-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WBx4mIanoIktcXOnUFhgBxhAR7NzvK2OvbGbKpR4xNu5eQQ5hGFOJVdvTFoDA5OS s90ewPIAuceGUYOZb43QSA== 0000950130-97-005667.txt : 19971224 0000950130-97-005667.hdr.sgml : 19971224 ACCESSION NUMBER: 0000950130-97-005667 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 19971223 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERMEDIA COMMUNICATIONS OF FLORIDA INC CENTRAL INDEX KEY: 0000885067 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 592913586 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: SEC FILE NUMBER: 333-42999 FILM NUMBER: 97742739 BUSINESS ADDRESS: STREET 1: 3625 QUEEN PALM DR STREET 2: STE 720 CITY: TAMPA STATE: FL ZIP: 33619 BUSINESS PHONE: 8138290011 S-3 1 FORM S-3 As filed with the Securities and Exchange Commission on ____________, 1997 Registration No. 333- ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _____________________ FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 _____________________ INTERMEDIA COMMUNICATIONS INC. (Exact name of registrant as specified in its charter) _____________________ Delaware 59-29-13586 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 3625 Queen Palm Drive Tampa, Florida 33619 (813) 829-0011 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) _____________________ David C. Ruberg, Chairman of the Board, President and Chief Executive Officer Intermedia Communications, Inc. 3625 Queen Palm Drive Tampa, Florida 33619 (813) 829-0011 (Name, address, including zip code, and telephone number, including area code, of agent for service) _____________________ Copy to: Ralph J. Sutcliffe, Esq. Kronish, Lieb, Weiner & Hellman LLP 1114 Avenue of the Americas New York, New York 10036-7798 _____________________ Approximate date of commencement of proposed sale to public: From time to time after the effective date of this Registration Statement. If the only securities being registered on this form are being offered pursuant to dividend on interest reinvestment plans, please check the following box. [_] If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [X] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [_] _____________________ CALCULATION OF REGISTRATION FEE
Title of Securities Amount to be Price Aggregate Amount of to be Registered Registered Per Share Price Registration Fee - --------------------------------------------------------------------------------------- Depositary Shares 8,000,000 $26.75 (1) $ 214,000,000 $63,130 each representing a one hundredth interest in a share of 7% Series E Junior Convertible Preferred Stock (liquidation preference $25.00 per share) - --------------------------------------------------------------------------------------- 7% Series E Junior 80,000 N.A. N.A. (2) Convertible Preferred Stock, liquidation preference $2,500 per share, $1.00 par value per share - --------------------------------------------------------------------------------------- Common Stock, 3,307,425 (3)(4) N.A. N.A. (2) $.01 par value per share issuable upon conversion of the Depositary Shares and 7% Series E Junior Convertible Preferred Stock - --------------------------------------------------------------------------------------- Common Stock, (5) (5) $28,000,000 (5) $ 8,260 $.01 par value issuable as dividends on the 7% Series E Junior Convertible Preferred Stock - --------------------------------------------------------------------------------------- Total: $71,390 - ---------------------------------------------------------------------------------------
(1) Average of the bid and asked prices on December 17, 1997, pursuant to Rule 457(c). (2) Pursuant to Rule 457(i), a registration fee is not required in connection with the registration of the Series E Preferred Stock or the Common Stock issuable upon conversion of the Depositary Shares or shares of the Series E Preferred Stock. (3) An indeterminate number of additional shares of Common Stock are registered hereunder which may be issued in the event that fractional shares of Depositary Shares or Series E Preferred Stock are rounded up to the nearest whole share in connection with the conversion of Depositary Shares or shares of Series E Preferred Stock. (4) Pursuant to Rule 416, an indeterminate number of additional shares of Common Stock are registered hereunder which may be issued in the event that applicable antidilution provisions with respect to conversion of the Depositary Shares and Series E Preferred Stock become operative. (5) Pursuant to Rule 457(o), an indeterminate number of shares of Common Stock are registered hereunder which may be issued by the Company from time to time in lieu of cash during the two year period commencing on the effective date of this Registration Statement as dividends on the 7% Series E Junior Convertible Preferred Stock. _____________________ THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE OR DATES AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. PROSPECTUS INTERMEDIA COMMUNICATIONS INC. 8,000,000 DEPOSITARY SHARES EACH REPRESENTING A ONE HUNDREDTH INTEREST IN A SHARE OF 7% SERIES E JUNIOR CONVERTIBLE PREFERRED STOCK, 80,000 SHARES OF 7% SERIES E JUNIOR CONVERTIBLE PREFERRED STOCK, 3,307,425 SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THE DEPOSITARY SHARES AND/OR THE 7% SERIES E JUNIOR CONVERTIBLE PREFERRED STOCK, AND COMMON STOCK ISSUABLE AS DIVIDENDS ON THE 7% SERIES E JUNIOR CONVERTIBLE PREFERRED STOCK _______________ This Prospectus is being used in connection with the offering from time to time by certain holders (the "Selling Securityholders") of (1) depositary shares (the "Depositary Shares") each representing a one hundredth interest in a share of 7% Series E Junior Convertible Preferred Stock ("Series E Preferred Stock"), liquidation preference $2,500 per share (equivalent to $25.00 per Depositary Share; the "Liquidation Preference"), par value $1.00 per share of Intermedia Communications Inc. (the "Company" or "Intermedia"), and (2) the shares of Series E Preferred Stock and the shares (the "Common Shares") of common stock, $.01 par value per share, of the Company (the "Common Stock") issuable upon conversion of the Series E Preferred Stock and/or the Depositary Shares (the Depositary Shares, Series E Preferred Stock and Common Shares are collectively referred to herein as the "Securities"). This Prospectus is also being used in connection with the issuance by the Company from time to time during the two-year period commencing on the date of this Prospectus and in accordance with the Certificate of Designation (as defined herein) of an indeterminate number of shares of Common Stock issuable by the Company in lieu of cash as dividends on the Series E Preferred Stock (the "Dividend Shares"). See "Description of Series E Preferred Stock--Dividends." The Depositary Shares were originally issued by the Company in a private placement on October 30, 1997 (the "First Closing") and purchased by Bear Stearns & Co., Inc. and Salomon Brothers Inc (the "Initial Purchasers") pursuant to a purchase agreement (the "Purchase Agreement") dated as of October 24, 1997 between the Company and the Initial Purchasers. Subsequently, the Initial Purchasers exercised the over- allotment option in connection therewith with respect to 1,000,000 Depositary Shares. The First Closing and the over-allotment exercise are collectively referred to herein as the "October 30 Equity Offering". The Initial Purchasers, in turn, resold the Depositary Shares in private sales pursuant to exemptions from registration under the Securities Act of 1933, as amended. (continued on next page) PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY MATTERS DISCUSSED UNDER THE CAPTION "RISK FACTORS" ON PAGE 1. -------------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. -------------------- NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BY ANY SALE OF THESE SECURITIES IN ANY STATE INWHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. THE DATE OF THIS PROSPECTUS IS _______, 1997. Holders of the Depositary Shares are entitled to all proportional rights and preferences of the Series E Preferred Stock (including dividend, voting, redemption and liquidation rights). Dividends on the Series E Preferred Stock accrue at a rate per annum equal to 7% of the Liquidation Preference per share of Series E Preferred Stock and are payable quarterly, in arrears, on January 15, April 15, July 15 and October 15 of each year, commencing on January 15, 1998. Dividends are payable in cash or at the option of the Company, in shares of Common Stock, or a combination thereof. The Depositary Shares are convertible, subject to prior redemption at any time after December 29, 1997, at the option of the holder thereof into Common Stock at a conversion price of $60.47 per share, subject to certain adjustments. The Series E Preferred Stock and the Depositary Shares are redeemable, in whole or in part, at the option of the Company at any time on or after October 18, 2000, at the redemption prices set forth herein, plus accumulated and unpaid dividends and Preferred Stock Liquidated Damages (as defined herein), if any, thereon to the redemption date. See "Description of Series E Preferred Stock" and "Description of Depositary Shares." Upon the occurrence of a Preferred Stock Change of Control (as defined herein), the Company will be required to make an offer to repurchase all outstanding shares of Series E Preferred Stock at a price equal to 100% of the Liquidation Preference thereof, plus accumulated and unpaid dividends and Preferred Stock Liquidated Damages, if any, thereon to the repurchase date. The Series E Preferred Stock ranks (i) senior to all Junior Securities (as defined herein), including all Common Stock of the Company; (ii) on a parity with any Parity Securities (as defined herein), including the Company's outstanding 7% Series D Junior Convertible Preferred Stock (the "Series D Preferred Stock"); and (iii) junior to each class of Senior Securities (as defined herein), including the Company's outstanding 13 1/2% Series B Redeemable Exchangeable Preferred Stock due 2009 ("Series B Preferred Stock"), and junior to all indebtedness and other obligations of the Company and its subsidiaries. As of September 30, 1997, on a pro forma basis after giving effect to the pending acquisition of Shared Technologies Fairchild Inc. ("Shared Technologies"), the October 30 Equity Offering and the concurrent private placement of $260.3 million principal amount at maturity of 8 7/8% Notes on October 30, 1997 (including the exercise of the over-allotment option in connection therewith) (the "October 30 Debt Offering", and collectively with the October 30 Equity Offering, the "October 30 Offerings") and the application of the proceeds therefrom, the Series E Preferred Stock would have been junior in right of payment to approximately $1.3 billion of liquidation preference of Series B Preferred Stock and total indebtedness and other obligations of the Company and its subsidiaries ($1.7 billion if the December Offering (as defined herein) is consummated). See "Description of Series E Preferred Stock-Ranking." The Securities may be sold from time to time to purchasers directly by the Selling Securityholders. Alternatively, the Selling Securityholders may from time to time offer the Securities through brokers, dealers or agents who may receive compensation in the form of discounts, concessions or commissions from the Selling Securityholders and/or the purchasers of the Securities for whom they may act as agent. The Selling Securityholders and any such brokers, dealers or agents who participate in the distribution of the Securities may be deemed to be "underwriters", and any profits on the sale of the Securities by them and any discounts, commissions or concessions received by any such brokers, dealers or agents might be deemed to be underwriting discounts and commissions under the Securities Act. To the extent the Selling Securityholders may be deemed to be underwriters, the Selling Securityholders may be subject to certain statutory liabilities of the Securities Act, including, but not limited to, Sections 11, 12 and 17 of the Securities Act and Rule 10b-5 under the Exchange Act. See "Plan of Distribution." The Selling Securityholders and any other person participating in such distribution will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including, without limitation, Regulation M, which may limit the timing of purchases and sales of any of the Securities by the Selling Securityholders and any other such person. All of the foregoing may affect the marketability of the Securities and the ability of any person or entity to engage in market-making activities with respect to the Securities. The Company will not receive any proceeds from the sale of the Securities or the issuance of the Dividend Shares offered hereby. The Company has agreed to pay substantially all of the expenses incidental to the registration, offering and sale of the Securities to the public other than commissions, fees and discounts of underwriters, brokers, dealers and agents. On December 15, 1997, the closing price for the Common Stock as quoted on the National Association of Securities Dealers, Inc. Automated Quotation System National Market ("Nasdaq National Market"), under the symbol "ICIX", was $53 5/16 per share. The Company has not and does not intend to apply for the listing of the Depositary Shares or the Series E Preferred Stock on any securities exchange or for quotation through the Nasdaq National Market. The Series E Preferred Stock and the Depositary Shares are eligible for trading in the National Association of Securities Dealers' Private Offerings, Resales and Trading Through Automative Linkages ("PORTAL") Market. AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith, files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). Such reports, proxy and information statements and other information can be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, its Midwest Regional Office, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and at its Northeast Regional Office, 7 World Trade Center, Suite 1300, New York, New York 10048. Copies of such material can be obtained from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Such material can also be inspected at the Web site of the Commission located at http://www.sec.gov. The Common Stock is listed on the Nasdaq National Market under the symbol "ICIX". Reports, proxy and information statements, and other information concerning the Company can also be inspected at the Nasdaq National Market at 1735 17 Street, N.W., Washington, D.C. 20006-1506. Statements contained in this Prospectus as to the contents of any contract or other document are not necessarily complete, and reference is made to the copy of such contract or other document filed as an exhibit to the Registration Statement of which this Prospectus forms a part, each such statement being qualified in all respects by such reference. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents or information have been filed by the Company with the Commission and are incorporated herein by reference: The Company's Annual Report on Form 10-K for the year ended December 31, 1996. The Company's Annual Report on Form 10-K/A for the year ended December 31, 1996 filed with the Commission on May 15, 1997. The portions of the Proxy Statement for the Annual Meeting of Stockholders of the Company held on May 22, 1997 that have been incorporated by reference into the Company's Annual Report on Form 10-K for the year ended December 31, 1996. The Company's Current Report on Form 8-K filed with the Commission on February 24, 1997. The Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997. The Company's Current Report on Form 8-K filed with the Commission on March 14, 1997. The Company's Current Report on Form 8-K filed with the Commission on June 5, 1997. The Company's Current Report on Form 8-K filed with the Commission on July 17, 1997. The Company's Current Report on Form 8-K/A filed with the Commission on August 4, 1997. The Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1997. The Company's Current Report on Form 8-K filed with the Commission on October 27, 1997. The Company's Current Report on Form 8-K filed with the Commission on November 6, 1997. The Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1997. The Company's Current Report on Form 8-K filed with the Commission on November 25, 1997. The Company's Current Report on Form 8-K/A filed with the Commission on December 4, 1997. The Company's Current Report on Form 8-K/A filed with the Commission on December 16, 1997. The Company's Current Report on Form 8-K filed with the Commission on December 18, 1997. The Company's Current Report on Form 8-K/A filed with the Commission on December 22, 1997. The description of the capital stock contained in the Company's registration statements on Form 8-A under the Exchange Act, filed April 7, 1992, April 28, 1992 and April 30, 1992 (File No. 0-20135). ii All documents subsequently filed by the Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to the termination of the offering covered by this Prospectus will be deemed incorporated by reference into this Prospectus and to be a part hereof from the date of filing of such documents. Any statement contained in a document incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. THE COMPANY HEREBY UNDERTAKES TO PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM A COPY OF THIS PROSPECTUS HAS BEEN DELIVERED, UPON THE WRITTEN OR ORAL REQUEST OF SUCH PERSON TO INTERMEDIA COMMUNICATIONS, INC., 3625 QUEEN PALM DRIVE, TAMPA, FLORIDA 33619 (TELEPHONE 813-829-0011), ATTENTION: INVESTOR RELATIONS, A COPY OF ANY OR ALL OF THE DOCUMENTS REFERRED TO ABOVE (OTHER THAN EXHIBITS TO SUCH DOCUMENTS) WHICH HAVE BEEN INCORPORATED BY REFERENCE IN THIS PROSPECTUS. iii RISK FACTORS Prospective investors should consider carefully the following factors relating to the business of the Company and this offering, in addition to other information set forth elsewhere in this Prospectus and in the Company's Annual Report on Form 10-K, before purchasing the Securities offered hereby. Substantial Indebtedness; Insufficiency of Earnings to Cover Fixed Charges, Including Dividends on the Series E Preferred Stock. The Company is highly leveraged. At September 30, 1997, after giving pro forma effect to the pending acquisition of Shared Technologies, the October 30 Offerings and the application of the net proceeds of the October 30 Offerings, the Company would have had outstanding approximately $993.8 million ($1.3 billion if the December Offering is consummated) in aggregate principal amount of indebtedness and other liabilities on a consolidated basis (including trade payables), approximately $312.0 million of obligations with respect to dividend payments and the mandatory redemption of the Series B Preferred Stock, $170.1 million of obligations with respect to the Series D Preferred Stock and $193.7 million of obligations with respect to the Series E Preferred Stock. The degree to which the Company is leveraged could have important consequences to holders of the Series E Preferred Stock, including the following: (i) a substantial portion of the Company's cash flow from operations will be dedicated to payment of the principal and interest on its indebtedness, to payment of dividends on and the redemption of the Series B Preferred Stock and the payment of dividends on the Series D Preferred Stock and the Series E Preferred Stock, thereby reducing funds available for other purposes; (ii) the Company's significant degree of leverage could increase its vulnerability to changes in general economic conditions or increases in prevailing interest rates; (iii) the Company's ability to obtain additional financing for working capital, capital expenditures, acquisitions, general corporate purposes or other purposes could be impaired; and (iv) the Company may be more leveraged than certain of its competitors, which may be a competitive disadvantage. The Company's historical earnings have been insufficient to cover combined fixed charges and dividends on preferred stock by $0.6 million, $2.3 million, $3.3 million, $19.8 million and $60.0 million for each of the years ended December 31, 1992, 1993, 1994, 1995 and 1996, respectively. In addition, insufficiencies of $37.6 million and $187.0 million were experienced in the nine-month periods ended September 30, 1996 and 1997, respectively. On a pro forma basis, after giving applicable effect to the DIGEX, EMI, NetSolve and UTT acquisitions, the pending acquisition of Shared Technologies and the March 1997 offerings, July 1997 Offerings (as defined herein) and October 30 Offerings, the Company's earnings were insufficient to cover combined fixed charges and dividends on preferred stock by $238.9 million ($269.6 million if the December Offering is consummated) for the year ended December 31, 1996 and by $294.8 million ($317.8 million if the December Offering is consummated) for the nine months ended September 30, 1997. The Company anticipates that earnings will be insufficient to cover fixed charges for the next several years. In order for the Company to meet its debt service obligations, its dividend and redemption obligations with respect to the Series B Preferred Stock and its dividend obligations with respect to the Series D Preferred Stock and Series E Preferred Stock the Company will need to substantially improve its operating results. There can be no assurance that the Company's operating results will be of sufficient magnitude to enable the Company to meet such debt service, dividend and redemption obligations. In the absence of such operating results, the Company could face substantial liquidity problems and might be required to raise additional financing through the issuance of debt or equity securities; however, there can be no assurance that Intermedia would be successful in raising such financing, or the terms or timing thereof. Restrictions on the Company's Ability to Pay Dividends on the Series E Preferred Stock. To date, the Company has not paid cash dividends on its shares of capital stock. The ability of Intermedia to pay cash dividends on the Series E Preferred Stock is substantially restricted under various covenants and conditions contained in the Indenture (the "12 1/2% Notes Indenture") governing the Company's 12 1/2% Senior Notes due 2006 (the "12 1/2% Notes"), the Indenture (the "11 1/4% Notes Indenture") governing the Company's 11 1/4% Senior Discount Notes due 2007 (the "11 1/4% Notes"), and the Indenture (the "8 7/8% Notes Indenture" and together with the 12 1/2 Notes Indenture and the 11 1/4 Notes Indenture, the "Existing Senior Notes Indentures") governing the Company's 8 7/8% Notes due 2007 (the "8 7/8% Notes" and together with the 12 1/2% Notes and the 11 1/4% Notes, the "Existing Senior Notes") and the Certificate of Designation (the "Series B Certificate of Designation") setting forth the rights of the Series B Preferred Stock. In addition to the limitations 1 imposed on the payment of dividends by the Existing Senior Notes Indentures and the Series B Certificate of Designation, under Delaware law the Company is permitted to pay dividends on its capital stock, including the Series E Preferred Stock, only out of its surplus, or in the event that it has no surplus, out of its net profits for the year in which a dividend is declared or for the immediately preceding fiscal year. Surplus is defined as the excess of a company's total assets over the sum of its total liabilities and the liquidation preference of its preferred stock plus the par value of its outstanding capital stock. At September 30, 1997, the Company had stockholders equity of $(90.8) million and surplus of $(90.9) million. The Company has had net losses in each of the last five years and expects to operate at a net loss for the next several years. These net losses will further reduce stockholders' equity and the surplus of the Company. For the nine months ended September 30, 1997, the Company had a net loss attributable to common stockholders of $228.3 million ($336.1 million on a pro forma basis after giving effect to the DIGEX Acquisition (as defined herein), the pending acquisition of Shared Technologies and the October 30 Offerings and the application of proceeds therefrom and $359.1 million if the December Offering is consummated). In order to pay dividends in cash, the Company must have surplus or net profits equal to the full amount of the cash dividend at the time such dividend is declared. The Company cannot predict what the value of its assets or the amount of its liabilities will be in the future and, accordingly, there can be no assurance that the Company will be able to pay cash dividends on the Series E Preferred Stock. In the event dividends are paid in shares of Common Stock, the number of shares of Common Stock to be issued on each dividend payment date will be determined by dividing the total dividend to be paid on each Depositary Share by 95% of the average of the high and low sales prices of the Common Stock as reported by the Nasdaq National Market or any national securities exchange upon which the Common Stock is then listed, for each of the ten consecutive trading days immediately preceding the fifth business day preceding the record date for such dividend. If such average is greater than 5.05% higher than the market value for the Common Stock on the dividend payment date and the holder sells at such lower price, the holder's actual dividend yield would be lower than the stated dividend yield on the Series E Preferred Stock. In addition, the holder is likely to incur commissions and other transaction costs in connection with the sale of such Common Stock. The Certificate of Designation provides that upon (a) the accumulation of accrued and unpaid dividends on the outstanding Series E Preferred Stock in an amount equal to six quarterly dividends (whether or not consecutive) and (b) the failure of the Company to make a Preferred Stock Change of Control Offer or to repurchase the Series E Preferred Stock tendered in a Preferred Stock Change of Control, the sole remedy to the holders of the Series E Preferred Stock is the voting rights arising from a Voting Rights Triggering Event (as defined herein). See "Description of Series E Preferred Stock-Voting Rights." Subordination of the Series E Preferred Stock. The Company's obligations with respect to the Series E Preferred Stock are subordinate and junior in right of payment to all present and future indebtedness of the Company and its subsidiaries, including the Existing Senior Notes, to the Series B Preferred Stock and to all subsequent series of preferred stock of the Company which by their terms rank senior to the Series E Preferred Stock. In addition to the substantial dividend restrictions set forth in the Existing Senior Notes Indentures, no cash dividend payments may be made with respect to the Series E Preferred Stock if (i) the obligations with respect to the Existing Senior Notes or Series B Preferred Stock are not paid when due or (ii) any other event of default has occurred under the Existing Senior Notes Indentures or Series B Certificate of Designation, and is continuing or would occur as a consequence of such payment. As of September 30, 1997, on a pro forma basis after giving effect to the October 30 Offerings and the application of the net proceeds therefrom, the Series E Preferred Stock would have been junior in right of payment to $1.3 billion of indebtedness and other liabilities and commitments and liquidation preference of the Company and its subsidiaries. In the event of bankruptcy, liquidation or reorganization of the Company, the assets of the Company will be available to pay obligations on the Series E Preferred Stock only after all Senior Securities and all indebtedness of the Company have been paid, and there may not be sufficient assets remaining to pay amounts due on any or all of the Series E Preferred Stock then outstanding. The Company has entered into preliminary discussions with several banks looking toward the establishment of a $250.0 million senior credit facility. Although there can be no assurance that such negotiations will be successful, or that the ultimate amount of the credit line will amount to $250.0 million, the 2 credit facility would likely be secured by substantially all of the assets of the Company. See "Description of Series E Preferred Stock-Ranking." Risks Associated with Acquisitions. The Company intends to use the net proceeds of the October 30 Offerings and the December Offering, if consummated, to expand its networks and service offerings through internal development and acquisitions. The Company has used a portion of such net proceeds to fund a pending acquisition of Shared Technologies. On December 17, 1997, the Company entered into a definitive agreement for the LDS Acquisition (as defined herein). Such acquisitions, if made, could divert the resources and management time of the Company and would require integration with the Company's existing networks and services. There can be no assurance that the pending acquisitions of Shared Technologies and LDS (as defined herein) will be consummated or that any other acquisitions will occur or that any such acquisitions, including the acquisitions of Shared Technologies and LDS, if made, would be on terms favorable to the Company or would be successfully integrated into the Company's operations. Consistent with its strategy, the Company is currently evaluating, has made offers with respect to, and is engaged in discussions regarding various acquisition opportunities. These acquisitions could be funded by cash (including the proceeds of the October 30 Offerings and the December Offering, if consummated) and/or the Company's securities. It is possible that one or more of such possible future acquisitions, if completed, could adversely affect the Company's funds from operations or cash available for distribution, in the short term or the long term or both, or increase the Company's debt, or such an acquisition could be followed by a decline in the market value of the Company's securities. Under the terms of the purchase agreement with the Initial Purchasers, the Company is not prohibited from issuing equity securities in connection with an acquisition during the 90-day "lock-up" period following the October 30 Offerings. On November 20, 1997, Intermedia, Moonlight Acquisition Corp., a wholly-owned subsidiary of Intermedia, and Shared Technologies signed a definitive merger agreement pursuant to which holders of Shared Technologies' common stock would receive $15.00 per share in cash upon consummation of the merger. In connection with the proposed acquisition of Shared Technologies and in anticipation of Shared Technologies becoming a "Restricted Subsidiary" within the meaning of the Company's Existing Senior Notes Indentures and the Series B Certificate of Designation, the Company purchased certain equity interests and certain notes issued by Shared Technologies. See "Recent Developments -- Acquisitions." If the proposed acquisition of Shared Technologies is not consummated before April 22, 1998 and, as a result, Shared Technologies does not become a Restricted Subsidiary of the Company, an Event of Default may occur under the terms of each of the Existing Senior Notes Indentures and the Series B Certificate of Designation unless the Company disposes of its investment in Shared Technologies without a loss or holds its investment through an Unrestricted Subsidiary. If such an event of default occurs, upon receipt of notice from the trustee under any of the Existing Senior Notes Indentures, or the holders of at least 25% of the outstanding principal amounts of the 12 1/2% Notes, the 11 1/4% Notes or the 8 7/8% Notes, acceleration of the 12 1/2% Notes, the 11 1/4% Notes or the 8 7/8% Notes, respectively, would result. The occurrence of an Event of Default would not lead to the acceleration of the Series B Preferred Stock. If all of the Existing Senior Notes were accelerated, the Company would not have sufficient funds available to repay the Existing Senior Notes, unless it could arrange a refinancing of the Existing Senior Notes. Effect of Substantial Additional Indebtedness on the Company's Ability to Make Payments on the Series E Preferred Stock. The Existing Senior Notes Indentures and the Series B Certificate of Designation limit, but do not prohibit, the incurrence of additional indebtedness by the Company and its subsidiaries, and the Company may incur substantial additional indebtedness during the next few years to finance the construction of networks and purchase of network electronics, including local/long distance voice and data switches. The Company has contracted to issue the 8 1/2% Senior Notes and may establish a bank credit facility for up to $250 million. All additional indebtedness of the Company will rank senior in right of payment to any payment obligations with respect to the Series E Preferred Stock. The debt service requirements of any additional indebtedness would make it more difficult for the Company to pay cash dividends with respect to the Series E Preferred Stock. 3 Regulatory Approval of the October 30 Offerings. Nine of the states in which the Company is certificated provide for prior approval or notification of the issuance of securities by the Company. Because of time constraints, the Company did not expect to have obtained such approval from any of the nine states prior to consummation of the October 30 Offerings or the December Offering. The requirements for these filings may have been pre- empted by the National Securities Market Improvement Act of 1996, although there is no case law on this point. The Company filed the necessary notifications and applications for approval in these states prior to the October 30 Offerings and has obtained approval in three states and will file such notifications and applications following the December Offering. After consultation with counsel, the Company believes the remaining approvals will be granted and that obtaining such approvals subsequent to the October 30 Offerings and the December Offering should not result in any material adverse consequences to the Company, although there can be no assurance that such a consequence will not result. Maintenance of Peering Relationships. The Internet is comprised of many Internet service providers ("ISPs") who operate their own networks and interconnect with other ISPs at various peering points. The establishment and maintenance of peering relationships with other ISPs is necessary in order to exchange traffic with other ISPs without having to pay settlement charges. Although the Company meets the industry's current standards for peering, there is no assurance that other national ISPs will maintain peering relationships with the Company. In addition, there may develop increasing requirements associated with maintaining peering with the major national ISPs with which the Company may have to comply. There can be no assurance that the Company will be able to expand or adapt its network infrastructure to meet the industry's evolving standards on a timely basis, at a commercially reasonable cost, or at all. Potential Liability of On-Line Service Providers. The law in the United States relating to the liability of on-line service providers and ISPs for information carried on, disseminated through or hosted on their systems is currently unsettled. Several private lawsuits seeking to impose such liability are currently pending. In one case brought against an ISP, Religious Technology Center v. Netcom On-Line Communication Services, Inc., the United States District Court for the Northern District of California ruled in a preliminary phase that under certain circumstances ISPs could be held liable for copyright infringement. The Telecommunications Act of 1996 (the "1996 Act") prohibits and imposes criminal penalties for using an interactive computer service to transmit certain types of information and content, such as indecent or obscene communications. On June 26, 1997, the Supreme Court affirmed the decision of a panel of three federal judges which granted a preliminary injunction barring enforcement of this portion of the 1996 Act to the extent that enforcement is based upon allegations other than obscenity or child pornography as an impermissible restriction on the First Amendment's right of free speech. In addition, numerous states have adopted or are currently considering similar types of legislation. The imposition upon ISPs or Web hosting sites of potential liability for materials carried on or disseminated through its systems could require the Company to implement measures to reduce its exposure to such liability, which may require the expenditure of substantial resources or the discontinuation of certain product or service offerings. The Company believes that it is currently unsettled whether the 1996 Act prohibits and imposes liability for any services provided by the Company should the content or information transmitted be subject to the statute. The increased attention focused upon liability issues as a result of these lawsuits, legislation and legislative proposals could affect the growth of Internet use. Any such liability or asserted liability could have a material adverse effect on the Company's business, financial condition and results of operations. Dependence upon Network Infrastructure; Risk of System Failure; Security Risks. The Company's success in marketing its services to business and government users requires that the Company provide superior reliability, capacity and security via its network infrastructure. The Company's networks are subject to physical damage, power loss, capacity limitations, software defects, breaches of security (by computer virus, break-ins or otherwise) and other factors, certain of which have caused, and will continue to cause, interruptions in service or reduced capacity for the Company's customers. Similarly, the Company's ISP business relies on the availability of its network infrastructure for the provision of Internet connectivity. Interruptions in service, capacity limitations or security breaches could have a material adverse effect on the Company's business, financial condition and results of operations. Absence of a Public Market for the Depositary Shares. The Series E Preferred Stock and the Depositary Shares were issued by the Company in the October 30 Equity Offering. The Company does not intend to apply for listing of the Depositary Shares or the Series E Preferred Stock on any securities exchange or on the Nasdaq National Market. The Initial Purchasers have informed the Company that they make a market for the Depositary Shares, but they are not 4 obligated to do so and their market making activity may be discontinued at any time without notice. Accordingly, there can be no assurance as to the liquidity or continuation of any market for the Depositary Shares. The Depositary Shares may trade at prices that may be higher or lower than their initial offering price depending upon many factors, including prevailing interest rates, the Company's operating results and the markets for similar securities. Historically, the market for securities such as the Depositary Shares has been subject to disruptions that have caused substantial volatility in the prices of securities similar to the Depositary Shares. There can be no assurance that the market for the Depositary Shares would not be subject to similar disruptions. The Company does not expect a market for the Series E Preferred Stock to develop. Certain Tax Considerations. For a discussion of certain material federal income tax considerations which are relevant to the purchase, ownership and disposition of the Depositary Shares and the Series E Preferred Stock, see "Certain Federal Income Tax Consequences." Anti-Takeover Provisions. The Company's Certificate of Incorporation and Bylaws, the provisions of the Delaware General Corporation Law (the "DCGL"), the Existing Senior Notes Indentures, the Series B Certificate of Designation, the Series D Certificate of Designation and the Certificate of Designation (as defined herein) may make it difficult in some respects to effect a change in control of the Company and replace incumbent management. In addition, the Company's Board of Directors has adopted a Stockholder's Rights Plan, pursuant to which rights to acquire a series of preferred stock, exercisable upon the occurrence of certain events, were distributed to its stockholders. The existence of these provisions may have a negative impact on the price of the Common Stock, may discourage third party bidders from making a bid for the Company, or may reduce any premiums paid to stockholders for their Common Stock. In addition, the Board has the authority to fix the rights and preferences of, and to issue shares of, the Company's preferred stock, which may have the effect of delaying or preventing a change in control of the Company without action by its stockholders. Shares Eligible for Future Sale. Future sales of shares by existing stockholders under Rule 144 of the Securities Act, or through the exercise of outstanding registration rights or the issuance of shares of Common Stock upon the exercise of options or warrants or conversion of convertible securities could materially adversely affect the market price of shares of Common Stock and could materially impair the Company's future ability to raise capital through an offering of equity securities. Substantially all of the Company's outstanding shares, other than those held by affiliates, are transferable without restriction under the Securities Act. No predictions can be made as to the effect, if any, that market sales of such shares or the availability of such shares for future sale will have on the market price of shares of Common Stock prevailing from time to time. Limited Operations of Certain Services; History of Net Losses. The Company's business commenced in 1987. Substantially all of the Company's revenues are derived from local exchange services, enhanced data services, long distance services, integration services and certain local network services. Many of these services have only recently been initiated or their availability only recently expanded in new market areas. The Company is expecting to substantially increase the size of its operations in the near future. Prospective investors, therefore, have limited historical financial information about the Company upon which to base an evaluation of the Company's performance. Given the Company's limited operating history, there is no assurance that it will be able to compete successfully in the telecommunications business. The development of the Company's business and the expansion of its networks require significant capital, operational and administrative expenditures, a substantial portion of which are incurred before the realization of revenues. These capital expenditures will result in negative cash flow until an adequate customer base is established. Although its revenues have increased in each of the last three years, Intermedia has incurred significant increases in expenses associated with the installation of local/long distance voice switches and expansion of its fiber optic networks, services and customer base. Intermedia reported net losses of approximately $3.1 million, $20.7 million, $57.2 million 5 for the years ended December 31, 1994, 1995 and 1996 and a net loss of $201.2 million for the nine months ended September 30, 1997, respectively. The Company anticipates recording a significant net loss in 1997 that is expected to be substantially greater than the loss in 1996 and expects net losses to continue for the next several years. In addition, the Company expects to have negative EBITDA in 1997. There can be no assurance that Intermedia will achieve or sustain profitability or positive EBITDA in the future. Class Action by DIGEX Stockholders. On June 5, 1997, the Company announced that it had agreed to acquire 100% of the outstanding equity of DIGEX, Incorporated ("DIGEX"; the "DIGEX Acquisition"). The acquisition was consummated through a tender offer for all of the outstanding shares of DIGEX, which closed on July 9, 1997, followed by a cash merger effective on July 11, 1997 (the "Merger"). On June 20, 1997, two purported class action complaints were filed in the Court of Chancery of the State of Delaware in and for New Castle County respectively by TAAM Associates, Inc. and David and Chaile Steinberg (the "Complaints"), purported stockholders of DIGEX, on behalf of all non- affiliated common stockholders of DIGEX, against Intermedia, DIGEX and the Directors of DIGEX (the "DIGEX Directors"). The Complaints allege that the DIGEX Directors violated their fiduciary duties to the public stockholders of DIGEX by agreeing to vote in favor of the Merger and that Intermedia knowingly aided and abetted such violation by offering to retain DIGEX management in their present positions and consenting to stock option grants to certain executive officers of DIGEX. The Complaints sought preliminary and permanent injunctions enjoining the Merger but no applications were made for such injunctions prior to the consummation of the Merger on July 11, 1997. In addition, the Complaints seek cash damages from the DIGEX Directors. In August 1997, a motion to dismiss the Complaints was filed on behalf of Intermedia, DIGEX and the DIGEX Directors. The action has been dormant since that time. These cases are in their very early stages and no assurance can be given as to their ultimate outcome. Intermedia, after consultation with its counsel, believes that there are meritorious factual and legal defenses to the claims in the Complaints. Intermedia intends to defend vigorously the claims in the Complaints. Significant Capital Requirements and Need for Additional Financing. Expansion of the Company's existing networks and services and the development of new networks and services require significant capital expenditures. Intermedia expects to fund its capital requirements through existing resources, joint ventures, debt or equity financing (including capital raised through the October 30 Offerings and the December Offering, if consummated), credit availability and internally generated funds. Assuming the consummation of the December Offering, the Company expects that continued expansion of its business will require raising equity and/or debt by the end of fiscal 1999. Depending on market conditions, the Company may determine to raise additional capital before such time. There can be no assurance, however, that Intermedia will be successful in raising sufficient debt or equity on terms that it will consider acceptable. Moreover, the Existing Senior Notes Indentures, the Series B Certificate of Designation, the Series D Certificate of Designation and the Certificate of Designation impose certain restrictions upon the Company's ability to incur additional indebtedness or issue additional preferred stock. In addition, the Company's future capital requirements will depend upon a number of factors, including marketing expenses, staffing levels and customer growth, as well as other factors that are not within the Company's control, such as competitive conditions, government regulation and capital costs. Failure to generate sufficient funds may require Intermedia to delay or abandon some of its future expansion or expenditures, which would have a material adverse effect on its growth and its ability to compete in the telecommunications industry. Expansion Risk. The Company is experiencing a period of rapid expansion which management expects will increase in the near future. This growth has increased the operating complexity of the Company as well as the level of responsibility for both existing and new management personnel. The Company's ability to manage its expansion effectively will require it to continue to implement and improve its operational and financial systems and to expand, train and manage its employee base. The Company's inability to effectively manage its expansion could have a material adverse effect on its business. 6 A portion of the Company's expansion may occur through acquisitions as an alternative to direct investments in the assets required to implement the expansion. No assurance can be given that suitable acquisitions can be identified, financed and completed on acceptable terms, or that the Company's future acquisitions, if any, will be successful or will not impair the Company's ability to service its outstanding obligations. Risks of Implementation; Need to Obtain Permits and Rights of Way. The Company is continuing to expand its existing networks. The Company has identified other expansion opportunities in the eastern half of the United States and is currently extending the reach of its networks to pursue such opportunities. There can be no assurance that the Company will be able to expand its existing networks or construct or acquire new networks as currently planned on a timely basis. The expansion of the Company's existing networks and its construction or acquisition of new networks will be dependent, among other things, on its ability to acquire rights-of-way and any required permits on satisfactory terms and conditions and on its ability to finance such expansion, acquisition and construction. In addition, the Company may require pole attachment agreements with utilities and incumbent local exchange carriers ("ILECs") to operate existing and future networks, and there can be no assurance that such agreements will be obtained or obtainable on reasonable terms. These factors and others could adversely affect the expansion of the Company's customer base on its existing networks and commencement of operations on new networks. If the Company is not able to expand, acquire or construct its networks in accordance with its plans, the growth of its business would be materially adversely affected. Competition. In each of its markets, the Company faces significant competition for the local network services, including local exchange services, it offers from ILECs, which currently dominate their local telecommunications markets. ILECs have long-standing relationships with their customers which relationships may create competitive barriers. Furthermore, ILECs may have the potential to subsidize competitive service from monopoly service revenues. In addition, a continuing trend toward business combinations and alliances in the telecommunications industry may create significant new competitors to the Company. The Company also faces competition in most markets in which it operates from one or more integrated communications services providers ("ICPs") and ILECs operating fiber optic networks. In addition, the Company faces competition in its integration services business from equipment manufacturers, the regional Bell operating companies ("RBOCs") and other ILECs, long distance carriers and systems integrators, and in its enhanced data services business (including Internet) from local telephone companies, long distance carriers, very small aperture terminal ("VSAT") providers, other ISPs and others. In particular, the market for Internet services is extremely competitive and there are limited barriers to entry. Many of the Company's existing and potential competitors have financial, personnel and other resources significantly greater than those of the Company. The Company believes that various legislative initiatives, including the recently enacted 1996 Act, have removed remaining legislative barriers to local exchange competition. Nevertheless, in light of the passage of the 1996 Act, regulators are also likely to provide ILECs with increased pricing flexibility as competition increases. If ILECs are permitted to lower their rates substantially or engage in excessive volume or term discount pricing practices for their customers, the net income or cash flow of ICPs and competitive local exchange carriers ("CLECs"), including the Company, could be materially adversely affected. In addition, while the Company currently competes with AT&T, MCI and others in the interexchange services market, the recent federal legislation permits the RBOCs to provide interexchange services once certain criteria are met. Once the RBOCs begin to provide such services, they will be in a position to offer single source service similar to that being offered by Intermedia. In addition, AT&T and MCI have entered and other interexchange carriers have announced their intent to enter into the local exchange services market, which is facilitated by the 1996 Act's resale and unbundled network element provisions. The Company cannot predict the number of competitors that will emerge as a result of existing or new federal and state regulatory or legislative actions. Competition from the RBOCs with respect to interexchange services or from AT&T, MCI or others with respect to local exchange services could have a material adverse effect on the Company's business. Regulation. The Company is subject to varying degrees of federal, state and local regulation. The Company is not currently subject to price cap or rate of return regulation at the state or federal level, nor is it currently required to obtain FCC authorization for the installation, acquisition or operation of its interstate network facilities. Further, the FCC issued an order holding that non-dominant carriers, such as the Company, are required to withdraw interstate 7 tariffs for domestic long distance service. That order has been stayed by a federal appeals court and it is not clear at this time whether the detariffing order will be implemented. Until further action is taken by the court, the Company will continue to maintain tariffs for these services. In June 1997, the FCC issued another order stating that non-dominant carriers, such as the Company, could withdraw their tariffs for interstate access services. While the Company has no immediate plans to withdraw its tariff, this FCC order allows the Company to do so. The FCC also requires the Company to file interstate tariffs on an ongoing basis for international traffic. The Company is generally subject to certification and tariff or price list filing requirements for intrastate services by state regulators. Although passage of the 1996 Act should result in increased opportunities for companies that are competing with the ILECs, no assurance can be given that changes in current or future regulations adopted by the FCC or state regulators or other legislative or judicial initiatives relating to the telecommunications industry would not have a material adverse effect on the Company. In addition, although the 1996 Act provides incentives to the ILECs that are subsidiaries of RBOCs to enter the long distance service market by requiring ILECs to negotiate interconnection agreements with local competitors, there can be no assurance that these ILECs will negotiate quickly with competitors such as the Company for the required interconnection of the competitor's networks with those of the ILECs or that such agreements will be favorable. Potential Diminishing Rate of Growth. During the period from 1994 through 1996, the Company's revenues grew at a compound annual growth rate of 169%. While the Company expects to continue to grow, as its size increases it is likely that its rate of growth will diminish. Risk of New Service Acceptance by Customers. The Company has recently introduced a number of services, primarily local exchange services, that the Company believes are important to its long-term growth. The success of these services will be dependent upon, among other things, the willingness of customers to accept the Company as the provider of such services. No assurance can be given that such acceptance will occur; the lack of such acceptance could have a material adverse effect on the Company. Rapid Technological Changes. The telecommunications industry is subject to rapid and significant changes in technology. While Intermedia believes that, for the foreseeable future, these changes will neither materially affect the continued use of its fiber optic networks nor materially hinder its ability to acquire necessary technologies, the effect on the business of Intermedia of technological changes such as changes relating to emerging wireline and wireless transmission technologies, including software protocols, cannot be predicted. Dependence on Key Personnel. The Company's business is managed by a small number of key management and operating personnel, the loss of certain of whom could have a material adverse impact on the Company's business. The Company believes that its future success will depend in large part on its continued ability to attract and retain highly skilled and qualified personnel. None of the Company's key executives, other than David C. Ruberg, President, Chief Executive Officer and Chairman of the Board, is a party to a long-term employment agreement with the Company. Risk of Cancellation or Non-Renewal of Network Agreements, Licenses and Permits. The Company has lease and/or purchase agreements for rights-of- way, utility pole attachments, conduit and dark fiber for its fiber optic networks. Although the Company does not believe that any of these agreements will be cancelled in the near future, cancellation or non-renewal of certain of such agreements could materially adversely affect the Company's business in the affected metropolitan area. In addition, the Company has certain licenses and permits from local government authorities. The 1996 Act requires that local government authorities treat telecommunications carriers in a competitively neutral, non-discriminatory manner, and that most utilities, including most ILECs and electric companies, afford alternative carriers access to their poles, conduits and rights-of-way at reasonable rates on non- discriminatory terms and conditions. There can be no assurance that the Company will be able to maintain its existing franchises, permits and rights or to obtain and maintain the other franchises, permits and rights needed to implement its strategy on acceptable terms. 8 Dependence on Business from Interexchange Carriers ("IXCs"). For the year ended December 31, 1996, approximately 10% of the Company's consolidated revenues were attributable to access services provided to IXCs. The loss of access revenues from IXCs in general could have a material adverse effect on the Company's business. In addition, the Company's growth strategy assumes increased revenues from IXCs from the deployment of local/long distance voice switches on its networks and the provision of switched access origination and termination services. There is no assurance that the IXCs will continue to increase their utilization of the Company's services, or will not reduce or cease their utilization of the Company's services, which could have a material adverse effect on the Company. Business Combinations; Change of Control. The Company has from time to time held, and continues to hold, preliminary discussions with (i) potential strategic investors who have expressed an interest in making an investment in or acquiring the Company and (ii) potential joint venture partners looking toward the formation of strategic alliances that would expand the reach of the Company's networks or services without necessarily requiring an additional investment in the Company. In addition to providing additional growth capital, management believes that an alliance with an appropriate strategic investor would provide operating synergy to, and enhance the competitive positions of, both Intermedia and the investor within the rapidly consolidating telecommunications industry. There can be no assurance that agreements for any of the foregoing will be reached. An investment, business combination or strategic alliance could constitute a change of control. The Existing Senior Notes Indentures and the Series B Certificate of Designation provide that a change of control would require the Company to repay the indebtedness and redeem the Series B Preferred Stock outstanding under such instruments. A change of control also requires the Company to offer to redeem the Series D Preferred Stock and the Series E Preferred Stock. The terms of the Existing Senior Notes Indentures and the Series B Certificate of Designation contain provisions that may prohibit the repurchase of the Series E Preferred Stock. If a change of control does occur, there is no assurance that the Company would have sufficient funds to make such repayments and redemption or could obtain any additional debt or equity financing that could be necessary in order to repay the Existing Senior Notes and to redeem the Series B Preferred Stock in order to redeem the Series E Preferred Stock. Forward Looking Statements. The statements contained in this Prospectus that are not historical facts are "forward-looking statements" (as such term is defined in the Private Securities Litigation Reform Act of 1995), which can be identified by the use of forward-looking terminology such as "estimates," "projects," "anticipates," "expects," "intends," "believes," or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. Management wishes to caution the reader that these forward- looking statements are only estimates or predictions. No assurance can be given that future results will be achieved; actual events or results may differ materially as a result of risks facing the Company or actual results differing from the assumptions underlying such statements. 9 RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS The Company's historical earnings have been insufficient to cover combined fixed charges and dividends on preferred stock by $0.6 million, $2.3 million, $3.3 million, $19.8 million and $60.0 million for each of the years ended December 31, 1992, 1993, 1994, 1995 and 1996, respectively. In addition, insufficiencies of $37.6 million and $187.0 million were experienced in the nine-month periods ended September 30, 1996 and 1997, respectively. On a pro forma basis, after giving effect to the DIGEX, EMI, NetSolve and UTT acquisitions, the pending acquisition of Shared Technologies and the March 1997 offerings, July 1997 Offerings and October 30, 1997 Offerings, the Company's earnings were insufficient to cover combined fixed charges and dividends on preferred stock by $238.9 million ($269.6 million if the December Offering is consummated) for the year ended December 31, 1996 and by $294.8 million ($317.8 million if the December Offering is consummated) for the nine months ended September 30, 1997. See "Risk Factors Substantial Indebtedness; Insufficiency of Earnings to Cover Fixed Charges Including Dividends on the Series E Preferred Stock" for a further discussion of factors which may have an impact on the Company's ratio of earnings to combined fixed charges and preferred stock dividends. 10 THE COMPANY Intermedia is a rapidly growing ICP, offering a full suite of local, long distance and enhanced data telecommunications services to business and government end user customers, long distance carriers, ISPs, resellers and wireless communications companies. Founded in 1987, the Company is currently the third largest (based on annualized telecommunications services revenues) among providers generally referred to as CLECs after MFS Communications Company, Inc. and Teleport Communications Group Inc. As of September 30, 1997, the Company had sales offices in 43 cities throughout the eastern half of the United States and offered a full product package of telecommunications services in 19 metropolitan statistical areas. In April 1996, Intermedia became one of the first ICPs in the United States to provide integrated switched local and long distance service and as of December 16, 1997 had thirteen switches in service. The Company provides enhanced data services, including frame relay, a synchronous transfer mode ("ATM") and Internet access services, primarily to business and government customers (including over 100 ISPs), in approximately 3,800 cities nationwide, utilizing 130 Company-owned data switches. Intermedia also serves as a facilities-based interexchange carrier to approximately 15,000 customers nationwide. Intermedia continues to increase its customer base and network density in the eastern half of the United States and is pursuing attractive opportunities to add additional services and expand into complementary geographic markets. Intermedia was incorporated in the State of Delaware on November 9, 1987, as the successor to a Florida corporation that was founded in 1986. The Company's principal offices are located at 3625 Queen Palm Drive, Tampa, Florida 33619, and its telephone number is (813) 829-0011. RECENT DEVELOPMENTS Acquisitions. On December 17, 1997 the Company entered into a definitive agreement for the acquisition of the Long Distance Savers group of companies ("LDS") for a purchase price of approximately $151.0 million, of which $120.0 million is payable in Intermedia common stock and $31.0 million is payable in cash, in each case, subject to certain adjustments (the "LDS Acquisition"). Closing of the LDS Acquisition, expected to occur in the first quarter of 1998, is subject to customary conditions, including regulatory approvals, and there can be no assurance that the LDS Acquisition will be consummated. LDS is a regional interexchange carrier, providing long distance services and Internet access to more than 45,000 business subscribers and employs over 100 sales and customer service professional in Louisiana, Texas, Oklahoma, Mississippi and Florida. LDS had revenues of $101.7 million and $82.3 million and EBITDA of $15.0 million and $9.9 million for the year ended December 31, 1996 and the nine months ended September 30, 1997, respectively. The LDS Acquisition will provide a significant time-to-market advantage in a region important to Intermedia's expansion plan, while also contributing an experienced regional management team and established sales platform. Because LDS's service portfolio and footprint complements Intermedia's, management of the Company believes that the LDS Acquisition also presents significant synergy realization opportunities. By joining forces with an established operating company with a staff of experienced sales, management and technical personnel, Intermedia expects to expedite its entry into these Southern markets. On November 20, 1997, Intermedia, through Moonlight Acquisition Corp., a wholly-owned subsidiary of Intermedia, entered into a definitive merger agreement with Shared Technologies. The total deemed purchase price for Shared Technologies is estimated to be approximately $640 million, excluding certain transaction expenses and fees relating to certain agreements. In addition, Intermedia agreed to settle certain litigation. As part of the agreement, Intermedia was granted irrevocable options, which together with other common stock of Shared Technologies owned by Intermedia, gives Intermedia control of over 50% of Shared Technologies common stock on a fully diluted basis. Intermedia has commenced a tender offer for four million additional shares of Shared Technologies at $15 per share in cash, which expires on December 26, 1997. Shared Technologies is the nation's largest provider of shared telecommunications services and systems. Through its technical infrastructure and 800 employees, Shared Technologies acts as a single point of contact for business 11 telecommunications services at more than 465 buildings throughout the United States and Canada. For the year ended December 31, 1996 and the nine months ended September 30, 1997, Shared Technologies' revenues were approximately $157.2 million and $141.8 million, respectively, and its EBITDA for such periods were approximately $34.9 million and $33.4 million, respectively. This acquisition is expected to enhance Intermedia's national presence in telecommunications markets, enabling it to provide a bundled offering of local, long distance, data, Internet and systems integration services to Shared Technologies' existing 15,000 business customers. If this acquisition is consummated, the Company will have approximately 160,000 CLEC access lines, making it the third largest independent CLEC in the U.S., serving more than 2,000 buildings. The merger agreement is expected to be consummated during the first quarter of 1998. Consummation of the merger agreement is subject to various customary conditions, including approval by Shared Technologies's stockholders and receipt of necessary regulatory approvals. On July 11, 1997, the Company consummated the final step in the DIGEX Acquisition through the merger of Daylight Acquisition Corp. ("Daylight"), a wholly-owned subsidiary of the Company, with DIGEX. The aggregate consideration for the DIGEX Acquisition, which was funded with the Company's then existing cash reserves, was approximately $160 million. DIGEX, headquartered in suburban Washington, D.C., is a national ISP, which provides a comprehensive range of industrial strength Internet solutions, including high speed dedicated business Internet connectivity, Web site management and private network solutions, primarily to business and government customers. For the nine months ended September 30, 1997, DIGEX's revenues were approximately $33.5 million. The Company is currently evaluating, has made offers with respect to and is engaged in discussions regarding various acquisition opportunities. These acquisitions could be funded by cash (including the proceeds of the October 30 Offerings and the December Offering) and/or the Company's securities. Except as described in this Registration Statement, Intermedia is not a party to any agreement for any material acquisition nor can there be any assurance that any such acquisition will be consummated. Under the terms of the Purchase Agreement with the Initial Purchasers, the Company is not prohibited from issuing equity securities, including common stock, in connection with an acquisition during the 90-day "lock-up" period following the October 30 Offerings. Offerings. On December 18, 1997, the Company contracted with the Initial Purchasers for a private placement (the "December Offering") of $350.0 million of 8 1/2% Senior Notes due 2008 (the "8 1/2% Senior Notes"). The Initial Purchasers were also granted an over-allotment option with respect to $50.0 million of 8 1/2% Notes. On October 30, 1997, the Company completed private placements of the Depositary Shares and the 8 7/8% Notes. The aggregate gross proceeds from the October 30 Offerings (including the subsequent exercise of the over- allotment options with respect to the Depositary Shares and the 8 7/8% Notes in connection therewith) were $460.3 million. In July 1997, the Company completed private placements (the "July 1997 Offerings") of 6,900,000 Depositary Shares (including the exercise of the over-allotment option with respect to such Depositary Shares) (the "Series D Depositary Shares"), each representing a one-hundredth interest in a share of Series D Preferred Stock, and $649.0 million principal amount at maturity of 11/1//4% Notes (including the exercise of the over-allotment option with respect to such Notes). The aggregate gross proceeds from the July 1997 Offerings were approximately $547.3 million. Regulatory Changes. The Telecommunications Act of 1996 (the "1996 Act") and the issuance by the Federal Communications Commission ("FCC") of rules governing local competition, particularly those requiring the interconnection of all networks and the exchange of traffic among the incumbent local exchange carriers ("ILECs") and CLECs, as well as pro- competitive policies already developed by state regulatory commissions, have caused fundamental changes in the structure of the local exchange markets. On July 18, 1997, the U.S. Court of Appeals for the Eighth Circuit issued a final decision vacating the FCC's pricing and "most favored nation" rules, as well as certain other of the FCC's interconnection rules. On October 14, 1997, the Eighth Circuit Court issued an order 12 clarifying its previous decision. In this order, the Court held that ILECs have an obligation under the 1996 Act to offer other carriers access to the ILECs network elements on an unbundled basis, but the ILECs do not have an obligation to recombine those elements for use by other carriers. The FCC and other parties have requested the Supreme Court to review these decisions. These issues also remain subject to scrutiny and oversight by state regulatory commissions. Although the Company is not able to predict the impact of these decisions on future efforts to negotiate interconnection agreements with ILECs, the Company's analysis shows that interconnection arrangements that have been approved or mandated by state regulatory commissions have been consistent with the intent of the 1996 Act and the Company's business plan. These regulatory developments create opportunities for new entrants offering local exchange services to capture a portion of the ILECs' nearly 100% market share. Due to the rapid development and continuing growth of the Company's sales force and its competitive advantages in providing integrated telecommunications services, the Company believes that it is well positioned to capitalize on the new market opportunities emerging in the local exchange market. On May 16, 1997, the FCC released an order that fundamentally restructured the "access charges" that ILECs charge to interexchange carriers and end user customers. The Company believes that the FCC's new access charge rules do not adversely affect the Company's business plan, and that they in fact present significant new opportunities for new entrants, including the Company. Aspects of the access charge order may be changed in the future. Numerous parties have either filed appeals with federal courts or asked the FCC to reconsider portions of its new rules. 13 USE OF PROCEEDS The Company will not receive any proceeds from the sale of the Securities by the Selling Securityholders or the issuance of the Dividend Shares by the Company. DESCRIPTION OF CAPITAL STOCK Intermedia's authorized capital stock consists of 50,000,000 shares of Common Stock, par value $.01 per share, and 2,000,000 shares of Preferred Stock, par value $1.00 per share ("Preferred Stock"). As of November 30, 1997, there were 17,315,317 shares of Common Stock, 323,499.1404 shares of Series B Preferred Stock, 69,000 shares of Series D Preferred Stock and 80,000 shares of Series E Preferred Stock issued and outstanding. On a fully- diluted basis, at that date, the Company had outstanding 32,643,661 shares of Common Stock assuming (a) the exercise of the Public Warrants (defined below), (b) the exercise of all outstanding options issued pursuant to the Company's employee stock option plans and (c) conversions of the Depositary Shares, the Series D Preferred Stock and the Series E Preferred Stock. As of November 30, 1997, the Company has reserved (i) 4,364,410 shares of Common Stock for issuance pursuant to the Company's employee stock option plans, (ii) 350,400 shares of Common Stock for issuance upon exercise of the Public Warrants, (iii) 276,500.8596 shares of Series B Preferred Stock for issuance as dividends on the outstanding shares of Series B Preferred Stock, (iv) 40,000 shares of Series C Preferred Stock for issuance in connection with the Stockholder's Rights Plan, (v) 4,434,448 shares of Common Stock for issuance on conversion of the Series D Preferred Stock, (vi) 1,938,728 shares of Common Stock for issuance as dividends on the outstanding shares of Series D Preferred Stock, (vii) 3,307,425 shares of Common Stock for issuance on conversion of the Series E Preferred Stock and (viii) 933,334 shares of Common Stock for issuance as dividends on the outstanding shares of Series E Preferred Stock. All outstanding shares of Common Stock, Series B Preferred Stock, Series D Preferred Stock and Series E Preferred Stock are fully paid and non-assessable. COMMON STOCK Holders of Common Stock are entitled to one vote for each share held of record on all matters submitted to a vote of the stockholders. Holders of Common Stock do not have cumulative rights, so that holders of more than 50% of the shares of Common Stock are able to elect all of Intermedia's directors eligible for election in a given year. For a description of the classification of the Board, see "-Delaware Law and Certain Provisions of Intermedia's Certificate of Incorporation and Bylaws." Subject to the preferences that may be applicable to any then outstanding Preferred Stock, holders of Common Stock are entitled to receive ratably such dividends, if any, as may be declared from time to time by the Board out of funds legally available therefor. See "-Dividend Restrictions." Upon any liquidation, dissolution or winding up, whether voluntary or involuntary, of Intermedia, holders of Common Stock are entitled to receive pro rata all assets available for distribution to stockholders after payment or provision for payment of the debts and other liabilities of Intermedia and the liquidation preferences of any then outstanding Preferred Stock. There are no preemptive or other subscription rights, conversion rights, or redemption or sinking fund provisions with respect to shares of Common Stock. All outstanding shares of Common Stock are, and all shares of Common Stock to be outstanding upon exercise of the Public Warrants and conversion of the Depositary Shares or shares of Series D Preferred Stock or Series E Preferred Stock will be, fully paid and non-assessable. PREFERRED STOCK The Preferred Stock may be issued at any time or from time to time in one or more classes or series with such designations, powers, preferences, rights, qualifications, limitations and restrictions (including dividend, conversion and voting rights) as may be fixed by the Board, without any further vote or action by the stockholders. As of November 30, 1997, the Company had outstanding 323,499.1404 shares of Series B Preferred Stock (aggregate liquidation preference of approximately $323.5 million). Dividends on the Series B Preferred Stock accumulate at a rate of 13 1/2% of the aggregate liquidation preference thereof and are payable quarterly, in arrears. Dividends are 14 payable in cash or, at the Company's option, by the issuance of additional Series B Preferred Stock having an aggregate liquidation preference equal to the amount of such dividends. The Series B Preferred Stock is subject to mandatory redemption at a liquidation preference of $1,000 per share, plus accumulated and unpaid dividends on March 31, 2009. The Series B Preferred Stock will be redeemable at the option of the Company at any time after March 31, 2002 at rates commencing with 106.75%, declining to 100% on March 31, 2007. The Series B Certificate of Designation contains certain covenants that, among other things, limit the ability of the Company and its subsidiaries to make certain restricted payments, incur additional indebtedness and issue additional preferred stock, pay dividends or make other distributions, repurchase equity interests, conduct certain lines of business or enter into certain mergers and consolidations. In the event of a change of control of the Company, holders of the Series B Preferred Stock have the right to require the Company to purchase their shares of Series B Preferred Stock at a price equal to 101% of the aggregate liquidation preference with respect thereto, plus accumulated and unpaid dividends, if any, to the date of purchase. This description is intended as a summary and is qualified in its entirety by reference to the Series B Certificate of Designation. The Company may, at its option, exchange some or all of the Series B Preferred Stock for the Company's 13 1/2% Senior Subordinated Debentures, due 2009 (the "Exchange Debentures"). The Exchange Debentures would mature on March 31, 2009. Interest on the Exchange Debentures would be payable semi- annually, and could be paid in the form of additional Exchange Debentures at the Company's option. Exchange Debentures would be redeemable by the Company at any time after March 31, 2002 at rates commencing with 106.75%, declining to 100% on March 31, 2007. The Exchange Debentures contain covenants similar to those contained in the Indenture. As of November 30, 1997, the Company had outstanding 69,000 shares of Series D Preferred Stock (aggregate liquidation preference approximately $172.5 million). Dividends on the Series D Preferred Stock accumulate at a rate of 7% of the aggregate liquidation preference thereof and are payable quarterly, in arrears on each January 15, April 15, July 15 and October 15. Dividends are payable in cash or, at the Company's option, by the issuance of shares of Common Stock. The Series D Preferred Stock will be redeemable at the option of the Company at any time on or after July 19, 2000 at rates commencing with 104%, declining to 100% on July 19, 2004. The Series D Preferred Stock is convertible (since October 7, 1997), at the option of the holder, into Common Stock at a conversion price of $38.90 per share of Common Stock, subject to certain adjustments. See "Description of Series E Preferred Stock" for a description of the terms of Series E Preferred Stock. DELAWARE LAW AND CERTAIN PROVISIONS OF INTERMEDIA'S CERTIFICATE OF INCORPORATION AND BYLAWS General. The Certificate of Incorporation and the Bylaws of Intermedia contain certain provisions that could make more difficult the acquisition of Intermedia by means of a tender offer, a proxy contest or otherwise. These provisions are expected to discourage certain types of coercive takeover practices and inadequate takeover bids and to encourage persons seeking to acquire control of Intermedia first to negotiate with Intermedia. Although such provisions may have the effect of delaying, deferring or preventing a change in control of Intermedia, the Company believes that the benefits of increased protection of Intermedia's potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure the Company outweigh the disadvantages of discouraging such proposals because, among other things, negotiation of such proposals could result in an improvement of their terms. The description set forth below is intended as a summary only and is qualified in its entirety by reference to the Certificate of Incorporation and Bylaws of Intermedia. Board of Directors. Intermedia's Certificate of Incorporation provides that (i) the Board be divided into three classes of directors, with each class having a number as nearly equal as possible and with the term of each class expiring in a different year and (ii) the Board shall consist of not less than three nor more than seven members, the exact number to be determined from time to time by the Board. The Board has set the number of directors at four. 15 Subject to any rights of holders of Preferred Stock, a majority of the Board then in office will have the sole authority to fill any vacancies on the Board. Stockholders can remove members of the Board only for cause. Stockholder Action and Special Meetings. Intermedia's Certificate of Incorporation provides that (i) any action required or permitted to be taken by Intermedia's stockholders must be effected at a duly called annual or special meeting of Stockholders and may not be effected by any consent in writing and (ii) the authorized number of directors may be changed only by resolution of the Board. The Company's Bylaws provide that, subject to any rights of holders of any series of Preferred Stock, special meetings of stockholders may be called only by the Chairman of the Board or the President of Intermedia, by a majority of the Board or by stockholders owning shares representing at least a majority of the capital stock of Intermedia issued and outstanding and entitled to vote. Stockholder's Rights Plan. Intermedia's Board of Directors has adopted a Stockholder's Rights Plan, pursuant to which rights to acquire a newly created series of Preferred Stock, exercisable upon the occurrence of certain events, including the acquisition by a person or group of a specified percentage of the Common Stock, were distributed to its stockholders. Anti-Takeover Statute. Subject to certain exceptions, Section 203 of the DGCL prohibits a publicly held Delaware corporation, such as Intermedia, from engaging in any "business combination" with an "interested stockholder" for a three-year period following the date on which such person became an interested stockholder, unless (i) prior to such date, the board of directors of the corporation approved either such business combination or the transaction that resulted in such person becoming an interested stockholder, (ii) upon consummation of the transaction that resulted in such person becoming an interested stockholder, such person owned at least 85% of the voting stock of the corporation outstanding immediately prior to such transaction (excluding certain shares) or (iii) on or subsequent to such date, such business combination is approved by the board of directors of the corporation and by the affirmative vote of at least 66 2/3% of the outstanding voting stock that is not owned by the interested stockholder. A "business combination" includes a merger, asset sale or other transaction resulting in a financial benefit to the interested stockholder. An "interested stockholder" is essentially a person who, together with affiliates and associates, owns (or within the past three years has owned) 15% or more of the corporation's voting stock. It is anticipated that the provisions of Section 203 of the DGCL may encourage any person interested in acquiring Intermedia to negotiate in advance with the Board since the stockholder approval requirement would be avoided if a majority of Intermedia's directors then in office approved either the business combination or the transaction that resulted in such person becoming an interested stockholder. DIVIDEND RESTRICTIONS The terms of the Existing Senior Note Indentures restrict the Company's ability to pay cash dividends on the Series B Preferred Stock. The existing Senior Note Indentures and the Series B Certificate of Designation restrict Intermedia's ability to pay cash dividends on the Common Stock, the Series D Preferred Stock and the Series E Preferred Stock. TRANSFER AGENT AND REGISTRAR The transfer agent and registrar for the Common Stock, Series B Preferred Stock, Series D Preferred Stock and Series E Preferred Stock is Continental Stock Transfer & Trust Company. OUTSTANDING WARRANTS 160,000 warrants (the "Public Warrants"), each to purchase 2.19 shares of Common Stock, at an exercise price of $10.86 per share (subject to anti-dilution adjustments) were issued as part of a June 1995 private placement. The Public Warrants are currently exercisable. Unless exercised, the Public Warrants will expire on June 1, 2000. 16 RESERVATION OF SHARES The Company has authorized and reserved for issuance such number of Common Shares as will be issuable upon the conversion of all Depositary Shares (or all shares of the Series D Preferred Stock and Series E Preferred Stock). Such Common Shares, when issued, will be duly and validly issued, fully paid and non-assessable, free of preemptive rights and free from all taxes, liens, charges and security interests with respect to the issue thereof. REGISTRATION RIGHTS. In addition to the rights granted under the Preferred Stock Registration Rights Agreement, dated October 30, 1997, among the Company and the Initial Purchasers (the "Preferred Stock Registration Rights Agreement"), the Company is a party to several agreements pursuant to which certain stockholders have the right, among other matters, to require the Company to register their shares of Common Stock under the Securities Act under certain circumstances. As a result, upon the effectiveness of this Registration Statement, substantially all of the Company's outstanding shares, other than those held by affiliates, will be transferable without restriction under the Securities Act. 17 DESCRIPTION OF SERIES E PREFERRED STOCK GENERAL The terms of the Series E Preferred Stock are set forth in the Certificate of Designation of Voting Power, Designation Preferences and Relative, Participating, Optional or Other Special Rights and Qualifications, Limitations and Restrictions (the "Certificate of Designation"). The following summary of the Series E Preferred Stock, the Certificate of Designation and the Preferred Stock Registration Rights Agreement is not intended to be complete and is subject to, and qualified in its entirety by reference to, the Company's Certificate of Incorporation, the Certificate of Designation and the Preferred Stock Registration Rights Agreement, including the definitions therein of certain terms used below. Copies of the form of Certificate of Designation and Preferred Stock Registration Rights Agreement are available from the Company, upon request. As used in this Description of Series E Preferred Stock, the term "Company" refers to Intermedia Communications Inc., excluding its Subsidiaries. Certain of the Company's operations are conducted through its Subsidiaries and, therefore, the Company is dependent upon the cash flow of its Subsidiaries to meet its obligations, including its obligations under the Series E Preferred Stock. Any right of the Company to receive assets of any of its Subsidiaries is effectively subordinated to all indebtedness and other liabilities and commitments (including trade payables and lease obligations) of the Company's Subsidiaries. As of September 30, 1997 on a pro forma basis after giving effect to the pending acquisition of Shared Technologies, and the October 30 Offerings and the application of the proceeds therefrom, the aggregate amount of liquidation preference of Senior Securities and indebtedness and other obligations of the Company and its Subsidiaries that would effectively rank senior in right of payment to the obligations of the Company under the Series E Preferred Stock would have been approximately $1.3 billion ($1.7 billion if the December Offering is consummated). See "Risk Factors." Pursuant to the Certificate of Designation, 87,500 shares (including 17,500 shares which the Initial Purchasers had the option to purchase to cover over-allotments) of Series E Preferred Stock with the Liquidation Preference were authorized. Eighty thousand of such shares are issued and outstanding and are fully paid and non-assessable. The Initial Purchasers did not exercise their option to purchase the remaining 7,500 shares. The holders of the Series E Preferred Stock have no preemptive rights. The transfer agent for the Series E Preferred Stock is Continental Stock Transfer & Trust Co. unless and until a successor is selected by the Company (the "Transfer Agent"). RANKING The Series E Preferred Stock, with respect to dividend distributions and distributions upon the liquidation, winding-up and dissolution of the Company, ranks (i) senior to all classes of common stock of the Company and to each other class of capital stock or series of preferred stock established after October 24, 1997 by the Board of Directors, the terms of which do not expressly provide that it ranks senior to or on a parity with the Series E Preferred Stock as to dividend distributions and distributions upon the liquidation, winding-up and dissolution of the Company (collectively referred to with the common stock of the Company as "Junior Securities"); (ii) on a parity with the Series D Preferred Stock, any additional shares of Series D Preferred Stock or Series E Preferred Stock issued by the Company in the future and any other class of capital stock or series of preferred stock issued by the Company established after October 24, 1997 by the Board of Directors, the terms of which expressly provide that such class or series will rank on a parity with the Series E Preferred Stock as to dividend distributions and distributions upon the liquidation, winding- up and dissolution of the Company (collectively referred to as "Parity Securities"); and (iii) junior to the Series B Preferred Stock ($323.5 million aggregate liquidation preference outstanding at November 30, 1997) and to each class of capital stock or series of preferred stock issued by the Company established after October 24, 1997 by the Board of Directors the terms of which expressly provide that such class or series will rank senior to the Series E Preferred Stock as to dividend distributions and distributions upon liquidation, winding-up and dissolution of the Company (collectively referred to as "Senior Securities"). 18 No dividend whatsoever shall be declared or paid upon, or any sum set apart for the payment of dividends upon, any outstanding share of the Series E Preferred Stock with respect to any dividend period unless all dividends for all preceding dividend periods have been declared and paid, or declared and a sufficient sum set apart for the payment of such dividend, upon all outstanding shares of Senior Securities. DIVIDENDS The holders of shares of the Series E Preferred Stock are entitled to receive, when, as and if dividends are declared by the Board of Directors out of funds of the Company legally available therefor, cumulative dividends from October 30, 1997 accruing at the rate per annum of 7% of the Liquidation Preference per share, payable quarterly in arrears on each January 15, April 15, July 15 and October 15, commencing on January 15, 1998 (each, a "Dividend Payment Date"). If any such date is not a Business Day, such payment shall be made on the next succeeding Business Day, to the holders of record as of the next preceding January 1, April 1, July 1 and October 1 (each, a "Record Date"). Dividends will be payable (i) in cash, (ii) by delivery of shares of Common Stock to holders (based upon 95% of the Average Stock Price (as defined below)) or (iii) through any combination of the foregoing. The Company intends to pay dividends in shares of Common Stock on each Dividend Payment Date to the extent that it is unable to pay dividends in cash. If the dividends are paid in shares of Common Stock, the number of shares of Common Stock to be issued on each Dividend Payment Date will be determined by dividing the total dividend to be paid on each share of Series E Preferred Stock by 95% of the average of the high and low sales prices of the Common Stock as reported by the Nasdaq National Market or any national securities exchange upon which the Common Stock is then listed, for each of the ten consecutive trading days immediately preceding the fifth business day preceding the Record Date (the "Average Stock Price"). The Transfer Agent is authorized and directed in the Certificate of Designation to aggregate any fractional shares of Common Stock that are issued as dividends, sell them at the best available price and distribute the proceeds to the holders in proportion to their respective interests therein. The Company will pay the expenses of the Transfer Agent with respect to such sale, including brokerage commissions. In the event the sale by the Transfer Agent of such aggregated fractional interests would be restricted, the Company and the Transfer Agent will agree upon other appropriate arrangements for the cash realization of fractional interests. Dividends payable on the Series E Preferred Stock will be computed on the basis of a 360-day year consisting of twelve 30-day months and will be deemed to accrue on a daily basis. Dividends on the Series E Preferred Stock will accrue whether or not the Company has earnings or profits, whether or not there are funds legally available for the payment of such dividends and whether or not dividends are declared. Dividends will accumulate to the extent they are not paid on the Dividend Payment Date for the period to which they relate. The Certificate of Designation provides that the Company will take all actions required or permitted under the DGCL to permit the payment of dividends on the Series E Preferred Stock, including, without limitation, through the revaluation of its assets in accordance with the DGCL, to make or keep funds legally available for the payment of dividends. No dividend whatsoever shall be declared or paid upon, or any sum set apart for the payment of dividends upon, any outstanding share of the Series E Preferred Stock with respect to any dividend period unless all dividends for all preceding dividend periods have been declared and paid, or declared and a sufficient sum set apart for the payment of such dividend, upon all outstanding shares of Series E Preferred Stock. Unless full cumulative dividends on all outstanding shares of Series E Preferred Stock for all past dividend periods shall have been declared and paid, or declared and a sufficient sum for the payment thereof set apart: (i) no dividend (other than a dividend payable solely in shares of any Junior Securities) shall be declared or paid upon, or any sum set apart for the payment of dividends upon, any shares of Junior Securities; (ii) no other distribution shall be declared or made upon, or any sum set apart for the payment of any distribution upon, any shares of Junior Securities, other than a distribution consisting solely of Junior Securities; (iii) no shares of Junior Securities shall be purchased, redeemed or otherwise acquired or retired for value (excluding an exchange for shares of other Junior Securities) by the Company or any of its Subsidiaries; and (iv) no monies shall be paid into or set apart or made available for a sinking or other like fund for the 19 purchase, redemption or other acquisition or retirement for value of any shares of Junior Securities by the Company or any of its Subsidiaries. Holders of the Series E Preferred Stock will not be entitled to any dividends, whether payable in cash, property or stock, in excess of the full cumulative dividends as herein described. The Existing Senior Notes Indentures contain, and any future credit agreements or other agreements relating to Indebtedness to which the Company becomes a party may contain, restrictions on the ability of the Company to pay dividends on the Series E Preferred Stock. OPTIONAL REDEMPTION The Series E Preferred Stock may not be redeemed at the option of the Company prior to October 18, 2000. The Series E Preferred Stock may be redeemed for cash, in whole or in part, at the option of the Company on or after October 18, 2000, at the redemption prices specified below (expressed as percentages of the Liquidation Preference thereof), in each case, together with accumulated and unpaid dividends (including an amount in cash equal to a prorated dividend for any partial dividend period) and Preferred Stock Liquidated Damages, if any, to the date of redemption, upon not less than 30 nor more than 60 days' prior written notice, if redeemed during the 12-month period commencing on October 18 of each of the years set forth below: Year Percentage ---- ---------- 2000.........................................................104.00% 2001.........................................................103.00% 2002.........................................................102.00% 2003.........................................................101.00% 2004 and thereafter..........................................100.00% No optional redemption may be authorized or made unless, prior to giving the applicable redemption notice, all accumulated and unpaid dividends for periods ended prior to the date of such redemption notice shall have been paid in cash or Common Stock. In the event of partial redemptions of Series E Preferred Stock, the shares to be redeemed will be determined pro rata or by lot, as determined by the Company. CONVERSION RIGHTS Each share of Series E Preferred Stock will be convertible at any time after December 29, 1997, unless previously redeemed, at the option of the holder thereof into Common Stock of the Company, at a conversion rate equal to the Liquidation Preference divided by the conversion price then applicable, except that the right to convert shares of Series E Preferred Stock called for redemption will terminate at the close of business on the business day preceding the redemption date and will be lost if not exercised prior to that time, unless the Company defaults in making the payment due upon redemption. The initial conversion price is $60.47 per share. The conversion price will be subject to adjustment in certain events, including: (i) the payment of dividends (and other distributions) in Common Stock on any class of capital stock of the Company other than the payment of dividends in Common Stock on the Series E Preferred Stock or any other regularly scheduled dividend on any other preferred stock which does not trigger any anti- dilution provisions in any other security; (ii) the issuance to all holders of Common Stock of rights, warrants or options entitling them to subscribe for or purchase Common Stock at less than the current market price (as calculated pursuant to the Certificate of Designation); (iii) subdivisions, combinations and reclassifications of Common Stock; (iv) distributions to all holders of Common Stock of evidences of indebtedness of the Company, shares of any class of capital stock, cash or other assets (including securities, but excluding those dividends, rights, warrants, options and distributions referred to in clauses (i) through (iii) above and dividends and distributions paid in cash out of the retained earnings of the Company, unless the sum of all such cash dividends and distributions made and the amount of cash and the fair market value of other consideration paid in respect of any repurchases of Common Stock by the Company or any of its 20 Subsidiaries, in each case within the preceding 12 months in respect of which no adjustment has been made, exceeds 20% of the product of the then current market price of the Common Stock times the aggregate number of shares of Common Stock outstanding on the record date for such dividend or distribution). No adjustment of the conversion price will be required to be made until cumulative adjustments amount to 1% or more of the conversion price as last adjusted. Notwithstanding the foregoing, no adjustment to the conversion price shall reduce the conversion price below the then applicable par value per share of the Common Stock. In addition to the foregoing adjustments, the Company will be permitted to make such reductions in the conversion price as it considers to be advisable in order that any event treated for federal income tax purposes as a dividend of stock or stock rights will not be taxable to the holders of the Common Stock. In the case of certain consolidations or mergers to which the Company is a party or the transfer of substantially all of the assets of the Company, each share of Series E Preferred Stock then outstanding would become convertible only into the kind and amount of securities, cash and other property receivable upon the consolidation, merger or transfer by a holder of the number of shares of Common Stock into which such share of Series E Preferred Stock might have been converted immediately prior to such consolidation, merger or transfer (assuming such holder of Common Stock failed to exercise any rights of election and received per share the kind and amount receivable per share by a plurality of non-electing shares). The holder of record of a share of Series E Preferred Stock at the close of business on a record date with respect to the payment of dividends on the Series E Preferred Stock will be entitled to receive such dividends with respect to such share of Series E Preferred Stock on the corresponding Dividend Payment Date, notwithstanding the conversion of such share after such Record Date and prior to such Dividend Payment Date. A share of Series E Preferred Stock surrendered for conversion during the period from the close of business on any Record Date for the payment of dividends to the opening of business of the corresponding Dividend Payment Date must be accompanied by a payment in cash, Common Stock or a combination thereof, depending on the method of payment that the Company has chosen to pay the dividend, in an amount equal to the dividend payable on such Dividend Payment Date, unless such share of Series E Preferred Stock has been called for redemption on a redemption date occurring during the period from the close of business on any Record Date for the payment of dividends to the close of business on the business day immediately following the corresponding Dividend Payment Date. The dividend payment with respect to a share of Series E Preferred Stock called for redemption on a date during the period from the close of business on any Record Date for the payment of dividends to the close of business on the business day immediately following the corresponding Dividend Payment Date will be payable on such Dividend Payment Date to the record holder of such share on such Record Date, notwithstanding the conversion of such share after such Record Date and prior to such Dividend Payment Date. No payment or adjustment will be made upon conversion of shares of Series E Preferred Stock for accumulated and unpaid dividends or for dividends with respect to the Common Stock issued upon such conversion. CHANGE OF CONTROL Upon the occurrence of a Preferred Stock Change of Control and subject to restrictions on repurchase contained in the instruments governing Company's outstanding indebtedness and the Series B Preferred Stock Certificate of Designation and subject to the participation of any Parity Securities, the Company will be required to make an offer (a "Preferred Stock Change of Control Offer") to repurchase all or any part of each holder's Series E Preferred Stock at an offer price in cash equal to 100% of the aggregate Liquidation Preference thereof, plus accumulated and unpaid dividends and Preferred Stock Liquidated Damages, if any, thereon to the date of repurchase. Within 30 days following a Preferred Stock Change of Control, the Company will mail a notice to each holder of Series E Preferred Stock describing the transaction that constitutes the Preferred Stock Change of Control and offering to repurchase the Series E Preferred Stock pursuant to the procedures required by the Certificate of Designation and described in such notice; provided that, prior to complying with the provisions of this covenant, but in any event within 90 days following a Preferred Stock Change of Control, the Company will either repay all outstanding indebtedness or obtain the requisite consents, if any, under all agreements governing outstanding indebtedness to permit the repurchase of the Series E 21 Preferred Stock required by this covenant. The Company will comply with the requirements of the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of the Series E Preferred Stock as a result of a Preferred Stock Change of Control. A "Preferred Stock Change of Control" will be deemed to have occurred upon the occurrence of any of the following: (a) the sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole, (b) the adoption of a plan relating to the liquidation or dissolution of the Company, (c) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any "person" or "group" (as such terms are used in Section 13(d)(3) of the Exchange Act) becomes the "beneficial owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly through one or more intermediaries, of more than 50% of the voting power of the outstanding voting stock of the Company, unless (i) the closing price per share of Common Stock for any five trading days within the period of ten consecutive trading days ending immediately after the announcement of such Preferred Stock Change of Control equals or exceeds 105% of the conversion price of the Series E Preferred Stock in effect on each such trading day or (ii) at least 90% of the consideration in the transaction or transactions constituting a Preferred Stock Change of Control pursuant to clause (c) consists of shares of Common Stock traded or to be traded immediately following such Preferred Stock Change of Control on a national securities exchange or the Nasdaq National Market and, as a result of such transaction or transactions, the Series E Preferred Stock becomes convertible solely into such Common Stock (and any rights attached thereto), or (d) the first day on which more than a majority of the members of the Board of Directors of the Company are not Preferred Stock Continuing Directors; provided, however, that a transaction in which the Company becomes a subsidiary of another entity shall not constitute a Preferred Stock Change of Control if (i) the stockholders of the Company immediately prior to such transaction "beneficially own" (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly through one or more intermediaries, at least a majority of the voting power of the outstanding voting stock of the Company immediately following the consummation of such transaction and (ii) immediately following the consummation of such transaction, no "person" or "group" (as such terms are defined above), other than such other entity (but including holders of equity interests of such other entity), "beneficially owns" (as such term is defined above), directly or indirectly through one or more intermediaries, more than 50% of the voting power of the outstanding voting stock of the Company. "Preferred Stock Continuing Directors" means, as of any date of determination, any member of the Board of Directors of the Company who (a) was a member of the Board of Directors on the date of original issuance of the Series E Preferred Stock or (b) was nominated for election to the Board of Directors with the approval of, or whose election was ratified by, at least two-thirds of the Preferred Stock Continuing Directors who were members of the Board of Directors at the time of such nomination or election. Except as described above with respect to a Preferred Stock Change of Control, the Certificate of Designation does not contain provisions that permit the holders of the Series E Preferred Stock to require that the Company repurchase or redeem the Series E Preferred Stock in the event of a takeover, recapitalization or similar transaction. In addition, the Company could enter into certain transactions, including acquisitions, refinancings or other recapitalization, that could affect the Company's capital structure or the value of the Series E Preferred Stock or the Common Stock, but that would not constitute a Preferred Stock Change of Control. The Existing Senior Notes or other indebtedness and the Series B Preferred Stock could restrict the Company's ability to repurchase the Series E Preferred Stock upon a Preferred Stock Change of Control. In the event a Preferred Stock Change of Control occurs at a time when the Company is prohibited from repurchasing the Series E Preferred Stock, the Company could either (i) repay in full or refinance all such outstanding indebtedness or Preferred Stock or (ii) obtain the requisite consents, if any, under all agreements governing outstanding indebtedness or Preferred Stock to permit the repurchase of Series E Preferred Stock required by this covenant. The Company must first comply with the covenants in its outstanding indebtedness or take the actions described in the preceding sentence before it will be required to repurchase shares of Series E Preferred Stock in the event of a Preferred Stock Change of Control; provided, that if the Company fails to repurchase shares of Series E Preferred Stock, the sole remedy to holders of 22 Series E Preferred Stock will be the voting rights arising from a Voting Rights Triggering Event. Moreover, the Company will not repurchase or redeem any Series E Preferred Stock pursuant to this Preferred Stock Change of Control provision prior to the Company's repurchase of the Series B Preferred Stock pursuant to the change of control covenants in the Series B Preferred Stock. As a result of the foregoing, a holder of the Series E Preferred Stock may not be able to compel the Company to purchase the Series E Preferred Stock unless the Company is able at the time to refinance all such indebtedness and the Series B Preferred Stock. See "Risk Factors-Business Combinations; Change of Control." The Company will not be required to make a Preferred Stock Change of Control Offer to the holders of Series E Preferred Stock upon a Preferred Stock Change of Control if a third party makes the Preferred Stock Change of Control Offer described above in the manner, at the times and otherwise in compliance with the requirements set forth in the Certificate of Designation applicable to a Preferred Stock Change of Control Offer made by the Company and purchases all shares of Series E Preferred Stock validly tendered and not withdrawn under such Preferred Stock Change of Control Offer. VOTING RIGHTS Holders of record of shares of the Series E Preferred Stock have no voting rights, except as required by law and as provided in the Certificate of Designation. The Certificate of Designation provides that upon (a) the accumulation of accrued and unpaid dividends on the outstanding Series E Preferred Stock in an amount equal to six quarterly dividends (whether or not consecutive) or (b) the failure of the Company to make a Preferred Stock Change of Control Offer or to repurchase all of the Series E Preferred Stock tendered in a Preferred Stock Change of Control Offer (each of the events described in clauses (a) and (b) being referred to herein as a "Voting Rights Triggering Event"), then the holders of a majority of the outstanding shares of Series E Preferred Stock voting together with any other subsequently issued Parity Securities then entitled to voting rights will be entitled to elect such number of members to the Board of Directors of the Company constituting at least 20% of the then existing Board of Directors before such election (rounded to the nearest whole number), provided, however, that such number shall be no less than one nor greater than two, and the number of members of the Company's Board of Directors will be immediately and automatically increased by one or two, as the case may be. Voting rights arising as a result of a Voting Rights Triggering Event will continue until such time as all dividends in arrears on the Series E Preferred Stock are paid in full and all other Voting Rights Triggering Events have been cured or waived, at which time the term of office of any such members of the Board of Directors so elected shall terminate and such directors shall be deemed to have resigned. In addition, the Certificate of Designation provides that the Company will not authorize any class of Senior Securities or any obligation or security convertible or exchangeable into or evidencing a right to purchase shares of any class or series of Senior Securities, without the approval of holders of at least a majority of the shares of Series E Preferred Stock then outstanding, voting or consenting, as the case may be, as one class. The Certificate of Designation also provides that the Company may not amend the Certificate of Designation so as to affect adversely the specified rights, preferences, privileges or voting rights of holders of shares of the Series E Preferred Stock or authorize the issuance of any additional shares of Series E Preferred Stock, without the approval of the holders of at least a majority of the then outstanding shares of Series E Preferred Stock voting or consenting, as the case may be, as one class; provided, however, that the Company may not amend the Preferred Stock Change of Control provisions of the Certificate of Designation (including the related definitions) without the approval of the holders of at least 66 2/3% of the then outstanding shares of Series E Preferred Stock voting or consenting, as the case may be, as one class. The Certificate of Designation also provides that, except as set forth above with respect to Senior Securities, (a) the creation, authorization or issuance of any shares of Junior Securities, Parity Securities or Senior Securities or (b) the increase or decrease in the amount of authorized capital stock of any class, including any preferred stock, shall not require the consent of the holders of Series E Preferred Stock and shall not be deemed to affect adversely the rights, preferences, privileges, special rights or voting rights of holders of shares of Series E Preferred Stock. The consent of the holders 23 of Series E Preferred Stock will not be required for the Company to authorize, create (by way of reclassification or otherwise) or issue any Parity Securities or any obligation or security convertible or exchangeable into or evidencing a right to purchase, shares of any class or series of Parity Securities. MERGER, CONSOLIDATION AND SALE OF ASSETS Without the vote or consent of the holders of a majority of the then outstanding shares of Series E Preferred Stock, the Company may not consolidate or merge with or into, or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its assets to, any person unless (a) the entity formed by such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made (in any such case, the "resulting entity") is a corporation organized and existing under the laws of the United States or any State thereof or the District of Columbia; (b) if the Company is not the resulting entity, the Series E Preferred Stock is converted into or exchanged for and becomes shares of such resulting entity, having in respect of such resulting entity the same (or more favorable) powers, preferences and relative, participating, optional or other special rights thereof that the Series E Preferred Stock had immediately prior to such transaction; and (c) immediately after giving effect to such transaction, no Voting Rights Triggering Event has occurred and is continuing. The resulting entity of such transaction shall thereafter be deemed to be the "Company" for all purposes of the Certificate of Designation. LIQUIDATION RIGHTS Upon any voluntary or involuntary liquidation, dissolution or winding-up of the Company or reduction or decrease in its capital stock resulting in a distribution of assets to the holders of any class or series of the Company's capital stock, each holder of shares of the Series E Preferred Stock will be entitled to payment out of the assets of the Company available for distribution of an amount equal to the Liquidation Preference per share of Series E Preferred Stock held by such holder, plus accrued and unpaid dividends and Preferred Stock Liquidated Damages, if any, to the date fixed for liquidation, dissolution, winding-up or reduction or decrease in capital stock, before any distribution is made on any Junior Securities, including, without limitation, Common Stock. After payment in full of the Liquidation Preference and all accrued dividends and Preferred Stock Liquidated Damages, if any, to which holders of Series E Preferred Stock are entitled, such holders will not be entitled to any further participation in any distribution of assets of the Company. If, upon any voluntary or involuntary liquidation, dissolution or winding-up of the Company, the amounts payable with respect to the Series E Preferred Stock and all other Parity Securities are not paid in full, the holders of the Series E Preferred Stock and the Parity Securities will share equally and ratably in any distribution of assets of the Company in proportion to the full liquidation preference and accumulated and unpaid dividends and Preferred Stock Liquidated Damages, if any, to which each is entitled. However, neither the voluntary sale, conveyance, exchange or transfer (for cash, shares of stock, securities or other consideration) of all or substantially all of the property or assets of the Company nor the consolidation or merger of the Company with or into one or more persons will be deemed to be a voluntary or involuntary liquidation, dissolution or winding-up of the Company or reduction or decrease in capital stock, unless such sale, conveyance, exchange or transfer shall be in connection with a liquidation, dissolution or winding-up of the business of the Company or reduction or decrease in capital stock. REPORTS The Certificate of Designation provides that the Company will file all annual and quarterly reports and the information, documents, and other reports that the Company is required to file with the Commission pursuant to Section 13(a) or 15(d) of the Exchange Act ("SEC Reports") with the Transfer Agent within 15 days after it files them with the Commission. In the event the Company is not required or shall cease to be required to file SEC Reports, pursuant to the Exchange Act, the Company will nevertheless continue to file such reports with the Commission (unless the Commission will not accept such a filing). Whether or not required by the Exchange Act to file SEC Reports with the Commission, so long as any Series E Preferred Stock are outstanding, the Company will furnish copies of the SEC Reports to the holders of Series E Preferred Stock at the time the Company is required to make such information available to the Transfer Agent and to investors who request it in writing. In addition, the Company has agreed that, 24 for so long as any shares of Series E Preferred Stock remain outstanding, it will furnish to the holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. REGISTRATION RIGHTS; LIQUIDATED DAMAGES Pursuant to the Preferred Stock Registration Rights Agreement, the Company agreed to file a shelf registration statement (the "Shelf Registration Statement") with the Commission covering resales of Preferred Stock Transfer Restricted Securities (as defined below) by holders thereof (who satisfied certain conditions relating to the provision of information to the registrant) on or prior to December 29, 1997, and to use its reasonable best efforts to cause such shelf registration statement to become effective on or prior to 120 days after such date. "Preferred Stock Transfer Restricted Securities" for this purpose, means each Depositary Share, each share of Series E Preferred Stock and each Common Share until (a) the date on which such security has been effectively registered under the Securities Act and disposed of in accordance with the Shelf Registration Statement or (b) the date on which such security is distributed to the public pursuant to Rule 144 under the Securities Act or may be distributed to the public pursuant to Rule 144(k) under the Securities Act. The Registration Statement of which this Prospectus forms a part constitutes the Shelf Registration statement. The Company is obligated to use its best efforts to maintain the effectiveness of the Shelf Registration Statement for a period ending on the earlier of October 30, 1999 and the date when all Preferred Stock Transfer Restricted Securities covered by the Shelf Registration Statement are sold. If the Shelf Registration Statement ceases to be effective or usable for any period of ten consecutive days or for any 20 days in any 180-day period in connection with resales of Preferred Stock Transfer Restricted Securities (provided, that the Company will have the option of suspending the effectiveness of the Shelf Registration Statement, without becoming obligated to pay Preferred Stock Liquidated Damages for periods of up to a total of 60 days in any calendar year if the Board of Directors of the Company determines that compliance with the disclosure obligations necessary to maintain the effectiveness of the Shelf Registration Statement at such time could reasonably be expected to have an adverse effect on the Company or a pending corporate transaction) (a "Registration Default"), then the Company will pay to each holder of Preferred Stock Transfer Restricted Securities liquidated damages ("Preferred Stock Liquidated Damages") at a rate of 0.25% per year of the Liquidation Preference of the Series E Preferred Stock constituting Preferred Stock Transfer Restricted Securities, which shall accrue from the date of the Registration Default until such Registration Default is cured. All accrued Preferred Stock Liquidated Damages will be paid in shares of Common Stock valued at the Average Stock Price by the Company on each Dividend Payment Date specified in the Certificate of Designation. Following the cure of all Registration Defaults, the accrual of Preferred Stock Liquidated Damages will cease. 25 DESCRIPTION OF DEPOSITARY SHARES Each Depositary Share represents a one-hundredth interest in a share of Series E Preferred Stock deposited under the Deposit Agreement ("Deposit Agreement"), entered into among Intermedia, Continental Stock Transfer & Trust Company, as depositary agent ("Continental"), and the holders from time to time of Depositary Receipts issued thereunder. Subject to the terms of the Deposit Agreement, each owner of a Depositary Share is entitled proportionately to all of the rights and preferences of the shares of Series E Preferred Stock represented thereby (including dividend, voting, redemption and liquidation rights) contained in the Company's Certificate of Incorporation and the Certificate of Designation and summarized above under "Description of Series E Preferred Stock." The Company does not expect that there will be any public trading market for the Series E Preferred Stock except as represented by the Depositary Shares. The Depositary Shares are evidenced by depositary receipts issued pursuant to the Deposit Agreement ("Depositary Receipts"). The following description of Depositary Shares does not purport to be complete and is subject to, and qualified in its entirety by, the provisions of the Deposit Agreement (which contains the form of Depositary Receipt), a copy of which is available from the Company, upon request. ISSUANCE OF DEPOSITARY RECEIPTS The Series E Preferred Stock was deposited with Continental immediately preceding the October 30 Offerings, and Continental in turn executed and delivered the Depositary Receipts to the Company. The Company delivered the Depositary Receipts to the Initial Purchasers. WITHDRAWAL OF SERIES E PREFERRED STOCK Upon surrender of the Depositary Receipts at the corporate trust office of Continental, the owner of the Depositary Shares evidenced thereby is entitled to delivery at such office of the number of whole shares of Series E Preferred Stock represented by such Depositary Shares. Owners of Depositary Shares are entitled to receive only whole shares of Series E Preferred Stock on the basis of one share of Series E Preferred Stock for each one hundred Depositary Shares. In no event will fractional shares of Series E Preferred Stock (or cash in lieu thereof) be distributed by Continental. If the Depositary Receipts delivered by the holder evidence a number of Depositary Shares in excess of the number of Depositary Shares representing the number of whole shares of Series E Preferred Stock to be withdrawn, Continental will deliver to such holder at the same time a new Depositary Receipt evidencing such excess number of Depositary Shares. The Company has not applied and does not intend to apply for the listing of the Depositary Shares or the Series E Preferred Stock on any securities exchange or for quotation through the Nasdaq National Market. CONVERSION AND CALL PROVISION Conversion at the Option of Holder. As described under "Description of Series E Preferred Stock- Conversion Rights," the Series E Preferred Stock may be converted, in whole or in part, into shares of Common Stock at the option of the holders of Series E Preferred Stock at any time after December 29, 1997, unless previously redeemed. The Depositary Shares held by any holder may, at the option of such holders, be converted in whole or from time to time in part (but only in lots of 100 Depositary Shares or integral multiples thereof), into shares of Common Stock upon the same terms and conditions as the Series E Preferred Stock, except that the number of shares of Common Stock received upon conversion of each Depositary Share will be equal to the number of shares of Common Stock received upon conversion of one share of Series E Preferred Stock divided by one hundred. To effect such an optional conversion, a holder of Depositary Shares must deliver Depositary Receipts evidencing the Depositary Shares to be converted, together with a written notice of conversion and a proper assignment of the Depositary Receipts to the Company or in blank, to Continental or its agent. A Depositary Share surrendered for conversion during the period 26 from the close of business on any Record Date for the payment of dividends to the opening of business of the corresponding Dividend Payment Date must be accompanied by a payment in cash, Common Stock or a combination thereof, depending on the method of payment that the Company has chosen to pay the dividend, in an amount equal to the dividend payable on such Dividend Payment Date, unless such Depositary Share has been called for redemption on a redemption date occurring during the period from the close of business on any Record Date for the payment of dividends to the close of business on the Business Day immediately following the corresponding Dividend Payment Date. The dividend payment with respect to a Depositary Share called for redemption on a date during the period from the close of business on any Record Date for the payment of dividends to the close of business on the Business Day immediately following the corresponding Dividend Payment Date will be payable on such Dividend Payment Date to the record holder of such share on such Record Date, notwithstanding the conversion of such share after such Record Date and prior to such Dividend Payment Date. Each optional conversion of Depositary Shares shall be deemed to have been effected immediately before the close of business on the date on which the foregoing requirements shall have been satisfied. If only a portion of the Depositary Shares evidenced by a Depositary Receipt is to be converted, a new Depositary Receipt or Receipts will be issued for any Depositary Shares not converted. No fractional shares of Common Stock will be issued upon conversion of Depositary Shares, and, if such conversion would otherwise result in a fractional share of Common Stock being issued, the number of shares of Common Stock to be issued upon such conversion shall be rounded up to the nearest whole share. After the date fixed for conversion or redemption, the Depositary Shares so converted or called for redemption will no longer be deemed to be outstanding and all rights of the holders of such Depositary Shares will cease, except the holder of such Depositary Shares shall be entitled to receive any money or other property to which the holders of such Depositary Shares were entitled upon such conversion or redemption, upon surrender to Continental of the Depositary Receipt or Receipts evidencing such Depositary Shares. DIVIDENDS AND OTHER DISTRIBUTIONS Continental will distribute all dividends or other distributions in respect of the Series E Preferred Stock to the record holders of Depositary Receipts in proportion to the number of Depositary Shares owned by such holders. See "Description of Series E Preferred Stock - Dividends." The amount distributed in any of the foregoing cases will be reduced by any amount required to be withheld by the Company or Continental on account of taxes. RECORD DATE Whenever (i) any dividend or other distribution shall become payable, any distribution shall be made, or any rights, preferences or privileges shall be offered with respect to the Series E Preferred Stock, or (ii) Continental shall receive notice of any meeting at which holders of Series E Preferred Stock are entitled to vote or of which holders of Series E Preferred Stock are entitled to notice, or of any election on the part of the Company to call for redemption any Series E Preferred Stock, Continental shall in each such instance fix a record date (which shall be the same date as the record date for the Series E Preferred Stock) for the determination of the holders of Depositary Receipts (x) who shall be entitled to receive such dividend, distribution, rights, preference or privileges or the net proceeds of the sale thereof, (y) who shall be entitled to give instructions for the exercise of voting rights at any such meeting or to receive notice of such meeting, or (z) who shall be subject to such redemption, subject to the provisions of the Deposit Agreement. 27 VOTING OF DEPOSITARY SHARES Holders of record of Depositary Shares have no voting rights, except as required by law and as provided in the Certificate of Designation in respect of the Series E Preferred Stock, as described under "Description of Series E Preferred Stock - Voting Rights." AMENDMENT AND TERMINATION OF DEPOSIT AGREEMENT The form of Depositary Receipts and any provision of the Deposit Agreement may at any time be amended by agreement between the Company and Continental. However, any amendment that imposes any fees, taxes or other charges payable by holders of Depositary Receipts (other than taxes and other governmental charges, fees and other expenses payable by such holders as stated under "Charges of Continental"), or that otherwise prejudices any substantial existing right of holders of Depositary Receipts, will not take effect as to outstanding Depositary Receipts until the expiration of 90 days after notice of such amendment has been mailed to the record holders of outstanding Depositary Receipts. Every holder of Depositary Receipts at the time any such amendment becomes effective shall be deemed to consent and agree to such amendment and to be bound by the Deposit Agreement, as so amended. In no event may any amendment impair the right of any owner of Depositary Shares, subject to the conditions specified in the Deposit Agreement, upon surrender of the Depositary Receipts evidencing such Depositary Shares, to receive Series E Preferred Stock or, upon conversion of the Series E Preferred Stock represented by the Depositary Receipts, to receive shares of Common Stock, and in each case any money or other property represented thereby, except in order to comply with mandatory provisions of applicable law. Whenever so directed by the Company, Continental will terminate the Deposit Agreement after mailing notice of such termination to the record holders of all Depositary Receipts then outstanding at least 30 days before the date fixed in such notice for such termination. Continental may likewise terminate the Deposit Agreement if at any time 45 days shall have expired after Continental shall have delivered to the Company a written notice of its election to resign and a successor depositary shall not have been appointed and accepted its appointment. If any Depositary Receipts remain outstanding after the date of termination, Continental thereafter will discontinue the transfer of Depositary Receipts, will suspend the distribution of dividends to the holders thereof, and will not give any further notices (other than notice of such termination) or perform any further acts under the Deposit Agreement except as provided below and except that Continental will continue (i) to collect dividends on the Series E Preferred Stock and any other distributions with respect thereto and (ii) to deliver the Series E Preferred Stock together with such dividends and distributions and the net proceeds of any sales or rights, preferences, privileges or other property, without liability for interest thereon, in exchange for Depositary Receipts surrendered. At any time after the expiration of two years from the date of termination, Continental may sell the Series E Preferred Stock then held by it at public or private sale, at such place or places and upon such terms as it deems proper and may thereafter hold the net proceeds of any such sale, together with any money and other property then held by it, without liability for interest thereon, for the pro rata benefit of the holders of Depositary Receipts which have not been surrendered. The Company does not intend to terminate the Deposit Agreement or to permit the resignation of Continental without appointing a successor depositary. CHARGES OF CONTINENTAL The Company will pay all charges of Continental including the distribution of information to the holders of Depositary Receipts with respect to matters on which Series E Preferred Stock are entitled to vote, withdrawals of the Series E Preferred Stock by the holders of Depositary Receipts or redemption or conversion of the Depositary Receipts, except for taxes (including transfer taxes, if any) and other governmental charges and such other charges as are provided in the Deposit Agreement to be at the expense of the holders of Depositary Receipts or persons depositing Series E Preferred Stock. 28 GENERAL Continental will make available for inspection by holders of Depositary Receipts at its corporate trust office all reports and communications from the Company that are delivered to Continental and made generally available to the holders of the Series E Preferred Stock. Neither Continental nor the Company will be liable if it is prevented or delayed by law or any circumstance beyond its control from or in performing its obligations under the Deposit Agreement. FORM AND DENOMINATION Global Shares; Book-Entry Form. Depositary Shares sold in offshore transactions in reliance on Regulation S ("Regulation S") under the Securities Act will initially be represented by one or more global certificates in definitive, fully registered form (the "Regulation S Temporary Global Certificate") and will be deposited with the Trustee as custodian for, and registered in the name of, Cede & Co., as nominee of The Depository Trust Company (the "Depositary") (such nominee being referred to herein as the "Global Security Holder"). On or prior to the end of the 40 day restricted period (the "Restricted Period") within the meaning of Regulation S, beneficial interests in Depositary Shares sold in offshore transactions in reliance on Regulation S may only be held through the Regulation S Temporary Global Certificate, held by the Depositary. Upon the conclusion of the Restricted Period, interests in the Regulation S Temporary Global Certificate may be transferred for interests in a permanent Regulation S global certificate (the "Regulation S Global Certificate") or otherwise as provided below. Shares of Depositary Shares sold in reliance on Rule 144A or to other Accredited Investors will be evidenced initially by one or more global certificates (the "Restricted Global Certificate" and, together with the Regulation S Global Certificate, the "Depositary Share Global Certificate") which will be deposited with, or on behalf of, the Depositary and registered in the name of Cede & Co., as nominee of the Depositary (the "Global Certificate Holder"). Except as set forth below, record ownership of the Depositary Share Global Certificate may be transferred, in whole or in part, only to another nominee of the Depositary or to a successor of the Depositary or its nominee. Owners of a beneficial interest in the Depositary Share Global Certificate may hold their interest in the Depositary Share Global Certificate directly through the Depositary if such holder is a Participant in the Depositary or indirectly through organizations that are Participants in the Depositary. Persons who are not Participants may beneficially own interests in the Depositary Share Global Certificate held by the Depositary only through Participants or certain banks, brokers, dealers, trust companies and other parties that clear though or maintain a custodial relationship with a Participant, either directly or indirectly. So long as Cede & Co., as the nominee of the Depositary, is the registered owner of the Depositary Share Global Certificate, Cede & Co. for all purposes will be considered the sole holder of the Depositary Share Global Certificate. Owners of beneficial interest in the Depositary Share Global Certificate will be entitled to have certificates registered in their names and to receive physical delivery of certificates in definitive form (the "Definitive Securities"). Payment of dividends on and any redemption price with respect to the Depositary Share Global Certificate will be made to the Global Certificate Holder, as registered owner of the Depositary Share Global Certificate, by wire transfer of immediately available funds on each Dividend Payment Date or redemption date, as applicable. Neither the Company nor the Transfer Agent will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in the Depositary Share Global Certificate or for maintaining, supervising or reviewing any records relating to such beneficial ownership interest. The Company has been informed by the Depositary that, with respect to any payment of dividends on, or the redemption price with respect to, the Depositary Share Global Certificate, the Depositary's practice is to credit Participants' accounts on the payment date therefor, with payments in amounts proportionate to their respective beneficial interests in the Depositary Shares represented by the Depositary Share Global Certificate as shown on the 29 records of the Depositary, unless the Depositary has reason to believe that it will not receive payment on such payment date. Payments by Participants to owners of beneficial interests in the Depositary Shares represented by the Depositary Share Global Certificate held through such Participants will be the responsibility of such Participants, as is now the case with securities held for the accounts of customers registered in "street name." Transfers between Participants will be effected in the ordinary way in accordance with the Depositary's rules and will be settled in immediately available funds. The laws of some states require that certain persons take physical delivery of securities in definitive form. Consequently, the ability to transfer beneficial interests in the Depositary Share Global Certificate to such persons may be limited. Because the Depositary can only act on behalf of Participants, who in turn act on behalf of Indirect Participants and certain banks, the ability of a person having a beneficial interest in the Depositary Shares represented by the Depositary Share Global Certificate to pledge such interest to persons or entities that do not participate in the Depositary system, or otherwise take actions in respect of such interest, may be affected by the lack of a physical certificate evidencing such interest. Neither the Company nor the Transfer Agent will have responsibility for the performance of the Depositary or its Participants or Indirect Participants of their respective obligations under the rules and procedures governing their operations. The Depositary has advised the Company that it will take any action permitted to be taken by a holder of Depositary Shares (including, without limitation, the presentation of Depositary Shares for exchange) only at the direction of one or more Participants to whose account with the Depositary interests in the Depositary Share Global Certificate are credited, and only in respect of the Depositary Shares represented by the Depositary Share Global Certificate as to which such Participant or Participants has or have given such direction. The Depositary has also advised the Company that the Depositary is a limited purpose trust company organized under the laws of the State of New York, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the Uniform Commercial Code and a "clearing agency" registered pursuant to the provisions of Section 17A of the Exchange Act. The Depositary was created to hold securities for its Participants and to facilitate the clearance and settlement of securities transactions between Participants through electronic book-entry changes to accounts of its Participants, thereby eliminating the need for physical movement of certificates. Participants include securities brokers and dealers, banks, trust companies and clearing corporations and may include certain other organizations such as the Initial Purchasers. Certain of such Participants (or their representatives), together with other entities, own the Depositary. Indirect access to the Depositary system is available to others such as banks, brokers, dealers and trust companies that clear through, or maintain a custodial relationship with, a Participant, either directly or indirectly. Although the Depositary has agreed to the foregoing procedures in order to facilitate transfers of interests in the Depositary Share Global Certificate among Participants, it is under no obligation to perform or continue to perform such procedures, and such procedures may be discontinued at any time. If the Depositary is at any time unwilling or unable to continue as depositary and a successor depositary is not appointed by the Company within 90 days, the Company will cause the Depositary Shares to be issued in definitive form in exchange for the Depositary Share Global Certificate. Certificated Depositary Shares. Investors in the Depositary Shares may request that Definitive Securities be issued in exchange for Depositary Shares represented by the Depositary Share Global Certificate. Furthermore, Definitive Securities may be issued in exchange for Depositary Shares represented by the Depositary Share Global Certificate if no successor depositary is appointed by the Company as set forth above. Unless determined otherwise by the Company in accordance with applicable law, Definitive Securities issued upon transfer or exchange of beneficial interests in Depositary Shares represented by the Depositary Share Global Certificate will bear a legend setting forth transfer restrictions under the Securities Act. Any request for the transfer of Definitive Securities bearing the legend, or for removal of the legend from Definitive Securities, must be accompanied by satisfactory evidence, in the form of an opinion of counsel, that such transfer complies with the Securities Act or 30 that neither the legend nor the restrictions on transfer set forth therein are required to ensure compliance with the provisions of the Securities Act, as the case may be. 31 CERTAIN FEDERAL INCOME TAX CONSEQUENCES The following discussion summarizes the material United States federal income tax considerations generally applicable to persons acquiring the Depositary Shares, but does not purport to be a complete analysis of all potential consequences. The discussion is based upon the Internal Revenue Code of 1986, as amended (the "Code"), Treasury regulations, Internal Revenue Service ("IRS") rulings and judicial decisions now in effect, all of which are subject to change at any time by legislative, judicial or administrative action. Any such changes may be applied retroactively in a manner that could adversely affect a holder of the Depositary Shares and Common Stock. The discussion assumes that the holders of the Depositary Shares and Common Stock will hold them as "capital assets" within the meaning of Section 1221 of the Code. The discussion is not binding on the IRS or the courts. The Company has not sought and will not seek any rulings from the IRS with respect to the positions of the Company discussed herein, and there can be no assurance that the IRS will not take a different position concerning the tax consequences of the purchase, ownership or disposition of the Depositary Shares or Common Stock or that any such position would not be sustained. The tax treatment of a holder of the Depositary Shares and Common Stock may vary depending on such holder's particular situation or status. Certain holders (including S corporations, insurance companies, tax-exempt organizations, financial institutions, broker-dealers, taxpayers subject to alternative minimum tax and persons holding Depositary Shares or Common Stock as part of a straddle, hedging or conversion transaction) may be subject to special rules not discussed below. The following discussion does not consider all aspects of United States federal income tax that may be relevant to the purchase, ownership and disposition of the Depositary Shares and Common Stock by a holder in light of such holder's personal circumstances. In addition, the discussion does not consider the effect of any applicable foreign, state, local or other tax laws, or estate or gift tax considerations. PERSONS CONSIDERING THE PURCHASE OF THE DEPOSITARY SHARES SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE UNITED STATES FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE, LOCAL, OR FOREIGN TAXING JURISDICTION. For purposes of this discussion, a "U.S. Holder" means a citizen or resident of the United States, a corporation, partnership or other entity created or organized in the United States or under the laws of the United States or of any political subdivision thereof, an estate whose income is includible in gross income for United States federal income tax purposes regardless of its source or a trust, if a U.S. court is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust. A "Non-U.S. Holder" means a holder who is not a U.S. Holder. INTRODUCTION Holders of Depositary Shares will be treated for United States federal income tax purposes as if they were owners of the Series E Preferred Stock represented by such Depositary Shares. Accordingly, holders of Depositary Shares will recognize the items of income, gain, loss and deduction that they would recognize if they directly held the Series E Preferred Stock. References in this "Certain Federal Income Tax Consequences" section to holders of Series E Preferred Stock include holders of Depositary Shares, and references to Depositary Shares include Series E Preferred Stock. 32 TAX CONSEQUENCES TO U.S. HOLDERS DISTRIBUTIONS ON DEPOSITARY SHARES AND COMMON STOCK A distribution on the Depositary Shares, whether paid in cash or in shares of Common Stock, or a cash distribution on Common Stock will be taxable to the U.S. Holder as ordinary dividend income to the extent that the amount of the distribution (i.e., the amount of cash and/or the fair market value of the Common Stock on the date of distribution) does not exceed the Company's current or accumulated earnings and profits allocable to such distribution (as determined for federal income tax purposes). To the extent that the amount of the distribution exceeds the Company's current or accumulated earnings and profits allocable to such distribution, the distribution will be treated as a return of capital, thus reducing the holder's adjusted tax basis in the Depositary Shares or Common Stock with respect to which such distribution is made. The amount of any such excess distribution that exceeds the U.S. Holder's adjusted tax basis in the Depositary Shares or Common Stock will be taxed as capital gain and will be long-term capital gain if the U.S. Holder's holding period for the Depositary Shares or Common Stock exceeds one year. The most favorable tax rate on long-term capital gains of non-corporate holders (20%) will not be available unless the holding period exceeds 18 months. A U.S. Holder's initial tax basis in Common Stock received as a distribution on the Depositary Shares will equal the fair market value of the Common Stock on the date of the distribution. The holding period for the Common Stock will commence on the day following the distribution. There can be no assurance that the Company will have sufficient earnings and profits to cause distributions on the Series E Preferred Stock or Common Stock to be treated as dividends for federal income tax purposes. For purposes of the remainder of this discussion, the term "dividend" refers to a distribution paid out of current or accumulated earnings and profits, unless the context indicates otherwise. Preferred Stock Liquidated Damages should be taxed in the same manner as dividend distributions, except that it is possible that Preferred Stock Liquidated Damages might be treated as payment of a fee and hence as ordinary income with respect to which no dividends-received deduction is available. Dividends received by corporate U.S. Holders will generally be eligible for the 70% dividends-received deduction under Section 243 of the Code. There are, however, many exceptions and restrictions relating to the availability of the dividends-received deduction, such as restrictions relating to (i) the holding period of the stock on which the dividends are received, (ii) debt-financed portfolio stock, (iii) dividends treated as "extraordinary dividends" for purposes of Section 1059 of the Code, and (iv) taxpayers that pay alternative minimum tax. Corporate U.S. Holders should consult their own tax advisors regarding the extent, if any, to which such exceptions and restrictions may apply to their particular factual situations. Recently enacted legislation requires a corporate holder to satisfy a separate 46 day (91-day, in the case of certain preferred stock dividends) holding period requirement with respect to each dividend in order to be eligible for the dividends-received deduction with respect to such dividend. REDEMPTION PREMIUM Under certain circumstances, Section 305(c) of the Code requires that any excess of the redemption price of preferred stock over its issue price be treated as constructively distributed on a periodic basis prior to actual receipt. However, the Company believes that a U.S. Holder of the Depositary Shares should not be required to include any redemption premium in income under Section 305(c). ADJUSTMENT OF CONVERSION PRICE Treasury regulations issued under Section 305 of the Code treat certain adjustments to conversion provisions of stock such as the Series E Preferred Stock as constructive distributions of stock with respect to preferred stock. Such constructive distributions of stock would be taxable to U.S. Holders of Depositary Shares as described above under the caption "Distributions on Depositary Shares and Common Stock." In general, any adjustment increasing the number of shares of Common Stock into which the Depositary Shares can be converted could constitute a constructive distribution of stock to U.S. Holders of Depositary Shares unless made pursuant to a bona fide, reasonable adjustment formula that has the effect of preventing dilution of the interest of the holders of Depositary Shares. Any adjustment in the conversion price to compensate the holders of Depositary Shares for taxable distributions of cash or property on any of 33 the outstanding Common Stock of the Company may be treated as a constructive distribution of stock to U.S. Holders of Depositary Shares. The Company is unable to predict whether any such adjustment will be made. CONVERSION OF SERIES E PREFERRED STOCK No gain or loss will generally be recognized for United States federal income tax purposes on conversion of the Series E Preferred Stock solely into Common Stock. However, if the conversion takes place when there is a dividend arrearage on the Series E Preferred Stock, a portion of the Common Stock received may be treated as a taxable dividend to the extent of such dividend arrearage. Except for any Common Stock treated as payment of a dividend, the tax basis for the Common Stock received upon conversion (including any fractional share deemed received) will be the tax basis of the Series E Preferred Stock converted, and the holding period of the Common Stock received upon conversion (including any fractional share deemed received) will include the holding period of the Series E Preferred Stock converted into such Common Stock. The receipt of cash in lieu of a fractional share upon conversion of Series E Preferred Stock into Common Stock will generally be treated as a sale of such fractional share of Common Stock in which the U.S. Holder will recognize taxable gain or loss equal to the difference between the amount of cash received and the U.S. Holder's adjusted tax basis in the fractional share redeemed. Such gain or loss will be capital gain or loss and will be long-term if the U.S. Holder's holding period for the fractional share exceeds one year. The most favorable tax rate on long- term capital gains of non-corporate holders (20%) will not be available unless the holding period exceeds 18 months. CONVERSION OF SERIES E PREFERRED STOCK AFTER DIVIDEND RECORD DATE If a holder whose Series E Preferred Stock has not been called for redemption surrenders such Series E Preferred Stock for conversion into shares of Common Stock after a dividend record date for the Series E Preferred Stock but before payment of the dividend, such holder will be required to pay the Company an amount equal to such dividend upon conversion. A U.S. Holder will likely recognize the dividend payment as ordinary dividend income when it is received and increase the basis of the Common Stock received by the amount paid to the Company. REDEMPTION, SALE OR OTHER TAXABLE DISPOSITION OF SERIES E PREFERRED STOCK AND SALE OR OTHER TAXABLE DISPOSITION OF COMMON STOCK A redemption of shares of Series E Preferred Stock for cash will be a taxable event. A redemption of shares of Series E Preferred Stock for cash will generally be treated as a sale or exchange if the holder does not own, actually or constructively within the meaning of Section 318 of the Code, any stock of the Company other than the Series E Preferred Stock redeemed. If a holder does own, actually or constructively, other stock of the Company, a redemption of Series E Preferred Stock may be treated as a dividend to the extent of the Company's allocable current or accumulated earnings and profits (as determined for federal income tax purposes). Such dividend treatment will not be applied if the redemption is "not essentially equivalent to a dividend" with respect to the holder under Section 302(b)(1) of the Code. A distribution to a holder will be "not essentially equivalent to a dividend" if it results in a "meaningful reduction" in the holder's stock interest in the Company. For this purpose, a redemption of Series E Preferred Stock that results in a reduction in the proportionate interest in the Company (taking into account any actual ownership of Common Stock and any stock constructively owned) of a holder whose relative stock interest in the Company is minimal and who exercises no control over corporate affairs should be regarded as a meaningful reduction in the holder's stock interest in the Company. If a redemption of the Series E Preferred Stock for cash is treated as a sale or exchange, the redemption will result in capital gain or loss equal to the difference between the amount of cash received and the holder's adjusted tax basis in the Series E Preferred Stock redeemed, except to the extent that the redemption price includes dividends that have been declared by the Board of Directors of the Company prior to the redemption. Similarly, upon the sale or exchange of the Series E Preferred Stock or Common Stock (other than in a redemption, on conversion or pursuant to 34 a tax-free exchange), the difference between the sum of the amount of cash and the fair market value of other property received and the holder's adjusted tax basis in the Series E Preferred Stock or Common Stock will be capital gain or loss. This gain or loss will be long-term capital gain or loss if the holder's holding period for the Series E Preferred Stock or Common Stock exceeds one year. The most favorable tax rate on long-term capital gains of individual holders (20%) will not be available unless the holding period exceeds 18 months. If a redemption of Series E Preferred Stock is treated as a distribution that is taxable as a dividend, the amount of the distribution will be the amount of cash received by the holder. The holder's adjusted tax basis in the redeemed Series E Preferred Stock will be transferred to any remaining stock holdings in the Company, subject to reduction or possible gain recognition under Section 1059 of the Code with respect to the non-taxed portion of such dividend. If the holder does not retain any actual stock ownership in the Company (having a stock interest only constructively by attribution), the holder may lose the benefit of the basis in the Series E Preferred Stock. TAX CONSEQUENCES TO NON-U.S. HOLDERS DISTRIBUTIONS ON DEPOSITARY SHARES AND COMMON STOCK Dividends paid to a Non-U.S. Holder of Series E Preferred Stock or Common Stock that are not effectively connected with the conduct of a trade or business within the United States by the Non-U.S. Holder will be subject to United States federal income tax, which generally will be withheld at a rate of 30% of the gross amount of the dividends unless the rate is reduced by an applicable income tax treaty. Under the currently applicable Treasury regulations, dividends paid to an address in a country other than the United States are subject to withholding (unless the payor has knowledge to the contrary). Dividends paid to a Non-U.S. Holder of Series E Preferred Stock or Common Stock that are effectively connected with a United States trade or business conducted by such Non-U.S. Holder are taxed at the graduated rates applicable to United States citizens, resident aliens and domestic corporations (the "Regular Federal Income Tax"), and are not subject to withholding tax if the Non-U.S. Holder gives an appropriate statement to the Company or its paying agent in advance of the dividend payment. In addition to the Regular Federal Income Tax, effectively connected dividends received by a Non-U.S. Holder that is a corporation may also be subject to an additional branch profits tax at a rate of 30% (or such lower rate as may be specified by an applicable income tax treaty). REDEMPTION, SALE OR OTHER TAXABLE DISPOSITION OF SERIES E PREFERRED STOCK AND SALE OR OTHER TAXABLE DISPOSITION OF COMMON STOCK A Non-U.S. Holder generally will not be subject to United States federal income tax or withholding on gain recognized upon the sale or other disposition of Series E Preferred Stock or Common Stock unless: (i) the gain is effectively connected with the conduct of a trade or business within the United States by the Non-U.S. Holder (in which case the branch profits tax also may apply if the Non-U.S. Holder is a corporation); (ii) in the case of a Non-U.S. Holder who is a non-resident alien individual and holds the Series E Preferred Stock or Common Stock as a capital asset, such holder is present in the United States for 183 or more days in the taxable year and certain other conditions are met; or (iii) the Series E Preferred Stock or Common Stock constitutes a United States real property interest by reason of the Company's status as a "United States real property holding corporation" ("USRPHC") for federal income tax purposes at any time within the shorter of the five-year period preceding such disposition or such Non-U.S. Holder's holding period for such Series E Preferred Stock or Common Stock. The Company does not believe that it is or will become a USRPHC for federal income tax purposes. If a Non-U.S. Holder falls within clause (i) or (iii) in the preceding paragraph, the holder will be taxed on the net gain derived from the sale under the Regular Federal Income Tax, and may be subject to withholding under certain circumstances (and, with respect to corporate Non- U.S. Holders, may also be subject to the branch profits tax). If an 35 individual Non-U.S. Holder falls under clause (ii) in the preceding paragraph, the holder generally will be subject to United States federal income tax at a rate of 30% on the gain derived from the sale. FEDERAL ESTATE TAXES An individual Non-U.S. Holder who owns, or is treated as owning, Series E Preferred Stock or Common Stock at the time of his or her death or has made certain lifetime transfers of an interest in Series E Preferred Stock or Common Stock will be required to include the value of such Series E Preferred Stock or Common Stock in his gross estate for United States federal estate tax purposes, unless an applicable estate tax treaty provides otherwise. NEW WITHHOLDING REGULATIONS The Treasury Department recently promulgated final regulations regarding the withholding and information reporting rules applicable to Non- U.S. Holders (the "New Withholding Regulations"). In general, the New Withholding Regulations do not significantly alter the substantive withholding and information reporting requirements but rather unify current certification procedures and forms and clarify reliance standards. The New Withholding Regulations are generally effective for payments made after December 31, 1998, subject to certain transition rules. NON-U.S. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE IMPACT, IF ANY, OF THE NEW WITHHOLDING REGULATIONS. INFORMATION REPORTING AND BACKUP WITHHOLDING A U.S. Holder of Depositary Shares or Common Stock may be subject to backup withholding at the rate of 31% with respect to dividends paid on, or the proceeds of a redemption, sale or exchange of, the Depositary Shares or Common Stock, unless such holder (a) is a corporation or comes within certain other exempt categories and, when required, demonstrates its exemption or (b) provides a correct taxpayer identification number, certifies as to no loss of exemption from backup withholding and otherwise complies with applicable requirements of the backup withholding rules. A U.S. Holder of Depositary Shares or Common Stock who does not provide the Company with the holder's correct taxpayer identification number may be subject to penalties imposed by the IRS. A Non-U.S. Holder of Depositary Shares or Common Stock may also be subject to certain information reporting or backup withholding if certain requisite certification is not received or other exemptions do not apply. Any amount paid as backup withholding would be creditable against the holder's federal income tax liability. 36 THE SELLING SECURITYHOLDERS The following table sets forth, as of December 18, 1997 certain information regarding the Selling Securityholders' ownership of the Company's Depositary Shares, Series E Preferred Stock and Common Stock. Unless otherwise disclosed in the footnotes to the table, no Selling Securityholder has held any position, office or had any other material relationship with the Company, its predecessors or affiliates during the past three years. All of the Depositary Shares and shares of Series E Preferred Stock are registered in the name of "Cede & Co." on the books of the Company's Transfer Agent. To the knowledge of the Company, except as disclosed in the table below, the Selling Securityholders did not own, nor have any rights to acquire, any other Depositary Shares, shares of Series E Preferred Stock or Common Stock as of the date of this Prospectus.
=================================================================================================================================== Common Stock Depositary Shares ------------ --------------------------------------------------- - ------------------------- --------------------------------------------------- --------------------------------------------------- Beneficially Beneficially Name of Selling Owned Owned After Security- Beneficially Owned Prior Offered After This Beneficially Owned Offered This Offering holder(1) to This Offering(2)(3) for Sale Offering(2)(3) Prior to This Offering(2) for Sale (2) --------- ---------------------- -------- -------------- ---------------------------- -------- ------------- ------------------------ -------- -------------- ---------------------------- -------- ------------- Number of Percent of Number of Percent of Depositary Depositary Shares Shares Shares Shares ------ ------ ------ ------ - ------------------------------------------------------------------------------------------------------------------------------------ Aim High Yield 239,789 1.3848 239,789 0 580,000 7.2500 580,000 0 - ------------------------------------------------------------------------------------------------------------------------------------ Allstate Insurance Company 49,612 * 49,612 0 120,000 1.5000 120,000 0 - ------------------------------------------------------------------------------------------------------------------------------------ American Travellers Life 5,458 * 5,458 0 13,200 * 13,200 0 Insurance Co. - Convertible - ------------------------------------------------------------------------------------------------------------------------------------ Bank of America Pension 49,612 * 49,612 0 120,000 1.5000 120,000 0 Plan - ------------------------------------------------------------------------------------------------------------------------------------ Bankers Life and Casualty 10,688 * 10,688 0 25,850 * 25,850 0 Insurance Co. - Convertible - ------------------------------------------------------------------------------------------------------------------------------------ Bear Stearns Securities 90,004 * 90,004 0 217,700 2.7213 217,700 0 Corp. - ------------------------------------------------------------------------------------------------------------------------------------ Beneficial Standard Life 13,189 * 13,189 0 31,900 * 31,900 0 Insurance Co. - Convertible - ------------------------------------------------------------------------------------------------------------------------------------
================================================================================ Series E Preferred Stock ------------------------ - ------------------------- --------------------------------------------------- Beneficially Owned After Name of Selling Beneficially Owned This Security- Prior to This Offered Offering holder(1) Offering(2)(4) for Sale (2)(4) --------- -------------- -------- --------- ------------------------ -------- -------------- Number of shares Percent of Series of E Series E Preferred Preferred Stock Stock ----- ----- - ------------------------------------------------------------------------------ Aim High Yield 5,800 7.2500 5,800 0 - ------------------------------------------------------------------------------ Allstate Insurance Company 1,200 1.5000 1,200 0 - ------------------------------------------------------------------------------ American Travellers Life 132 * 132 0 Insurance Co. - Convertible - ------------------------------------------------------------------------------ Bank of America Pension 1,200 1.5000 1,200 0 Plan - ------------------------------------------------------------------------------ Bankers Life and Casualty 259 * 259 0 Insurance Co. - Convertible - ------------------------------------------------------------------------------ Bear Stearns Securities 2,177 2.7213 2,177 0 Corp. - ------------------------------------------------------------------------------ Beneficial Standard Life 319 * 319 0 Insurance Co. - Convertible - ------------------------------------------------------------------------------
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=================================================================================================================================== Common Stock Depositary Shares ------------ --------------------------------------------------- - ------------------------- --------------------------------------------------- --------------------------------------------------- Beneficially Beneficially Name of Selling Owned Owned After Security- Beneficially Owned Prior Offered After This Beneficially Owned Offered This Offering holder(1) to This Offering(2)(3) for Sale Offering(2)(3) Prior to This Offering(2) for Sale (2) --------- ---------------------- -------- -------------- ---------------------------- -------- ------------- ------------------------ -------- -------------- ---------------------------- -------- ------------- Number of Percent of Number of Percent of Depositary Depositary Shares Shares Shares Shares ------ ------ ------ ------ - ------------------------------------------------------------------------------------------------------------------------------------ BNP Arbitrage SNC 41,343 * 41,343 0 100,00 1.2500 100,000 0 - ------------------------------------------------------------------------------------------------------------------------------------ Capitol American Life 5,458 * 5,458 0 13,200 * 13,200 0 Insurance Co. - Convertible - ------------------------------------------------------------------------------------------------------------------------------------ Chase Securities, Inc. 45,478 * 45,478 0 110,000 1.3750 110,000 0 - ------------------------------------------------------------------------------------------------------------------------------------ Chrysler Corporation 43,038 * 43,038 0 104,100 1.3013 104,100 0 Master Retirement Trust - ------------------------------------------------------------------------------------------------------------------------------------ CNA Income Shares, Inc. 16,538 * 16,538 0 40,000 * 40,000 0 - ------------------------------------------------------------------------------------------------------------------------------------ Combined Insurance Company 10,502 * 10,502 0 25,400 * 25,400 0 of America - ------------------------------------------------------------------------------------------------------------------------------------ Conseco Fund Group - Asset 4,962 * 4,962 0 12,000 * 12,000 0 Allocation - ------------------------------------------------------------------------------------------------------------------------------------ Conseco Series Trust 11,576 * 11,576 0 28,000 * 28,000 0 -Asset Allocation - ------------------------------------------------------------------------------------------------------------------------------------ Delaware PERS 8,269 * 8,269 0 20,000 * 20,000 0 - ------------------------------------------------------------------------------------------------------------------------------------ DeMoss Foundation 2,068 * 2,068 0 5,000 * 5,000 0 - ------------------------------------------------------------------------------------------------------------------------------------ Donaldson, Lufkin & 102,324 * 102,324 0 247,500 3.0938 247,500 0 Jenrette Sec. Corp. - ------------------------------------------------------------------------------------------------------------------------------------
================================================================================ Series E Preferred Stock ------------------------ - ------------------------- --------------------------------------------------- Beneficially Owned After Name of Selling Beneficially Owned This Security- Prior to This Offered Offering holder(1) Offering(2)(4) for Sale (2)(4) --------- -------------- -------- --------- ------------------------ -------- -------------- Number of shares Percent of Series of E Series E Preferred Preferred Stock Stock ----- ----- - ------------------------------------------------------------------------------ BNP Arbitrage SNC 1,000 1.2500 1,000 0 - ------------------------------------------------------------------------------ Capitol American Life 132 * 132 0 Insurance Co. - Convertible - ------------------------------------------------------------------------------ Chase Securities, Inc. 1,100 1.3750 1,100 0 - ------------------------------------------------------------------------------ Chrysler Corporation 1,041 1.3013 1,401 0 Master Retirement Trust - ------------------------------------------------------------------------------ CNA Income Shares, Inc. 400 * 400 0 - ------------------------------------------------------------------------------ Combined Insurance Company 254 * 254 0 of America - ------------------------------------------------------------------------------ Conseco Fund Group - Asset 120 * 120 0 Allocation - ------------------------------------------------------------------------------ Conseco Series Trust 280 * 280 0 -Asset Allocation - ------------------------------------------------------------------------------ Delaware PERS 200 * 200 0 - ------------------------------------------------------------------------------ DeMoss Foundation 50 * 50 0 - ------------------------------------------------------------------------------ Donaldson, Lufkin & 2,475 3.0938 2,475 0 Jenrette Sec. Corp. - ------------------------------------------------------------------------------
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=================================================================================================================================== Common Stock Depositary Shares ------------ --------------------------------------------------- - ------------------------- --------------------------------------------------- --------------------------------------------------- Beneficially Beneficially Name of Selling Owned Owned After Security- Beneficially Owned Prior Offered After This Beneficially Owned Offered This Offering holder(1) to This Offering(2)(3) for Sale Offering(2)(3) Prior to This Offering(2) for Sale (2) --------- ---------------------- -------- -------------- ---------------------------- -------- ------------- ------------------------ -------- -------------- ---------------------------- -------- ------------- Number of Percent of Number of Percent of Depositary Depositary Shares Shares Shares Shares ------ ------ ------ ------ - ------------------------------------------------------------------------------------------------------------------------------------ Eaton Vance High Income Portfolio 76,485 * 76,485 0 185,000 2.3125 185,000 0 - ------------------------------------------------------------------------------------------------------------------------------------ Eaton Vance Income Fund of 18,605 * 18,605 0 45,000 * 45,000 0 Boston - ------------------------------------------------------------------------------------------------------------------------------------ Enterprise Accum Trust HY 3,101 * 3,101 0 7,500 * 7,500 0 - ------------------------------------------------------------------------------------------------------------------------------------ Enterprise High Yield Bd. 3,101 * 3,101 0 7,500 * 7,500 0 - ------------------------------------------------------------------------------------------------------------------------------------ Forehooks & Co. 20,672 * 20,672 0 50,000 * 50,000 0 - ------------------------------------------------------------------------------------------------------------------------------------ Forest Convertible 621 * 621 0 1,500 * 1,500 0 Opportunity Fund - ------------------------------------------------------------------------------------------------------------------------------------ Forest Fulcrum Fd LP 5,127 * 5,127 0 12,400 * 12,400 0 - ------------------------------------------------------------------------------------------------------------------------------------ Forest Global Convert B2 621 * 621 0 1,500 * 1,500 0 - ------------------------------------------------------------------------------------------------------------------------------------ Forest Global Convert Fund 290 * 290 0 700 * 700 0 B-3 - ------------------------------------------------------------------------------------------------------------------------------------ Forest Global Convert Fund 5,292 * 5,292 0 12,800 * 12,800 0 Ser A-5 - ------------------------------------------------------------------------------------------------------------------------------------ Forest Global Convert Fund 827 * 827 0 2,000 * 2,000 0 Ser B-5 - ------------------------------------------------------------------------------------------------------------------------------------ Forest Performance Fund 703 * 703 0 1,700 * 1,700 0 - ------------------------------------------------------------------------------------------------------------------------------------
================================================================================ Series E Preferred Stock ------------------------ - ------------------------- --------------------------------------------------- Beneficially Owned After Name of Selling Beneficially Owned This Security- Prior to This Offered Offering holder(1) Offering(2)(4) for Sale (2)(4) --------- -------------- -------- --------- ------------------------ -------- -------------- Number of shares Percent of Series of E Series E Preferred Preferred Stock Stock ----- ----- - ------------------------------------------------------------------------------ Eaton Vance High Income Portfolio 1,850 2.3125 1,850 0 - ------------------------------------------------------------------------------ Eaton Vance Income Fund of 450 * 450 0 Boston - ------------------------------------------------------------------------------ Enterprise Accum Trust HY 75 * 75 0 - ------------------------------------------------------------------------------ Enterprise High Yield Bd. 75 * 75 0 - ------------------------------------------------------------------------------ Forehooks & Co. 500 * 500 0 - ------------------------------------------------------------------------------ Forest Convertible 15 * 15 0 Opportunity Fund - ------------------------------------------------------------------------------ Forest Fulcrum Fd LP 124 * 124 0 - ------------------------------------------------------------------------------ Forest Global Convert B2 15 * 15 0 - ------------------------------------------------------------------------------ Forest Global Convert Fund 7 * 7 0 B-3 - ------------------------------------------------------------------------------ Forest Global Convert Fund 128 * 128 0 Ser A-5 - ------------------------------------------------------------------------------ Forest Global Convert Fund 20 * 20 0 Ser B-5 - ------------------------------------------------------------------------------ Forest Performance Fund 17 * 17 0 - ------------------------------------------------------------------------------
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=================================================================================================================================== Common Stock Depositary Shares ------------ --------------------------------------------------- - ------------------------- --------------------------------------------------- --------------------------------------------------- Beneficially Beneficially Name of Selling Owned Owned After Security- Beneficially Owned Prior Offered After This Beneficially Owned Offered This Offering holder(1) to This Offering(2)(3) for Sale Offering(2)(3) Prior to This Offering(2) for Sale (2) --------- ---------------------- -------- -------------- ---------------------------- -------- ------------- ------------------------ -------- -------------- ---------------------------- -------- ------------- Number of Percent of Number of Percent of Depositary Depositary Shares Shares Shares Shares ------ ------ ------ ------ - ------------------------------------------------------------------------------------------------------------------------------------ Forest Performance Greyhound 827 * 827 0 2,000 * 2,000 0 - ------------------------------------------------------------------------------------------------------------------------------------ Forest Global Convert B-1 703 * 703 0 1,700 * 1,700 0 - ------------------------------------------------------------------------------------------------------------------------------------ Forum Capital Markets LLC 3,101 * 3,101 0 7,500 * 7,500 0 - ------------------------------------------------------------------------------------------------------------------------------------ Fox Family Foundation 497 * 497 0 1,200 * 1,200 0 10/10/87 c/o Forest Investment Management Co. - ------------------------------------------------------------------------------------------------------------------------------------ Fox Family Portfolio 1,654 * 1,654 0 4,000 * 4,000 0 Partnership - ------------------------------------------------------------------------------------------------------------------------------------ General Motors Employees 16,538 * 16,538 0 40,000 * 40,000 0 Domestic Group Pension Trust - ------------------------------------------------------------------------------------------------------------------------------------ Golden Rule Insurance HY 4,135 * 4,135 0 10,000 * 10,000 0 - ------------------------------------------------------------------------------------------------------------------------------------ Great American Reserve 10,688 * 10,688 0 25,850 * 25,850 0 Insurance Co. - Convertible - ------------------------------------------------------------------------------------------------------------------------------------ ICI American Holdings 3,308 * 3,308 0 8,000 * 8,000 0 Pension Trust - ------------------------------------------------------------------------------------------------------------------------------------ JMG Convertible 41,343 * 41,343 0 100,000 1.2500 100,000 0 Investments L.P. - ------------------------------------------------------------------------------------------------------------------------------------
================================================================================ Series E Preferred Stock ------------------------ - ------------------------- --------------------------------------------------- Beneficially Owned After Name of Selling Beneficially Owned This Security- Prior to This Offered Offering holder(1) Offering(2)(4) for Sale (2)(4) --------- -------------- -------- --------- ------------------------ -------- -------------- Number of shares Percent of Series of E Series E Preferred Preferred Stock Stock ----- ----- - ------------------------------------------------------------------------------ Forest Performance Greyhound 20 * 20 0 - ------------------------------------------------------------------------------ Forest Global Convert B-1 17 * 17 0 - ------------------------------------------------------------------------------ Forum Capital Markets LLC 75 * 75 0 - ------------------------------------------------------------------------------ Fox Family Foundation 12 * 12 0 10/10/87 c/o Forest Investment Management Co. - ------------------------------------------------------------------------------ Fox Family Portfolio 40 * 40 0 Partnership - ------------------------------------------------------------------------------ General Motors Employees 400 * 400 0 Domestic Group Pension Trust - ------------------------------------------------------------------------------ Golden Rule Insurance HY 100 * 100 0 - ------------------------------------------------------------------------------ Great American Reserve 259 * 259 0 Insurance Co. - Convertible - ------------------------------------------------------------------------------ ICI American Holdings 80 * 80 0 Pension Trust - ------------------------------------------------------------------------------ JMG Convertible 1,000 1.2500 1,000 0 Investments L.P.
=================================================================================================================================== Common Stock Depositary Shares ------------ --------------------------------------------------- - ------------------------- --------------------------------------------------- --------------------------------------------------- Beneficially Beneficially Name of Selling Owned Owned After Security- Beneficially Owned Prior Offered After This Beneficially Owned Offered This Offering holder(1) to This Offering(2)(3) for Sale Offering(2)(3) Prior to This Offering(2) for Sale (2) --------- ---------------------- -------- -------------- ---------------------------- -------- ------------- ------------------------ -------- -------------- ---------------------------- -------- ------------- Number of Percent of Number of Percent of Depositary Depositary Shares Shares Shares Shares ------ ------ ------ ------ - ------------------------------------------------------------------------------------------------------------------------------------ J.P. Morgan & Co, Inc. 285,266 1.6475 285,266 0 690,000 8.6250 690,000 0 - ------------------------------------------------------------------------------------------------------------------------------------ KA Management Ltd. 45,478 * 45,478 0 110,000 1.3750 110,000 0 - ------------------------------------------------------------------------------------------------------------------------------------ KA Trading L.P. 45,478 * 45,478 0 110,000 1.3750 110,000 0 - ------------------------------------------------------------------------------------------------------------------------------------ Landing & Co. 20,672 * 20,672 0 50,000 * 50,000 0 - ------------------------------------------------------------------------------------------------------------------------------------ LB Series Fund, Inc. -High 20,672 * 20,672 0 50,000 * 50,000 0 Yield Portfolio - ------------------------------------------------------------------------------------------------------------------------------------ Lincoln National 8,779 * 8,779 0 21,235 * 21,235 0 Convertible Securities Fund - ------------------------------------------------------------------------------------------------------------------------------------ LLT Limited 414 * 414 0 1,000 * 1,000 0 - ------------------------------------------------------------------------------------------------------------------------------------ Lutheran Brother High 12,403 * 12,403 0 30,000 * 30,000 0 Yield Fund - ------------------------------------------------------------------------------------------------------------------------------------ Millennium Trading L.P. 53,746 * 53,746 0 130,000 1.6250 130,000 0 - ------------------------------------------------------------------------------------------------------------------------------------ Nalco Chemical Retirement 1,654 * 1,654 0 4,000 * 4,000 0 - ------------------------------------------------------------------------------------------------------------------------------------ Northstar Balance Sheet 16,538 * 16,538 0 40,000 * 40,000 0 Opportunities - ------------------------------------------------------------------------------------------------------------------------------------ The Northwestern Mutual 33,075 * 33,075 0 80,000 1.0000 80,000 0 Life Insurance Company - ------------------------------------------------------------------------------------------------------------------------------------
================================================================================ Series E Preferred Stock ------------------------ - ------------------------- --------------------------------------------------- Beneficially Owned After Name of Selling Beneficially Owned This Security- Prior to This Offered Offering holder(1) Offering(2)(4) for Sale (2)(4) --------- -------------- -------- --------- ------------------------ -------- -------------- Number of shares Percent of Series of E Series E Preferred Preferred Stock Stock ----- ----- - ------------------------------------------------------------------------------ J.P. Morgan & Co, Inc. 6,900 8.6250 6,900 0 - ------------------------------------------------------------------------------ KA Management Ltd. 1,100 1.3750 1,100 0 - ------------------------------------------------------------------------------ KA Trading L.P. 1,100 1.3750 1,100 0 - ------------------------------------------------------------------------------ Landing & Co. 500 * 500 0 - ------------------------------------------------------------------------------ LB Series Fund, Inc. -High 500 * 500 0 Yield Portfolio - ------------------------------------------------------------------------------ Lincoln National 213 * 213 0 Convertible Securities Fund - ------------------------------------------------------------------------------ LLT Limited 10 * 10 0 - ------------------------------------------------------------------------------ Lutheran Brother High 300 * 300 0 Yield Fund - ------------------------------------------------------------------------------ Millennium Trading L.P. 1,300 1.6250 1,300 0 - ------------------------------------------------------------------------------ Nalco Chemical Retirement 40 * 40 0 - ------------------------------------------------------------------------------ Northstar Balance Sheet 400 * 400 0 Opportunities - ------------------------------------------------------------------------------ The Northwestern Mutual 800 1.0000 800 0 Life Insurance Company - ------------------------------------------------------------------------------
41
=================================================================================================================================== Common Stock Depositary Shares ------------ --------------------------------------------------- - ------------------------- --------------------------------------------------- --------------------------------------------------- Beneficially Beneficially Name of Selling Owned Owned After Security- Beneficially Owned Prior Offered After This Beneficially Owned Offered This Offering holder(1) to This Offering(2)(3) for Sale Offering(2)(3) Prior to This Offering(2) for Sale (2) --------- ---------------------- -------- -------------- ---------------------------- -------- ------------- ------------------------ -------- -------------- ---------------------------- -------- ------------- Number of Percent of Number of Percent of Depositary Depositary Shares Shares Shares Shares ------ ------ ------ ------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ OCM Convertible Trust 62,842 * 62,842 0 152,000 1.9000 152,000 0 - ------------------------------------------------------------------------------------------------------------------------------------ Pacific Life Insurance 43,410 * 43,410 0 105,000 1.3125 105,000 0 Company - ------------------------------------------------------------------------------------------------------------------------------------ SBC Warburg Dillon Read 19,432 * 19,432 0 47,000 * 47,000 0 Inc. - ------------------------------------------------------------------------------------------------------------------------------------ Swiss Bank Corporation 12,403 * 12,403 0 30,000 * 30,000 0 London Branch - ------------------------------------------------------------------------------------------------------------------------------------ State Employees' 15,297 * 15,297 0 37,000 * 37,000 0 Retirement Fund of the State of Delaware - ------------------------------------------------------------------------------------------------------------------------------------ State of Connecticut 56,847 * 56,847 0 137,500 1.7188 137,500 0 Combined Investment Funds - ------------------------------------------------------------------------------------------------------------------------------------ Surfboard & Co. 24,806 * 24,806 0 60,000 * 60,000 0 - ------------------------------------------------------------------------------------------------------------------------------------ Susquehanna Capital Group 31,834 * 31,834 0 77,000 * 77,000 0 - ------------------------------------------------------------------------------------------------------------------------------------ Triton Capital Investments 49,612 * 49,612 0 120,000 1.5000 120,000 0 Ltd. - ------------------------------------------------------------------------------------------------------------------------------------ The United Bank of Kuwait 82,686 * 82,686 0 200,000 2.5000 200,000 0 PLC - ------------------------------------------------------------------------------------------------------------------------------------
================================================================================ Series E Preferred Stock ------------------------ - ------------------------- --------------------------------------------------- Beneficially Owned After Name of Selling Beneficially Owned This Security- Prior to This Offered Offering holder(1) Offering(2)(4) for Sale (2)(4) --------- -------------- -------- --------- ------------------------ -------- -------------- Number of shares Percent of Series of E Series E Preferred Preferred Stock Stock ----- ----- - ------------------------------------------------------------------------------ OCM Convertible Trust 1,520 1.9000 1,520 0 - ------------------------------------------------------------------------------ Pacific Life Insurance 1,050 1.3125 1,050 0 Company - ------------------------------------------------------------------------------ SBC Warburg Dillon Read 470 * 470 0 Inc. - ------------------------------------------------------------------------------ Swiss Bank Corporation 300 * 300 0 London Branch - ------------------------------------------------------------------------------ State Employees' 370 * 370 0 Retirement Fund of the State of Delaware - ------------------------------------------------------------------------------ State of Connecticut 1,375 1.7188 1,375 0 Combined Investment Funds - ------------------------------------------------------------------------------ Surfboard & Co. 600 * 600 0 - ------------------------------------------------------------------------------ Susquehanna Capital Group 770 * 770 0 - ------------------------------------------------------------------------------ Triton Capital Investments 1,200 1.5000 1,200 0 Ltd. - ------------------------------------------------------------------------------ The United Bank of Kuwait 2,000 2.5000 2,000 0 PLC - ------------------------------------------------------------------------------
42
=================================================================================================================================== Common Stock Depositary Shares ------------ --------------------------------------------------- - ------------------------- --------------------------------------------------- --------------------------------------------------- Beneficially Beneficially Name of Selling Owned Owned After Security- Beneficially Owned Prior Offered After This Beneficially Owned Offered This Offering holder(1) to This Offering(2)(3) for Sale Offering(2)(3) Prior to This Offering(2) for Sale (2) --------- ---------------------- -------- -------------- ---------------------------- -------- ------------- ------------------------ -------- -------------- ---------------------------- -------- ------------- Number of Percent of Number of Percent of Depositary Depositary Shares Shares Shares Shares ------ ------ ------ ------ - ------------------------------------------------------------------------------------------------------------------------------------ United National Insurance 614 * 614 0 1,485 * 1,485 0 - ------------------------------------------------------------------------------------------------------------------------------------ Vanguard Convertible 38,780 * 38,780 0 93,800 1.1725 93,800 0 Securities Fund, Inc. - ------------------------------------------------------------------------------------------------------------------------------------ Walker Art Center 1,499 * 1,499 0 3,625 * 3,625 0 - ------------------------------------------------------------------------------------------------------------------------------------ Weirton Trust 3,734 * 3,734 0 9,370 * 9,370 0 - ------------------------------------------------------------------------------------------------------------------------------------ Wm. M. Keck Jr. Foundation 4,135 * 4,135 0 10,000 * 10,000 0 - ------------------------------------------------------------------------------------------------------------------------------------ Zeneca Holdings Pension 3,308 * 3,308 0 8,000 * 8,000 0 Trust - ------------------------------------------------------------------------------------------------------------------------------------
================================================================================ Series E Preferred Stock ------------------------ - ------------------------- --------------------------------------------------- Beneficially Owned After Name of Selling Beneficially Owned This Security- Prior to This Offered Offering holder(1) Offering(2)(4) for Sale (2)(4) --------- -------------- -------- --------- ------------------------ -------- -------------- Number of shares Percent of Series of E Series E Preferred Preferred Stock Stock ----- ----- - ------------------------------------------------------------------------------ United National Insurance 15 * 15 0 - ------------------------------------------------------------------------------ Vanguard Convertible 938 1.1725 938 0 Securities Fund, Inc. - ------------------------------------------------------------------------------ Walker Art Center 37 * 37 0 - ------------------------------------------------------------------------------ Weirton Trust 94 * 94 0 - ------------------------------------------------------------------------------ Wm. M. Keck Jr. Foundation 100 * 100 0 - ------------------------------------------------------------------------------ Zeneca Holdings Pension 80 * 80 0 Trust - ------------------------------------------------------------------------------
* Less than one percent. Based on 17,315,317 shares of common stock outstanding on November 30, 1997, 8,000,000 Depositary Shares outstanding on December 18, 1997 and 80,000 shares of Series E Preferred Stock outstanding on December 18, 1997. (1)The names of additional Selling Securityholders may be provided subsequent hereto pursuant to Section 424(c) of the Securities Act of 1933, as amended. (2)Under the rules of the Commission, a person is deemed to be the beneficial owner of a security if such person has or shares the power to vote or direct the voting of such security or the power to dispose or direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities if that person has the right to acquire beneficial ownership within 60 days. Accordingly, more than one person may be deemed to be a beneficial owner of the same securities. Unless otherwise indicated by footnote, the named individuals have sole voting and investment power with respect to the securities beneficially owned. (3)Assuming the conversion of all Depositary Shares and/or shares of Series E Preferred Stock. The Depositary Shares and the Series E Preferred Stock may not be converted into Common Stock until after December 29, 1997. 43 (4) Assuming the conversion of all Depositary Shares into shares of Series E Preferred Stock on the basis of one share of Series E Preferred Stock for each one hundred Depositary Shares. The Common Stock and Depositary Shares owned by the Selling Securityholders and the Dividend Shares issuable by the Company represent all of the securities covered by the Registration Statement. The Depositary Shares were originally issued by the Company and purchased by the Initial Purchasers in the October 30 Equity Offering. The Initial Purchasers, in turn, resold the Depositary Shares in private sales pursuant to exemption from registration under the Securities Act of 1933, as amended. 44 PLAN OF DISTRIBUTION The Company will not receive any proceeds from the sale of the Securities or the issuance of the Dividend Shares offered hereby. The Dividend Shares may be issued by the Company in lieu of cash from time to time to holders of record of the Series E Preferred Stock, all in accordance with the Certificate of Designation, during the two year period commencing on the date of this Prospectus. See "Description of Series E Preferred Stock--Dividends." The Securities may be sold from time to time to purchasers directly by the Selling Securityholders. Alternatively, the Selling Securityholders may from time to time offer the Securities through brokers, dealers or agents who may receive compensation in the form of discounts, concessions or commissions from the Selling Securityholders and/or the purchasers of the Securities for whom they may act as agent. The Selling Securityholders and any such brokers, dealers or agents who participate in the distribution of the Securities may be deemed to be "underwriters", and any profits on the sale of the Securities by them and any discounts, commissions or concessions received by any such brokers, dealers or agents might be deemed to be underwriting discounts and commissions under the Securities Act. To the extent the Selling Securityholders may be deemed to be underwriters, the Selling Securityholders may be subject to certain statutory liabilities under the Securities Act, including, but not limited to, Sections 11, 12 and 17 of the Securities Act and Rule 10b-5 under the Exchange Act. The Securities offered hereby may be sold by the Selling Securityholders from time to time in one or more transactions at fixed prices, at prevailing market prices at the time of sale, at varying prices determined at the time of sale or at negotiated prices. The Securities may be sold by one or more of the following methods, without limitation: (a) a block trade in which the broker or dealer so engaged will attempt to sell the Securities as agent but may position and resell a portion of the block as principal to facilitate the transaction; (b) purchases by a broker or dealer as principal and resale by such broker or dealer for its account pursuant to this Prospectus; (c) ordinary brokerage transactions and transactions in which the broker solicits purchasers; (d) an exchange distribution in accordance with the rules of such exchange; (e) face-to- face transactions between sellers and purchasers without a broker-dealer; (f) through the writing of options; and (g) other. At any time a particular offer of the Securities is made, a revised Prospectus or Prospectus Supplement, if required, will be distributed which will set forth the aggregate amount and type of Securities being offered and the terms of the offering, including the name or names of any underwriters, dealers or agents, any discounts, commissions and other items constituting compensation from the Selling Securityholders and any discounts, commissions or concessions allowed or reallowed or paid to dealers. Such Prospectus Supplement and, if necessary, a post-effective amendment to the Registration Statement of which this Prospectus is a part, will be filed with the Commission to reflect the disclosure of additional information with respect to the distribution of the Securities. In addition, the Securities covered by this Prospectus may be sold in private transactions or under Rule 144 rather than pursuant to this Prospectus. To the best knowledge of the Company, there are currently no plans, arrangements or understandings between any Selling Securityholders and any broker, dealer, agent or underwriter regarding the sale of the Securities by the Selling Securityholders. There is no assurance that any Selling Securityholder will sell any or all of the Securities offered by it hereunder or that any such Selling Securityholder will not transfer, devise or gift such Securities by other means not described herein. The Selling Securityholders and any other person participating in such distribution will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including, without limitation, Regulation M, which may limit the timing of purchases and sales of any of the Securities by the Selling Securityholders and any other such person. All of the foregoing may affect the marketability of the Securities and the ability of any person or entity to engage in market-making activities with respect to the Securities. Pursuant to the Preferred Stock Registration Rights Agreement entered into in connection with the offer and sale of the Depositary Shares by the Company, each of the Company and the applicable Selling Securityholders will be indemnified by the other against certain liabilities, including certain liabilities under the Securities Act, or 45 will be entitled to contribution in connection therewith. The Company has agreed to pay substantially all of the expenses incidental to the registration, offering and sale of the Securities to the public other than commissions, fees and discounts of underwriters, brokers, dealers and agents. LEGAL MATTERS The legality of the securities offered hereby has been passed upon for the Company by Kronish, Lieb, Weiner & Hellman LLP, 1114 Avenue of the Americas, New York, New York 10036-7798. Ralph J. Sutcliffe, a partner of Kronish, Lieb, Weiner & Hellman LLP, beneficially owns 5,745 shares of the Common Stock and owns a warrant to purchase 100,000 shares of Common Stock at an exercise price of $41.50 per share. EXPERTS The consolidated financial statements and schedule of Intermedia Communications Inc. appearing in Intermedia Communication Inc.'s Annual Report (Form 10-K) for the year ended December 31, 1996, have been audited by Ernst & Young LLP, independent certified public accountants, as set forth in their report thereon included therein and incorporated herein by reference. Such consolidated financial statements and schedule are incorporated herein by reference in reliance upon such report given upon the authority of such firm as experts in accounting and auditing. The consolidated financial statements of DIGEX, Incorporated, appearing in DIGEX, Incorporated's Annual Report (Form 10-KSB) for the year ended December 31, 1996, have been audited by Ernst & Young, LLP, independent auditors, as set forth in their report thereon included therein and incorporated herein by reference. Such consolidated financial statements are incorporated herein by reference in reliance upon such report given upon the authority of such firm as experts in accounting and auditing. The December 31, 1996 audited financial statements of Shared Technologies Fairchild Inc. incorporated by reference in this Prospectus and elsewhere in the Registration Statement have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their report with respect thereto, and are included herein in reliance upon the authority of said firm as experts in giving said report. The consolidated financial statements and schedule of Shared Technologies Fairchild Inc. and subsidiaries at December 31, 1995 and for each of the two years in the period ended December 31, 1995 incorporated by reference in this Prospectus have been audited by Rothstein, Kass & Company, P.C., independent certified public accountants, as indicated in their report, which includes an explanatory paragraph relating to the changing of the method of accounting for its investment in one of its subsidiaries, with respect thereto, and are incorporated by reference herein in reliance upon the authority of said firm as experts in accounting and auditing. 46 PART II INFORMATION NOT REQUIRED IN THE PROSPECTUS ITEM 14. Other Expenses of Issuance and Distribution. The following statement sets forth the expenses payable in connection with this Registration Statement (estimated except for the registration fee), all of which will be borne by the Company: Securities and Exchange Commission filing fee...............................$ 71,390.00 Legal fees and expenses.....................................................$ 25,000.00 Accountant's fees and expenses payable to Ernst & Young LLP.................$ 15,000.00 Accountant's fees and expenses payable to Arthur Andersen LLP...............$ 3,000.00 Accountant's fees and expenses payable to Rothstein, Kass & Company, P.C....$ 2,100.00 Miscellaneous...............................................................$ 8,510.00 - -------------------------------------------------------------------------------------------- Total.......................................................................$ 125,000.00 ========== - -------------------------------------------------------------------------------------------
ITEM 15. Indemnification of Directors and Officers. The Company's Certificate of Incorporation provides that the Company will to the fullest extent permitted by the DGCL indemnify all persons whom it may indemnify pursuant thereto. The Company's By-laws contain a similar provision requiring indemnification of the Company's directors and officers to the fullest extent authorized by the DGCL. The DGCL permits a corporation to indemnify its directors and officers (among others) against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by them in connection with any action, suit or proceeding brought (or threatened to be brought) by third parties, if such directors or officers acted in good faith and in a manner they reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe their conduct was unlawful. In a derivative action, i.e., one by or in the right of the corporation, indemnification ---- may be made for expenses (including attorneys' fees) actually and reasonably incurred by directors and officers in connection with the defense or settlement of such action if they had acted in good faith and in a manner they reasonably believed to be in or not opposed to the best interests of the corporation, except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged liable to the Company unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses. The DGCL further provides that, to the extent any director or officer has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in this paragraph, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith. In addition, the Company's Certificate of Incorporation contains a provision limiting the personal liability of the Company's directors for monetary damages for certain breaches of their fiduciary duty. The Company has indemnification insurance under which directors and officers are insured against certain liability that may occur in their capacity as such. ITEM 16. Exhibits and Financial Data Schedules. (a) Exhibits 1.1 -- Purchase Agreement, dated as of October 24, 1997, among the Company and the Initial Purchasers. 2.1 -- Agreement and Plan of Merger, dated as of June 4, 1997, among the Company, Daylight Acquisition Corp. and DIGEX, Incorporated. Exhibit 99(c)(1) to the Company's Schedule 14D-1 filed with the Commission on June 11, 1997 is incorporated herein by reference. 2.2 -- Agreement and Plan of Merger, dated as of November 20, 1997, by and among the Company, Moonlight Acquisition Corp. and Shared Technologies Fairchild Inc. Exhibit 99(c)(1) to the Company's Schedule 14D-1 and Schedule 13D filed with the Commission on November 26, 1997 is incorporated herein by reference. 4.1 -- Indenture, dated as of June 2, 1995, between the Company and SunBank National Association, as trustee. Exhibit 4.1 to the Company's Registration Statement on Form S-4 filed with the Commission on June 20, 1995 (No. 33-93622) is incorporated herein by reference. 4.1(a) -- Amended and Restated Indenture, dated as of April 26, 1996, governing the Company's 13 1/2% Series B Senior Notes due 2005, between the Company and SunTrust Bank, Central Florida, National Association, as trustee. Exhibit 4.1 to the Company's Current Report on Form 8-K filed with the Commission on April 29, 1996 is incorporated herein by reference. 4.2 -- Indenture, dated as of May 14, 1996, between the Company and SunTrust Bank, Central Florida, National Association, as trustee. Exhibit 4.1 to Amendment No. 1 to the Company's Registration Statement on Form S-3 (Commission File No. 33-34738) filed with the Commission on April 18, 1996 is incorporated herein by reference. 4.3 -- Indenture, dated as of July 9, 1997, between the Company and SunTrust Bank, Central Florida, National Association, as trustee. Exhibit 4.1 to the Company's Current Report on Form 8-K filed with the Commission on July 17, 1997 is incorporated herein by reference. 4.4 -- Indenture, dated as of October 30, 1997, between the Company and SunTrust Bank, Central Florida, National Association, as trustee. Exhibit 4.1 to the Company's Current Report on Form 8-K filed with the Commission on November 6, 1997 is incorporated herein by reference. 4.5 -- Preferred Stock Registration Rights Agreement, dated as of October 30, 1997, among the Company and the Initial Purchasers. 4.6 -- Certificate of Designation of Voting Power, Designation Preferences and Relative, Participating, Optional and Other Special Rights and Qualifications, Limitations and Restrictions of 7% Series E Junior Convertible Preferred Stock of the Company, filed with the Secretary of State of the State of Delaware on October 29, 1997. Exhibit 4.2 to the Company's Current Report on Form 8-K filed with the Commission on November 6, 1997 is incorporated herein by reference. 4.7 -- Deposit Agreement, dated as of October 30, 1997, between the Company and Continental Stock Transfer & Trust Company. Exhibit 4.3 to the Company's Current Report on Form 8-K filed with the Commission on November 6, 1997 is incorporated herein by reference. 5.1* -- Opinion of Kronish, Lieb, Weiner & Hellman LLP. 8.1* -- Opinion of Kronish, Lieb, Weiner & Hellman LLP re: Tax matters is contained in their opinion filed as Exhibit 5.1 to this Registration Statement. 12.1 -- Statement Re: Computation of Ratios. 23.1* -- Consent of Kronish, Lieb, Weiner & Hellman LLP is contained in their opinion filed as Exhibit 5.1 to this Registration Statement. 23.2 -- Consent of Ernst & Young LLP. 23.3 -- Consent of Ernst & Young LLP. 23.4 -- Consent of Arthur Andersen LLP 23.5 -- Consent of Rothstein, Kass & Company, P.C. 24.1 -- Power of Attorney is set forth on the signature page of this Registration Statement. - --------------- * To be filed by Amendment. (b) Financial Data Schedules Financial Data Schedules are not required to be filed since all financial statements have been previously included in filings with the Commission. ITEM 17. Undertakings. The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act; (ii) To reflect in the Prospectus any facts or events arising after the effective date of this Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this Registration Statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in this Registration Statement; provided, however, that paragraphs (i) and (ii) above do not apply if the -------- ------- information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the Company pursuant to Section 13 or Section 15(d) of the Exchange Act that are incorporated by reference in this Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (4) That, for purposes of determining any liability under the Securities Act, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in this Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Tampa, State of Florida, on this 22nd day of December, 1997. INTERMEDIA COMMUNICATIONS INC. By: /s/ Robert M. Manning ----------------------------------------- Robert M. Manning, Chief Financial Officer and Senior Vice President Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated. Each person whose signature appears below authorizes David C. Ruberg and Robert M. Manning, or either of them, as attorney-in-fact to sign and file in each capacity stated below, all amendments and post-effective amendments to this Registration Statement.
SIGNATURE TITLE DATE --------- ----- ---- Principal Executive Officers: Chairman of the Board, December 22, 1997 /s/ David C. Ruberg President and Chief - ---------------------------------------------- Executive Officer David C. Ruberg Principal Financial and Accounting Officers: Chief Financial Officer December 22, 1997 /s/ Robert M. Manning and - ---------------------------------------------- Senior Vice President Robert M. Manning /s/ Jeanne M. Walters Controller and Chief December 22, 1997 - ---------------------------------------------- Accounting Officer Jeanne M. Walters Other Directors: /s/ John C. Baker Director December 22, 1997 - ---------------------------------------------- John C. Baker /s/ George F. Knapp Director December 22, 1997 - ---------------------------------------------- George F. Knapp /s/ Philip A. Campbell Director December 22, 1997 - ---------------------------------------------- Philip A. Campbell
EXHIBIT INDEX Number Exhibit Page ------ ------- ---- 1.1 -- Purchase Agreement, dated as of October 24, 1997, among the Company and the Initial Purchasers. 2.1 -- Agreement and Plan of Merger, dated as of June 4, 1997, among the Company, Daylight Acquisition Corp. and DIGEX, Incorporated. Exhibit 99(c)(1) to the Company's Schedule 14D-1 filed with the Commission on June 11, 1997 is incorporated herein by reference. 2.2 -- Agreement and Plan of Merger, dated as of November 20, 1997, by and among the Company, Moonlight Acquisition Corp. and Shared Technologies Fairchild Inc. Exhibit 99(c)(1) to the Company's Schedule 14D-1 and Schedule 13D filed with the Commission on November 26, 1997 is incorporated herein by reference. 4.1 -- Indenture, dated as of June 2, 1995, between the Company and SunBank National Association, as trustee. Exhibit 4.1 to the Company's Registration Statement on Form S-4 filed with the Commission on June 20, 1995 (No. 33-93622) is incorporated herein by reference. 4.1(a) -- Amended and Restated Indenture, dated as of April 26, 1996, governing the Company's 13 1/2% Series B Senior Notes due 2005, between the Company and SunTrust Bank, Central Florida, National Association, as trustee. Exhibit 4.1 to the Company's Current Report on Form 8-K filed with the Commission on April 29, 1996 is incorporated herein by reference. 4.2 -- Indenture, dated as of May 14, 1996, between the Company and SunTrust Bank, Central Florida, National Association, as trustee. Exhibit 4.1 to Amendment No. 1 to the Company's Registration Statement on Form S-3 (Commission File No. 33-34738) filed with the Commission on April 18, 1996 is incorporated herein by reference. 4.3 -- Indenture, dated as of July 9, 1997, between the Company and SunTrust Bank, Central Florida, National Association, as trustee. Exhibit 4.1 to the Company's Current Report on Form 8-K filed with the Commission on July 17, 1997 is incorporated herein by reference. 4.4 -- Indenture, dated as of October 30, 1997, between the Company and SunTrust Bank, Central Florida, National Association, as trustee. Exhibit 4.1 to the Company's Current Report on Form 8-K filed with the Commission on November 6, 1997 is incorporated herein by reference. 4.5 -- Preferred Stock Registration Rights Agreement, dated as of October 30, 1997, among the Company and the Initial Purchasers. 4.6 -- Certificate of Designation of Voting Power, Designation Preferences and Relative, Participating, Optional and Other Special Rights and Qualifications, Limitations and Restrictions of 7% Series E Junior Convertible Preferred Stock of the Company, filed with the Secretary of State of the State of Delaware on October 29, 1997. Exhibit 4.2 to the Company's Current Report on Form 8-K filed with the Commission on November 6, 1997 is incorporated herein by reference. 4.7 -- Deposit Agreement, dated as of October 30, 1997, between the Company and Continental Stock Transfer & Trust Company. Exhibit 4.3 to the Company's Current Report on Form 8-K filed with the Commission on November 6, 1997 is incorporated herein by reference. 5.1* -- Opinion of Kronish, Lieb, Weiner & Hellman LLP. 8.1* -- Opinion of Kronish, Lieb, Weiner & Hellman LLP re: Tax matters is contained in their opinion filed as Exhibit 5.1 to this Registration Statement. 12.1 -- Statement Re: Computation of Ratios. 23.1* -- Consent of Kronish, Lieb, Weiner & Hellman LLP is contained in their opinion filed as Exhibit 5.1 to this Registration Statement. 23.2 -- Consent of Ernst & Young LLP. 23.3 -- Consent of Ernst & Young LLP. 23.4 -- Consent of Arthur Andersen LLP 23.5 -- Consent of Rothstein, Kass & Company, P.C. 24.1 -- Power of Attorney is set forth on the signature page of this Registration Statement. - --------------- * To be filed by Amendment. EX-1.1 2 PURCHASE AGREEMENT Exhibit 1.1 - -------------------------------------------------------------------------------- INTERMEDIA COMMUNICATIONS INC. 7,000,000 Depositary Shares Each Representing a One-Hundredth Interest in a Share of 7% Series E Junior Convertible Preferred Stock Depositary Share Purchase Agreement October 24, 1997 BEAR, STEARNS & CO. INC. SALOMON BROTHERS INC - -------------------------------------------------------------------------------- INTERMEDIA COMMUNICATIONS INC. 7,000,000 Depositary Shares Each Representing a One-Hundredth Interest in a Share of 7% Series E Junior Convertible Preferred Stock DEPOSITORY SHARE PURCHASE AGREEMENT ----------------------------------- October 24, 1997 New York, New York BEAR, STEARNS & CO. INC. SALOMON BROTHERS INC c/o Bear, Stearns & Co. Inc. 245 Park Avenue New York, New York 10167 Ladies & Gentlemen: Intermedia Communications Inc., a Delaware corporation (the "Company"), ------- proposes to issue and sell to Bear, Stearns & Co. Inc. and Salomon Brothers Inc (together, the "Initial Purchasers") 7,000,000 Depositary Shares (the ------------------ "Depositary Shares"), each representing a one-hundredth interest in a share of ----------------- its 7% Series E Junior Convertible Preferred Stock, par value $1.00 per share (the "Series E Preferred Stock"). The Series E Preferred Stock and the related ------------------------ Depositary Shares are to be authorized and issued pursuant to the provisions of a Certificate of Designation of Voting Power, Designation Preferences and Relative, Participating, Optional or Other Special Rights and Qualifications, Limitations and Restrictions (the "Certificate of Designation") to be filed with -------------------------- the Secretary of State of the State of Delaware. Continental Stock Transfer & Trust Company will be transfer agent and registrar for the Series E Preferred Stock and will act as the "Depositary" for the Depositary Shares. ---------- 1. Issuance of Securities. The Company proposes to, upon the terms and ---------------------- subject to the conditions set forth herein, issue and sell to the Initial Purchasers 7,000,000 Depositary Shares (the "Firm Shares"). The Company also ----------- proposes to sell to the Initial Purchasers, upon the terms and conditions set forth herein, up to an additional 1,750,000 Depositary Shares (the "Additional ---------- Shares", and together with the Firm Shares, the "Company Shares"). The Firm - ------ -------------- Shares, the Additional Shares, and the Series E Preferred Stock are collectively referred to herein as the "Securities." For purposes of this Purchase Agreement (this "Agreement"), the term --------- "Subsidiaries" shall mean the entities listed on Exhibit D hereto. Capitalized terms used but not otherwise defined herein shall have the meanings given to such terms in the Certificate of Designation. Upon original issuance thereof, and until such time as the same is no longer required under the applicable requirements of the Act, the Series E Preferred Stock, the Company Shares (and all securities issued in exchange therefor, in substitution thereof or upon conversion thereof) shall bear the following legend: "THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) TO THE COMPANY, (2) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (3) TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (4) PURSUANT TO OFFERS AND SALES TO NON- U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (5) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT (AN "IAI") THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE) OR (6) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT (AND BASED ON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), SUBJECT IN EACH OF THE FOREGOING CASES TO APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE." 2. Offering. The Company Shares, will be offered and sold to the -------- Initial Purchasers pursuant to an exemption from the registration requirements under the Securities Act of 1933, as amended (the "Act"). The Company has --- prepared a preliminary offering memorandum, dated October 22, 1997 (including the information in the Exhibits included in the exhibit volume delivered therewith, the "Preliminary Offering Memorandum"), and a final offering ------------------------------- memorandum, dated October 24, 1997 (including the information in the Exhibits attached thereto, the "Offering Memorandum"), relating to the Company and the ------------------- Series E Preferred Stock (and the related Depositary Shares) and the issuance of the Senior Notes due 2007. The Initial Purchasers have advised the Company that the Initial Purchasers will make offers of sale (the "Exempt Resales") of the Company -------------- Shares, on the terms set forth in the Offering Memorandum, as amended or supplemented, solely (i) to persons whom any of the Initial Purchasers reasonably believe to be "qualified institutional buyers," as defined in Rule 144A under the Act 2 ("QIBs"), (ii) to a limited number of persons who have represented to the ---- Company that they are institutional "Accredited Investors" referred to in Rule 501(a)(1), (2), (3) or (7) under the Act (each, an "Accredited Investor") and ------------------- (iii) pursuant to offers and sales that occur outside the United States within the meaning of Regulation S under Securities Act. The QIBs, Accredited Investors and the purchasers pursuant to Regulation S are referred to herein as the "Eligible Purchasers." The Initial Purchasers will offer the Series E Preferred ------------------- Stock (and the related Depositary Shares) to such Eligible Purchasers initially at a price of $2,500.00 (and $25.00 for the related Depositary Shares) per share. Such price may be changed at any time without notice. Holders (including subsequent transferees) of the Series E Preferred Stock (and the related Depositary Shares) will have the registration rights set forth in the registration rights agreement relating thereto (the "Registration ------------ Rights Agreement") to be dated the Closing Date (as defined), for so long as - ---------------- such Series E Preferred Stock (and the related Depositary Shares) constitute "Transfer Restricted Securities" (as defined in the Registration Rights Agreement). Pursuant to the Registration Rights Agreement, the Company will agree to file with the Securities and Exchange Commission (the "Commission"), ---------- under the circumstances set forth therein, (i) a shelf registration statement pursuant to Rule 415 under the Act (the "Shelf Registration Statement") relating ---------------------------- to the resale by certain holders of the Series E Preferred Stock and the related Depositary Shares, and (ii) a registration statement (the "Common Registration ------------------- Statement") relating to the sale by certain holders of Common Stock of the - --------- Company received in connection with conversion of the Series E Preferred Stock, and to use its best efforts to cause the Shelf Registration Statement and the Common Registration Statement to be declared effective. This Agreement, the Certificate of Designation, the Securities, and the Registration Rights Agreement are hereinafter sometimes referred to collectively as the "Operative --------- Documents." - --------- 3. Purchase, Sale and Delivery. (a) On the basis of the --------------------------- representations, warranties and covenants contained in this Agreement, and subject to its terms and conditions, the Company agrees to issue and sell to each Initial Purchaser, and each Initial Purchaser agrees severally and not jointly to purchase from the Company, the number of Firm Shares set forth opposite its name on Schedule I hereto. The purchase price for the Firm Shares, shall be $24.25 per share. The Company also agrees, subject to all the terms and conditions set forth herein, to sell to the Initial Purchasers, and, upon the basis of the representations, warranties and agreements of the Company herein contained and subject to all the terms and conditions set forth herein, the Initial Purchasers shall have the right to purchase from the Company, solely for the purpose of covering over-allotments in connection with sales of the Firm Shares, at the purchase price per Depository Share of $24.25, pursuant to an option (the "over-allotment option") which may be exercised at any time and from time to --------------------- time prior to 10:00 p.m., New York City time, on the 30th day after the date of the Offering Memorandum (or, if such 30th day shall be a Saturday or Sunday or a holiday, on the next business day thereafter when the New York Stock Exchange is open for trading), up to an aggregate of 1,750,000 Additional Shares. Upon any exercise of the over-allotment option, each Initial Purchaser, severally and not jointly, agrees to purchase from the Company the number of Additional Shares (subject to such adjustments as the Initial Purchasers may determine in order to avoid fractional Depository Shares) that bears the same proportion to the aggregate number of Additional Shares to be purchased by the Initial Purchasers as the number of Firm Shares set forth opposite the name of such Initial Purchaser on Schedule I hereto bears to the aggregate number of Firm Shares. 3 (b) Delivery of, and payment of the purchase price for, the Firm Shares shall be made, against payment of the purchase price, at the offices of Latham & Watkins, 885 Third Avenue, New York, NY 10022, or such other location as may be mutually acceptable. Such delivery and payment shall be made at 9:00 A.M. New York time, on October 30, 1997, or at such other time as shall be agreed upon by the Initial Purchasers and the Company. The time and date of such delivery and payment of the Firm Shares are herein called the "Closing Date." ------------ (c) Delivery of, and payment of the purchase price for any Additional Shares to be purchased by the Initial Purchasers shall be made at the offices of Latham & Watkins, 885 Third Avenue, New York, NY 10022, or such other location as may be mutually acceptable, at such time and on such date (the "Option ------ Closing Date"), which may be the same as the Closing Date but shall in no event - ------------ be earlier than the Closing Date nor later than ten business days after the giving of the notice hereinafter referred to, as shall be specified in a written notice from Bear, Stearns & Co. Inc., on behalf of the Initial Purchasers to purchase a number, specified in such notice, of Additional Shares. (d) The Firm Shares and any Additional Shares to be purchased hereunder shall initially be issued in the form of one or more Global Securities (the "Global Securities"), registered in the name of Cede & Co., as nominee of ----------------- the Depository Trust Company ("DTC"), having a liquidation preference --- corresponding to the aggregate liquidation preference of the Firm Shares and the Additional Shares, as the case may be. The Global Securities shall be delivered by the Company to the Initial Purchasers (or as the Initial Purchasers direct) in each case with any transfer taxes payable upon initial issuance thereof duly paid by the Company against payment of the purchase price by wire transfer of immediately available funds to the order of the Company. The Global Securities shall be made available to the Initial Purchasers for inspection not later than 9:30 a.m., New York City time, on the business day immediately preceding the Closing Date. 4. Agreements of the Company. The Company covenants and agrees with ------------------------- each of the Initial Purchasers as follows: (a) To advise the Initial Purchasers promptly and, if requested by the Initial Purchasers, confirm such advice in writing, (i) of the issuance by any state securities commission of any stop order suspending the qualification or exemption from qualification of any of the Company Shares for offering or sale in any jurisdiction, or the initiation of any proceeding for such purpose by any state securities commission or other regulatory authority and (ii) of the happening of any event that, in the reasonable opinion of either counsel to the Company or counsel to the Initial Purchasers, makes any statement of a material fact made in the Preliminary Offering Memorandum or the Offering Memorandum untrue or that requires the making of any additions to or changes in the Preliminary Offering Memorandum or the Offering Memorandum in order to make the statements therein, in the light of the circumstances under which they are made, not misleading. The Company shall use its best efforts to prevent the issuance of any stop order or order suspending the qualification or exemption of any of the Series E Preferred Stock (and the related Depositary Shares) under any state securities or Blue Sky laws and, if at any time any state securities commission or other regulatory authority shall issue an order suspending the qualification or exemption of any of the Company Shares, under any state securities or Blue Sky laws, the Company shall use its best efforts to obtain the withdrawal or lifting of such order at the earliest possible time. 4 (b) To furnish the Initial Purchasers and those persons identified by the Initial Purchasers to the Company, without charge, as many copies of the Preliminary Offering Memorandum and the Offering Memorandum, and any amendments or supplements thereto, as the Initial Purchasers may reasonably request. The Company consents to the use of the Preliminary Offering Memorandum and the Offering Memorandum, and any amendments and supplements thereto required pursuant hereto, by the Initial Purchasers in connection with Exempt Resales. (c) Not to amend or supplement the Preliminary Offering Memorandum or the Offering Memorandum prior to the Closing Date unless the Initial Purchasers shall previously have been advised thereof and shall not have objected thereto within a reasonable time after being furnished a copy thereof. The Company shall promptly prepare, upon the Initial Purchasers' request, any amendment or supplement to the Preliminary Offering Memorandum or the Offering Memorandum that may be necessary or advisable in connection with Exempt Resales. (d) If, after the date hereof and prior to consummation of any Exempt Resale, any event shall occur as a result of which, in the judgment of the Company or in the reasonable opinion of either counsel to the Company or counsel to the Initial Purchasers, it becomes necessary or advisable to amend or supplement the Preliminary Offering Memorandum or Offering Memorandum in order to make the statements therein, in the light of the circumstances when such Offering Memorandum is delivered to an Eligible Purchaser which is a prospective purchaser, not misleading, or if it is necessary or advisable to amend or supplement the Preliminary Offering Memorandum or Offering Memorandum to comply with applicable law, (i) to notify the Initial Purchasers and (ii) forthwith to prepare an appropriate amendment or supplement to such Offering Memorandum so that the statements therein as so amended or supplemented will not, in the light of the circumstances when it is so delivered, be misleading, or so that such Offering Memorandum will comply with applicable law. (e) To cooperate with the Initial Purchasers and counsel to the Initial Purchasers in connection with the qualification or registration of the Company Shares under the securities or Blue Sky laws of such jurisdictions as the Initial Purchasers may reasonably request and to continue such qualification in effect so long as required for the Exempt Resales; provided, however, that the Company shall not be required in connection therewith to register or qualify as a foreign corporation where it is not now so qualified or to take any action that would subject it to service of process in suits or taxation, in each case, other than as to matters and transactions relating to the Preliminary Offering Memorandum, the Offering Memorandum or Exempt Resales, in any jurisdiction where it is not now so subject. (f) Whether or not the transactions contemplated hereby are consummated or this Agreement becomes effective or is terminated, to pay all costs, expenses, fees and taxes incident to the performance of the obligations of the Company hereunder, including in connection with: (i) the preparation, printing, filing and distribution of the Preliminary Offering Memorandum and the Offering Memorandum (including, without limitation, financial statements) and all amendments and supplements thereto required pursuant hereto, (ii) the preparation (including, without limitation, duplication costs) and delivery of all preliminary and final Blue Sky memoranda prepared and delivered in connection herewith and with the Exempt Resales, (iii) the issuance, transfer and delivery by the Company of the Securities to the Initial Purchasers, (iv) the qualification or registration of the Securities for offer and sale under the securities or Blue Sky laws of the several states (including, without limitation, the reasonable fees and disbursements of 5 counsel to the Initial Purchasers relating thereto), (v) furnishing such copies of the Preliminary Offering Memorandum and the Offering Memorandum, and all amendments and supplements thereto, as may be requested for use in connection with Exempt Resales, (vi) the preparation of certificates for the Securities (including, without limitation, printing and engraving thereof), (vii) the fees, disbursements and expenses of the Company's counsel and accountants, (viii) all expenses and listing fees in connection with the application for quotation of the Company Shares in the National Association of Securities Dealers, Inc. ("NASD") Automated Quotation System - PORTAL ---- ("PORTAL"), (ix) all fees and expenses (including fees and expenses of counsel ------ to the Company) of the Company in connection with the approval of the Securities by DTC for "book-entry" transfer, (x) rating the Securities by rating agencies, (xi) the reasonable fees and expenses of the Transfer Agent and its counsel in connection with the Certificate of Designation, (xii) the performance by the Company of its other obligations under this Agreement and the other Operative Documents and (xiii) "roadshow" travel and other expenses incurred in connection with the marketing and sale of the Securities (other than out-of-pocket expenses incurred by the Initial Purchasers for travel, meals and lodgings). (g) To use the proceeds from the sale of the Company Shares in the manner described in the Offering Memorandum under the caption "Use of Proceeds." (h) To do and perform all things required to be done and performed under this Agreement by it prior to or after the Closing Date and to satisfy all conditions precedent on its part to the delivery of the Company Shares. (i) Not to sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in the Act) that would be integrated with the sale of the Company Shares, in a manner that would require the registration under the Act of the sale to the Initial Purchasers or Eligible Purchasers of the Company Shares, or to take any other action that would result in the Exempt Resales not being exempt from registration under the Act. (j) For so long as any of the Securities remain outstanding and during any period in which the Company is not subject to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), to make ------------ available to any holder of the Company Shares, in connection with any sale thereof and any prospective purchaser of such Company Shares from such holder, the information required by Rule 144A(d)(4) under the Act. (k) To comply with all of its agreements set forth in the Registration Rights Agreement and all agreements set forth in the representation letters of the Company to DTC relating to the approval of the Company Shares, by DTC for "book-entry" transfer. (l) To use its best efforts to effect the inclusion of the Company Shares, in PORTAL and to obtain approval of the Company Shares, by DTC for "book-entry" transfer. (m) During a period of five years following the Closing Date, to deliver without charge to each of the Initial Purchasers, as they may reasonably request, promptly upon their becoming available, copies of (i) all reports or other publicly available information that the Company shall mail or otherwise make available to its stockholders and (ii) all reports, financial statements and proxy or information statements filed by the Company with the Commission or any national securities exchange and such other publicly available information concerning the Company or its Subsidiaries, including without limitation, press releases. 6 (n) Prior to the Closing Date, to furnish to each of the Initial Purchasers, as soon as they have been publicly disclosed by the Company, a copy of any consolidated financial statements and any unaudited interim financial statements of the Company for any period subsequent to the period covered by the financial statements appearing in the Offering Memorandum. (o) Neither the Company nor any of its Subsidiaries will take, directly or indirectly, any action designed to, or that might reasonably be expected to, cause or result in stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Company Shares. Except as permitted by the Act, the Company will not distribute any preliminary offering memorandum, offering memorandum or other offering material in connection with the offering and sale of the Company Shares. (p) To comply with the agreements in the Certificate of Designation, the Indenture, the Registration Rights Agreement and any other Operative Document. (q) Not to engage in any directed selling efforts with respect to the Company Shares within the meaning of Regulation S, and that the Company and each person acting on behalf of the Company has complied and will comply with the offering restrictions requirement of Regulation S. (r) During the period of 90 days from the date of the Offering Memorandum, the Company will not offer, sell, contract to sell, grant any option to purchase, establish a put equivalent position (as defined in Rule 16a-1(h) under the Exchange Act), pledge or otherwise dispose of, directly or indirectly, any shares of Common Stock of the Company, or any securities that are substantially similar to the Common Stock, including, but limited to any securities that are convertible into or exercisable or exchangeable for, or that represent the right to receive, Common Stock or any substantially similar securities or publicly disclose the intention to make any such offer, sale, pledge or disposal, without the prior written consent of Bear, Stearns & Co. Inc. except (i) for private sales so long as the purchaser thereof enters into a corresponding lockup agreement with Bear, Stearns & Co. Inc. for the then unexpired portion of the 90-day period, (ii) for grants of employee stock options, restricted stock and other incentive awards in the ordinary course of business, issuances of Common Stock pursuant to the exercise of such options or awards or the exercise of any other employee stock options outstanding on the date hereof, (iii) issuances in connection with the acquisition by the Company or any of its subsidiaries of Telecommunications Related Assets or a Telecommunications Business and (iv) dividends on securities outstanding on the Issue Date in accordance with the terms thereof or issuances in connection with the exercise of any convertible securities, warrants or option securities existing on the Issue Date or that are required to be issued pursuant to any agreement in existence on the Issue Date. 5. Representations and Warranties. (a) The Company represents and ------------------------------ warrants to each of the Initial Purchasers that: (i) The Preliminary Offering Memorandum and the Offering Memorandum have been prepared in connection with the Exempt Resales. The Preliminary Offering Memorandum and the Offering Memorandum do not, and any supplement or amendment to them will not, contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances 7 under which they were made, not misleading, except that the representations and warranties contained in this paragraph shall not apply to statements in or omissions from the Preliminary Offering Memorandum and the Offering Memorandum (or any supplement or amendment thereto) made in reliance upon and in conformity with information relating to the Initial Purchasers furnished to the Company in writing by the Initial Purchasers expressly for use therein. No stop order preventing the use of the Preliminary Offering Memorandum or the Offering Memorandum, or any amendment or supplement thereto, or any order asserting that any of the transactions contemplated by this Agreement are subject to the registration requirements of the Act, has been issued. (ii) When the Company Shares are issued and delivered pursuant to this Agreement, neither the Series E Preferred Stock nor the Company Shares will be of the same class (within the meaning of Rule 144A under the Act) as securities of the Company that are listed on a national securities exchange registered under Section 6 of the Exchange Act, or that are quoted in a United States automated inter-dealer quotation system. (iii) The Company and each of its Subsidiaries (A) has been duly organized, is validly existing as a corporation in good standing under the laws of its respective jurisdiction of incorporation, (B) has all requisite corporate power and authority to carry on its business as it is currently being conducted and as described in the Offering Memorandum and to own, lease and operate its properties, and (C) is duly qualified and in good standing as a foreign corporation authorized to do business in each jurisdiction in which the nature of its business or its ownership or leasing of property requires such qualification except, with respect to this clause (C), where the failure to be so qualified or in good standing does not and could not reasonably be expected to (x) individually or in the aggregate, result in a material adverse effect on the properties, business, results of operations, condition (financial or otherwise), affairs or prospects of the Company and the Subsidiaries, taken as a whole, (y) interfere with or adversely affect the issuance or marketability of the Securities pursuant hereto or (z) in any manner draw into question the validity of this Agreement or any other Operative Document or the transactions described in the Offering Memorandum under the caption "Use of Proceeds" (any of the events set forth in clauses (x), (y) or (z), a "Material Adverse Effect"). ----------------------- (iv) All of the outstanding shares of capital stock of the Company have been duly authorized, validly issued, and are fully paid and nonassessable and were not issued in violation of any preemptive or similar rights. At June 30, 1997 on a combined basis, after giving effect to the issuance and sale of the Series E Preferred Stock (and the related Depositary Shares) pursuant hereto, and to the offering of the Senior Notes due 2007 being issued concurrently herewith and the events stated therein, the Company had an authorized and outstanding consolidated capitalization as set forth in the Offering Memorandum under the caption "Capitalization." (v) Except as set forth in the Offering Memorandum, there are not currently, and will not be as a result of the Offering, any outstanding subscriptions, rights, warrants, calls, commitments of sale or options to acquire, or instruments convertible into or exchangeable for, any capital stock or other equity interest of the Company or any Subsidiary. (vi) The Company has all requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement and the other Operative Documents, and to consummate the transactions contemplated hereby and thereby, including, 8 without limitation, the corporate power and authority to issue, sell and deliver the Securities as provided herein and therein. (vii) This Agreement has been duly and validly authorized, executed and delivered by the Company and is the legal, valid and binding agreement of the Company, enforceable against it in accordance with its terms, except insofar as indemnification and contribution provisions may be limited by applicable law or equitable principles and subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization or similar laws affecting the rights of creditors generally and subject to general principles of equity. (viii) The shares of Series E Preferred Stock (and the related Depositary Shares) have been duly and validly authorized for issuance and sale to the Initial Purchasers by the Company pursuant to this Agreement and, when issued, delivered and paid for in accordance with the terms of this Agreement, will be validly issued, fully paid and non-assessable and entitled to the rights, privileges and preferences set forth in the Certificate of Designation, and the issuance of such shares of Series E Preferred Stock (and the related Depositary Shares) will not be subject to any preemptive or similar rights. The Series E Preferred Stock (and the related Depositary Shares) will conform in all material respects with the description thereof in the Offering Memorandum. (ix) The Certificate of Designation has been duly authorized by all necessary corporate and any necessary stockholder action and, on the Closing Date will have been duly executed by the Company and filed with the Secretary of State of the State of Delaware and will conform in all material respects to the description thereof in the Offering Memorandum. (x) Each of the Registration Rights Agreement and the Deposit Agreement has been duly and validly authorized by the Company and, when duly executed and delivered by the Company, will be the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization or similar laws affecting the rights of creditors generally and subject to general principles of equity and limitations on the validity or enforceability of provisions relating to rights of indemnity and contribution set forth therein. The Offering Memorandum contains a fair summary of the terms of the Registration Rights Agreement and the Deposit Agreement. (xi) None of the Company or any Subsidiary is and, after giving effect to the Offering, will not be (A) in violation of its charter or bylaws, (B) in default in the performance of any bond, debenture, note, indenture, mortgage, deed of trust or other agreement or instrument to which it is a party or by which it is bound or to which any of its properties is subject, or (C) in violation of any local, state or Federal law, statute, ordinance, rule, regulation, requirement, judgment or court decree (including, without limitation, the Communications Act and the rules and regulations of the FCC and environmental laws, statutes, ordinances, rules, regulations, judgments or court decrees) applicable to the Company or any Subsidiary or any of their assets or properties (whether owned or leased) other than, in the case of clauses (B) and (C), any default or violation that (1) could not reasonably be expected to have a Material Adverse Effect or (2) which was disclosed in the Offering Memorandum. To the best knowledge of the Company, there exists no condition that, with notice, the passage of time or otherwise, would constitute a default under any such document or 9 instrument that could reasonably be expected to result in a Material Adverse Effect, except as disclosed in the Offering Memorandum. (xii) None of (A) the execution, delivery or performance by the Company of this Agreement and the other Operative Documents, (B) the issuance and sale of the Series E Preferred Stock (and the related Depositary Shares), (C) the performance by the Company of its obligations under this Agreement and the other Operative Documents and (D) the consummation of the transactions contemplated by this Agreement and the other Operative Documents violate, conflict with or constitute a breach of any of the terms or provisions of, or a default under (or an event that with notice or the lapse of time, or both, would constitute a default), or require consent under, or result in the imposition of a lien or encumbrance on any properties of the Company or any Subsidiary, or an acceleration of any indebtedness of the Company or any Subsidiary pursuant to, (i) the charter or bylaws of the Company or any Subsidiary, (ii) any bond, debenture, note, indenture, mortgage, deed of trust or other agreement or instrument to which the Company or any Subsidiary is a party or by which any of them or their property is or may be bound, (iii) any statute, rule or regulation applicable to the Company or any Subsidiary or any of their respective assets or properties or (iv) any judgment, order or decree of any court or governmental agency or authority having jurisdiction over the Company or the Subsidiaries or any of their assets or properties, except in the case of clauses (ii), (iii) and (iv) for such violations conflicts, breaches, defaults, consents, impositions of liens or accelerations that (1) would not singly, or in the aggregate, have a Material Adverse Effect or (2) were disclosed in the Offering Memorandum. Other than as described in the Offering Memorandum, no consent, approval, authorization or order of, or filing, registration, qualification, license or permit of or with, (A) any court or governmental agency, body or administrative agency (including, without limitation, the FCC) or (B) any other person is required for (1) the execution, delivery and performance by the Company of this Agreement and the other Operative Documents, or (2) the issuance and sale of the Securities and the transactions contemplated hereby and thereby, except (x) such as have been obtained and made (or, in the case of the Registration Rights Agreement, will be obtained and made) under the Act, the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act") and state securities or Blue Sky ------------------- laws and regulations or such as may be required by the NASD or (y) where the failure to obtain any such consent, approval, authorization or order of, or filing registration, qualification, license or permit would not reasonably be expected to result in a Material Adverse Effect. (xiii) There is (i) no action, suit or proceeding before or by any court, arbitrator or governmental agency, body or official, domestic or foreign, now pending or, to the best knowledge of the Company or any Subsidiary, threatened or contemplated to which the Company or any of the Subsidiaries is or may be a party or to which the business or property of the Company or any Subsidiary is subject, (ii) no statute, rule, regulation or order that has been enacted, adopted or issued by any governmental agency or that has been proposed by any governmental body or (iii) no injunction, restraining order or order of any nature by a federal or state court or foreign court of competent jurisdiction to which the Company or any Subsidiary is or may be subject or to which the business, assets, or property of the Company or any Subsidiary are or may be subject, that, in the case of clauses (i), (ii) and (iii) above, (x) is required to be disclosed in the Preliminary Offering Memorandum and the Offering Memorandum and that is not so disclosed, or (y) could reasonably be expected to individually or in the aggregate, result in a Material Adverse Effect. 10 (xiv) No action has been taken and no statute, rule, regulation or order has been enacted, adopted or issued by any governmental agency that prevents the issuance of the Series E Preferred (and the related Depositary Shares) or prevents or suspends the use of the Offering Memorandum; no injunction, restraining order or order of any nature by a federal or state court of competent jurisdiction has been issued that prevents the issuance of the Series E Preferred Stock (and the related Depositary Shares) or prevents or suspends the sale of the Series E Preferred Stock (and the related Depositary Shares) in any jurisdiction referred to in Section 4(e) hereof; and every request of any securities authority or agency of any jurisdiction for additional information has been complied with in all material respects. (xv) Except as set forth in the Offering Memorandum, there is (i) no significant unfair labor practice complaint pending against the Company or any Subsidiary nor, to the best knowledge of the Company, threatened against any of them, before the National Labor Relations Board, any state or local labor relations board or any foreign labor relations board, and no significant grievance or significant arbitration proceeding arising out of or under any collective bargaining agreement is so pending against the Company or any Subsidiary or, to the best knowledge of the Company, threatened against any of them, (ii) no significant strike, labor dispute, slowdown or stoppage pending against the Company or any Subsidiary nor, to the best knowledge of the Company, threatened against the Company or any Subsidiary and (iii) to the best knowledge of the Company, no union representation question existing with respect to the employees of the Company or any Subsidiary that, in the case of clauses (i), (ii) or (iii), could reasonably be expected to result in a Material Adverse Effect. To the best knowledge of the Company, no collective bargaining organizing activities are taking place with respect to the Company and the Subsidiaries that could reasonably be expected to result in a Material Adverse Effect. None of the Company or any Subsidiary has violated (A) any federal, state or local law or foreign law relating to discrimination in hiring, promotion or pay of employees (except as set forth in the Offering Memorandum), (B) any applicable wage or hour laws or (C) any provision of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or the rules and ----- regulations thereunder, which in the case of clause (A), (B) or (C) above could reasonably be expected to result in a Material Adverse Effect. (xvi) None of the Company or any Subsidiary has violated any environmental, safety or similar law or regulation applicable to it or its business or property relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants ("Environmental Laws"), lacks any permit, license or other approval ------------------ required of it under applicable Environmental Laws or is violating any term or condition of such permit, license or approval which could reasonably be expected to, either individually or in the aggregate, have a Material Adverse Effect. (xvii) Each of the Company and the Subsidiaries has (i) good and marketable title to all of the properties and assets described in the Offering Memorandum as owned by it, free and clear of all liens, charges, encumbrances and restrictions, (ii) peaceful and undisturbed possession under all material leases to which any of them is a party as lessee, (iii) all licenses, certificates, permits, authorizations, approvals, franchises and other rights from, and has made all declarations and filings with, all federal, state and local authorities (including, without limitation, the FCC), all self-regulatory authorities and all courts and other tribunals (each an "Authorization") ------------- necessary to engage in the business conducted by any of them in the manner described in the Offering Memorandum and (iv) no reason to believe that any governmental body or agency is considering limiting, suspending or revoking any such Authorization, except 11 with respect to clauses (i) through (iv) as described in the Offering Memorandum or as could not reasonably be expected to result in a Material Adverse Effect. Except where the failure to be in full force and effect would not have a Material Adverse Effect, all such Authorizations are valid and in full force and effect and each of the Company and the Subsidiaries is in compliance in all material respects with the terms and conditions of all such Authorizations and with the rules and regulations of the regulatory authorities having jurisdiction with respect thereto. Except as could not reasonably be expected to result in a Material Adverse Effect, all material leases to which the Company and the Subsidiaries is a party are valid and binding and no default by the Company or any Subsidiary has occurred and is continuing thereunder and, to the best knowledge of the Company and the Subsidiaries no material defaults by the landlord are existing under any such lease. (xviii) Except as could not reasonably be expected to result in a Material Adverse Effect, each of the Company and the Subsidiaries owns, possesses or has the right to employ all patents, patent rights, licenses (including all FCC, state, local or other jurisdictional regulatory licenses), inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, software, systems or procedures), trademarks, service marks and trade names, inventions, computer programs, technical data and information (collectively, the "Intellectual ------------ Property") presently employed by it or its Subsidiaries in connection with the - -------- businesses now operated by it or which are proposed to be operated by it or its Subsidiaries free and clear of and without violating any right, claimed right, charge, encumbrance, pledge, security interest, restriction or lien of any kind of any other person and none of the Company or any Subsidiary has received any notice of infringement of or conflict with asserted rights of others with respect to any of the foregoing. The use of the Intellectual Property in connection with the business and operations of the Company and the Subsidiaries does not infringe on the rights of any person, except as could not reasonably be expected to have a Material Adverse Effect. (xix) None of the Company or any Subsidiary, or to the best knowledge of the Company, any of their respective officers, directors, partners, employees, agents or affiliates or any other person acting on behalf of the Company or any Subsidiary has, directly or indirectly, given or agreed to give any money, gift or similar benefit (other than legal price concessions to customers in the ordinary course of business) to any customer, supplier, employee or agent of a customer or supplier, official or employee of any governmental agency (domestic or foreign), instrumentality of any government (domestic or foreign) or any political party or candidate for office (domestic or foreign) or other person who was, is or may be in a position to help or hinder the business of the Company or any Subsidiary (or assist the Company or any Subsidiary in connection with any actual or proposed transaction) which (i) might subject the Company or any Subsidiary, or any other individual or entity to any damage or penalty in any civil, criminal or governmental litigation or proceeding (domestic or foreign), (ii) if not given in the past, might have had a material adverse effect on the assets, business or operations of the Company or any Subsidiary or (iii) if not continued in the future, might have a Material Adverse Effect. (xx) All material tax returns required to be filed by the Company and each of the Subsidiaries in all jurisdictions have been so filed. All taxes, including withholding taxes, penalties and interest, assessments, fees and other charges due or claimed to be due from such entities or that are due and payable have been paid, other than those being contested in good faith and for which adequate reserves have been provided or those currently payable 12 without penalty or interest. To the knowledge of the Company, there are no material proposed additional tax assessments against the Company, the assets or property of the Company or any Subsidiary. (xxi) None of the Company or any Subsidiary is (i) an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended, or (ii) a "holding company" or a "subsidiary company" or an "affiliate" of a holding company within the meaning of the Public Utility Holding Company Act of 1935, as amended. (xxii) Except as disclosed in the Offering Memorandum, and except with respect to the holders of certain shares of Common Stock issued pursuant to an Asset Acquisition Agreement dated as of December 6, 1996 among Universal Telecom, Inc., Intermedia Communications, Inc. and certain individuals, there are no holders of securities of the Company or the Subsidiaries who, by reason of the execution by the Company of this Agreement or any other Operative Document to which it is a party or the consummation by the Company of the transactions contemplated hereby and thereby, have the right to request or demand that the Company or any of the Subsidiaries register under the Act or analogous foreign laws and regulations securities held by them. (xxiii) Each of the Company and the Subsidiaries maintains a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed in accordance with management's general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management's general or specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect thereto. (xxiv) Each of the Company and the Subsidiaries maintains insurance covering its properties, operations, personnel and businesses. Such insurance insures against such losses and risks as are adequate in accordance with customary industry practice to protect the Company and the Subsidiaries and their respective businesses. None of the Company or any Subsidiary has received notice from any insurer or agent of such insurer that substantial capital improvements or other expenditures will have to be made in order to continue such insurance. All such insurance is outstanding and duly in force on the date hereof, subject only to changes made in the ordinary course of business, consistent with past practice, which do not, singly or in the aggregate, materially alter the coverage thereunder or the risks covered thereby. (xxv) None of the Company or any Subsidiary has (i) taken, directly or indirectly, any action designed to, or that might reasonably be expected to, cause or result in stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Securities or (ii) since the date of the Preliminary Offering Memorandum (A) sold, bid for, purchased or paid any person (other than the Initial Purchasers) any compensation for soliciting purchases of the Series E Preferred Stock (and the related Depositary Shares) or (B) paid or agreed to pay to any person any compensation for soliciting another to purchase any other securities of the Company. 13 (xxvi) No registration under the Act of the Series E Preferred Stock (and the related Depositary Shares) is required for the sale of the Series E Preferred Stock (and the related Depositary Shares) to the Initial Purchasers as contemplated hereby or for the Exempt Resales assuming (i) that the purchasers who buy the Series E Preferred Stock (and the related Depositary Shares) in the Exempt Resales are Eligible Purchasers and (ii) the accuracy of the Initial Purchasers' representations regarding the absence of general solicitation in connection with the sale of Series E Preferred Stock (and the related Depositary Shares) to the Initial Purchasers and the Exempt Resales contained herein. No form of general solicitation or general advertising was used by the Company or any of its representatives (other than the Initial Purchasers, as to which the Company makes no representation or warranty) in connection with the offer and sale of any of the Series E Preferred Stock (and the related Depositary Shares) or in connection with Exempt Resales, including, but not limited to, articles, notices or other communications published in any newspaper, magazine, or similar medium or broadcast over television or radio, or any seminar or meeting whose attendees have been invited by any general solicitation or general advertising. (xxvii) Set forth on Exhibit A hereto is a list of each employee --------- pension or benefit plan with respect to which the Company or any corporation considered an affiliate of the Company within the meaning of Section 407(d)(7) of ERISA is a party in interest or disqualified person. The execution and delivery of this Agreement, the other Operative Documents and the sale of the Series E Preferred Stock (and the related Depositary Shares) to be purchased by the Eligible Purchasers will not involve any prohibited transaction within the meaning of Section 406 of ERISA or Section 4975 of the Internal Revenue Code of 1986. The representation made by the Company in the preceding sentence is made in reliance upon and subject to the accuracy of, and compliance with, the representations and covenants made or deemed made by the Eligible Purchasers as set forth in the Offering Memorandum under the caption "Notice to Investors." (xxviii) Each of the Preliminary Offering Memorandum and the Offering Memorandum, as of its date, and each amendment or supplement thereto, as of its date, contains the information specified in, and meets the requirements of, Rule 144A(d)(4) under the Act. (xxix) Subsequent to the respective dates as of which information is given in the Offering Memorandum and up to the Closing Date, except as set forth in the Offering Memorandum, (i) none of the Company or any Subsidiary has incurred any liabilities or obligations, direct or contingent, which are material, individually or in the aggregate, to the Company and the Subsidiaries taken as a whole, nor entered into any transaction not in the ordinary course of business, (ii) there has not been, singly or in the aggregate, any change or development, which could reasonably be expected to result in a Material Adverse Effect and (iii) there has been no dividend or distribution of any kind declared, paid or made by the Company on any class of its capital stock, except for dividends paid in respect of the Series B Preferred Stock or the Series D Junior Convertible Preferred Stock. (xxx) None of the Company or any Subsidiary or any agent thereof acting on behalf of them has taken, and none of them will take, any action that might cause this Agreement or the issuance or sale of the Securities to violate Regulation G (12 C.F.R. Part 207), Regulation T (12 C.F.R. Part 220), Regulation U (12 C.F.R. Part 221) or Regulation X 14 (12 C.F.R. Part 224) of the Board of Governors of the Federal Reserve System or analogous foreign laws and regulations. (xxxi) To the best knowledge of the Company, the accountants who have certified or will certify the financial statements included or to be included as part of the Offering Memorandum are independent accountants. The consolidated historical financial statements, together with related schedules and notes, set forth in the Offering Memorandum comply as to form in all material respects with the requirements applicable to registration statements on Form S-1 under the Act and present fairly in all material respects the financial position and results of operations of the Company and the Subsidiaries at the respective dates and for the respective periods indicated. Such financial statements have been prepared in accordance with generally accepted accounting principles applied on a consistent basis throughout the periods presented. The pro forma financial statements included in the Offering Memorandum have been prepared on a basis consistent with such historical statements, except for the pro forma adjustments specified therein, and give effect to assumptions made on a reasonable basis and present fairly in all material respects the historical and proposed transactions contemplated by this Agreement and the other Operative Documents; and such pro forma financial statements comply as to form in all material respects with the requirements applicable to pro forma financial statements included in registration statements on Form S-1 under the Act. The other financial and statistical information and data included in the Offering Memorandum, historical and pro forma, are accurately presented in all material respects and prepared on a basis consistent with the financial statements, historical and pro forma, included in the Offering Memorandum and the books and records of the Company and the Subsidiaries, as applicable. (xxxii) The Company does not intend to, nor does it believe that it will, incur debts beyond its ability to pay such debts as they mature. The present fair saleable value of the assets of the Company on a consolidated basis exceeds the amount that will be required to be paid on or in respect of the existing debts and other liabilities (including contingent liabilities) of the Company on a consolidated basis as they become absolute and matured. The assets of the Company on a consolidated basis do not constitute unreasonably small capital to carry out the business of the Company and the Subsidiaries, taken as a whole, as conducted or as proposed to be conducted. Upon the issuance of the Series E Preferred Stock (and the related Depositary Shares), the present fair saleable value of the assets of the Company on a consolidated basis will exceed the amount that will be required to be paid on or in respect of the existing debts and other liabilities (including contingent liabilities) of the Company on a consolidated basis as they become absolute and matured. Upon the issuance of the Series E Preferred Stock (and the related Depositary Shares), the assets of the Company on a consolidated basis will not constitute unreasonably small capital to carry out its businesses as now conducted, including the capital needs of the Company on a consolidated basis, taking into account the projected capital requirements and capital availability. (xxxiii) Except pursuant to this Agreement, there are no contracts, agreements or understandings between the Company and any other person that would give rise to a valid claim against the Company or either of the Initial Purchasers for a brokerage commission, finder's fee or like payment in connection with the issuance, purchase and sale of the Securities. 15 (xxxiv) Each certificate signed by any officer of the Company and delivered to the Initial Purchasers or counsel for the Initial Purchasers shall be deemed to be a representation and warranty by the Company to the Initial Purchasers as to the matters covered thereby. (xxxv) None of the Company, its Subsidiaries or any of its or their affiliates or any person acting on its or their behalf has engaged or will engage in any directed selling efforts within the meaning of Regulation S with respect to the Company Shares, and the Company, its Subsidiaries and its or their affiliates and all persons acting on its or their behalf have complied with and will comply with the offering restrictions requirements of Regulation S in connection with the offering of the Company Shares outside the United States. The Company acknowledges that each of the Initial Purchasers and, for purposes of the opinions to be delivered to the Initial Purchasers pursuant to Section 8 hereof, counsel to the Company and counsel to the Initial Purchasers, will rely upon the accuracy and truth of the foregoing representations and hereby consents to such reliance. (b) Each of the Initial Purchasers, severally and not jointly, represents, warrants and covenants to the Company and agrees that: (i) Such Initial Purchaser is a QIB, with such knowledge and experience in financial and business matters as are necessary in order to evaluate the merits and risks of an investment in the Company Shares. (ii) Such Initial Purchaser (A) is not acquiring the Company Shares with a view to any distribution thereof that would violate the Act or the securities laws of any state of the United States or any other applicable jurisdiction and (B) will be reoffering and reselling the Company Shares only to QIBs in reliance on the exemption from the registration requirements of the Act provided by Rule 144A, to Accredited Investors in a private placement exempt from the registration requirements of the Act and pursuant to offers and sales that occur outside the United States in reliance upon the exemption from the registration requirements of the Act provided by Regulation S. (iii) No form of general solicitation or general advertising has been or will be used by either of the Initial Purchasers or any of their representatives in connection with the offer and sale of any of the Company Shares, including, but not limited to, articles, notices or other communications published in any newspaper, magazine, or similar medium or broadcast over television or radio, or any seminar or meeting whose attendees have been invited by any general solicitation or general advertising. (iv) Each of the Initial Purchasers agrees that, in connection with the Exempt Resales, it will solicit offers to buy the Company Shares, only from, and will offer to sell the Company Shares, only to, Eligible Purchasers. The Initial Purchasers further agree (A) that they will offer to sell the Company Shares, only to, and will solicit offers to buy the Company Shares, only from (1) QIBs who in purchasing such Company Shares will be deemed to have represented and agreed that they are purchasing the Company Shares, for their own accounts or accounts with respect to which they exercise sole investment discretion and that they or such accounts are QIBs, (2) Accredited Investors who make the representations contained in, and execute and return to one of the Initial Purchasers, a certificate in the form 16 of Annex B attached to the Offering Memorandum and (3) pursuant to offers and sales that occur outside the United States within the meaning of Regulation S under the Securities Act and (B) that such Eligible Purchasers acknowledge and agree that such Company Shares will not have been registered under the Act and may be resold, pledged or otherwise transferred only (i) to the Company, (ii) pursuant to a registration statement which has been declared effective under the Securities Act, (iii) to a person it reasonably believes is a QIB in a transaction meeting the requirements of Rule 144A under the Securities Act, (iv) pursuant to offers and sales to non-U.S. persons that occur outside the United States in a transaction meeting the requirements of Rule 904 of Regulation S under the Securities Act, (v) to an institutional "accredited investor" (as defined in Rule 501(a) (1), (2), (3) or (7) of Regulation D under the Securities Act (an "IAI") that, prior to such transfer, furnishes to the trustee a signed letter containing certain representations and agreements relating to the transfer of the Securities (the form of which letter can be obtained from the Trustee) or (vi) pursuant to any other available exemption from the registration requirements of the Securities Act (and based on an opinion of counsel if the Company so requests), subject in each of the foregoing cases to the applicable state securities laws of any State of the United States or any other applicable jurisdiction and (C) that the holder will, and each subsequent holder is required to, notify any purchaser of the security evidenced thereby of the resale restrictions set forth in (B) above. Accordingly, each of the Initial Purchasers agrees that neither it, its affiliates nor any persons acting on its behalf has engaged or will engage in any directed selling efforts within the meaning of Rule 902 of Regulation S with respect to the Company Shares, and it, its affiliates and all persons acting on its or their behalf have complied and will comply with the offering restrictions requirements of Regulation S. (v) Each of the Initial Purchasers represents and agrees that the Company Shares offered and sold in reliance on Regulation S have been and will be offered and sold only in offshore transactions and that such securities have been and will be represented upon issuance by a global security that may be exchanged for definitive securities only upon certification of beneficial ownership of the securities by a non-U.S. person or a U.S. person who purchases such securities in a transaction that was exempt from the registration requirements of the Securities Act. (vi) Each of the Initial Purchasers understands that the Company and, for purposes of the opinions to be delivered to the Initial Purchasers pursuant to Section 8 hereof, counsel to the Company and counsel to the Initial Purchasers will rely upon the accuracy and truth of the foregoing representations and hereby consents to such reliance. Terms used in this Section 5 that have meanings assigned to them in Regulation S are used herein as so defined. 6. Indemnification. --------------- (a) The Company agrees to indemnify and hold harmless (i) each of the Initial Purchasers, (ii) each person, if any, who controls any of the Initial Purchasers within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act and (iii) the respective officers, directors, partners, employees, representatives and agents of any of the Initial Purchasers or any controlling person to the fullest extent lawful, from and against any and all losses, liabilities, claims, damages and expenses whatsoever (including but not limited to attorneys' fees and any and all expenses whatsoever incurred in investigating, preparing or defending against any 17 investigation or litigation, commenced or threatened, or any claim whatsoever, and any and all amounts paid in settlement of any claim or litigation), joint or several, to which they or any of them may become subject under the Act, the Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages or expenses (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Preliminary Offering Memorandum or the Offering Memorandum, or in any supplement thereto or amendment thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the Company will not be liable in any such case to the extent, but only to the extent, that (i) any such loss, liability, claim, damage or expense arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with written information furnished to the Company by or on behalf of the Initial Purchasers expressly for use therein and (ii) the foregoing indemnity with respect to any untrue statement contained in or omitted from a preliminary offering memorandum shall not inure to the benefit of any Initial Purchaser (or any person controlling such Initial Purchaser), from whom the person asserting any such loss, liability, claim, damage or expense purchased any of the Company Shares, which are the subject thereof if it is finally judicially determined that such loss, liability, claim, damage or expense resulted solely from the fact that the Initial Purchaser sold the Company Shares, to a person to whom there was not sent or given, at or prior to the written confirmation of such sale, a copy of the Offering Memorandum, as amended or supplemented, and (x) the Company shall have previously and timely furnished sufficient copies of the Offering Memorandum, as so amended or supplemented, to such Initial Purchaser in accordance with this Agreement and (y) the Offering Memorandum, as so amended or supplemented, would have corrected such untrue statement or omission of a material fact. This indemnity agreement will be in addition to any liability which the Company may otherwise have, including, under this Agreement. (b) Each Initial Purchaser, severally and not jointly, agrees to indemnify and hold harmless the Company and each person, if any, who controls the Company within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, against any losses, liabilities, claims, damages and expenses whatsoever (including but not limited to attorneys' fees and any and all expenses whatsoever incurred in investigating, preparing or defending against any investigation or litigation, commenced or threatened, or any claim whatsoever and any and all amounts paid in settlement of any claim or litigation), joint or several, to which they or any of them may become subject under the Act, the Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages or expenses (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Preliminary Offering Memorandum or the Offering Memorandum, or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, in each case to the extent, but only to the extent, that any such loss, liability, claim, damage or expense arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with written information furnished to the Company by or on behalf of any Initial Purchaser expressly for use therein; provided, however, that in no case shall any Initial Purchaser be liable or responsible for any amount in excess of the discounts and commissions received by such Initial Purchaser, as set forth on the cover page of 18 the Offering Memorandum. This indemnity agreement will be in addition to any liability which any Initial Purchaser may otherwise have, including, under this Agreement. (c) Promptly after receipt by an indemnified party under subsection (a) or (b) above of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify each party against whom indemnification is to be sought in writing of the commencement thereof (but the failure so to notify an indemnifying party shall not relieve it from any liability which it may have under this Section 6 except to the extent that it has been prejudiced in any material respect by such failure or from any liability which it may otherwise have). In case any such action is brought against any indemnified party, and it notifies an indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein, and to the extent it may elect by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party. Notwithstanding the foregoing, the indemnified party or parties shall have the right to employ its or their own counsel in any such case, but the fees and expenses of such counsel shall be at the expense of such indemnified party or parties unless (i) the employment of such counsel shall have been authorized in writing by one of the indemnifying parties in connection with the defense of such action, (ii) the indemnifying parties shall not have employed counsel to take charge of the defense of such action within a reasonable time after notice of commencement of the action, or (iii) such indemnified party or parties shall have reasonably concluded that there may be defenses available to it or them which are different from or additional to those available to one or all of the indemnifying parties (in which case the indemnifying party or parties shall not have the right to direct the defense of such action on behalf of the indemnified party or parties), in any of which events such fees and expenses of counsel shall be borne by the indemnifying parties; provided, however, that the indemnifying party under subsection (a) or (b) above, shall only be liable for the legal expenses of one counsel (in addition to any local counsel) for all indemnified parties in each jurisdiction in which any claim or action is brought. Anything in this subsection to the contrary notwithstanding, an indemnifying party shall not be liable for any settlement of any claim or action effected without its written consent; provided, however, that such consent was not unreasonably withheld. 7. Contribution. In order to provide for contribution in ------------ circumstances in which the indemnification provided for in Section 6 is for any reason held to be unavailable from the Company or is insufficient to hold harmless a party indemnified thereunder, the Company and the Initial Purchasers shall contribute to the aggregate losses, claims, damages, liabilities and expenses of the nature contemplated by such indemnification provision (including any investigation, legal and other expenses incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding or any claims asserted, but after deducting in the case of losses, claims, damages, liabilities and expenses suffered by the Company, any contribution received by the Company from persons, other than the Initial Purchasers, who may also be liable for contribution, including persons who control the Company within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act) to which the Company and one or more of the Initial Purchasers may be subject, in such proportion as is appropriate to reflect the relative benefits received by the Company and the Initial Purchasers from the offering of the Company Shares, or, if such allocation is not permitted by applicable law or indemnification is not available as a result of the indemnifying party not having received notice as provided in Section 6, in such proportion as is appropriate to reflect not only the relative benefits referred to above but also the relative fault of the Company and the Initial Purchasers in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant 19 equitable considerations. The relative benefits received by the Company and the Initial Purchasers shall be deemed to be in the same proportion as (x) the total proceeds from the offering of Company Shares, (net of discounts but before deducting expenses) received by the Company and (y) the discounts received by the Initial Purchasers, respectively, in each case as set forth in the table on the cover page of the Offering Memorandum. The relative fault of the Company and of the Initial Purchasers shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Initial Purchasers and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Initial Purchasers agree that it would not be just and equitable if contribution pursuant to this Section 7 were determined by pro rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to above. Notwithstanding the provisions of this Section 7, (i) in no case shall any of the Initial Purchasers be required to contribute any amount in excess of the amount by which the discount applicable to the Company Shares, purchased by such Initial Purchaser pursuant to this Agreement exceeds the amount of any damages which such Initial Purchaser has otherwise been required to pay by reason of any untrue or alleged untrue statement or omission or alleged omission and (ii) no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 7, (A) each person, if any, who controls any of the Initial Purchasers within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act and (B) the respective officers, directors, partners, employees, representatives and agents of any of the Initial Purchasers or any controlling person shall have the same rights to contribution as such Initial Purchaser, and each person, if any, who controls the Company within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act shall have the same rights to contribution as the Company, subject in each case to clauses (i) and (ii) of this Section 7. Any party entitled to contribution will, promptly after receipt of notice of commencement of any action, suit or proceeding against such party in respect of which a claim for contribution may be made against another party or parties under this Section 7, notify such party or parties from whom contribution may be sought, but the failure to so notify such party or parties shall not relieve the party or parties from whom contribution may be sought from any obligation it or they may have under this Section 7 or otherwise. No party shall be liable for contribution with respect to any action or claim settled without its prior written consent; provided, however, that such written consent was not unreasonably withheld. 8. Conditions of Initial Purchasers' Obligations. The several --------------------------------------------- obligations of the Initial Purchasers to purchase and pay for the Firm Shares and the Additional Shares, as provided herein, shall be subject to the satisfaction of the following conditions, except that with respect to the Additional Shares, references to the Closing Date shall mean the Option Closing Date: (a) All of the representations and warranties of the Company contained in this Agreement shall be true and correct on the date hereof and on the Closing Date with the same force and effect as if made on and as of the date hereof and the Closing Date, respectively. The Company shall have performed or complied in all material respects with all of the agreements herein contained and required to be performed or complied with by it at or prior to the Closing Date. (b) The Offering Memorandum shall have been printed and copies distributed to the Initial Purchasers not later than 10:00 a.m., New York City time, on the day following the date of this Agreement or at such later date and time as to which the Initial Purchasers may agree, and no stop order suspending the qualification or exemption from qualification of the Company Shares in any jurisdiction referred to in Section 4(e) shall have been issued and no proceeding for that purpose shall have been commenced or shall be pending or threatened. (c) No action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued by any governmental agency which would, as of the 20 Closing Date prevent the issuance of the Company Shares; no action, suit or proceeding shall have been commenced and be pending against or affecting or, to the best knowledge of the Company, threatened against, the Company or the Subsidiaries before any court or arbitrator or any governmental body, agency or official that (1) could reasonably be expected to result in a Material Adverse Effect or (2) has not been disclosed in the Offering Memorandum; and no stop order shall have been issued preventing the use of the Offering Memorandum, or any amendment or supplement thereto, or which could reasonably be expected to have a Material Adverse Effect. (d) Since the dates as of which information is given in the Offering Memorandum and except as contemplated by the Offering Memorandum, (i) there shall not have been any material adverse change, or any development that is reasonably likely to result in a material adverse change, in the capital stock or the long-term debt, or material increase in the short-term debt, of the Company and the Subsidiaries from that set forth in the Offering Memorandum, (ii) no dividend or distribution of any kind shall have been declared, paid or made by the Company or any Subsidiary (other than any dividends or distributions paid to the Company) on any class of its capital stock, except for regular dividends paid in respect of the Series B Preferred Stock or Series D Preferred Stock and (iii) neither the Company nor any Subsidiary shall have incurred any liabilities or obligations, direct or contingent, that are material, individually or in the aggregate, to the Company and the Subsidiaries, taken as a whole, and that are required to be disclosed on a balance sheet or notes thereto in accordance with generally accepted accounting principles and are not disclosed on the latest balance sheet or notes thereto included in the Offering Memorandum. Since the date hereof and since the dates as of which information is given in the Offering Memorandum, there shall not have occurred any material adverse change, or any development which may reasonably be expected to involve a material adverse change, in the properties, business, results of operations, condition (financial or otherwise), affairs or prospects of the Company and the Subsidiaries taken as a whole. (e) The Initial Purchasers shall have received a certificate, dated the Closing Date, signed on behalf of the Company by (i) David C. Ruberg, Chairman of the Board, President and Chief Executive Officer and (ii) Robert M. Manning, Senior Vice President and Chief Financial Officer, in form and substance reasonably satisfactory to the Initial Purchasers, confirming, as of the Closing Date, the matters set forth in paragraphs (a), (b), (c) and (d) of this Section 8 and that, as of the Closing Date, the obligations of the Company to be performed hereunder on or prior thereto have been duly performed in all material respects. (f) The Initial Purchasers shall have received on the Closing Date an opinion, dated the Closing Date, in form and substance satisfactory to the Initial Purchasers and counsel to the Initial Purchasers, of Kronish, Lieb, counsel for the Company, to the effect set forth in Exhibit B hereto. --------- (g) The Initial Purchasers shall have received on the Closing Date an opinion, dated the Closing Date, in form and substance satisfactory to the Initial Purchasers and counsel to the Initial Purchasers, of Kelley Drye & Warren LLP, special regulatory counsel to the Company, to the effect set forth in Exhibit C hereto. --------- (h) The Initial Purchasers shall have received an opinion, dated the Closing Date, in form and substance reasonably satisfactory to the Initial Purchasers, of Latham & Watkins, counsel to the Initial Purchasers, covering such matters as are customarily covered in such opinions. 21 (i) At the time this Agreement is executed and at the Closing Date the Initial Purchasers shall have received from Ernst & Young LLP, independent public accountants for the Company, dated as of the date of this Agreement and as of the Closing Date, customary comfort letters addressed to the Initial Purchasers and in form and substance satisfactory to the Initial Purchasers and counsel to the Initial Purchasers with respect to the financial statements and certain financial information of the Company contained in the Offering Memorandum. (j) Latham & Watkins shall have been furnished with such documents, in addition to those set forth above, as they may reasonably require for the purpose of enabling them to review or pass upon the matters referred to in this Section 8 and in order to evidence the accuracy, completeness or satisfaction in all material respects of any of the representations, warranties or conditions herein contained. (k) Prior to the Closing Date, the Company and the Subsidiaries shall have furnished to the Initial Purchasers such further information, certificates and documents as the Initial Purchasers may reasonably request. (l) The Company shall have authorized, executed and filed the Certificate of Designation in accordance with Delaware law and each of the Initial Purchasers shall have received an original, duly executed by the Company. (m) The Company shall have entered into each of the Registration Rights Agreement and the Deposit Agreement and the Initial Purchasers shall have received counterparts, conformed as executed, thereof. (n) The Company shall have deposited the Series E Preferred Stock with the Depositary. (o) At or prior to the Closing Date, all FCC or state approvals required in connection with the Offering shall have been obtained or applications for such approvals submitted or prepared for submission promptly following the Closing Date and the Company shall have delivered to the Initial Purchasers evidence satisfactory to the Initial Purchasers that such FCC or state approvals have been obtained or applications thereof have been made or prepared for submission promptly following the Closing Date. All opinions, certificates, letters and other documents required by this Section 8 to be delivered by the Company will be in compliance with the provisions hereof only if they are reasonably satisfactory in form and substance to the Initial Purchasers. The Company will furnish the Initial Purchasers with such conformed copies of such opinions, certificates, letters and other documents as it shall reasonably request. 22 9. Initial Purchasers' Information. The Company and the Initial ------------------------------- Purchasers severally acknowledge that the statements with respect to the offering of the Series E Preferred Stock (and the related Depositary Shares) set forth in the last paragraph of the cover page and the third, eighth, eleventh and twelfth paragraphs under the caption "Plan of Distribution" in such Offering Memorandum constitute the only information furnished in writing by the Initial Purchasers expressly for use in the Offering Memorandum. 10. Survival of Representations and Agreements. All representations ------------------------------------------ and warranties, covenants and agreements of the Initial Purchasers and the Company contained in this Agreement, including the agreements contained in Sections 4(f) and 11(d), the indemnity agreements contained in Section 6 and the contribution agreements contained in Section 7, shall remain operative and in full force and effect regardless of any investigation made by or on behalf of the Initial Purchasers or any controlling person thereof or by or on behalf of the Company or any controlling person thereof, and shall survive delivery of and payment for the Series E Preferred Stock (and the related Depositary Shares) to and by the Initial Purchasers. The representations contained in Section 5 and the agreements contained in Sections 4(f), 6, 7 and 11(d) shall survive the termination of this Agreement, including any termination pursuant to Section 11. 11. Effective Date of Agreement; Termination. ---------------------------------------- (a) This Agreement shall become effective upon execution and delivery of a counterpart hereof by each of the parties hereto. (b) The Initial Purchasers shall have the right to terminate this Agreement at any time prior to the Closing Date by notice to the Company from the Initial Purchasers, without liability (other than with respect to Sections 6 and 7) on the Initial Purchasers' part to the Company if, on or prior to such date, (i) the Company shall have failed, refused or been unable to perform in any material respect any agreement on its part to be performed hereunder, (ii) any other condition to the obligations of the Initial Purchasers hereunder as provided in Section 8 is not fulfilled when and as required in any material respect, (iii) in the reasonable judgment of the Initial Purchasers any material adverse change shall have occurred since the respective dates as of which information is given in the Offering Memorandum in the condition (financial or otherwise), business, properties, assets, liabilities, prospects, net worth, results of operations or cash flows of the Company and the Subsidiaries taken as a whole, other than as set forth in the Offering Memorandum, or (iv)(A) any domestic or international event or act or occurrence has materially disrupted, or in the opinion of the Initial Purchasers will in the immediate future materially disrupt, the market for the Company's securities or for securities in general; or (B) trading in securities generally on the New York or American Stock Exchanges shall have been suspended or materially limited, or minimum or maximum prices for trading shall have been established, or maximum ranges for prices for securities shall have been required, on such exchange, or by such exchange or other regulatory body or governmental authority having jurisdiction; or (C) a banking moratorium shall have been declared by Federal or state authorities, or a moratorium in foreign exchange trading by major international banks or persons shall have been declared; or (D) there is an outbreak or escalation of armed hostilities involving the United States on or after the date hereof, or if there has been a declaration by the United States of a national emergency or war, the effect of which shall be, in the Initial Purchasers' judgment, to make it inadvisable or impracticable to proceed with the offering or delivery of the Company Shares on the terms and in the manner contemplated in the Offering Memorandum; or (E) there shall have been such a material adverse change in general economic, political or financial conditions or if the effect of 23 international conditions on the financial markets in the United States shall be such as, in the Initial Purchasers' judgment, makes it inadvisable or impracticable to proceed with the delivery of the Company Shares as contemplated hereby. (c) Any notice of termination pursuant to this Section 11 shall be by telephone, telex, telephonic facsimile, or telegraph, confirmed in writing by letter. (d) If this Agreement shall be terminated pursuant to any of the provisions hereof (otherwise than pursuant to any of clauses (iii) or (iv) of Section 11(b), in which case each party will be responsible for its own expenses), or if the sale of the Series E Preferred Stock (and the related Depositary Shares) provided for herein is not consummated because any condition to the obligations of the Initial Purchasers set forth herein is not satisfied or because of any refusal, inability or failure on the part of the Company to perform any agreement herein or comply with any provision hereof, the Company will, subject to demand by the Initial Purchasers, reimburse the Initial Purchasers for all out-of-pocket expenses (including the reasonable fees and expenses of Initial Purchasers' counsel), incurred by the Initial Purchasers in connection herewith. 12. Notice. All communications hereunder, except as may be otherwise ------ specifically provided herein, shall be in writing and, if sent to the Initial Purchasers shall be mailed, delivered, or telexed, telegraphed or telecopied and confirmed in writing to Bear, Stearns & Co. Inc. and Salomon Brothers Inc, c/o Bear, Stearns & Co. Inc., 245 Park Avenue, New York, New York 10167, Attention: Corporate Finance Department, telecopy number: (212) 272-3092; and if sent to the Company, shall be mailed, delivered or telexed, telegraphed or telecopied and confirmed in writing to Intermedia Communications Inc., 3625 Queen Palm Drive, Tampa, Florida 33619, Attention: Robert M. Manning, Chief Financial Officer, telecopy number: (813) 744-2470, with a copy to Kronish, Lieb, Weiner & Hellman LLP, 1114 Avenue of the Americas, 46th Floor, New York, New York 10036, Attention: Ralph J. Sutcliffe, telecopy number (212) 997-3527; provided, however, that any notice pursuant to Section 7 shall be mailed, delivered or telexed, telegraphed or telecopied and confirmed in writing. 13. Parties. This Agreement shall inure solely to the benefit of, and ------- shall be binding upon, the Initial Purchasers and the Company and the controlling persons and agents referred to in Sections 6 and 7, and their respective successors and assigns, and no other person shall have or be construed to have any legal or equitable right, remedy or claim under or in respect of or by virtue of this Agreement or any provision herein contained. The term "successors and assigns" shall not include a purchaser, in its capacity as such, of Series E Preferred Stock (and the related Depositary Shares) from the Initial Purchasers. 14. Construction. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED ------------ IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK AS APPLIED TO CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK. TIME IS OF THE ESSENCE IN THIS AGREEMENT. 15. Captions. The captions included in this Agreement are included -------- solely for convenience of reference and are not to be considered a part of this Agreement. 16. Counterparts. This Agreement may be executed in various ------------ counterparts which together shall constitute one and the same instrument. 24 If the foregoing correctly sets forth the understanding among the Initial Purchasers and the Company, please so indicate in the space provided below for that purpose, whereupon this letter shall constitute a binding agreement between us. Very truly yours, INTERMEDIA COMMUNICATIONS INC. By:/s/ Robert A. Ruh ------------------------- Name: Robert A. Ruh Title: Senior Vice President Accepted and agreed to as of the date first above written: BEAR, STEARNS & CO. INC. By:/s/ Stephen Parish ---------------------------- Name: Stephen Parish Title: Senior Managing Director SALOMON BROTHERS INC By:/s/ Peter Westley ---------------------------- Name: Peter Westley Title: Vice President 25 SCHEDULE I
Number of Firm Shares Initial Purchaser to be Purchased - ----------------- --------------- Bear, Stearns & Co. Inc. .............................................3,500,000 Salomon Brothers Inc. ................................................3,500,000 ------------- Total 7,000,000
Sched-I EXHIBIT A List of Employee Pension and Benefit Plans of Intermedia Communications Inc. and its Subsidiaries 1. Intermedia Communications Inc. 401(k) Profit Sharing Plan A-1 EXHIBIT B Form of Opinion of Kronish, Lieb, Weiner & Hellman LLP 1. Each of the Company and the Subsidiaries is duly organized and validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation, and has all requisite corporate power and authority to carry on its business as it is being conducted and as described in the Offering Memorandum and to own, lease and operate its properties, and is duly qualified and in good standing as a foreign corporation authorized to do business in each jurisdiction in which the nature of its business or its ownership or leasing of property requires such qualification, except where the failure to be so qualified would not, singly or in the aggregate, have a Material Adverse Effect. All of the issued and outstanding shares of capital stock of, or other ownership interests in, each Subsidiary have been duly authorized and validly issued, are fully paid and non-assessable and were not issued in violation of or subject to any preemptive or similar rights under the Delaware General Corporation Law or known to such counsel, after reasonable inquiry, and, except as set forth in the Offering Memorandum or on Schedule A hereto, are owned by the Company of record, and to the knowledge of such counsel, after reasonable inquiry, beneficially, directly or through subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or other restriction on transferability or voting. 2. All of the outstanding shares of capital stock of the Company have been duly authorized, validly issued, and are fully paid and nonassessable and were not issued in violation of any preemptive or similar rights. The authorized, issued and outstanding capital stock of the Company conforms in all respects to the description thereof set forth in the Offering Memorandum. Except as set forth in the Offering Memorandum or on Schedule A hereto, there are no outstanding subscriptions, rights, warrants, calls, commitments of sale or options to acquire, or instruments convertible into or exercisable or exchangeable for, any capital stock or other equity interest in the Company or any of its Subsidiaries known to such counsel after reasonable inquiry. 3. When the Company Shares, are issued and delivered pursuant to this Agreement, no Company Shares will be of the same class (within the meaning of Rule 144A under the Act) as securities of the Company that are listed on a national securities exchange registered under Section 6 of the Exchange Act or that are quoted in a United States automated inter-dealer quotation system. 4. The Company has all requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement, the Certificate of Designation, the Deposit Agreement, the Registration Rights Agreement and the other Operative Documents, as applicable, and to consummate the transactions contemplated thereby, including, without limitation, the corporate power and authority to issue, sell and deliver the Securities as provided herein and therein. 5. This Agreement has been duly and validly authorized, executed and delivered by the Company and, assuming due execution by the other parties thereto, is the legally valid and binding agreement of the Company. B-1 6. The Certificate of Designation has been duly authorized by all necessary corporate and stockholder action, executed by the Company and filed with the Secretary of State of the State of Delaware. 7. Each of the Deposit Agreement and the Registration Rights Agreement has been duly and validly authorized, executed and delivered by the Company and, assuming due execution by the other parties thereto, is the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except that we express no opinion as to the validity or enforceability of rights of indemnity or contribution, or both and except as such enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization or similar laws affecting the rights of creditors generally and subject to general principles of equity. 8. The Series E Preferred Stock (and the related Depositary Shares) have been duly and validly authorized for issuance and sale to the Initial Purchasers by the Company pursuant to this Agreement and, when issued, delivered and paid for in accordance with the terms of this Agreement, will be validly issued, fully paid and non-assessable and entitled to the rights, privileges and preferences set forth in the Certificate of Designation, and the issuance of such shares of Series E Preferred Stock (and the related Depositary Shares) will not be subject to any preemptive or similar rights. 9. The Offering Memorandum contains a fair summary of each of the Series E Preferred Stock, the Certificate of Designation, the Company Shares, the Deposit Agreement and the Registration Rights Agreement. 10. No registration under the Act of the Series E Preferred Stock (and the related Depositary Shares) is required for the sale of the Company Shares, to the Initial Purchasers as contemplated by this Agreement or for the Exempt Resales assuming (i) that the Initial Purchasers are Qualified Institutional Buyers, as defined in Rule 144A under the Act ("QIB"), (ii) that the purchasers --- who buy the Company Shares, in the Exempt Resales are Eligible Purchasers (iii) the accuracy of the Initial Purchasers' and the Company's representations regarding the absence of general solicitation in connection with the sale of Company Shares, to the Initial Purchasers and the Exempt Resales contained in this Agreement, (iv) the accuracy of the Company's representations in Sections 5(a)(ii), (xxv),(xxvi) last sentence only and (xxviii) of this Agreement and (v) with respect to Accredited Investors, the accuracy of the representations made by each Accredited Investor as set forth in the letters of representation executed by such Accredited Investor in the form of Annex B to the Offering ------- Memorandum. 11. The Offering Memorandum, as of its date (except for the financial statements, including the notes thereto, and supporting schedules and other financial, statistical and accounting data included therein or omitted therefrom, as to which no opinion need be expressed), and each amendment or supplement thereto, as of its date, contains all the information specified in, and meets the requirements of, Rule 144A(d)(4) under the Act. B-2 12. None of (A) the execution, delivery or performance by the Company of this Agreement and the other Operative Documents, (B) the issuance and sale of the Series E Preferred Stock (and the related Depositary Shares), (C) the performance by the Company of its obligations under this Agreement and the other Operative Documents and (D) the consummation of the transactions contemplated by this Agreement and the other Operative Documents violates, conflicts with or constitutes a breach of any of the terms or provisions of, or a default under (or an event that with notice or the lapse of time, or both, would constitute a default), or require consent under, or result in the imposition of a lien or encumbrance on any properties of the Company or any Subsidiary, or an acceleration of any indebtedness of the Company or any Subsidiary pursuant to, (i) the charter or bylaws of the Company or any Subsidiary, (ii) any bond, debenture, note, indenture, mortgage, deed of trust or other agreement or instrument to which the Company or any Subsidiary is a party or by which any of them or their property is or may be bound identified to such counsel by the Company as material (assuming all of such agreements are governed by New York law), (iii) any local, state, federal or administrative statute, rule or regulation applicable to the Company or any Subsidiary or any of their assets or properties (except such counsel shall express no opinion as to the matters addressed in the opinion of Kelley Drye & Warren LLP), or (iv) any judgment, order or decree of any court or governmental agency or authority having jurisdiction over the Company or any Subsidiary or any of their assets or properties known to such counsel, except in the case of clauses (ii), (iii) and (iv) for such violations, conflicts, breaches, defaults, consents, impositions of liens or accelerations that (x) would not, singly or in the aggregate, have a Material Adverse Effect or (y) are disclosed in the Offering Memorandum. Assuming compliance with applicable state securities and Blue Sky laws, as to which such counsel need express no opinion, and except for the filing of a registration statement under the Act and qualification of the Indenture under the Trust Indenture Act of 1939, as amended, in connection with the Registration Rights Agreement, no consent, approval, authorization or order of, or filing, registration, qualification, license or permit of or with, any court or governmental agency, body or administrative agency is required for (1) the execution, delivery and performance by the Company of this Agreement and the other Operative Documents, (2) the issuance and sale of the Securities or (3) consummation by the Company and the Subsidiaries of the transactions described in the Offering Memorandum under the caption "Use of Proceeds," except (i) such as have been obtained and made or have been disclosed in the Offering Memorandum, (ii) where the failure to obtain such consents or waivers would not, singly or in the aggregate, have a Material Adverse Effect and (iii) such counsel shall express no opinion as to the matters addressed in the opinion of Kelley Drye & Warren LLP. To such counsel's knowledge, after reasonable inquiry, no consents or waivers from any other person are required for the execution, delivery and performance by the Company of this Agreement and the other Operative Documents for the issuance and sale of the Securities, other than such consents and waivers as have been obtained. 13. None of the Company or the Subsidiaries is (i) an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended, or (ii) a "holding company" or a "subsidiary company" or an "affiliate" of a holding company within the meaning of the Public Utility Holding Company Act of 1935, as amended. 14. Except as set forth in this Agreement, the Registration Rights Agreement or the Registration Rights Agreement in respect of the Senior Notes due 2007, and except with respect to the holders of certain shares of Common Stock issued pursuant to an Asset Acquisition Agreement dated as of December 6, 1996 among Universal Telecom, Inc., Intermedia Communications, Inc. and certain B-3 individuals, to such counsel's knowledge, after reasonable inquiry, there are no holders of any securities of the Company who, by reason of the execution by the Company of this Agreement or any other Operative Document to which it is a party or the consummation by the Company of the transactions contemplated thereby, have the right to request or demand that the Company register under the Act securities held by them. 15. None of the execution, delivery and performance of this Agreement, the issuance and sale of the Securities, the application of the proceeds from the issuance and sale of the Securities and the consummation of the transactions contemplated thereby as set forth in the Offering Memorandum, will violate Regulations G, T, U or X promulgated by the Board of Governors of the Federal Reserve System. 16. To the knowledge of such counsel, no search of court records having been made, there is (i) no action, suit, investigation or proceeding before or by any court, arbitrator or governmental agency, body or official, domestic or foreign, now pending, or threatened or contemplated to which any of the Company or any Subsidiary is or may be a party or to which the business or property of the Company or any Subsidiary is or may be subject, (ii) no statute, rule, regulation or order that has been enacted, adopted or issued by any governmental agency or that has been proposed by any governmental body, or (iii) no injunction, restraining order or order of any nature by a federal or state court of competent jurisdiction to which any of the Company or any Subsidiary is or may be subject or to which the business, assets or property of the Company or any of the Subsidiaries are or may be subject has been issued that, in the case of clauses (i), (ii) and (iii) above, (x) is required to be disclosed in the Preliminary Offering Memorandum and the Offering Memorandum and that is not so disclosed, (y) could reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect, except as disclosed in the Offering Memorandum or (z) might interfere with, adversely affect or in any manner question the validity of the issuance and sale of the Series E Preferred Stock (and the related Depositary Shares) or any of the other transactions contemplated by this Agreement or any of the other Operative Documents, except that such counsel shall express no opinion as to the matters addressed in the opinion of Kelley Drye & Warren LLP. 17. The statements under the captions "Description of Preferred Stock" and "Description of the Depositary Shares" in the Offering Memorandum, insofar as such statements constitute a summary of documents referred to therein present a fair summary thereof. The terms of the Certificate of Designation conform to the descriptions thereof contained in the Offering Memorandum. 18. The statements contained in the Offering Memorandum under the caption "Certain Federal Income Tax Consequences" are a fair and accurate summary of the matters discussed therein. We have participated in conferences with officers and other representatives of the Company, representatives of the independent certified public accountants of the Company and the Initial Purchasers and their representatives at which the contents of the Preliminary Offering Memorandum and the Offering Memorandum and related matters were discussed and, although we have not undertaken to investigate or verify independently, and do not assume any responsibility for, the accuracy, completeness or fairness of the statements contained in the Preliminary Offering Memorandum or the Offering Memorandum (except as indicated above), on the basis of the foregoing, no facts have come to our attention which led us to B-4 believe that the Preliminary Offering Memorandum or the Offering Memorandum, as of its date or the Closing Date, contained an untrue statement of a material fact or omitted to state any fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (except we express no opinion as to financial statements and related notes, the financial statement schedules and other financial and statistical data included therein). B-5 EXHIBIT C [Form of Opinion of Kelley Drye & Warren LLP] C-1 [Kelley Drye & Warren LLP Letterhead] October 30, 1997 Bear, Stearns & Co. Inc. Salomon Brothers Inc c/o Bear, Stearns & Co. Inc. 245 Park Avenue New York, N.Y. 10167 Ladies and Gentlemen: This opinion is furnished to you pursuant to Section 8(g) of the Purchase Agreements dated October 24, 1997 (the "Agreements"), between Intermedia Communications Inc. (the "Company") and Bear, Stearns & Co. Inc., and Salomon Brothers Inc (together, the "Initial Purchasers"), relating to the sale by the Company of (i) 7,000,000 depositary shares (the "Depositary Shares") representing a one-hundredth interest in a share of the Company's 7% Series E Junior Convertible Preferred Stock (the "Series E Preferred Stock"), and (ii) $250,000,000 aggregate principal amount at maturity of 8 7/8% Senior Discount Notes due 2007 (the "Notes"). This firm has acted as special telecommunications counsel for the Company and our representation has been limited to federal and state telecommunications regulatory matters, and this opinion is accordingly limited to such matters. We express no opinion as to the laws of any jurisdiction or agency except the Telecommunications Laws of the Federal Communications Commission (the "FCC") and State Telecommunications Agencies of those states in which the Company is providing intrastate service. For purposes of this opinion, the term "State Telecommunications Agencies" means "state commissions" as defined in Section 3 of the Communications Act of 1934, as amended. The term "Telecommunications Laws" means the statutes governing the FCC and State Telecommunications Agencies and the rules and regulations promulgated by them. To the extent this opinion concerns state Telecommunications Laws, you are advised that the attorneys in our Firm are not admitted to practice in all of the states covered by this opinion and, for the purpose of this opinion, we should not be considered to be experts in the Telecommunications Laws of any such states. However, in connection with the previous opinion provided to you Bear, Stearns & Co. Salomon Brothers Inc October 30, 1997 Page 2 dated July 9, 1997, concerning a similar transaction by the Company, we conducted a review of statutes and regulations relating to state Telecommunications Laws which we deemed relevant and as they appear in standard compilations and, in some cases, had direct communications with the staff of State Telecommunications Agencies. To the best of our knowledge, nothing has occurred subsequent to this earlier review and those conversations which would change our understanding of these State Telecommunications Laws with respect to any matter we deem relevant to this opinion. Our opinion as to state Telecommunications Laws is based solely upon that earlier review and those conversations, as supplemented by us in connection with states in which the Company commenced intrastate service subsequent to July 9, 1997. In rendering this opinion, we have examined and relied upon relevant documents in our files, certificates and other information in the publicly available files and records of the FCC and State Telecommunications Agencies and appropriate portions of the Offering Memorandum for the Notes and Depositary Shares (the "Offering Memorandum") prepared in connection with this transaction. With your permission, as to all matters of fact concerning the Company and its operations (including factual conclusions and characterizations), we have relied entirely upon the relevant statements contained in the Offering Memorandum, including the exhibits thereto, and in the certificate of David C. Ruberg, President and CEO, dated October 29, 1997, attached hereto. We have assumed, without independent inquiry, the accuracy of the representations in the certificate and have made no independent review of the operations or the business of the Company for the purpose of rendering this opinion. We have assumed the genuineness of all signatures, the conformity to the originals of all documents reviewed by us as copies, the authenticity and completeness of all original documents reviewed by us in original or copy form and the legal competence of each individual executing any document. Bear, Stearns & Co. Salomon Brothers Inc October 30, 1997 Page 3 When an opinion set forth below is given to the best of our knowledge or with another similar qualification, the relevant knowledge is limited to the actual knowledge of the individual attorneys currently in the firm who have devoted substantive legal attention to representation of the Company as its telecommunications counsel and we have undertaken no independent inquiry or investigation in rendering this opinion. In reliance upon the foregoing and subject to the qualifications and limitations set forth herein, we are of the opinion that: All of the licenses, permits and authorizations required by the FCC for the provision of telecommunications services by the Company, as we understand those services to be provided currently based on the attached certificate, have been issued to and are validly held by the Company and its subsidiaries and are in full force and effect. All of the licenses, permits and authorizations required by the State Telecommunications Agencies for the provision of telecommunications services by the Company, as we understand those services to be provided currently based on the attached certificate, have been issued to and, to the best of our knowledge, are validly held by the Company and its subsidiaries, where the failure to obtain or hold such license, permit or authority would have a material adverse effect, as defined in the attached certificate, on the Company and the subsidiaries, taken as a whole. All such licenses, permits and authorizations are in full force and effect. Neither the Company nor its subsidiaries is the subject of any proceeding (including a rulemaking proceeding), pending complaint or investigation, or, to the best of our knowledge, any threatened complaint or investigation, before the FCC, or, to the best of our knowledge after oral inquiry made in connection with our opinion to you of July 9, 1997, and supplemented currently as indicated above, of any proceeding (including a rulemaking proceeding), pending complaint or investigation, or any threatened complaint or investigation, before State Telecommunications Agencies based, in each case, on any alleged violation of Telecommunications Laws by the Company or any subsidiary in connection with their provision of or failure to provide telecommunications services of a character required to be disclosed in the Offering Memoranda which is not disclosed in the Offering Memoranda. Bear, Stearns & Co. Salomon Brothers Inc October 30, 1997 Page 4 The statements in the Offering Memoranda under the headings of "The Company - - Recent Developments - Regulatory Changes," "Risk Factors - Regulatory Approval of the Offering" regarding the Telecommunications Laws of the FCC or any State Telecommunications Agencies fairly and accurately summarize the matters therein described. Except as discussed below, the Company and its subsidiaries have the consents, approvals, authorizations, licenses, certificates, permits, or orders of the FCC or any State Telecommunications Agency, if any is required, for the consummation of the transactions contemplated in the Offering Memoranda, except where the failure to obtain the consents, approvals, authorizations, licenses, certificates, permits or orders would not have a Material Adverse Effect, as defined in the attached certificate, on the Company and its subsidiaries, taken as a whole. In ten states where the Company holds certificates to provide intrastate toll service and, in some cases, local exchange service, the applicable statute or regulations provide for prior notification and/or approval for the issuance of debt or equity securities by certificate holders. In some of these states, approval has been obtained for the issuance of Depositary Shares in an amount sufficient to cover the proposed transaction. However, additional approval will be required from those states for the issuance of the Notes. Due to time constraints, the Company will not have received all such approvals prior to the consummation of the proposed transaction. Based on our firm's experience in similar situations involving intrastate interexchange services, we believe that it is unlikely that these states would take any action against the Company for issuing the Depositary Shares and the related Series E Preferred Stock or the Notes prior to approval which would have a Material Adverse Effect, as defined in the attached certificate, on the Company and its subsidiaries, taken as a whole. Except as discussed above, neither the execution and delivery of the Purchase Agreements nor the sale of the securities contemplated thereby will conflict with or result in a violation of any order or regulation of the FCC or any State Telecommunications Agency applicable to the Company or its subsidiaries, except where the conflict with or the violation of which would not have a Bear, Stearns & Co. Salomon Brothers Inc October 30, 1997 Page 5 Material Adverse Effect, as defined in the attached certificate, on the Company and its subsidiaries, taken as a whole. The opinions stated above are limited to the matters set forth herein. No opinion may be inferred or implied beyond the matters expressly stated in this opinion letter, and the opinions stated above must be read in conjunction with the assumptions, exceptions and qualifications set forth in this opinion letter. We assume no obligation to advise you of changes of fact or law, whether or not deemed material which may be brought to our attention after the date hereof. This opinion is being delivered for your use in connection with the transactions contemplated by the Offering Memoranda pursuant to the Agreements and may not be referred to or used for any other purpose or relied upon or delivered to any other person without our prior written consent. Very truly yours, Kelley Drye & Warren LLP EXHIBIT D Subsidiaries of Intermedia Communications Inc. ---------------------------------------------- FiberNet North Carolina, Inc FiberNet Huntsville, Inc. FiberNet St. Louis, Inc. FiberNet Telecommunications Cincinnati, Inc. Phone One, Inc. FiberNet USA, Inc. EMI Telecommunications Inc. Eastern Message Communications Inc. Intermedia Licensing Company DIGEX, Incorporated D-1 EX-4.5 3 PREFERRED STOCK REGISTRATION RIGHTS AGREEMENT Exhibit 4.5 ================================================================================ REGISTRATION RIGHTS AGREEMENT Depositary Shares Representing a One-Hundredth Interest in a Share of 7% Series E Junior Convertible Preferred Stock Dated as of October 30, 1997 by and among INTERMEDIA COMMUNICATIONS INC., BEAR, STEARNS & CO. INC. and SALOMON BROTHERS INC ================================================================================ This Registration Rights Agreement (this "Agreement") is made and --------- entered into as of October 30, 1997 by and among Intermedia Communications Inc., a Delaware corporation (the "Company"), and Bear, Stearns & Co. Inc., and ------- Salomon Brothers Inc (each an "Initial Purchaser" and together, the "Initial ----------------- ------- Purchasers"), each of whom have agreed to purchase Depositary Shares (the - ---------- "Depositary Shares"), each representing a one-hundredth interest in a share of ----------------- the Company's 7% Series E Junior Convertible Preferred Stock (the "Series E -------- Preferred Stock") pursuant to the Purchase Agreement (as defined below). - --------------- This Agreement is made pursuant to the Depositary Share Purchase Agreement in respect to the Series E Preferred Stock, dated October 24, 1997 (the "Purchase Agreement"), by and among the Company and the Initial Purchasers. ------------------ In order to induce the Initial Purchasers to purchase the Depositary Shares, the Company has agreed to provide the registration rights set forth in this Agreement. The execution and delivery of this Agreement is a condition to the obligations of the Initial Purchasers set forth in Section 8 of the Purchase Agreement. The parties hereby agree as follows: SECTION 1. DEFINITIONS As used in this Agreement, the following capitalized terms shall have the following meanings: Act: The Securities Act of 1933, as amended. --- Average Stock Price: The average of the high and low sales prices of the ------------------- Common Stock (as defined herein) as reported by the Nasdaq National Market or any national securities exchange upon which the Common Stock is then listed, for each of the ten consecutive trading days immediately preceding the twentieth calendar day preceding the Dividend Payment Date. Business Day: Any day except a Saturday, Sunday or other day in the City ------------- of New York, on which banks are authorized to close. Certificate of Designation: The Certificate of Designation pursuant to -------------------------- which the Depositary Shares, Series E Preferred Stock, and Common Stock are to be issued, as such Certificate of Designation is amended or supplemented from time to time in accordance with the terms thereof. Closing Date: The date hereof. ------------ Commission: The Securities and Exchange Commission. ---------- Common Dividend Filing Deadline: As defined in Section 4 hereof. ------------------------------- Common Dividend Registration Statement: As defined in Section 4 hereof. -------------------------------------- Common Stock: The common stock of the Company to be issued upon ------------ conversion of the Series E Preferred Stock or to be issued as dividends in respect of the Series E Preferred Stock. Common Stock Dividends: Common Stock to be issued as dividends in ---------------------- respect of the Series E Preferred Stock. Definitive Securities: As defined in the Deposit Agreement. ---------------------- Deposit Agreement: The Deposit Agreement dated the date hereof between ----------------- the Company and Continental Stock Transfer & Trust Company. Dividend Payment Date: As defined in the Certificate of Designation. --------------------- Effectiveness Target Date: As defined in Section 5. ------------------------- Exchange Act: The Securities Exchange Act of 1934, as amended. ------------ Global Certificate Holder: As defined in the Deposit Agreement. ------------------------- Holders: As defined in Section 2 hereof. ------- Liquidated Damages: As defined in Section 5 hereof. ------------------ Liquidation Preference: As defined in the Certificate of Designation. ---------------------- NASD: National Association of Securities Dealers, Inc. ---- Offering Memorandum: The final offering memorandum, dated October 24, ------------------- 1997, relating to the Company, the Depositary Shares, and the Series E Preferred Stock. Person: An individual, partnership, corporation, trust, unincorporated ------ organization, or a government or agency or political subdivision thereof. Prospectus: The prospectus included in a Registration Statement at the ---------- time such Registration Statement is declared effective, as amended or supplemented by any prospectus supplement and by all other amendments thereto, including post-effective amendments, and all material incorporated by reference into such Prospectus. Registration Default: As defined in Section 5 hereof. -------------------- 2 Registration Statement: The Shelf Registration Statement and Common ---------------------- Dividend Registration Statement. Shelf Registration Statement: As defined in Section 4 hereof. ---------------------------- Shelf Filing Deadline: As defined in Section 4 hereof. --------------------- Shelf Registration Statement: As defined in Section 4 hereof. ----------------------------- Transfer Agent: The transfer agent with respect to the Depositary Shares -------------- and the Series E Preferred Stock. Transfer Restricted Securities: Each Depositary Share, each share of ------------------------------ Series E Preferred Stock, and each share of Common Stock until the earliest to occur of (i) the date on which such Depositary Share, share of Series E Preferred Stock, or share of Common Stock, as the case may be, is effectively registered under the Act and disposed of in accordance with the Shelf Registration Statement or Common Dividend Registration Statement, (ii) the date on which such Depositary Share, share of Series E Preferred Stock, or share of Common Stock, as the case may be, is distributed to the public pursuant to Rule 144 under the Act or may be distributed to the public pursuant to Rule 144(k) under the Securities Act or (iii) in the case of Common Stock Dividends, the date the Common Stock Dividends are issued by the Company pursuant to an effective Common Stock Registration Statement. Underwritten Registration or Underwritten Offering: A registration in ------------------------- --------------------- which securities of the Company are sold to an underwriter for re-offering to the public. SECTION 2. HOLDERS A Person is deemed to be a holder of Transfer Restricted Securities (each, a "Holder") whenever such Transfer Restricted Securities are registered ------ in such Person's name. SECTION 3. [INTENTIONALLY OMITTED]. SECTION 4. REGISTRATION (a) Shelf Registration. The Company shall: ------------------ (x) cause to be filed on or prior to 60 days after the consummation of the offering of Series E Preferred Stock (and the related Depositary Shares) (the "Shelf Filing Deadline"), a shelf registration statement --------------------- pursuant to Rule 415 under the Act (the "Shelf Registration Statement"), ---------------------------- relating to resales of all Transfer Restricted Securities 3 (except Common Stock Dividends) the Holders of which shall have provided the information required pursuant to Section 4(b) hereof, and (y) use its reasonable best efforts to cause such Shelf Registration Statement to become effective on or prior to 120 days after the Shelf Filing Deadline. The Company shall use its best efforts to keep the Shelf Registration Statement discussed in this Section 4(a) continuously effective, supplemented and amended as required by the provisions of Sections 6(b) and (c) hereof to the extent necessary to ensure that it is available for resales of Transfer Restricted Securities by the Holders thereof entitled to the benefit of this Section 4(a), and to ensure that it conforms with the requirements of this Agreement, the Act and the policies, rules and regulations of the Commission as announced from time to time, for a period expiring on the earlier to occur of: (i) the date when all Transfer Restricted Securities (except Common Stock Dividends) have been sold; and (ii) 730 days from the date of the Closing Date, provided, that the Company will have the option of suspending the effectiveness of the Shelf Registration Statement for periods of up to an aggregate of 60 days in any calendar year if the Board of Directors of the Company determines that compliance with the disclosure obligations necessary to maintain the effectiveness of the Shelf Registration Statement at such time could reasonably be expected to have a material adverse effect on the Company or a pending corporate transaction of the Company (a "Permitted Shelf Suspension"). -------------------------- (b) Provision by Holders of Certain Information in Connection with -------------------------------------------------------------- the Shelf Registration Statement. No Holder of Transfer Restricted Securities - -------------------------------- may include any of its Transfer Restricted Securities in the Shelf Registration Statement pursuant to this Agreement unless and until such Holder furnishes to the Company in writing, within 20 Business Days after receipt of a request therefor, such information specified in item 507 of Regulation S-K under the Act for use in connection with the Shelf Registration Statement or Prospectus or preliminary Prospectus included therein, including the information set forth in the questionnaire included as Annex A to the Offering Memorandum. No Holder of Transfer Restricted Securities shall be entitled to Liquidated Damages pursuant to Section 5 hereof unless and until such Holder shall have provided all such information required to be provided by such Holder for inclusion therein. Each Holder as to which the Shelf Registration Statement is being effected agrees to furnish promptly to the Company, for so long as the Shelf Registration Statement is effective, all information required to be disclosed in order to make the information previously furnished to the Company by such Holder not materially misleading. (c) Registration of Common Dividends. The Company shall: -------------------------------- (x) cause to be filed on or prior to 60 days after the consummation of the offering of Series E Preferred Stock (and the related Depositary Shares) (the "Common Dividend Filing Deadline"), a registration ------------------------------- statement (the "Common Dividend Registration Statement"), relating to the -------------------------------------- issuance of dividends on the Series E Preferred Stock to the extent that such dividends are paid in Common Stock; and 4 (y) use its reasonable best efforts to cause such Common Stock Dividend Registration Statement to become effective on or prior to 120 days after the Common Dividend Filing Deadline. The Company shall use its best efforts to keep the Common Dividend Registration Statement discussed in this Section 4(c) continuously effective, supplemented and amended as required by the provisions of Sections 6(b) and (c) hereof to the extent necessary to ensure that it is available on each dividend payment date of the Series E Preferred Stock and to ensure that it conforms with the requirements of this Agreement, the Act and the policies, rules and regulations of the Commission as announced from time to time, for a period expiring on the earlier to occur of: (i) the date when all Series E Preferred Stock is no longer Transfer Restricted Securities; and (ii) 730 days from the date of the Closing Date, provided, that the Company will have the option of suspending the effectiveness of the Common Dividend Registration Statement for periods of up to an aggregate of 60 days in any calendar year if the Board of Directors of the Company determines that compliance with the disclosure obligations necessary to maintain the effectiveness of the Shelf Registration Statement at such time could reasonably be expected to have a material adverse effect on the Company or a pending corporate transaction of the Company (a "Permitted Dividend Suspension," and together with a Permitted Shelf Suspension, ----------------------------- a "Permitted Suspension"). -------------------- If for any reason the Common Dividend Registration Statement is not filed or is not declared effective (including by reason of any position, determination, rule or regulation of the Commission or the Staff of the Commission not permitting such Common Dividend Registration Statement), the Company shall file the Common Dividend Registration Statement as a registration statement to permit resales of the Common Stock issued as dividends on the Series E Preferred Stock and to keep such registration statement effective for the equivalent periods. SECTION 5. LIQUIDATED DAMAGES If (i) the Company fails to file the Shelf Registration Statement with the Commission on or prior to the Shelf Filing Deadline, (ii) the Shelf Registration Statement has not been declared effective by the Commission on or prior to the 120th day after the Shelf Filing Deadline (the "Effectiveness ------------- Target Date"), whether or not the Company has breached any obligation to use its - ----------- best efforts to cause the Shelf Registration Statement to be declared effective, or (iii) the Shelf Registration Statement is declared effective but thereafter ceases to be effective or usable in connection with resales of Transfer Restricted Securities (except Common Stock Dividends) for any period of ten consecutive days or for any 20 days in any 180-day period without being succeeded within the time period provided for herein by a post effective amendment to such Shelf Registration Statement that cures such failure and that is itself declared effective within ten Business Days of the filing thereof, provided, that such effectiveness was not suspended in connection with a Permitted Suspension (a "Registration Default"), then commencing on the day -------------------- following the date on which such Registration Default occurs, the Company agrees to pay to each Holder of Transfer Restricted Securities affected by such Registration Default, liquidated damages ("Liquidated Damages") at a rate of ------------------ $0.25 per $2,500 Liquidation Preference of Series E Preferred Stock (or $.0025 per $25.00 Liquidation Preference of Depositary Shares) constituting Transfer Restricted Securities held by such Holder until such Registration Default is cured. All accrued Liquidated Damages will be paid in shares of Common Stock valued at the Average Stock Price by the Company on each Dividend Payment Date. All accrued Liquidated Damages shall be paid to the Global Certificate Holder by wire transfer of immediately available funds or by federal funds check and to Holders of Definitive Securities by mailing checks to their registered addresses by the Company on each Interest Payment Date. All obligations of the Company set forth in the preceding paragraph that are outstanding with respect to any Transfer Restricted Security at the time such security ceases to be a Transfer Restricted Security shall survive until such time as all such obligations with respect to such security shall have been satisfied in full. SECTION 6. REGISTRATION PROCEDURES (a) Shelf Registration Statement. In connection with the Shelf ---------------------------- Registration Statement, the Company shall comply with all the provisions of Section 6(b) below and shall use its best efforts to effect such registration to permit the sale of the Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution thereof (as indicated in the information furnished to the Company pursuant to Section 4(b) hereof), and pursuant thereto the Company will prepare and file with the Commission a Shelf Registration Statement relating to the registration on any appropriate form under the Act, which form shall be available for the sale of the Transfer Restricted Securities in accordance with the intended method or methods of distribution thereof within the time periods and otherwise in accordance with the provisions hereof. 5 (b) General Provisions. In connection with the Registration ------------------ Statement and any related Prospectus required by this Agreement to permit the sale or resale of Transfer Restricted Securities, the Company shall: (i) use its best efforts to keep such Registration Statement continuously effective, subject to a Permitted Suspension, and provide all requisite financial statements for the period specified in Section 4 of this Agreement. Upon the occurrence of any event that would cause any such Registration Statement or the Prospectus contained therein (A) to contain a material misstatement or emission or (B) not to be effective and usable for resale of Transfer Restricted Securities during the period required by this Agreement, the Company shall file promptly an appropriate amendment to such Registration Statement (1) in the case of clause (A), correcting any such misstatement or omission, and (2) in the case of either clause (A) or (B), use its best efforts to cause such amendment to be declared effective and such Registration Statement and the related Prospectus to become usable for their intended purpose(s) as soon as practicable thereafter; (ii) except in the event of a Permitted Suspension, prepare and file with the Commission such amendments and post-effective amendments to the Registration Statement as may be necessary to keep the Registration Statement effective for the applicable period set forth in Section 4 hereof, or such shorter period as will terminate when all Transfer Restricted Securities covered by such Registration Statement have been sold, cause the Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Act, and to comply fully with Rules 424 and 430A, as applicable, under the Act in a timely manner; and comply with the provisions of the Act with respect to the disposition of all securities covered by such Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the sellers thereof set forth in such Registration Statement or supplement to the Prospectus; (iii) advise the underwriter(s), if any, and selling Holders promptly and, if requested by such Persons, confirm such advice in writing, (A) when the Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to the Registration Statement or any post- effective amendment thereto, when the same has become effective, (B) of any request by the Commission for amendments to the Registration Statement or amendments or supplements to the Prospectus or for additional information relating thereto, (C) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement under the Act or of the suspension by any state securities commission of the qualification of the Transfer Restricted Securities for offering or sale in any jurisdiction, or the initiation of any proceeding for any of the preceding purposes, (D) of the existence of any fact or the happening of any event that makes any statement of a material fact made in the Registration Statement, the Prospectus, any amendment or supplement thereto or any document incorporated by reference therein untrue, or that requires the making of 6 any additions to or changes in the Shelf Registration Statement in order to make the statements therein not misleading, or that requires the making of any additions to or changes in the Prospectus in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. If at any time the Commission shall issue any stop order suspending the effectiveness of the Registration Statement, or any state securities commission or other regulatory authority shall issue an order suspending the qualification or exemption from qualification of the Transfer Restricted Securities under state securities or Blue Sky laws, the Company shall use its best efforts to obtain the withdrawal or lifting of such order at the earliest possible time; (iv) make available, if requested, to each selling Holder named in the Registration Statement or Prospectus and each of the underwriters) in connection with such sale, if any, before filing with the Commission, copies of the Registration Statement or any Prospectus included therein or any amendments or supplements to any such Registration Statement or Prospectus (including all documents incorporated by reference after the initial filing of such Registration Statement), substantially in the form to be filed, which documents will be subject to the review and comment of such Holders and underwriters, in connection with such sale, if any, for a period of at least five Business Days, and the Company will not file any such Registration Statement or Prospectus or any amendment or supplement to any such Registration Statement or Prospectus (including all such documents incorporated by reference) to which the selling Holders of the Transfer Restricted Securities covered by such Registration Statement or the underwriters, in connection with such sale, if any, shall reasonably object within five Business Days after the receipt thereof. A selling Holder or underwriter, if any, shall be deemed to have reasonably objected to such filing if such Registration Statement, amendment, Prospectus or supplement, as applicable, as proposed to be filed, contains a material misstatement or omission or fails to comply with the applicable requirements of the Act; (v) promptly upon the filing of any document that is to be incorporated by reference into a Registration Statement or Prospectus, make available copies of such document to the selling Holders and to the underwriters in connection with such sale, if any, make the Company's representatives available for discussion of such document and other customary due diligence matters, and include such information in such document prior to the filing thereof as such selling Holders or underwriters, if any, reasonably may request; (vi) make available at reasonable times for inspection by the selling Holders, any underwriter participating in any disposition pursuant to such Registration Statement and any attorney or accountant retained by such selling Holders or any of such underwriters, all financial and other records, pertinent corporate documents and properties of the Company and cause the Company's officers, directors and employees to supply all information reasonably requested by any such Holder, underwriter, attorney or accountant in connection with such Registration Statement or any post-effective amendment thereto subsequent to the filing thereof and prior to its effectiveness; provided that any person to whom information is provided under this clause (vi) agrees in writing to maintain the confidentiality of such information to the extent such information is not in the public domain; (vii) if requested by any selling Holders or the underwriters in connection with such sale, if any, promptly include in the Registration Statement or Prospectus, pursuant to a supplement or post-effective amendment if necessary, such information as such selling Holders and underwriters, if any, may reasonably request to have included therein, including, without limitation, information relating to the "Plan of Distribution" of the Transfer Restricted -------------------- Securities, information with respect to the principal amount of Transfer Restricted Securities being sold to such underwriters, the purchase price being paid therefor and any other terms of the offering of the Transfer Restricted Securities to be sold in such offering; and make all required filings of such Prospectus supplement or post-effective amendment as soon as practicable after the Company is notified of the matters to be included in such Prospectus supplement or post-effective amendment; (viii) cause the Transfer Restricted Securities covered by the Shelf Registration Statement to be rated with the appropriate rating agencies, if so requested by the Holders of a majority in aggregate Liquidation Preference of Series E Preferred Stock (and the related Depositary Shares) covered thereby, or by the underwriters, if any; 7 (ix) furnish to each selling Holder and each of the underwriters, if any, in connection with such sale, if any, without charge, at least one copy of the Registration Statement, as first filed with the Commission, and of each amendment thereto, and make available all documents incorporated by reference therein and all exhibits (including exhibits incorporated therein by reference); (x) deliver to each selling Holder and each of the underwriters, if any, without charge, as many copies of the Prospectus (including each preliminary prospectus) and any amendment or supplement thereto as such Persons reasonably may request; the Company hereby consents to the use of the Prospectus and any amendment or supplement thereto by each of the selling Holders and each of the underwriters, if any, in connection with the offering and the sale of the Transfer Restricted Securities covered by the Prospectus or any amendment or supplement thereto; (xi) enter into such agreements (including, unless not required pursuant to Section 10 hereof, an underwriting agreement) and make such representations and warranties and take all such other actions in connection therewith in order to expedite or facilitate the disposition of the Transfer Restricted Securities pursuant to the Registration Statement contemplated by this Agreement as may be reasonably requested by any Holder of Transfer Restricted Securities or underwriter in connection with any sale or resale pursuant to the Registration Statement contemplated by this Agreement, and 8 in such connection, whether or not an underwriting agreement is entered into and whether or not the registration is an Underwritten Registration, the Company shall: (A) furnish to each selling Holder and each underwriter, if any, upon the effectiveness of the Registration Statement: (1) a certificate, dated the date of effectiveness of the Registration Statement signed by (x) the President or any Vice President and (y) a principal financial or accounting officer of the Company, confirming with respect to the Prospectus or any purchase or underwriting agreement and the Transfer Restricted Securities, as of the date thereof, the matters set forth in paragraphs (a), (b), (c) and (d) of Section 8 of the Purchase Agreement and such other matters as the Holders and/or underwriters may reasonably request; (2) an opinion, dated the date of effectiveness of the Registration Statement of counsel for the Company, covering (i) due authorization and enforceability of the Depositary Shares, Series E Preferred Stock, and Common Stock, (ii) a statement to the effect that such counsel has participated in conferences with officers and other representatives of the Company and representatives of the independent public accountants for the Company and have considered the matters required to be stated therein and the statements contained therein, although such counsel has not independently verified the accuracy, completeness or fairness of such statements; and that such counsel advises that, on the basis of the foregoing (relying as to materiality to a large extent upon facts provided to such counsel by officers and other representatives of the Company and without independent check or verification), no facts came to such counsel's attention that caused such counsel to believe that the Registration Statement, at the time such Registration Statement or any post-effective amendment thereto became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that the Prospectus contained in such Registration Statement as of its date contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading and (iii) such other matters of the type customarily covered in opinions of counsel for an issuer in connection with similar securities offerings, as may reasonably be requested by such parties. Without limiting the foregoing, such counsel may state further that such counsel assumes no responsibility for, and has not independently verified, the accuracy, completeness or fairness of the financial statements, notes and schedules and other financial, statistical and accounting data included in the Registration Statement contemplated by this Agreement or the related Prospectus; and 9 (3) if the registration is a registration in which securities of the Company are sold to an underwriter for reoffering to the public, obtain a customary comfort letter, dated as of the date of effectiveness of the Registration Statement, addressed to the Board of Directors of the Company or any underwriter from the Company's independent accountants, in the customary form and covering matters of the type customarily covered in comfort letters to boards of directors in underwritten offerings; (B) set forth in full or incorporated by reference in the underwriting agreement, if any, in connection with any sale or resale pursuant to the Registration Statement the indemnification provisions and procedures of Section 8 hereof with respect to all parties to be indemnified pursuant to said Section; and (C) deliver such other documents and certificates as may be reasonably requested by such parties to evidence compliance with clause (A) above and with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company pursuant to this clause (xi), if any. The above shall be done at each closing under such underwriting or similar agreement, as and to the extent required thereunder, and if at any time the representations and warranties of the Company contemplated in (A)(1) above cease to be true and correct, the Company shall so advise the underwriter(s), if any, and selling Holders promptly and if requested by such Persons, shall confirm such advice in writing; (xii) prior to any public offering of Transfer Restricted Securities, cooperate with the selling Holders, the underwriters, if any, and their respective counsel in connection with the registration and qualification of the Transfer Restricted Securities under the securities or Blue Sky laws of such jurisdictions as the selling Holders or underwriters), if any, may request and do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Transfer Restricted Securities covered by the Registration Statement; provided, however, that the Company shall not be required to register or qualify as a foreign corporation where it is not now so qualified or to take any action that would subject it to the service of process in suits or to taxation, other than as to matters and transactions relating to the Registration Statement, in any jurisdiction where it is not now so subject; (xiii) [Intentionally Omitted]; (xiv) in connection with any sale of Transfer Restricted Securities that will result in such securities no longer being Transfer Restricted Securities, cooperate with the selling Holders and the underwriters, if any, to facilitate the timely preparation and delivery of certificates representing Transfer Restricted Securities to be sold and not bearing any restrictive legends; and to register such Transfer Restricted Securities in such denominations and such names as the Holders or the underwriters), if 10 any, may request at least two Business Days prior to such sale of Transfer Restricted Securities; (xv) use its best efforts to cause the Transfer Restricted Securities covered by the Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the seller or sellers thereof or the underwriters, if any, to consummate the disposition of such Transfer Restricted Securities, subject to the proviso contained in clause (xii) above; (xvi) if any fact or event contemplated by Section 6(b)(iii)(D) above shall exist or have occurred, except in the event of a Permitted Suspension prepare a supplement or post-effective amendment to the Registration Statement or related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of Transfer Restricted Securities, the Prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (xvii) provide a CUSIP number for all Transfer Restricted Securities not later than the effective date of the Shelf Registration Statement covering such Transfer Restricted Securities and provide the Transfer Agent or the Trustee, as the case may be, with printed certificates for the Transfer Restricted Securities which are in a form eligible for deposit with the Depository Trust Company; (xviii) cooperate and assist in any filings required to be made with the NASD and in the performance of any due diligence investigation by any underwriter (including any "qualified independent underwriter") that is required --------------------------------- to be retained in accordance with the rules and regulations of the NASD, and use its best efforts to cause such Registration Statement to become effective and approved by such governmental agencies or authorities as may be necessary to enable the Holders selling Transfer Restricted Securities to consummate the disposition of such Transfer Restricted Securities; (xix) otherwise use its best efforts to comply with all applicable rules and regulations of the Commission, and make generally available to its security holders with regard to the Registration Statement, as soon as practicable, a consolidated earnings statement meeting the requirements of Rule 158 (which need not be audited) covering a twelve-month period beginning after the effective date of the Registration Statement (as such term is defined in paragraph (c) of Rule 158 under the Act); (xx) [Intentionally Omitted]; (xxi) [Intentionally Omitted]; 11 (xxii) cause all Transfer Restricted Securities covered by the Shelf Registration Statement to be listed on each securities exchange on which similar securities issued by the Company are then listed if requested by the Holders of a majority in aggregate Liquidation Preference of Series E Preferred Stock (and the related Depositary Shares) or the managing underwriters, if any; and (xxiii) provide promptly to each Holder upon written request each document filed with the Commission pursuant to the requirements of Section 13 or Section 15(d) of the Exchange Act. (c) Restrictions on Holders. Each Holder agrees by acquisition of a ----------------------- Transfer Restricted Security that, upon receipt of any notice from the Company of the existence of any fact of the kind described in Section 6(b)(iii)(D) hereof, such Holder will forthwith discontinue disposition of Transfer Restricted Securities pursuant to the Registration Statement until such Holder's receipt of the copies of the supplemented or amended Prospectus contemplated by Section 6(b)(xvi) hereof, or until it is advised in writing (the "Advice") by ------ the Company that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated by reference in the Prospectus. If so directed by the Company, each Holder will deliver to the Company (at the Company's expense) all copies, other than permanent file copies then in such Holder's possession, of the Prospectus covering such Transfer Restricted Securities that was current at the time of receipt of such notice. In the event the Company shall give any such notice, the time period regarding the effectiveness of such Registration Statement set forth in Section 4 hereof, shall be extended by the number of days during the period from and including the date of the giving of such notice pursuant to Section 6(c)(iii)(D) hereof to and including the date when each selling Holder covered by such Registration Statement shall have received the copies of the supplemented or amended Prospectus contemplated by Section 6(c)(xvi) hereof or shall have received the Advice. SECTION 7. REGISTRATION EXPENSES (a) All expenses incident to the Company's performance of or compliance with this Agreement will be borne by the Company, regardless of whether the Registration Statement becomes effective, including without limitation: (i) all registration and filing fees and expenses (including filings made with the NASD, including, if applicable, the fees and expenses (excluding underwriting discounts or commissions, of any "qualified independent underwriter" and its counsel, as may be required by the rules and regulations of the NASD)); (ii) all fees and expenses of compliance with federal securities and state Blue Sky or securities laws; (iii) all expenses of printing (including printing certificates for the Depositary Shares, Series E Preferred Stock and Common Stock and printing of Prospectuses), messenger and delivery services and telephone; (iv) all fees and disbursements of counsel for the Company and, in accordance with Section 7(b) below, the Holders of Transfer Restricted Securities; (v) all application and filing fees in connection with listing the Depositary Shares, Series E Preferred Stock, or Common Stock on a national exchange or automated quotation system if required hereunder; and (vi) all fees and 12 disbursements of independent certified public accountants of the Company (including the expenses of any special audit and comfort letters required by or incident to such performance). The Company will, in any event, bear its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expenses of any annual audit and the fees and expenses of any Person, including special experts, retained by the Company. (b) In connection with the Registration Statement required by this Agreement, the Company will reimburse the Initial Purchasers and the Holders of Transfer Restricted Securities being registered pursuant to the Registration Statement for the reasonable fees and disbursements of not more than one counsel, or such other counsel as may be chosen by the Holders of a majority in number of shares or principal amount, as the case may be, of the Transfer Restricted Securities for whose benefit the Registration Statement is being prepared. SECTION 8. INDEMNIFICATION (a) The Company agrees to indemnify and hold harmless (i) each Holder, (ii) each person, if any, who controls a Holder within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act and (iii) the respective officers, directors, partners, employees, representatives and agents of any Holder or any controlling person to the fullest extent lawful, from and against any and all losses, liabilities, claims, damages and expenses whatsoever (including but not limited to attorneys' fees and any and all expenses whatsoever incurred in investigating, preparing or defending against any investigation or litigation, commenced or threatened, or any claim whatsoever, and any and all amounts paid in settlement of any claim or litigation), joint or several, to which they or any of them may become or are subject under the Act, the Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages or expenses (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or the Prospectus, or in any supplement thereto or amendment thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the Company will not be liable in any such case to the extent, but only to the extent, that (i) any such loss, liability, claim, damage or expense arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with written information furnished to the Company by or on behalf of such Holder expressly for use therein and (ii) the foregoing indemnity with respect to any untrue statement contained in or omitted from a Registration Statement or the Prospectus shall not inure to the benefit of any Holder (or any person controlling such Holder), from whom the person asserting any such loss, liability, claim, damage or expense purchased (or received upon conversion), any of the Depositary Shares, Series E Preferred Stock or Common Stock which are the subject thereof if it is finally judicially determined that such loss, liability, claim, damage or expense resulted solely from the fact that the 13 Holder sold Depositary Shares, Series E Preferred Stock or Common Stock, to a person to whom there was not sent or given, at or prior to the written confirmation of such sale, a copy of the Registration Statement and the Prospectus, as amended or supplemented, and (x) the Company shall have previously and timely furnished sufficient copies of the Registration Statement or Prospectus, as so amended or supplemented, to such Holder in accordance with this Agreement and (y) the Registration Statement or Prospectus, as so amended or supplemented, would have corrected such untrue statement or omission of a material fact. This indemnity agreement will be in addition to any liability which the Company may otherwise have, including, under this Agreement. (b) Each Holder, severally and not jointly, agrees to indemnify and hold harmless the Company and each person, if any, who controls the Company within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, against any losses, liabilities, claims, damages and expenses whatsoever (including but not limited to attorneys' fees and any and all expenses whatsoever incurred in investigating, preparing or defending against any investigation or litigation, commenced or threatened, or any claim whatsoever and any and all amounts paid in settlement of any claim or litigation), joint or several, to which they or any of them may become subject under the Act, the Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages or expenses (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or the Prospectus, or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, in each case to the extent, but only to the extent, that any such loss, liability, claim, damage or expense arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with written information furnished to the Company by or on behalf of such Holder expressly for use therein. This indemnity will be in addition to any liability which a Holder may otherwise have, including under this Agreement. In no event, however, shall the liability of any selling Holder thereunder be greater in amount than the dollar amount of the proceeds received by such Holder upon its sale of the Depositary Shares, Series E Preferred Stock, or Common Stock giving rise to such indemnification obligation. (c) Promptly after receipt by an indemnified party under subsection (a) or (b) above of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify each party against whom indemnification is to be sought in writing of the commencement thereof (but the failure so to notify an indemnifying party shall not relieve it from any liability which it may have under this Section 8 except to the extent that it has been prejudiced in any material respect by such failure or from any liability which it may otherwise have). In case any such action is brought against any indemnified party, and it notifies an indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein, and to the extent it may elect by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof with counsel 14 reasonably satisfactory to such indemnified party. Notwithstanding the foregoing, the indemnified party or parties shall have the right to employ its or their own counsel in any such case, but the fees and expenses of such counsel shall be at the expense of such indemnified party or parties unless (i) the employment of such counsel shall have been authorized in writing by the indemnifying parties in connection with the defense of such action, (ii) the indemnifying parties shall not have employed counsel to take charge of the defense of such action within a reasonable time after notice of commencement of the action, or (iii) such indemnified party or parties shall have reasonably concluded that there may be defenses available to it or them which are different from or additional to those available to one or all of the indemnifying parties (in which case the indemnifying party or parties shall not have the right to direct the defense of such action on behalf of the indemnified party or parties), in any of which events such fees and expenses of counsel shall be borne by the indemnifying parties; provided, however, that the indemnifying party under subsection (a) or (b) above, shall only be liable for the legal expenses of one counsel (in addition to any local counsel) for all indemnified parties in each jurisdiction in which any claim or action is brought. Anything in this subsection to the contrary notwithstanding, an indemnifying party shall not be liable for any settlement of any claim or action effected without its prior written consent, provided, however, that such consent was not unreasonably withheld. (d) In order to provide for contribution in circumstances in which the indemnification provided for in this Section 8 is for any reason held to be unavailable from the Company or is insufficient to hold harmless a party indemnified thereunder, the Company and each Holder shall contribute to the aggregate losses, claims, damages, liabilities and expenses of the nature contemplated by such indemnification provision (including any investigation, legal and other expenses incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding or any claims asserted, but after deducting in the case of losses, claims, damages, liabilities and expenses suffered by the Company, any contribution received by the Company from persons, other than the Holders, who may also be liable for contribution, including persons who control the Company within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act) to which the Company and any Holder may be subject, in such proportion as is appropriate to reflect the relative benefits received by the Company from the offering of the Series E Preferred Stock (and the related Depositary Shares), and any such Holder from its sale of Depositary Shares, Series E Preferred Stock, or Common Stock, or, if such allocation is not permitted by applicable law or indemnification is not available as a result of the indemnifying party not having received notice as provided in this Section 8, in such proportion as is appropriate to reflect not only the relative benefits referred to above but also the relative fault of the Company and the Holders in connection with the statements or emissions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative benefits received by the Company and any Holder shall be deemed to be in the same proportion as (x) the total proceeds from the offering (net of discounts but before deducting expenses) of the Series E Preferred Stock (and the related Depositary Shares) received by the Company and (y) the total proceeds received by such Holder upon its sale of Depositary Shares, Series E Preferred Stock, or Common Stock which would otherwise give rise to the indemnification obligation. The relative fault of the Company and of the Holders shall be determined by reference to, among other things, whether the untrue 15 or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Holders and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and each Holder agree that it would not be just and equitable if contribution pursuant to this Section 8 were determined by pro rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to above. Notwithstanding the provisions of this Section 8, (i) no Holder shall be required to contribute, in the aggregate, any amount in excess of the amount by which the total received by such Holder with respect to the sale of its Depositary Shares, Series E Preferred Stock, or Common Stock, as the case may be, exceeds the sum of (A) the amount paid by such Holder for such Depositary Shares, Series E Preferred Stock, or Common Stock, plus (B) the amount of any damages which such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission and (ii) no person guilty of fraudulent misrepresentation (within the meaning of Section II (f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 8, (A) each person, if any, who controls a Holder within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act and (B) the respective officers, directors, partners, employees, representatives and agents of a Holder or any controlling person shall have the same rights to contribution as such Holder, and each person, if any, who controls the Company within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act shall have the same rights to contribution as the Company, subject in each case to clauses (i) and (ii) of this Section 8(d). Any party entitled to contribution will, promptly after receipt of notice of commencement of any action, suit or proceeding against such party in respect of which a claim for contribution may be made against another party or parties under this Section 8, notify such party or parties from whom contribution may be sought, but the failure to so notify such party or parties shall not relieve the party or parties from whom contribution may be sought from any obligation it or they may have under this Section 8 or otherwise. No party shall be liable for contribution with respect to any action or claim settled without its prior written consent; provided, however, that such written consent was not unreasonably withheld. 16 SECTION 9. RULE 144A The Company hereby agrees with each Holder, for so long as any Transfer Restricted Securities remain outstanding, to make available, upon request of any Holder of Transfer Restricted Securities, to any Holder or beneficial owner of Transfer Restricted Securities in connection with any sale thereof and any prospective purchaser of such Transfer Restricted Securities designated by such Holder or beneficial owner, the information required by Rule 144A(d)(4) under the Act in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144A. SECTION 10. UNDERWRITTEN REGISTRATIONS The Holders of Transfer Restricted Securities may elect to sell their Transfer Restricted Securities pursuant to one or more Underwritten Registrations; provided, however, that in no event shall any Holder commence any such Underwritten Registration if a period of less than 180 days has elapsed since the consummation of the most recent Underwritten Registration hereunder; and provided further, that in no event shall the Holders effect more than three such Underwritten Registrations hereunder. No Holder may participate in any Underwritten Registration hereunder unless such Holder (a) agrees to sell such Holder's Transfer Restricted Securities on the basis provided in customary underwriting arrangements entered into in connection therewith and (b) completes and executes all reasonable questionnaires, powers of attorney, indemnities, underwriting agreements, lock-up letters and other documents required under the terms of such underwriting arrangements. SECTION 11. SELECTION OF UNDERWRITERS In any Underwritten Offering, the investment banker or investment bankers and manager or managers that will administer the offering will be selected by the Holders of a majority in aggregate Liquidation Preference or aggregate principal amount of the Transfer Restricted Securities included in such offering, provided, that such investment bankers and managers must be reasonably satisfactory to the Company. Such investment bankers and managers are referred to herein as the "underwriters." ------------ 17 SECTION 12. MISCELLANEOUS (a) Remedies. Each Holder, in addition to being entitled to exercise -------- all rights provided herein, in the Certificate of Designation, the Purchase Agreement or granted by law, including recovery of liquidated or other damages, will be entitled to specific performance of its rights under this Agreement. The Company agrees that monetary damages (including the Liquidated Damages contemplated hereby) would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Agreement and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate. (b) No Inconsistent Agreements. The Company will not on or after the -------------------------- date of this Agreement enter into any agreement with respect to its securities that conflicts with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Company's securities under any agreement in effect on the date hereof, except where a waiver with respect thereto has been obtained prior to the date of effectiveness of any registration statement required under this Agreement. 18 (c) [Intentionally Omitted]. (d) Amendments and Waivers. The provisions of this Agreement may not ---------------------- be amended, modified or supplemented, and waivers or consents to or departures from the provisions hereof may not be given unless the Company has obtained the written consent of Holders of a majority of the outstanding Liquidation Preference or principal amount of Transfer Restricted Securities. (e) Notices. All notices and other communications provided for or ------- permitted hereunder shall be made in writing by hand-delivery, first-class mail (registered or certified, return receipt requested), telex, telecopier, or air courier guaranteeing overnight delivery: (f) if to a Holder, at the address set forth on the records of the Transfer Agent with a copy to the Transfer Agent; and if to the Company: Intermedia Communications Inc. 3625 Queen Palm Drive Tampa, Florida 33619 Telecopier No.: (813) 829-2470 Attention: Chief Financial Officer With a copy to: 19 Kronish, Lieb, Weiner & Hellman LLP 1114 Avenue of the Americas, 46th Floor New York, New York 10036 Telecopier No.: (212) 997-3527 Attention: Ralph J. Sutcliffe All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged, if telecopied; and on the next business day, if timely delivered to an air courier guaranteeing overnight delivery. Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Transfer Agent at the address specified in the Certificate of Designation. (g) Successors and Assigns. This Agreement shall inure to the benefit ---------------------- of and be binding upon the successors and assigns of each of the parties, including without limitation and without the need for an express assignment, subsequent Holders of Transfer Restricted Securities; provided, however, that this Agreement shall not inure to the benefit of or be binding upon a successor or assign of a Holder unless and to the extent such successor or assign acquired Transfer Restricted Securities directly from such Holder. 20 (h) Counterparts. This Agreement may be executed in any number of ------------ counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (i) Headings. The headings in this Agreement are for convenience of -------- reference only and shall not limit or otherwise affect the meaning hereof. (j) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED ------------- IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAW RULES THEREOF. (k) Severability. In the event that any one or more of the provisions ------------ contained herein, or the application thereof in any circumstances is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. (l) Entire Agreement. This Agreement together with the other ---------------- Operative Documents (as defined in the Purchase Agreement) is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the 21 agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the registration rights granted by the Company with respect to the Transfer Restricted Securities. This Agreement supersedes all prior agreements and understanding between the parties with respect to such subject matter. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. INTERMEDIA COMMUNICATIONS INC. By: /s/ Robert M. Manning ---------------------------------------- Name: Robert M. Manning Title: Senior Vice President and Chief Financial Officer BEAR, STEARNS & CO. INC. By: /s/ Stephen M. Parish --------------------------------- Name: Stephen M. Parish Title: Senior Managing Director SALOMON BROTHERS INC By: /s/ Peter Westley --------------------------------- Name: Peter Westley Title: Vice President 22 EX-12.1 4 COMPUTATION OF RATIOS EXHIBIT 12.1 Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends Intermedia Communications Inc.
Pro forma(1) Pro forma(1) Year Nine months ended Nine months Years ended December 31, Ended September 30, Ended ------------------------------------------------- December 31, ------------------ September 30, 1992 1993 1994 1995 1996 1996 1996 1997 1997 -------------------------------------------------------------------------------------------------- Loss before extraordinary items (235) (2,074) (3,067) (19,157) (57,198) (164,332) (35,642) (157,385) (239,159) Income tax benefit - - - (97) - 783 - - 214 -------------------------------------------------------------------------------------------------- Loss before income taxes (235) (2,074) (3,067) (19,254) (57,198) (163,549) (35,642) (157,385) (238,945) =================================================================================================== Fixed charges: Interest expensed 1,031 844 1,219 13,355 35,213 94,668 24,179 39,895 81,327 Capitalized interest 120 213 257 677 2,780 2,780 1,940 2,528 2,528 Amortization of deferred financing costs (3) 67 78 69 412 1,252 - - - - Estimated interest factor on operating leases (4) 275 313 200 428 1,598 3,940 897 2,422 3,742 Dividends on redeemable preferred stock 267 - - - - 71,851 - 27,118 53,135 -------------------------------------------------------------------------------------------------- Total fixed charges 1,760 1,448 1,745 14,872 40,843 173,239 27,016 71,963 140,732 ================================================================================================== Earnings: Loss before income tax (235) (2,074) (3,067) (19,157) (57,198) (164,332) (35,642) (157,385) (239,159) Fixed charges excluding capitalized interest and preferred stock dividends 1,373 1,235 1,488 14,195 38,063 98,608 25,076 42,317 85,069 -------------------------------------------------------------------------------------------------- Total earnings 1,138 (839) (1,579) (4,962) (19,135) (65,724) (10,566) (115,068) (154,090) ================================================================================================== Ratio of earnings to fixed charges and preferred stock dividends 0.65 (0.58) (0.90) (0.33) (0.47) (0.38) (0.39) (1.60) (1.09) ================================================================================================== Insufficiency of earnings to cover fixed charges and preferred stock dividends 622 2,287 3,324 19,834 59,978 238,963 37,582 187,031 294,822 ==================================================================================================
Pro Forma as Adjusted(2) -------------------------------------- Year Nine Months Ended Ended December 31, September 30, 1996 1997 -------------------------------------- Loss before extraordinary items (194,967) (262,136) Income tax benefit 783 214 -------------------------------------- Loss before income taxes (194,184) (261,922) ====================================== Fixed charges: Interest expensed 125,303 104,304 Capitalized interest 2,780 2,528 Amortization of deferred financing costs (3) - - Estimated interest factor on operating leases (4) 3,940 3,742 Dividends on redeemable preferred stock 71,851 53,135 -------------------------------------- Total fixed charges 203,874 163,709 ====================================== Earnings: Loss before income tax (194,967) (262,136) Fixed charges excluding capitalized interest and preferred stock dividends 129,243 108,046 -------------------------------------- Total earnings (65,724) (154,090) ====================================== Ratio of earnings to fixed charges and preferred stock dividends (0.32) (0.94) ====================================== Insufficiency of earnings to cover fixed charges and preferred stock dividends 269,598 317,799 ====================================== (1) Gives effect to the pending acquisition of Shared Technologies, the October 1997 Offerings and the application of the net proceeds therefrom. (2) Gives effect to the December 1997 Offering and the application of the net proceeds therefrom. (3) Deferred financing costs are included in interest expense for proforma amounts and the 9 months ended September 30, 1997 and 1996. (4) Estimated interest factor on operating leases represents an estimated 1/3 of total operating lease expense for the period.
EX-23.2 5 CONSENT OF ERNST & YOUNG LLP EXHIBIT 23.2 Consent of Independent Certified Public Accountants We consent to the reference to our firm under the captions "Experts" in the Registration Statement (Form S-3) and related Prospectus of Intermedia Communications Inc. for the registration of 8,000,000 Depositary Shares (each representing a one-hundredth interest in a share of 7% Series E Junior Convertible Preferred Stock), 80,000 shares of 7% Series E Junior Convertible Preferred Stock, 3,307,425 shares of Common Stock issuable upon conversion of the 7% Series E Junior Convertible Preferred Stock and Common Stock issuable as dividends on the 7% Series E Junior Convertible Preferred Stock, and to the incorporation by reference therein of our report dated February 10, 1997, except for Note 13, as to which the date is March 7, 1997, with respect to the consolidated financial statements and schedule of Intermedia Communications Inc. included in its Annual Report (Form 10-K) for the year ended December 31, 1996, filed with the Securities and Exchange Commission. /s/ Ernst & Young LLP Tampa, Florida December 19, 1997 EX-23.3 6 CONSENT OF ERNST & YOUNG LLP EXHIBIT 23.3 Consent of Independent Certified Public Accountants We consent to the reference to our firm under the caption "Experts" in the Registration Statement (Form S-3) and related Prospectus of Intermedia Communications Inc. for the registration of 8,000,000 Depositary Shares (each representing a one-hundredth interest in a share of 7% Series E Junior Convertible Preferred Stock), 80,000 shares of 7% Series E Junior Convertible Preferred Stock, 3,307,425 shares of Common Stock issuable upon conversion of the 7% Series E Junior Convertible Preferred Stock and Common Stock issuable as dividends on the 7% Series E Junior Convertible Preferred Stock, and to the incorporation by reference therein of our report dated February 24, 1997, with respect to the consolidated financial statements of DIGEX, Incorporated included in its Annual Report (Form 10-KSB) for the year ended December 31, 1996, filed with the Securities and Exchange Commission. /s/ Ernst & Young LLP Baltimore, Maryland December 19, 1997 EX-23.4 7 CONSENT OF AUTHUR ANDERSEN LLP Exhibit 23.4 Consent of Independent Certified Public Accountants As independent public accountants, we hereby consent to the incorporation by reference in this Form S-3 Registration Statement of our report dated March 7, 1997 incorporated by reference in the Shared Technologies Fairchild Inc. Form 10-K for the year ended December 31, 1996 and to all references to our Firm included in this Form S-3 Registration Statement. /s/ Arthur Andersen LLP Washington, D.C. December 16, 1997 EX-23.5 8 CONSENT OF ROTHSTIEN KASS & COMPANY P.C. Exhibit 23.5 Consent of Independent Certified Public Accountants We consent to the incorporation by reference in this Registration Statement on Form S-3 of Intermedia Communications Inc. for the registration of 8,000,000 Depositary Shares (each representing a one-hundredth interest in a share of 7% Series E Junior Convertible Preferred Stock), 80,000 shares of 7% Series E Junior Convertible Preferred Stock, 3,307,425 shares of Common Stock issuable upon conversion of the 7% Series E Junior Convertible Preferred Stock and Common Stock issuable as dividends on the 7% Series E Junior Convertible Preferred Stock, of our report, which contains an explanatory paragraph relating to the changing of the method of accounting for Shared Technologies Fairchild Inc.'s investment in one of its subsidiaries, dated March 1, 1996, on our audits of the consolidated financial statements and financial statement schedule of Shared Technologies Fairchild Inc. as of December 31, 1995 and for the years ended December 31, 1995 and 1994. We also consent to the reference to our firm under the caption "Experts". /s/ Rothstein, Kass & Company, P.C. Roseland, New Jersey December 16, 1997 -----END PRIVACY-ENHANCED MESSAGE-----