- 6514 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:
a. Amount reflected in demand deposits (included in Schedule RC-E. RCON
Memorandum item 4.a) ---------------------------------------------------- 2314 0 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 BIP) ---------- 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 ---------------------------------------------- 5598 9
10. Benefit-responsive 'Depository Institution Investment Contracts'
(included in total deposits) ----------------------------------------------- 6432 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> 32
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA, N.A. Call Date: 12/31/1998 State#: 12-1159 FFIEC 032
P.O. BOX 4418 CENTER 632 Vendor ID: D Cert#: 21043 RC-21
ATLANTA, GA 30302 Transit #: 06310215 29
</TABLE>
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
banks reciprocal demand balances with the domestic offices of U.S.
banks and savings associations and insured branches in Puerto Rico RCON
and U.S. territories and possessions that were reported on a gross ----
basis in Schedule RC-E had been reported on a net basis ...................... 5785 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 2,657,464 M.1.a1
RCO NUMBER ---------
(2) Number of deposit accounts of $100,00 or less --- ------
(to be completed for the June report only)....................... 3778 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 2,063,572 M.1.b1
---------
(2) Number of deposit accounts of more than $100,000................ 2722 5,417 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 RCO YES / NO
method or procedure for determining a better estimate --- --------
of uninsured deposits than the estimate described above................................. 6861 NO M.2.a
--------
b. If the box marked YES has been checked, report the estimate of uninsured
deposits determined by using your bank's method of procedure............................ 5567 0 M.2.b
--------
3. Has the reporting institution been consolidated with a parent bank
or savings association in that parent bank's or parent savings association's
Cell 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 00000 M.3
A549 -------------
</TABLE>
<PAGE> 33
<TABLE>
<S> <C> <C> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. CALL DATE: 12/31/1998 STATE #: 12-1169 FFIEC 032
P.O. BOX 4418 CENTER 832 VENDOR ID: D CERT #: 21043 RC-22
ATLANTA, GA 30302 TRANSIT #: 06310215 30
</TABLE>
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.
<TABLE>
<CAPTION>
<S> <C> <C>
1. Test for determining the extent to which Schedule RC-R must be completed. C380 <.
To be completed only by banks with total assets of less than $1 billion.
Indicate in the appropriate box at the right whether the bank has total capital greater than or CO
---- YES/NO
equal to eight percent of adjusted total assets.................................................... 0088 YES 1.
------
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.
Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------------------
2. Portion of qualifying limited-life capital instruments (original weighted
average maturity of at least five years) that is includible in Tier 2 capital: RCON
a. Subordinated debt (1) and intermediate term preferred stock..................................... A516 180,000 2.a
---------
b. Other limited-life capital instruments.......................................................... A518 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 654,554 3.a(1)
---------
(2) Tier 2 capital.............................................................................. 8275 238,514 3.a(2)
---------
(3) Tier 3 capital.............................................................................. 1386 0 3.a(3)
---------
b. Total risk-based capital........................................................................ 3782 893,178 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 8,555,638 3.d.1
---------
(2) Market risk equivalent assets............................................................... 1851 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 8,600,172 3.f
---------
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.
-(Column A)- -(Column B)-
Assets Credit Equiv-
Recorded alent Amount
on the of Off-Balance
Dollar Amounts in Thousands Balance Sheet Sheet Items (3)
- ---------------------------------------------------------------------------------------------------------------------------
4. Assets and credit equivalent amount of off-balance sheet items assigned
to the Zero percent risk category: RCON
----
a. Assets recorded on the balance sheet.......................................... 5183 530,820 CON 4.a
------- ---
b. Credit equivalent amount of off-balance sheet items............................................ 3798 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> 34
<TABLE>
<CAPTION>
SUNTRUST BANK CENTRAL FLORIDA N.A. Call Date: 12/31/1998 State #: 12/1159 FFIEC 03Z
P.O.Box 4418 CENTER 632 Vendor ID: D Cert #: Z1043 RC-23
Atlanta, GA 30302 Transit #: 06310216
31
Schedule RC-R - Continued
-(Column A)- (Column B)-
Assets Credit Equi-
Recorded valent Amount
on the of Off-Balance
Dollar Amounts in Thousands Balance Sheet Sheet Items(2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
5. Assets and credit equivalent amounts of off-balance items assigned to the
20 percent risk category: RCO
----
a. Assets recorded on the balance sheet ........................................ 5186 1,450,584 CON 5.a
---------
b. Credit equivalent amount of off-balance sheet items ......................... 3801 722,223 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 1,282,680 6.a
---------
b. Credit equivalent amount of off-balance sheet items ......................... 3803 151,131 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 5,527,578 7.a
---------
b. Credit equivalent amount of off-balance sheet items ......................... 3805 1,876,595 7.b
---------
8. On-balance sheet asset values excluded from and deducted in
the calculation of the risk-based capital ratio(2) ............................. 3808 6,707 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 8,788,387 9.
---------
Memoranda Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------------------------------
1. Current credit exposure across all off-balance sheet derivative contracts covered by the
risk-based capital standards ................................................... 8784 9,192 M.1
</TABLE>
<TABLE>
<CAPTION>
---------With a remaining maturity of---------
<S> <C> <C> <C>
-(Column A)- -(Column B)- -(Column c)-
One Year Over Over
or less One year five years
thru five years
2. National principal amounts of off-balance
sheet derivative contracts:(3) RCON CON CON
a. Interest rate contracts ............................................. 3809 0 8768 33,572 8787 132,230 M.2.a
------ ------ -------
b. Foreign exchange contracts .......................................... 3812 0 8789 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 9 and report
the amortized cost of these securities in item 4 through 7 above. Item 8
also includes on-balance sheet asset values (or portions thereof) of
off-balance sheet interest rate, foreign exchange rate, and commodity
contracts and those contracts (e.g. future contracts) not subject to
risk-based capital, item 8 margin accounts and accrued receivables not
included in the calculation of credit equivalent amounts of off-balance
sheet derivatives as well as any portion of the allowance for loan and lease
losses in excess of the amount that may be included in Tier 2 capital.
(3) Exclude foreign exchange contracts with an original maturity of 14 days or
less and all futures contracts.
<PAGE> 35
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SUNTRUST BANK, CENTRAL FLORIDA N.A. Call Date: 12/31/1998 State #: 12-1159 FFIEC 032
P. O. Box 4418 Center 632 Vendor ID: D Cert. #: 21043 RC-24
Atlanta, GA 30302 Transit #: 06310216 32
</TABLE>
OPTIONAL NARRATIVE STATEMENT CONCERNING THE AMOUNTS
REPORTED IN THE REPORTS OF CONDITION AND INCOME
at close of business on December 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 and 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 CUSTOM.
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 BE EDITED OR SCREENED IN ANY WAY 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 <-
RCON
----
X = NO COMMENT Y = COMMENT -------------------------------- 6979 X
BANK MANAGEMENT STATEMENT (please type or print clearly):
TEXT 6980 (70 characters per line)
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
/s/ R. Todd Bowers
---------------------------------------------------------------
Signature of Executive Officer of Bank Date of Signature
<PAGE> 36
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: 3064-0082
ATLANTA, GA 30302 OMB No. For Federal Reserve: 7100-0036
Expiration Date: 3/31/2001
SPECIAL REPORT
C700
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------
Close of Busi-
ness Date: FDIC Cert. #
12/31/1998 21043
- --------------------------------------------------------------------------------
LOANS TO EXECUTIVE OFFICERS (Complete as of each Call Report Date)
- --------------------------------------------------------------------------------
The following information is required by Public Laws 90-44 and 102-242, but
does not constitute a part of the Report of Condition. With each Report of
Condition, these Laws require all banks to furnish a report of all loans or
other extensions of credit to their executive officers made since the date of
the previous Report of Condition. Data regarding individual loans or other
extensions of credit are not required. If no such loans or other extensions of
credit were made during the period. Insert "none" against subitem (a). (Exclude
the first $15,000 of Indebtedness of each executive officer under bank credit
card plan.) See Section 215.2 and 215.3 of Title 12 of the Code of Federal
Regulations. (Federal Reserve Board Regulation O) for the definitions of
"executive officer" and "extension of credit", respectively. Exclude loans and
other extensions of credit to directors and principal shareholders who are not
executive officers.
The following information is required by Public Laws 90-44 and 102-242, but does
not constitute a part of the Report of
<TABLE>
<CAPTION>
RCON
----
<S> <C>
a. Number of loans made to executive officers since the previous Call Report date................ 3581 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>
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------------------
SIGNATURE AND TITLE OF OFFICER AUTHORIZED TO SIGN REPORT: DATE (Month, Day, Year):
- -------------------------------------------------------------------------------------------
FDIC 8040/53 (3-93)
</TABLE>
<PAGE> 1
LETTER OF TRANSMITTAL
FOR
9 1/2% SENIOR NOTES DUE 2009 AND
12 1/4% SENIOR SUBORDINATED DISCOUNT NOTES DUE 2009
OF
INTERMEDIA COMMUNICATIONS INC.
PURSUANT TO THE EXCHANGE OFFERS IN RESPECT OF
ALL OF THEIR OUTSTANDING 9 1/2% SENIOR NOTES DUE 2009
FOR 9 1/2% SERIES B SENIOR NOTES DUE 2009
AND
ALL OF THEIR OUTSTANDING 12 1/4% SENIOR SUBORDINATED DISCOUNT NOTES DUE 2009
FOR 12 1/4% SERIES B SENIOR DISCOUNT NOTES DUE 2009
PURSUANT TO THE PROSPECTUS DATED APRIL , 1999
THE EXCHANGE OFFERS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 1999, UNLESS EXTENDED. TENDERS OF OLD NOTES MAY BE WITHDRAWN AT ANY
TIME PRIOR TO THE EXPIRATION OF THE EXCHANGE OFFERS.
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
Orlando, Florida 32801 Confirm by Telephone:
Attention: Holly Arencibia (407) 237-5179
</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 OFFERS MUST VALIDLY TENDER (AND NOT WITHDRAW) THEIR OLD
NOTES TO THE EXCHANGE AGENT PRIOR TO THE DATE THE EXCHANGE OFFERS EXPIRE.
By execution hereof, the undersigned acknowledges receipt of Intermedia's
Prospectus, dated April , 1999, which together with this letter and the
instructions hereto, constitute Intermedia's offer to exchange $1,000 principal
amount of its 9 1/2% Series B Senior Notes due 2009 that have been registered
under the Securities Act for each $1,000 principal amount of its outstanding
9 1/2% Senior Notes dues 2009 and $1,000 principal amount at maturity of its
12 1/4% Series B Senior Subordinated Discount Notes due 2009 that have been
registered under the Securities Exchange Act for each $1,000 principal amount at
maturity of its outstanding 12 1/4% Senior Subordinated Discount Notes due 2009,
in each case, upon the terms and subject to the conditions set forth in the
Prospectus.
Intermedia has not entered into any arrangement or understanding with any
person to distribute the New Notes to be received in the Exchange Offers and to
the best of Intermedia's information and belief, each person participating in
the Exchange Offers 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 Offers.
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 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 Offers -- 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
<PAGE> 2
Exchange Offers -- Guaranteed Delivery Procedures." Delivery of documents to DTC
does not constitute delivery to the Exchange Agent.
The term "Holder" with respect to the Exchange Offers means any person: (i)
in whose name Old Notes are registered on the books of Intermedia or any other
person who has obtained a properly completed bond power from the registered
Holder or (ii) whose Old Notes are held 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 Offers. 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 given 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 OFFERS 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 series of Notes, certificate
the 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>
<S> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF OLD NOTES
---------------------------------------------------------------------------------------------------------------------------
INDICATE EITHER
9 1/2% SENIOR CERTIFICATE AGGREGATE
NOTE NUMBER(S)* PRINCIPAL AMOUNT
NAMES(S) AND ADDRESS(ES) OF HOLDER(S) OR 12 1/4% SENIOR (ATTACH SIGNED LIST TENDERED (IF LESS
(PLEASE FILL IN, IF BLANK) SUBORDINATED NOTE IF NECESSARY THAN ALL )**
---------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------
-----------------------------------------------------------
-----------------------------------------------------------
-----------------------------------------------------------
-----------------------------------------------------------
-----------------------------------------------------------
-----------------------------------------------------------
-----------------------------------------------------------
-----------------------------------------------------------
-----------------------------------------------------------
-----------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
TOTAL PRINCIPAL AMOUNT OF OLD NOTES TENDERED
---------------------------------------------------------------------------------------------------------------------------
* Need not be completed by Holders tendering by book-entry transfer.
** Need not be completed by Holders who wish to tender with respect to all Old Notes listed. See Instruction 2.
---------------------------------------------------------------------------------------------------------------------------
</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 Offers 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 date the Exchange Offers expire or (iii) the
procedures for book-entry transfer cannot be completed prior to the date the
Exchange Offers expire, 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 Offers -- Guaranteed Delivery Procedures."
[ ] 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 Offers the undersigned hereby tenders
to Intermedia 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, Intermedia 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 Intermedia and as Trustee under the indentures 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 Intermedia, or
transfer ownership of such Old Notes on the account books maintained by DTC,
together, in either such
3
<PAGE> 4
case, with all accompanying evidences of transfer and authenticity to, or upon
the order of, Intermedia and (ii) present such Old Notes for transfer on the
books of Intermedia 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 Offers. 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 Intermedia 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 Intermedia. The
undersigned also acknowledges that these Exchange Offers are being made in
reliance upon an interpretation by the staff of the SEC that the New Notes
issued in exchange for the Old Notes pursuant to the Exchange Offers may be
offered for resale, resold and otherwise transferred by Holders thereof (other
than any such Holder that is an "affiliate" of Intermedia 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 Offers 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 Offers 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 Intermedia 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 Intermedia to be necessary or
desirable to complete the assignment and transfer of the Old Notes tendered
hereby.
For purposes of the Exchange Offers, Intermedia shall be deemed to have
accepted validly tendered Old Notes when, as and if Intermedia 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 Offers 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 date the Exchange Offers expire.
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 Offers -- Procedures for
Tendering Old Notes" in the Prospectus and in the instructions hereto will
constitute a binding agreement between the undersigned and Intermedia upon the
terms and subject to the conditions of the Exchange Offers.
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
4
<PAGE> 5
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 Intermedia 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 Intermedia does not accept for
exchange any of the Old Notes so tendered.
5
<PAGE> 6
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) of 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:
- ------------------------------------------------------
6
<PAGE> 7
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 Offers 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 Offers 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
7
<PAGE> 8
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS
OF THE EXCHANGE OFFER AND THE SOLICITATIONS
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 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 date the Exchange Offers expire. Intermedia may
extend the Exchange Offers at any time and from time to time by giving oral or
written notice to Holders of Old Notes and, unless otherwise required by
applicable law or regulation, by making a release to the Dow Jones News Service
on or before 9:00 a.m. of the next business day following the date the Exchange
Offers expire. 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
Intermedia.
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 date the Exchange Offers expire, 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 date the Exchange Offers expire, 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 date the Exchange Offers expire, 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 date the
Exchange Offers expire, 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 date the Exchange Offers expire.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Old Notes will be determined by
Intermedia in its sole discretion, which determination will be final and
binding. Intermedia reserves the absolute right to reject any and all Old Notes
not properly tendered or any Old Notes the acceptance of which would, in the
opinion of counsel for Intermedia, be unlawful. Intermedia also reserves the
right to waive any irregularities or conditions of tender as to particular Old
Notes. Intermedia's interpretation of the terms and conditions of the Exchange
Offers (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
Intermedia shall determine. Neither Intermedia, 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 Date the Exchange Offers expire.
8
<PAGE> 9
2. Partial Tenders. Tenders of Old Notes will be accepted in denominations
of $1,000 and integral multiples 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 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 if
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 Intermedia, evidence satisfactory to Intermedia 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. Intermedia will pay all transfer taxes, if any,
applicable to the exchange of Old Notes pursuant to the Exchange Offers. 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 the Exchange Offers, 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.
9
<PAGE> 10
6. Waiver of Conditions. Intermedia reserves the absolute right to amend,
waive or modify specified conditions in the Exchange Offers 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. Request 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 Offers.
(DO NOT WRITE IN SPACE BELOW)
WITH RESPECT TO SENIOR NOTES
<TABLE>
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------
CERTIFICATE SURRENDERED OLD NOTES TENDERED OLD NOTES ACCEPTED
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Delivery Prepared by __________ Checked by ____________ Date ____________
- -------------------------------------------------------------------------------------------------------
</TABLE>
WITH RESPECT TO SENIOR SUBORDINATED NOTES
<TABLE>
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------
CERTIFICATE SURRENDERED OLD NOTES TENDERED OLD NOTES ACCEPTED
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Delivery Prepared by __________ Checked by ____________ Date ____________
- -------------------------------------------------------------------------------------------------------
</TABLE>
10
