-----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, Wj+/SheGIoWy1W/aqPf4gRytVQhJEZ8v2a+golrWNvntrLMb9hXkz07hfJpV2x1P EVxcMhwQe8P778In33BwZA== 0000950134-03-015443.txt : 20031114 0000950134-03-015443.hdr.sgml : 20031114 20031114152117 ACCESSION NUMBER: 0000950134-03-015443 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20030930 FILED AS OF DATE: 20031114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HIGH SPEED ACCESS CORP CENTRAL INDEX KEY: 0001075244 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING, DATA PROCESSING, ETC. [7370] IRS NUMBER: 611324009 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-26153 FILM NUMBER: 031003930 BUSINESS ADDRESS: STREET 1: 1000 W ORMSBY AVE STREET 2: SUITE 210 CITY: LOUISVILLE STATE: KY ZIP: 40210 MAIL ADDRESS: STREET 1: 1000 W ORMSBY AVE STREET 2: SUITE 210 CITY: LOUISVILLE STATE: KY ZIP: 40210 10-Q 1 d10246e10vq.txt FORM 10-Q ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q --------------- (Mark One) [X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended September 30, 2003. [ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from ___________ to ___________. COMMISSION FILE NUMBER 000-26153 --------------- HIGH SPEED ACCESS CORP. (Exact name of Registrant as specified in its charter) DELAWARE 61-1324009 (State or other jurisdiction of (I.R.S. Employer Identification Number) incorporation or organization) 9900 CORPORATE CAMPUS DRIVE, SUITE 3000 LOUISVILLE, KENTUCKY 40223 (Address of principal executive offices, including zip code) 502/657-6340 (Registrant's telephone number, including area code) FORMER NAME, FORMER ADDRESS, AND FORMER YEAR, IF CHANGED SINCE LAST REPORT: NOT APPLICABLE Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). YES [ ] NO [X] Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] Number of shares of Common Stock outstanding as of October 31, 2003...40,294,783 1 INDEX
PAGE PART I - FINANCIAL INFORMATION Item 1 - Financial Statements (Unaudited) Condensed Consolidated Statements of Net Assets in Liquidation as of September 30, 2003 and December 31, 2002 3 Condensed Consolidated Statement of Changes in Net Assets in Liquidation for the three and nine months ended September 30, 2003 4 Condensed Consolidated Statement of Operations (Going Concern Basis) for the three and nine months ended September 30, 2002 5 Condensed Consolidated Statement of Cash Flows (Going Concern Basis) for the nine months ended September 30, 2002 6 Notes to Condensed Consolidated Financial Statements 7 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 11 Item 3 - Quantitative and Qualitative Disclosures About Market Risk 17 Item 4 - Controls and Procedures 17 PART II - OTHER INFORMATION Item 1 - Legal Proceedings 18 Item 2 - Changes in Securities and Use of Proceeds 18 Item 3 - Defaults upon Senior Securities 18 Item 4 - Submission of Matters to a Vote of Security Holders 18 Item 5 - Other Information 18 Item 6 - Exhibits and Reports on Form 8-K 18 Signatures 20
2 PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS HIGH SPEED ACCESS CORP. CONDENSED CONSOLIDATED STATEMENTS OF NET ASSETS IN LIQUIDATION (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS) (UNAUDITED)
SEPTEMBER 30, DECEMBER 31, 2003 2002 -------------- --------------- ASSETS Cash and cash equivalents $ 1,456 $ 63,640 Short-term investments 416 1,237 Interest receivable 33 392 Charter holdback -- 2,092 Furniture and fixtures 53 113 ------------ ----------- Total assets 1,958 67,474 ------------ ----------- LIABILITIES Accounts payable and accrued liabilities 273 2,571 Estimated costs to be incurred during the wind-up period 529 1,089 ------------ ----------- Total liabilities 802 3,660 ------------ ----------- Net assets in liquidation 1,156 63,814 Less: Contingency reserve 1,150 2,000 ------------ ----------- Net assets available for distribution to stockholders $ 6 $ 61,814 ============ =========== Net assets in liquidation per share $ 0.03 $ 1.58 Net assets available for distribution to stockholders per share $ 0.00 $ 1.53 Outstanding shares used in computing per share amounts 40,294,783 40,294,783
The accompanying notes are an integral part of these condensed consolidated financial statements. 3 HIGH SPEED ACCESS CORP. CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2003 (IN THOUSANDS) (UNAUDITED)
Three months Nine months ------------ ----------- Net assets in liquidation, beginning of period $ 8,007 $ 63,814 Adjust assets and liabilities to fair value -- 661 Accrue additional estimated costs during wind-up -- (56) Cash distributions (6,851) (63,263) ------------ ------------ Net assets in liquidation at September 30, 2003 $ 1,156 $ 1,156 ============ ============
The accompanying notes are an integral part of these condensed consolidated financial statements. 4 HIGH SPEED ACCESS CORP. CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (GOING CONCERN BASIS) FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2002 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS) (UNAUDITED)
Three months Nine months ------------ ----------- General and administrative operating expenses: General and administrative expenses $ 509 $ 6,502 Non-cash compensation expense from restricted stock 12 1,673 ------------ ----------- Total general and administrative operating expenses 521 8,175 ------------ ----------- Loss from continuing operations before other income (expense) and discontinued operations (521) (8,175) Investment income 328 852 Interest expense -- (226) ------------ ------------ Loss from continuing operations before discontinued operations (193) (7,549) Discontinued operations: Loss from discontinued operations, net -- (4,217) Gain on sale of operations to Charter -- 40,259 ------------ ----------- Net income (loss) $ (193) $ 28,493 ============= =========== Basic and diluted net (loss) income per share: Loss from continuing operations $ (0.01) $ (0.17) Loss from discontinued operations -- (0.10) Gain on sale of operations to Charter -- 0.92 ------------ ----------- Net (loss) income $ (0.01) $ 0.65 ============= =========== Weighted average shares used in computation of basic and diluted net (loss) income per share 40,208,580 43,938,876
The accompanying notes are an integral part of these condensed consolidated financial statements. 5 HIGH SPEED ACCESS CORP. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (GOING CONCERN BASIS) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 (IN THOUSANDS) (UNAUDITED) OPERATING ACTIVITIES Net income $ 28,493 Adjustments to reconcile net income to cash used in operating activities of continuing operations: Loss from discontinued operations, net 4,217 Gain on sale of operations to Charter (40,259) Loss on early extinguishment of debt and capital lease obligations 2,041 Non-cash compensation expense from restricted stock 1,673 Changes in operating assets and liabilities excluding the effect of dispositions: Prepaid expenses (206) Accrued compensation and related expenses 74 ---------- Net cash used in operating activities of continuing operations (3,967) Net cash used in operating activities of discontinued operations (8,936) ---------- Net cash used in operating activities (12,903) ---------- INVESTING ACTIVITIES Purchases of short-term investments (67,324) Sales and maturities of short-term investments 72,129 ---------- Net cash provided by investing activities of continuing operations 4,805 Net cash provided by investing activities of discontinued operations 76,160 ---------- Net cash provided by investing activities 80,965 ---------- FINANCING ACTIVITIES Repurchase of common stock (4,449) Proceeds from exercise of stock options 36 ---------- Net cash used in financing activities of continuing operations (4,413) Net cash used in financing activities of discontinued operations (11,017) ---------- Net cash used in financing activities (15,430) ---------- Net change in cash and cash equivalents from continuing operations (3,575) Net change in cash and cash equivalents from discontinued operations 56,207 ---------- Net change in cash and cash equivalents 52,632 Cash and cash equivalents, beginning of period 11,714 ---------- Cash and cash equivalents, end of period $ 64,346 ==========
The accompanying notes are an integral part of these condensed consolidated financial statements. 6 ITEM 1 - NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1 - BASIS OF PRESENTATION The unaudited condensed consolidated financial statements of High Speed Access Corp. and its subsidiaries (herein referred to as the Company, we, us, or our) included herein reflect all adjustments, consisting only of normal recurring adjustments, which in the opinion of management are necessary to present fairly the Company's net assets in liquidation and changes in net assets in liquidation or financial position, results of operations and cash flows for the periods presented. Certain information and footnote disclosures normally included in audited financial information prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the Securities and Exchange Commission's rules and regulations. The Board of Directors unanimously adopted a Plan of Liquidation and Dissolution (the "Plan") on August 13, 2002. The Plan was approved by the holders of a majority of the Company's shares on November 27, 2002. The key features of the Plan are (1) filing a Certificate of Dissolution with the Secretary of State of Delaware and thereafter remaining in existence as a non-operating entity for three years; (2) winding up our affairs, including the settlement of any then-outstanding issues with Charter (Charter Communications, Inc., CC Systems, LLC, Charter Communications Holding Company, LLC and Charter Communications Ventures, LLC) relating to the Asset Sale, selling any remaining non-cash assets of the Company, and taking such action as may be necessary to preserve the value of our assets and distributing our assets in accordance with the Plan; (3) paying our creditors; (4) terminating any of our remaining commercial agreements, relationships or outstanding obligations; (5) resolving our outstanding litigation; (6) establishing a Contingency Reserve for payment of the Company's expenses and liabilities; and (7) preparing to make distributions to our stockholders. Under Delaware law, the Company will remain in existence as a non-operating entity until December 5, 2005 and is required to maintain a certain level of liquid assets and reserves to cover any remaining liabilities and pay operating costs during the wind-up period. During the wind-up period, the Company will attempt to convert its remaining assets to cash and settle its liabilities as expeditiously as possible. These financial statements should be read in conjunction with the financial statements, notes and discussions thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2002 and our October 25, 2002 Proxy Statement. LIQUIDATION BASIS OF ACCOUNTING The condensed consolidated financial statements for the three and nine months ended September 30, 2002 were prepared on the going concern basis of accounting, which contemplates realization of assets and satisfaction of liabilities in the normal course of business. As a result of the adoption of the Plan, the Company adopted the liquidation basis of accounting effective November 27, 2002. Inherent in the liquidation basis of accounting are significant management estimates and judgments. Under the liquidation basis of accounting, assets are stated at their estimated net realizable values and liabilities, including costs of liquidation, are stated at their anticipated settlement amounts, all of which approximate their estimated fair values. The estimated net realizable values of assets and settlement amounts of liabilities represent our best estimate of the recoverable values of the assets and settlement amounts of liabilities. There can be no assurance, however, that we will be successful in selling the assets at their estimated net realizable value or in settling the liabilities at their estimated amounts. The liquidation basis of accounting requires that we accrue an estimate for all liabilities related to expenses to be incurred during the wind-up period. While we believe our estimates are reasonable under the circumstances, if the length of our wind-up period were to change or other conditions were to arise, actual results may differ from these estimates and those differences may be material. The Company made an Initial Cash Distribution of $1.40 per share or $56.4 million to its stockholders on May 30, 2003 and a Subsequent Cash Distribution of $0.17 per share or $6.9 million on August 29, 2003. The "per share" amounts are based on 40,294,783 shares of common stock outstanding as of October 31, 2003. THE COMPANY DOES NOT EXPECT TO MAKE ANY ADDITIONAL LIQUIDATING DISTRIBUTIONS UNTIL THE FINAL LIQUIDATION PAYMENT IS MADE ON OR BEFORE DECEMBER 31, 2005. THE COMPANY'S BOARD OF DIRECTORS HAS AUTHORIZED, EFFECTIVE AS OF THE CLOSE OF BUSINESS ON DECEMBER 31, 2003, THE TRANSFER OF ITS REMAINING ASSETS AND LIABILITIES TO A LIQUIDATING TRUST. AT SUCH TIME, THE COMPANY WILL CANCEL ITS OUTSTANDING SHARES OF COMMON STOCK IN EXCHANGE FOR ILLIQUID BENEFICIAL INTERESTS IN THE LIQUIDATING TRUST, CLOSE THE STOCK TRANSFER BOOKS, AND DEREGISTER THE COMPANY'S SECURITIES UNDER THE SECURITIES EXCHANGE ACT OF 1934. After the stock transfer books have been closed, you will no longer be able to transfer your shares, and we will not issue any new stock certificates, other than replacement certificates. Certificates representing shares of common stock will not be assignable or transferable on our books except by will, intestate succession or operation of law. In addition, the Company will not 7 file any additional quarterly reports on Form 10-Q or proxy statements under the Securities Exchange Act of 1934. Instead, the Company will file only abbreviated reports on Forms 10-K or 8-K regarding its net assets in liquidation and changes in net assets in liquidation or financial position and cash flows for the period presented. Due to the duration of the wind-up period to December 5, 2005, and provisions in Delaware law that require the Company to maintain reserves sufficient to allow for the payment of all its liabilities and obligations, including all contingent, conditional and unmatured claims, the Company established a $2.0 million Contingency Reserve upon the adoption of liquidation basis accounting on November 27, 2002. As of June 30, 2003, the Company lowered the established Contingency Reserve to $1,150,000. At September 30, 2003, the Company has no known material claims against this reserve. If no claims are presented against this reserve, then the amount of the Final Liquidation Payment on or before December 31, 2005 would include the full amount of the Contingency Reserve. The amount and timing of the Final Liquidation Payment by the trustee will depend upon a variety of factors including, but not limited to, the actual proceeds from the realization of the Company's assets, the ultimate settlement amounts of the Company's liabilities and obligations and actual costs incurred in connection with carrying out the Plan, including salaries, administrative and operating costs during the wind-up period. A summary of significant estimates and judgments utilized in preparation of the September 30, 2003 condensed consolidated financial statements on a liquidation basis follows: Interest Receivable. At September 30, 2003, interest receivable of $33,000 represents the Company's estimate of future interest earnings on cash, cash equivalents and short-term investments over the wind-up period through December 5, 2005 and accounts for less than 2.0% of the Company's total assets. Furniture and Fixtures. At September 30, 2003, furniture and fixtures of $53,000 represents the Company's estimate of cash proceeds to be received on the sale of office furniture. The Company's remaining office furniture was subsequently sold for approximately the carrying value in October 2003. Accounts Payable and Accrued Liabilities. At September 30, 2003, accounts payable and accrued expenses were $0.3 million, including accrued circuit termination charges of $0.2 million. Estimated Costs to be Incurred During The Wind-Up Period. At September 30, 2003, the Company estimates that there are $0.5 million of costs to be incurred through December 5, 2005, including compensation for liquidation personnel ($0.2 million) and professional fees and other miscellaneous costs ($0.3 million). Contingency Reserve. In view of the duration of the wind-up period to December 5, 2005, and provisions in Delaware law that require the Company to maintain reserves sufficient to allow for the payment of all its liabilities and obligations, including all contingent, conditional and unmatured claims, the Company established a $2.0 million Contingency Reserve upon the adoption of liquidation basis accounting on November 27, 2002. As of June 30, 2003, the Company lowered the established Contingency Reserve to $1,150,000. At September 30, 2003, the Company has no known material claims against this reserve. In the event there are no claims against this reserve, the amount of the Final Liquidation Payment that may ultimately be paid to stockholders would include the full amount of the Contingency Reserve. Stock-Based Employee Compensation. The Company accounted for stock-based awards to employees in accordance with Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" and adopted the disclosure-only requirements of SFAS No. 123 "Accounting for Stock-Based Compensation" ("SFAS 123"). The following illustrates the effect on net income (loss) and net income (loss) per share for the three and nine months ended September 30, 2002 if the fair value based method of SFAS 123 had been applied to all outstanding and unvested awards (in thousands).
Three months Nine months ------------ ----------- Net (loss) income as reported.................................... $ (193) $ 28,493 Add: Stock based employee compensation expense included in reported net (loss) income.................................... 12 1,697 Deduct: Total stock-based employee compensation expense determined under fair value based methods for all awards (2,981) (10,604) ---------- ---------- Pro forma net (loss) income...................................... $ (3,162) $ 19,586 ========== ========== Basic and diluted net (loss) income per share: As reported.................................................. $ (0.01) $ 0.65 Pro forma.................................................... $ (0.08) $ 0.45
8 NOTE 2 - COMPREHENSIVE INCOME (LOSS) Comprehensive income (loss), comprised of net income (loss) and net unrealized holding gains and losses on investments, totaled $(0.2) million and $28.5 million for the three and nine months ended September 30, 2002, respectively. NOTE 3 - INCOME (LOSS) PER SHARE For the three and nine months ended September 30, 2002, the Company computed net income (loss) per share under the provisions of SFAS No. 128, "Earnings per Share," ("SFAS 128"). Under the provisions of SFAS 128, basic net income (loss) per share was computed by dividing the net income for the period by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share was determined in the same manner as basic earnings per share, except that the number of shares was increased assuming exercise of dilutive stock options and warrants using the treasury stock method, assuming conversion of preferred stock, and assuming vesting of restricted stock awards. In addition, income was adjusted for dividends and other transactions relating to preferred stock for which conversion was assumed. The calculation of diluted net income per share excluded potential common shares if the effect was anti-dilutive. Basic and diluted net income (loss) per share for the three and nine months ended September 30, 2002 were $(0.01) and $0.65, respectively, based on weighted average shares outstanding of 40,208,580 and 43,938,876, respectively. Diluted net income (loss) per share equals basic net income (loss) per share because the assumed exercise of the Company's stock options and warrants, the assumed conversion of preferred stock, and the vesting of restricted stock is anti-dilutive to the loss from continuing operations per share. Stock options and warrants to purchase 8,873,996 shares of our common stock at September 30, 2002 were excluded from the calculation of diluted net income (loss) per share as they were anti-dilutive. NOTE 4 - COMMITMENTS, GUARANTEES AND CONTINGENCIES The IPO Litigation. On November 5, 2001, the Company and its IPO underwriters, Lehman Brothers, Inc., J.P. Morgan Securities, Inc., CIBC World Markets Corp., and Banc of America Securities, Inc., were named as defendants in a purported class action lawsuit filed in the United States District Court for the Southern District of New York (Ruthy Parnes v. High Speed Access Corp., et. al., Index No. 01-CV-9743(SAS)). The lawsuit alleges that our Registration Statement, dated June 3, 1999, and Prospectus, dated June 4, 1999, for the issuance and initial public offering of 13,000,000 shares of our common stock to investors contained material misrepresentations and/or omissions. The class action alleges violations of Sections 11 and 15 of the Securities Act of 1933 (the "1933 Act") and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the "1934 Act") and Rule 10b- promulgated thereunder. The essence of the complaints is that defendants issued and sold our common stock pursuant to the Registration Statement for the IPO without disclosing to investors that certain underwriters in the offering had solicited and received excessive and undisclosed commissions from certain investors. The complaints also allege that our Registration Statement for the IPO failed to disclose that the underwriters allocated Company shares in the IPO to customers in exchange for the customers' promises to purchase additional shares in the aftermarket at pre-determined prices above the IPO price, thereby maintaining, distorting and/or inflating the market price for the shares in the aftermarket. On February 19, 2003, the Court denied the Company's motion to dismiss the alleged violations of Section 11 and 15 of the 1933 Act. However, the Court granted the Company's motion to dismiss the alleged violations of Sections 10(b) and 20(a) of the 1934 Act and Rule 10b- promulgated thereunder. On June 26, 2003, the Plaintiffs' Executive Committee announced that a proposed settlement between the approximately 300 issuer defendants and their directors and officers and the plaintiffs had been structured in the IPO Litigation which would guarantee at least $1.0 billion to investors who were class members from the insurers of the issuers. The Company has assented to participate in the settlement, which is subject to final documentation and review and consent of the Court. If final settlement occurs, the Company will be removed from the litigation without payment of any funds. Accordingly, we do not believe that the IPO litigation will have a material adverse effect on our net assets in liquidation. 9 Indemnification of Charter. In connection with the Asset Sale, we agreed to indemnify Charter against all claims arising from breaches of our representations, warranties and covenants, various excluded liabilities and the pre-closing operation of the assets we sold to Charter. With the exception of certain representations and warranties and covenants described below, all other representations and warranties expired August 31, 2003. The following representations and warranties and covenants extend beyond August 31, 2003 and are not subject to any limitations: (i) breaches of representations and warranties related to title to the acquired assets, and certain matters affecting intellectual property, technology and know-how, will be in effect until the Company is finally dissolved on December 5, 2005; (ii) breaches of representations and warranties related to taxes, certain employee benefit plans and environmental matters will be in effect through February 28, 2004; (ii) the excluded liabilities; (iii) our operation of the assets sold to Charter prior to the closing of the Asset Sale; and (iv) common law fraud. The Company has no liability to Charter for claims arising from breaches of our representations and warranties relating to intellectual property, technology and know-how unless the damages in the aggregate for such breaches exceed $250,000, in which case Charter is entitled to reimbursement from the first dollar of such damages. With respect to any other claims listed above, Charter is entitled to reimbursement from the first dollar of damages and such damages are unlimited. These indemnification obligations are limited to actual damages. The Company has no liability to Charter for indirect or consequential damages. We are aware of no other claims that Charter has or intends to assert against us in connection with the Asset Sale. NOTE 5 - RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS In May 2002, the FASB issued SFAS No. 145 ("SFAS 145"), "Rescission of SFAS Nos. 4, 44, 64, Amendment of SFAS 13, and Technical Corrections as of April 2002." SFAS 145 rescinds SFAS No. 4, "Reporting Gains and Losses from Extinguishment of Debt," which required that gains and losses from extinguishment of debt that were included in the determination of net income be aggregated and, if material, classified as an extraordinary item, net of the related income tax effect. Under SFAS 145, gains or losses from extinguishment of debt should be classified as extraordinary items only if they meet the criteria in Accounting Principal's Board Opinion No. 30 ("APB 30"), "Reporting the Results of Operations - Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions". Applying the criteria in APB 30 will distinguish transactions that are part of an entity's recurring operations from those that are unusual or infrequent or that meet the criteria for classification as an extraordinary item. The Company adopted SFAS 145 on January 1, 2003. The losses on early extinguishment of debt and capital lease obligations that were classified as extraordinary items in prior periods presented that did not meet the criteria of APB 30 for classification as extraordinary items were reclassified to loss from continuing operations. In November 2002, the FASB, issued FASB Interpretation No. 45 ("FIN 45"), Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, an interpretation of FASB Statements No. 5, 57, and 107 and Rescission of FASB Interpretation No. 34. Fin 45 requires that upon issuance of a guarantee, the entity must recognize a liability for the fair value of the obligation it assumes under that guarantee. FIN 45 requires disclosure about each guarantee even if the likelihood of the guarantor's having to make any payments under the guarantee is remote. The provisions for initial recognition and measurement are effective on a prospective basis for guarantees that are issued or modified after December 31, 2002 and the disclosure provisions of FIN 45 were effective for our December 31, 2002 financial statements. Adopting the recognition provisions of FIN 45 did not have an impact on the Company. We have made the disclosures required by FIN 45 in the notes to our condensed consolidated financial statements (see Note 4, "Commitments, Guarantees and Contingencies"). In January 2003, the FASB issued Interpretation No. 46 ("FIN 46"), Consolidation of Variable Interest Entities, an interpretation of ARB 51. The primary objectives of FIN 46 are to provide guidance on the identification of entities for which control is achieved through means other than through voting right (variable interest entities, or VIEs) and how to determine when and which business enterprise should consolidate the VIE (the primary beneficiary). The provisions of FIN 46 are effective immediately for VIEs created after January 31, 2003 and no later than December 31, 2003 for VIEs created before February 1, 2003. In addition, FIN 46 requires 10 that both the primary beneficiary and all other enterprises with a significant variable interest make additional disclosure in filings issued after January 31, 2003. The adoption of FIN 46 will not have an impact on the Company because we do not hold any interest in an entity qualifying as a VIE. In January 2003, the FASB issued Statement No. 148 ("SFAS 148"), Accounting for Stock-Based Compensation - Transition and Disclosure. SFAS 148 amends FASB Statement No. 123 ("SFAS 123"), Accounting for Stock-Based Compensation, to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS 148 amends the disclosure requirements of SFAS 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. See Note 1, "Basis of Presentation" for our stock option accounting policy and required disclosures. ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Quarterly Report on Form 10-Q contains certain statements of a forward-looking nature relating to future events or the future financial performance of the Company. Such statements are only predictions, involve risks and uncertainties, and actual events or results may differ materially from the results discussed in the forward-looking statements. Factors that could cause or contribute to such differences include those discussed under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations - Risk Factors" as well as those discussed in other filings with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2002. OVERVIEW High Speed Access Corp. (hereinafter referred to as the Company, we, us or our) formerly provided high speed Internet access and related services to residential and commercial customers primarily via cable modems and international ISP infrastructure services. On February 28, 2002, we sold our Internet access and related services business to Charter in the Asset Sale. On August 13, 2002, our Board concluded that the liquidation of the Company was the best alternative available for maximizing stockholder value and adopted a Plan of Liquidation and Dissolution (the "Plan"). The Plan was approved by the holders of a majority of the Company's shares on November 27, 2002. The key features of the Plan are (1) filing a Certificate of Dissolution with the Secretary of State of Delaware and thereafter remaining in existence as a non-operating entity for three years; (2) winding up our affairs, including the settlement of any then-outstanding issues with Charter relating to the Asset Sale, selling any remaining non-cash assets of the Company, and taking such action as may be necessary to preserve the value of our assets and distributing our assets in accordance with the Plan; (3) paying our creditors; (4) terminating any of our remaining commercial agreements, relationships or outstanding obligations; (5) resolving our outstanding litigation; (6) establishing a Contingency Reserve for payment of the Company's expenses and liabilities; and (7) preparing to make distributions to our stockholders. In connection with the adoption of the Plan and the anticipated liquidation, the Company adopted the liquidation basis of accounting effective November 27, 2002, and has valued its assets at their estimated net realizable cash values and has stated its liabilities, including costs to liquidate, at their estimated settlement amounts, all of which approximate their estimated fair values. Uncertainties as to the value to be realized from the disposal of the Company's assets (other than cash), and the ultimate amount paid to settle its liabilities make it impracticable to predict the aggregate net value that may ultimately be distributable to stockholders. Claims, liabilities and future expenses of liquidation (including salaries, payroll and local taxes, professional fees, and miscellaneous office expenses), although currently declining in the aggregate, will continue to be incurred with execution of the Plan. Although we do not believe that a precise estimate of the Company's net assets can currently be made, we believe that available cash and cash equivalent investments and amounts received from the sale of office furniture will be adequate to provide for the Company's obligations, liabilities, operating costs and claims (including contingent liabilities). Under Delaware law, the Company will remain in existence as a non-operating entity until December 5, 2005 and is required to maintain a certain level of liquid assets and reserves to cover any remaining liabilities and pay operating costs during the wind-up period. During the wind-up period, the Company will attempt to covert its remaining assets to cash and settle its liabilities as expeditiously as possible. Pursuant to the Plan, the Company made an Initial Cash Distribution of $1.40 per share or $56.4 million to its stockholders on May 30, 2003 and a Subsequent Cash Distribution of $0.17 per share or $6.9 million on August 29, 2003. The "per share" amounts are 11 based on 40,294,783 shares of common stock outstanding as of October 31, 2003. The Company does not expect to make any additional distributions until the Final Liquidation Payment is made on or before December 31, 2005. CRITICAL ACCOUNTING POLICIES AND ESTIMATES Liquidation Basis of Accounting. As of November 27, 2002, all activities of the Company are presented under the liquidation basis of accounting. Inherent in the liquidation basis of accounting are significant management estimates and judgments. Under the liquidation basis of accounting, assets have been valued at their estimated net realizable values and liabilities are stated at their anticipated settlement amounts, all of which approximate their estimated fair values. The estimated net realizable values of assets and settlement amounts of liabilities, including costs of liquidation, represent our best estimate of the recoverable value of the assets and settlement amounts of liabilities. There can be no assurance, however, that we will be successful in selling the assets at their estimated net realizable value or in settling the liabilities at their estimated amounts. The liquidation basis of accounting requires that we accrue an estimate for all liabilities related to expenses to be incurred during the wind-up period. While we believe our estimates are reasonable under the circumstances, if the length of our wind-up period were to change or other conditions were to arise, actual results may differ from these estimates and these differences may be material. The Company made an Initial Cash Distribution of $1.40 per share or $56.4 million to its stockholders on May 30, 2003 and a Subsequent Cash Distribution of $0.17 per share or $6.9 million on August 29, 2003. The "per share" amounts are based on 40,294,783 shares of common stock outstanding as of October 31, 2003. THE COMPANY DOES NOT EXPECT TO MAKE ANY ADDITIONAL LIQUIDATING DISTRIBUTIONS UNTIL THE FINAL LIQUIDATION PAYMENT IS MADE ON OR BEFORE DECEMBER 31, 2005. THE COMPANY'S BOARD OF DIRECTORS HAS AUTHORIZED, EFFECTIVE AS OF THE CLOSE OF BUSINESS ON DECEMBER 31, 2003, THE TRANSFER OF ITS REMAINING ASSETS AND LIABILITIES TO A LIQUIDATING TRUST. AT SUCH TIME, THE COMPANY WILL CANCEL ITS OUTSTANDING SHARES OF COMMON STOCK IN EXCHANGE FOR ILLIQUID BENEFICIAL INTERESTS IN THE LIQUIDATING TRUST, CLOSE THE STOCK TRANSFER BOOKS, AND DEREGISTER THE COMPANY'S SECURITIES UNDER THE SECURITIES EXCHANGE ACT OF 1934. After the stock transfer books have been closed, you will no longer be able to transfer your shares, and we will not issue any new stock certificates, other than replacement certificates. Certificates representing shares of common stock will not be assignable or transferable on our books except by will, intestate succession or operation of law. In addition, the Company will not file any additional quarterly reports on Form 10-Q or proxy statements under the Securities Exchange Act of 1934. Instead, the Company will file only abbreviated reports on Forms 10-K or 8-K regarding its net assets in liquidation and changes in net assets in liquidation or financial position and cash flows for the period presented. Due to the duration of the wind-up period to December 5, 2005, and provisions in Delaware law that require the Company to maintain reserves sufficient to allow for the payment of all its liabilities and obligations, including all contingent, conditional and unmatured claims, the Company established a $2.0 million Contingency Reserve upon the adoption of liquidation basis accounting on November 27, 2002. As of June 30, 2003, the Company lowered the established Contingency Reserve to $1,150,000. At September 30, 2003, the Company has no known material claims against this reserve. In the event there are no claims against this reserve, then the amount of the Final Liquidation Payment on or before December 31, 2005 would include the full amount of the Contingency Reserve. The amount and timing of the Final Liquidation Payment by the trustee will depend upon a variety of factors including, but not limited to, the actual proceeds from the realization of the Company's assets, the ultimate settlement amounts of the Company's liabilities and obligations and actual costs incurred in connection with carrying out the Plan, including salaries, administrative and operating costs during the wind-up period. A summary of significant estimates and judgments utilized in preparation of the September 30, 2003 condensed consolidated financial statements on a liquidation basis follows: Interest Receivable. At September 30, 2003, interest receivable of $33,000 represents the Company's estimate of future interest earnings on cash, cash equivalents and short-term investments over the wind-up period through December 5, 2005 and accounts for less than 2.0% of the Company's total assets. Furniture and Fixtures. At September 30, 2003, furniture and fixtures of $53,000 represents the Company's estimate of cash proceeds to be received on the sale of office furniture. The Company's remaining office furniture was subsequently sold for approximately the carrying value in October, 2003. Accounts Payable and Accrued Liabilities. At September 30, 2003, accounts payable and accrued expenses were $0.3 million, including accrued circuit termination charges of $0.2 million. 12 Estimated Costs to be Incurred During The Wind-up Period. At September 30, 2003, the Company estimates that there are $0.5 million of costs to be incurred through December 5, 2005, including compensation for liquidation personnel ($0.2 million) and professional fees and other miscellaneous costs ($0.3 million). Contingency Reserve. In view of the duration of the wind-up period to December 5, 2005, and provisions in Delaware law that require the Company to maintain reserves sufficient to allow for the payment of all its liabilities and obligations, including all contingent, conditional and unmatured claims, the Company established a $2.0 million Contingency Reserve upon the adoption of liquidation basis accounting on November 27, 2002. As of June 30, 2003, the Company lowered the established Contingency Reserve to $1,150,000. At September 30, 2003, the Company has no known material claims against this reserve. In the event there are no claims against this reserve, then the amount of the Final Liquidation Payment that may be paid to stockholders would include the full amount of the Contingency Reserve. Net Assets Available for Distribution to Stockholders Per Share. Because of the need to maintain the Contingency Reserve to pay liabilities and claims, the Company does not expect to make any other liquidating distributions until the Final Liquidation Payment is made on or before December 31, 2005. STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION The condensed consolidated financial statements for the three and nine months ended September 30, 2002 were prepared on the going concern basis of accounting, which contemplates realization of assets and satisfaction of liabilities in the normal course of business. The Company adopted the liquidation basis of accounting as of November 27, 2002. The decrease in net assets in liquidation during the nine months ended September 30, 2003 is the result of the $56.4 million Initial Cash Distribution on May 31, 2003 and a Subsequent Cash Distribution of $6.9 million on August 29, 2003 plus the following adjustments made during the nine months ended September 30, 2003 (in thousands): ADJUST ASSETS AND LIABILITIES TO FAIR VALUE: Increase in estimated future interest income $ 28 Accounts payable and accrued expenses 633 ---------- Total adjustments to fair value 661 ACCRUE ADDITIONAL ESTIMATED COSTS DURING WIND-UP: Costs to be incurred during the wind-up period (56) ---------- Total estimated costs during the wind-up period (56) ---------- Total liquidation adjustments $ 605 ==========
The decrease in accounts payable and accrued expenses was the result of the settlement of liabilities at less than the recorded amounts. The increase in estimated costs during the wind-up period was primarily the result of additional legal fees. LIQUIDITY AND CAPITAL RESOURCES The Company's primary objectives are to liquidate its assets in the shortest time period possible while realizing the maximum values for such assets. The actual nature, amount, and timing of all future distributions will be determined by the Board in its sole discretion, and will depend in part upon the Company's ability to convert certain remaining assets into cash and settle certain obligations. Although the liquidation is currently expected to be concluded on or before December 31, 2005, the period of time to liquidate the assets and distribute the proceeds is subject to uncertainties and contingencies, many of which are beyond the Company's control (see Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Risk Factors"). The Company made an Initial Cash Distribution of $1.40 per share or $56.4 million to its stockholders on May 30, 2003 and a Subsequent Cash Distribution of $0.17 per share or $6.9 million on August 29, 2003. THE COMPANY DOES NOT EXPECT TO MAKE OTHER LIQUIDATING DISTRIBUTIONS PRIOR TO THE FINAL LIQUIDATION PAYMENT ON OR BEFORE DECEMBER 31, 2005. The "per share" amounts are based on 40,294,783 shares of common stock outstanding as of October 31, 2003. These amounts do not include any benefit that might be realized if some or all of the Contingency Reserve is not required to pay claims. THE COMPANY WILL TRANSFER ITS REMAINING ASSETS AND LIABILITIES TO A LIQUIDATING TRUST AS OF THE CLOSE OF BUSINESS ON DECEMBER 31, 2003. AT SUCH TIME, THE COMPANY WILL CANCEL ITS OUTSTANDING SHARES OF COMMON STOCK IN EXCHANGE FOR ILLIQUID BENEFICIAL INTERESTS IN THE LIQUIDATING TRUST, CLOSE THE STOCK TRANSFER BOOKS, AND DEREGISTER THE COMPANY'S SECURITIES UNDER THE SECURITIES EXCHANGE ACT OF 1934. After the stock transfer books have been closed, you will no longer be able to transfer your shares, and we will not issue any new stock certificates, 13 other than replacement certificates. Certificates representing shares of common stock will not be assignable or transferable on our books except by will, intestate succession or operation of law. In addition, the Company will not file any additional quarterly reports on Form 10-Q or proxy statements under the Securities Exchange Act of 1934. Instead, the Company will file only abbreviated reports on Forms 10-K or 8-K regarding its net assets in liquidation and changes in net assets in liquidation or financial position and cash flows for the period presented. Due to the duration of the wind-up period to December 5, 2005, and provisions in Delaware law that require the Company to maintain reserves sufficient to allow for the payment of all its liabilities and obligations, including all contingent, conditional and unmatured claims, the Company established a $2.0 million Contingency Reserve upon the adoption of liquidation basis accounting on November 27, 2002. As of June 30, 2003, the Company lowered the established Contingency Reserve to $1,150,000. At September 30, 2003, the Company has no known material claims against this reserve. In the event there are no claims against this reserve, then the amount of the Final Liquidation Payment that may ultimately be paid to stockholders would include the full amount of the Contingency Reserve. At September 30, 2003, the Company estimates that there is $0.5 million of operating costs to be incurred during the remaining wind-up period through December 5, 2005. The estimated liabilities of the Company at September 30, 2003 total $0.8 million. In addition, the Company has a Contingency Reserve of $1,150,000 (see Note 1 of "Notes to Condensed Consolidated Financial Statements"), equivalent to approximately $0.0285 per share. At September 30, 2003, net assets in liquidation were $1,156,000. We had cash and cash equivalents and short-term investments of $1.5 million and $0.4 million, respectively, compared to cash and cash equivalents and short-term investments of $63.6 million and $1.2 million, respectively, at December 31, 2002. The net decrease in cash, cash equivalents and short-term investments of $63.0 million is the result of the following: (in thousands): Receipt of Charter holdback $ 2,103 Interest received 376 Sale of furniture and fixtures 60 Cash distributions (63,263) Compensation and related expenses and severance (1,381) Property, income and franchise taxes (153) Legal settlement (167) Professional fees (275) Circuit termination charges (89) Other accrued expenses (216) ---------- Net decrease in cash, cash equivalents and short-term investments $ (63,005) ==========
THE COMPANY DOES NOT EXPECT TO MAKE OTHER LIQUIDATING DISTRIBUTIONS PRIOR TO THE FINAL LIQUIDATION PAYMENT ON OR BEFORE DECEMBER 31, 2005. The amount and timing of liquidating distributions will depend upon a variety of factors including, but not limited to, the actual proceeds from the realization of the Company's assets, the ultimate settlement amounts of the Company's liabilities and obligations and actual costs incurred in connection with carrying out the Plan, including salaries, administrative and operating costs during the wind-up period. INVESTMENT PORTFOLIO. Cash equivalents are highly liquid investments with insignificant interest rate risk and original maturities of 90 days or less and are stated at amounts that approximate fair value based on quoted market prices. Cash equivalents consist of investments in interest-bearing money market accounts with financial institutions. Short-term investments at September 30, 2003 are comprised solely of a certificate of deposit. LEGAL PROCEEDINGS. The IPO Litigation. On November 5, 2001, the Company and our IPO underwriters, Lehman Brothers, Inc., J.P. Morgan Securities, Inc., CIBC World Markets Corp., and Banc of America Securities, Inc., were named as defendants in a purported class action lawsuit filed in the United States District Court for the Southern District of New York (Ruthy Parnes v. High Speed Access Corp., et. al., Index No. 01-CV-9743(SAS)). The lawsuit alleges that our Registration Statement, dated June 3, 1999, and Prospectus, dated June 4, 1999, for the issuance and initial public offering of 13,000,000 shares of our common stock to investors contained material misrepresentations and/or omissions. The class action alleges violations of Sections 11 and 15 of the Securities Act of 1933 (the "1933 Act") and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the "1934 Act") and Rule 10b- promulgated 14 thereunder. The essence of the complaints is that defendants issued and sold our common stock pursuant to the Registration Statement for the IPO without disclosing to investors that certain underwriters in the offering had solicited and received excessive and undisclosed commissions from certain investors. The complaints also allege that our Registration Statement for the IPO failed to disclose that the underwriters allocated Company shares in the IPO to customers in exchange for the customers' promises to purchase additional shares in the aftermarket at pre-determined prices above the IPO price, thereby maintaining, distorting and/or inflating the market price for the shares in the aftermarket. On February 19, 2003, the Court denied the Company's motion to dismiss the alleged violations of Section 11 and 15 of the 1933 Act. However, the Court granted the Company's motion to dismiss the alleged violations of Sections 10(b) and 20(a) of the 1934 Act and Rule 10b- promulgated thereunder. On June 26, 2003, the Plaintiffs' Executive Committee announced that a proposed settlement between the approximately 300 issuer defendants and their directors and officers and the plaintiffs had been structured in the IPO Litigation which would guarantee at least $1.0 billion to investors who were class members from the insurers of the issuers. The Company has assented to participate in the settlement, which is subject to final documentation and review and consent of the Court. If final settlement occurs, the Company will be removed from the litigation without payment of any funds. Accordingly, we do not believe that the IPO litigation will have a material adverse effect on our net assets in liquidation. RISK FACTORS You should carefully consider the following factors and other information in this Form 10-Q and other filings we make with the Securities and Exchange Commission before trading in our common stock. The Company's plan is to wind-up the Company's affairs and distribute its net assets to the stockholders. The timing and completion of these objectives are subject to a number of risks and uncertainties, including those set forth below: WE MAKE FORWARD-LOOKING STATEMENTS IN THIS FORM 10-Q THAT ARE SUBJECT TO RISKS THAT MAY CHANGE THE LIKELIHOOD OF THOSE STATEMENTS BEING REALIZED. This Form 10-Q, as well as other documents incorporated by reference herein and to which we refer in this Form 10-Q, describes many of the positive factors and assumed benefits of the Plan. You should also be aware of factors that could have a negative impact on the Plan and our ability to make distributions of net assets. When we use such words as "believes", "expects", "anticipates", or similar expressions, we are making forward-looking statements. In addition, we have made in this Form 10-Q certain forward looking statements, including statements concerning the timing and amount of distributions of cash to stockholders and other statements concerning the value of our net assets and the resultant liquidation value per share of common. All such forward-looking statements are necessarily only estimates of future results, and there can be no assurance that actual results will not materially differ from expectations. These statements are subject to many risks, including those set forth in each of the following paragraphs. YOU WILL NOT KNOW THE EXACT AMOUNT OR TIMING OF ANY FUTURE LIQUIDATING DISTRIBUTIONS. The methods used by the Board and management to estimate the value of our net assets do not result in an exact determination of value nor are they intended to indicate definitively the amount of cash you will receive during the winding up and liquidation of the Company. The Company has established reserves for known and unknown liabilities (see "Contingency Reserve" discussion herein) but we cannot be certain such reserves are adequate. Moreover, we cannot assure you that the amount you will receive in liquidation will equal or exceed the price or prices at which the common stock has recently traded or may trade in the future. The Final Liquidation Payment to you may be reduced by additional liabilities we may incur and the ultimate settlement amounts of our liabilities. Additionally, even though we are not aware of any other pending or threatened claims, a creditor of the Company or other party with a claim against us might file a new lawsuit or obtain an injunction against our making any further distributions to you under the Plan. In that event, our Board, the liquidating trustee or a court may decide that the amounts to be distributed are needed to provide for the payment of such liabilities and expenses, including unknown or contingent liabilities that may arise or be put in dispute at a later date. WE MIGHT MISCALCULATE OR FAIL TO ADEQUATELY RESERVE AN AMOUNT SUFFICIENT TO COVER OUR CONTINGENT LIABILITIES. 15 On December 5, 2002 we filed a Certificate of Dissolution with the State of Delaware dissolving the Company. According to Delaware General Corporation Law, we will continue to exist for three years after the dissolution becomes effective (December 5, 2005) or for a longer period if the Delaware Court of Chancery requires us to, for the purpose of prosecuting and defending suits against us and enabling us to dispose of our property, discharge our liabilities and distribute to our stockholders any remaining assets. Under Delaware law, the Board established a reserve for known and unknown liabilities expected to be incurred through completion of our liquidation (the "Contingency Reserve"), and the adequacy of that reserve has been and will continue to be reviewed prior to making any cash distributions to you. As of September 30, 2003, we set aside a $1,150,000 Contingency Reserve. However, we cannot assure you that such Contingency Reserve will be adequate to cover all of our expenses and liabilities expected to be incurred through completion of our liquidation. If the Contingency Reserve is insufficient for payment of our expenses and liabilities, you could be held liable for payment to our creditors of your proportional share of amounts owed to creditors in excess of the Contingency Reserve. In that regard, your liability would be limited to the amounts previously received by you from us or a liquidating trust established by the Company. Accordingly, you could be required to return some or all distributions previously made to you. In such an event, you could receive nothing from us under the Plan. Moreover, you could incur a net tax cost if you paid taxes on the amounts received from us and then have to repay such amounts back to our creditors. Unless you are able to get a corresponding reduction in taxes in connection with your repayment, you may end up having paid taxes on monies that you have had to return. YOU WILL NOT BE ABLE TO BUY OR SELL SHARES OF OUR COMMON STOCK IF AND WHEN WE CLOSE OUR STOCK TRANSFER BOOKS. We expect to close our stock transfer books and transfer the remaining assets of the Company to a liquidating trust on December 31, 2003, after which you will no longer be able to transfer shares. After the stock transfer books have been closed, certificates representing shares of common stock will not be assignable or transferable on our books except by will, intestate succession or operation of law. After the final record date for the recording of stock transfers, we will not issue any new stock certificates, other than replacement certificates. OUR STOCK PRICE COULD BE VOLATILE AND OUR STOCK IS LIKELY TO BE THINLY TRADED. Our stock price has been trading at a discount to our net cash value per share. Even though we do not expect to make any additional cash distributions prior to the Final Liquidation Payment on or before December 31, 2005, our stock price prior to December 31, 2003 could fluctuate suddenly and widely depending on the amount and timing of any claims that are subsequently present against the funds still retained by the Company, and these fluctuations may be unrelated to our performance or actions with respect to the Plan. In addition, at such time as the Company transfers its remaining assets and liabilities to a liquidating trust, the Company will most likely deregister and cancel its outstanding shares in exchange for illiquid beneficial interests in the liquidating trust. This deregistration and cancellation, or even the announcement of such a deregistration and cancellation could also adversely affect the price of our common stock. Moreover, if the number of the Company's shareholders of record drops below 300, the Company may deregister under the Securities Act of 1934 prior to December 31, 2003, and will no longer be subject to its rules, including those relating to reporting and proxy solicitations. Until the closure of our stock transfer books on December 31, 2003, it is possible that our stock will be thinly traded on the over the counter electronic bulletin board and the Pink Sheets, which could affect a stockholder's ability to obtain price quotations and/or acquire or dispose of the Company's shares. THE TAX CONSEQUENCES OF OUR LIQUIDATION MAY NOT BE FAVORABLE TO YOU The following discussion is a general summary of what the Company believes are the material Federal income tax consequences of the Plan to its stockholders, but does not purport to be a complete analysis of all the potential tax effects: As a consequence of our liquidation, our stockholders will recognize gain or loss equal to the difference between (i) the sum of the amount of cash distributed to them and the fair market value (at the time of distribution) of any property distributed to them (net of their proportionate share of liabilities), and (ii) their tax basis for their shares of the common stock. A stockholder's tax basis in his or her shares will depend upon various 16 factors, including the amount paid by the stockholder for his or her shares and the amount and nature of any distributions received with respect to those shares. A stockholder's gain or loss will be computed on a "per share" basis. We have made more than one liquidating distribution, and the amount of each such liquidating distribution will be allocated proportionately to each share of stock owned by a stockholder. Any gain will be recognized by reason of a liquidating distribution only to the extent that the aggregate value of such distributions received by a stockholder with respect to a share exceeds his, her or its tax basis for that share. Any loss will be recognized only if the aggregate value of the liquidating distributions with respect to a share is less than the stockholder's tax basis for that share. Any gain or loss recognized by a stockholder will be capital gain or loss provided the shares are held as capital assets. Gain resulting from distributions of cash or assets from a corporation pursuant to a plan of liquidation is, therefore, generally capital gain rather than ordinary income. If it were to be determined that distributions made pursuant to the Plan were not liquidating distributions, the result could be treatment of distributions as dividends, taxable at ordinary income rates. Upon any distribution of property, the stockholder's tax basis in such property immediately after the distribution will be the fair market value of such property at the time of distribution. The gain or loss realized upon the stockholder's future sale of that property will be measured by the difference between the stockholder's tax basis in the property at the time of the sale and the proceeds of the sale. After the close of each year, we will provide stockholders and the IRS with a statement of the amount of cash distributed to the stockholders and, if applicable, our best estimate as to the value of any property distributed to them during that year. There is no assurance that the IRS will not challenge such property valuation. As a result of such a challenge, the amount of gain or loss recognized by stockholders might be changed. Distributions to stockholders could result in tax liability to any given stockholder exceeding the amount of cash received, requiring the stockholder to meet the tax obligations from other sources or by selling all or a portion of the assets received. We intend to structure the transfer of our remaining assets and liabilities to the liquidating trust so that stockholders will be treated for tax purposes as having received their proportionate share of the property at the time it is transferred to the liquidating trust. In such event, the amount of the distribution deemed to have been received by a stockholder will be reduced by his or her proportionate share of known liabilities assumed by the liquidating trust or to which the property transferred is subject. Assuming such treatment is achieved, assets transferred to the liquidating trust will cause the stockholders to be treated in the same manner for Federal income tax purposes as if the stockholders had received a distribution directly from us and they may be subject to tax on their proportionate value of such transferred assets even though they will not have received any actual distributions from the Company or the liquidating trust with which to pay the tax. The liquidating trust itself should not be subject to tax. After formation of the liquidating trust, the stockholders will take into account for Federal income tax purposes their allocable portion of any income, gain or loss recognized by the liquidating trust. AS A RESULT OF THE ONGOING OPERATIONS OF THE LIQUIDATING TRUST, STOCKHOLDERS SHOULD BE AWARE THAT THEY MAY BE SUBJECT TO TAX, WHETHER OR NOT THEY HAVE RECEIVED ANY ACTUAL DISTRIBUTIONS FROM THE LIQUIDATING TRUST WITH WHICH TO PAY THE TAX. Stockholders may also be subject to state or local taxes and should consult their tax advisor with respect to the state and local tax consequences of the Plan. The foregoing summary of certain Federal income tax consequences is included for general information only and does not constitute legal advice to any stockholder. The tax consequences of the Plan may vary depending upon your particular circumstances. We recommend that you consult your own tax advisor regarding the specific tax consequences of the Plan to you. ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Our exposure to market risk is limited to interest rate sensitivity, which is affected by changes in the general level of U.S. interest rates. Our cash equivalents are invested with high-quality issuers and limit the amount of credit exposure to any one issuer. Due to the short-term nature of our cash equivalents, we believe that we are not subject to any material market risk exposure. We do not have any foreign currency hedging instruments. ITEM 4 - CONTROLS AND PROCEDURES As of September 30, 2003, an evaluation was carried out under the supervision and with the participation of the Company's management, including the Company's principal executive officer and chief financial officer, of the effectiveness of our disclosure 17 controls and procedures. Based on that evaluation, he has concluded that the Company's disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. Subsequent to the date of the evaluation, there were no significant changes in the Company's internal controls or in other factors that could significantly affect the disclosure controls, including any corrective actions with regard to significant deficiencies and material weaknesses. PART II - OTHER INFORMATION ITEM 1 - LEGAL PROCEEDINGS The IPO Litigation. On November 5, 2001, the Company and its IPO underwriters, Lehman Brothers, Inc., J.P. Morgan Securities, Inc., CIBC World Markets Corp., and Banc of America Securities, Inc., were named as defendants in a purported class action lawsuit filed in the United States District Court for the Southern District of New York (Ruthy Parnes v. High Speed Access Corp., et. al., Index No. 01-CV-9743(SAS)). The lawsuit alleges that our Registration Statement, dated June 3, 1999, and Prospectus, dated June 4, 1999, for the issuance and initial public offering of 13,000,000 shares of our common stock to investors contained material misrepresentations and/or omissions. The class action alleges violations of Sections 11 and 15 of the Securities Act of 1933 (the "1933 Act") and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the "1934 Act") and Rule 10b- promulgated thereunder. The essence of the complaints is that defendants issued and sold our common stock pursuant to the Registration Statement for the IPO without disclosing to investors that certain underwriters in the offering had solicited and received excessive and undisclosed commissions from certain investors. The complaints also allege that our Registration Statement for the IPO failed to disclose that the underwriters allocated Company shares in the IPO to customers in exchange for the customers' promises to purchase additional shares in the aftermarket at pre-determined prices above the IPO price, thereby maintaining, distorting and/or inflating the market price for the shares in the aftermarket. On February 19, 2003, the Court denied the Company's motion to dismiss the alleged violations of Section 11 and 15 of the 1933 Act. However, the Court granted the Company's motion to dismiss the alleged violations of Sections 10(b) and 20(a) of the 1934 Act and Rule 10b- promulgated thereunder. On June 26, 2003, the Plaintiffs' Executive Committee announced that a proposed settlement between the approximately 300 issuer defendants and their directors and officers and the plaintiffs had been structured in the IPO Litigation which would guarantee at least $1.0 billion to investors who were class members from the insurers of the issuers. The Company has assented to participate in the settlement, which is subject to final documentation and review and consent of the Court. If final settlement occurs, the Company will be removed from the litigation without payment of any funds. Accordingly, we do not believe that the IPO litigation will have a material adverse effect on our net assets in liquidation. ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS None ITEM 3 - DEFAULTS UPON SENIOR SECURITIES None. ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. ITEM 5 - OTHER INFORMATION None. ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 18 10.1 Liquidating Trust Agreement dated as of December 31, 2003 by and among High Speed Access Corp. (the "Company") and John G. Hundley (the "Trustee" or "Liquidating Trustee") executed in connection with the Company's Plan of Dissolution and Liquidation dated November 25, 2002 31.1 Certification of CFO Pursuant to Securities Exchange Act Rules 13a-14 and 15d-14 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1 Certification Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act Of 2002 (b) On June 6, 2003, the Company filed an 8-K announcing that Charter Communications, Inc. was dismissed as a defendant in the IPO litigation and had paid to us the remaining $1.0 million balance of the indemnity holdback plus accrued interest. On August 6, 2003, the Company filed an 8-K announcing a cash distribution of $0.17 per share on August 29, 2003, payable to shareholders of record as of August 22, 2003. 19 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 as amended, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. High Speed Access Corp. Date: November 14, 2003 By /s/ George E. Willett ----------------- -------------------------------------- George E. Willett President and Chief Financial Officer 20 Exhibit Index Exhibit No. Description - ----------- ----------- 10.1 Liquidating Trust Agreement dated as of December 31, 2003 by and among High Speed Access Corp. (the "Company") and John G. Hundley (the "Trustee" or "Liquidating Trustee") executed in connection with the Company's Plan of Dissolution and Liquidation dated November 25, 2002 31.1 Certification of CFO Pursuant to Securities Exchange Act Rules 13a-14 and 15d-14 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1 Certification Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act Of 2002 (b) On June 6, 2003, the Company filed an 8-K announcing that Charter Communications, Inc. was dismissed as a defendant in the IPO litigation and had paid to us the remaining $1.0 million balance of the indemnity holdback plus accrued interest. On August 6, 2003, the Company filed an 8-K announcing a cash distribution of $0.17 per share on August 29, 2003, payable to shareholders of record as of August 22, 2003. 21 EX-10.1 3 d10246exv10w1.txt LIQUIDATING TRUST AGREEMENT Exhibit 10.1 LIQUIDATING TRUST AGREEMENT This Liquidating Trust Agreement (the "Trust Agreement"), dated as of December 31, 2003 by and among HIGH SPEED ACCESS CORP., a Delaware corporation (the "Company"), and JOHN G. HUNDLEY, an individual resident of the Commonwealth of Kentucky (the "Trustee" or "Liquidating Trustee"), executed in connection with the Company's Plan of Dissolution and Liquidation dated November 25, 2002 (as amended, modified and supplemented from time to time, the "Plan"). Capitalized terms used in this Trust Agreement and not otherwise defined herein shall have the meanings ascribed to them in the Plan. W I T N E S S E T H WHEREAS, the Company has elected to wind up its affairs and liquidate in accordance with the Plan recommended by its Board of Directors and approved by the stockholders of the Company on November 25, 2002; WHEREAS, the Plan provides for the sale of substantially all of the Company's assets, other than, among other things, the Liquidating Trust Assets (defined below); WHEREAS, the Liquidating Trust is created pursuant to, and to effectuate certain provisions of, the Plan and to hold the Liquidating Trust Assets; WHEREAS, the Liquidating Trust is intended to qualify as a liquidating trust within the meaning of Treasury Regulations Section 301.7701-4(d); and WHEREAS, the Liquidating Trust is established for the sole purpose of liquidating its assets for the benefit of the stockholders of the Company as of December 31, 2003 (collectively, the "Beneficiaries"), in accordance with Treasury Regulations Section 301.7701-4(d), with no objective or authority to continue or engage in the conduct of a trade or business except to the extent reasonably necessary to, and consistent with, the liquidating purpose of this Liquidation Trust and the Plan; NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein and in the Plan, the Company and the Liquidating Trustee agree as follows: ARTICLE 1 ESTABLISHMENT OF THE LIQUIDATING TRUST 1.1 Establishment of Liquidated Trust. Pursuant to the Plan, the Company and the Liquidating Trustee hereby establish the Liquidating Trust on behalf of the Beneficiaries. The Liquidating Trustee agrees to accept and hold the Liquidating Trust Assets in trust for the Beneficiaries subject to the terms of this Trust Agreement. 1.2 Purpose of the Liquidating Trust. The Liquidating Trust shall be established for the sole purpose of liquidating the Liquidating Trust Assets in accordance with Treasury Regulations Section 301.7701-4(d), with no objective to continue or engage in the conduct of a trade or business. Accordingly, the Liquidating Trustee shall, in an expeditious but orderly manner, liquidate and convert to Cash the Liquidating Trust Assets, settle or otherwise pay any liabilities of or claims against the Liquidating Trust Assets, make a Final Liquidation Payment to Beneficiaries upon completion of the statutory period for the dissolution on the Company under Delaware law, and otherwise settle the affairs of the Company and distribute any remaining Liquidating Trust Assets in accordance with the Plan. 1.3 Transfer of Assets and Rights to the Liquidating Trustee. (a) As of 11:59:59 A.M., Eastern Standard Time, December 31, 2003 (the "Effective Time and Date"), the Company hereby transfers, assigns, and delivers to the Liquidating Trustee, (i) all of its right, title, and interest in the Liquidating Trust Assets free and clear of any lien or Claim in such property of any other Person or entity except as otherwise provided in the Plan, (ii) all of their rights with respect to the Liquidating Trust Assets including attorney-client privilege and work product and hereby waive their right and the right of any legal, financial or other advisors to assert such rights as a defense or otherwise, and the Liquidating Trustee hereby assumes and agrees that all such Liquidating Trust Assets will be transferred to the Liquidating Trust free and clear of any and all liabilities except to the extent otherwise provided in the Plan. (b) On or prior to the Effective Time and Date, the Company shall deliver or cause to be delivered to the Liquidating Trustee any and all documents required in connection with the administration of any known or existing Claims (including those maintained in electronic format and original documents) whether held by the Company, their agents, advisors, attorneys, accountants or any other professional hired by the Company and provide access to such employees of the Company, their agents, advisors, attorneys, accountants or any other professional hired by the Company with knowledge of matters relevant to the Claims. (c) At any time and from time to time on and after the Effective Time and Date, the Company agrees (i) at the reasonable request of the Liquidating Trustee to execute and deliver any instruments, documents, books, and records (including those maintained in electronic format and original documents as may be needed), and (ii) take, or cause to be taken, all such further action as the Liquidating Trustee may reasonably request in order to evidence or effectuate the transfer of the Liquidating Trust Assets to the Liquidating Trust and consummation of the transactions contemplated hereby and by the Plan and to otherwise carry out the intent of the parties hereunder and under the Plan. 1.4 Title to Liquidating Trust Assets. (a) The transfer of the Liquidating Trust Assets to the Liquidating Trust shall be made by the Company for the benefit and on behalf of the Beneficiaries. In this regard, the Liquidating Trust Assets will be treated for tax purposes as being transferred by the Company to the Beneficiaries, and then by such holders to the Liquidating Trust in exchange for interests in the Liquidating Trust (the "Liquidating Trust Interests") for the benefit of such Beneficiaries in accordance with the Plan. Upon the transfer of the Liquidating Trust Assets, the Liquidating Trustee shall succeed to all of the Company' right, title and interest in the Liquidating Trust Assets and the Company will have no further interest in or with respect to the Liquidating Trust Assets or this Liquidating Trust. (b) For all federal income tax purposes, all parties (including, without limitation, the Company, the Liquidating Trustee, and the Beneficiaries) shall treat the transfer of Liquidating Trust Assets to the Liquidating Trust, as set forth in this Section 1.4 and in accordance with the Plan, as a transfer to the Beneficiaries, followed by a transfer by such Beneficiaries to the Liquidating Trust, and the Beneficiaries of this Liquidating Trust shall be treated as the grantors and owners hereof. 1.5 Reliance. The Liquidating Trustee may rely upon the Company's filed schedules and statements of financial affairs and all other information provided by the Company or its representatives to the Liquidating Trustee concerning Claims filed against the Company, and its reconciliation and documents supporting such reconciliation. 1.6 Governance of the Liquidating Trust. The Liquidating Trust shall be governed by the Liquidating Trustee. The Liquidating Trustee's powers are exercisable solely in a fiduciary capacity consistent with, and in furtherance of, the purposes of this Liquidating Trust and not otherwise. 1.7 Funding of the Liquidating Trust. The Liquidating Trustee may from time to time make withdrawals from the Liquidating Trust Assets in amounts and at times that the Liquidating Trustee, in its sole discretion, deems necessary or appropriate to fund any and all costs and expenses that the Liquidating Trustee and the Liquidating Trust incur subsequent to the Effective Time and Date in accordance with this Trust Agreement and the Plan. ARTICLE 2 LIQUIDATING TRUST BENEFICIARIES 2.1 Identification of Beneficiaries of Liquidating Trust. The Beneficiaries of the Liquidating Trust are the holders of the Liquidating Trust Interests and shall be recorded and set forth in a register maintained by the Liquidating Trustee expressly for such purpose. All references in this Trust Agreement to the Beneficiaries or the holders of Liquidating Trust Interests shall be read to mean holders of record as set forth in the official register maintained by the Liquidating Trustee and shall not mean any beneficial owner not recorded on such official registry. Unless expressly provided herein, the Liquidating Trustee may establish a record date that it deems practicable for determining the Beneficiaries for a particular purpose. The distribution of Liquidating Trust Interests to the Beneficiaries shall be accomplished as set forth in the Plan. 2.2 Allocation of Beneficial Interests. Each holder of the common capital stock of the Company on the record date established by the Liquidating Trustee (which shall be the close of business on December 31, 2003) is hereby allocated a proportional beneficial share and interest in the Liquidating Trust, subject to any liabilities of and claims against their ratable portion thereof. 2.3 Transferability of Liquidating Trust Interests. The Liquidating Trust Interests shall not be transferable, provided that the Liquidating Trust Interests shall be assignable or transferable by will, intestate succession, or operation of law and that the executor or administrator of the estate of a holder of a Liquidating Trust Interest may mortgage, pledge, grant a security interest in, hypothecate or otherwise encumber, the Liquidating Trust Interests held by the estate of such holder if necessary in order to borrow money to pay estate, succession or inheritance taxes or the expenses of administering the estate of the holder, upon written notice to, and written consent of, the Liquidating Trustee, which consent may not be unreasonably withheld. 2.4 Distribution; Withholding. In the discretion of the Liquidating Trustee and subject to the withholding of property on account of Claims pursuant to the provisions of Article 5 hereof, the Liquidating Trustee shall distribute from the Liquidating Trust to each holder of a Liquidating Trust Interest Cash on hand (including, without limitation, all net Cash income plus all net Cash proceeds from the liquidation of Liquidating Trust Assets, including, without limitation, as Cash for this purpose, all permissible investments described in Section 3.12 below) pro rata in proportion to such holders' respective Liquidating Trust Interests; provided, however, that the Liquidating Trustee shall not be required to make any distributions prior the Final Liquidating Payment on or before December 31, 2005 upon expiration of the Company's statutory period for dissolution under Delaware law. Notwithstanding anything to the contrary herein, prior to making any distribution to holders of Liquidating Trust Interests, the Liquidating Trustee may retain such amounts (i) as are reasonably necessary to meet contingent liabilities and to maintain the value of the Liquidating Trust Assets during liquidation, (ii) to pay reasonable estimated expenses (including, without limitation, any taxes imposed on the Liquidating Trust or in respect of the Liquidating Trust Assets), and (iii) to satisfy other liabilities incurred or assumed by the Liquidating Trust (or to which the Liquidating Trust Assets are otherwise subject), all for the term of the Liquidating Trust and in accordance with this Trust Agreement and the Plan. The Liquidating Trustee may withhold from amounts distributable to any Person any and all amounts, determined in the Liquidating Trustee's reasonable sole discretion, required by any law, regulation, rule, ruling, directive or other governmental requirement. 2.5 Manner of Payment or Distribution. All Distributions made by the Liquidating Trustee to holders of Liquidating Trust Interests shall be payable to the holders of Liquidating Trust Interests of record as of the 10th day prior to the date scheduled for the distribution, unless such day is not a Business Day, then such day shall be the following Business Day (the "Record Date"). If the Distribution shall be in Cash, the Liquidating Trustee shall distribute such Cash by wire, check, or such other method as the Liquidating Trustee deems appropriate under the circumstances. ARTICLE 3 THE LIQUIDATING TRUSTEE 3.1 Role of the Liquidating Trustee. In furtherance of and consistent with the purpose of the Liquidating Trust and the Plan the Liquidating Trustee shall, for the benefit of the Beneficiaries, (i) have the power and authority to hold, manage, and distribute the liquidating Trust Assets, and (ii) have the power and authority to hold, manage, and distribute the Cash or non - Cash Liquidating Trust Assets obtained through the exercise of its power and authority. In all circumstances, the Liquidating Trustee shall act in the best interests of all Beneficiaries of the Liquidating Trust and in furtherance of the purpose of the Liquidating Trust. 3.2 Authority of Liquidation Trustee. In connection with the administration of the Liquidating Trust, except as set forth in this Trust Agreement, the Liquidating Trustee is authorized to perform any and all acts necessary or desirable to accomplish the purposes of the Liquidating Trust. Without limiting, but subject to, the express purpose of the Liquidating Trustee and to Section 3.3 hereof, the Liquidating Trustee shall be expressly authorized, but shall not be required, to: (a) hold legal title to any and all rights of the holders of the Liquidating Trust Interests in or arising from the Liquidating Trust Assets, including, without limitation, collecting, receiving any and all money and other property belonging to the Liquidating Trust; (b) protect and enforce the rights to the Liquidating Trust Assets by any method deemed appropriate including, without limitation, by judicial proceedings or pursuant to any applicable bankruptcy, insolvency, moratorium or similar law and general principles of equity; (c) borrow funds, incur or assume liabilities, and pledge Liquidating Trust Assets on behalf of the Liquidating Trust in furtherance of or in connection with the Liquidating Trustee's or the Liquidating Trust's duties, powers, authority, and obligations under this Trust Agreement, and determine and satisfy any and all liabilities created, incurred or assumed by the Liquidating Trust; (d) file, if necessary, any and all tax and information returns with respect to the Liquidating Trust and pay taxes, if any, properly payable by the Liquidating Trust; (e) pay all expenses and make all other payments relating to the Liquidating Trust Assets; (f) obtain reasonable insurance coverage with respect to its liabilities and obligations as Liquidating Trustee under this Trust Agreement (in the form of an errors and omissions policy or otherwise); (g) obtain insurance coverage with respect to real and personal property that may become Liquidating Trust Assets, if any; (h) retain and pay such counsel and other professionals as the Liquidating Trustee in its sole discretion may select to assist the Liquidating Trustee in its duties, on such terms as the Liquidating Trustee deems appropriate. The Liquidating Trustee may commit the Liquidating Trust to and shall pay such counsel and other professionals reasonable compensation for services rendered and expenses incurred. A law firm or professional shall not be disqualified from serving the Liquidating Trustee solely because of its current or prior retention as counsel or professional to the Company; (i) retain and pay an independent public accounting firm to perform such reviews and/or audits of the financial books and records of the Liquidating Trust and the Contingency Reserve as may be appropriate in the Liquidating Trustee's sole discretion and to prepare and file any tax returns or informational returns for the Liquidating Trust and the Liquidating Trust Disputed Claims Reserve as may be required. The Liquidating Trustee may commit the Liquidating Trust to and shall pay such independent public accounting firm reasonable compensation for services rendered and expenses incurred; (j) retain and pay such third parties as the Liquidating Trustee, in its sole discretion, may deem necessary or appropriate to assist the Liquidating Trustee in carrying out its powers and duties under this Trust Agreement. The Liquidating Trustee may commit the Liquidating Trust to and shall pay all such persons or entities reasonable compensation for services rendered and expenses incurred, as well as commit the Liquidating Trust to indemnify any such parties in connection with the performance of services; (k) employ such employees as the Liquidating Trustee, in his sole discretion and as consistent with the purposes of the Liquidating Trust, may deem necessary or appropriate to assist the Liquidating Trustee in carrying out its powers and duties under this Trust Agreement. The Liquidating Trustee may commit the Liquidating Trust to and shall pay all such employees reasonable salary in the amounts it shall determine to be appropriate and any employee benefits it may establish pursuant to Section 3.2(l) below. If the Liquidating Trustee employs employees pursuant to this Section 3.2(k), the Liquidating Trustee shall establish payroll procedures and pay any and all federal, state or local tax withholding required under applicable law with respect to any such employees, and it will take all other actions it deems necessary to effectuate the provisions of this Section 3.2(k); (l) establish and adopt or cease to provide such employee benefits for the benefit of any employees described in Section 3.2(k) above as the Liquidating Trustee, in its sole discretion and as consistent with the purposes of the Liquidating Trust, may deem necessary or appropriate, including, without limitation, the adoption of any group health plan; (m) assert or waive any privilege or defense on behalf of the Liquidating Trust or, with respect to the Liquidating Trust Assets, the Company; (n) compromise, adjust, arbitrate, sue on or defend, pursue, prosecute abandon, exercise rights, powers, and privileges with respect to, or otherwise deal with and settle, in accordance with the terms set forth herein, Claims and all causes of action in favor of or against the Liquidating Trust as the Liquidating Trustee shall deem advisable; (o) execute offsets and assert counterclaims against Claims in connection with the Liquidating Trust Assets; (p) in his sole discretion (subject to Section 2.4 hereof and this Section 3.2), take all appropriate action with respect to the Liquidating Trust Assets consistent with the purpose of the Liquidating Trust, including without limitation the avoidance of any transfer or obligation, and the filing, prosecution, settlement or other resolution of claims and causes of action, including without limitation those based upon Sections 510, 542-550, or 553(b) of the Bankruptcy Code; (q) invest any moneys held as part of the Liquidating Trust in accordance with the terms of Section 3.12 hereof, limited, however, to such investments that are consistent with the Liquidating Trust's status as a liquidating trust within the meaning of Treasury Regulations Section 301.7701-4(d); (r) request any appropriate tax determination with respect to the Liquidating Trust; (s) establish and maintain a website for the purpose of providing notice of Liquidating Trust activities in lieu of sending written notice to holders of Liquidating Trust Interests, subject to providing notice of such website to such holders; and (t) take or refrain from taking any and all actions the Liquidating Trustee reasonably deems necessary or convenient for the continuation, protection and maximization of the Liquidating Trust Assets or to carry out the purposes hereof. 3.3 Limitation of Liquidating Trustee's Authority. (a) Notwithstanding anything herein to the contrary, the Liquidating Trustee shall not be authorized to engage in any trade or business, and shall not take such actions inconsistent with the orderly liquidation of the Liquidating Trust Assets as are required or contemplated by applicable law, the Plan and this Trust Agreement. (b) The Liquidating Trust shall not hold 50% or more of the stock (in either vote or value) of any entity that is treated as a corporation for federal income tax purposes, nor be the sole member of a limited liability company, nor have any interest in an entity that is treated as a partnership for federal income tax purposes, unless such stock, membership interest, or partnership interest was obtained involuntarily or as a matter of practical economic necessity in order to preserve the value of the Liquidating Trust Assets. 3.4 Books and Records. The Liquidating Trustee shall maintain in respect of the Liquidating Trust and the holders of Liquidating Trust Interests books and records relating to the Liquidating Trust Assets and income of the Liquidating Trust and the payment of expenses of, and liabilities of claims against or assumed by, the Liquidating Trust in such detail and for such period of time as may be necessary to enable it to make full and proper accounting in respect thereof. Such books and records shall be maintained on a modified cash or other comprehensive basis of accounting necessary to facilitate compliance with the tax reporting requirements of the Liquidating Trust. Except as otherwise may be expressly provided in this Trust Agreement, nothing in this Trust Agreement requires the Liquidating Trustee to file any accounting or seek approval of any court with respect to the administration of the Liquidating Trust, or as a condition for managing any payment or distribution out of the Liquidating Trust Assets. 3.5 Additional Powers. Except as otherwise set forth in this Trust Agreement or in the Plan, and subject to the Treasury Regulations governing liquidating trusts and the retained jurisdiction of the Delaware Chancery Court as provided for in the Plan, but without prior or further authorization, the Liquidating Trustee may control and exercise authority over the Liquidating Trust Assets and over the protection, conservation and disposition thereof. No Person dealing with the Liquidating Trust shall be obligated to inquire into the authority of the Liquidating Trustee in connection with the protection, conservation or disposition of the Liquidating Trust Assets. 3.6 Tax and Reporting Duties of the Liquidating Trustee. The Liquidating Trustee shall be responsible for all tax and other matters as set forth in Article 4. 3.7 Compliance with Laws. Any and all distributions of Liquidating Trust Assets and proceeds of borrowings, if any, shall be in compliance with applicable laws, including, without limitation, applicable federal and state securities laws. 3.8 Costs and Expenses of the Liquidating Trustee. The costs and expenses of the Liquidating Trust, including the fees and expenses of the Liquidating Trustee and its retained professionals, shall be paid first out of the Liquidating Trust Assets. Fees and expenses incurred in connection with the prosecution and settlement of any Claims shall be considered costs and expenses of the Liquidating Trust. 3.9 Compensation of the Liquidating Trustee. The Liquidating Trustee shall be entitled to reasonable compensation in an amount consistent with that of similar functionaries in similar types of liquidations. 3.10 Retention of Professionals by the Liquidating Trustee. The Liquidating Trustee may retain and compensate counsel and other professionals to assist in its duties as Liquidating Trustee on such terms as the Liquidating Trustee deems appropriate. 3.11 Reliance by Liquidating Trustee. Except as otherwise provided in Article 8 hereof: (a) the Liquidating Trustee may rely, and shall be protected in acting upon, any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, or other paper or document believed by him to be genuine and to have been signed or presented by the proper party or parties; and (b) Persons dealing with the Liquidating Trustee shall look only to the Liquidating Trust Assets to satisfy any liability incurred by the Liquidating Trustee to such person in carrying out the terms of this Trust Agreement, and neither the Liquidating Trustee nor any Trustee shall have any personal obligation to satisfy any such liability. 3.12 Investment and Safekeeping of Trust Assets. The right and power of the Liquidating Trustee to invest Liquidating Trust Assets, the proceeds thereof, or any income earned by the Liquidating Trust, shall be limited to the right and power that a liquidating trust, within the meaning of Treasury Regulations Section 301.7701-4(d), is permitted to hold, pursuant to the Treasury Regulations, or any modification in the IRS guidelines, whether set forth in IRS rulings, other IRS pronouncements or otherwise. The Liquidating Trustee may expend the Cash of the Liquidating Trust (a) as reasonably necessary to meet contingent liabilities and to maintain the value of the respective assets of the Liquidating Trust during liquidation, (b) to pay the reasonable costs and expenses (including, without limitation, any taxes imposed on the Liquidating Trust) and (c) to satisfy other respective liabilities incurred by the Liquidating Trust in accordance with this Trust Agreement or the Plan. 3.13 Authorization to Expend Liquidating Trust Assets. The Liquidating Trustee may expend the Liquidating Trust Assets (a) as reasonably necessary to maintain the value of the Liquidating Trust Assets during liquidation, (b) to pay all costs and expenses of the Liquidating Trust (including, without limitation, any taxes imposed on the Liquidating Trust), and (c) to satisfy all other liabilities incurred or assumed by the Liquidating Trust (or to which the Liquidating Trust Assets are otherwise subject) in accordance with this Trust Agreement and the Plan. ARTICLE 4 TAX MATTERS 4.1 Federal Income Tax Treatment of the Trust for the Liquidating Trust Assets. (i) Liquidating Trust Assets Treated as Owned by Creditors. For all federal income tax purposes, all parties (including, without limitation, the Company, the Liquidating Trustee, and the Beneficiaries) shall treat the transfer of the Liquidating Trust Assets to the Liquidating Trust for the benefit of the Beneficiaries as (A) a transfer of the Liquidating Trust Assets directly to the Beneficiaries followed by (B) the transfer by such holders to the Liquidating Trust of the Liquidating Trust Assets in exchange for beneficial interests in the Liquidating Trust. Accordingly, the Beneficiaries shall be treated for federal income tax purposes as the grantors and owners of their respective share of the Liquidating Trust Assets. (ii) Tax Reporting. A. The Liquidating Trustee shall file returns for the Liquidating Trust as a grantor trust pursuant to Treasury Regulation section 1.671-4(a) and in accordance with this Article 4. The Liquidating Trustee shall also annually send to each holder of a beneficial interest a separate statement setting forth the holder's share of items of income, gain, loss, deduction or credit and will instruct all such holders to report such items on their federal income tax returns. The Liquidating Trust's taxable income, gain, loss, deduction or credit will be allocated to the Beneficiaries in accordance with their relative beneficial interests in the Liquidating Trust. B. As soon as possible after the Effective Time and Date, the Liquidating Trustee shall make a good faith valuation of the Liquidating Trust Assets, and such valuation shall be used consistently by all parties (including, without limitation, the Company, the Liquidating Trustee, and the Beneficiaries) for all federal income tax purposes. The Liquidating Trustee shall also file (or cause to be filed) any other statements, returns or disclosures relating to the Liquidating Trust that are required by any governmental unit. C. The Liquidating Trustee shall be responsible for payments, out of the Liquidating Trust Assets, of any taxes imposed on the trust or its assets. D. The Liquidating Trustee may request an expedited determination of Taxes of the Liquidating Trust, for all returns filed for, or on behalf of, the Liquidating Trust for all taxable periods through the dissolution of the Liquidating Trust. ARTICLE 5 LIQUIDATING TRUST CONTINGENCY RESERVE 5.1 Creation of Reserve. On the Effective Time and Date, the Liquidating Trustee shall place an undivided interest in a portion of the Liquidating Trust Assets in the Liquidating Trust Contingency Reserve for unknown or disputed Claims. The amount of Liquidating Trust Assets so placed in the Liquidating Trust Contingency Reserve shall equal One Million One Hundred Fifty Thousand Dollars ($1,150,000.00) (the "Contingency Reserve Assets"). 5.2 Withholding Pending Allowance of Claims. The Liquidating Trustee shall withhold from any property to be distributed under this Trust Agreement the Contingency Reserve Assets and shall hold such property in trust pending resolution of any unknown or contingent Claims, together with all earnings thereon (net of any expenses allocable thereto, including, without limitation, any taxes imposed thereon or otherwise payable by the trust). ARTICLE 6 DISTRIBUTIONS 6.1 Delivery of Liquidating Trust Distributions. All distributions under this Trust Agreement to any Beneficiary shall be made at the address of such holder as set forth on the books and records/ of the Liquidating Trust, the Company or either or their agents, unless the Liquidating Trustee has been notified in writing of a change of address, including, without limitation, by the filing of a proof of claim or interest by such holder that contains an address for such holder different from the address reflected on the record for such holder. In the event that any distribution to any holder is returned as undeliverable, the Liquidating Trustee shall use reasonable efforts to determine the current address of such holder, but no distribution to such holder shall be made unless and until the Liquidating Trustee has determined the then current address of such holder, at which time such distribution shall be made to such holder without interest; provided, however, that such undeliverable or unclaimed distributions shall be deemed unclaimed property at the expiration of one year from the date of distribution. The Liquidating Trustee shall reallocate the undeliverable and unclaimed distributions for the benefit of the holders of other Beneficiaries. 6.2 Manner of Payment. At the option of the Liquidating Trustee, any Cash payment to be made under this Trust Agreement may be made by a check or wire transfer or as otherwise required or provided in applicable agreements. 6.3 Cash Distributions. No Cash distributions shall be required to be made in an amount less than $10,000. Any funds so withheld and not distributed shall be held in reserve and distributed in subsequent distributions. Notwithstanding the foregoing, all cash shall be distributed in the Final Liquidating distribution of the Liquidating Trust. ARTICLE 7 SUCCESSOR TRUSTEES 7.1 Resignation. The Liquidating Trustee may resign by giving not less than ninety (90) days' prior written notice thereof to the holders of Liquidating Trust Interests. Such resignation shall become effective on the later to occur of: (i) the day specified in such notice; or (ii) the appointment of a successor Trustee and the acceptance by such successor Trustee of such appointment. If a successor Trustee is not appointed or does not accept its appointment within ninety (90) days following delivery of notice of resignation, the Liquidating Trustee may petition the Chancery Court for the appointment of a successor Trustee. 7.2 Acceptance of Appointment by Successor Trustee. Any successor Trustee appointed hereunder shall execute an instrument accepting such appointment hereunder and shall file such acceptance with the Liquidating Trust records. Thereupon, such successor Trustee shall, without any further act, become vested with all the estates, properties, rights, powers, trusts and duties of its predecessor in the Liquidating Trust with like effect as if originally named herein; provided, however, that an incapacitated, or resigning Trustee shall, nevertheless, when requested in writing by the successor Trustee, execute and deliver an instrument or instruments conveying and transferring to such successor Trustee under the Liquidating Trust all the estates, properties, rights, powers, and trusts of such predecessor Trustee. ARTICLE 8 INDEMNIFICATION 8.1 Indemnification of Liquidating Trustee. The Liquidating Trustee, and the Liquidating Trustee's agents, representatives, designees, and professionals, and their respective employees, shall not be liable for actions taken or omitted by any individual Trustee, agent, representative, designee, professional, or employee, and shall not be liable for any actions taken or omitted in its capacity as, or on behalf of, the Liquidating Trustee, except those acts or omissions arising out of its or their own willful misconduct, fraud, or gross negligence, and each shall be entitled to indemnification and reimbursement for fees and expenses in defending any and all of its actions or inactions in its capacity as, or on behalf of, the Liquidating Trustee, except for any actions or inactions involving willful misconduct, fraud, or gross negligence. Any indemnification claim of the Liquidating Trustee (and the other parties entitled to indemnification under this Section 8.1) shall be satisfied first from the Contingency Reserve Assets and then from the Liquidating Trust Assets. The Liquidating Trustee shall be entitled to rely, in good faith, on the advice of its retained professionals. The Liquidating Trust shall indemnify and hold harmless the Liquidating Trustee and its Trustees, designees, and professionals, and all duly designated agents and representatives thereof, from and against and in respect of all liabilities, losses, damages, claims, costs, and expenses, including without limitation attorneys' fees and costs arising out of or due to their actions or omissions, or consequences of such actions or omissions, with respect to the Liquidating Trust or the implementation or administration of this Trust Agreement and the Plan; provided, however, that no such indemnification will be made for such actions or omissions as a result of willful misconduct, fraud, or gross negligence. ARTICLE 9 REPORTS TO HOLDERS OF LIQUIDATING TRUST INTERESTS 9.1 Securities Laws, Tax and Other Reports to Holders of Liquidating Trust Interests. (a) Securities Laws. The issuance of Liquidating Trust Interests under the Plan shall be exempt from registration under the Securities Act of 1933 and applicable state and local laws requiring registration of securities. If the Liquidating Trustee determines, with the advice of counsel, that the Liquidating Trust is required to comply with the registration and reporting requirements of the Securities Exchange Act of 1934, as amended, or the Investment Company Act of 1940, as amended, then the Liquidating Trustee shall take any and all actions to comply with such reporting requirements and file periodic reports with the Securities and Exchange Commission. (b) Other Reporting. If the Liquidating Trustee is not required to file the periodic reports referred to in Section 9.1(a) above, as soon as practicable after December 31 of each year, and as soon as practicable upon termination of the Liquidating Trust, the Liquidating Trustee shall submit to each holder of Liquidating Trust Interests appearing on its records as of such date or the date of termination a written report by filing such report on abbreviated Form 10-K with the Securities and Exchange Commission. Such report shall include, without limitation, the following: (i) financial statements of the Liquidating Trust for such period prepared on a modified cash basis or other comprehensive basis of accounting, and, if the end of a calendar year, a report of an independent certified public accountant employed by the Liquidating Trustee, which report shall reflect the result of such procedures relating to the financial accounting administration of the Liquidating Trust as approved by the Liquidating Trustee; and (ii) a description of any action taken by the Liquidating Trustee in the performance of its duties that materially affects the Liquidating Trust and of which notice has not previously been given to the holders of Liquidating Trust Interests. The Liquidating Trustee shall promptly submit additional reports to the holders of Liquidating Trust Interests whenever a material event or change occurs that affects either the Liquidating Trust or the rights of the holders of Liquidating Trust Interests hereunder. The annual reports furnished pursuant to this Section 9.1(b) shall include a description of the progress of converting Liquidating Trust Assets to Cash and making distributions to holders of Liquidating Trust Interests and any other material information relating to the Liquidating Trust Assets and the administration of the Liquidating Trust. (c) Tax Reporting. By March 31 (if such day is not a Business Day, the first Business Day thereafter) following the end of each calendar year, the Liquidating Trustee shall submit to each holder of a Liquidating Trust Interest appearing on its records during such year a separate statement setting forth the holder's share of items of income, gain, loss, deduction or credit and will instruct all such holders to report such items on their federal income tax returns. The Liquidating Trust's taxable income, gain, loss, deduction, and credit will be allocated pro rata to the holders of Liquidating Trust Interests in accordance with such holders' respective beneficial interests in the Trust. The Liquidating Trustee shall file (or cause to be filed) any other statements, returns, or disclosures relating to the Liquidating Trust that are required by any governmental authority. (d) Any report required to be distributed by the Liquidating Trustee under Section 9.1(b) hereof shall also be distributed to the Persons listed in Section 12.6 hereof within ten Business Days of its distribution to holders of Liquidating Trust Interests under Section 9.1 (b) hereof. The Liquidating Trustee may post any report required to be provided under this Section 9.l on a website maintained by the Liquidating Trustee in lieu of actual notice to holders of Liquidating Trust Interests (unless otherwise required by law) subject to providing notice to the Persons listed in Section 12.6 herein. ARTICLE 10 TERMINATION OF LIQUIDATING TRUST 10.1 Termination of Liquidation Trust. The Liquidating Trust will terminate on the earlier of (a) thirty (30) days after the final distribution of all of the Liquidating Trust Assets in accordance with the terms of this Trust Agreement and the Plan; or (b) the third (3rd) anniversary of the Effective Time and Date. Notwithstanding the foregoing, multiple fixed-term extensions can be obtained so long as Chancery Court approval upon motion and a showing that such extension is necessary to facilitate or complete the recovery and liquidation of the Liquidation Trust Assets is obtained within six (6) months before the expiration of the original term and each extended term. The aggregate of all such extensions shall not exceed three (3) years, unless the Liquidating Trustee receives a favorable ruling from the IRS that any further extension would not adversely affect the status of the Liquidating Trust as a liquidating trust within the meaning of Treasury Regulations Section Section 301.7701-4(d) for federal income tax purposes. The Liquidating Trustee shall not unduly prolong the duration of the Liquidating Trust and shall at all times endeavor to resolve, settle or otherwise dispose of all claims that constitute Liquidating Trust Assets and to effect the distribution of the Liquidating Trust Assets to the holders of the Liquidating Trust Interests in accordance with the terms hereof and terminate the Liquidating Trust as soon as practicable. ARTICLE 11 AMENDMENT AND WAIVER 11.1 Amendment and Waiver. Any substantive provision of this Trust Agreement may be amended or waived by the Liquidating Trustee with the approval of the Chancery Court, or by the Liquidating Trustee, provided, however, that no change may be made to this Trust Agreement that would (a) adversely affect the Distributions to be made under this Trust Agreement to any Beneficiaries, or (b) adversely affect the U.S. Federal income status of the Liquidating Trust as a "liquidating trust" (in accordance with Section 1.2 hereof). Notwithstanding this Section 11.1, any amendments to this Trust Agreement shall not be inconsistent with the purpose and intention of the Liquidating Trust to liquidate in an expeditious but orderly manner the Liquidating Trust Assets in accordance with Treasury Regulations Section 301.7701-4(d) and Section 1.2 hereof. ARTICLE 12 MISCELLANEOUS PROVISIONS 12.1 Intention of Parties to Establish Liquidating Trust. This Trust Agreement is intended to create a liquidating trust for federal income tax purposes and, to the extent provided by law, shall be governed and construed in all respects as such a trust and any ambiguity herein shall be construed consistent herewith and, if necessary, this Trust Agreement may be amended to comply with such federal income tax laws, which amendments may apply retroactively. 12.2 Preservation of Privilege and Defenses. In connection with the rights, claims, and causes of action that constitute the Liquidating Trust Assets, any attorney-client privilege, work-product privilege, or other privilege or immunity attaching to any documents or communications (whether written or oral) transferred to the Liquidating Trust shall vest in the Liquidating Trustee and its representatives, and the Company are authorized to take all necessary actions to effectuate the transfer of such privileges and available defenses. 12.3 Prevailing Party. If the Liquidating Trustee or the Liquidating Trust, as the case may be, is the prevailing party in a dispute regarding the provisions of this Trust Agreement or the enforcement thereof, the Liquidating Trustee or the Liquidating Trust, as the case may be, shall be entitled to collect any and all costs, expenses and fees, including attorneys' fees, from the nonprevailing party incurred in connection with such dispute or enforcement action. 12.4 Laws as to Construction. This Trust Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to rules governing the conflict of laws. In the event of any conflict between the terms of this Trust Agreement and the Plan, this Trust Agreement shall control. 12.5 Severability. If any provision of this Trust Agreement or the application thereof to any Person or circumstance shall be finally determined by a court of competent jurisdiction to be invalid or unenforceable to any extent, the remainder of this Trust Agreement, or the application of such provision to Persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and such provision of this Trust Agreement shall be valid and enforced to the fullest extent permitted by law. 12.6 Notices. Any notice or other communication hereunder shall be in writing (including by facsimile transmission or by e-mail) and shall be deemed to have been sufficiently given, for all purposes, if deposited, postage prepaid, in a post office or letter box addressed to the person for whom such notice is intended (or, in the case of notice by facsimile transmission or email, when received and telephonically or electronically confirmed), addressed as follows (provided, however, that only one notice or other communication hereunder need be sent to holders sharing the same address): If to the Liquidating Trustee or Trustees, to: John G. Hundley High Speed Access Corp. Liquidating Trust 9900 Corporate Campus Drive, Suite 300 Louisville, KY 40223 Phone: 502-657-6341 Fax: 502-657-6344 Email: Jhundley@hsaccorp.net With a copy to: Caryn Price, Esq. Wyatt Tarrant & Combs, LLP 500 W. Jefferson Street, Suite 2800 Louisville, KY 40202 Facsimile: 502-589-0309 12.7 Headings. The section headings contained in this Trust Agreement are solely for convenience of reference and shall not affect the meaning or interpretation of this Trust Agreement or of any term or provision hereof. 12.8 Counterparts. This Trust Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original instrument, but all together shall constitute one agreement. 12.9 Relationship to the Plan. The principal purpose of this Trust Agreement is to aid in the implementation of the Plan and therefore this Trust Agreement incorporates the provisions of the Plan. To that end, the Liquidating Trustee shall have full power and authority to take any action consistent with the purpose and provisions of the Plan, and to seek any orders from the Bankruptcy Court in furtherance of implementation of this Trust Agreement, the Plan. If any provisions of this Trust Agreement are found to be inconsistent with the provisions of the Plan, the provisions of this Trust Agreement shall control. 12.10 No Bond. The Liquidating Trustee and each Trustee may serve without bond. 12.11 Confidentiality. The Liquidating Trustee and each Trustee shall, during the period that they serve in such capacity under this Trust Agreement and following either the termination of this Trust Agreement or such Liquidating Trustee's removal, incapacity, or resignation hereunder, hold strictly confidential and not use for personal gain any material, non-public information of or pertaining to any entity to which any of the Liquidating Trust Assets relates or of which it has become aware in its capacity as Liquidating Trustee or Trustee. IN WITNESS WHEREOF, the parties hereto have either executed and acknowledged this Trust Agreement, or caused it to be executed and acknowledged on their behalf by their duly authorized officers all as of the date first above written. HIGH SPEED ACCESS CORP. By: __________________________________ David A. Jones, Jr. Chairman of the Board of Directors Liquidating Trustee ______________________________________ Name: John G. Hundley EX-31.1 4 d10246exv31w1.txt CERTIFICATION OF CFO PURSUANT TO SECTION 302 EXHIBIT 31.1 CERTIFICATION OF CFO PURSUANT TO SECURITIES EXCHANGE ACT RULES 13A-14 AND 15D-14 AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, George E. Willett, President and Chief Financial Officer of High Speed Access Corp., certify that: (1) I have reviewed this Quarterly Report on Form 10-Q of High Speed Access Corp. (the "Company"); (2) Based on my knowledge, this Quarterly Report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Quarterly Report; (3) Based on my knowledge, the financial statements, and other financial information included in this Quarterly Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this Quarterly Report; (4) I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have: (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Quarterly Report is being prepared; (b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this Quarterly Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Quarterly Report based on such evaluation; and (d) disclosed in this Quarterly Report any change in the Company's internal control over financial reporting that occurred during the Company's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting, and (5) I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the Audit Committee of the Company's Board of Directors: (a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting. Date: November 14, 2003 By /s/ George E. Willett ----------------- -------------------------------------- George E. Willett President and Chief Financial Officer EX-32.1 5 d10246exv32w1.txt CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 EXHIBIT 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of High Speed Access Corp. (the "Company") on Form 10-Q for the period ended September 30, 2003, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, George E. Willett, President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. Date: November 14, 2003 By /s/ George E. Willett ----------------- -------------------------------------- George E. Willett President and Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----