-----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, JvkshfcXvI76ip5k/7BQgDnXmKaRDonpgChrx9t2EOi+0r/LvamZp/fFdgwoOqGa i/0k4pb5ApFLnzNyQ2itHQ== 0000950172-01-000241.txt : 20010224 0000950172-01-000241.hdr.sgml : 20010224 ACCESSION NUMBER: 0000950172-01-000241 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20010215 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20010216 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERMEDIA COMMUNICATIONS 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: 8-K SEC ACT: SEC FILE NUMBER: 000-20135 FILM NUMBER: 1548656 BUSINESS ADDRESS: STREET 1: 3625 QUEEN PALM DR STREET 2: STE 720 CITY: TAMPA STATE: FL ZIP: 33619 BUSINESS PHONE: 8138290011 MAIL ADDRESS: STREET 1: ONE INTERMEDIA WAY CITY: TAMPA STATE: FL ZIP: 33647 FORMER COMPANY: FORMER CONFORMED NAME: INTERMEDIA COMMUNICATIONS OF FLORIDA INC DATE OF NAME CHANGE: 19930328 8-K 1 0001.txt 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported): February 15, 2001 INTERMEDIA COMMUNICATIONS INC. -------------------------------- (Exact Name of Registrant as Specified in Charter) DELAWARE 0-20135 59-2913586 ---------- --------- ------------ (State or Other Jurisdiction of (Commission (IRS Employer Incorporation) File Number) Identification No.) One Intermedia Way, Tampa, Florida 33647 ------------------------------------------------------------ (Address of principal executive offices) (zip code) Registrant's telephone number, including area code: (813) 829-0011 -------------- NOT APPLICABLE -------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) ITEM 5. OTHER EVENTS. On February 15, 2001, Intermedia Communications Inc., a Delaware corporation ("Intermedia"), Digex, Incorporated, a Delaware corporation and a majority owned subsidiary of Intermedia ("Digex"), and WorldCom, Inc., a Georgia corporation ("WorldCom"), issued a joint press release announcing that they have entered into a memorandum of understanding to settle, subject to court approval, certain litigation pending in the Court of Chancery of the State of Delaware captioned In re Digex Shareholders Litigation (Consolidated C.A. No. 18336 NC) (the "Delaware Litigation"). The Delaware Litigation challenges certain actions taken in connection with the Agreement and Plan of Merger, dated as of September 1, 2000 (the "Merger Agreement"), by and among Intermedia, WorldCom and Wildcat Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of WorldCom. Intermedia and WorldCom also announced that they have entered into an amendment to the Merger Agreement, as well as an amendment to the related Note Purchase Agreement, dated as of October 31, 2000 (the "Note Purchase Agreement"), by and between Intermedia and WorldCom. Intermedia has also entered into a memorandum of understanding to settle, subject to court approval, certain litigation pending in the Circuit Court of the Thirteenth Judicial Circuit in and for Hillsborough County, Florida captioned Monteforte v. Intermedia Communications Inc., et al., (the "Florida Litigation"). The Florida Litigation challenges certain actions taken in connection with the original Merger Agreement. As part of the settlement, the plaintiffs' representative has been provided with the opportunity to review the terms of the revised Merger Agreement and has concluded that they are fair, reasonable and in the best interests of the stockholders of Intermedia. The amendments to the Merger Agreement and the Note Purchase Agreement, the memoranda of understanding relating to the proposed settlements of the Delaware Litigation and the Florida Litigation and the joint press release of Intermedia, WorldCom and Digex are attached hereto as Exhibits 2.2, 10.2, 10.3, 10.4 and 99.1, respectively. All of the foregoing exhibits are incorporated herein by reference and the discussion above is qualified in its entirety by reference to such exhibits. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (a) Financial Statements Not applicable. (b) Pro Forma Financial Statements Not applicable. (c) Exhibits No. Description - --- ----------- 2.1 Agreement and Plan of Merger, dated as of September 1, 2000, by and among WorldCom, Inc., Wildcat Acquisition Corp. and Intermedia Communications Inc. (incorporated herein by reference to Exhibit 2.1 to Intermedia's Current Report on Form 8-K filed on September 7, 2000). 2.2 First Amendment to Agreement and Plan of Merger, dated as of February 15, 2001, by and among WorldCom, Inc., Wildcat Acquisition Corp. and Intermedia Communications Inc.* 10.1 Note Purchase Agreement, dated as of October 31, 2000, by and between WorldCom, Inc. and Intermedia Communications Inc. (incorporated herein by reference to Exhibit 10.1 to Intermedia's Quarterly Report on Form 10-Q filed on November 14, 2000). 10.2 First Amendment to Note Purchase Agreement, dated as of February 15, 2001, by and between WorldCom, Inc. and Intermedia Communications Inc.* 10.3 Memorandum of Understanding, dated as of February 15, 2001, by and among WorldCom, Inc., Intermedia Communications Inc., Digex, Incorporated, certain directors of Intermedia Communications Inc. and certain minority stockholders of Digex, Incorporated.* 10.4 Memorandum of Understanding, dated as of February 14, 2001, by and among Intermedia Communications Inc., certain directors of Intermedia Communications Inc. and a class of public stockholders of Intermedia Communications Inc.* 99.1 Joint Press Release, dated February 15, 2001, of Intermedia Communications Inc., Digex, Incorporated and WorldCom, Inc.* - -------------------- * Filed herewith. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. INTERMEDIA COMMUNICATIONS INC. By: /s/ Robert M. Manning ------------------------------------ Name: Robert M. Manning Title: Senior Vice President and Chief Financial Officer Dated: February 15, 2001 EXHIBIT INDEX Exhibit No. Description - ----------- ----------- 2.1 Agreement and Plan of Merger, dated as of September 1, 2000, by and among WorldCom, Inc., Wildcat Acquisition Corp. and Intermedia Communications Inc. (incorporated herein by reference to Exhibit 2.1 to Intermedia's Current Report on Form 8-K filed on September 7, 2000). 2.2 First Amendment to Agreement and Plan of Merger, dated as of February 15, 2001, by and among WorldCom, Inc., Wildcat Acquisition Corp. and Intermedia Communications Inc.* 10.1 Note Purchase Agreement, dated as of October 31, 2000, by and between WorldCom, Inc. and Intermedia Communications Inc. (incorporated herein by reference to Exhibit 10.1 to Intermedia's Quarterly Report on Form 10-Q filed on November 14, 2000). 10.2 First Amendment to Note Purchase Agreement, dated as of February 15, 2001, by and between WorldCom, Inc. and Intermedia Communications Inc.* 10.3 Memorandum of Understanding, dated as of February 15, 2001, by and among WorldCom, Inc., Intermedia Communications Inc., Digex, Incorporated, certain directors of Intermedia Communications Inc. and certain minority stockholders of Digex, Incorporated.* 10.4 Memorandum of Understanding, dated as of February 14, 2001, by and among Intermedia Communications Inc., certain directors of Intermedia Communications Inc. and a class of public stockholders of Intermedia Communications Inc.* 99.1 Joint Press Release, dated February 15, 2001, of Intermedia Communications Inc., Digex, Incorporated and WorldCom, Inc.* - -------------------- * Filed herewith. EX-2 2 0002.txt EXHIBIT 2.2 - AMENDMENT TO AGREEMENT AND PLAN OF MERGER EXHIBIT 2.2 EXECUTION COPY ============================================================================= FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER by and among WORLDCOM, INC., WILDCAT ACQUISITION CORP. and INTERMEDIA COMMUNICATIONS INC. Dated February 15, 2001 ============================================================================= FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER, dated as of February 15, 2001 (this "First Amendment"), by and among WORLDCOM, INC., a Georgia corporation ("Wildcat"), WILDCAT ACQUISITION CORP., a Delaware corporation ("Merger Sub") and a wholly owned Subsidiary of Wildcat, and INTERMEDIA COMMUNICATIONS INC., a Delaware corporation ("Target"). WHEREAS, Wildcat, Merger Sub and Target have entered into an Agreement and Plan of Merger, dated as of September 1, 2000 (the "Merger Agreement"), pursuant to which Merger Sub is to merge with and into Target, with Target being the surviving corporation; WHEREAS, in consideration of Target's willingness to enter into this First Amendment, Wildcat and Merger Sub have agreed to adopt the amendments to the Merger Agreement set forth herein; WHEREAS, in consideration of Wildcat's and Merger Sub's willingness to enter into this First Amendment, Target has agreed to adopt the amendments to the Merger Agreement set forth herein; WHEREAS, Wildcat, Target, Dove and certain other parties are entering into a Memorandum of Understanding dated as of the date of this First Amendment (the "Settlement Agreement") for the purpose of, inter alia, settling the shareholder litigation captioned In re Digex, Inc. Shareholders Litigation (Consolidated Civil Action No. 18336 NC); WHEREAS, the Board of Directors of Target has approved, and deems it advisable and in the best interests of Target's stockholders to enter into, this First Amendment; WHEREAS, the respective Boards of Directors of Wildcat and Merger Sub have approved, and deem it advisable and in the best interests of their respective shareholders to enter into, this First Amendment; WHEREAS, except as amended by this First Amendment it is intended that the Merger Agreement shall remain in full force and effect with no amendment or modification thereto other than as set forth herein; and WHEREAS, capitalized terms used herein and not defined herein shall have the respective meanings given in the Merger Agreement; NOW, THEREFORE, the parties hereby agree as follows: ARTICLE I SECTION 1.01. The third sentence of Section 1.5 of the Merger Agreement is hereby deleted and replaced with the following: "Prior to such filing, a closing shall be held at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, Four Times Square, New York, NY 10019, or such other place as shall be agreed to by the parties, for the purpose of confirming the satisfaction or waiver, as the case may be, of the conditions set forth in Article V." SECTION 1.02. The second, third and fourth sentences of Section 1.6(a) of the Merger Agreement are hereby deleted and replaced with the following: "The "Exchange Ratio" means 1.0.". SECTION 1.03. Clause (1) of Section 2.9 of the Merger Agreement is hereby amended by deleting the words "(other than those relating to the economy or securities markets in general or the industries in which Target and its Subsidiaries operate in general or resulting from the announcement of this Agreement)". SECTION 1.04. The following is hereby added to the end of Section 2.10 of the Merger Agreement: "For the purpose of this Section 2.10, no such suit, action, proceeding, claim, grievance, investigation, judgment, decree, injunction, rule, order, facts, circumstances or conditions (each an "Event") shall be deemed, individually or in the aggregate, reasonably likely to have a Material Adverse Effect on Target or any of its Subsidiaries if and to the extent such Event is based on or arising out of this Agreement, the Voting Agreement or the transactions contemplated hereby or thereby. As of the date of the First Amendment, there is no Event based on or arising out of this Agreement, the Voting Agreement or the transactions contemplated hereby or thereby other than as set forth on Attachment I to the First Amendment.". SECTION 1.05. The last sentence of Section 2.11 of the Merger Agreement is hereby deleted and replaced with the following: "No other approval of the stockholders of Target is required with respect to this Agreement, the Voting Agreement or the transactions contemplated hereby or thereby. The term "Target Stockholder Approval" shall include any Target Stockholder Approval required under Section 251(d) of the DGCL in connection with any amendment to this Agreement.". SECTION 1.06. Section 2.13 of the Merger Agreement is hereby amended to read as follows: "Target has received the opinion of Bear Stearns & Co. Inc., dated the date of the First Amendment, to the effect that, as of such date, the Exchange Ratio is fair, from a financial point of view, to the holders of Target Common Stock.". SECTION 1.07. Section 2.14 of the Merger Agreement is hereby amended to read as follows: "The Board of Directors of Target has approved the terms of this Agreement, the Voting Agreement and the consummation of the transactions contemplated by this Agreement and the Voting Agreement. Such approval represents all the action necessary to ensure that the restrictions on "business combinations" (as defined in Section 203 of the DGCL) contained in Section 203 of the DGCL do not apply to Wildcat or Merger Sub in respect of Target in connection with the Merger and the other transactions contemplated by this Agreement and the Voting Agreement. To the Knowledge of Target, no other state takeover statute or similar statute or regulation is applicable to this Agreement, the Voting Agreement, the Merger or the other transactions contemplated by this Agreement and the Voting Agreement.". SECTION 1.08. The following is added to the end of Article II of the Merger Agreement: "2.17 First Amendment. As of the date of the First Amendment, to the Knowledge of Target or any of its Subsidiaries, all of the representations and warranties of Target in this Agreement that are qualified by reference to Material Adverse Effect are true and correct, ignoring, for purposes of this Section 2.17, clauses (iv) and (v) of subclause (a) of the definition of "Material Adverse Effect".". SECTION 1.09. The following is hereby inserted each time following the words "following the date of this Agreement" in Section 4.8(b) of the Merger Agreement: "or any amendment to this Agreement needing adoption by the stockholders of Target under Section 251(d) of the DGCL in order to be valid". SECTION 1.10. Sections 4.9 and 4.10 of the Merger Agreement are hereby deleted in their entirety; provided, however, that the section numbers of the remaining sections of Article IV of the Merger Agreement shall not be renumbered to reflect such deletion. SECTION 1.11. The words "(assuming, for this purpose, that Wildcat failed to make the Wildcat Cash Election)" are hereby deleted from Sections 4.17(a) and 4.17(g) of the Merger Agreement. SECTION 1.12. Section 4.24 of the Merger Agreement is hereby amended to read as follows: "Pending the adoption of the amendment to the Certificate of Incorporation of Dove set forth in Attachment II to the First Amendment, as contemplated by Section 5 of the Settlement Agreement, Wildcat and the Surviving Corporation shall cause Dove to abide by the provisions contained in such amendment prior to the formal adoption of such amendment.". SECTION 1.13. Section 4.25 of the Merger Agreement is hereby amended to read as follows: "Wildcat shall provide Target financing pursuant to, and subject to the conditions of, the Note Purchase Agreement dated October 31, 2000 between Target and Wildcat, as amended by the First Amendment thereto.". SECTION 1.14. Section 6.1(d) of the Merger Agreement is hereby amended by adding the following at the end of such Section: "; and provided further, however, that to the extent that the judgment contemplated by Section 9(e) of the Settlement Agreement shall have been entered but the period for appeals regarding such judgment shall not have expired on or prior to the Termination Date, then the Termination Date shall be extended until September 30, 2001.". SECTION 1.15. (a) the word "and" is hereby deleted from the end of Section 5.1(f) of the Merger Agreement, (b) "; and" is hereby substituted for the period at the end of Section 5.1(g) of the Merger Agreement and (c) the following is hereby added to the end of Section 5.1 of the Merger Agreement: "(h) (i) the Stipulation of Settlement contemplated by the Settlement Agreement shall have received final and unappealable court approval as contemplated by Section 11 of the Settlement Agreement and (ii) the judgment contemplated by Section 9(e) of the Settlement Agreement shall have been entered and become final and unappealable.". SECTION 1.16. The following is hereby added to Section 7.1 of the Merger Agreement: "First Amendment: the First Amendment to this Agreement dated as of February 15, 2001." SECTION 1.17. The following is hereby added to the end of the definition of "Form S-4" in Section 7.1 of the Merger Agreement: ", and the post-effective amendment to such registration statement made in connection with the First Amendment.". SECTION 1.18. The definition of "Material Adverse Effect" in Section 7.1 of the Merger Agreement is hereby amended to read as follows: "Material Adverse Effect: (a) when used with respect to Target, any change or effect that, individually or in the aggregate with all other changes or effects, is or is reasonably likely to be materially adverse to the business, operations, properties, financial condition, assets, liabilities or prospects of Target and its Subsidiaries, taken as a whole, other than those (i) relating to the economy or securities markets in general or the industries in which Target and its Subsidiaries operate in general, (ii) resulting from the announcement of this Agreement and/or the marketing of any assets of Target by Wildcat, (iii) arising from or relating to any of the Events set forth on Attachment I to the First Amendment, (iv) arising prior to the date of the First Amendment or (v) consisting of any deterioration in the business substantially resulting from circumstances or trends existing as of the date of the First Amendment or in the results of operations or any consequential changes in financial condition, in each case of Target and/or its Subsidiaries, whether individually or in the aggregate; provided that this clause (v) shall not be applicable in connection with Sections 2.1, 2.5, 2.6 and 2.16 of this Agreement, and (b) when used with respect to Wildcat, any change or effect that, individually or in the aggregate with all other changes or effects, is or is reasonably likely to be materially adverse to the business, operations, properties, financial condition, assets, liabilities or prospects of Wildcat and its Subsidiaries, taken as a whole, other than those relating to the economy or securities markets in general or the industries in which Wildcat and its Subsidiaries operate in general.". SECTION 1.19. The following is hereby added to the end of the definition of "Proxy Statement" in Section 7.1 of the Merger Agreement: ", and the additional proxy statement relating to the solicitation of the adoption of the Merger Agreement as amended by the First Amendment, which is also included in the Form S-4 (as amended).". SECTION 1.20. The references to "Average Price" and "Wildcat Cash Election" are hereby deleted from Section 7.1 of the Merger Agreement. SECTION 1.21. The following is hereby added to the end of Section 7.2 of the Merger Agreement: "References to this Agreement shall be references to this Agreement as amended or supplemented; provided, however, that references "to the date hereof" or "the date of this Agreement" shall be references to September 1, 2000 and references to the date of the First Amendment shall be references to February 15, 2001.". SECTION 1.22. Section 8.2 of the Merger Agreement is hereby amended by deleting the second address paragraph under such Section and replacing it with the following: "and a copy to: Skadden, Arps, Slate, Meagher & Flom LLP Four Times Square New York, NY 10036 Attention: Peter Allan Atkins, Esq. Eric L. Cochran, Esq. Facsimile: (212) 735-2000". ARTICLE II SECTION 2.01. Merger Agreement. Except as amended hereby, the provisions of the Merger Agreement shall remain in full force and effect with no amendment or modification thereto other than as set forth herein. SECTION 2.02. Entire Agreement; Third-Party Beneficiaries. Other than the Merger Agreement (and subject to Section 8.4 thereof), this First Amendment (a) constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties, or any of them, with respect to the subject matter of this First Amendment and (b) is not intended to confer upon any Person other than the parties hereto any rights or remedies hereunder. SECTION 2.03. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS, INCLUDING VALIDITY, INTERPRETATION AND EFFECT, BY THE INTERNAL LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO CONFLICTS OF LAWS PROVISIONS. SECTION 2.04. Counterparts. This First Amendment may be executed in two or more counterparts which together shall constitute a single instrument and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties. SECTION 2.05. Assignment. Neither this First Amendment nor any of the rights, interest or obligations under this First Amendment shall be assigned, in whole or in part, by operation of law or otherwise by any of the parties hereto without the prior written consent of the other parties. Any assignment in violation of the preceding sentence shall be void. Subject to the preceding two sentences, this First Amendment will be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns. SECTION 2.06. Specific Performance. The parties agree that due to the unique subject matter of this transaction, monetary damages will be insufficient to compensate the non-breaching parties in the event of a breach of any part of this First Amendment. Accordingly, the parties agree that any non-breaching party shall be entitled (without prejudice to any other right or remedy to which it may be entitled) to an appropriate decree of specific performance, or an injunction restraining any violation of this First Amendment or other equitable remedies to enforce this First Amendment (without establishing the likelihood of irreparable injury or posting bond or other security), and the breaching party waives in any action or proceeding brought to enforce this First Amendment the defense that there exists an adequate remedy at law. SECTION 2.07. Jurisdiction. Each of the parties hereto (a) consents to submit itself to the personal jurisdiction of any Federal court located in the State of Delaware or any Delaware state court in the event any dispute arises out of this First Amendment or any of the transactions contemplated by this First Amendment, (b) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court and (c) agrees that it will not bring any action relating to this First Amendment or any of the transactions contemplated by this First Amendment in any court other than a Federal court sitting in the State of Delaware or a Delaware state court. SECTION 2.08. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY OR AGAINST IT ON ANY MATTERS WHATSOEVER, IN CONTRACT OR IN TORT, ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS FIRST AMENDMENT. [SIGNATURE PAGE FOLLOWS] IN WITNESS WHEREOF, the parties have caused this First Amendment to be executed, by their respective duly authorized officers, on the date first above written. WORLDCOM, INC. By: /s/ Michael H. Salsbury ------------------------ Name: Michael H. Salsbury Title: General Counsel WILDCAT ACQUISITION CORP. By: /s/ John T. Stupka ------------------------- Name: John T. Stupka Title: INTERMEDIA COMMUNICATIONS INC. By: /s/ David C. Ruberg -------------------------- Name: David C. Ruberg Title: President and CEO ATTACHMENT I TO FIRST AMENDMENT In re Digex, Inc. Shareholders Litigation - ----------------------------------------- (Consolidated Civil Action No. 18336 NC) Monteforte v. Intermedia Communications Inc., et al. - ---------------------------------------------------- (Civil Action No. 0008844) (Florida Circuit Court) Attachment II to First Amendment CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF DIGEX, INCORPORATED DIGEX, INCORPORATED, a corporation organized and existing under the laws of Delaware (the "Corporation"), hereby certifies that: FIRST: The name of the corporation is DIGEX, INCORPORATED SECOND: The following Article Twelfth of the Certificate of Incorporation of the Corporation is hereby inserted in its entirety to read as follows: "TWELFTH: Transactions with Interested Stockholders. ------- A. The Corporation will not, and will not permit, cause or suffer any direct or indirect subsidiary of the Corporation to, enter into or engage in any Transaction (as defined below) with or for the benefit of any Interested Stockholder (as defined below) without (i) there being in office two or more Independent Directors (as defined below) and (ii) obtaining the prior written approval of at least a majority of the Independent Directors then in office of such Transaction; provided, that the prior written approval of at least a majority of the Independent Directors shall not be required if (x) such Transaction is first reviewed by the Independent Directors then in office and their recommendation to the entire Board of Directors is not to approve such Transaction and (y) despite such recommendation, at least 66 2/3% of the entire Board of Directors (other than the Independent Directors) determines in good faith, at a meeting duly called pursuant to the By-laws of the Corporation, that such Transaction is fair to the Corporation and its stockholders and the reasons for such determination are set forth in the records of such meeting. Such approval shall be in addition to any other approval required by applicable law. B. Certain Definitions. For purposes of this Article TWELFTH: "INDEPENDENT DIRECTOR" means, with respect to any member of the Board of Directors of the Corporation, a Director who is: (i) not (a) an employee, agent or officer of an Interested Stockholder or any of its subsidiaries (including the Corporation or any of its subsidiaries), (b) a director of an Interested Stockholder or (c) the relative of any of the foregoing; and (ii) does not have any direct or indirect financial interest in an Interested Stockholder or any of its subsidiaries that is material to such member. "INTERESTED STOCKHOLDER" shall have the meaning provided in Section 203(c)(5) of the General Corporation Law of the State of Delaware (the "DGCL"), as in effect as of February 15, 2001, without regard to the proviso at the end of the first sentence thereof. Each of WorldCom, Inc., and Intermedia Communications Inc. are Interested Stockholders for purposes of this definition based on the facts in existence as of February 15, 2001. "TRANSACTION" shall mean any of the following: (i) a transaction (or a series of related transactions) involving the sale, lease or other transfer of assets, products, property (tangible or intangible) or services by any Interested Stockholder to the Corporation or any direct or indirect subsidiary of the Corporation, or by the Corporation or any direct or indirect subsidiary of the Corporation to any Interested Stockholder, having a value in excess of $1,000,000; (ii) any merger or consolidation of the Corporation or any direct or indirect subsidiary of the Corporation with or into any Interested Stockholder; (iii) the repurchase by the Corporation or any direct or indirect subsidiary of the Corporation of any of its capital stock or other securities from any Interested Stockholder; (iv) the issuance or transfer by the Corporation or any direct or indirect subsidiary of the Corporation of any of its capital stock or other securities to any Interested Stockholder; and (v) any other transaction that would constitute a business combination under Section 203(c)(3)(i) - (iv) of the DGCL. C. In addition to any other vote of stockholders or the Board of Directors of the Corporation required by law or this Certificate of Incorporation, this Article TWELFTH may not be amended, altered or modified without (i) (a) there being in office two or more Independent Directors and (b) obtaining the prior written approval of at least a majority of the Independent Directors then in office, and (ii) a 66 2/3% affirmative vote of the holders of the Class A Common Stock (excluding any such stock owned of record or beneficially, directly or indirectly, by any Interested Stockholder), voting as a separate class. D. This Article TWELFTH shall cease to have any further force and effect on February 15, 2004, or such earlier date on which the only holders of the Corporation's Common Stock are Interested Stockholders or their affiliates or associates (as defined under Section 203(c)(1) and (c)(2), respectively, of the DGCL)." THIRD: The foregoing amendment to the Certificate of Incorporation of the Corporation was duly adopted by the Board of Directors and the stockholders of the Corporation in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be signed by , this day of , 2001. DIGEX, INCORPORATED By: ----------------------------- Name: Title: EX-10 3 0003.txt EXHIBIT 10.2 - AMENDMENT TO NOTE PURCHASE AGREEMENT EXHIBIT 10.2 EXECUTION COPY ============================================================================== FIRST AMENDMENT TO NOTE PURCHASE AGREEMENT by and among WORLDCOM, INC. and INTERMEDIA COMMUNICATIONS INC. Dated as of February 15, 2001 ============================================================================= FIRST AMENDMENT TO NOTE PURCHASE AGREEMENT, dated as of February 15, 2001 (this "First Amendment"), by and among WORLDCOM, INC., a Georgia corporation ("Wildcat"), and INTERMEDIA COMMUNICATIONS INC., a Delaware corporation (the "Company"). WHEREAS, Wildcat and the Company have entered into a Note Purchase Agreement, dated as of October 31, 2000 (the "Note Purchase Agreement"), pursuant to which Wildcat has agreed to purchase from the Company, and the Company has agreed to sell to Wildcat, certain of the Company's 14.12% Senior Subordinated Notes due 2009, all upon the terms and subject to the conditions set forth therein; WHEREAS, in consideration of the Company's willingness to enter into this First Amendment, Wildcat has agreed to adopt the amendments to the Note Purchase Agreement set forth herein; WHEREAS, in consideration of Wildcat's willingness to enter into this First Amendment, the Company has agreed to adopt the amendments to the Note Purchase Agreement set forth herein; WHEREAS, Wildcat, the Company, Dove and certain other parties are entering into a Memorandum of Understanding, dated as of the date of this First Amendment, for the purpose of, inter alia, settling the shareholder litigation captioned In re Digex, Inc. Shareholders Litigation (Consolidated Civil Action No. 18336 NC); WHEREAS, Wildcat, Merger Sub (as defined in the Merger Agreement) and the Company are entering into a First Amendment, dated as of the date hereof, to the Merger Agreement (the "Merger Agreement Amendment"); WHEREAS, the Board of Directors of the Company has approved, and deems it advisable and in the best interests of the Company's stockholders to enter into, this First Amendment; WHEREAS, the Board of Directors of Wildcat has approved, and deems it advisable and in the best interests of Wildcat's shareholders to enter into, this First Amendment; WHEREAS, except as amended by this First Amendment it is intended that the Note Purchase Agreement shall remain in full force and effect with no amendment or modification thereto other than as set forth herein; and WHEREAS, capitalized terms used herein and not defined herein shall have the respective meanings given in the Note Purchase Agreement; NOW THEREFORE, the parties hereby agree as follows: ARTICLE I CERTAIN AMENDMENTS Section 1.1 Certain Amendments. (a) The following is hereby added to the end of Section 5.07 of the Note Purchase Agreement: "For the purpose of this Section 5.07, no action, suit or proceeding (each an "Event") shall be deemed, individually or in the aggregate, to reasonably be expected to have a Material Adverse Effect on the Company or any of its Subsidiaries if and to the extent such Event is based on or arising out of the Merger Agreement, the Voting Agreement or the transactions contemplated thereby. As of the date of the First Amendment, there is no Event based on or arising out of the Merger Agreement, the Voting Agreement (as defined in the Merger Agreement) or the transactions contemplated thereby other than as set forth on Attachment I to the First Amendment." (b) The following is added to the end of Article V of the Note Purchase Agreement: "SECTION 5.20. First Amendment. As of the date of the First Amendment, to the Knowledge of the Company or any of its Subsidiar- ies, all of the representations and warranties of the Company in this Agreement that are qualified by reference to Material Adverse Effect are true and correct, ignoring, for purposes of this Section 5.20, clauses (iv) and (v) of the definition of "Material Adverse Effect". (c) The words "Material Adverse Event" at the end of Section 5.18 of the Note Purchase Agreement are hereby deleted and replaced with the words "Material Adverse Effect". (d) The definition of "Material Adverse Effect" set forth in Schedule A to the Note Purchase Agreement is hereby amended to read as follows: "Material Adverse Effect" means a material adverse effect on (a) the business, operations, affairs, financial condition, assets or properties of the Company and its Subsidiaries taken as a whole, or (b) the ability of the Company to perform its obligations under this Agreement and the Notes, or (c) the validity or enforceability of this Agreement or the Notes, except in each case for those (i) resulting from the announcement of the Merger or the marketing of any assets of the Company by you, (ii) relating to the economy or the securities markets in general or the industries in which the Company and its Subsidiaries operate in general, (iii) arising from or relating to any of the Events set forth on Attachment I to the First Amendment, (iv) arising prior to the date of the First Amendment or (v) consisting of any deterioration in the business substantially resulting from circumstances or trends existing as of the date of the First Amendment or in the results of operations or any consequential changes in financial condition, in each case of the Company and/or its Subsidiaries, whether individually or in the aggregate; provided that this clause (v) shall not be applicable in connection with Sections 5.01, 5.04, 5.06, 5.11 and 5.18 of this Agreement." (e) The following is hereby added to Schedule A to the Note Purchase Agreement: "First Amendment" means the First Amendment to the Agreement dated as of February 15, 2001." (f) The following is added to the end of Article V of the Note Purchase Agreement: SECTION 22.07 Interpretation. When a reference is made in this Agreement to a recital, Article, Section, Schedule or Exhibit, such reference shall be to a recital, Article or Section of, or Schedule or Exhibit to, this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words "include", "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation." The words "hereof", "herein" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such term. References to this Agreement or the Merger Agreement shall be references to this Agreement or the Merger Agreement as amended or supplemented; provided, however, that references "to the date hereof" or "the date of this Agreement" shall be references to October 31, 2000 and references to the date of the First Amendment shall be references to February 15, 2001." ARTICLE II MISCELLANEOUS Section 2.1 Note Purchase Agreement. Except as amended hereby, the provisions of the Note Purchase Agreement shall remain in full force and effect with no amendment or modification thereto other than as set forth herein. Section 2.2 Entire Agreement. Other than the Note Purchase Agreement (including the exhibits, schedules, documents and instruments referred to therein), the Registration Rights Agreement, the Merger Agreement (and subject to Section 8.4 thereof) and the Merger Agreement Amendment, this First Amendment constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties, or any of them, with respect to the subject matter of this First Amendment. Section 2.3 Governing Law. THIS FIRST AMENDMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF NEW YORK EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE. Section 2.4 Counterparts. This First Amendment may be executed in two or more counterparts which together shall constitute a single instrument and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties. Section 2.5 Successors and Assigns. All covenants and other agreements contained in this First Amendment by or on behalf of any of the parties hereto bind and inure to the benefit of their respective successors and assigns (including, without limitation, any subsequent holder of a Note) whether so expressed or not. [SIGNATURE PAGE FOLLOWS] IN WITNESS WHEREOF, the parties have caused this First Amendment to be executed, by their respective duly authorized officers, on the date first above written. WORLDCOM, INC. By: /s/ Michael H. Salsbury -------------------------------- Name: Michael H. Salsbury Title: General Counsel INTERMEDIA COMMUNICATIONS INC. By: /s/ David C. Ruberg --------------------------------- Name: David C. Ruberg Title: President and CEO ATTACHMENT I TO FIRST AMENDMENT In re Digex, Inc. Shareholders Litigation - ----------------------------------------- (Consolidated Civil Action No. 18336 NC) (Delaware Chancery Court) Monteforte v. Intermedia Communications Inc., et al. - ---------------------------------------------------- (Civil Action No. 0008844) (Florida Circuit Court) EX-10 4 0004.txt EXHIBIT 10.3 - MEMORANDUM OF UNDERSTANDING EXHIBIT 10.3 IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY - ---------------------------- IN RE: DIGEX, INC. CONSOLIDATED CIVIL ACTION NO. 18336 NC SHAREHOLDERS LITIGATION This document relates to: All Actions - ---------------------------- MEMORANDUM OF UNDERSTANDING All parties(1) to the consolidated action entitled In Re: Digex, Inc. Shareholders Litigation, Consolidated Civil Action No. 18336 NC, pending in the Court of Chancery of the State of Delaware (the "Action"), and the Special Committee of the Board of Directors of Digex, Incorporated (consisting of Richard Jalkut and Jack Reich), and Mark Shull (collectively, the "Parties"), by their respective counsel, have reached an agreement in principle providing for the settlement of the Action in its entirety, including all class and derivative claims, on the terms and subject to the conditions set forth below (the "Settlement"): 1. WorldCom, Inc. ("WorldCom") will make a payment (the "Settlement Payment") of registered and freely tradable WorldCom common stock having a total value of one hundred and sixty-five million dollars ($165,000,000) for distribution to certain members of the plaintiff Class as set forth in Paragraph 9(a) below, at the Effective Time(2) of consummation of the Merger pursuant to the Agreement and Plan of Merger Among WorldCom, Wildcat Acquisition Corp. and Intermedia Communications, Inc. ("Intermedia") dated September 1, 2000 (as amended, the "Merger Agreement"). (A copy of the Merger Agreement is attached hereto as Exhibit A). For purposes of this Paragraph, the WorldCom common stock shall be valued at a price per share equal to the Average Price. "Average Price" means the average (rounded to the nearest 1/10,000) of the volume weighted averages (rounded to the nearest 1/10,000) of the trading prices of WorldCom common stock on the Nasdaq National Market, as reported by Bloomberg Financial Markets (or such other source as the Parties shall agree in writing), for the 10 trading days randomly selected by lot by WorldCom and a representative of the Special Committee of Digex, Incorporated ("Digex") together from the 20 consecutive trading days ending on the third trading day immediately preceding the Effective Date. All fees and expenses of all plaintiffs and all counsel representing all plaintiffs in the action shall be paid out of the Settlement Payment provided for in this Paragraph 1. The Parties agree to take all necessary steps and seek all necessary approvals to fully effectuate the payment of WorldCom common stock contemplated by this Paragraph 1. - -------- 1 The parties to the Corrected Amended Consolidated Class Action and Derivative Complaint are as follows: TCW Technology Limited Partnership, TCW Small Capitalization Growth Stocks Limited Partnership, TCW Asset Management Company, Kansas Public Employees Retirement System, Gerard F. Hug, Mohamed Yassin, Taam Associates, John F. Prince, David Reynoldson, Marilyn Kalabsa, Thomas Turberg, David J. Steinberg, Crandon Capital Partners, Amrita Sinha (collectively, the "Plaintiffs") and Intermedia Communications, Inc., David C. Ruberg, Phillip A. Campbell, John C. Baker, Robert M. Manning, WorldCom, Inc. and Digex, Incorporated (collectively, the "Defendants"). 2 Unless otherwise defined herein, all capitalized terms used herein shall have the same definition as used in the Merger Agreement. 2. WorldCom will reimburse Digex for all fees and expenses incurred by it in connection with (a) the evaluation of various potential transactions involving Digex; (b) the Action, including all legal fees and investment advisor fees approved by the Special Committee of the Board of Directors of Digex; and (c) the reasonable costs and expenses of providing notice to the members of the Class and of administering the Settlement (the "Reimbursement"); provided, however, that the Reimbursement shall not exceed fifteen million dollars ($15,000,000). This Reimbursement will be paid in cash contemporaneously with the payment made pursuant to Paragraph 1 above. 3. The consideration payable by WorldCom to the shareholders of Intermedia pursuant to the Merger Agreement shall be reduced in accordance with the First Amendment to Agreement and Plan of Merger annexed hereto as Exhibit B (the "First Amendment"). The Parties agree to take all necessary steps and seek all necessary approvals to fully effectuate the First Amendment to the Merger Agreement, provided, however, that the Merger Agreement shall not be amended in any way that will adversely affect the Parties' rights or obligations under this Memorandum of Understanding or under the Stipulation of Settlement, unless all Parties hereto consent in writing. 4. WorldCom and Digex agree to enter into certain commercial agreements, the terms of which are separately described in Exhibit C annexed hereto (the "Commercial Agreements"), and which have been determined by the Special Committee of the Board of Directors of Digex to be fair and beneficial to Digex. The Parties agree to keep Exhibit C confidential. The principal terms of the Commercial Agreements will be generally described in the Stipulation of Settlement. The Commercial Agreements will become effective on or before the Effective Time of the consummation of the Merger pursuant to the Merger Agreement. 5. Intermedia and WorldCom agree to take all steps necessary to adopt (at the first regularly scheduled Digex shareholders' meeting following the Commercial Agreements becoming effective) the amendment to the Certificate of Incorporation of Digex substantially in the form of Exhibit D annexed hereto (the "Charter Amendment") and Intermedia and WorldCom agree to cause Digex to abide by the provisions of such charter amendment prior to the formal adoption thereof. 6. The Parties will use their best efforts to promptly agree upon, execute and present to the Court of Chancery of the State of Delaware (the "Court") a Stipulation of Settlement and such other documentation as may be required in order to obtain the approval of the Court of this Settlement and the dismissal of the Action upon the terms set forth in this Memorandum of Understanding. The Stipulation of Settlement will expressly provide, inter alia, that defendants in the Action have denied, and continue to deny, that they have violated or have threatened to violate any law, and that the defendants are entering into the Stipulation because the proposed Settlement would eliminate the burden, risk and expense of further litigation. 7. The members of the Special Committee of the Board of Directors of Digex have approved the Settlement embodied in this Memorandum of Understanding and determined that it is in the best interests of Digex and its shareholders and, subject to the provisions of this Memorandum of Understanding, agree to take all steps which may be reasonably necessary to give effect to the terms of this Settlement. 8. The Parties will present the Stipulation of Settlement to the Court for preliminary approval and for final approval following appropriate notice to and final certification of the Class pursuant to Chancery Court Rules 23(b)(1) and (b)(2) and will use their best efforts to obtain final Court approval of the Settlement, the dismissal with prejudice of the entire Action, as against the named plaintiffs and the Class, and the entry of a final order consistent with the Stipulation of Settlement. 9. The Stipulation of Settlement shall also provide as follows: (a). The Class shall be defined as all record and beneficial holders of Digex Class A common stock (other than the defendants in the Action and their affiliates) at any time during the period from and including August 31, 2000 through and including the Effective Time of the Merger pursuant to the Merger Agreement, including their respective successors in interest, assignees or transferees, immediate and remote (the "Class"). The Settlement Payment, less the amount awarded as the Fees (as defined in Paragraph 12 below), will be distributed on a per share basis to certain members of the Class as follows: (i) fifty percent (50%) will be distributed to the record holders of Digex Class A common stock as of the close of business on September 1, 2000; and (ii) fifty percent (50%) will be distributed to the record holders of Digex Class A common stock as of a record date expected to be on or about the Effective Time of the consummation of the Merger pursuant to the Merger Agreement. Members of the Class who fall within both of the descriptions set forth in (i) and (ii) immediately above will receive both distributions. The Parties agree that a condition precedent to this Settlement becoming effective is a final Order of the Court certifying the Class as defined above and providing for a complete release of Settled Claims of all members of the Class as set forth in Paragraph 9(b) below and the final judgment described in Paragraph 9(e) below. If the Court is unwilling to approve the Settlement because of the allocation among Class members of the Settlement Payment and the other settlement consideration, then the Parties will reallocate the Settlement Payment in whatever manner is necessary to obtain Court approval of the Settlement and of a release and final judgment, as set forth in Paragraphs 9(b) and 9(e) below, that is binding upon all members of the Class.(3) - -------- 3 It is understood and agreed that the definition of the plaintiff Class is intended to and will ensure that all past, present, and future record and beneficial holders of Digex stock who have a claim related to or arising from the matters alleged in the Corrected Amended Consolidated Class Action and Derivative Complaint are included within the Class and will be effectively barred from seeking any relief for such claims in the Action or in any subsequent action. (b). for the complete discharge, dismissal with prejudice, settlement and release of, and an injunction barring, all claims, demands, rights, actions or causes of action, liabilities, damages, losses, obligations, judgments, suits, matters and issues of any kind or nature whatsoever, whether known or unknown, contingent or absolute, suspected or unsuspected, disclosed or undisclosed, hidden or concealed, matured or unmatured, that have been, could have been, or in the future can or might be asserted in the Action or in any court, tribunal or proceeding (including, but not limited to, any claims arising under federal or state law relating to alleged fraud, breach of any duty, negligence, violations of the federal securities laws or otherwise) by or on behalf of Digex or by or on behalf of any member of the Class and all present, past and future shareholders of Digex, whether individual, class, derivative, representative, legal, equitable or any other type or in any other capacity against the Parties, or any or all of their respective past, present or future officers, directors, stockholders, representatives, families, parent entities, associates, affiliates, subsidiaries, employees, financial or investment advisors, consultants, accountants, attorneys, law firms, investment bankers, commercial bankers, engineers, advisors or agents, heirs, executors, trustees, general or limited partners or partnerships, personal representatives, estates, administrators, predecessors, successors, and assigns (collectively, the "Released Persons") which have arisen, could have arisen, or may arise out of, or relate in any manner to, the allegations, facts, events, transactions, acts, occurrences, statements, representations, misrepresentations, omissions or any other matter, thing or cause whatsoever, or any series thereof, embraced or set forth in the Corrected Amended Consolidated Class Action and Derivative Complaint filed in the Action, or otherwise related, directly or indirectly, to the Merger between WorldCom and Intermedia, to any provision of the Merger Agreement (including, but not limited to, those relating to the approvals pursuant to Section 203 of the Delaware General Corporation Law ("Section 203") previously granted to WorldCom by the Digex Board of Directors in connection with the Merger Agreement and the Merger), or to any offering or proxy material, public filings or statements (including, but not limited to, public statements) by any of the defendants or their representatives in the Action or any other Released Persons in connection with the Merger or Merger Agreement (collectively, the "Settled Claims"); provided, however, that nothing herein shall release the Parties from their obligations under the Stipulation of Settlement; and (c). that Digex, Intermedia and WorldCom shall each release each other (as well as each of their respective affiliates, parent entities, subsidiaries, directors, officers, agents, attorneys, investment advisors, investment bankers and consultants) from any claims of any nature relating to or arising out of the matters alleged in the Corrected Amended Consolidated Class Action and Derivative Complaint; provided, however, that nothing in this Settlement (or in the Stipulation of Settlement) shall alter, amend or in any way affect, the rights and obligations of Digex, Intermedia and WorldCom in connection with ongoing contractual arrangements between or among them, including by way of example but not limited to the following: the Parties' obligations under the Stipulation of Settlement; the Merger Agreement (as amended by the First Amendment and by subsequent amendments thereto); the Fourth Amendment to Credit Agreement entered into as of October 31, 2000 among WorldCom, Intermedia, Digex and others, the Guaranty entered into as of October 31, 2000 among WorldCom, Intermedia, Digex and others, the Digex Borrowing (or Side) Letter Agreement dated November 20, 2000 among WorldCom, Intermedia, and Digex (and any and all other related agreements); the Commercial Agreements described in Exhibit C hereto (as well as any other commercial agreements between WorldCom and Digex); the Consent-to-Disclosure Letter Agreement dated October 13, 2000 between WorldCom and Intermedia; the Note Purchase Agreement between Intermedia and WorldCom dated October 31, 2000; and the related Registration Rights Agreement of November 22, 2000. (d). that all defendants named in the Action shall release each of the named plaintiffs and their attorneys from any claims of any nature relating to or arising out of the matters alleged in the Corrected Amended Consolidated Class Action and Derivative Complaint or the Action; and (e). for entry of a final judgment: (i) dismissing the Corrected Amended Consolidated Class Action and Derivative Complaint in its entirety with prejudice and without costs (except, with respect to costs, as otherwise provided in the Stipulation of Settlement); (ii) providing that Plaintiffs and all members of the Class, Digex and all present, past and future shareholders of Digex, or any of them, are permanently barred and enjoined from commencing, prosecuting, instigating, or in any way participating in the commencement or prosecution of any action asserting any Settled Claims, either directly, representatively, derivatively, or in any other capacity, against any Released Persons which have been or could have been asserted, or which arise out of or relate in any way to any of the transactions or events described in the Corrected Amended Consolidated Class Action and Derivative Complaint in the Action, including, but not limited to, any and all claims which seek to challenge, or otherwise call into question, the validity or effectiveness of the Section 203 approvals previously granted to WorldCom pursuant to Section 203 in connection with the Merger and Merger Agreement; and (iii) declaring that WorldCom and its subsidiaries shall not be subject to any restrictions on "business combinations" (as defined in Section 203) with Digex, or any of its subsidiaries, pursuant to Section 203 in connection with or by virtue of its acquisition of Intermedia and indirect acquisition of Digex stock as a result of the Merger Agreement or the transactions contemplated thereby. (f). subject to the Order of the Court, pending final determination of whether the Settlement provided for in the Stipulation of Settlement should be approved, that plaintiff, Digex, and all members of the Class, or any of them, are barred and enjoined from commencing, prosecuting, instigating, or in any way participating in the commencement or prosecution of any action asserting any Settled Claims, either directly, representatively, derivatively, or in any other capacity, against any Released Persons or challenging the Settlement (other than in this Action in accordance with the procedures established by the Court). The Parties further agree that they shall use their best efforts to prevent the filing of any such action and to seek stay or a dismissal of any such action in contemplation of dismissal of this Action upon final approval of this Settlement. 10. The consummation of the Settlement is subject to the drafting and execution of an appropriate Stipulation of Settlement and such other documentation as may be required to obtain final judicial approval of the Settlement, release of all Settled Claims against the Parties and the dismissal of the Action with prejudice as to all claims asserted herein as against the named defendants and their affiliates without costs to any party (except, as to costs, as otherwise expressly provided in the Stipulation of Settlement). 11. The Settlement contemplated by this Memorandum of Understanding is binding on all Parties, but it is understood that it is subject to (a) preliminary judicial approval; (b) the good faith documentation and execution of a Stipulation of Settlement in accordance with paragraph 7 above; (c) the consummation of the Merger in accordance with the terms of the Merger Agreement, as amended by the First Amendment (and any subsequent amendments, subject to the provisions of Paragraph 3 above); and (d) final Court approval upon notice to and certification of the Class and hearing. This Memorandum of Understanding shall be avoidable by the Parties should any of these conditions not be met and, in that event, this Memorandum of Understanding shall be null and void, and shall not be admissible in any proceeding or be deemed to prejudice any of the positions of the Parties in or with respect to the Action or any other action. 12. Plaintiffs' Counsel in the Action intends to apply to the Court for an award of attorneys' fees and reasonable out-of-pocket disbursements (collectively, the "Fees"), which Fees shall be payable from the Settlement Payment set forth in Paragraph 1 above. WorldCom and Intermedia and the Individual Defendants agree not to oppose the application for Fees. It is understood that the amount of the application for Fees will be set forth in the Notice to the Class. The Special Committee of the Board of Directors of Digex reserves all rights regarding the application for Fees. The Parties agree that the application for Fees may be considered separately from the Settlement and proposed entry of a final and appealable order (certified pursuant to Chancery Rule 54(b)) dismissing and releasing the Settled Claims. The parties will provide in the Stipulation of Settlement for an appropriate methodology to defer distribution of a sufficient portion of the Settlement Payment to pay such Fees as may be awarded by the Court. 13. Pending negotiation, execution and Court approval of the Settlement, the Parties to the Action agree to stay any discovery, to stay any and all other proceedings other than those incident to the Settlement itself. The Parties also agree to use their best efforts to prevent the entry of any interim or final relief in favor of any member of the Class in any other litigation against any of the Parties to the Memorandum of Understanding which challenges the Settlement or otherwise involves a Settled Claim. 14. The Parties shall agree to extensions of time with respect to pleadings and other court filings as are appropriate in the context of this Memorandum of Understanding. 15. This Memorandum of Understanding may be executed in any number of counterparts with the same effect as if all Parties hereto had executed the same document. All such counterparts shall be construed together and shall constitute one instrument. 16. This Memorandum of Understanding constitutes the entire agreement among the Parties with respect to the subject matter hereof, and may not be amended nor any of its provisions waived except by a writing signed by all of the signatories hereto. 17. This Memorandum of Understanding and the Settlement contemplated by it shall be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to conflict of laws principles. 18. The Plaintiffs and Plaintiffs' Counsel in the Action represent and warrant that none of Plaintiffs' claims or causes of action referred to in the Corrected Amended Consolidated Class Action and Derivative Complaint in the Action or in this Memorandum of Understanding, including any Settled Claims, have been assigned, encumbered or in any manner transferred in whole or in part. The Parties agree that a sale or transfer of, or loan against, a Plaintiff's Digex stock after the commencement of this Action shall not be deemed an assignment, encumbrance or transfer of such Plaintiff's claims or causes of action for the limited purpose of the preceding sentence of this Paragraph 18. 19. Digex shall be responsible for providing notice of the Settlement to the members of the Class. Digex shall pay all reasonable costs and expenses incurred in providing notice of the Settlement to the members of the Class and shall cooperate with plaintiffs' counsel in providing such information as is reasonably available to it and reasonably identifies potential Class members. 20. Except as provided herein, the Parties in the Action shall bear no other expenses, costs, damages or fees alleged or incurred by plaintiffs, by any member of the Class, or by any of their attorneys, experts, advisors, agents or representatives. 21. The provisions contained in this Memorandum of Understanding shall not be deemed a presumption, concession or any admission by any of the Parties of any fault, liability or wrongdoing as to any facts or claims alleged or asserted in the Action, or any other actions or proceedings, and shall not be interpreted, construed, deemed, invoked, offered, or received in evidence or otherwise used by any person in the Action, or in any other action or proceeding, whether civil, criminal or administrative. 22. This Memorandum of Understanding shall be binding upon and shall inure to the benefit of the Parties and their respective agents, successors, executors, heirs and assigns. 23. The undersigned attorneys represent and warrant that they have been duly authorized by all of their respective clients to execute and to deliver this Memorandum of Understanding. 24. Plaintiffs will cooperate with defendants in all reasonable respects in connection with implementation of the Merger Agreement as modified herein and the other understandings set forth herein. The Parties, through their counsel, (i) agree to use their best efforts to pursue the Settlement in as expeditious and comprehensive a manner as possible and acknowledge that time is of the essence; and (ii) agree to cooperate in preparing any and all necessary papers to define, pursue and effectuate the Settlement. Dated: February 15, 2001 By: /s/ Stuart M. Grant ------------------------------- STUART M. GRANT, ESQ. MEGAN D. MCINTYRE, ESQ. GRANT & EISENHOFER 1220 N. Market Street - Suite 500 Wilmington, DE 19801 LEAD COUNSEL FOR PLAINTIFFS AND THE CLASS By: /s/ Brian J. McMahon ------------------------------- BRIAN J. MCMAHON, ESQ. STEPHEN R. REYNOLDS, ESQ. GIBBONS, DEL DEO, DOLAN, GRIFFINGER & VECCHIONE, P.C. One Riverfront Plaza Newark, New Jersey 07102 HENRY E. GALLAGHER, ESQ. COLLINS J. SEITZ, JR., ESQ. CONNOLLY BOVE LODGE & HUTZ, LLP 1220 Market St. P. O. Box 2207 Wilmington, Delaware 19899-2207 ATTORNEYS FOR DEFENDANT WORLDCOM, INC. By: /s/ Karen L. Valihura ------------------------------- STEVEN J. ROTHSCHILD, ESQ. KAREN L. VALIHURA, ESQ. Skadden, Arps, Slate, Meagher & Flom, LLP One Rodney Square P.O. Box 636 Wilmington, DE 19899 ROBERT K. PAYSON, ESQ. STEPHEN C. NORMAN, ESQ. POTTER ANDERSON & CORROON, LLP 1313 North Market street Hercules Plaza, 6th Floor Wilmington, Delaware 19899-0951 ATTORNEYS FOR DEFENDANTS INTERMEDIA COMMUNICATIONS, INC., DAVID C. RUBERG, PHILIP A. CAMPBELL, JOHN C. BAKER, GEORGE P. KNAPP, AND ROBERT M. MANNING By: /s/ Kevin M. McGinty ------------------------------- KEVIN M. MCGINTY, ESQ. MINTZ LEVIN COHN FERRIS GLOVSKY and POPEO, PC One Financial Center Boston, Massachusetts 02111 WILLIAM O. LAMOTTE, III, ESQ. MORRIS NICHOLS ARSHT & TUNNELL 1201 North Market P.O. Box 1347 Wilmington, Delaware 19899-1347 ATTORNEYS FOR DEFENDANT DIGEX, INCORPORATED By: /s/ P. Kevin Castel ------------------------------- P. KEVIN CASTEL, ESQ. KEVIN BURKE, ESQ. CAHILL GORDON & REINDEL 80 Pine Street New York, New York 10005 KEVIN G. ABRAMS, ESQ. RICHARDS LAYTON & FINGER One Rodney Square P.O. Box 551 Wilmington, Delaware 19899 ATTORNEYS FOR RICHARD JALKUT, JACK REICH (SPECIAL COMMITTEE OF THE BOARD OF DIRECTORS OF DIGEX, INCORPORATED) By: /s/ Robert Novack ------------------------------- ROBERT NOVACK, ESQ. EDWARDS & ANGELL, LLP 51 John F. Kennedy Parkway Short Hills, NJ 07078 WILLIAM O. LAMOTTE, III, ESQ. MORRIS NICHOLS ARSHT & TUNNELL 1201 North Market P.O. Box 1347 Wilmington, Delaware 19899-1347 ATTORNEYS FOR MARK K. SHULL EX-10 5 0005.txt EXHIBIT 10.4 - MEMORANDUM OF UNDERSTANDING EXHIBIT 10.4 IN THE CIRCUIT COURT OF THE THIRTEENTH JUDICIAL CIRCUIT IN AND FOR HILLSBOROUGH COUNTY, FLORIDA JOAN MONTEFORTE, ) Civil Action No. 0008844 ) Division I Plaintiff, ) ) CLASS REPRESENTATION v. ) ) INTERMEDIA COMMUNICATIONS ) INC., DAVID C. RUBERG, PHILIP A. ) CAMPBELL, JOHN C. BAKER, and ) RALPH J. SUTCLIFFE, ) ) Defendants. ) ) ) MEMORANDUM OF UNDERSTANDING WHEREAS, on September 5, 2000, Intermedia Communications Inc. ("Intermedia") and WorldCom, Inc. ("WorldCom") jointly announced that the Boards of Intermedia, WorldCom, and Digex, Inc. ("Digex") had each approved a definitive merger agreement (the "Merger Agreement") whereby WorldCom would exchange shares of its own common stock for all outstanding shares of Intermedia stock (the "Merger"); WHEREAS, Joan Monteforte, a stockholder of Intermedia ("Plaintiff") commenced a purported class action (the "Action") on behalf of a class of public stockholders of Intermedia alleging that certain aspects of the Merger were unfair to Intermedia stockholders, and that the Defendants(1) violated fiduciary duties in connection with the Merger Agreement and the Merger; WHEREAS, Plaintiff has closely followed the proceedings in a related action pending in the Delaware Court of Chancery captioned, In re: Digex, Inc. Shareholders Litig., Consolidated Civil Action No. 18336 NC (the "Delaware Action"), which alleges that Intermedia, as the majority stockholder of Digex, and David C. Ruberg, Philip A. Campbell and John C. Baker (among others) as directors of Digex, breached fiduciary duties to Digex's minority stockholders in connection with the Merger; WHEREAS, the Parties(2) have coordinated discovery in this Action with discovery in the Delaware Action; WHEREAS, Defendants have provided discovery to Plaintiffs, including producing thousands of pages of documents, providing copies of the transcripts of the depositions taken of Defendants in the Delaware Action, and making three representatives of Intermedia's investment advisors, Bear Stearns & Co. Inc. ("Bear Stearns") available for interview by Plaintiff's counsel; - -------- (1) The "Defendants" are David C. Ruberg, Philip A. Campbell, John C. Baker, Ralph Sutcliffe and Intermedia. George F. Knapp, James H. Greene, Jr. and Alexander Navab were named as defendants in the Complaint, but Plaintiff has voluntarily dismissed them without prejudice. (2) The "Parties" are Plaintiff and Defendants. WHEREAS, Intermedia has negotiated a First Amendment to the Merger Agreement with WorldCom; WHEREAS, Defendants have acknowledged that the filing and prosecution of the Action was a significant factor in Intermedia's obtaining both a more favorable exchange ratio, as well as increased certainty, in connection with the First Amendment to the Merger Agreement. WHEREAS, in addition to the discovery mentioned above, Intermedia has produced to Plaintiff certain non-public and public information concerning the Merger and the First Amendment to the Merger Agreement; WHEREAS, counsel for Plaintiff and counsel for Defendants have, among other things, negotiated at arms' length in an effort to reach a settlement of the Action; WHEREAS, counsel for the parties have reached an agreement in principle providing for the settlement of the Action on the terms and conditions set forth below; WHEREAS, the parties to the Delaware Action have negotiated an agreement in principle for the settlement of that lawsuit; WHEREAS, the Defendants have at all times denied, and continue to deny that they have committed, or have threatened to commit, any wrongful act or violation of law of any nature whatsoever; WHEREAS, the Defendants are entering into this agreement in principle because it will (a) halt the substantial expense, inconvenience and distraction of continued litigation of claims that have been, or could be, asserted in the Action, and (b) finally put to rest these claims; WHEREAS, Plaintiff's counsel believes that the proposed settlement (the "Settlement") is fair, reasonable and in the best interests of Intermedia's stockholders. IT IS HEREBY AGREED, subject to the approval of Intermedia's board of directors, and upon final approval of the Settlement (as provided below), that the following sets forth the terms of the agreement in principle between the Parties to settle this Action: 1. Plaintiff has been provided with information and analyses, and has conducted his own independent analyses, of the First Amendment to the Merger Agreement (the "First Amendment")(attached hereto as Exhibit A). Among other things, Plaintiff has discussed with Intermedia's investment advisor, Bear, Stearns, among other things, various analyses that Bear Stearns has performed in connection with their evaluation of the First Amendment, general market conditions affecting Intermedia and the overall financial condition of Intermedia. 2. As a result of these analyses, Plaintiff has concluded that the Merger, as amended, is fair to the stockholders of Intermedia and that, under the existing circumstances, the benefits received by the stockholders of Intermedia as a result of the Merger, as amended, constitutes fair, reasonable and adequate consideration for settlement of the Settled Claims (as defined in paragraph 7(b) below) and would be in the best interests of the Intermedia stockholders. 3. Plaintiff may conduct such reasonable discovery as the Parties agree is appropriate and necessary to confirm the fairness, reasonableness and adequacy of the terms of this Settlement. 4. No fees or expenses shall be paid to Plaintiff's counsel, nor shall any be sought, in the absence of (i) an approval by the Court of a release of as set forth in Paragraph 7(c) below; and (ii) the consummation of the Merger. The Parties agree to be bound by this Paragraph 4 as of the date of the execution of this Memorandum of Understanding. 5. The Parties will attempt in good faith to agree upon and execute an appropriate Stipulation of Settlement of the actions (the "Stipulation") and such other documentation as may be required in order to obtain final approval of the Settlement by the Court and the dismissal of the Action, and such Stipulation shall be executed and submitted to the Court for approval at the earliest practicable time. The Stipulation shall expressly provide, among other things, that: a. Defendants have denied, and continue to deny, that they have committed or aided and abetted in the commission of any violation of law or engaged in any of the wrongful acts alleged in the Complaint, as amended; b. Defendants are entering into the Stipulation solely because the proposed Settlement would eliminate the risk, burden and expense of further litigation; and c. Plaintiff's counsel, having made a thorough investigation of the facts, believe that, under the existing circumstances, the proposed Settlement is fair, reasonable, adequate, and in the best interests of Plaintiff and the Class, and appropriately minimizes the risks of continued litigation while providing greater certainty that the Merger, as amended, will close. d. Defendants have acknowledged that the filing and prosecution of the Action was a significant factor in Intermedia's obtaining both a more favorable exchange ratio, as well as increased certainty, in connection with the First Amendment to the Merger Agreement. e. Defendants shall permit Plaintiff's counsel to review and comment on Intermedia's proxy materials relating to the First Amendment to the Merger Agreement prior to the submission of those materials to Intermedia's common stockholders for a vote. Defendants further agree to consider in good faith Plaintiff's counsel's views and comments, but retain the right to determine whether or not to make any such proposed changes. 6. The Stipulation will further provide, among other things, a. for appropriate certification of a non opt-out class defined as all record and beneficial holders of Intermedia common stock (other than the Defendants in this Action and their affiliates) at any time during the period from and including August 31, 2000 through and including the Effective Time of the Merger, including their respective successors in interest, assigns or transferees, immediate and remote. Plaintiffs shall assume the responsibility of printing and mailing the Notice to the Class. b. the entry of a judgment in appropriate form, dismissing the Action with prejudice and barring and releasing, among other things, any claims known or unknown that have been, could have been, or in the future can or might be asserted in the Action or in any court, tribunal, or proceeding (including but not limited to any claims arising under federal, state, or common law, including the federal securities laws and any state disclosure law), by or on behalf of Intermedia or any member of the class, whether individual, class, derivative, representative, legal, equitable, or any other type or in any other capacity against Intermedia, David C. Ruberg, Philip A. Campbell, John C. Baker, Ralph Sutcliffe, George F. Knapp, James H. Greene, Jr., Alexander Navab, and Digex, or any of their families, parent entities, associates, affiliates or subsidiaries and each and all of their respective past, present, or future officers, directors, stockholders, principals, representatives, employees, attorneys, financial or investment advisors, consultants, accountants, investment bankers, commercial bankers, advisors or agents, heirs, executors, trustees, general or limited partners or partnerships, personal representatives, estates, administrators, predecessors, successors and assigns (collectively, the "Released Persons") which have arisen, arise now or hereafter may arise out of or relate in any manner to the allegations, facts, events, transactions, acts, occurrences, statements, representations, misrepresentations, ommissions or any other matter, thing or cause whatsoever, embraced, involved, set forth or otherwise related, directly or indirectly, to the Complaint in the Action, as amended, to the Merger, to any provision of the Merger Agreement or the First Amendment to the Merger Agreement, or to any offering or proxy material, public filings, or statements (including but not limited to public statements) by any of the defendants or their representatives in the Action or any other Released Person in connection with the Merger, Merger Agreement, First Amendment to the Merger Agreement or any other amendments thereto (collectively, the "Settled Claims"); and c. the delivery of releases in an appropriate form, consistent with paragraph 7(b) above, releasing any claims for violation of federal, state, or common law. d. subject to the order of the Court, pending final determination of whether the Settlement provided for in the Stipulation of Settlement should be approved, the Plaintiff and all members of the class, or any of them, are barred and enjoined from commencing or prosecuting any action asserting any Settled Claims, either directly, representatively, derivatively, or in any other capacity, against any Released Persons which have been or could have been asserted, or which arise out of or related in any way to the Merger, the Merger Agreement, the First Amendment to the Merger Agreement, any other amendments thereto or any of the transactions, occurrences or events described in the Complaint. The parties further agree that they shall use their best efforts to cause a stay of such action in contemplation of dismissal upon final approval of this Settlement. 7. The Settlement described herein shall be subject to the approval of the Court. In the event such approval is not obtained, neither the existence of this Memorandum of Understanding nor its contents shall be admissible in evidence or shall be referred to for any purpose in this litigation or in any other litigation or proceeding. 8. Plaintiffs intend to apply to the Court for an award of attorneys' fees and reimbursement of reasonable out-of-pocket expenses (collectively "Fees"). Defendants shall not oppose an application for (and, subject to final approval by the Court of such Fees, and the Settlement of the Action, including any appeals Intermedia or its successor shall pay) an award of fees to Plaintiff's counsel not to exceed $2.1 million, in addition to up to a maximum of $150,000 in expenses. Defendants reserve the right to oppose any other application for an award of attorneys' fees and expenses made to the Court or to any other court by, or on behalf of, Plaintiff's counsel, any member of the class, or any other person. 9. The consummation of the Settlement is subject to the drafting and execution of an appropriate Stipulation of Settlement and such other documentation as may be required to obtain final judicial approval of the Settlement and dismissal of the Action with prejudice as to all claims asserted herein as against the named defendants and their affiliates without costs to any party. 10. The Settlement contemplated by this Memorandum of Understanding is binding on all parties, but it is understood that it is subject to (a) preliminary judicial approval; (b) the good faith documentation and execution of a Stipulation of Settlement in accordance with the terms hereof; (c) the consummation of the Merger in accordance with the terms of the Merger Agreement, as amended by the First Amendment to the Merger Agreement (and any subsequent amendments); and (d) final court approval upon notice to and certification of the class and hearing. This Memorandum of Understanding shall be null and void and of no force and effect should any of these conditions not be met, and, in that event, this Memorandum of Understanding shall not be admissible in any proceeding or be deemed to prejudice any of the positions of the parties with respect to any action. 11. Plaintiff and Plaintiff's counsel in the Action represent and warrant that none of Plaintiff's claims or causes of action referred to in the Action or in this Memorandum of Understanding, indicating any settled claims, have been assigned, encumbered, or in any manner transferred in whole or in part. 12. The parties shall agree to extensions of time with respect to pleadings and other court filings as are appropriate in the context of this Memorandum of Understanding. 13. This Memorandum of Understanding may be signed in counterparts which shall together shall constitute one and the same instrument. DATED: February 14, 2001 Respectfully submitted, /s/ Paul J. Lockwood -------------------------- Steven J. Rothschild Karen L. Valihura Paul J. Lockwood SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP One Rodney Square P.O. Box 636 Wilmington, Delaware 19899 (302) 651-3000 Attorneys for Intermedia Communications Inc., David C. Ruberg, Philip A. Campbell, and John C. Baker /s/ David T. Knight ----------------------------- David T. Knight HILL WARD & HENDERSON 3700 Bank of America Plaza 101 East Kennedy Boulevard Tampa, Florida 33602 (813) 221-3900 Attorneys for Intermedia Communications Inc., David C. Ruberg, Philip A. Campbell, John C. Baker, and Ralph J. Sutcliffe /s/ Paul J. Geller ------------------------------ Paul J. Geller Howard K. Coates, Jr. Florida Bar No. 0714305 Florida Bar No. 984795 Jack Reise Florida Bar No. 058149 CAULEY GELLER BOWMAN & COATES, LLP 2255 Glades Road, Suite 421A Boca Raton, Florida 33431 (561) 750-3000 Attorneys for Plaintiff EX-99 6 0006.txt EXHIBIT 99.1 - PRESS RELEASE EXHIBIT 99.1 FOR IMMEDIATE RELEASE CONTACTS: WORLDCOM INTERMEDIA DIGEX Media: Media: Media: Claire Hassett Alan Hill Alice Andors 703-341-7561 813-829-4409 240-456-3566 Investors: Investors: Investors: Scott Hamilton Mark Tubb Tania Almond 601-460-5111 813-829-2408 240-456-3800 WORLDCOM, INTERMEDIA AND DIGEX AGREE TO SETTLE LAWSUIT RELATED TO WORLDCOM-INTERMEDIA MERGER WORLDCOM AND DIGEX ANNOUNCE LONG-TERM COMMERCIAL ARRANGEMENTS CLINTON, MISS., TAMPA, FLA., AND LAUREL, MD., FEBRUARY 15, 2001 -- WorldCom, Inc. (NASDAQ:WCOM), Intermedia Communications Inc. (NASDAQ:ICIX) and Digex, Inc. (NASDAQ:DIGX) today announced a proposed settlement of a lawsuit arising out of WorldCom's planned acquisition of a controlling interest in Digex through a merger with Intermedia. Certain minority shareholders of Digex had sued to either enjoin the merger or to invalidate the approval of the transaction by the Digex Board of Directors. The proposed settlement would, if approved by the Delaware Chancery Court, fully resolve all claims in the lawsuit and permit the Intermedia transaction to proceed. As part of the settlement, WorldCom and Intermedia have amended the terms of their merger agreement to reduce the exchange ratio and make certain other modifications as described below. The acquisition of Intermedia's controlling interest in Digex will represent a major step toward WorldCom's execution of its web hosting expansion and will provide WorldCom with a comprehensive portfolio of mission critical managed web and application hosting products and services for mid- and large-sized businesses. The principal terms of the proposed settlement and the amended merger agreement are: o The exchange ratio in the WorldCom/Intermedia merger agreement has been reduced to a fixed 1:1 exchange ratio that is not subject to adjustment; -MORE- 2-2-2 o WorldCom and Digex have agreed on a series of commercial arrangements that will offer WorldCom's customers favorable access to the Digex portfolio of managed web and application hosting services: |X| A sales channel agreement will cover sales by the WorldCom sales force of the advanced web hosting services offered by Digex, with a minimum sales commitment from WorldCom to Digex; |X| After the completion of the Intermedia merger, WorldCom will provide Digex funding for the performance of its 2001 and 2002 business plans as approved by the Digex and WorldCom boards of directors; |X| Managed web hosting facilities for Digex will be located in WorldCom data centers in the United States and around the globe. o Concurrent with the reduction in the WorldCom/Intermedia exchange ratio, a settlement fund of $165 million in WorldCom common stock, based upon WorldCom stock's trading price for a period preceding the WorldCom/Intermedia merger, will be created for Digex stockholders (other than Intermedia) and plaintiffs' counsel fees. Net of plaintiffs' counsel fees, one-half of the settlement fund will be distributed to holders of Digex Class A common stock as of Sept. 1, 2000. The balance will be distributed to such holders as of a future record date to be determined and expected to be on or about the date of the WorldCom-Intermedia merger; o Similarly, a fund of up to $15 million in cash will be created to cover expenses incurred by Digex and a special committee of independent directors of the Digex Board of Directors, as well as administrative expenses of the settlement; and o Certain "material adverse effect" provisions of the merger agreement have been narrowed to eliminate various categories of items as potentially giving rise to material adverse effects on Intermedia and its subsidiaries; o The approval of the WorldCom/Intermedia merger under Section 203 of the Delaware General Corporation Law by the Digex Board of Directors will no longer be subject to challenge and WorldCom will not be subject to any restrictions under Section 203 on future transactions with Digex. The proposed settlement has been approved by the Boards of Directors of WorldCom, Intermedia and Digex, as well as the Special Committee of the Digex Board. In connection with the transactions, Intermedia's financial advisor, Bear, Stearns & Co. Inc., has provided the Intermedia Board of Directors with an opinion that the exchange ratio, as revised, is fair from a financial point of view to the Intermedia common stockholders. The settlement must be preliminarily and -- following class notification procedures -- finally approved by the Delaware Chancery Court. The closing of the WorldCom-Intermedia merger under the amended merger agreement is subject to approval by the Intermedia stockholders and final court approval of the settlement. Because the regulatory approvals of the transaction by the Department of Justice and by the Federal Communication Commission are not affected by the proposed settlement or the merger amendment, the parties expect the WorldCom-Intermedia merger to close during the second quarter of 2001. -MORE- 3-3-3 "We are pleased to put this matter to rest and look forward to enhancing our ability to provide world-class managed web and application hosting services," said Bernard J. Ebbers, WorldCom president and chief executive officer. "This agreement helps WorldCom accelerate momentum in its global managed hosting business and is ideally complementary to WorldCom's range of data, Internet, VPN, and managed networks." David C. Ruberg, chairman and chief executive officer of Intermedia and chairman of the board of Digex said, "This continues to be an exciting transaction for the Intermedia and Digex stockholders, employees and other stakeholders. This settlement represents great potential future value to Digex shareholders and I believe the WorldCom-Digex business combination will be a powerful one in the web hosting marketplace." WorldCom (NASDAQ:WCOM) is a preeminent global communications company for the digital generation, operating in more than 65 countries with 2000 revenues of approximately $40 billion. WorldCom provides the innovative technologies and services that are the foundation for business in the 21st century. For more information, go to http://www.worldcom.com. Intermedia Communications (NASDAQ: ICIX) is dedicated to providing fully integrated next generation data-centric solutions to the complex communications needs of business and government customers in major U.S. markets. Intermedia offers broadband data, high-speed Internet access, advanced network and voice services. Headquartered in Tampa, FL, Intermedia is among the largest independent Competitive Local Exchange Carriers, the nation's fourth largest frame relay provider, a leading systems integration provider, a leading Internet Service Provider and the nation's largest provider of multi-tenant services. Additional information on Intermedia is available at http://www.intermedia.com. Digex (NASDAQ: DIGX) is a leading provider of managed Web and application hosting services for some of the world's leading companies that rely on the Internet as a critical business tool. Digex customers, from mainstream enterprise corporations, Internet-based businesses and Application Service Providers (ASPs), leverage Digex services to deploy secure, scaleable, high performance business solutions, including electronic retailing, online financial services, online procurement and customer self-service applications. Digex also offers value-added enterprise and professional services, including performance and security testing, monitoring, reporting and networking services. Additional information on Digex is available at http://www.digex.com. -MORE- 4-4-4 FORWARD LOOKING STATEMENTS Information contained in this release with respect to the financial impact of the proposed transaction is forward looking. These statements represent the companies' reasonable judgements with respect to future events and are subject to risks and uncertainties that could cause actual results to differ materially. Such factors include, but are not limited to, material adverse changes in economic and competitive conditions in the markets served by the companies, material adverse changes in the business and financial condition of either or both companies and their respective customers, uncertainties concerning technological changes and future product performance, and any delay in the expected closing of the transaction. AMENDED PROXY FILING In connection with the revised merger, WorldCom and Intermedia will be filing an amended proxy statement/prospectus with the Securities and Exchange Commission. Investors and security holders are urged to read the amended proxy statement/prospectus when it becomes available because it will contain important information. Investors and security holders may obtain a free copy of the amended proxy statement/prospectus when it becomes available and other documents filed by WorldCom and Intermedia with the Securities and Exchange Commission in connection with the merger at the Securities and Exchange Commission's web site at www.sec.gov. The amended proxy statement/prospectus and other documents in connection with the merger may also be obtained for free by directing a request to WorldCom, Inc., 500 Clinton Center Drive, Clinton, Mississippi 39056, Attention: Scott Hamilton, Investor Relations, Telephone: (601) 460-5111, email: investor@wcom.com or Intermedia Communications Inc., One Intermedia Way, Tampa, Florida 33647, Attention: Mark H. Tubb, Investor Relations, Telephone: (813) 829-2408, email: mhtubb@intermedia.com. # # # -----END PRIVACY-ENHANCED MESSAGE-----