EXHIBIT 99.1
STOCK OPTION AGREEMENT
([Name of Stockholder])
STOCK OPTION AGREEMENT (this "Option Agreement"), dated as of January 6,
2000, by and between McLeodUSA Incorporated, a Delaware corporation
("Acquiror"), and __________________ (the "Stockholder"), a significant
stockholder of Splitrock Services, Inc., a Delaware corporation (the "Company").
WITNESSETH:
WHEREAS, concurrently with the execution and delivery of this Option
Agreement, Acquiror, the Company, and Southside Acquisition Corporation, a
Delaware corporation ("Acquiror Sub"), are entering into an Agreement and Plan
of Merger, dated as of the date hereof (the "Merger Agreement"), which provides
that, among other things, upon the terms and subject to the conditions thereof,
Acquiror Sub will be merged with and into the Company (the "Merger"), with the
Company continuing as the surviving corporation; and
WHEREAS, as a condition to the willingness of Acquiror to enter into the
Merger Agreement, Acquiror has required that the Stockholder agree, and in order
to induce Acquiror to enter into the Merger Agreement the Stockholder has
agreed, to grant Acquiror an irrevocable option to purchase up to that number of
shares of common stock, par value $.001 per share, of the Company ("Company
Common Stock") as set forth on Annex A hereto which are owned (beneficially or
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of record) or hereafter acquired by the Stockholder (the "Shares").
NOW, THEREFORE, to induce Acquiror to enter into the Merger Agreement and
in consideration of the representations, warranties, covenants and agreements
set forth herein and in the Merger Agreement, the parties hereto, intending to
be legally bound, hereby agree as follows. Capitalized terms used herein but not
defined herein shall have the meanings set forth in the Merger Agreement.
1. GRANT OF OPTION. The Stockholder hereby grants Acquiror an irrevocable
option (the "Option") to purchase the Shares on the terms and subject to the
conditions set forth below.
2. EXERCISE OF OPTION.
(a) EXERCISE. At any time or from time to time prior to the
termination of the Option granted hereunder in accordance with the terms of this
Option Agreement, Acquiror (or a wholly owned subsidiary of Acquiror designated
by Acquiror) may exercise the Option, in whole or in part, if on or after the
date hereof:
(i) any corporation, partnership, individual, trust,
unincorporated association, or other entity or person (as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) other than Acquiror or any of its affiliates (as defined
in the Exchange Act) (a "Third Party"), shall have:
(A) commenced or announced an intention to commence a bona
fide tender offer or exchange offer for any shares of the Company
Common Stock, the consummation of which would result in beneficial
ownership (as defined under Rule 13d-3 of the Exchange Act) by such
Third Party (together with all such Third Party's affiliates and
associates (as such term is defined in the Exchange Act)) of 15% or
more of the then voting equity of the Company (either on a primary or
a fully diluted basis);
(B) filed a Notification and Report Form under the Xxxx-
Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), reflecting an intent to acquire the Company or any assets or
securities of the Company; or
(C) solicited proxies in a solicitation subject to the proxy
rules under the Exchange Act, executed any written consent or become a
participant in any solicitation (as such terms are defined in
Regulation 14A under the Exchange Act), in each case with respect to
the Company Common Stock; or
(ii) the events described in Section 8.01(b)(iv), (c)(i),
(c)(ii), (c)(iii) or (e) of the Merger Agreement or any other event that
would require the Company to pay Acquiror the Company Termination Fee set
forth in Section 8.03 of the Merger Agreement occurs (but without the
necessity of Acquiror having terminated the Merger Agreement) or, if the
Stockholder entered into a Company Stockholder Voting Agreement with
Acquiror, upon a material breach of such Company Stockholder Voting
Agreement.
Each of the events described in clauses (i) and (ii) hereof shall be
referred to herein as a "Trigger Event." The Stockholder shall notify
Acquiror promptly in writing of the occurrence of any Trigger Event;
however, such notice shall not be a condition to the right of Acquiror to
exercise the Option.
(b) EXERCISE PROCEDURE. In the event Acquiror wishes to exercise the
Option, Acquiror shall deliver to the Stockholder a written notice (an "Exercise
Notice") specifying the total number of the Shares it wishes to purchase.
Provided that the conditions set forth in Section 3 hereof to the Stockholder's
obligation to sell the Shares to Acquiror hereunder have been satisfied or
waived, Acquiror shall, upon delivery of the Exercise Notice and tender of the
applicable
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aggregate Exercise Price (as defined below), immediately be deemed to be the
holder of record of the Shares purchasable upon such exercise, notwithstanding
that the stock transfer books of the Company shall then be closed or that
certificates representing such Shares shall not theretofore have been delivered
to Acquiror. Each closing of a purchase of the Shares (a "Closing") shall occur
at a place, on a date and at a time designated by Acquiror in an Exercise Notice
delivered at least two (2) business days prior to the date of the Closing.
(c) TERMINATION OF THE OPTION. The Option shall terminate upon the
earliest of: (i) the Effective Time of the Merger; (ii) the termination of the
Merger Agreement pursuant to Section 8.01(a), (b)(i), (b)(ii), (b)(iii), (c)(iv)
or (d) thereof; and (iii) nine (9) months following the termination of the
Merger Agreement pursuant to Section 8.01(b)(iv), (c)(i), (c)(ii), (c)(iii) or
(e) thereof. Notwithstanding the foregoing, if the Option cannot be exercised
by reason of any applicable judgment, decree, order, law or regulation, the
Option shall remain exercisable and shall not terminate until the earlier of (x)
the date on which such impediment shall become final and not subject to appeal,
and (y) 5:00 p.m. New York City Time, on the tenth (10th) business day after
such impediment shall have been removed. Notwithstanding the termination of the
Option, Acquiror shall be entitled to purchase the Shares with respect to which
Acquiror had exercised the Option prior to such termination.
(d) EXERCISE PRICE. The purchase price per share of Company Common
Stock purchased pursuant to the Option (the "Exercise Price") shall be (i) an
amount in cash equal to the product of (x) the Exchange Ratio multiplied by (y)
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the average closing price of Acquiror Common Stock (as defined below) for the
five (5) trading days preceding the date the Option is exercised (the "Cash
Exercise Price") or (ii) a number of shares of Class A common stock, par value
$.01 per share, of Acquiror ("Acquiror Common Stock") equal to the Exchange
Ratio (the "Stock Exercise Price"); provided, however, that the aggregate Cash
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Exercise Price paid to the Stockholder when aggregated with all other cash
purchases of Company Common Stock including cash in lieu of fractional shares by
Acquiror shall be limited to that amount of cash that would permit any
subsequent acquisition of the Company by Acquiror that occurs to qualify as a
tax free reorganization under the provisions of Section 368(a) of the Code.
(e) ADDITIONAL CONSIDERATION. Notwithstanding the terms of this
Section 2 or any other provision in this Option Agreement, in the event that (i)
Acquiror exercises in whole or in part the Option granted in this Option
Agreement and (ii) the Company thereafter consummates a Company Subsequent
Alternate Transaction (as defined in Sec. 8.03(b) of the Merger Agreement)
within twelve months of the exercise of the Option, Acquiror shall pay the
Stockholder an amount of additional consideration equal to 50% of the difference
between the applicable aggregate Exercise Price previously paid by Acquiror to
the Stockholder and the aggregate amount received by Acquiror in the Company
Subsequent
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Alternate Transaction for any or all of the Shares. The form of such additional
consideration shall be in the sole discretion of Acquiror and may be cash,
additional shares of Acquiror Common Stock or the form of consideration received
by Acquiror in the Company Subsequent Alternate Transaction; provided, however,
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that Acquiror shall not be permitted to pay such additional consideration in the
form of Acquiror Common Stock unless there shall not have occurred an Acquiror
Material Adverse Effect.
(f) PRO RATA EXERCISE. In the event Acquiror determines to exercise
the Option in whole or in part, Acquiror hereby covenants and agrees that it
will purchase the aggregate number of shares of Company Common Stock being
sought pro rata from the stockholders who have entered into Option Agreements in
connection with the execution and delivery of the Merger Agreement.
3. CONDITIONS TO CLOSING. The obligation of the Stockholder to sell the
Shares to Acquiror hereunder is subject to the conditions that (a) all waiting
periods, if any, under the HSR Act applicable to the sale of the Shares by
Stockholder and the acquisition of such Shares by Acquiror hereunder shall have
expired or have been terminated; (b) all consents, approvals, orders or
authorizations of, or registrations, declarations or filings with, any federal,
state or local administrative agency or commission or other federal, state or
local governmental authority or instrumentality, if any, required in connection
with the sale of the Shares by the Stockholder and the acquisition of such
Shares by Acquiror hereunder shall have been obtained or made, as the case may
be; and (c) no preliminary or permanent injunction or other order by any court
of competent jurisdiction prohibiting or otherwise restraining such sale shall
be in effect.
4. CLOSING. At any Closing,
(a) the Stockholder shall deliver to Acquiror a certificate or
certificates evidencing the Shares being purchased, duly endorsed in blank, or
with appropriate stock powers, duly executed in blank, in proper form for
transfer, with the signature of the Stockholder thereon guaranteed, and with all
applicable taxes paid or provided for;
(b) Acquiror shall deliver to the Stockholder (i) by wire transfer of
immediately available funds to the account or accounts specified in writing by
the Stockholder the aggregate Cash Exercise Price for the Shares so designated
and being purchased for cash, and (ii) one or more certificates representing
shares of Acquiror Common Stock equal to the aggregate Stock Exercise Price for
the Shares so designated and being purchased by delivery of Acquiror Common
Stock; and
(c) at which Acquiror is exercising the Option in part, Acquiror shall
present and surrender this Option Agreement to the Stockholder, and the
Stockholder shall deliver to Acquiror an executed new agreement with the same
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terms as this Option Agreement evidencing the right to purchase the balance of
the Shares purchasable hereunder.
5. RESTRICTIONS ON TRANSFER; NON-INTERFERENCE. Except as contemplated by
this Option Agreement and the Merger Agreement and the transactions contemplated
thereby, the Stockholder hereby agrees not to, prior to the termination of this
Option Agreement, (a) directly or indirectly sell, transfer, pledge, encumber,
assign or otherwise dispose of, or enter into any contract, option or other
arrangement or understanding with respect to the sale, transfer, pledge,
encumbrance, assignment or other disposition of, any of the Shares, or (b) take
any other action which would have the effect of preventing or inhibiting the
Stockholder from performing the Stockholder's obligations under this Option
Agreement, except to the extent (i) any such transfer as referred to in (a)
above is approved in advance in writing by Acquiror and (ii) the transferee of
the Shares, prior to and as a condition to such transfer, executes and delivers
to Acquiror an agreement in substantially the form of this Option Agreement.
6. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. The Stockholder
represents, warrants, and covenants to Acquiror that:
(a) the Stockholder, if an entity, is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power and authority to execute and deliver
this Option Agreement, to grant the Option and to consummate the transactions
contemplated hereby;
(b) the Stockholder, if an individual, has the legal capacity and all
other power and authority necessary to execute and deliver this Option
Agreement, to grant the Option and to consummate the transactions contemplated
hereby;
(c) if the Stockholder is an entity, the execution and delivery of
this Option Agreement by the Stockholder and the consummation by the Stockholder
of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of the Stockholder and no other corporate
proceedings on the part of the Stockholder are necessary to authorize this
Option Agreement or any of the transactions contemplated hereby;
(d) the execution and delivery of this Option Agreement by the
Stockholder do not, and the performance of this Option Agreement by the
Stockholder will not, (i) conflict with or violate the organizational documents
of the Stockholder, if the Stockholder is an entity, (ii) conflict with or
violate any law, rule, regulation, order, judgment or decree applicable to the
Stockholder or by which the Stockholder or any of the Stockholder's properties
is bound or affected, or (iii) result in any breach of or constitute a default
(or an event that with notice or lapse of time
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or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the property or assets of the
Stockholder, including, without limitation, the Shares, pursuant to any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Stockholder is a party
or by which the Stockholder or any of the Stockholder's properties is bound or
affected, except with respect to (ii) and (iii) above, as would not materially
adversely affect the ability of the Stockholder to perform his or its
obligations under the Option Agreement;
(e) the execution and delivery of this Option Agreement by the
Stockholder do not, and the performance of this Option Agreement by the
Stockholder will not, require any consent, approval, authorization or permit of,
or filing with or notification to, any governmental or regulatory authority,
domestic or foreign, except for applicable requirements, if any, of the Exchange
Act, the Securities Act of 1933, as amended (the "Securities Act"), state
securities laws and the HSR Act;
(f) this Option Agreement has been duly executed and delivered by the
Stockholder and constitutes a valid and binding obligation of the Stockholder,
and, assuming this Option Agreement constitutes a valid and binding obligation
of Acquiror, is enforceable against the Stockholder in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other laws affecting the
rights and remedies of creditors generally and general principles of equity
(whether considered in a proceeding in equity or at law);
(g) the Stockholder (i) is the record and beneficial owner of the
Shares, free and clear of any pledge, lien, security interest, charge, claim,
equity, option, proxy, voting restriction, right of first refusal or other
limitation on disposition or encumbrance of any kind ("Encumbrances"), other
than pursuant to this Option and the Company Stockholder Voting Agreement, and
(ii) has full right, power and authority to sell, transfer and deliver the
Shares pursuant to this Option Agreement; and
(h) upon delivery of the Shares and payment of the aggregate Exercise
Price therefor as contemplated herein, Acquiror will receive good and valid
title to the Shares, free and clear of any Encumbrances.
7. INVESTMENT REPRESENTATIONS OF THE STOCKHOLDER. The Stockholder
represents, warrants, and covenants to Acquiror as follows:
(a) the Stockholder understands that any issuance of Acquiror Common
Stock to the Stockholder pursuant to this Option Agreement (the "Restricted
Securities") is intended to be exempt from registration under the
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Securities Act by virtue of Section 4(2) of the Securities Act or Regulation D
promulgated thereunder, and that no registration statement relating to the
issuance of the Restricted Securities has been or will be filed with the SEC or
any state securities commission;
(b) the Stockholder intends to acquire the Restricted Securities
solely for its own account, for investment purposes only and not with a view to
the resale or distribution other than pursuant to an effective resale
registration statement;
(c) the Stockholder agrees not to sell (other than pursuant to an
effective resale registration statement), transfer, exchange, pledge or
otherwise dispose of, or make any offer or agreement relating to the Restricted
Securities and/or any option, right or other interest with respect to the
Restricted Securities that the Stockholder may acquire, unless: (i) counsel
representing the Stockholder, which counsel is reasonably satisfactory to
Acquiror and Acquiror's legal counsel, shall have advised Acquiror in a written
opinion letter satisfactory to Acquiror and Acquiror's legal counsel, and upon
which Acquiror and Acquiror's legal counsel may rely, that no registration under
the Securities Act would be required in connection with the proposed sale,
transfer, exchange, pledge or other disposition, and (ii) all transferees (and
other subsequent transferees) who receive the Restricted Securities agree to be
bound by the investment and other restrictions to which the Stockholder was
subject;
(d) the Stockholder is an "accredited investor" as defined in Rule 501
of Regulation D under the Securities Act, has the capacity to protect such
Stockholder's interests in connection with this Option Agreement, and has such
knowledge and experience in financial, tax and business matters to be capable of
evaluating the merits and risks of an investment in the Restricted Securities
and in protecting the Stockholder's interests in connection with the investment
and, in the Stockholder's judgment, has obtained sufficient information from
Acquiror to evaluate the merits and risks of an investment in the Restricted
Securities;
(e) the Stockholder acknowledges that (i) it has conducted its own
investigation and review of the business and affairs of Acquiror, (ii) it has
not relied on any representations or warranties of Acquiror concerning the
business and affairs of Acquiror or an investment in the Shares, (iii) it has
had the opportunity to ask questions of and receive information and answers from
Acquiror concerning the terms and conditions of this Option Agreement, the
Restricted Securities and other matters pertaining to an investment in the
Restricted Securities, and (iv) it has been given the opportunity to verify the
information provided to it in order for the Stockholder to evaluate the merits
and risks of an investment in the Restricted Securities, and all such questions
have been answered and all such information has been provided to the full
satisfaction of the Stockholder;
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(f) the Stockholder further acknowledges, represents, agrees and is
aware that the representations, warranties, agreements, undertakings and
acknowledgments made by the Stockholder in this Option Agreement are made with
the intent that they be relied upon by Acquiror in determining the suitability
of the Stockholder as an investor in the Restricted Securities; and
(g) the Stockholder undertakes to notify Acquiror immediately of any
change in any representation, warranty or other information relating to the
Stockholder set forth herein.
8. REPRESENTATIONS AND WARRANTIES OF ACQUIROR. Acquiror represents,
warrants and covenants to the Stockholder that:
(a) Acquiror is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has the corporate
power and authority to execute and deliver this Option Agreement and to
consummate the transactions contemplated hereby;
(b) the execution and delivery of this Option Agreement by Acquiror
and the consummation by Acquiror of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Acquiror
and no other corporate proceedings on the part of Acquiror are necessary to
authorize this Option Agreement or any of the transactions contemplated hereby;
(c) this Option Agreement has been duly executed and delivered by
Acquiror and constitutes a valid and binding obligation of Acquiror, and,
assuming this Option Agreement constitutes a valid and binding obligation of the
Stockholder, is enforceable against Acquiror in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other laws affecting the rights and
remedies of creditors generally and general principles of equity (whether
considered in a proceeding in equity or at law);
(d) the execution and delivery of this Option Agreement by Acquiror
does not, and the performance of this Option Agreement by Acquiror will not, (i)
conflict with or violate the organizational documents of Acquiror, (ii) conflict
with or violate any law, rule, regulation, order, judgment or decree applicable
to Acquiror or by which Acquiror or any of its properties is bound or affected,
or (iii) result in any breach of or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, or result
in the creation of a lien or encumbrance on any of the property or assets of
Acquiror pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which
Acquiror is a party or by which it or any of its properties is bound or
affected, except with respect to (ii) and (iii) above, as
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would not materially adversely affect the business, operations or financial
condition of Acquiror;
(e) the execution and delivery of this Option Agreement by Acquiror do
not, and the performance of this Option Agreement by Acquiror will not, require
any consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, domestic or foreign,
except for applicable requirements, if any, of the Exchange Act, the Securities
Act, the Delaware General Corporation Law, the National Association of
Securities Dealers, Inc., state securities laws and the HSR Act; and
(f) if, as a result of the exercise of the Option granted under this
Option Agreement, the Company is required to make a Change of Control Offer (as
defined in the Indenture relating to the Company's 11 3/4% Senior Notes Due
2008), then (i) Acquiror shall cooperate with the Company to obtain waivers from
senior noteholders or pursue other alternatives to eliminate the Change of
Control Offer requirement and (ii) if such waivers are not received or such
other alternatives do not eliminate the need to make a Change of Control Offer,
then Acquiror will purchase any senior notes the Company would otherwise be
obligated to purchase pursuant to such Change of Control Offer.
9. INVESTMENT REPRESENTATIONS OF ACQUIROR. Acquiror represents, warrants,
and covenants to the Stockholder and the Company as follows (except as
contemplated by this Option Agreement and the Merger Agreement and the
transactions contemplated thereby):
(a) Acquiror does not now have, and as of any Closing will not have,
any present plan or intention to sell, transfer, exchange, pledge or otherwise
dispose of, or to effect any other transaction which would result in a reduction
in the risk of ownership of, the Shares;
(b) Acquiror understands that any sale of the Shares hereunder is
intended to be exempt from registration, and that no registration statement
relating to the sale of the Shares in connection with this Option Agreement has
been or will be filed with the SEC or any state securities commission;
(c) Acquiror intends to acquire the Shares solely for its own account,
for investment purposes only and not with a view to the resale or distribution
thereof;
(d) Acquiror agrees not to sell, transfer, exchange, pledge or
otherwise dispose of, or make any offer or agreement relating to the Shares
and/or any option, right or other interest with respect to the Shares that
Acquiror may acquire, unless: (i) counsel representing Acquiror, which counsel
is reasonably satisfactory to the Company and the Company's legal counsel, shall
have advised the Company in a written opinion letter satisfactory to the Company
and the
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Company's legal counsel, and upon which the Company and the Company's legal
counsel may rely, that no registration under the Securities Act would be
required in connection with the proposed sale, transfer, exchange, pledge or
other disposition, and (ii) all transferees (and other subsequent transferees)
who receive the Shares agree to be bound by the investment and other
restrictions to which the Stockholder was subject;
(e) Acquiror is an "accredited investor" as defined in Rule 501 of
Regulation D under the Securities Act, has the capacity to protect such
Acquiror's interests in connection with this Option Agreement, and has such
knowledge and experience in financial, tax and business matters to be capable of
evaluating the merits and risks of an investment in the Shares and in protecting
Acquiror's interests in connection with the investment and, in Acquiror's
judgment, has obtained sufficient information from the Company to evaluate the
merits and risks of an investment in the Shares;
(f) Acquiror acknowledges that (i) it has conducted its own
investigation and review of the business and affairs of the Company, (ii) it has
not relied on any representations or warranties of the Company concerning the
business and affairs of the Company or an investment in the Shares, (iii) it has
had the opportunity to ask questions of and receive information and answers from
the Company concerning the terms and conditions of this Option Agreement, the
Shares and other matters pertaining to an investment in the Shares, and (iv) it
has been given the opportunity to verify the information provided to it in order
for Acquiror to evaluate the merits and risks of an investment in the Shares,
and all such questions have been answered and all such information has been
provided to the full satisfaction of Acquiror;
(g) Acquiror further acknowledges, represents, agrees and is aware
that the representations, warranties, agreements, undertakings and
acknowledgments made by Acquiror in this Option Agreement are made with the
intent that they be relied upon by the Stockholder and the Company in
determining the suitability of Acquiror as an investor in the Shares; and
(h) Acquiror undertakes to notify the Company immediately of any
change in any representation, warranty or other information relating to Acquiror
set forth herein.
10. ADJUSTMENT UPON CHANGES IN CAPITALIZATION. In the event of any change
in the Company Common Stock or Acquiror Common Stock by reason of stock
dividends, stock splits, mergers (other than the Merger), recapitalizations,
combinations, exchange of shares or the like, the type and number of shares or
securities subject to the Option, and the purchase price per share provided in
Section 2(d) hereof, shall be adjusted appropriately, and proper provision shall
be made in the agreements governing such transaction so that
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Acquiror shall receive, upon exercise of the Option, the number and class of
shares or other securities or property that Acquiror would have received in
respect of the Company Common Stock if the Option had been exercised immediately
prior to such event or the record date therefor, as applicable.
11. AGREEMENT TO REGISTER ACQUIROR COMMON STOCK.
(a) Subject to Section 11(b) below, within ninety (90) days following
the exercise of the Option in exchange for the Stock Exercise Price, Acquiror
shall prepare and file a registration statement on Form S-3 (the "Resale
Registration Statement") under the Securities Act covering the resale of a
maximum of 25% of Acquiror Common Stock issued to the Stockholder upon exercise
of the Option (the "Registrable Shares"). Acquiror shall thereafter use its
reasonable best efforts to have such Resale Registration Statement declared
effective by the Securities and Exchange Commission ("SEC") as soon after the
filing as practicable and to keep that Resale Registration Statement effective
and current, including through the filing of any amendments and supplements that
may be required under provisions of applicable law, for one year after its
original effectiveness. Acquiror may include other shares of Acquiror Common
Stock on the Resale Registration Statement. At Acquiror's option, Acquiror may
satisfy its obligations under this Section 11 on another form of registration
statement under the Securities Act or by including the Registrable Shares in a
registration statement filed by Acquiror to register shares of Acquiror Common
Stock in either a primary or secondary offering. Acquiror agrees to notify the
Stockholder (i) when the Resale Registration Statement (or any post-effective
amendment thereto) has become effective, (ii) if the SEC has issued any stop
order with respect to the Resale Registration Statement or initiated any
proceedings for that purpose, and (iii) if Acquiror has received any written
notification with respect to the suspension of qualification of any Acquiror
Common Stock for sale in any jurisdiction or on any securities exchange or
market or with respect to the initiation or threat of any proceeding for such
purpose. Acquiror further agrees to furnish the Stockholder such numbers of
copies of a prospectus, in conformity with the requirements of applicable law,
and such other documents as the Stockholder may reasonably request in order to
facilitate the disposition of the Acquiror Common Stock owned by such holder.
(b) Notwithstanding the requirements of Section 11(a) above, the
obligations of Acquiror to file the Resale Registration Statement may be tolled
by Acquiror for up to ninety (90) days if Acquiror is engaged in, or has fixed
plans to engage in, a registered public offering of Acquiror Stock or is engaged
in any other activity which, in the good faith determination of the Board of
Directors of Acquiror, would be materially adversely affected by the filing of
the Resale Registration Statement during the period otherwise required by
Section 11(a) to the material detriment of Acquiror.
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(c) Acquiror will give notice to the Stockholder of the happening of
any event as a result of which the prospectus included in the Resale
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing. The Stockholder shall cease using such prospectus
immediately upon receipt of notice from Acquiror to that effect. If so
requested by Acquiror, the Stockholder shall return promptly to Acquiror any
copies of any prospectus in its possession that contains an untrue statement of
a material fact or omits to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances then existing. At the request of the Stockholder, Acquiror shall
prepare and furnish to the Stockholder 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 light of the circumstances then existing.
(d) (i) Acquiror shall bear all costs incurred in preparing and
filing the Resale Registration Statement including, without limitation, all
applicable legal, accounting, printing, blue sky and SEC filing fees; provided,
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however, that Acquiror shall not be responsible for any underwriting commissions
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or discounts, brokerage fees or legal fees or disbursements incurred by any
person or entity (other than Acquiror) that sells any shares of Acquiror Common
Stock under the Resale Registration Statement. Acquiror shall also bear all
costs of keeping the Resale Registration Statement current during the applicable
period described in Section 11(a).
(ii) Acquiror will indemnify and hold harmless the Stockholder
against any losses, claims, damages or liabilities to which the Stockholder
may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities arise out of or are based upon an
untrue statement or alleged untrue statement of any material fact contained
in the Resale Registration Statement, any final prospectus contained
therein, or any amendment or supplement thereof, or arise out of or are
based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that Acquiror will not be liable
-------- -------
in any such case if and to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission so made in conformity with
information furnished by the Stockholder in writing specifically for use in
the Resale Registration Statement or prospectus.
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(iii) The Stockholder shall furnish to Acquiror in writing such
information with respect to the Stockholder as Acquiror may reasonably
request or as may be required by law for use in connection with the Resale
Registration Statement and the final prospectus contained therein, and the
Stockholder will indemnify and hold harmless Acquiror against any losses,
claims, damages or liabilities to which Acquiror may become subject under
the Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Resale Registration
Statement, any final prospectus contained therein, or any amendment or
supplement thereof, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading to the
same extent as the foregoing indemnity from Acquiror to the Stockholder,
but only with respect to (i) any such information with respect to the
Stockholder furnished in writing to Acquiror expressly for use therein or
(ii) a breach of any obligations of the Stockholder under this Section 11;
provided, however, that the total amount to be indemnified by the
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Stockholder under this Section 11 shall be limited to the net proceeds
received by the Stockholder in the offering to which the Resale
Registration Statement or prospectus relates.
(e) The rights described in this Section 11 shall not be transferable
without the express written consent of Acquiror.
12. BINDING EFFECT; NO ASSIGNMENT. This Option Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Except as expressly provided for in this
Option Agreement, neither this Option Agreement nor the rights or the
obligations of either party hereto are assignable, except by operation of law,
or with the written consent of the other party. Nothing contained in this
Option Agreement, express or implied, is intended to confer upon any person
other than the parties hereto and their respective permitted assigns any rights
or remedies of any nature whatsoever by reason of this Option Agreement.
13. SPECIFIC PERFORMANCE. The parties recognize and agree that if for any
reason any of the provisions of this Option Agreement are not performed in
accordance with their specific terms or are otherwise breached, immediate and
irreparable harm or injury would be caused for which money damages would not be
an adequate remedy. Accordingly, each party agrees that, in addition to other
remedies, the other party shall be entitled to an injunction restraining any
violation or threatened violation of the provisions of this Option Agreement. In
the event that any action should be brought in equity to enforce the provisions
of this Option Agreement, neither party will allege, and each party hereby
waives the defense, that there is adequate remedy at law.
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14. ENTIRE AGREEMENT. This Option Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and oral,
among the parties or any of them with respect to the subject matter hereof.
15. FURTHER ASSURANCE. Each party will execute and deliver all such
further documents and instruments and take all such further action as may be
necessary in order to consummate the transactions contemplated hereby.
16. VALIDITY. The invalidity or unenforceability of any provision of this
Option Agreement shall not affect the validity or enforceability of the other
provisions of this Option Agreement, which shall remain in full force and
effect. In the event any court or other competent authority holds any provision
of this Option Agreement to be null, void or unenforceable, the parties hereto
shall negotiate in good faith the execution and delivery of an amendment to this
Option Agreement in order, as nearly as possible, to effectuate, to the extent
permitted by law, the intent of the parties hereto with respect to such
provision. Each party agrees that, should any court or other competent
authority hold any provision of this Option Agreement or part hereof to be null,
void or unenforceable, or order any party to take any action inconsistent
herewith, or not take any action required herein, the other party shall not be
entitled to specific performance of such provision or part hereof or to any
other remedy, including but not limited to money damages, for breach hereof or
of any other provision of this Option Agreement or part hereof as the result of
such holding or order.
17. NOTICES. Any notice or communication required or permitted hereunder
shall be in writing and either delivered personally, telegraphed or telecopied
with confirmation or sent by certified or registered mail, postage prepaid, and
shall be deemed to be given, dated and received when so delivered personally,
telegraphed or telecopied or, if mailed, five business days after the date of
mailing to the following address, or to such other address or addresses as such
person may subsequently designate by notice given hereunder.
(a) If to Acquiror, to:
McLeodUSA Incorporated
McLeodUSA Technology Park
0000 X Xxxxxx XX
X.X. Xxx 0000
Xxxxx Xxxxxx, Xxxx 00000-0000
Telecopier No.: (000) 000-0000
Attention: Xxxxxxx Rings
Vice President, General Counsel and Secretary
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With a copy (which shall not constitute notice) to:
Xxxxx & Xxxxxxx L.L.P.
Columbia Square
000 Xxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx, Xx.
(b) If to the Stockholder, to the address set forth below its or
his signature on this Option Agreement
With a copy (which shall not constitute notice) to:
Telecopier No.:
Attention:
and
Telecopier No.:
Attention:
18. GOVERNING LAW. This Option Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without giving
effect to the principles of conflicts of law thereof.
19. DESCRIPTIVE HEADINGS. The descriptive headings herein are inserted
for convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Option Agreement.
20. COUNTERPARTS. This Option Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same instrument.
21. EXPENSES. Except as otherwise expressly provided herein or in the
Merger Agreement, all costs and expenses incurred in connection with the
transactions contemplated by this Option Agreement shall be paid by the party
incurring such expenses.
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22. AMENDMENTS; WAIVER. This Option Agreement may be amended by the
parties hereto and the terms and conditions hereof may be waived only by an
instrument in writing signed on behalf of each of the parties hereto, or, in the
case of a waiver, by an instrument signed on behalf of the party waiving
compliance.
23. PARTIES IN INTEREST. This Option Agreement shall be binding upon,
inure solely to the benefit of and be enforceable by each party hereto and its
respective successors and assigns, and, with the exception of the obligations of
Acquiror to the Company set forth in Section 8(f) with regard to a Change of
Control Offer, nothing in this Option Agreement, express or implied, is intended
to or shall confer upon any Person other than the parties hereto any right,
benefit or remedy of any nature whatsoever under or by reason of this Option
Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed, or caused to be
executed by their duly authorized officers, this Option Agreement as of the date
first above written.
MCLEODUSA INCORPORATED
By: ____________________________________
Name: ____________________________________
Title: ____________________________________
STOCKHOLDER
______________________________________________
Name: ____________________________________
Address: ____________________________________
____________________________________
____________________________________
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ANNEX A to OPTION AGREEMENT
---------------------------
([Name of Stockholder])
. Number of shares of Company Common Stock beneficially owned (excluding
shares subject to outstanding Company Stock Options and Company Warrants):
. Number of shares of Company Common Stock subject to Company Stock Options:
. Number of shares of Company Common Stock subject to Company Warrants:
