EXHIBIT 99.8
REGISTRATION RIGHTS AGREEMENT
Dated as of September 30, 2001
between
McLeodUSA INCORPORATED
and
The Purchasers Listed on the Signature Pages Hereto
REGISTRATION RIGHTS AGREEMENT, dated as of September 30, 2001,
between McLeodUSA Incorporated, a Delaware corporation (the "Company"), and
Forstmann Little & Co. Subordinated Debt and Equity Management Buyout
Partnership-VI, L.P., a Delaware limited partnership ("MBO-VI"), Forstmann
Little & Co. Subordinated Debt and Equity Management Buyout
Partnership-VII, L.P., a Delaware limited partnership ("MBO-VII"), and
Forstmann Little & Co. Equity Partnership-V, L.P., a Delaware limited
partnership ("Equity-V" and, collectively with MBO-VI and MBO-VII, the
"Purchasers").
WHEREAS, the Company and the Purchasers have entered into an
Exchange Agreement (the "Exchange Agreement"), dated as of September 30,
2001, pursuant to which simultaneously herewith, (i) MBO-VI and MBO-VII are
exchanging an aggregate of 275,000 shares of the Company's Series B
Preferred Stock, par value $0.01 per share (the "Series B Preferred
Stock"), for an aggregate of 275,000 shares of the Company's Series D
Preferred Stock, par value $0.01 per share (the "Series D Preferred
Stock"), and (ii) Equity-V is exchanging an aggregate of 125,000 shares of
the Company's Series C Preferred Stock, par value $0.01 per share (the
"Series C Preferred Stock" and, collectively with the Series B Preferred
Stock, the "Old Preferred Shares"), for an aggregate of 125,000 shares of
the Company's Series E Preferred Stock, par value $0.01 per share (the
"Series E Preferred Stock" and, collectively with the Series D Preferred
Stock, the "Preferred Shares").
WHEREAS, as part of, and as consideration for, the exchange by
the Purchasers of the Old Preferred Shares for the Preferred Shares on the
date hereof and from time to time hereafter, the Company agrees to grant to
the Purchasers certain registration and other rights with respect to their
shares of Class A Common Stock.
WHEREAS, in connection with the acquisition by the Purchasers of
shares of Series B Preferred Stock and Series C Preferred Stock, the
Company and the Purchasers entered into that certain Registration Rights
Agreement, dated as of September 15, 1999 (the "Existing Agreement").
WHEREAS, the Company and the Purchasers are entering into this
Agreement to replace and supersede the Existing Agreement in its entirety
and to grant to the Purchasers certain registration and other rights with
respect to their Preferred Shares and their shares of Class A Common Stock,
as more fully set forth herein.
NOW, THEREFORE, the parties hereto agree as follows:
1. Definitions. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:
"Affiliate" has the meaning ascribed to such term in Rule 12b-2
of the General Rules and Regulations under the Exchange Act.
"Certificate of Incorporation" means the Restated Certificate of
Incorporation of the Company, as amended, as it may be amended or restated
hereafter from time to time.
"Commission" means the Securities and Exchange Commission or any
other Federal agency at the time administering the Securities Act.
"Common Stock" means any shares of Class A Common Stock of the
Company, now or hereafter authorized to be issued, and any and all
securities of any kind whatsoever of the Company which may be exchanged for
or converted into Class A Common Stock, any and all securities of any kind
whatsoever of the Company which may be issued on or after the date hereof
in respect of, in exchange for, or upon conversion of shares of Class A
Common Stock pursuant to a merger, consolidation, stock split, stock
dividend, recapitalization of the Company or otherwise.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar Federal statute, and the rules and regulations of
the Commission thereunder, all as the same shall be in effect at the time.
Reference to a particular section of the Exchange Act shall include a
reference to the comparable section, if any, of any such similar Federal
statute.
"Person" means a corporation, an association, a partnership, an
organization, a business, a trust, an individual, or any other entity or
organization, including a government or political subdivision or an
instrumentality or agency thereof.
"Registrable Securities" means (i) any shares of Common Stock
owned by the Purchasers, (ii) any shares of Common Stock issued or issuable
upon the conversion, exercise or exchange of any Preferred Shares of or any
other Common Stock equivalents at any time held by the Purchasers, and
(iii) any shares of Common Stock issued with respect to the Common Stock
referred to in clauses (i) or (ii) by way of a stock dividend, stock split
or reverse stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or otherwise. As to any particular
Registrable Securities, such securities shall cease to be Registrable
Securities (a) when a registration statement with respect to the sale of
such securities shall have become effective under the Securities Act and
such securities shall have been disposed of in accordance with such
registration statement, (b) when such securities shall have been otherwise
transferred or disposed of and new certificates for them not bearing a
legend restricting further transfer shall have been delivered by the
Company and subsequent transfer or distribution of them shall not require
registration of them under the Securities Act, or (c) when such securities
shall have been sold as permitted by, and in compliance with, the
Securities Act.
"Registration Expenses" means all expenses incident to the
registration and disposition of the Registrable Securities pursuant to
Section 2 hereof, including, without limitation, all registration, filing
and applicable national securities exchange fees, all fees and expenses of
complying with state securities or blue sky laws (including fees and
disbursements of counsel to the underwriters or the Purchasers in
connection with "blue sky" qualification of the Registrable Securities and
determination of their eligibility for investment under the laws of the
various jurisdictions), all word processing, duplicating and printing
expenses, all messenger and delivery expenses, the fees and disbursements
of counsel for the Company and of its independent public accountants,
including the expenses of "cold comfort" letters or any special audits
required by, or incident to, such registration, all fees and disbursements
of underwriters (other than underwriting discounts and commissions), all
transfer taxes, and all fees and expenses of counsel to the Purchasers;
provided, however, that Registration Expenses shall exclude, and the
Purchasers shall pay, underwriting discounts and commissions in respect of
the Registrable Securities being registered.
"Securities Act" means the Securities Act of 1933, as amended, or
any similar Federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
References to a particular section of the Securities Act shall include a
reference to the comparable section, if any, of any such similar Federal
statute.
2. Registration Under Securities Act, etc.
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2.1 Registration on Request.
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(a) Request. At any time or from time to time that the
Purchasers are permitted to transfer Registrable Securities under Section
4.12 of the Exchange Agreement, the Purchasers shall have the right to
require the Company to effect the registration under the Securities Act of
all or part of the Registrable Securities, by delivering a written request
therefor to the Company specifying the number of shares of Registrable
Securities and the intended method of distribution. The Company shall (i)
use its reasonable best efforts to effect the registration under the
Securities Act (including by means of a shelf registration pursuant to Rule
415 under the Securities Act if so requested in such request and if the
Company is then eligible to use such a registration) of the Registrable
Securities which the Company has been so requested to register by the
Purchasers, for distribution in accordance with the intended method of
distribution set forth in the written request delivered by the Purchasers,
such registration to be effected as expeditiously as possible (but in any
event within 90 days of receipt of a written request), and (ii) if
requested by the Purchasers, use its reasonable best efforts to obtain
acceleration of the effective date of the registration statement relating
to such registration.
(b) Registration of Other Securities. Whenever the
Company shall effect a registration pursuant to this Section 2.1 in
connection with an underwritten offering by the Purchasers of Registrable
Securities, no securities other than Registrable Securities shall be
included among the securities covered by such registration if inclusion of
such other securities would result in a request by the managing
underwriters for a reduction in the number of Registrable Securities
requested to be so registered.
(c) Registration Statement Form. Registrations under
this Section 2.1 shall be on such appropriate registration form of the
Commission as, subject to clause (a)(i) above, shall be selected by the
Company and as shall be reasonably acceptable to the Purchasers. The
Company agrees to include in any such registration statement all
information which, in the opinion of counsel to the Purchasers and counsel
to the Company, is necessary or desirable to be included therein.
(d) Expenses. The Company shall pay all Registration
Expenses in connection with any registration requested pursuant to this
Section 2.1.
(e) Effective Registration Statement. A registration
requested pursuant to this Section 2.1 shall not be deemed to have been
effected (including for purposes of paragraph (h) of this Section 2.1) (i)
unless a registration statement with respect thereto has become effective
and has been kept continuously effective for a period of at least 365 days
(or such shorter period which shall terminate when all the Registrable
Securities covered by such registration statement have been sold pursuant
thereto), (ii) if after it has become effective, such registration is
interfered with by any stop order, injunction or other order or requirement
of the Commission or other governmental agency or court for any reason not
attributable to the Purchasers and has not thereafter become effective, or
(iii) if the conditions to closing specified in the underwriting agreement,
if any, entered into in connection with such registration are not satisfied
or waived.
(f) Selection of Underwriters. The managing
underwriters of each underwritten offering of the Registrable Securities so
to be registered shall be selected by the Purchasers, subject to the
Company's approval, which approval shall not be unreasonably withheld.
(g) Right to Withdraw. If the managing underwriter of
any underwritten offering shall advise the Purchasers that the Registrable
Securities covered by the registration statement cannot be sold in such
offering within a price range acceptable to the Purchasers, then the
Purchasers shall have the right to notify the Company in writing that they
have determined to withdraw their shares from the registration statement.
In the event of such withdrawal, the request for registration shall not be
counted for purposes of the requests for registration to which the
Purchasers are entitled pursuant to this Section 2.1.
(h) Limitations on Registration on Request. The
Purchasers shall be entitled to require the Company to effect, and the
Company shall be required to effect, three registrations in the aggregate
pursuant to this Section 2.1.
(i) Postponement. The Company shall be entitled once in
any six-month period to postpone for a reasonable period of time (but not
exceeding 60 days) (the "Postponement Period") the filing of any
registration statement required to be prepared and filed by it pursuant to
this Section 2.1 if the Company determines, in its reasonable judgment,
that such registration and offering would materially interfere with any
material financing, corporate reorganization or other material transaction
involving the Company or any subsidiary, or would require premature
disclosure thereof, and promptly gives the Purchasers written notice of
such determination, containing a general statement of the reasons for such
postponement and an approximation of the anticipated delay. If the Company
shall so postpone the filing of a registration statement, (i) the Company
shall use its reasonable best efforts to limit the delay to as short a
period as is practicable and (ii) the Purchasers shall have the right to
withdraw the request for registration by giving written notice to the
Company at any time and, in the event of such withdrawal, such request
shall not be counted for purposes of the requests for registration to which
the Purchasers are entitled pursuant to this Section 2.1.
2.2 Incidental Registration.
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(a) Right to Include Registrable Securities. If the
Company at any time proposes to register any of its securities for the
account of any other stockholder under the Securities Act by registration
on Form ▇-▇, ▇-▇ or S-3 or any successor or similar form(s) (except
registrations on any such Form or similar form(s) solely for registration
of securities in connection with an employee benefit plan or dividend
reinvestment plan or a merger or consolidation) and provided that the
Purchasers are permitted to transfer Registrable Securities under Section
4.12 of the Exchange Agreement, the Company will each such time give prompt
written notice to the Purchasers of its intention to do so and of the
Purchasers' rights under this Section 2.2. Upon the written request of the
Purchasers (which request shall specify the maximum number of Registrable
Securities intended to be disposed of by the Purchasers), made as promptly
as practicable and in any event within 30 days after the receipt of any
such notice (10 days if the Company states in such written notice or gives
telephonic notice to the Purchasers, with written confirmation to follow
promptly thereafter, stating that (i) such registration will be on Form S-3
and (ii) such shorter period of time is required because of a planned
filing date), the Company shall use its reasonable best efforts to effect
the registration under the Securities Act of all Registrable Securities
which the Company has been so requested to register by the Purchasers;
provided, however, that if, at any time after giving written notice of its
intention to register any securities and prior to the effective date of the
registration statement filed in connection with such registration, the
Company shall determine for any reason not to register or to delay
registration of such securities, the Company shall give written notice of
such determination and its reasons therefor to the Purchasers and (i) in
the case of a determination not to register, shall be relieved of its
obligation to register any Registrable Securities in connection with such
registration (but not from any obligation of the Company to pay the
Registration Expenses in connection therewith), without prejudice, however,
to the rights of the Purchasers to request that such registration be
effected as a registration under Section 2.1 and (ii) in the case of a
determination to delay registering, shall be permitted to delay registering
any Registrable Securities, for the same period as the delay in registering
such other securities. No registration effected under this Section 2.2
shall relieve the Company of its obligation to effect any registration upon
request under Section 2.1. The Company will pay all Registration Expenses
in connection with any registration of Registrable Securities requested
pursuant to this Section 2.2.
(b) Right to Withdraw. The Purchasers shall have the
right to withdraw its request for inclusion of its Registrable Securities
in any registration statement pursuant to this Section 2.2 at any time
prior to the execution of an underwriting agreement with respect thereto by
giving written notice to the Company of its request to withdraw.
(c) Priority in Incidental Registrations. If the
managing underwriter of any underwritten offering shall inform the Company
by letter of its belief that the number of Registrable Securities requested
to be included in such registration, when added to the number of other
securities to be offered in such registration, would materially adversely
affect such offering, then the Company shall include in such registration,
to the extent of the number and type which the Company is so advised can be
sold in (or during the time of) such offering without so materially
adversely affecting such offering (the "Section 2.2 Sale Amount"), (i) all
of the securities proposed by the other stockholders triggering such
incidental registration rights; and (ii) thereafter, to the extent the
Section 2.2 Sale Amount is not exceeded, the Registrable Securities
requested by the Purchasers to be included in such registration pursuant to
Section 2.2(a) and any other securities of the Company requested to be
included in such registration by any holder having the right to include
securities on a pro rata basis, including, in the case where such
registration is to be effected as a result of the exercise by a holder of
the Company's securities of such holder's right to cause such securities to
be so registered, the securities of such holder with the amount of
securities of the Purchasers and each such holder to be included based on
the pro rata amount of shares of Common Stock held, or obtainable by
exercise or conversion of other securities of the Company, by the
Purchasers or such holder.
(d) Plan of Distribution. Any participation by holders
of Registrable Securities in a registration by the Company shall be in
accordance with the Company's plan of distribution, provided that the
Purchasers shall have the right to select the co-managing underwriter.
2.3 Registration Procedures. If and whenever the Company is
required to use its reasonable best efforts to effect the registration of
any Registrable Securities under the Securities Act as provided in Sections
2.1 and 2.2 hereof, the Company shall as expeditiously as possible:
(a) prepare and file with the Commission as soon as
practicable the requisite registration statement to effect such
registration (and shall include all financial statements required
by the Commission to be filed therewith) and thereafter use its
reasonable best efforts to cause such registration statement to
become effective; provided, however, that before filing such
registration statement (including all exhibits) or any amendment
or supplement thereto or comparable statements under securities
or blue sky laws of any jurisdiction, the Company shall as
promptly as practicable furnish such documents to the Purchasers
and each underwriter, if any, participating in the offering of
the Registrable Securities and their respective counsel, which
documents will be subject to the review and comments of the
Purchasers, each underwriter and their respective counsel; and
provided, further, however, that the Company may discontinue any
registration of its securities which are not Registrable
Securities at any time prior to the effective date of the
registration statement relating thereto;
(b) notify the Purchasers of the Commission's requests for
amending or supplementing the registration statement and the
prospectus, and prepare and file with the Commission such
amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to
keep such registration statement effective and to comply with the
provisions of the Securities Act with respect to the disposition
of all Registrable Securities covered by such registration
statement for such period as shall be required for the
disposition of all of such Registrable Securities in accordance
with the intended method of distribution thereof; provided, that
except with respect to any such registration statement filed
pursuant to Rule 415 under the Securities Act, such period need
not exceed 365 days;
(c) furnish, without charge, to the Purchasers and each
underwriter such number of conformed copies of such registration
statement and of each such amendment and supplement thereto (in
each case including all exhibits), such number of copies of the
prospectus contained in such registration statement (including
each preliminary prospectus and any summary prospectus) and any
other prospectus filed under Rule 424 under the Securities Act,
in conformity with the requirements of the Securities Act, and
such other documents, as the Purchasers and such underwriters may
reasonably request;
(d) use its reasonable best efforts (i) to register or
qualify all Registrable Securities and other securities covered
by such registration statement under such securities or blue sky
laws of such States of the United States of America where an
exemption is not available and as the Purchasers or any managing
underwriter shall reasonably request, (ii) to keep such
registration or qualification in effect for so long as such
registration statement remains in effect, and (iii) to take any
other action which may be reasonably necessary or advisable to
enable the Purchasers to consummate the disposition in such
jurisdictions of the securities to be sold by the Purchasers,
except that the Company shall not for any such purpose be
required to qualify generally to do business as a foreign
corporation in any jurisdiction wherein it would not but for the
requirements of this subsection (d) be obligated to be so
qualified or to consent to general service of process in any such
jurisdiction;
(e) use its reasonable best efforts to cause all Registrable
Securities covered by such registration statement to be
registered with or approved by such other federal or state
governmental agencies or authorities as may be necessary in the
opinion of counsel to the Company and counsel to the Purchasers
to consummate the disposition of such Registrable Securities;
(f) furnish to the Purchasers and each underwriter, if any,
participating in the offering of the securities covered by such
registration statement, a signed counterpart of (i) an opinion of
counsel for the Company, and (ii) a "comfort" letter signed by
the independent public accountants who have certified the
Company's or any other entity's financial statements included or
incorporated by reference in such registration statement,
covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) and,
in the case of the accountants' comfort letter, with respect to
events subsequent to the date of such financial statements, as
are customarily covered in opinions of issuer's counsel and in
accountants' comfort letters delivered to the underwriters in
underwritten public offerings of securities (and dated the dates
such opinions and comfort letters are customarily dated);
(g) promptly notify the Purchasers and each managing
underwriter, if any, participating in the offering of the
securities covered by such registration statement (i) when such
registration statement, any pre-effective amendment, the
prospectus or any prospectus supplement related thereto or
post-effective amendment to such registration statement has been
filed, and, with respect to such registration statement or any
post-effective amendment, when the same has become effective;
(ii) of any request by the Commission for amendments or
supplements to such registration statement or the prospectus
related thereto or for additional information; (iii) of the
issuance by the Commission of any stop order suspending the
effectiveness of such registration statement or the initiation of
any proceedings for that purpose; (iv) of the receipt by the
Company of any notification with respect to the suspension of the
qualification of any of the Registrable Securities for sale under
the securities or blue sky laws of any jurisdiction or the
initiation of any proceeding for such purpose; (v) at any time
when a prospectus relating thereto is required to be delivered
under the Securities Act, upon discovery that, or upon the
happening of any event as a result of which, the prospectus
included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to
make the statements therein not misleading, in the light of the
circumstances under which they were made, and in the case of this
clause (v), at the request of the Purchasers promptly prepare and
furnish to the Purchasers and each managing underwriter, if any,
participating in the offering of the Registrable Securities, a
reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such securities, such prospectus
shall not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the
light of the circumstances under which they were made; and (vi)
at any time when the representations and warranties of the
Company contemplated by Section 2.4(a) or (b) hereof cease to be
true and correct;
(h) otherwise comply with all applicable rules and
regulations of the Commission, and make available to its security
holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months beginning with the
first full calendar month after the effective date of such
registration statement, which earnings statement shall satisfy
the provisions of Section 11(a) of the Securities Act and Rule
158 promulgated thereunder, and promptly furnish to the
Purchasers a copy of any amendment or supplement to such
registration statement or prospectus;
(i) provide and cause to be maintained a transfer agent and
registrar (which, in each case, may be the Company) for all
Registrable Securities covered by such registration statement
from and after a date not later than the effective date of such
registration;
(j) (i) use its reasonable best efforts to cause all
Registrable Securities covered by such registration statement to
be listed on the NASDAQ "national market system" or the principal
securities exchange on which similar securities issued by the
Company are then listed (if any), if the listing of such
Registrable Securities is then permitted under the rules of such
exchange, or (ii) if no similar securities are then so listed,
use its reasonable best efforts to (x) cause all such Registrable
Securities to be listed on a national securities exchange or (y)
failing that, secure designation of all such Registrable
Securities as a NASDAQ "national market system security" within
the meaning of Rule 11Aa2-1 of the Commission or (z) failing
that, to secure NASDAQ authorization for such shares and, without
limiting the generality of the foregoing, to arrange for at least
two market makers to register as such with respect to such shares
with the National Association of Securities Dealers, Inc.;
(k) deliver promptly to counsel to the Purchasers and each
underwriter, if any, participating in the offering of the
Registrable Securities, copies of all correspondence between the
Commission and the Company, its counsel or auditors and all
memoranda relating to discussions with the Commission or its
staff with respect to such registration statement;
(l) use its reasonable best efforts to obtain the withdrawal
of any order suspending the effectiveness of the registration
statement;
(m) provide a CUSIP number for all Registrable Securities,
no later than the effective date of the registration statement;
and
(n) make available its senior executive officers and
chairman and otherwise provide reasonable assistance to the
underwriters (taking into account the needs of the Company's
business) in their marketing of Registrable Securities.
The Company may require the Purchasers to furnish the Company such
information regarding the Purchasers and the distribution of the
Registrable Securities as the Company may from time to time reasonably
request in writing.
The Purchasers agree that upon receipt of any notice from the
Company of the happening of any event of the kind described in paragraph
(g)(iii), (iv) or (v) of this Section 2.3, the Purchasers will, to the
extent appropriate, discontinue their disposition of Registrable Securities
pursuant to the registration statement relating to such Registrable
Securities until, in the case of paragraph (g)(v) of this Section 2.3,
their receipt of the copies of the supplemented or amended prospectus
contemplated by paragraph (g)(v) of this Section 2.3 and, if so directed by
the Company, will deliver to the Company (at the Company's expense) all
copies, other than permanent file copies, then in its possession, of the
prospectus relating to such Registrable Securities current at the time of
receipt of such notice. If the disposition by the Purchasers of their
securities is discontinued pursuant to the foregoing sentence, the Company
shall extend the period of effectiveness of the registration statement by
the number of days during the period from and including the date of the
giving of notice to and including the date when the Purchasers shall have
received copies of the supplemented or amended prospectus contemplated by
paragraph (g)(v) of this Section 2.3; and, if the Company shall not so
extend such period, the Purchasers' request pursuant to which such
registration statement was filed shall not be counted for purposes of the
requests for registration to which the Purchasers are entitled pursuant to
Section 2.1 hereof.
2.4 Underwritten Offerings.
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(a) Requested Underwritten Offerings. If requested by
the underwriters for any underwritten offering by the Purchasers pursuant
to a registration requested under Section 2.1, the Company shall enter into
a customary underwriting agreement (in the form of underwriting agreement
used at such time by the managing underwriter(s)) with a managing
underwriter or underwriters selected by the Purchasers. Such underwriting
agreement shall be satisfactory in form and substance to the Purchasers and
shall contain such representations and warranties by, and such other
agreements on the part of, the Company and such other terms as are
generally prevailing in agreements of the managing underwriter(s),
including, without limitation, their customary provisions relating to
indemnification and contribution. The Purchasers shall be party to such
underwriting agreement and may, at their option, require that any or all of
the representations and warranties by, and the other agreements on the part
of, the Company to and for the benefit of such underwriters shall also be
made to and for the benefit of the Purchasers and that any or all of the
conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of the
Purchasers. The Purchasers shall not be required to make any
representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties or agreements regarding
the Purchasers, their ownership of and title to the Registrable Securities,
and their intended method of distribution; and any liability of the
Purchasers to any underwriter or other person under such underwriting
agreement shall be limited to liability arising from breach of their
representations and warranties and shall be limited to an amount equal to
the proceeds (net of expenses and underwriting discounts and commissions)
that they derive from such registration.
(b) Incidental Underwritten Offerings. In the case of a
registration pursuant to Section 2.2 hereof, if the Company shall have
determined to enter into any underwriting agreements in connection
therewith, all of the Registrable Securities to be included in such
registration shall be subject to such underwriting agreements. The
Purchasers may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of,
the Company to and for the benefit of such underwriters shall also be made
to and for the benefit of the Purchasers and that any or all of the
conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of the
Purchasers. The Purchasers shall not be required to make any
representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties or agreements regarding
the Purchasers, their ownership of and title to the Registrable Securities,
and their intended method of distribution; and any liability of the
Purchasers to any underwriter or other Person under such underwriting
agreement shall be limited to liability arising from breach of their
representations and warranties and shall be limited to an amount equal to
the proceeds (net of expenses and underwriting discounts and commissions)
that they derive from such registration.
2.5 Preparation; Reasonable Investigation. In connection
with the preparation and filing of each registration statement under the
Securities Act pursuant to this Agreement, the Company will give the
Purchasers, their underwriters, if any, and their respective counsel,
accountants and other representatives and agents the opportunity to
participate in the preparation of such registration statement, each
prospectus included therein or filed with the Commission, and each
amendment thereof or supplement thereto, and give each of them such access
to its books and records and such opportunities to discuss the business of
the Company with its officers and employees and the independent public
accountants who have certified its financial statements, and supply all
other information reasonably requested by each of them, as shall be
necessary or appropriate, in the opinion of the Purchasers and such
underwriters' respective counsel, to conduct a reasonable investigation
within the meaning of the Securities Act.
2.6 Indemnification.
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(a) Indemnification by the Company. The Company agrees
that in the event of any registration of any Registrable Securities of the
Company under this Registration Rights Agreement the Company shall, and
hereby does, indemnify and hold harmless the Purchasers, their respective
directors, officers, members, partners, agents and affiliates and each
other Person who participates as an underwriter in the offering or sale of
such securities and each other Person, if any, who controls the Purchasers
or any such underwriter within the meaning of the Securities Act, against
any losses, claims, damages, or liabilities, joint or several, to which the
Purchasers or any such director, officer, member, partner, agent or
affiliate or underwriter or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities, joint or several (or actions or proceedings, whether commenced
or threatened, in respect thereof), arise out of or are based upon (i) any
untrue statement or alleged untrue statement of any material fact contained
in any registration statement under which such securities were registered
under the Securities Act, any preliminary prospectus, final prospectus or
summary prospectus contained therein, or any amendment or supplement
thereto, (ii) any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein in light of the circumstances in which they were made not
misleading, or (iii) any violation by the Company of any federal, state or
common law rule or regulation applicable to the Company and relating to
action required of or inaction by the Company in connection with any such
registration, and the Company shall reimburse the Purchasers and each such
director, officer, member, partner, agent or affiliate, underwriter and
controlling Person for any legal or any other expenses reasonably incurred
by them in connection with investigating or defending any such loss, claim,
liability, action or proceeding; provided that the Company shall not be
liable in any such case to the Purchasers or any such director, officer,
member, partner, agent, affiliate, or controlling person to the extent that
any such loss, claim, damage, liability (or action or proceeding in respect
thereof) or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in such
registration statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon and in
conformity with written information furnished to the Company through an
instrument duly executed by or on behalf of the Purchasers, specifically
stating that it is for use in the preparation thereof. Such indemnity shall
remain in full force regardless of any investigation made by or on behalf
of the Purchasers or any such director, officer, member, partner, agent,
affiliate, underwriter or controlling Person and shall survive the transfer
of such securities by the Purchasers.
(b) Indemnification by the Purchasers. As a condition
to including any Registrable Securities in any registration statement, the
Company shall have received an undertaking reasonably satisfactory to it
from the Purchasers so including any Registrable Securities to indemnify
and hold harmless (in the same manner and to the same extent as set forth
in paragraph (a) of this Section 2.6) the Company, and each director of the
Company, each officer of the Company and each other Person, if any, who
controls the Company within the meaning of the Securities Act, with respect
to any statement or alleged statement in or omission or alleged omission
from such registration statement, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, but only to the extent such statement or alleged
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company through an
instrument duly executed by the Purchasers specifically stating that it is
for use in the preparation of such registration statement, preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement;
provided, however, that the liability of any such indemnifying party under
this Section 2.6(b) shall be limited to the amount of proceeds (net of
expenses and underwriting discounts and commissions) received by such
indemnifying party in the offering giving rise to such liability. Such
indemnity shall remain in full force and effect, regardless of any
investigation made by or on behalf of the Company or any such director,
officer or controlling Person and shall survive the transfer of such
securities by the Purchasers.
(c) Notices of Claims, etc. Promptly after receipt by
an indemnified party of notice of the commencement of any action or
proceeding involving a claim referred to in the preceding subsections of
this Section 2.6, such indemnified party shall, if a claim in respect
thereof is to be made against an indemnifying party, give written notice to
the latter of the commencement of such action or proceeding; provided,
however, that the failure of any indemnified party to give notice as
provided herein shall not relieve the indemnifying party of its obligations
under the preceding subsections of this Section 2.6, except to the extent
that the indemnifying party is actually prejudiced by such failure to give
notice, and shall not relieve the indemnifying party from any liability
which it may have to the indemnified party otherwise than under this
Section 2.6. In case any such action or proceeding is brought against an
indemnified party, the indemnifying party shall be entitled to participate
therein and, unless in the opinion of outside counsel to the indemnified
party a conflict of interest between such indemnified and indemnifying
parties may exist in respect of such claim, to assume the defense thereof,
jointly with any other indemnifying party similarly notified to the extent
that it may wish, with counsel reasonably satisfactory to such indemnified
party; provided, however, that if the defendants in any such action or
proceeding include both the indemnified party and the indemnifying party
and if in the opinion of outside counsel to the indemnified party there may
be legal defenses available to such indemnified party and/or other
indemnified parties which are different from or in addition to those
available to the indemnifying party, the indemnified party or parties shall
have the right to select separate counsel to defend such action or
proceeding on behalf of such indemnified party or parties, provided,
however, that the indemnifying party shall be obligated to pay for only one
counsel and one local counsel for all indemnified parties. After notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof and approval by the indemnified party of such
counsel, the indemnifying party shall not be liable to such indemnified
party for any legal expenses subsequently incurred by the latter in
connection with the defense thereof other than reasonable costs of
investigation (unless the first proviso in the preceding sentence shall be
applicable). No indemnifying party shall be liable for any settlement of
any action or proceeding effected without its written consent. No
indemnifying party shall, without the consent of the indemnified party,
consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in
respect to such claim or litigation.
(d) Contribution. If the indemnification provided for
in this Section 2.6 shall for any reason be held by a court to be
unavailable to an indemnified party under subsection (a) or (b) hereof in
respect of any loss, claim, damage or liability, or any action in respect
thereof, then, in lieu of the amount paid or payable under subsection (a)
or (b) hereof, the indemnified party and the indemnifying party under
subsection (a) or (b) hereof shall contribute to the aggregate losses,
claims, damages and liabilities (including legal or other expenses
reasonably incurred in connection with investigating the same), (i) in such
proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand, and the indemnified party on the other,
with respect to the statements or omissions which resulted in such loss,
claim, damage or liability, or action in respect thereof, as well as any
other relevant equitable considerations, or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law or if the allocation
provided in this clause (ii) provides a greater amount to the indemnified
party than clause (i) above, in such proportion as shall be appropriate to
reflect not only the relative fault but also the relative benefits received
by the indemnifying party and the indemnified party from the offering of
the securities covered by such registration statement as well as any other
relevant equitable considerations. The parties hereto agree that it would
not be just and equitable if contributions pursuant to this Section 2.6(d)
were to be determined by pro rata allocation or by any other method of
allocation which does not take into account the equitable considerations
referred to in the preceding sentence of this Section 2.6(d). No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation. In addition, no
Person shall be obligated to contribute hereunder any amounts in payment
for any settlement of any action or claim effected without such Person's
consent, which consent shall not be unreasonably withheld. Notwithstanding
anything in this subsection (d) to the contrary, no indemnifying party
(other than the Company) shall be required to contribute any amount in
excess of the proceeds (net of expenses and underwriting discounts and
commissions) received by such party from the sale of the Registrable
Securities in the offering to which the losses, claims, damages or
liabilities of the indemnified parties relate.
(e) Other Indemnification. Indemnification and
contribution similar to that specified in the preceding subsections of this
Section 2.6 (with appropriate modifications) shall be given by the Company
and the Purchasers with respect to any required registration or other
qualification of securities under any federal, state or blue sky law or
regulation of any governmental authority other than the Securities Act. The
indemnification agreements contained in this Section 2.6 shall be in
addition to any other rights to indemnification or contribution which any
indemnified party may have pursuant to law or contract and shall remain
operative and in full force and effect regardless of any investigation made
by or on behalf of any indemnified party and shall survive the transfer of
any of the Registrable Securities by the Purchasers.
(f) Indemnification Payments. The indemnification and
contribution required by this Section 2.6 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as and when bills are received or expense, loss, damage or
liability is incurred.
2.7 Unlegended Certificates. In connection with the offering
of any Registrable Securities registered pursuant to this Section 2, the
Company shall (i) facilitate the timely preparation and delivery to the
Purchasers and the underwriters, if any, participating in such offering, of
unlegended certificates representing ownership of such Registrable
Securities being sold in such denominations and registered in such names as
requested by the Purchasers or such underwriters and (ii) instruct any
transfer agent and registrar of such Registrable Securities to release any
stop transfer orders with respect to any such Registrable Securities.
2.8 Limitation on Sale of Securities. The Company hereby
agrees that if it shall previously have received a request for registration
pursuant to Section 2.1 or 2.2 hereof, and if such previous registration
shall not have been withdrawn or abandoned, the Company shall not effect
any public or private offer, sale or distribution of its securities or
effect any registration of any of its equity securities under the
Securities Act whether or not for sale for its own account, until a period
of 90 days (or such shorter period as the Purchasers shall be advised by
their managing underwriter) shall have elapsed from the effective date of
such previous registration, and the Company shall so provide in any
registration rights agreements hereafter entered into with respect to any
of its securities provided, however, that during this 90 day period the
Company may (i) offer, sell and distribute its equity securities in
connection with acquisitions or any Company employee or director benefit or
stock purchase or stock option plans, (ii) grant or award Common Stock,
options to purchase Common Stock in connection with acquisitions or under
such Company plans and (iii) take any other actions necessary in connection
with any of the foregoing in order to register such Common Stock with the
Commission.
2.9 No Required Sale. Nothing in this Agreement shall be
deemed to create an independent obligation on the part of the Purchasers to
sell any Registrable Securities pursuant to any effective registration
statement.
3. Rule 144. Without limiting in any way the provisions of
Section 4.12 of the Exchange Agreement, the Company shall take all actions
reasonably necessary to enable holders of Registrable Securities to sell
such securities without registration under the Securities Act within the
limitation of the exemptions provided by (i) Rule 144, or (ii) any similar
rule or regulation hereafter adopted by the Commission including, without
limiting the generality of the foregoing, filing on a timely basis all
reports required to be filed by the Exchange Act. Upon the request of the
Purchasers, the Company will deliver to such holder a written statement as
to whether it has complied with such requirements.
4. Amendments and Waivers. This Agreement may be amended,
modified or supplemented only by written agreement of the party against
whom enforcement of such amendment, modification or supplement is sought.
5. [INTENTIONALLY OMITTED]
6. Notice. All notices and other communications hereunder shall
be in writing and, unless otherwise provided herein, shall be deemed to
have been given when received by the party to whom such notice is to be
given at its address set forth below, or such other address for the party
as shall be specified by notice given pursuant hereto:
(a) If to the Purchasers, to:
c/o Forstmann Little & Co.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
With a copy to:
Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
(b) If to the Company, to it at:
McLeodUSA Incorporated
McLeodUSA Technology Park
▇▇▇▇ ▇ ▇▇▇▇▇▇ ▇▇
▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ Rings, Esq.
Group Vice President and Chief Legal Officer
with a copy to (which shall not constitute notice):
▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
Columbia Square
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., Esq.
7. Assignment; Third Party Beneficiaries. This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors and permitted assigns. This
Agreement may not be assigned by the Company, without the prior written
consent of the Purchasers. This Agreement may not be assigned by any of the
Purchasers, without the prior written consent of the Company; provided
however, the Purchasers may, at their election, at any time or from time to
time, assign their rights under this Agreement, in whole or in part, to any
Affiliates of the Purchasers; provided further, however, that any rights to
withdraw shares from inclusion in a registration statement pursuant to
Section 2 shall be made only by the Purchasers for themselves and all such
Affiliates.
8. Remedies. The parties hereto agree that money damages or other
remedy at law would not be sufficient or adequate remedy for any breach or
violation of, or a default under, this Agreement by them and that, in
addition to all other remedies available to them, each of them shall be
entitled to an injunction restraining such breach, violation or default or
threatened breach, violation or default and to any other equitable relief,
including without limitation specific performance, without bond or other
security being required. In any action or proceeding brought to enforce any
provision of this Agreement (including the indemnification provisions
thereof), the successful party shall be entitled to recover reasonable
attorneys' fees in addition to its costs and expenses and any other
available remedy.
9. No Inconsistent Agreements. The Company will not, on or after
the date of this Agreement, enter into any agreement with respect to its
securities which is inconsistent with the rights granted to the Purchasers
in this Agreement or otherwise conflicts with the provisions hereof. The
Company further represents and warrants that the rights granted to the
Purchasers hereunder do not in any way conflict with and are not
inconsistent with any other agreements to which the Company is a party or
by which it is bound. The Company further agrees that if any other
registration rights agreement entered into after the date of this Agreement
with respect to any of its securities contains terms which are more
favorable to, or less restrictive on, the other party thereto than the
terms and conditions contained in this Agreement are (insofar as they are
applicable) with respect to the Purchasers, then the terms and conditions
of this Agreement shall immediately be deemed to have been amended without
further action by the Company or the Purchasers so that the Purchasers
shall be entitled to the benefit of any such more favorable or less
restrictive terms or conditions.
10. Descriptive Headings. The descriptive headings of the several
sections and paragraphs of this Agreement are inserted for reference only
and shall not control or otherwise affect the meaning hereof.
11. Governing Law. This Agreement shall be construed and enforced
in accordance with, and the rights and obligations of the parties hereto
shall be governed by, the laws of the State of New York, without giving
effect to the conflicts of law principles thereof. Each of the parties
hereto hereby irrevocably and unconditionally consents to submit to the
exclusive jurisdiction of the courts of the State of New York and the
United States of America located in the County of New York for any action
or proceeding arising out of or relating to this Agreement and the
transactions contemplated hereby (and agrees not to commence any action or
proceeding relating thereto except in such courts), and further agrees that
service of any process, summons, notice or document by U.S. registered mail
to its respective address set forth in Section 6 hereof shall be effective
service of process for any action or proceeding brought against it in any
such court. Each of the parties hereto hereby irrevocably and
unconditionally waives any objection to the laying of venue of any action
or proceeding arising out of this Agreement or the transactions
contemplated hereby in the courts of the State of New York or the United
States of America located in the County of New York, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in
any such court that any such action or proceeding brought in any such court
has been brought in an inconvenient forum.
12. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.
13. Invalidity of Provision. The invalidity or unenforceability
of any provision of this Agreement in any jurisdiction shall not affect the
validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of this Agreement, including
that provision, in any other jurisdiction. If any restriction or provision
of this Agreement is held unreasonable, unlawful or unenforceable in any
respect, such restriction or provision shall be interpreted, revised or
applied in a manner that renders it lawful and enforceable to the fullest
extent possible under law.
14. Further Assurances. Each party hereto shall do and perform or
cause to be done and performed all further acts and things and shall
execute and deliver all other agreements, certificates, instruments, and
documents as any other party hereto reasonably may request in order to
carry out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
15. Termination of Existing Agreement; Entire Agreement;
Effectiveness. This Agreement replaces and supersedes in its entirety the
Existing Agreement. The Existing Agreement is hereby terminated and shall
be of no further force and effect. Each party hereto agrees and confirms
that there are no unsatisfied obligations of any of the parties hereto
under the Existing Agreement. This Agreement constitutes the entire
agreement, and supersedes all prior agreements and understandings, oral and
written, between the parties hereto with respect to the subject matter
hereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officers thereunto duly
authorized.
McLEODUSA INCORPORATED
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President & Chief Executive
Officer
FORSTMANN LITTLE & CO. EQUITY
PARTNERSHIP-V, L.P.
By: FLC XXX Partnership, L.P.
its general partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
a general partner
FORSTMANN LITTLE & CO.
SUBORDINATED DEBT AND EQUITY
MANAGEMENT BUYOUT PARTNERSHIP-
VI, L.P.
By: FLC XXIX Partnership, L.P.
its general partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
a general partner
FORSTMANN LITTLE & CO.
SUBORDINATED DEBT AND EQUITY
MANAGEMENT BUYOUT PARTNERSHIP-
VII, L.P.
By: FLC XXXIII Partnership, L.P.
its general partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
a general partner