Exhibit 4.2
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WARRANT AGREEMENT, dated as of April 12, 2002, between
McLeodUSA Incorporated, a Delaware corporation (the "Company"), and Xxxxx
Fargo Bank Minnesota, N.A , a national banking association, as Warrant
Agent (the "Warrant Agent").
WHEREAS, the Company proposes to issue warrants as
hereinafter described (the "Warrants") to purchase up to an aggregate of
44,318,182 shares (the "Shares") of the Company's Class A Common Stock, par
value $.01 per share (the "Common Stock"), pursuant to (i) section 4.6 of
the Amended Plan of Reorganization of McLeodUSA Incorporated, dated
February 28, 2002 (as it may be further amended or modified, the "Plan")
and (ii) that certain Amended and Restated Purchase Agreement, dated as of
January 30, 2002, by and among the Company and the investors party thereto;
and
WHEREAS, the Company wishes the Warrant Agent to act as
Warrant Agent on behalf of the Company, and the Warrant Agent is willing to
so act, in connection with the issuance of the Warrants and other matters
provided herein.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements set forth herein and for good and valuable consideration,
the parties hereto agree as follows:
1. Appointment of Warrant Agent; Issuance of Warrants; Form of
Warrants. The Company hereby appoints the Warrant Agent to act as
agent for the Company in accordance with the instructions set
forth in this Agreement, and the Warrant Agent hereby accepts such
appointment. The Warrant Agent shall maintain the Warrant Register
described in Section 2 and shall countersign, issue and deliver
the Warrants and carry out the other duties specified herein under
the terms of this Agreement and the written instructions of the
Chairman of the Board, the President, one of the Vice Presidents,
the Secretary or one of the Assistant Secretaries of the Company.
The Warrants shall be in registered form only and shall
be evidenced by certificates ("Warrant Certificates" or "Certificates")
substantially in the form attached hereto as Exhibit A. The Warrants shall
be executed on behalf of the Company by the manual or facsimile signature
of the Chairman of the Board, the Chief Executive Officer, the Chief
Financial Officer, the President, the Treasurer or a Vice President of the
Company and attested by the manual or facsimile signature of the Secretary
or an Assistant Secretary of the Company.
Each Warrant shall be countersigned by the manual
signature of the Warrant Agent (or any successor to the Warrant Agent then
acting as warrant agent under this Agreement) and shall not be valid for
any purpose unless so countersigned. Warrants shall be dated as of the date
of countersignature thereof by the Warrant Agent upon initial issuance and
upon division, exchange, substitution or transfer.
In case any officer of the Company who shall have signed
any of the Warrant Certificates shall cease to be such officer of the
Company before countersignature by the Warrant Agent, such Warrant
Certificates may, nevertheless, be issued and delivered with the same force
and effect as though the person who signed such Warrant Certificates had
not ceased to be such officer of the Company. Any Warrant Certificates may
be signed on behalf of the Company by any person who, at the actual date of
execution of such Warrant Certificates, shall be a proper officer of the
Company to sign such Warrant Certificates, even if such person did not hold
such office on the date of this Agreement.
2. Registration. The Warrants shall be numbered and shall be
registered in a warrant register (the "Warrant Register") as they
are issued, which register shall be kept at one of the Warrant
Agent's offices in South St. Xxxx, Minnesota. The Warrant Register
shall show the names and addresses of the respective holders of
the Warrants, the number of Shares purchasable on the face of each
Warrant so held and the date of such Warrant. The Company and the
Warrant Agent shall be entitled to treat the registered holder of
any Warrant on the Warrant Register (the "Holder", which term
shall also refer to the registered holder of any Shares) as the
owner in fact thereof for all purposes and shall not be bound to
recognize, or make any inquiries with respect to, any equitable or
other claim to or interest in such Warrant on the part of any
other person, and neither the Company nor the Warrant Agent shall
be affected by notice to the contrary.
3. Exchange of Warrant Certificates. Each Warrant Certificate may be
exchanged for another Certificate or Certificates entitling the
Holder thereof to purchase a like aggregate number of Shares as
the Certificate or Certificates surrendered then entitle such
Holder to purchase. No fractional Warrant Certificates shall be
issued. Any Holder desiring to exchange a Warrant Certificate or
Certificates shall make such request in writing delivered to the
Warrant Agent and shall surrender, properly endorsed, the
Certificate or Certificates to be so exchanged at the office of
the Warrant Agent designated for such purpose. Thereupon, the
Warrant Agent shall countersign and deliver to the person entitled
thereto a new Warrant Certificate or Certificates, as the case may
be, as so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be
imposed in connection with any exchange of Warrant Certificates.
4. Transfers of Warrants. The Warrants shall be transferable only on
the Warrant Register upon surrender thereof accompanied by a
written instrument for transfer in the form of the assignment
appearing on the form of Warrant Certificate attached hereto as
Exhibit A, duly executed by the Holder or by his duly authorized
attorney or representative. In all cases of transfer by an
attorney, the original power of attorney, duly approved, or an
official copy thereof, duly certified, shall be deposited and
remain with the Warrant Agent. In case of transfer by executors,
administrators, guardians or other legal representatives, duly
authenticated evidence of their authority shall be produced, and
may be required to be deposited with the Warrant Agent in its
discretion. Upon any registration of transfer, the Warrant Agent
shall countersign and deliver a new Warrant or Warrants to the
persons entitled thereto. The Holder of such Warrants shall pay
any transfer taxes or other reasonable charges as the Company may
prescribe in connection with such transfer.
5. Term of Warrants; Exercise of Warrants.
(a) Each Warrant entitles the Holder thereof to purchase
one Share, subject to adjustment as set forth herein, at any time until
5:00 P.M., New York City time, on April 16, 2007; provided that if such
date shall not be a Business Day (as defined below), then 5:00 P.M., New
York City Time, on the next following day which is a Business Day (the
"Expiration Date"), at an initial exercise price per Share equal to
$1.3538462, subject to adjustment as set forth herein (the "Exercise
Price"). As used herein, the term "Business Day" shall mean a day which is
not a Saturday or Sunday and which is not, in the State of New York, a
holiday or a day on which banks are authorized to close. Each Warrant not
exercised on or before the Expiration Date shall expire.
(b) The Exercise Price and the number of Shares
purchasable upon the exercise of each Warrant are subject to adjustment
upon the occurrence of certain events, pursuant to the provisions of
Sections 11 and 12 of this Agreement. Subject to the provisions of this
Agreement, each Holder of a Warrant Certificate shall have the right to
exercise the Warrants evidenced thereby in whole or in part at any time and
from time to time prior to the Expiration Date upon surrender of the
Warrant Certificate, with the form of election to exercise (the "Exercise
Notice") on the reverse side thereof duly filled in and executed, to the
Warrant Agent at the office of the Warrant Agent designated for such
purpose, together with payment of the Exercise Price, for the number of
Shares in respect of which such Warrants are then exercised.
(c) Payment of the Exercise Price shall be made at the
option of the Holder (i) by cashier's check, official bank check or money
order made payable to the order of the Company or wire transfer of funds to
an account designated by the Company or (ii) by the surrender of a Warrant
Certificate to the Warrant Agent, with a duly executed Exercise Notice
marked to reflect "Cashless Exercise" (a "Cashless Exercise"), and, in
either case, specifying the number of Warrants being exercised. Upon an
exercise of Warrants other than a Cashless Exercise, the holder shall be
entitled to receive the number of shares of Common Stock purchasable upon
exercise of the number of Warrants specified in the Exercise Notice. Upon a
Cashless Exercise, the holder shall be entitled to receive the number of
shares of Common Stock computed using the following formula:
X = Y x (A-B)
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A
Where X = the number of shares of Common Stock to be issued to the
Holder;
Y = the number of shares of Common Stock purchasable upon
the exercise for cash of the number of Warrants specified
in the Exercise Notice;
A = the Fair Market Value of one share of the Common Stock;
B = the Exercise Price (as adjusted to the date of such
calculation).
(d) The date of exercise of any Warrant shall be deemed
to be the date of receipt of the Warrant Certificate by the Warrant Agent
with an Exercise Notice duly filled in and executed and accompanied by
proper payment as herein provided. The method of delivery of any Warrant
Certificates to the Warrant Agent is at the option and risk of the Holder
thereof.
(e) Upon receipt of a Warrant Certificate representing an
exercisable Warrant, with the Exercise Notice duly filled in and executed,
accompanied by payment of the Exercise Price for the Shares to be purchased
as provided in Section 5(c), the Warrant Agent shall thereupon promptly (i)
requisition from any transfer agent of the Shares (or make available, if
the Warrant Agent is the transfer agent) certificate(s) for the number of
Shares to be purchased, and the Company hereby irrevocably authorizes its
transfer agent to comply with all such requests, (ii) when appropriate,
requisition from the Company the amount of cash, if any, to be paid in lieu
of issuance of fractional Shares in accordance with Section 13, (iii)
promptly after receipt of certificate(s) representing such Shares, cause
the same to be delivered to or upon the order of the Holder of such Warrant
Certificate, registered in such name or names as may be designated by such
Holder, and (iv) when appropriate, after receipt thereof, promptly deliver
such cash to or upon the order of the Holder of such Warrant Certificate.
In the event that the Company is obligated to issue other securities of the
Company upon the exercise of a Warrant, the Company shall make all
arrangements necessary so that such other securities are available for
distribution by the Warrant Agent, if and when appropriate.
(f) In case the Holder of any Warrant Certificate shall
exercise less than all the Warrants evidenced thereby, a new Warrant
Certificate evidencing Warrants equivalent to the Warrants remaining
unexercised shall be issued by the Warrant Agent and delivered to the
Holder of such Warrant Certificate or to his duly authorized assigns.
6. Cancellation and Destruction of Warrant Certificates. All Warrant
Certificates surrendered for the purpose of exercise, transfer or
exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Warrant Agent for cancellation or in
canceled form, or, if surrendered to the Warrant Agent, shall be
canceled by it, and no Warrant Certificates shall be issued in
lieu thereof except as expressly permitted by any of the
provisions of this Agreement. The Company shall deliver to the
Warrant Agent for cancellation and retirement, and the Warrant
Agent shall so cancel and retire, any other Warrant Certificate
purchased or acquired by the Company otherwise than upon the
exercise thereof. The Warrant Agent shall deliver all canceled
Warrant Certificates to the Company.
7. Payment of Taxes. The Company shall pay all federal and state
transfer taxes, documentary stamp taxes, and charges, if any
attributable to the initial issuance of Warrants and of Shares
initially issued upon the exercise of Warrants; provided, however,
that the Company shall not be required to pay any tax or taxes
which may be payable in respect of any transfer involved in the
issue or delivery of any Warrant Certificates or any certificates
for Shares in a name other than that of the Holder of such
Warrants or to issue or deliver any certificates for Shares in a
name other than that of the Holder upon the exercise of any
Warrants until such tax shall have been paid (any such tax being
payable by the Holder of such Warrant Certificate at the time of
surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
8. Mutilated or Missing Warrants. Upon receipt by the Company and the
Warrant Agent of evidence reasonably satisfactory to them of the
loss, theft, destruction or mutilation of a Warrant Certificate
and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to the Company, and reimbursement
to the Company and the Warrant Agent of all reasonable expenses
incidental thereto, and upon surrender to the Warrant Agent and
cancellation of the Warrant Certificate if mutilated, the Company
shall execute and deliver a new Warrant Certificate of like tenor
to the Warrant Agent for countersignature and delivery to the
Holder in lieu of the Warrant Certificate so lost, stolen,
destroyed or mutilated.
9. Reservation and Availability of Common Stock; Purchase of
Warrants.
9.1 Reservation and Availability of Common Stock; Listing
of Common Stock. The Company covenants and agrees that it shall at all
times cause to be reserved and kept available, free from preemptive rights,
out of the authorized and unissued Shares, a number of Shares that shall be
sufficient to permit the exercise in full of the rights of purchase
represented by the Warrants.
The Company covenants and agrees that it shall take all
such action as may be necessary to ensure that all Shares that may be
issued upon exercise of Warrants shall, at the time of delivery of the
certificates for such Shares (subject to the payment of the Exercise
Price), be duly and validly authorized and issued, fully paid and
nonassessable outstanding Shares of the Company.
The Company will use its reasonable efforts so that the
shares of Common Stock issuable upon exercise of the Warrants, as soon as
reasonably practicable following their issuance upon the exercise of this
Warrant, will be listed on the principal securities exchanges, automated
quotation systems or other markets within the United States of America, if
any, on which the shares of Common Stock are then listed (but, in any
event, such listing shall be effected by the Company within the time frame
required by any such exchanges, quotation systems or other markets).
9.2 Purchase of Warrants by the Company. The Company
shall have the right, except as limited by law, to purchase, or otherwise
acquire in negotiated transactions, Warrants at such times, in such manner
and for such consideration as it may deem appropriate.
10. Common Stock Record Date. Each person in whose name any
certificate for Shares is issued upon the exercise of Warrants
shall for all purposes be deemed to have become the holder of the
Shares represented thereby on, and such certificate shall be
dated, the date upon which the Warrant Certificate evidencing such
Warrants was duly presented and payment of the Exercise Price (and
any applicable transfer taxes) was made; provided, however, that
if the date of such presentation and payment is a date upon which
the transfer books of the Company are closed, such person shall be
deemed to have become the record holder of such Shares on, and
such certificate shall be dated, the next succeeding Business Day
on which the transfer books of the Company are open; provided,
further, that unless otherwise provided by law, such transfer
books shall not be closed at any one time for a period of longer
than five calendar days. Prior to the exercise of the rights
evidenced thereby, the Holder of a Warrant Certificate, as such,
shall not be entitled to any rights of a stockholder of the
Company with respect to Shares for which the Warrants shall be
exercisable, including, without limitation, the right to vote upon
any matter submitted to the stockholders of the Company, to
receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice
of any proceeding of the Company, except as provided herein.
11. Consolidation, Merger, etc. If any consolidation or merger of the
Company with another corporation or other entity or the sale of
all or substantially all of its assets to another corporation or
other entity (each an "Extraordinary Event") shall be effected,
then, as a condition of such Extraordinary Event, the Company
shall cause lawful and adequate provision to be made whereby the
Holders of Warrants shall thereafter have the right to receive,
upon exercise hereof and the payment of the Exercise Price, in
lieu of the shares of Common Stock of the Company immediately
theretofore receivable upon the exercise of the Warrants, such
shares of stock, securities or property (including cash) as may be
issued or payable with respect to or in exchange for a number of
shares of Common Stock of the Company immediately theretofore
receivable upon the exercise of the Warrants had such
Extraordinary Event not taken place, and in any such case
appropriate provision shall be made with respect to the rights and
interests of the Holders of the Warrants to the end that the
provisions hereof (including, without limitation, provisions for
adjustments of the number of shares purchasable upon the exercise
of the Warrants) shall thereafter be applicable, as nearly as may
be, in relation to any shares of stock, securities or property
thereafter deliverable upon the exercise hereof. The foregoing
provisions shall similarly apply to successive Extraordinary
Events. The Company shall not effect any such consolidation,
merger or sale of all or substantially all of its assets unless,
prior to the consummation thereof, the successor corporation or
other entity (if other than the Company) resulting from such
consolidation or merger or the corporation or other entity
purchasing such assets shall assume by written instrument the
obligation to deliver to such Holder such shares of stock,
securities or property as, in accordance with the foregoing
provisions, such Holder may be entitled to purchase or receive.
12. Antidilution Protection.
12.1 If at any time or from time to time after the date
of this Agreement, the Company issues or sells, or is deemed by the express
provisions of this Section 12 to have issued or sold, any Additional Shares
of Common Stock (as defined below), other than as a dividend or other
distribution on any class of stock as provided in Section 12.4 and other
than a subdivision or combination of shares of Common Stock as provided in
Section 12.5, without consideration or for an Effective Price (as defined
below) less than the Fair Market Value (as defined below) per share of
Common Stock immediately prior to the time of such issue or sale, the then
effective Exercise Price shall be reduced, as of the opening of business on
the date of such issue or sale, to the price equal to the quotient obtained
by dividing: (A) the product of (x) such Exercise Price multiplied by (y)
the sum of (i) the total number of shares of Common Stock Outstanding
(including any shares of Common Stock deemed to have been issued pursuant
to this Section 12) immediately prior to such issuance, and (ii) a number
of shares of Common Stock calculated by dividing the consideration received
by the Company from such issuance by the Fair Market Value per Share of the
Common Stock; by (B) the total number of shares of Common Stock Outstanding
(including any shares of Common Stock deemed to have been issued pursuant
to this Section 12) immediately after such issuance of the Additional
Shares of Common Stock. No adjustment of the Exercise Price, however, shall
be made in an amount less than $0.01 per share, and any such lesser
adjustment shall be carried forward and shall be made at the time and
together with the next subsequent adjustment which together with any
adjustments so carried forward shall amount to $0.01 per share or more.
Upon any such reduction in the Exercise Price, the total number of Shares
issuable upon exercise of a Warrant shall be equal to the amount obtained
by multiplying the Exercise Price in effect immediately prior to such
adjustment by the number of Shares issuable upon exercise of such Warrant
immediately prior to such adjustment and dividing the product thereof by
the Exercise Price resulting from such adjustment.
12.2 For the purpose of making any adjustment required
under this Section 12, the consideration received by the Company for any
issue or sale of securities shall (i) to the extent it consists of cash, be
computed at the gross amount of cash received by the Company before
deduction of any underwriting or similar commissions, compensation or
concessions paid or allowed by the Company in connection with such issue or
sale and without deduction of any expenses payable by the Company, (ii) to
the extent it consists of property other than cash, be computed at the fair
market value of that property as determined in good faith by the Board of
Directors of the Company or any committee thereof, and (iii) if Additional
Shares of Common Stock, Convertible Securities (as defined below) or
Options (as defined below) to purchase either Additional Shares of Common
Stock or Convertible Securities are issued or sold together with other
stock or securities or other assets of the Company for a consideration
which covers both, be computed as the portion of the consideration so
received that may be reasonably determined in good faith by the Board of
Directors to be allocable to such Additional Shares of Common Stock,
Convertible Securities or Options.
12.3 For the purpose of the adjustment required under
this Section 12, if the Company issues or sells any (i) stock or other
securities convertible into or exercisable or exchangeable for Additional
Shares of Common Stock (such convertible, exercisable or exchangeable stock
or securities being herein referred to as "Convertible Securities") or (ii)
rights, options or warrants for the purchase of Additional Shares of Common
Stock or Convertible Securities (such rights, options or warrants being
referred to herein as "Options"), and if the Effective Price of such
Additional Shares of Common Stock is less than the Fair Market Value of a
share of Common Stock immediately prior to the time of the granting of such
Convertible Securities or Options, the Company shall be deemed to have
issued at the time of the issuance of such Options or Convertible
Securities the maximum number of Additional Shares of Common Stock issuable
upon exercise, conversion or exchange thereof and to have received as
consideration for the issuance of such shares an amount equal to the total
amount of the consideration, if any, received by the Company for the
issuance of such Options or Convertible Securities, plus, in the case of
such Options, the minimum amounts of consideration, if any, payable to the
Company upon the exercise of such Options, plus, in the case of Convertible
Securities, the minimum amounts of consideration, if any, payable to the
Company (other than by cancellation of liabilities or obligations evidenced
by such Convertible Securities) upon the conversion, exercise or exchange
thereof; provided that if in the case of Convertible Securities the minimum
amounts of such consideration cannot be ascertained, but are a function of
antidilution or similar protective clauses, the Company shall be deemed to
have received the minimum amounts of consideration without reference to
such clauses; provided further that if the minimum amount of consideration
payable to the Company upon the exercise, conversion or exchange of Options
or Convertible Securities is reduced over time or on the occurrence or
non-occurrence of specified events other than by reason of antidilution
adjustments, the Effective Price shall be recalculated using the figure to
which such minimum amount of consideration is reduced; provided further
that if the minimum amount of consideration payable to the Company upon the
exercise, conversion or exchange of such Options or Convertible Securities
is subsequently increased, the Effective Price shall be again recalculated
using the increased minimum amount of consideration payable to the Company
upon the exercise, conversion or exchange of such Options or Convertible
Securities. No further adjustment of the Exercise Price, as adjusted upon
the issuance of such Options or Convertible Securities, shall be made as a
result of the actual issuance of Additional Shares of Common Stock on the
exercise of any such Options or the conversion, exercise or exchange of any
such Convertible Securities. If any such Options or the conversion
privilege represented by any such Convertible Securities shall expire
without having been exercised, the Exercise Price as adjusted upon the
issuance of such Options or Convertible Securities, shall be readjusted at
the time of such expiration to the Exercise Price which would have been in
effect had an adjustment been made on the basis that the only Additional
Shares of Common Stock so issued were the Additional Shares of Common
Stock, if any, actually issued or sold on the exercise of such Options or
rights of conversion of such Convertible Securities, and such Additional
Shares of Common Stock, if any, were issued or sold for the consideration
actually received by the Company upon such exercise, plus the
consideration, if any, actually received by the Company for the granting of
all such Options, whether or not exercised, plus the consideration received
for issuing or selling the Convertible Securities actually converted,
exercised or exchanged, plus the consideration, if any, actually received
by the Company (other than by cancellation of liabilities or obligations
evidenced by such Convertible Securities) on the conversion, exercise or
exchange of such Convertible Securities.
12.4 In case the Company shall declare a dividend or make
any other distribution upon any stock of the Company payable in Common
Stock, Options or Convertible Securities (other than rights or warrants
distributed to all holders of such stock, which shall be treated in
accordance with Section 12.3), any Common Stock, Options or Convertible
Securities, as the case may be, issuable in payment of such dividend or
distribution shall be deemed to have been issued or sold without
consideration, and the Exercise Price then in effect immediately prior to
such dividend declaration or distribution shall be reduced and the number
of Shares issuable upon exercise of a Warrant shall be increased as if the
Company had subdivided its outstanding shares of Common Stock into a
greater number of shares as provided in Section 12.5.
12.5 If the Company at any time subdivides (by any stock
split, stock dividend, recapitalization or otherwise) its outstanding
shares of Common Stock into a greater number of shares, the number of
Shares issuable upon exercise of a Warrant will be proportionately
increased and the Exercise Price will be proportionately decreased, and if
the Company at any time combines (by reverse stock split, recapitalization
or otherwise) its outstanding shares of Common Stock into a smaller number
of shares, the number of Shares issuable upon exercise of a Warrant will be
proportionately decreased and the Exercise Price will be proportionately
increased.
12.6 Other than ordinary cash dividends or distributions
paid out of the Company's current earnings, which are specifically excluded
from the provisions of this Section 12.6, in the event the Company shall
fix a record date for the making of a dividend or distribution on its
Common Stock payable in cash, securities of other persons, evidences of
indebtedness issued by the Company or other persons, assets or warrants or
rights not referred to in Section 12.4 or 12.5 (the "Other Distribution"),
then, in each such case, at the election of the Company, either (i) the
number of Shares issuable after such record date upon exercise of a Warrant
shall be adjusted by multiplying the number of Shares issuable upon the
exercise of a Warrant immediately prior to such record date by a fraction,
the numerator of which shall be the then Fair Market Value per share of
Common Stock on the record date for such distribution and the denominator
of which shall be the then Fair Market Value per share of Common Stock on
the record date for such distribution less an amount equal to the then fair
market value (as determined in good faith by the Board of Directors of the
Company) of the Other Distribution applicable to one share of Common Stock,
or (ii) adequate provision shall be made so that the Holders of Warrants
shall have the right to receive, in addition to shares of Common Stock upon
the exercise of the Warrants, at the election of the Company, either (A)
the Other Distribution to which such holder would have been entitled as a
holder of Common Stock if such Holder had exercised such Warrant
immediately prior to the record date for such distribution or (B) the cash
equivalent of such Other Distribution. Upon any adjustment in the number of
Shares issuable upon exercise of a Warrant pursuant to clause (i) above,
the Exercise Price shall be equal to the amount obtained by multiplying the
Exercise Price in effect immediately prior to such adjustment by the number
of Shares issuable upon exercise of such Warrant immediately prior to such
adjustment and dividing the product thereof by the number of Shares
issuable upon exercise of such Warrant immediately after such adjustment.
If the Company elects to adjust the number of Shares
issuable upon the exercise of a Warrant pursuant to clause (i) above, such
adjustment shall be made whenever any such distribution is made and shall
become effective on the date of distribution retroactive to the record date
for the determination of stockholders of the Company entitled to receive
such distribution; provided however, that the Company shall deliver to a
Holder who exercises a Warrant after any such record date, but prior to the
related distribution, a due xxxx or other appropriate instrument evidencing
such Holder's right to receive such distribution upon its occurrence.
Notwithstanding the foregoing, the Company shall not
elect the adjustment provided for in clause (i) above if the then fair
market value (as determined in good faith by the Board of Directors of the
Company) of the Other Distribution applicable to one share of Common Stock
is equal to or greater than the then Fair Market Value per share of Common
Stock on the record date of such distribution.
12.7 "Additional Shares of Common Stock" shall mean all
shares of Common Stock issued by the Company or deemed to be issued
pursuant to this Section 12 (whether or not subsequently reacquired or
retired by the Company), other than Excluded Stock.
"Common Stock Outstanding" means, as of any date, the sum
of the number of shares of Common Stock outstanding plus the aggregate
number of shares of Common Stock into which the Company's Class B Common
Stock, par value $.01 per share, and the Company's Class C Common Stock,
par value $.01 per share, are convertible as of such date.
"Excluded Stock" shall mean (i) Common Stock and/or
options, warrants or other Common Stock purchase rights and the Common
Stock issued pursuant to such options, warrants or other rights to
employees, officers or directors of the Company or any subsidiary pursuant
to stock purchase or stock option plans or other compensation arrangements
that are approved by the Board of Directors; (ii) Common Stock issued
pursuant to the exercise of options, warrants or convertible securities
outstanding as of the date of this Agreement or issued in connection with
the Plan; (iii) securities issued as consideration for the acquisition of
any person or entity whether by merger or otherwise; (iv) Common Stock
issued pursuant to a transaction for which an adjustment is made pursuant
to Section 11 or Section 12.4 or 12.5; and (v) shares of Common Stock
issued for cash in a registered underwritten offering bona fide offered and
sold to the public.
The "Effective Price" of Additional Shares of Common
Stock shall mean the quotient determined by dividing the total number of
Additional Shares of Common Stock issued or sold, or deemed to have been
issued or sold by the Company under this Section 12, into the aggregate
consideration received, or deemed to have been received by the Company for
such issue under this Section 12, for such Additional Shares of Common
Stock.
"Average Price" means, with respect to any shares of
stock or securities, including the Common Stock, on any date of
determination, (i) if the relevant stock or security is listed or admitted
for trading on the New York Stock Exchange or any other national securities
exchange, the average for the twenty (20) Trading Days preceding and
including such date of determination of the last reported sale prices per
share on such national securities exchange or (ii) if the relevant stock or
security is (x) admitted to unlisted trading privileges on any exchange or
(y) quoted on the Nasdaq National Market or any other system of automated
dissemination of quotations of securities prices, the average for the
twenty (20) Trading Days preceding and including the date of determination
of the average of the last reported bid and asked prices per share or
security reported by the National Quotation Bureau or such other system
then in use.
"Fair Market Value" means, with respect to any shares of
stock or other securities, (i) if such stock or securities are listed or
admitted to trading on a national securities exchange or admitted to
unlisted trading privileges on such exchange or quoted in the Nasdaq
System, the Average Price per share or security, as the case may be, at the
close of trading on the Trading Day on which the relevant determination is
to be made (the date of exercise of the Warrant, in the case of any such
determination to be made with respect to such exercise) or, if such day is
not a Trading Day, the Trading Day immediately preceding such day and (ii)
if such stock or security is not so listed or admitted to unlisted trading
privileges, the current fair market value of such stock or security as
determined in good faith by the Board of Directors of the Corporation.
"Trading Day" means (i) if the relevant stock or security
is listed or admitted for trading on the New York Stock Exchange or any
other national securities exchange, a day on which such exchange is open
for business; or (ii) if the relevant stock or security is quoted on the
Nasdaq National Market or any other system of automated dissemination of
quotations of securities prices, a day on which trades may be effected
through such system.
12.8
No adjustment pursuant to this Section 12 need be made for the adoption of
a plan commonly referred to as a "Stockholders' Rights Plan" which provides
for the issuance of rights to acquire shares of capital stock upon the
occurrence of some event that is not within the control of the rights
holders, or the issuance of rights under such plan; provided that the
issuance of capital stock pursuant to such rights shall require adjustment
to the Exercise Price and number of Shares purchasable upon the exercise
hereof.
12.9
Whenever the Exercise Price is adjusted or the number of Shares purchasable
upon the exercise of each Warrant is adjusted, as herein provided, the
Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such
adjustment, (b) promptly file with the Warrant Agent and with each transfer
agent for the Common Stock a copy of such certificate and (c) mail a brief
summary thereof to each Holder of a Warrant Certificate in accordance with
Section 20 hereof. The Warrant Agent shall be fully protected in relying on
any such certificate and on any adjustment therein contained and shall not
be deemed to have knowledge of any such adjustment unless and until it
shall have received such certificate.
12.10 In the event of any adjustments in the Exercise
Price or the number or kind of securities purchasable upon the exercise of
the Warrants, Warrant Certificates theretofore or thereafter issued may
continue to express the same price and number and kind of Shares as are
stated in the Warrant Certificates initially pursuant to this Agreement,
unless a Holder requests in writing that its Warrant Certificate be revised
to reflect such adjustments.
13. Fractional Interests. The Company shall not be required to issue
fractional Shares on the exercise of Warrants. If more than one
Warrant shall be presented for exercise in full at the same time
by the same Holder, the number of full Shares which shall be
issuable upon the exercise thereof shall be computed on the basis
of the aggregate number of Shares purchasable on exercise of the
Warrants so presented. If any fraction of a Share would, except
for the provisions of this Section 13, be issuable on the exercise
of any Warrant (or specified portion thereof), the Company shall
pay an amount in cash equal to (a) the Fair Market Value for one
Share, as defined herein, on the day immediately preceding the
date the Warrant is presented for exercise multiplied by (b) such
fraction.
14. Agreements of Holders. Every Holder of a Warrant by accepting the
same consents and agrees with the Company and the Warrant Agent
and with every other holder of a Warrant that:
(a) the Warrant Certificates are transferable only on the
registry books of the Warrant Agent if surrendered at the office of the
Warrant Agent designated for such purpose, duly endorsed or accompanied by
a proper instrument of transfer; and
(b) the Company and the Warrant Agent may deem and treat
the person in whose name a Warrant Certificate is registered as the
absolute owner thereof and of the Warrants evidenced thereby
(notwithstanding any notations of ownership or writing on the Warrant
Certificates made by anyone other than the Company or the Warrant Agent)
for all purposes whatsoever, and neither the Company nor the Warrant Agent
shall be affected by any notice to the contrary.
15. Merger or Consolidation or Change of Name of Warrant Agent. Any
corporation or other entity into which the Warrant Agent or any
successor Warrant Agent may be merged or with which it may be
consolidated, or any corporation or other entity resulting from
any merger or consolidation to which the Warrant Agent or any
successor Warrant Agent shall be a party, or any corporation or
other entity succeeding to the corporate trust or stock transfer
business of the Warrant Agent or any successor Warrant Agent,
shall be the successor to the Warrant Agent under this Agreement
without the execution or filing of any paper or any further act on
the part of any of the parties hereto, provided that such
corporation or other entity would be eligible for appointment as a
successor Warrant Agent under the provisions of Section 17 hereof.
In case at the time such successor Warrant Agent shall succeed to
the agency created by this Agreement any of the Warrant
Certificates shall have been countersigned but not delivered, any
such successor Warrant Agent may adopt the countersignature of the
predecessor Warrant Agent and deliver such Warrant Certificates so
countersigned; and, in case at that time any of the Warrant
Certificates shall not have been countersigned, any successor
Warrant Agent may countersign such Warrant Certificate either in
the name of the predecessor or in the name of the successor
Warrant Agent; and in all such cases such Warrant Certificates
shall have the full force provided in the Warrant Certificates in
this Agreement.
In case at any time the name of the Warrant Agent shall be
changed, and at such time any of the Warrant Certificates shall have been
countersigned but not delivered, the Warrant Agent may adopt the
countersignature under its prior name and deliver Warrant Certificates so
countersigned; and, in case at that time any of the Warrant Certificates
shall not have been countersigned, the Warrant Agent may countersign such
Warrant Certificates either in its prior name or in its changed name; and
in all such cases such Warrant Certificates shall have the full force
provided in the Warrant Certificates and in this Agreement.
16. Warrant Agent. The Warrant Agent undertakes the duties and
obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of
Warrants, by their acceptance thereof, shall be bound:
16.1 The statements contained herein and in the Warrant
Certificates shall be taken as statements of the Company and the Warrant
Agent assumes no responsibility for the correctness of any of the same
except such as describe the Warrant Agent or action taken or to be taken by
it.
16.2 The Warrant Agent shall not be responsible for any
failure of the Company to comply with any of the covenants contained in
this Agreement or in the Warrant Certificates to be complied with by the
Company.
16.3 The Warrant Agent may consult at any time with
counsel satisfactory to it (who may be counsel for the Company) and the
Warrant Agent shall incur no liability or responsibility to the Company or
to any holder of any Warrant Certificate in respect of any action taken,
suffered or omitted by it hereunder in good faith and in accordance with
the opinion or the advice of such counsel.
16.4 The Warrant Agent shall incur no liability or
responsibility to the Company or to any holder of any Warrant Certificate
for any action taken in reliance on any notice, resolution, waiver,
consent, order, certificate, or other paper, document or instrument
believed by it to be genuine and to have been signed, sent or presented by
the proper party or parties.
16.5 The Company agrees to pay to the Warrant Agent
reasonable compensation for all services rendered by the Warrant Agent in
the execution of this Agreement, to reimburse the Warrant Agent for all
expenses, taxes and governmental charges and other charges of any kind and
nature incurred by the Warrant Agent in the execution of this Agreement and
to indemnify the Warrant Agent and save it harmless against any and all
liabilities, including judgments, costs and counsel fees, for anything done
or omitted by the Warrant Agent in the execution of this Agreement except
as a result of its negligence or bad faith.
16.6 The Warrant Agent shall be under no obligation to
institute any action, suit or legal proceeding or to take any other action
likely to involve expense unless the Company or one or more registered
holders of Warrant Certificates shall furnish the Warrant Agent with
reasonable security and indemnity for any costs and expenses which may be
incurred, but this provision shall not affect the power of the Warrant
Agent to take such action as it may consider proper, whether with or
without any such security or indemnity. All rights of action under this
Agreement or under any of the Warrants may be enforced by the Warrant Agent
without the possession of any of the Warrant Certificates or the production
thereof at any trial or other proceeding relative thereto, and any such
action, suit or proceeding instituted by the Warrant Agent shall be brought
in its name as Warrant Agent, and any recovery of judgment shall be for the
ratable benefit of the registered holders of the Warrants, as their
respective rights or interests may appear.
16.7 The Warrant Agent, and any stockholder, director,
officer or employee thereof, may buy, sell or deal in any of the Warrants
or other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or
lend money to the Company or otherwise act as fully and freely as though it
were not Warrant Agent under this Agreement. Nothing herein shall preclude
the Warrant Agent from acting in any other capacity for the Company or for
any other legal entity.
16.8 The Warrant Agent shall act hereunder solely as
agent for the Company, and its duties shall be determined solely by the
provisions hereof. The Warrant Agent shall not be liable for anything which
it may do or refrain from doing in connection with this Agreement except
for its own negligence or bad faith.
16.9 The Warrant Agent shall account promptly to the
Company with respect to Warrants exercised and concurrently pay to the
Company all moneys received by the Warrant Agent on the purchase of Shares
through the exercise of Warrants.
17. Change of Warrant Agent. The Warrant Agent or any successor
Warrant Agent may resign and be discharged from its duties under
this Agreement upon thirty (30) days' notice in writing mailed to
the Company and to each transfer agent of the Common Stock by
registered or certified mail. The Company may remove the Warrant
Agent or any successor Warrant Agent upon thirty (30) days' notice
in writing mailed to the Warrant Agent or successor Warrant Agent,
as the case may be, and to each transfer agent of the Common Stock
by registered or certified mail. If the Warrant Agent shall resign
or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Warrant Agent. If the
Company shall fail to make such appointment within a period of
thirty (30) days after giving notice of such removal or after it
has been notified in writing of such resignation or incapacity by
the resigning or incapacitated Warrant Agent, then the Holder of
any Warrant Certificate may apply to any court of competent
jurisdiction for the appointment of a new Warrant Agent.
Notwithstanding any provision to the contrary contained herein,
the removal or resignation of the Warrant Agent will not be
effective until such time as a successor Warrant Agent has been
appointed in accordance with the terms of this Agreement. Any
successor Warrant Agent, whether appointed by the Company or by a
court, shall be (a) a corporation or other entity organized and
doing business under the laws of the United States or of the State
of New York (or of any other state of the United States so long as
such corporation is authorized to do business as a banking
institution in the State of New York); in good standing, having a
principal office in the State of New York, which is authorized
under such laws to exercise corporate trust or stock transfer
powers and is subject to supervision or examination by federal or
state authority and which has at the time of its appointment as
Warrant Agent a combined capital and surplus of at least fifty
million dollars ($50,000,000) or (b) an affiliate of a corporation
described in clause (a) of this sentence. After appointment, the
successor Warrant Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally
named as Warrant Agent without further act or deed; but the
predecessor Warrant Agent shall deliver and transfer to the
successor Warrant Agent any property at the time held by it
hereunder and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than
the effective date of any such appointment, the Company shall file
notice thereof in writing with the predecessor Warrant Agent and
each transfer agent of the Common Stock and mail a notice thereof
in writing to the Holders of the Warrant Certificates. Failure to
give any notice provided for in this Section 17, or any defect
therein, shall not affect the legality or validity of the
resignation or removal of the Warrant Agent or the appointment of
the successor Warrant Agent, as the case may be.
18. Issuance of New Warrant Certificates. Notwithstanding any of the
provisions of this Agreement or of the Warrants to the contrary,
the Company may, at its option, issue new Warrant Certificates
evidencing Warrants in such form as may be approved by its Board
of Directors to reflect any adjustment or change in the Exercise
Price per Share and the number or kind or class of shares or other
securities or property, purchasable under the Warrant Certificates
made in accordance with the provisions of this Agreement.
19. Notice of Certain Events. In case the Company shall propose (a) to
pay any dividend payable in stock of any class to the Holders of
Common Stock or to make any other distribution to the Holders of
Common Stock (other than ordinary cash dividends or distributions
paid out of the Company's current earnings) or (b) to offer to the
Holders of Common Stock rights or warrants to subscribe for or to
purchase any additional Shares or shares of stock of any class or
any other securities, rights or options, or (c) to effect any
reclassification of its Common Stock (other than a
reclassification involving only the subdivision of outstanding
Shares), or (d) to effect any consolidation or merger into or
with, or to effect any sale or other transfer (or to permit one or
more of its subsidiaries to effect any sale or other transfer), in
one or more transactions, of more than fifty percent (50%) of the
assets of the Company and its subsidiaries (taken as a whole) to
any other person, or (e) to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company
shall give to each Holder of a Warrant Certificate, in accordance
with Section 20 hereof, a notice of such proposed action, which
shall specify the record date for the purposes of such stock
dividend, distribution of rights or warrants, or the date on which
such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the
date of participation therein by the Holders of the Shares, if any
such date is to be fixed, and such notice shall be so given in the
case of any action covered by clause (a) or (b) above at least
twenty (20) days prior to the record date for determining Holders
of the Shares for purposes of such action, and in the case of any
such other action, at least twenty (20) days prior to the date of
the taking of such proposed action or the date of participation
therein by the Holders of the Shares, whichever shall be the
earlier. Failure to publish, mail or receive such notice or any
defect therein or in the publication or mailing thereof shall not
affect the validity of any action taken in connection with such
dividend, distribution or subscription rights, or such proposed
dissolution, liquidation or winding up.
20. Notices. Notices or demands authorized by this Agreement to be
given or made by the Warrant Agent or by the Holder of any Warrant
Certificate to or on the Company shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed
(until another address is filed in writing with the Warrant Agent)
as follows:
McLeodUSA Incorporated
0000 X Xxxxxx XX,
Xxxxx Xxxxxx, Xxxx 00000.
Attn: General Counsel
Any notice or demand authorized by this Agreement to be given or made by
the Company or by the Holder of any Warrant Certificate to or on the
Warrant Agent shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing
with the Company) as follows:
Xxxxx Fargo Bank Minnesota, N.A.
000 Xxxxx Xxxxxxx Xxxxxxxx
Xxxxx Xx. Xxxx, XX 00000
Attn: Shareowner Relations Department
Notices or demands authorized by this Agreement to be given or made by the
Company or the Warrant Agent to the holder of any Warrant Certificate shall
be sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such Holder at the address of such Holder as shown on the
Warrant Register.
21. Supplements and Amendments. The Company and the Warrant Agent may
from time to time supplement or amend this Agreement without
approval of any holders of Warrant Certificates in order (i) to
cure any ambiguity, (ii) to correct or supplement any provision
contained herein which may be defective or inconsistent with any
other provisions herein, or (iii) to change or supplement the
provisions hereunder in any manner which the Company may deem
necessary or desirable; provided, that, in any such case, such
change or supplement does not adversely affect the interests of
the holders of Warrant Certificates; provided, further, that in no
event will an amendment or supplement to this Agreement that
increases the aggregate number of Shares for which Warrants may be
issued under this Agreement to provide for the treatment of
fractional Warrants under the Plan be deemed to adversely affect
the holders of Warrant Certificates. Upon the delivery of a
certificate from an appropriate officer of the Company which
states that the proposed supplement or amendment is in compliance
with the terms of this Section 21, the Warrant Agent shall execute
such supplement or amendment.
22. Determination and Actions by the Board of Directors, etc. For all
purposes of this Agreement, any calculation of the total number of
shares of Common Stock Outstanding at any particular time shall be
made on a fully diluted basis. The Board of Directors of the
Company shall have the exclusive power and authority to administer
this Agreement and to exercise all rights and powers specifically
granted to the Board of Directors, or the Company, or as may be
necessary or advisable in the administration of this Agreement,
including, without limitation, the right and power to (i)
interpret the provisions of this Agreement and (ii) make all
determinations deemed necessary or advisable for the
administration of this Agreement (including a determination to
amend this Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of
clause (y) below, all omissions with respect to the foregoing)
which are done or made by the Board of Directors in good faith
shall (x) be final, conclusive and binding on the Company, the
Warrant Agent, the Holders of the Warrant Certificates and all
other parties absent manifest error and (y) not subject the Board
of Directors to any liability to the Holders of the Warrant
Certificates.
23. No Rights as Stockholders. Nothing contained in this Agreement or
in any of the Warrants shall be construed as conferring upon the
holders or their transferees any rights whatsoever as stockholders
of the Company, including, without limitation, the right to vote
or to receive dividends or to consent to or to receive notice as
stockholders in respect of any meeting of stockholders for the
election of directors of the Company or on any other matter.
24. Registration Rights. Upon receipt of a written request, the
Company agrees to negotiate in good faith to enter into a
registration rights agreement within 90 days of such request with
(i) any Holder of Warrants who, as of the date of issuance of the
Warrants, is the beneficial owner of more than 10% of the
outstanding voting stock of the Company or (ii) any Holder having
a representative on the Board of Directors of the Company
resulting in such Holder being deemed to be an affiliate of the
Company and thereby requiring registration rights; provided that
the aggregate market value (based on the Fair Market Value of the
Common Stock on the date the Company receives such request) of the
securities of such Holder to be registered must be at least
$5,000,000. Such registration rights agreement shall provide for
limited shelf registration rights to facilitate resales of Common
Stock issuable upon exercise of the Warrants by such Holder and
include customary terms and conditions for such agreements,
including reimbursement of registration expenses and "blackout"
periods.
25. Successors. All the covenants and provisions of this Agreement by
or for the benefit of the Company, the Warrant Agent or the
Holders shall bind and inure to the benefit of their respective
successors and assigns hereunder, whether by merger or otherwise.
26. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the
Company, the Warrant Agent and the Holders any legal or equitable
right, remedy or claim under this Agreement, and this Agreement
shall be for the sole and exclusive benefit of the Company, the
Warrant Agent and the Holders of the Warrants.
27. Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of
this Agreement shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.
28. Governing Law. This Agreement, each Warrant and each Warrant
Certificate issued hereunder shall be deemed to be a contract made
under the laws of the State of Delaware and for all purposes shall
be governed by and construed in accordance with the laws of such
State applicable to contracts to be made and to be performed
entirely within such State.
29. Descriptive Headings. Descriptive headings of the several Sections
of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the
provisions hereof.
30. Counterparts. This Agreement may be executed in any number of
counterparts each of which so executed shall be deemed to be an
original; but such counterparts together shall constitute but one
and the same instrument.
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the day, month and year first above written.
MCLEODUSA INCORPORATED
By: /s/ Xxxxxxx Rings
---------------------------
Name: Xxxxxxx Rings
Title: Group Vice President
XXXXX FARGO BANK MINNESOTA, N.A.,
As Warrant Agent
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
EXHIBIT A
VOID AFTER 5:00 P.M.
NEW YORK CITY TIME, ON
APRIL16, 2007
No._________ ______ Warrants
WARRANT CERTIFICATE FOR PURCHASE OF
COMMON STOCK OF
MCLEODUSA INCORPORATED
This certifies that, for value received, _______________, or
registered assigns, is the owner of the number of Warrants set forth above,
each of which entitles the owner to purchase, subject to the terms and
conditions hereof and of the Warrant Agreement mentioned below, at any time
after the date hereof and prior to the Expiration Date (as herein defined),
one share of the Class A common stock, par value $.01 per share (the
"Common Stock"), of McLeodUSA Incorporated, a Delaware corporation (the
"Company"), at the exercise price equal to $1.3538462 per share payable (i)
by cashier's check, official bank check or money order made payable to the
order of the Company or wire transfer of funds to an account designated by
the Company or (ii) by the surrender of this Warrant to the Company, with a
duly executed exercise notice marked to reflect "Cashless Exercise," upon
surrender of this Warrant Certificate with the form of Election to Exercise
on the reverse hereof duly completed and executed together with payment of
the exercise price at the office or agency of the Warrant Agent (as defined
in the Warrant Agreement) in the City of South St. Xxxx, State of
Minnesota.
This Warrant Certificate and each Warrant represented hereby are
issued pursuant to, and are subject to all of the terms, provisions and
conditions of, that certain Warrant Agreement dated as of April 12, 2002
(hereinafter called the "Warrant Agreement"), between the Company and the
Warrant Agent, to all of which terms, provisions and conditions the
registered holder of this Warrant Certificate consents by acceptance
hereof. The Warrant Agreement and the summary of its terms set forth on the
reverse side of this Warrant Certificate are hereby incorporated into this
Warrant Certificate by reference and made a part of this Warrant
Certificate. The Warrant Agreement sets forth the terms and conditions
under which the exercise price of a Warrant, the type of shares or other
consideration to be received upon exercise of the Warrant, and/or the
number of shares to be received upon exercise of a Warrant are or may be
adjusted. Reference is hereby made to the Warrant Agreement for a full
description of the rights, limitations of rights, obligations, duties and
immunities hereunder of the Warrant Agent, the Company and the holders of
the Warrant Certificates or Warrants. In the event of any conflict between
the provisions of this Warrant Certificate and the Warrant Agreement, the
provisions of the Warrant Agreement shall control.
Copies of the Warrant Agreement are available for inspection at the
South St. Xxxx office of the Warrant Agent, Xxxxx Fargo Bank Minnesota, N.A
, or may be obtained upon written request addressed to the Secretary,
McLeodUSA Incorporated, 0000 X Xxxxxx XX, Xxxxx Xxxxxx, Xxxx 00000. The
Company shall not be required upon the exercise of the Warrants evidenced
by this Warrant Certificate to issue fractions of Warrants or shares, but
shall make adjustment therefor in cash on the basis of the Fair Market
Value of any fractional interest as provided in the Warrant Agreement.
The Warrants evidenced by this Warrant Certificate shall expire at
5:00 p.m., New York City time, on April 16, 2007; provided that if such
date shall not be a Business Day (as defined below), then 5:00 P.M., New
York City Time, on the next following day which is a Business Day
("Expiration Date"). As used herein, the term "Business Day" shall mean a
day which is not a Saturday or Sunday and which is not, in the State of New
York, a holiday or a day on which banks are authorized to close.
This Warrant Certificate shall not be valid unless countersigned by
the Warrant Agent, as that term is used in the Warrant Agreement.
Witness the facsimile signatures of the duly authorized officers of
the Company.
DATED: ,
MCLEODUSA INCORPORATED
By:_________________________
President
Attest:________________________
Secretary
COUNTERSIGNED:
XXXXX FARGO BANK MINNESOTA, N.A,
Warrant Agent
By:___________________________________
Authorized Signature
SUMMARY OF TERMS OF WARRANT AGREEMENT
The Warrant Agreement provides that, if the initial purchase price set
forth on the face of this Warrant Certificate (the "Exercise Price") is
adjusted from time to time for reasons enumerated in the Warrant Agreement,
the number of shares purchasable upon the exercise of each Warrant
represented by this Warrant Certificate and the type of securities or other
property subject to purchase upon the exercise of each Warrant represented
by this Warrant Certificate are subject to modification or adjustment.
The Warrants evidenced by this Warrant Certificate shall be
exercisable until 5:00 p.m., New York City time, on April 16, 2007;
provided that if such date shall not be a Business Day, then 5:00 P.M., New
York City Time, on the next following day which is a Business Day.
In the event that upon any exercise the number of Warrants exercised
shall be fewer than the total number of Warrants represented hereby, there
shall be issued to holder hereof or his assignee a new Warrant Certificate
evidencing the Warrants not so exercised.
The Company shall not be required to issue fractions of shares or any
certificates which evidence fractional shares. In lieu of a fractional
share there shall be paid to the registered holder of a Warrant with regard
to which the fractional share would be issuable an amount in cash equal to
the same fraction of the Fair Market Value (as determined under the Warrant
Agreement) of a share.
The Company and the Warrant Agent may deem and treat the registered
holder of this Warrant Certificate as the absolute owner hereof and the
Warrants represented by this Warrant Certificate (notwithstanding any
notation of ownership or other writing hereon made by anyone) for the
purpose of any exercise of such Warrants and for all other purposes, and
neither the Company nor the Warrant Agent shall be affected by any notice
to the contrary.
Prior to the exercise of the Warrants represented hereby, the
registered holder of this Warrant Certificate, as such, shall not be
entitled to vote on or be deemed the holder of Common Stock or any other
securities of the Company which may at any time be issuable on the exercise
hereof for any purpose, and nothing contained in the Warrant Agreement or
herein shall be construed to confer upon the holder of this Warrant
Certificate, as such, any of the rights of a stockholder of the Company,
including, without limitation, the right to vote upon any matter submitted
to stockholders of the Company, to receive dividends or other
distributions, to exercise any preemptive rights or to receive any notice
of any proceedings of the Company (except as provided in the Warrant
Agreement).
Upon surrender of this Warrant Certificate with the form of Assignment
below duly completed, accompanied by payment of an amount equal to any
applicable transfer tax, at the office or agency of the Warrant Agent
indicated on the face of this Warrant Certificate, a new Warrant
Certificate or Certificates representing the Warrants represented by this
Warrant Certificate shall be issued to the transferee; provided, however,
that if the registered holder of this Warrant Certificate elects to
transfer fewer than all of the Warrants represented by this Warrant
Certificate, a new Warrant Certificate for the Warrants not so transferred
shall be issued to such registered holder. This Warrant Certificate,
together with other Warrant Certificates, may be exchanged by the
registered holder for another Warrant Certificate or Certificates of
different denominations, of like tenor and representing in the aggregate
Warrants equal in number to the same full number of Warrants represented by
this Warrant Certificate and any other Warrant Certificate so exchanged
with the form of Assignment duly completed and executed. Certificates for
fractions of a Warrant will not be issued upon any exchange or transfer.
If the day of receipt of this Warrant Certificate with the form of
Election to Exercise duly filled in and executed, accompanied by payment of
the Exercise Price (either in cash or pursuant to a "Cashless Exercise")
for the shares specified in the form of Election to Exercise (and of an
amount to any applicable taxes or governmental charges), shall occur within
any period during which the transfer books for the Company's Common Stock
or other class of stock purchasable upon the exercise of the Warrants
evidenced by this Warrant Certificate are closed for any purpose, the
Company shall not be required to make delivery of certificates for shares
purchasable upon such exercise, and the person entitled to receive delivery
of such certificates shall not be deemed to have become a holder of record
of such shares, until the next succeeding Business Day on which the
transfer books of the Company are open.
To be printed on reverse side of Warrant Certificate
FORM OF ELECTION TO EXERCISE
Cashless Exercise _______ NO _______ YES
(See Section 5(c) of the Warrant Agreement)
The undersigned hereby irrevocably elects to exercise Warrants
evidenced by this Warrant Certificate, and to purchase full shares (the
"Shares"), of the Class A common stock, par value $.01 per share (the
"Common Stock") of McLeodUSA Incorporated, a Delaware corporation (the
"Company"), issuable upon exercise of such Warrants, and, unless "Cashless
Exercise" is marked "Yes" above, herewith tenders payment for such Shares
in the amount of $ in accordance with the terms hereof. The undersigned
requests that a certificate for such Shares be registered in the name of
whose address is , and
whose social security number or other identifying number is ,
and that such certificate be delivered to
whose address is . If said number of
Shares is less than all of the Shares purchasable hereunder, the undersigned
requests that a new Warrant Certificate evidencing the right to purchase the
remaining balance of the Shares of Common Stock for which this Warrant
Certificate is exercisable be registered in the name of
whose address is and whose social security
number or other identifying number is , . Any
check representing payment to be paid by the Company in lieu of fractional
shares should be made payable to and should be delivered
to whose address is .
Name of registered holder of Warrant:
(Please print)
Address:
(Please print)
Signature(s):
NOTE: The above
signature(s) must
correspond with the
name written upon the
face of this Warrant
Certificate in every
particular, without
alteration or
enlargement or any
change whatever. If
this Warrant is held
of record by two or
more joint owners,
all such owners must
sign.
Dated: , 200_
Signature Guarantee:
(All signatures should be guaranteed
by an eligible guarantor institution
(Banks, Stockbrokers, Savings and
Loan Associations and Credit Unions
with membership in an approved
signature guarantee medallion
program), pursuant to SEC Rule 17Ad-15)
FORM OF ASSIGNMENT
(To be signed only upon assignment of Warrant Certificate)
FOR VALUE RECEIVED, hereby sells, assigns
and transfers unto
whose address is
and whose social security number or other identifying number is ,
the Warrant Certificate, together with all right, title and interest therein
and to the Warrants represented thereby, and does hereby irrevocably
constitute and appoint , attorney, to transfer
said Warrant Certificate on the books of the Company, with full power of
substitution in the premises.
Signature(s)
NOTE: The above
signature(s) must
correspond with the
name written upon the
face of this Warrant
Certificate in every
particular, without
alteration or
enlargement or any
change whatever. If
this Warrant is held
of record by two or
more joint owners,
all such owners must
sign.
Dated: , 200_
Signature Guarantee:
(All signatures should be guaranteed by an
eligible guarantor institution (Banks,
Stockbrokers, Savings and Loan Associations
and Credit Unions with membership in an
approved signature guarantee medallion
program), pursuant to SEC Rule 17Ad-15)
