EXHIBIT 4.2
Voting Agreements and Term Sheet for Exchange of (I) Cash and Newco
Common Stock for 13% Senior Notes due 2010 Issued by Mpower Holding Corporation
and (II) Newco Common Stock for Series C and Series D Preferred Stock Issued by
the Company.
VOTING AGREEMENT
This Voting Agreement dated as of February 22, 2002 (the "Agreement")
is made by and among (i) the undersigned holders or managers of discretionary
accounts that hold or beneficially own (each, a "Consenting Noteholder" and
collectively the "Consenting Noteholders") the 13% Senior Notes due 2010
(collectively, the "Notes") governed by the Indenture, dated as of March 24,
2000 (the "Indenture"), by and between Mpower Holding Corporation (the
"Company") and HSBC Bank USA, as trustee (the " Indenture Trustee") and (ii) the
Company (each of the foregoing, a "Party", and collectively, the "Parties").
RECITALS
WHEREAS, the Company is a communications company that offers, through
its subsidiaries, local dialtone, long distance, Internet access via dial-up or
dedicated Symmetrical Digital Subscriber Line ("SDSL") technology, voice over
SDSL ("VoSDSL") and other voice and data services primarily to small and medium
size business customers;
WHEREAS, the Company has determined that a prompt restructuring,
recapitalization or exchange transaction concerning or impacting the Notes and
the issued and outstanding shares of Series C and Series D Preferred Stock
issued by the Company (collectively, the "Preferred Stock") would be in the best
interests of its creditors and shareholders;
WHEREAS, at the Company's request, certain of the holders of the Notes
formed an ad hoc committee (the "Ad Hoc Committee") for the purposes of
negotiating a restructuring, recapitalization or exchange transaction whereby
the Notes would be exchanged for cash and common stock of the Company, and the
Preferred Stock would be exchanged for common stock of the Company pursuant to
the terms and conditions set forth in the Term Sheet (defined below and in this
Voting Agreement) and this Agreement (the "Transaction");
WHEREAS, each Consenting Noteholder is the holder of record or if not a
holder of record, then the beneficial owner, of a claim, as defined in section
101(5) of title 11 of the United States Code, 11 U.S.C. xx.xx. 101-1330 (as
amended, the "Bankruptcy Code") arising out of, or related to, the Notes (a
"Noteholder Claim");
WHEREAS, the Ad Hoc Committee has retained Milbank, Tweed, Xxxxxx &
XxXxxx LLP ("Milbank"), as legal counsel, and Xxxxxxxxx & Company, Inc.
("Jefferies"), as financial advisor, at the expense of the Company, all of which
have been involved in the negotiation of a Transaction;
WHEREAS, the Parties intend to implement the Transaction through a
confirmed plan of reorganization for the Company (the "Plan") in a voluntary
bankruptcy case (the "Bankruptcy Case") to be commenced by the Company by filing
a petition (the "Petition") under chapter 11 of the Bankruptcy Code;
WHEREAS, subject to execution of definitive documentation and
appropriate approvals of the United States Bankruptcy Court for the District of
Delaware (the "Bankruptcy Court"), the following sets forth the agreement
between the Parties concerning their respective obligations.
NOW, THEREFORE, in consideration of the foregoing, the Parties agree as
follows:
AGREEMENT
SECTION 1. MEANS FOR EFFECTUATING THE TRANSACTION. To implement the Transaction,
the Company has agreed, on the terms and conditions set forth herein and
pursuant to the terms and conditions of the Term Sheet (defined below), to
consummate, and to cause each of its direct and indirect subsidiaries to
consummate (to the extent necessary), the Transaction through the Plan, the
requisite acceptances of which will be solicited after the Company commences the
Bankruptcy Case by filing the Petition under chapter 11 of the Bankruptcy Code,
and to use its commercially reasonable best efforts to have the Plan confirmed
by the Bankruptcy Court, as expeditiously as possible under the Bankruptcy Code,
the Federal Rules of Bankruptcy Procedure, and the local bankruptcy rules of the
Bankruptcy Court (the federal and local rules being, the "Bankruptcy Rules").
Prior to the Filing Date, the Company will determine whether any of its
operating subsidiaries will also file petitions under chapter 11 of the
Bankruptcy Code commencing reorganization cases (the "Chapter 11 Cases").
SECTION 2. CONDUCT OF BUSINESS PENDING THE EFFECTIVE DATE OF PLAN. The Company
agrees that, prior to the Effective Date, unless otherwise expressly permitted
by this Agreement, the Company:
(a) shall not, at any time following the Filing Date, disburse or
transfer any cash, securities or other assets or property outside the ordinary
course of business without Bankruptcy Court approval.
(b) shall not repurchase, exchange, redeem or otherwise retire any of
its (i) Notes for aggregate consideration exceeding 15.5% of the principal
amount of any Note or (ii) Preferred Stock for aggregate consideration exceeding
$1 per share; and
(c) shall and shall cause each of its direct and indirect subsidiaries
to (i) maintain its good standing under the laws of the State or other
jurisdiction in which it is incorporated or organized, and (ii) notify the
Consenting Noteholders of any governmental or third party complaints,
investigations or hearings (or communications indicating that the same may be
contemplated or threatened) which could reasonably be anticipated to materially
adversely affect the business, property, or financial condition of the Company
considered as one enterprise, except to the extent such disclosure contains
material, non-public information, in which case the Company shall instead
immediately notify Milbank and Jefferies.
SECTION 3. TERM SHEET. The term sheet, dated as of February 22, 2002 annexed
hereto as Exhibit A (the "Term Sheet"), is incorporated herein and is made part
of this Agreement.
Capitalized terms used herein without definition shall have the meanings
ascribed to such terms in the Term Sheet. The general terms and conditions of
the Transaction are set forth in the Term Sheet, however, the Term Sheet is
supplemented by the terms and conditions of this Agreement. In the event of any
inconsistencies between the terms of this Agreement and the Term Sheet, this
Agreement shall govern.
SECTION 4. CONSENTING NOTEHOLDERS' COMMITMENTS REGARDING A TRANSACTION.
4.01. VOTE SUBJECT TO COURT APPROVED DISCLOSURE STATEMENT.
Each Consenting Noteholder agrees that so long as it (or a client or an
account for which it has discretion) is the holder of record or the beneficial
owner of a Noteholder Claim, subject to the conditions that (i) the material
terms of any applicable agreements implementing the Transaction, including,
without limitation, the Plan, embody and are consistent with the terms and
conditions set forth in the Term Sheet, (ii) all final documents that are
material to the Transaction, including, but not limited to, the amended and
restated certificate of incorporation and by-laws, are in form and substance
reasonably satisfactory to a Consenting Noteholders' Majority and all agreements
that are material to the Transaction have been or will be entered into by all
applicable parties and have or will become valid, binding and enforceable, (iii)
no Consenting Noteholders' Termination Event (as defined in the Term Sheet)
shall have occurred and be continuing, including any Consenting Noteholders'
Termination Event arising under subparagraph n. in the "Consenting Noteholders'
Termination Event" section of the Term Sheet even if relief from the automatic
stay under section 362 of the Bankruptcy Code, to the extent it has been sought
in connection with effecting such Consenting Noteholders' Termination Event, has
not been granted after the Bankruptcy Court has entered a final order with
respect to the motion seeking such relief, (iv) the Company has not terminated
this Agreement after the occurrence of a Company Termination Event and none of
its direct and indirect subsidiaries shall have taken any action materially
inconsistent with the terms and conditions set forth in this Agreement, and (v)
no other termination of this Agreement has occurred pursuant to the terms set
forth under Section 8 and Section 12.10 of this Agreement, it shall, when
solicited, subject to the acknowledgements contained in Section 9 hereof, vote
to support the Plan; provided, however, that no Consenting Noteholder shall be
barred from (x) objecting to compliance with Bankruptcy Code section 1125 or
other applicable law relating to the sufficiency of the disclosures contained in
the accompanying disclosure statement for the Plan (the "Disclosure Statement"),
if it believes the Disclosure Statement or other document received by such
Consenting Noteholder lacks adequate information (as defined in section
1125(a)(1) of the Bankruptcy Code) or contains a material misstatement or
omission or (y) taking any action that does not directly or indirectly conflict
with the provisions of the Term Sheet.
4.02. TRANSFER OF CLAIMS, INTERESTS AND SECURITIES.
Except as expressly provided herein, this Agreement shall not in any
way restrict the right or ability of any Consenting Noteholder to sell, use,
assign, transfer or otherwise dispose of
any of the securities of, or claims against, the Company, provided, however,
that for a period commencing as of the date such Consenting Noteholder executes
this Agreement until the earlier to occur of (i) the occurrence of a Consenting
Noteholders' Termination Event, (ii) the Company's termination of this Agreement
after the occurrence of a Company Termination Event, (iii) any other termination
of this Agreement pursuant to the terms set forth under Section 8 and Section
12.10 of this Agreement and (iv) the Effective Date of the Plan (such period,
the "Restricted Period"), such transfer shall be void and without effect unless
and until the transferee delivers to the Consenting Noteholder transferor and
the Company, within five (5) days after the date of such transfer, a written
agreement containing, among other things, a provision substantially similar to
the provision set forth in Exhibit B attached hereto pursuant to which such
transferee shall assume all obligations of the Consenting Noteholder transferor
hereunder in respect of the Noteholder Claims transferred (such transferees, if
any, to also be a "Consenting Noteholder" hereunder); provided that any
securities of the Company acquired by a Consenting Noteholder after the date
such Consenting Noteholder executes this Agreement shall not be subject to the
restrictions on transfer and the assumption of obligations by any transferee as
set forth in this Section 4.02.
4.03. REPRESENTATION OF CONSENTING NOTEHOLDERS' HOLDINGS.
Each of the Consenting Noteholders represents that, as of the date such
Consenting Noteholder executes and delivers this Agreement, it is the beneficial
owner of, and/or the investment adviser or manager (with the power to vote and
dispose of all or substantially all of the aggregate principal amount of the
Notes, and/or issued and outstanding shares of Common Stock, as set forth on its
signature page (collectively, the "Relevant Securities") on behalf of their
beneficial owners) of discretionary accounts for the holders or beneficial
owners of the Relevant Securities.
4.04. REPRESENTATION OF THE COMPANY.
The Company represents that, as of the Filing Threshold Date, the
Company shall not (i) have resolved to engage in any merger, consolidation,
Partial Asset Sale, Asset Sale or the purchase or acquisition of all or a
substantial part of the assets of another entity and (ii) have been a party to
any agreement or have engaged in any discussions or negotiations with any person
that is reasonably likely to lead to any merger, consolidation, Partial Asset
Sale, Asset Sale, or the purchase or acquisition of all or a substantial part of
the assets of another entity, except to the extent previously disclosed to
Jefferies; and the Company represents that, as of the Plan and Disclosure
Statement Filing Date, the Company shall not have any unsecured creditors owed
in the aggregate more than twenty thousand dollars ($20,000) other than the
holders of the Notes, the holders of the Senior Secured Notes and the Operating
Company (in connection with intercompany debt), and other than Rothschild Inc.,
Xxxxxxxx & Sterling, Xxxxxxxxx & Company, Inc., and Milbank, Tweed, Xxxxxx &
XxXxxx LLP, to the extent they are unsecured creditors of the Company as of the
Plan and Disclosure Statement Filing Date.
SECTION 5. THE COMPANY'S UNDERTAKINGS.
5.01 CONSUMMATION OF TRANSACTIONS AND CONFIRMATION OF PLAN.
After the Filing Threshold Date, the Company shall, and shall cause its
direct and indirect subsidiaries, to, as applicable, to (i) take all acts
necessary to effectuate and consummate the transactions contemplated by the Term
Sheet and the Plan as expeditiously as possible and (ii) implement all steps
necessary and desirable to obtain an order of the Bankruptcy Court confirming
the Plan, in each case, as expeditiously as possible under the Bankruptcy Code
and the Bankruptcy Rules.
5.02 THIRD PARTY APPROVALS.
The Company shall use its commercially reasonable best efforts, and
shall cause its direct and indirect subsidiaries to use their commercially
reasonable best efforts, to obtain all regulatory, governmental, administrative,
and third party approvals of the Transaction and confirmation of the Plan.
SECTION 6. MUTUAL REPRESENTATIONS, WARRANTIES, AND COVENANTS. Each of the
Parties represents, warrants, and covenants to the others the following as of
the date of this Agreement, each of which is a continuing representation,
warranty, and covenant:
6.01. ENFORCEABILITY.
This Agreement is a legal, valid, and binding obligation of the Party,
enforceable against it in accordance with its terms, except as enforcement may
be limited by applicable laws relating to or limiting creditor's rights
generally or by equitable principles relating to enforceability.
6.02. NO CONSENT OR APPROVAL.
Except as expressly provided in this Agreement, no consent or approval
is required by any other person or entity in order for it to carry out the
provisions of this Agreement.
6.03 POWER AND AUTHORITY. Except as expressly provided in this
Agreement, it has all requisite power and authority to enter into this Agreement
and to carry out the transactions contemplated by, and perform its respective
obligations under, this Agreement.
6.04 AUTHORIZATION. The execution and delivery of this Agreement and
the performance of its obligations hereunder have been duly authorized by all
necessary action on its part.
6.05 GOVERNMENTAL CONSENTS. The execution, delivery and performance by
it of this Agreement do not and shall not require any registration, filing,
consent, approval, or notice to, or other action by, any federal, state or other
governmental authority or regulatory body,
except (i) such filings as may be necessary and/or required under the federal
securities laws, (ii) in connection with the Bankruptcy Case, the approval of
the Disclosure Statement and confirmation of the Plan, (iii) any filings,
notifications, or approvals required by the regulatory body of one or more
jurisdictions, including but not limited to California, Nevada, and North
Carolina, and (iv) any filings, notifications, or approvals required by the
regulatory body of one or more jurisdictions, including but not limited to Ohio,
that are required to be made or obtained by any party before that party,
directly or indirectly, owns, controls, holds the power to vote, of holds the
power to vote proxies that constitute, a percentage of the total voting power of
the Company and/or Mpower Communications Corp. that would result in that party
acquiring actual or presumed control thereof.
6.06 MUTUAL RELEASE. It has executed and delivered to the other a
mutual release, substantially similar to the form annexed hereto as Exhibit C
(each, a "Mutual Release").
SECTION 7. NO WAIVER OF PARTICIPATION AND RESERVATION OF RIGHTS. Except as
expressly provided in this Agreement and in any Mutual Release between a
Consenting Noteholder and the Company referred to in Section 10 hereof, nothing
herein is intended to, or does, in any manner waive, limit, impair, or restrict
the ability of each of the Consenting Noteholders to protect and preserve its
rights, remedies and interests, including without limitation, its claims against
the Company or its full participation in any Bankruptcy Case filed by the
Company or any of its affiliates and subsidiaries. If the transactions
contemplated by this Agreement or in the Plan are not consummated, or if this
Agreement is terminated for any reason, the Parties fully reserve any and all of
their rights.
SECTION 8. TERMINATION EVENTS OF AGREEMENT. The termination events for this
Agreement and the Term Sheet are as set forth in and are incorporated by
reference to the Term Sheet.
SECTION 9. ACKNOWLEDGMENT. This Agreement and the Term Sheet and the
transactions contemplated herein and therein are the product of negotiations
between the Company and the Ad Hoc Committee and their respective
representatives. This Agreement is not and shall not be deemed to be a
solicitation of votes for the acceptance of the Plan. Each of the Consenting
Noteholders' acceptance of the Plan will not be solicited until it has received
a Disclosure Statement approved by the Bankruptcy Court.
SECTION 10. EFFECTIVENESS; AMENDMENTS. This Agreement shall become effective and
binding upon each of the Parties that have executed and delivered counterpart
signature pages hereto. Each Consenting Noteholder acknowledges, by its
execution of this Agreement, that the Company has executed and delivered a
counterpart signature page to this Agreement as of the date hereof. Once
effective, this Agreement may not be modified, amended, or supplemented (except
as expressly provided herein) as to any Consenting Noteholder except in writing
signed by the Company and such Consenting Noteholder.
SECTION 11. IMPACT OF APPOINTMENT TO OFFICIAL COMMITTEE. Notwithstanding
anything herein to the contrary, if any Consenting Noteholder is appointed to
and serves on any official committee appointed in the Bankruptcy Cases (an
"Official Committee"), the terms of this Agreement shall not be construed so as
to limit such Consenting Noteholder's exercise (in its sole discretion) of its
fiduciary duties to any person arising from its service on such Official
Committee, and any such exercise (in the sole discretion of such Consenting
Noteholder) of such fiduciary duties shall not be deemed to constitute a breach
of the terms of this Agreement (but the fact of such service on an Official
Committee shall not otherwise affect the continuing validity or enforceability
of this Agreement).
SECTION 12. MISCELLANEOUS.
12.01. FURTHER ASSURANCES.
The Parties agree to execute and deliver such other instruments and
perform such acts, in addition to the matters herein specified, as may be
appropriate or necessary, from time to time, to effectuate the agreements and
understandings of the Parties herein, whether the same occurs before or after
the date of this Agreement.
12.02. COMPLETE AGREEMENT.
This Agreement is the entire agreement between the Parties with respect
to the subject matter hereof and supersedes all prior agreements, oral or
written, between the Parties with respect thereto. No claim of waiver,
modification, consent or acquiescence with respect to any provision of this
Agreement shall be made against any Party, except on the basis of a written
instrument executed by or on behalf of such Party. All Parties shall receive
advance written notice of any proposed material changes to the Plan.
12.03. PARTIES.
This Agreement shall be binding upon, and inure to the benefit of, the
Parties. No rights or obligations of any Party under this Agreement may be
assigned or transferred to any other person or entity except as provided in
Section 4.02 hereof. Nothing in this Agreement, express or implied, shall give
to any person or entity, other than the Parties, any benefit or any legal or
equitable right, remedy or claim under this Agreement.
12.04. HEADINGS.
The headings of all sections of this Agreement are inserted solely for
the convenience of reference and are not a part of and are not intended to
govern, limit or aid in the construction or
interpretation of any term or provision hereof.
12.05. GOVERNING LAW.
THIS AGREEMENT IS TO BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE
PERFORMED IN SUCH STATE, WITHOUT GIVING EFFECT TO THE CHOICE OF LAWS PRINCIPLES
THEREOF.
12.06. EXECUTION OF AGREEMENT.
This Agreement may be executed and delivered (by facsimile or
otherwise) in any number of counterparts, each of which, when executed and
delivered, shall be deemed an original, and all of which together shall
constitute the same agreement. Except as expressly provided in this Agreement,
each individual executing this Agreement on behalf of a Party has been duly
authorized and empowered to execute and deliver this Agreement on behalf of said
Party.
12.07. INTERPRETATION.
This Agreement is the product of negotiations between the Company and
the Ad Hoc Committee, and in the enforcement or interpretation hereof, is to be
interpreted in a neutral manner, and any presumption with regard to
interpretation for or against any Party by reason of that Party having drafted
or caused to be drafted this Agreement, or any portion hereof, shall not be
effective in regard to the interpretation hereof.
12.08. CONFIDENTIALITY.
All information obtained in the course of the negotiations leading up
to this Agreement shall be treated as confidential information pursuant to the
confidentiality agreements previously executed between the Company and certain
of the Consenting Noteholders, which such confidentiality agreements are
incorporated by reference as if fully set forth herein with respect to such
Consenting Noteholders.
12.09. FEES AND EXPENSES.
Unless the Consenting Noteholders shall have materially breached any
provision of this Agreement, the Company shall pay in full on the day
immediately prior to the Filing Date all fees and expenses that are due and
owing to Milbank and Jefferies under their respective engagement letters.
The Company agrees that it shall continue to pay, subject to Bankruptcy
Court approval, the reasonable fees and expenses of Milbank and Jefferies, as
legal and financial advisors to the
Ad Hoc Committee, from and after the commencement (and through the conclusion)
of the Bankruptcy Cases and through the earlier to occur of (x) the consummation
of the Plan and (y) the termination of this Agreement by the Company or the
Consenting Noteholders, whether or not an Official Committee is appointed and,
if an Official Committee is appointed, whether or not Milbank and Jefferies are
selected as advisors to the Official Committee; provided, however, that if
Milbank and Jefferies are selected as advisors to the Official Committee, then
the Company's obligations to pay their respective fees and expenses under this
Agreement, with respect solely to fees incurred after the date of such
selection, shall terminate. Notwithstanding the foregoing, the Company, Milbank
and Jefferies shall remain bound by and subject to the terms and conditions of
the engagement letters between the Company and each of Milbank and Jefferies
(the "Engagement Letters"), and in the event of any inconsistencies between the
terms of this Agreement and such Engagement Letters, the Engagement Letters
shall govern.
12.10. TERMINATION.
This Agreement shall automatically terminate and have no further force
or effect if either (x) the Conditions have not been satisfied (and the Filing
Threshold Date has not occurred) on or before March 29, 2002 or (y) the Company
has terminated the Consent Solicitation and the Conditions have not been
satisfied at such time. In addition to any other termination provisions
contained in this Agreement and the Term Sheet, this Agreement shall be
terminable via written notice to all of the Parties upon unanimous written
agreement of the Company and a Consenting Noteholders' Majority to terminate
this Agreement; provided, however, that such termination of this Agreement shall
not restrict the Parties' remedies for a prior breach hereof.
Exhibit 4.2
Voting Agreements and Term Sheet for Exchange of (I) Cash and Newco Common
Stock for 13% Senior Notes due 2010 Issued by Mpower Holding Corporation and
(II) Newco Common Stock for Series C and Series D Preferred Stock Issued by the
Company.
12.11. SUCCESSORS AND ASSIGNS.
This Agreement is intended to bind and inure to the benefit of the
Parties and their respective successors, assigns, heirs, executors,
administrators and representatives, other than a trustee or similar
representative appointed in the Bankruptcy Cases. The agreements,
representations and obligations of the Consenting Noteholders under this
Agreement are, in all respects, several and not joint.
12.12. NOTICES.
All notices hereunder shall be deemed given if in writing and
delivered, if sent by telecopy, courier or by registered or certified mail
(return receipt requested) to the following addresses and telecopier numbers (or
at such other addresses or telecopier numbers as shall be specified by like
notice)
(1) IF TO THE COMPANY, TO:
Mpower Holding Corporation Mpower Communication Corp.
000 Xxxxx'x Xxxxx, Xxxxx 000 Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxxx, Senior Vice
President, General Counsel and Secretary Telecopier:
(000) 000-0000
WITH COPIES TO:
Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Telecopier: (000) 000-0000
(2) IF TO A CONSENTING NOTEHOLDER OR A TRANSFEREE
THEREOF, TO THE ADDRESSES OR TELECOPIER NUMBERS SET
FORTH BELOW FOLLOWING THE CONSENTING NOTEHOLDER'S
SIGNATURE (OR AS DIRECTED BY ANY TRANSFEREE THEREOF),
AS THE CASE MAY BE WITH COPIES TO:
Milbank, Tweed, Xxxxxx & XxXxxx LLP
0 Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000-1418
Attention: Xxxxxx X. Xxxxx, Esq.
Telecopier: (000) 000-0000
Any notice given by delivery, mail or courier shall be effective when received.
Any notice given by telecopier shall be effective upon oral or machine
confirmation of transmission.
IN WITNESS WHEREOF, the Parties have executed this Agreement on the day
and year first above written.
MPOWER HOLDING CORPORATION
By:
----------------------------------------
Name:
Title:
[CONSENTING NOTEHOLDERS SIGNATURE PAGES FOLLOW]
SIGNATURE PAGE TO THE VOTING AGREEMENT
BY AND AMONG MPOWER HOLDING CORPORATION AND THE CONSENTING NOTEHOLDERS PARTY
THERETO
Date Executed: February __, 2002
-----------------------------------
PRINT NAME OF CONSENTING NOTEHOLDER
-----------------------------------
Name:
Title:
Address:
----------------------------
----------------------------
----------------------------
Attention:
--------------------------
Telephone:
--------------------------
Facsimile:
--------------------------
Aggregate principal amount
of Notes beneficially
owned or managed on
behalf of accounts that
hold or beneficially own
such Notes:
$
----------------------------------
Aggregate number of
shares of issued and
outstanding Common Stock
beneficially owned or
managed on behalf of
accounts that hold or
beneficially own such
securities:
-----------------------------------
SIGNATURE PAGE TO THE VOTING AGREEMENT
BY AND AMONG MPOWER HOLDING CORPORATION AND THE CONSENTING NOTEHOLDERS
PARTY THERETO
EXHIBIT A
Term Sheet
[attached]
EXHIBIT B
PROVISION FOR TRANSFER AGREEMENT
The undersigned ("Transferee") hereby acknowledges that it has read and
understands the Voting Agreement between Mpower Holding Corporation and
[Transferor Consenting Noteholder Name], inter alia, and agrees to be bound by
the terms and conditions thereof to the extent Transferor was thereby bound.
By:
----------------------------
[Transferee Name]
EXHIBIT C
Form of Mutual Release
[attached]
VOTING AGREEMENT
This Voting Agreement dated as of March 18, 2002 (the "Agreement") is
made by and among (i) the undersigned holders or managers of discretionary
accounts that hold or beneficially own (each, a "Consenting Preferred
Stockholder" and collectively the "Consenting Preferred Stockholders") the
issued and outstanding shares of Series C and Series D Preferred Stock
(collectively, the "Preferred Stock") issued by Mpower Holding Corporation (the
"Company") and (ii) the Company (each of the foregoing, a "Party", and
collectively, the "Parties"). Reference is made to (a) the Voting Agreement
dated as of February 22, 2002 (the "Consenting Noteholders' Voting Agreement"),
among (i) the holders or managers of discretionary accounts that hold or
beneficially own (each, a "Consenting Noteholder" and collectively, the
"Consenting Noteholders") the 13% Senior Notes due 2010 (collectively, the
"Notes") governed by the Indenture, dated as of March 24, 2000 (the
"Indenture"), by and between the Company and HSBC Bank USA, as trustee, (the
"Indenture Trustee") and (ii) the Company and (b) the Consenting Noteholder Side
Agreement (defined below).
RECITALS
WHEREAS, the Company is a communications company that offers, through
its subsidiaries, local dialtone, long distance, Internet access via dial-up or
dedicated Symmetrical Digital Subscriber Line ("SDSL") technology, voice over
SDSL ("VoSDSL") and other voice and data services primarily to small and medium
size business customers;
WHEREAS, the Company has determined that a prompt restructuring,
recapitalization or exchange transaction concerning or impacting the Notes and
the Preferred Stock would be in the best interests of its creditors and
shareholders;
WHEREAS, at the Company's request, certain of the holders of the Notes
formed an ad hoc committee (the "Ad Hoc Committee") for the purposes of
negotiating a restructuring, recapitalization or exchange transaction whereby
the Notes would be exchanged for cash and common stock of the Company, and the
Preferred Stock would be exchanged for common stock of the Company pursuant to
the terms and conditions set forth in the Term Sheet (defined below) and this
Agreement (the "Transaction");
WHEREAS, each Consenting Preferred Stockholder is the holder of record
or if not a holder of record, then the beneficial owner, of certain issued and
outstanding shares of Preferred Stock;
WHEREAS, the Parties intend to implement the Transaction through a
confirmed plan of reorganization for the Company (the "Plan") in a voluntary
bankruptcy case (the "Bankruptcy Case") to be commenced by the Company by filing
a petition (the "Petition") under chapter 11 of Title 11 of the United States
Code, 11 U.S.C. ss.ss.101-1330 (as amended, the "Bankruptcy Code")
WHEREAS, the Consenting Noteholders and the Company have entered into
the Consenting Noteholders' Voting Agreement dated February 22, 2002 which
incorporates therein and makes part thereof the Term Sheet (defined below); and
WHEREAS, in accordance with the terms and conditions of the Term Sheet
(defined below) and the Consenting Noteholders' Voting Agreement, the allocation
of the Equityholder Newco Common Stock under the Plan as between the Preferred
Stockholders and the Common Stockholders shall be determined subject to
negotiations with the Preferred Stockholders and the Common Stockholders prior
to the filing of the Plan; provided that in the event no agreement can be
reached on such allocation, the Company's Board of Directors shall determine
such allocation;
WHEREAS, in accordance with the terms and conditions of the Term Sheet
and the Consenting Noteholders' Voting Agreement, subsequent to negotiations
with certain of the Preferred Stockholders and certain of the Common
Stockholders, the Company's management and advisors have recommended that the
Equityholder Newco Common Stock will be allocated (the "Equityholder Newco
Common Stock Allocation") under the Plan and in accordance with the terms and
conditions of the Term Sheet, the Consenting Noteholders' Voting Agreement and
this Agreement as follows (i) thirteen and one-half percent (13.5%) of the Newco
Common Stock will be allocated for distribution on a pro rata basis to the
Preferred Stockholders based on the liquidation preference plus accumulated
dividends of such holder's Preferred Stock and (ii) one and one-half percent
(1.5%) of the Newco Common Stock will be allocated to be distributed on a pro
rata basis by the Common Stockholders based on the number of shares of Common
Stock held by such holder;
WHEREAS, the Company's Board of Directors has duly approved the
Equityholder Newco Common Stock Allocation;
WHEREAS, certain of the Consenting Noteholders have executed agreements
(collectively, the "Consenting Noteholder Side Agreement") agreeing to the
Equityholder Newco Common Stock Allocation as set forth in this Agreement; and
WHEREAS, subject to execution of definitive documentation and
appropriate approvals of the United States Bankruptcy Court for the District of
Delaware (the "Bankruptcy Court"), the following sets forth the agreement
between the Parties concerning their respective obligations.
NOW, THEREFORE, in consideration of the foregoing, the Parties agree as
follows:
AGREEMENT
SECTION 1. MEANS FOR EFFECTUATING THE TRANSACTION. To implement the Transaction,
the Company has agreed, on the terms and conditions set forth herein and
pursuant to the terms and conditions of the Term Sheet (defined below), to
consummate, and to cause each of its direct and indirect subsidiaries to
consummate (to the extent necessary), the Transaction through the Plan, the
requisite acceptances of which will be solicited after the Company commences the
Bankruptcy Case by filing the Petition under chapter 11 of the Bankruptcy Code,
and to use its commercially reasonable best efforts to have the Plan confirmed
by the Bankruptcy Court, as expeditiously as possible under the Bankruptcy Code,
the Federal Rules of Bankruptcy Procedure, and the local bankruptcy rules of the
Bankruptcy Court (the federal and local rules being, the "Bankruptcy Rules").
Prior to the Filing Date, the Company will determine whether
any of its operating subsidiaries will also file petitions under chapter 11 of
the Bankruptcy Code commencing reorganization cases (the "Chapter 11 Cases").
SECTION 2. CONDUCT OF BUSINESS PENDING THE EFFECTIVE DATE OF PLAN. The Company
agrees that, prior to the Effective Date, unless otherwise expressly permitted
by this Agreement, the Company:
(d) shall not, at any time following the Filing Date, disburse or
transfer any cash, securities or other assets or property outside the ordinary
course of business without Bankruptcy Court approval;
(e) shall not repurchase, exchange, redeem or otherwise retire any of
its (i) Notes for aggregate consideration exceeding 15.5% of the principal
amount of any Note or (ii) Preferred Stock for aggregate consideration exceeding
$1 per share;
(f) shall and shall cause each of its direct and indirect subsidiaries
to maintain its good standing under the laws of the State or other jurisdiction
in which it is incorporated or organized; and
(g) shall not cause to change the total number of outstanding shares
of, and liquidation preferences per share (excluding accrued and unpaid
dividends and the liquidation preference dollar amount solely by reason of the
accrued and unpaid dividends included therein) of, its Series C and Series D
Preferred Stock set forth on Schedule A to this Agreement.
SECTION 3. TERM SHEET. The term sheet, dated as of February 22, 2002 annexed
hereto as Exhibit A (the "Term Sheet"), is incorporated herein and is made part
of this Agreement. Capitalized terms used herein without definition shall have
the meanings ascribed to such terms in the Term Sheet. The general terms and
conditions of the Transaction are set forth in the Term Sheet, however, the Term
Sheet is supplemented by the terms and conditions of this Agreement. With
respect to the terms of this Agreement, in the event of any inconsistencies
between the terms of this Agreement and the Term Sheet, this Agreement shall
govern.
SECTION 4. CONSENTING PREFERRED STOCKHOLDERS' COMMITMENTS REGARDING A
TRANSACTION.
4.01. VOTE SUBJECT TO COURT APPROVED DISCLOSURE STATEMENT.
Each Consenting Preferred Stockholder agrees that:
(a) so long as it (or a client or an account for which it has
discretion) is the holder of record or the beneficial owner of Preferred Stock,
subject to the conditions that (i) the material terms of any applicable
agreements implementing the Transaction, including, without limitation, the
Plan, and all final documents that are material to the Transaction including,
but not limited to, the amended and restated certificate of incorporation and
by-laws, embody and are consistent in all material respects with the terms and
conditions set forth in the Term Sheet and this Agreement, (ii) all agreements
that are material to the Transaction have been or will be entered
into by all applicable parties and have or will become valid, binding and
enforceable, (iii) the Plan and all final documents that are material to the
Transaction shall, with respect to any material provision affecting the
Consenting Preferred Stockholders, be in form and substance reasonably
satisfactory to Consenting Preferred Stockholders holding at least 50% of the
outstanding shares of Preferred Stock (a "Consenting Preferred Stockholders'
Majority") which such approval shall not be unreasonably withheld, (iv) no
Consenting Preferred Stockholders' Termination Event shall have occurred and be
continuing and not waived or cured in accordance with the terms and conditions
set forth in this Agreement, (v) no Consenting Noteholders' Termination Event
shall have occurred and be continuing, and not waived or cured in accordance
with the terms and conditions set forth in the Term Sheet and the Consenting
Noteholders' Voting Agreement, (vi) the Company has not terminated this
Agreement after the occurrence of a Company Termination Event and none of its
direct and indirect subsidiaries shall have taken any action materially
inconsistent with the terms and conditions set forth in this Agreement, (vii) no
other termination of this Agreement has occurred pursuant to the terms set forth
under Section 8 and Section 11.08 of this Agreement, and (viii) the Equityholder
Newco Common Stock shall be allocated under the Plan as provided in subparagraph
(b) of this Section 4.01, it shall, when solicited, subject to the
acknowledgements contained in Section 9 hereof, vote to support the Plan;
provided, however, that no Consenting Preferred Stockholder shall be barred from
(1) objecting to compliance with Bankruptcy Code section 1125 or other
applicable law relating to the sufficiency of the disclosures contained in the
accompanying disclosure statement for the Plan (the "Disclosure Statement"), if
it believes the Disclosure Statement or other document received by such
Consenting Preferred Stockholder lacks adequate information (as defined in
section 1125(a)(1) of the Bankruptcy Code) or contains a material misstatement
or omission or (2) taking any action that does not directly or indirectly
conflict with the provisions of the Term Sheet; provided, further, that in
accordance with the terms and conditions set forth in the Term Sheet and this
Agreement, if the class of Preferred Stockholders under the Plan reject the Plan
and accordingly no distribution is made to the class of Preferred Stockholders
under the Plan, the agreement of a Consenting Preferred Stockholder to vote to
support the Plan pursuant to subparagraph (a) above shall not constitute a
waiver of such Consenting Preferred Stockholder's right to object, if any, to
the application by the Bankruptcy Court of such provision in the Plan providing
for no distribution to be made to the Preferred Stockholders; and
(b) the Equityholder Newco Common Stock will be allocated under the
Plan and in accordance with the terms and conditions of the Term Sheet, the
Consenting Noteholders' Voting Agreement and this Agreement as follows (i)
thirteen and one-half percent (13.5%) of the Newco Common Stock shall be
allocated for distribution on a pro rata basis to the Preferred Stockholders
based on the liquidation preference plus accumulated dividends of such holder's
Preferred Stock and (ii) one and one-half percent (1.5%) of the Newco Common
Stock shall be allocated to be distributed on a pro rata basis by the Common
Stockholders based on the number of shares of Common Stock held by such holder;
provided, however, that if the Equityholder Newco Common Stock is subject to any
percentage increase (in accordance with any downward adjustment made to the
Noteholder Newco Common Stock, as set forth in the Term Sheet), then the
Equityholder Newco Common Stock shall be allocated in accordance with the terms
and conditions of the Term Sheet, the Consenting Noteholders' Voting Agreement
and this Agreement as follows (i) ninety percent (90%) of the Equityholder Newco
Common Stock shall be allocated for distribution on a pro rata basis to the
Preferred Stockholders based on the liquidation preference plus accumulated
dividends of such holder's Preferred Stock and (ii) ten
percent (10%) of the Equityholder Newco Common Stock shall be allocated to be
distributed on a pro rata basis by the Common Stockholders based on the number
of shares of Common Stock held by such holder; provided, further, that the
Equityholder Newco Common Stock shall be subject to dilution by the Employee
Option, as set forth in the Term Sheet.
4.02. TRANSFER OF CLAIMS, INTERESTS AND SECURITIES.
Except as expressly provided herein, this Agreement shall not in any
way restrict the right or ability of any Consenting Preferred Stockholder to
sell, use, assign, transfer or otherwise dispose of any of the securities of, or
claims against, the Company, provided, however, that for a period commencing as
of the date such Consenting Preferred Stockholder executes this Agreement until
the earlier to occur of (i) the occurrence of a Consenting Preferred
Stockholders' Termination Event that has not been waived or cured in accordance
with the terms and conditions of this Agreement, (ii) the occurrence of a
Consenting Noteholders' Termination Event that has not been waived or cured in
accordance with the terms and conditions of the Term Sheet and the Consenting
Noteholders' Voting Agreement, (iii) the Company's termination of this Agreement
after the occurrence of a Company Termination Event, (iv) any other termination
of this Agreement pursuant to the terms set forth under Section 8 and Section
11.08 of this Agreement and (v) the Effective Date of the Plan (such period, the
"Restricted Period"), such transfer shall be void and without effect unless and
until the transferee delivers to the Consenting Preferred Stockholder transferor
and the Company, within five (5) days after the date of such transfer, a written
agreement containing, among other things, a provision substantially similar to
the provision set forth in Exhibit B attached hereto pursuant to which such
transferee shall assume all obligations of the Consenting Preferred Stockholder
transferor hereunder in respect of the Preferred Stock transferred (such
transferees, if any, to also be a "Consenting Preferred Stockholder" hereunder);
provided that any securities of the Company acquired by a Consenting Preferred
Stockholder after the date such Consenting Preferred Stockholder executes this
Agreement shall not be subject to the restrictions on transfer and the
assumption of obligations by any transferee as set forth in this Section 4.02.
4.03 REPRESENTATION OF THE COMPANY.
The Company represents that, as of the date hereof, (a) the total
issued and outstanding shares of each of Series C and Series D Preferred Stock
are as set forth in Schedule A to this Agreement, and there are no other shares
of any series of Preferred Stock issued and outstanding and (b) the liquidation
preferences per share (excluding accrued and unpaid dividends and the
liquidation preference dollar amount solely by reason of the accrued and unpaid
dividends included therein) for each of Series C and Series D Preferred Stock
are as set forth on Schedule A to this Agreement.
4.04. REPRESENTATION OF CONSENTING PREFERRED STOCKHOLDERS' HOLDINGS.
Each of the Consenting Preferred Stockholders represents that, as of
the date such Consenting Preferred Stockholder executes and delivers this
Agreement, it is the beneficial owner of, and/or the investment adviser or
manager (with the power to vote and dispose of all or substantially all of the
issued and outstanding shares of Preferred Stock and/or issued and outstanding
shares of Common Stock, as set forth on its signature page (collectively, the
"Relevant Securities") on behalf of their beneficial owners) of discretionary
accounts for the holders or beneficial owners of the Relevant Securities.
SECTION 5. THE COMPANY'S UNDERTAKINGS.
5.01 CONSUMMATION OF TRANSACTIONS AND CONFIRMATION OF PLAN.
After the Filing Threshold Date, the Company shall, and shall cause its
direct and indirect subsidiaries, to, as applicable, to (i) take all acts
necessary to effectuate and consummate the transactions contemplated by the Term
Sheet and the Plan as expeditiously as possible and (ii) implement all steps
necessary and desirable to obtain an order of the Bankruptcy Court confirming
the Plan, in each case, as expeditiously as possible under the Bankruptcy Code
and the Bankruptcy Rules.
5.02 THIRD PARTY APPROVALS.
The Company shall use its commercially reasonable best efforts, and
shall cause its direct and indirect subsidiaries to use their commercially
reasonable best efforts, to obtain all regulatory, governmental, administrative,
and third party approvals of the Transaction and confirmation of the Plan.
SECTION 6. MUTUAL REPRESENTATIONS, WARRANTIES, AND COVENANTS. Each of the
Parties represents, warrants, and covenants to the others the following as of
the date of this Agreement, each of which is a continuing representation,
warranty, and covenant:
6.01. ENFORCEABILITY.
This Agreement is a legal, valid, and binding obligation of the Party,
enforceable against it in accordance with its terms, except as enforcement may
be limited by applicable laws relating to or limiting creditor's rights
generally or by equitable principles relating to enforceability.
6.02. NO CONSENT OR APPROVAL.
Except as expressly provided in this Agreement, no consent or approval
is required by any other person or entity in order for it to carry out the
provisions of this Agreement.
6.03 POWER AND AUTHORITY. Except as expressly provided in this
Agreement, it has all requisite power and authority to enter into this Agreement
and to carry out the transactions contemplated by, and perform its respective
obligations under, this Agreement.
6.04 AUTHORIZATION. The execution and delivery of this Agreement and
the performance of its obligations hereunder have been duly authorized by all
necessary action on its part.
6.05 GOVERNMENTAL CONSENTS. The execution, delivery and performance by
it of this Agreement do not and shall not require any registration, filing,
consent, approval, or notice to, or other action by, any federal, state or other
governmental authority or regulatory body, except (i) such filings as may be
necessary and/or required under the federal securities laws,
(ii) in connection with the Bankruptcy Case, the approval of the Disclosure
Statement and confirmation of the Plan, (iii) any filings, notifications, or
approvals required by the regulatory body of one or more jurisdictions,
including but not limited to California, Nevada, and North Carolina, and (iv)
any filings, notifications, or approvals required by the regulatory body of one
or more jurisdictions, including but not limited to Ohio, that are required to
be made or obtained by any party before that party, directly or indirectly,
owns, controls, holds the power to vote, of holds the power to vote proxies that
constitute, a percentage of the total voting power of the Company and/or Mpower
Communications Corp. that would result in that party acquiring actual or
presumed control thereof.
6.06 MUTUAL RELEASE. It has executed and delivered to the other a
mutual release, substantially similar to the form annexed hereto as Exhibit C
(each, a "Mutual Release").
SECTION 7. NO WAIVER OF PARTICIPATION AND RESERVATION OF RIGHTS. Except as
expressly provided in this Agreement and in any Mutual Release between a
Consenting Preferred Stockholder and the Company referred to in Section 10
hereof, nothing herein is intended to, or does, in any manner waive, limit,
impair, or restrict the ability of each of the Consenting Preferred Stockholders
to protect and preserve its rights, remedies and interests, including without
limitation, its claims against the Company or its full participation in any
Bankruptcy Case filed by the Company or any of its affiliates and subsidiaries.
If the transactions contemplated by this Agreement or in the Plan are not
consummated, the Parties fully reserve any and all of their rights.
SECTION 8. TERMINATION EVENTS OF AGREEMENT. The termination events for this
Agreement shall be the Consenting Preferred Stockholders' Termination Events.
"Consenting Preferred Stockholders' Termination Event" means any of the
following events:
(a) the Company shall have materially breached any material
provision of the Term Sheet or this Agreement;
(b) the Plan does not provide that the Equityholder Newco Common
Stock will be allocated as provided in Section 4.01(b) of this
Agreement;
(c) the Confirmation Order confirming a Plan in accordance with
the terms and conditions of the Term Sheet and this Agreement
has been reversed on appeal and shall have become a final
order;
(d) the Bankruptcy Court does not confirm the Plan on or before
one hundred and forty (140) days after the Filing Date;
(e) a trustee or examiner with enlarged powers shall have been
appointed under section 1104 or 105 of the Bankruptcy Code for
service in Chapter 11 cases;
(f) the Chapter 11 Cases shall have been converted to cases under
chapter 7 of the Bankruptcy Code;
(g) the Plan provides or is modified to provide for any terms that
are materially adverse to or materially inconsistent with the
terms set forth in the Term Sheet or this Agreement (to the
extent applicable); and
(h) after filing the Plan, the Company (i) submits a second or
amended plan of reorganization or liquidation that does not
incorporate all the material terms of the Term Sheet and this
Agreement (to the extent applicable) or (ii) moves to withdraw
or withdraws the Plan unless such withdrawal is necessary to
give effect to the Sale of Assets provision under the Term
Sheet.
SECTION 9. ACKNOWLEDGMENT. This Agreement and the Term Sheet and the
transactions contemplated herein and therein are the product of negotiations
between the Company, the Ad Hoc Committee and the Preferred Stockholders and
their respective representatives. This Agreement is not and shall not be deemed
to be a solicitation of votes for the acceptance of the Plan. Each of the
Consenting Preferred Stockholders' acceptance of the Plan will not be solicited
until it has received a Disclosure Statement approved by the Bankruptcy Court.
SECTION 10. EFFECTIVENESS; AMENDMENTS. This Agreement shall become effective and
binding upon each of the Parties that have executed and delivered counterpart
signature pages hereto. Each Consenting Preferred Stockholder acknowledges, by
its execution of this Agreement, that the Company has executed and delivered a
counterpart signature page to this Agreement as of the date hereof. Once
effective, this Agreement may not be modified, amended, or supplemented (except
as expressly provided herein) as to any Consenting Preferred Stockholder except
in writing signed by the Company and such Consenting Preferred Stockholder.
SECTION 11. MISCELLANEOUS.
11.01. FURTHER ASSURANCES.
The Parties agree to execute and deliver such other instruments and
perform such acts, in addition to the matters herein specified, as may be
appropriate or necessary, from time to time, to effectuate the agreements and
understandings of the Parties herein, whether the same occurs before or after
the date of this Agreement.
11.02. COMPLETE AGREEMENT.
This Agreement is the entire agreement between the Parties with respect
to the subject matter hereof and supersedes all prior agreements, oral or
written, between the Parties with respect thereto. No claim of waiver,
modification, consent or acquiescence with respect to any provision of this
Agreement shall be made against any Party, except on the basis of a written
instrument executed by or on behalf of such Party. All Parties shall receive
advance written notice of any proposed material changes to the Plan.
11.03. PARTIES.
This Agreement shall be binding upon, and inure to the benefit of, the
Parties. No rights or obligations of any Party under this Agreement may be
assigned or transferred to any other person or entity except as provided in
Section 4.02 hereof. Nothing in this Agreement, express or implied, shall give
to any person or entity, other than the Parties, any benefit or any legal or
equitable right, remedy or claim under this Agreement.
11.04. HEADINGS.
The headings of all sections of this Agreement are inserted solely for
the convenience of reference and are not a part of and are not intended to
govern, limit or aid in the construction or interpretation of any term or
provision hereof.
11.05. GOVERNING LAW.
THIS AGREEMENT IS TO BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE
PERFORMED IN SUCH STATE, WITHOUT GIVING EFFECT TO THE CHOICE OF LAWS PRINCIPLES
THEREOF.
11.06. EXECUTION OF AGREEMENT.
This Agreement may be executed and delivered (by facsimile or
otherwise) in any number of counterparts, each of which, when executed and
delivered, shall be deemed an original, and all of which together shall
constitute the same agreement. Except as expressly provided in this Agreement,
each individual executing this Agreement on behalf of a Party has been duly
authorized and empowered to execute and deliver this Agreement on behalf of said
Party.
11.07. INTERPRETATION.
This Agreement is the product of negotiations between the Company, the
Ad Hoc Committee and the Preferred Stockholders and their respective
representatives, and the enforcement or interpretation hereof, is to be
interpreted in a neutral manner, and any presumption with regard to
interpretation for or against any Party by reason of that Party having drafted
or caused to be drafted this Agreement, or any portion hereof, shall not be
effective in regard to the interpretation hereof.
11.08. TERMINATION.
This Agreement shall automatically terminate and have no further force
or effect if (i) the Conditions have not been satisfied (and the Filing
Threshold Date has not occurred) on or before March 29, 2002, (ii) the Company
has terminated the Consent Solicitation and the Conditions have not been
satisfied at such time, (iii) the Consenting Noteholders' Voting Agreement has
been terminated; or (iv) any of the Consenting Preferred Stockholders'
Termination Events shall have occurred, unless (x) the occurrence of such
Consenting Preferred Stockholders' Termination Event is waived in writing within
five (5) business days of its occurrence by a Consenting Preferred Stockholders'
Majority; or (y) the Consenting Preferred Stockholders' Termination Event that
has occurred is that set forth under subparagraph (a) in Section 8 of this
Agreement, in which case, to properly terminate this Agreement (A) written
notice must be provided to the Company by a Consenting Preferred Stockholders'
Majority that (1) the Company has materially breached a material provision of
the Term Sheet or this Agreement and (2) sets forth the provisions of the Term
Sheet and/or this Agreement that have been breached;
provided that the Company hereby agrees to waive the requirement (if any) that
the automatic stay in effect pursuant to section 362 of the Bankruptcy Code (the
"Automatic Stay") be lifted in connection with giving such notice (and not to
object to the Consenting Preferred Stockholders seeking to lift the Automatic
Stay in connection with giving such notice, if necessary), and (B) a ten (10)
day cure period with respect to such breach shall have occurred and such breach
remains uncured. In addition to any other termination provisions contained in
this Agreement, this Agreement shall be terminable (i) by the Company via
written notice to each Consenting Preferred Stockholder, if at any time the
aggregate holdings of the Consenting Preferred Stockholders is less than 66?% of
the outstanding shares of Preferred Stock, (ii) by the Company via written
notice to each Consenting Preferred Stockholder, if the terms and conditions set
forth in the Term Sheet or this Agreement are materially breached by a
Consenting Preferred Stockholders' Majority, and (iii) via written notice to all
of the Parties upon unanimous written agreement of the Company and a Consenting
Preferred Stockholders' Majority to terminate this Agreement; provided, however,
that such termination of this Agreement shall not restrict the Parties' remedies
for a prior breach hereof. If any Consenting Preferred Stockholders' Termination
Event occurs and has not been waived or cured, or the Company terminates the
Term Sheet or this Agreement after the occurrence of a Company Termination Event
at a time when approval of the Bankruptcy Court shall be required for a
Consenting Preferred Stockholder to change or withdraw (or cause to be changed
or withdrawn) its votes to accept the Plan, the Company shall not oppose any
attempt by such Consenting Preferred Stockholder to change or withdraw (or cause
to be changed or withdrawn) such votes at such time. If this Agreement is
terminated for any reason, the Parties fully reserve any and all of their rights
and shall have no continuing liability or obligation to any other party hereto;
provided that no such termination shall relieve any Party from liability for its
breach or non-performance of its obligations hereunder prior to the date of such
termination.
11.09. SUCCESSORS AND ASSIGNS.
This Agreement is intended to bind and inure to the benefit of the
Parties and their respective successors, assigns, heirs, executors,
administrators and representatives, other than a trustee or similar
representative appointed in the Bankruptcy Cases. The agreements,
representations and obligations of the Consenting Preferred Stockholders under
this Agreement are, in all respects, several and not joint.
11.10. NOTICES.
All notices hereunder shall be deemed given if in writing and
delivered, if sent by telecopy, courier or by registered or certified mail
(return receipt requested) to the following addresses and telecopier numbers (or
at such other addresses or telecopier numbers as shall be specified by like
notice)
(3) IF TO THE COMPANY, TO:
Mpower Holding Corporation
Mpower Communication Corp.
000 Xxxxx'x Xxxxx, Xxxxx 000
Pittsford, NY 14534
Attention: Xxxxxxx X. Xxxxxxxxx,
Senior Vice President,
General Counsel and Secretary
Telecopier: (000) 000-0000
WITH COPIES TO:
Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Telecopier: (000) 000-0000
(4) IF TO A CONSENTING PREFERRED STOCKHOLDER OR A
TRANSFEREE THEREOF, TO THE ADDRESSES OR TELECOPIER
NUMBERS SET FORTH BELOW FOLLOWING THE CONSENTING
PREFERRED STOCKHOLDER'S SIGNATURE (OR AS DIRECTED BY
ANY TRANSFEREE THEREOF), AS THE CASE MAY BE.
Any notice given by delivery, mail or courier shall be effective when received.
Any notice given by telecopier shall be effective upon oral or machine
confirmation of transmission.
IN WITNESS WHEREOF, the Parties have executed this Agreement on the day
and year first above written.
MPOWER HOLDING CORPORATION
By:
---------------------------------------
Name:
Title:
[CONSENTING PREFERRED STOCKHOLDERS SIGNATURE PAGES FOLLOW]
SIGNATURE PAGE TO THE VOTING AGREEMENT
BY AND AMONG MPOWER HOLDING CORPORATION AND THE CONSENTING PREFERRED
STOCKHOLDERS PARTY THERETO
Date Executed: March __, 2002
-------------------------------------------
PRINT NAME OF CONSENTING PREFERRED
STOCKHOLDER
-------------------------------------------
Name:
Title:
Address:
------------------------------------
Attention:
----------------------------------
Telephone:
----------------------------------
Facsimile:
----------------------------------
Aggregate number of shares issued and
outstanding Series C Preferred Stock
beneficially owned or managed on behalf of
accounts that hold or beneficially own such
securities, and subject to the terms and
conditions of this Agreement:
-------------------------------------------
Aggregate number of shares of issued and
outstanding Series D Preferred Stock
beneficially owned or managed on behalf of
accounts that hold or beneficially own such
securities, and subject to the terms and
conditions of this Agreement:
-------------------------------------------
Aggregate number of shares of issued and
outstanding Common Stock beneficially owned
or managed on behalf of accounts that hold
or beneficially own such securities:
-------------------------------------------
SIGNATURE PAGE TO THE VOTING AGREEMENT BY
AND AMONG MPOWER HOLDING CORPORATION AND THE CONSENTING PREFERRED STOCKHOLDERS
PARTY THERETO
EXHIBIT A
Term Sheet
[attached]
EXHIBIT B
PROVISION FOR TRANSFER AGREEMENT
The undersigned ("Transferee") hereby acknowledges that it has read and
understands the Voting Agreement between Mpower Holding Corporation and
[Transferor Consenting Noteholder Name], inter alia, and agrees to be bound by
the terms and conditions thereof to the extent Transferor was thereby bound.
By:
--------------------------------------------
[Transferee Name]
EXHIBIT C
Form of Mutual Release
[attached]
Exhibit 4.2
TERM SHEET FOR EXCHANGE OF (I) CASH AND NEWCO COMMON STOCK FOR 13% SENIOR
NOTES DUE 2010 (THE "NOTES") ISSUED BY MPOWER HOLDING
CORPORATION (THE "COMPANY") AND (II) NEWCO COMMON STOCK FOR SERIES C
AND SERIES D PREFERRED STOCK (COLLECTIVELY, THE "PREFERRED STOCK")
ISSUED BY THE COMPANY
This term sheet (the "Term Sheet") is being circulated in confidence, in
furtherance of settlement discussions, and is entitled to the protection from
use or disclosure afforded by Federal Rules of Evidence 408 and any similar
applicable federal or state rule of evidence. This Term Sheet is intended to
provide an overview of the general terms of a financial restructuring of the
Company and is subject to definitive documentation.
The transactions contemplated below will be consummated pursuant to a
pre-negotiated plan of reorganization (the "Plan"), in form and substance
reasonably satisfactory to certain holders of the Notes that are members of the
ad hoc committee (the "Ad Hoc Committee"), under chapter 11 of Title 11 of the
United States Code, 11 U.S.C. xx.xx. 101-1330 (as amended, the "Bankruptcy
Code"). The Company believes that if the transactions contemplated by this Term
Sheet were to be completed, then the Company may have sufficient cash to fund
its operations through the beginning of 2003. Prior to the Filing Date (as
defined below), the Company, in its sole discretion but after consultation with
the Ad Hoc Committee, will determine whether any of its operating subsidiaries
will also file petitions under chapter 11 of the Bankruptcy Code commencing
reorganization cases.
Filing Date and Voting Agreement o The Company will file a petition under
chapter 11 of the Bankruptcy Code
commencing a reorganization case (the
"Chapter 11 Case") in the United States
Bankruptcy Court for the District of
Delaware (the "Bankruptcy Court") on a
date (the "Filing Date") as soon as is
practicable after the date (the "Filing
Threshold Date") all of the following
conditions (the "Conditions") are
satisfied: (x) holders of the Notes (the
"Noteholders") holding an aggregate
principal amount of not less than
66 2/3% of all outstanding Notes (the
"Filing Threshold") agree to become a
party to a voting agreement in form and
substance satisfactory to the Company
(the "Voting Agreement") by executing
and delivering a counterpart signature
page to such Voting Agreement to the
Company (those Noteholders becoming a
party to the Voting Agreement being
"Consenting Noteholders") and the
Company's Board of Directors duly
approves the terms and conditions of
such Voting Agreement and this Term
Sheet, (y) the Company has completed
soliciting (the "Consent Solicitation")
all Noteholders to provide such holders
an opportunity to
become party to the Voting Agreement;
and (z) the Plan is otherwise
confirmable with respect to the
requirements set forth under Section
1129(a)(10) of the Bankruptcy Code, as
determined in good faith after
consultation with the Ad Hoc Committee
within three (3) business days after the
completion of the Consent Solicitation;
provided that the Filing Date in any
case shall occur no later than the later
of (A) April 30, 2002 and (B) fifteen
(15) business days after the Filing
Threshold Date; and provided, further,
that the Company may earlier commence
the Chapter 11 Case whether or not all
of the Conditions have been satisfied.
o The Consenting Noteholders and the
Company will implement this Term Sheet
through the Voting Agreement, which
will, among other things, contain (i)
fiduciary duty exclusions with respect
to a Consenting Noteholder's service on
an official committee appointed in the
Chapter 11 Case and (ii) a limited
exemption that will exclude purchases of
the Company's securities by any
Consenting Noteholder after its
execution of the Voting Agreement from
the terms and conditions set forth in
the Voting Agreement.
o In the event a Consenting Noteholder
assigns its claim or interest to a third
party, such third party assignor must
agree to be bound by the Voting
Agreement executed by such Consenting
Noteholder.
Treatment of Noteholders NEWCO COMMON STOCK
o On the effective date of the Plan (the
"Effective Date"), each Noteholder will
receive its pro rata share of the
Noteholder Newco Common Stock.
"Noteholder Newco Common Stock" means
eighty-five percent (85%) of the
reorganized Company's ("Newco") issued
and outstanding common stock on the
Effective Date (the "Newco Common
Stock"); provided that to the extent
that the Company acquires any Notes in
the open market prior to the Effective
Date and the class comprised of the
holders of the Preferred Stock (the
"Preferred Stockholders") under the Plan
accepts the
Plan in the Chapter 11 Case, the
percentage of the "Noteholder Newco
Common Stock" shall be reduced by the
percentage of Notes acquired by such
open market acquisitions.
o For example, if the Company acquires 50%
of the Notes outstanding prior to the
Effective Date and the class of
Preferred Stockholders under the Plan
accepts the Plan in the Chapter 11 Case,
the Noteholders will receive 42.5% of
the Newco Common Stock, and the
Preferred Stockholders and the Common
Stockholders will own in the aggregate
57.5% of the Newco Common Stock.
However, in the event that the class of
Preferred Stockholders under the Plan
rejects the Plan in the Chapter 11 Case,
the Noteholders in this example would
receive 100% of the Newco Common Stock,
and as set forth below, the Preferred
Stockholders and the Common Stockholders
would not receive any Newco Common Stock
under the Plan.
o The total issued and outstanding Newco
Common Stock on the Effective Date shall
be approximately 65 million shares,
excluding any shares issued in
connection with the Employee Options.
o On the Effective Date, the Noteholder
Newco Common Stock will be subject to
dilution only by the Employee Options
(defined below) and will not be diluted
in connection with either any
restructuring of the Senior Secured
Notes (defined below) or any Operating
Company claims; provided that at any
date after the Effective Date the
Noteholder Newco Common Stock may be
subject to dilution by any dilutive
action duly approved by the Newco Board
of Directors.
o The Noteholder Newco Common Stock will
be freely transferable.
o Noteholders that individually receive in
excess of ten percent (10%) of the Newco
Common Stock under the Plan shall have
reasonable piggyback registration rights
and reasonable demand registration
rights,
unless, with respect to the demand
registration rights only, a Noteholder
receives an opinion of counsel for the
Company, reasonably satisfactory to such
demanding Noteholder, that such
Noteholder's Newco Common Stock is
freely transferable. The terms of such
registration rights shall be
incorporated under a registration rights
agreement to be negotiated in good faith
by the Company and the Noteholders and
Preferred Stockholders (if any) that
individually receive in excess of ten
percent (10%) of the Newco Common Stock
under the Plan.
Treatment of holders of Preferred o If the class of Preferred Stockholders
Stock and holders of Common Stock under the Plan accepts the Plan during
(the "Common Stockholders") if the the Chapter 11 Case, then on the
class of Preferred Stockholders under Effective Date the Preferred
the Plan accepts the Plan in the Stockholders and Common Stockholders,
Chapter 11 Case in collectively, will own fifteen
percent (15%) of the Newco Common Stock
(the "Equityholder Newco Common Stock"),
subject to any percentage increase (in
accordance with any downward adjustment
made to the Noteholder Newco Common
Stock, as described above and below) and
to dilution by the Employee Options
(defined below).
o For example, if the Company acquires 50%
of the Notes outstanding prior to the
Effective Date and the class of
Preferred Stockholders under the Plan
accepts the Plan in the Chapter 11 Case,
the Noteholders will receive 42.5% of
the Newco Common Stock, and the
Preferred Stockholders and the Common
Stockholders will own in the aggregate
57.5% of the Newco Common Stock.
However, in the event that the class of
Preferred Stockholders under the Plan
rejects the Plan in the Chapter 11 Case,
the Noteholders in this example would
receive 100% of the Newco Common Stock,
and as set forth below, the Preferred
Stockholders and the Common Stockholders
would not receive any Newco Common Stock
under the Plan.
o The allocation of the Equityholder Newco
Common Stock under the Plan as between
the Preferred Stockholders and the
Common Stockholders will be determined
subject to further negotiations with the
Preferred Stockholders and the Common
Stockholders prior to the filing of the
Plan. In the event that no agreement
can be reached on such allocation prior
to the filing of the Plan, the Company's
Board of Directors shall determine the
allocation of the Equityholder Newco
Common Stock under the Plan.
o The Preferred Stockholder Newco Common
Stock will be freely transferable.
o Preferred Stockholders that individually
receive in excess of ten percent (10%)
of the Newco Common Stock under the Plan
shall have reasonable piggyback
registration rights and reasonable
demand registration rights, unless, with
respect to the demand registration
rights only, a Preferred Stockholder
receives an opinion of counsel for the
Company, reasonably satisfactory to such
demanding Preferred Stockholder, that
such Preferred Stockholder's Newco
Common Stock is freely transferable. The
terms of such registration rights shall
be incorporated under a registration
rights agreement to be negotiated in
good faith by the Company and the
Preferred Stockholders (if any) and
Noteholders that individually receive in
excess of ten percent (10%) of the Newco
Common Stock under the Plan.
Treatment of Noteholders, Preferred o If the class of Preferred Stockholders
Stockholders and Common Stockholders under the Plan rejects the Plan in the
if the class of Preferred Chapter 11 Case, the Preferred
Stockholders under the Plan rejects Stockholders and Common Stockholders
the Plan in the Chapter 11 Case will not receive any distribution under
the Plan, and "Noteholder Newco Common
Stock" (defined above) shall instead
mean one hundred percent (100%) of the
Newco Common Stock.
Treatment of Certain Operating o Impaired creditors in respect of
Company Impaired Creditors rejected executory contracts or
unexpired leases will be paid up to 100%
of their allowed claim in cash and/or
promissory notes.
Employees o Employees will continue to be eligible
to participate in a stock option plan,
to be approved and adopted by Newco's
Board of Directors, providing for no
more than 10% of the Newco Common Stock
(the "Employee Options"). As part of
such 10% of the Newco Common Stock
allocated for the Employee Options, the
existing 6,336,166 outstanding options
currently
held by employees will remain in place
and retain all of their present terms
and conditions, including, but not
limited to, their strike price. The
strike price at the issuance of any new
Employee Options issued after the
Effective Date shall be determined by
the Newco Board of Directors; provided
that in no event will such options or
warrants have a nominal price.
o The Company's existing Employee Benefit
Trust and all amounts thereunder shall
remain in place pursuant to the Plan for
the benefit of employees of the Company
or its affiliates in connection with
certain severance and retention
agreements the Company has established;
provided that pursuant to Section 11 of
the Voting Agreement, if any Consenting
Noteholder is appointed to and serves on
any official committee appointed in the
Chapter 11 Case, this provision in this
Term Sheet shall not be construed so as
to limit such Consenting Noteholder's
exercise (in the sole discretion of such
Consenting Noteholder) of its fiduciary
duties and any such exercise (in the
sole discretion of such Consenting
Noteholder) of such fiduciary duties
shall not be deemed to be a breach of
the terms of the Voting Agreement.
Repurchases and Redemptions o Other than with respect to the
consummation of the transactions
contemplated hereby, the Company will
not repurchase, exchange, redeem, tender
for or otherwise retire any of its (i)
Notes for aggregate consideration
exceeding 15.5% of the principal amount
of any Note or (ii) Preferred Stock for
aggregate consideration exceeding $1 per
share (so long as permitted under the
Indenture governing the Notes).
Governance o The Plan and the amended and restated
certificate of incorporation of Newco
will provide for a Board of Directors of
seven members. Four members of the Board
of Directors (the "Noteholder
Designees") will initially be nominated
by the Noteholders. At least one of the
Noteholder Designees shall satisfy the
National Association of Securities
Dealers' qualifications to serve on the
Audit Committee of the
Newco Board of Directors. If the class
of Preferred Stockholders under the Plan
accepts the Plan in the Chapter 11 Case,
one member of Newco's Board of Directors
(the "Preferred Stockholder Designee")
will initially be nominated by the
Preferred Stockholders. If the class of
Preferred Stockholders under the Plan
rejects the Plan in the Chapter 11 Case,
the Noteholder Designees shall consist
of five (instead of four) members of
Newco's Board of Directors and there
shall be no Preferred Stockholder
Designee. The names of the Noteholder
Designees and the Preferred Stockholder
Designee (if any) shall be provided in a
written authorized letter by counsel to
the Ad Hoc Committee and counsel to the
Preferred Stockholders, respectively, to
the Company's counsel on or before five
(5) business days before the hearing on
the adequacy of the Disclosure Statement
(defined below) in accordance with
section 1125 and rule 3017 of the
Bankruptcy Code. The Noteholder
Designees and the Preferred Stockholder
Designee (if any) will have the right to
serve for a minimum term of two (2)
years and the restated certificate of
incorporation shall provide that such
designees cannot be removed by
shareholders without "cause" during
their initial two (2) year term. One
member of Newco's Board of Directors
will be Xxxxx's Chief Executive Officer.
The remaining one member of Newco's
Board of Directors will be determined by
the Company prior to the hearing on the
adequacy of the Disclosure Statement
(defined below) in accordance with
Section 1125 and rule 3017 of the
Bankruptcy Code.
o Except as provided above, Board
members will be elected in accordance
with the terms of Newco's amended and
restated certificate of incorporation
and by-laws, which shall be consented to
as acceptable in form and substance by
counsel to the Ad Hoc Committee prior to
the filing of the Plan and accompanying
disclosure statement (the "Disclosure
Statement"). Such consent shall not be
unreasonably withheld.
Sale of Assets o After the Filing Threshold Date, each
of the Company and the Operating Company
shall be permitted, subject to
compliance with applicable law, to
engage in transactions for (i) any
merger, (ii) any consolidation,
(iii) a partial sale of its assets (a
"Partial Asset Sale") and (iv) a sale of
all or substantially all of its assets
(an "Asset Sale"). Prior to the
Effective Date, proceeds from any
Partial Asset Sale may be reinvested by
the Company in the business to fund the
business plan, but may not be
distributed to any member of any class
of claims against or class of interests
in the Company under the Bankruptcy Code
if such class is junior to the Notes.
Proceeds from any merger, any
consolidation or an Asset Sale will be
distributed in accordance with the terms
and conditions of the Voting Agreement
and this Term Sheet pursuant to the
Plan, as if the Plan had been
consummated; provided that if on the
date (the "Plan and Disclosure Statement
Filing Date") on which the Company files
the Plan and Disclosure Statement the
Company cannot make the representation
described in subsection (y) in the
paragraph below, (the "Creditor
Representation"), then the Company shall
have ten (10) business days to resolve
any claims that may have been asserted
by any creditor of the Company (the
"Representation Cure Period"); provided,
further, that if on the date that is one
(1) business day after the
Representation Cure Period the Company
cannot make the Creditor Representation,
then there shall be no agreement on how
the proceeds from any merger,
consolidation or Assets Sale may be
distributed, as set forth above.
o The Voting Agreement will contain, among
other things, (x) a representation by
the Company that, as of the Filing
Threshold Date, the Company (i) has not
resolved to engage in any merger,
consolidation, Partial Asset Sale, Asset
Sale or the purchase or acquisition of
all or a substantial part of the assets
of another entity and (ii) is not a
party to any agreement or engaged in any
discussions or negotiations with any
person that is reasonably likely to lead
to any merger, consolidation, Partial
Asset Sale, Asset Sale or purchase or
acquisition of all or a substantial part
of the assets of another entity, except
to the extent previously disclosed to
Xxxxxxxxx & Company, Inc; and (y) a
representation by the Company that, as
of the Plan and Disclosure Statement
Filing Date, the Company does not have
any unsecured creditors owed in the
aggregate more than twenty thousand
dollars ($20,000) other than the
Noteholders, the holders of the Senior
Secured Notes (defined below), the
Operating Company (in connection with
intercompany debt), and other than
Rothschild Inc., Xxxxxxxx & Sterling,
Xxxxxxxxx & Company, Inc., and Milbank,
Tweed, Xxxxxx & XxXxxx LLP, to the
extent that they are unsecured creditors
of the Company as of the Plan and
Disclosure Statement Filing Date.
Payment of Interest on the Notes o In accordance with the Plan (to the
extent that the Plan is filed with the
Bankruptcy Court in accordance with the
terms and conditions of this Term Sheet
and the Voting Agreement), no further
interest payments will be made on the
Notes.
Payment of Dividends on the o In accordance with the Plan (to the
Preferred Stock extent that the Plan is filed with the
Bankruptcy Court in accordance with the
terms and conditions of this Term Sheet
and the Voting Agreement), no payments
will be made in respect of any accrued
or unpaid dividend on any class of
Preferred Stock.
Consent Fee NOTES
o Upon the occurrence of the Filing
Threshold Date, each Noteholder that has
become a party to the Voting Agreement
on or before the Filing Threshold Date
in accordance with the terms and
conditions of the Consent Solicitation
will be entitled to receive a cash
payment equal to such holder's pro rata
share of $19.025 million (the
"Noteholder Consent Fee"). The
Noteholder Consent Fee will be paid on
the date that is no later than five (5)
business days after the Filing Threshold
Date. If a Consenting Noteholder who has
received the Noteholder Consent Fee
materially breaches the Voting Agreement
or this Term Sheet, such breaching
Consenting Noteholder shall return to
the Company, and the Company shall have
a right to, its Noteholder Consent Fee.
CONSENT SOLICITATION
o The Company shall have no obligation to
commence the Consent Solicitation
unless, and until the date
(the "Consent Solicitation Threshold
Date") on which, Noteholders holding an
aggregate principal amount of not less
than 66 2/3% of all outstanding Notes
are party to the Voting Agreement and
the Company's Board of Directors has
duly approved the terms and conditions
of the Voting Agreement and this Term
Sheet (the "Consent Solicitation
Threshold").
o Provided that the Consent Solicitation
Threshold has been achieved, the Company
shall commence the Consent Solicitation
on or before ten (10) days after the
Consent Solicitation Threshold Date;
provided, however, that the Company may
(in its sole discretion) commence the
Consent Solicitation at any time prior
to the Consent Solicitation Threshold
Date.
o Each Noteholder that is a Consenting
Noteholder agrees to comply with the
procedures set forth in and agrees to be
bound by the terms and conditions of the
documents governing the Consent
Solicitation in order to become eligible
to receive the Noteholder Consent Fee.
Such documents will be prepared by the
Company and will be subject to the
reasonable approval of the counsel to
the Ad Hoc Committee prior to the
commencement of the Consent
Solicitation.
13% Senior Secured Notes due 2004 Neither the commencement of the Chapter
(the "Senior Secured Notes") and 11 Cases nor the filing of the Plan will
other Creditors be conditioned upon a restructuring of
the Senior Secured Notes, provided that
the Company will be entitled to include
the restructuring of the Senior Secured
Notes in the Plan, subject to meeting
the deadlines set forth in this Term
Sheet.
Termination Events: o "Consenting Noteholders' Termination
Event", wherever used herein, means any
of the following events (whatever the
reason for such Consenting Noteholders'
Termination Event and whether it will be
voluntary or involuntary):
a. the Company's Board of Directors has
not duly approved the terms and
conditions of the Voting Agreement
and this Term
Sheet prior to the commencement of
the Consent Solicitation;
b. the Company has not commenced the
Consent Solicitation on or before ten
(10) days after the Consent
Solicitation Threshold Date (only to
the extent that the Consent
Solicitation Threshold has been
achieved);
c. the Filing Threshold Date does not
occur by March 29, 2002;
d. the Company has not paid the
Noteholder Consent Fee on or before
the date that is no later than five
(5) business days after the Filing
Threshold Date;
e. the Filing Date does not occur by the
later of (A) April 30, 2002 and (B)
fifteen (15) business days after the
Filing Threshold Date;
f. the Plan and Disclosure Statement
Filing Date does not occur on or
before twenty (20) days after the
Filing Date;
g. the Company does not obtain
Bankruptcy Court approval of the
Disclosure Statement on or before
sixty-five (65) days after the Filing
Date;
h. the Bankruptcy Court does not confirm
the Plan on or before one hundred and
forty (140) days after the Filing
Date;
i. the Company does not commence
distributions to the Noteholders and
Preferred Stockholders pursuant to
the Plan within fifteen (15) days
after the Confirmation Order is
entered;
j. the Confirmation Order confirming a
Plan in accordance with the terms and
conditions of the Voting Agreement
and this Term Sheet has been reversed
on appeal and shall have become a
final order;
k. the Noteholder Newco
Common Stock is diluted in connection
with either any restructuring of the
Senior Secured Notes or any Operating
Company claims;
l. a trustee or examiner with enlarged
powers shall have been appointed
under section 1104 or 105 of the
Bankruptcy Code for service in the
Chapter 11 Cases;
m. the Chapter 11 Cases shall have been
converted to cases under chapter 7 of
the Bankruptcy Code;
n. the Company shall have materially
breached any material provision of
the Voting Agreement or this Term
Sheet;
o. the Plan provides or is modified to
provide for any terms that are
materially adverse to or materially
inconsistent with the terms set forth
in this Term Sheet;
p. after filing the Plan, the Company
(i) submits a second or amended plan
of reorganization or liquidation that
does not incorporate all of the
material terms and provisions of this
Term Sheet or (ii) moves to withdraw
or withdraws the Plan unless such
withdrawal is necessary to give
effect to the Sale of Assets
provision under this Term Sheet; and
q. the Company commences the Chapter 11
Case (or otherwise seeks relief under
the Bankruptcy Code) without having
previously paid the Noteholder
Consent Fee.
o The foregoing Consenting Noteholders'
Termination Events are intended solely
for the benefit of the Consenting
Noteholders.
o All provisions of this Term Sheet, the
Voting Agreement, and the Restricted
Period in connection therewith (as
defined in section 4.02 of the Voting
Agreement) shall
terminate (a Consenting Noteholders'
Termination") automatically without the
act of any party to the Voting Agreement
upon the occurrence of any of the
Consenting Noteholders' Termination
Events, unless (x) the occurrence of
such Consenting Noteholders' Termination
Event is waived in writing within five
(5) business days of its occurrence by a
majority of the Noteholders that become
a party to the Voting Agreement (a
"Consenting Noteholders' Majority"); or
(y) the Consenting Noteholders'
Termination Event that has occurred is
that set forth under subparagraph n.
above, in which case to properly effect
a Consenting Noteholders' Termination
(A) written notice must be provided to
the Company by a Consenting Noteholders'
Majority that (1) the Company has
materially breached a material provision
of the Voting Agreement or this Term
Sheet and (2) sets forth the provisions
of the Voting Agreement and/or this Term
Sheet that have been breached; provided
that the Company hereby agrees to waive
the requirement (if any) that the
automatic stay in effect pursuant to
section 362 of the Bankruptcy Code (the
"Automatic Stay") be lifted in
connection with giving such notice (and
not to object to the Consenting
Noteholders seeking to lift the
Automatic Stay in connection with giving
such notice, if necessary), and (B) a
ten (10) day cure period with respect to
such breach must have occurred and such
breach must remain uncured.
o If any Consenting Noteholders'
Termination Event occurs (and has not
been waived) or the Company terminates
this Term Sheet or the Voting Agreement
after the occurrence of a Company
Termination Event (defined below) at a
time when approval of the Bankruptcy
Court shall be required for a Consenting
Noteholder to change or withdraw (or
cause to be changed or withdrawn) its
votes to accept the Plan, the Company
shall not oppose any attempt by such
Consenting Noteholder to change or
withdraw (or cause to be changed or
withdrawn) such votes at such time.
Unless a Consenting Noteholders'
Termination Event is waived in
accordance with the terms hereof, upon
the occurrence of a Consenting
Noteholders' Termination Event or the
termination of this Term Sheet or the
Voting Agreement by the Company after
the occurrence of a Company Termination
Event, each of the Consenting
Noteholders shall have all of the rights
and remedies available to it as existed
immediately prior to the date that the
parties entered into the Voting
Agreement.
o The Company shall, and shall cause each
of its wholly-owned subsidiaries at all
times to immediately advise the
Consenting Noteholders by written notice
to counsel to the Ad Hoc Committee, of
(A) any breach of the Voting Agreement
or this Term Sheet by or on behalf of
the Company or (B) of the occurrence of
any Consenting Noteholders' Termination
Event.
o Consenting Noteholders shall immediately
advise the Company of (A) any material
breach of the Voting Agreement or this
Term Sheet by or on behalf of such
holder, (B) the termination of the
Voting Agreement and/or this Term Sheet
by or on behalf of such holder or (C)
the occurrence of a material breach of
any material provision of the Voting
Agreement or this Term Sheet by the
Company pursuant to subparagraph n.
above. The Company will agree to waive
the requirement (if any) that the
Automatic Stay be lifted in connection
with giving any such notice.
o The waiver in writing by a Consenting
Noteholders' Majority of any condition
hereunder or of the occurrence of any
Consenting Noteholders' Termination
Event shall not relieve any other party
of any liability or obligation with
respect to any covenant or agreement set
forth in this Term Sheet or the Voting
Agreement.
o Upon the occurrence of a Consenting
Noteholders' Termination Event (unless
such Consenting Noteholders' Termination
Event is waived in accordance with the
terms hereof) or upon the Company's
declaration of the occurrence of a
Company Termination Event, this Term
Sheet and the Voting Agreement shall
terminate and no party to the Voting
Agreement shall have any continuing
liability or obligation to any other
party thereto; provided that no such
termination shall relieve any party from
liability for its breach or non-
performance of its obligations hereunder
prior to the date of such termination;
provided, further, that any termination,
except for any termination due to a
Company Termination Event, shall not
affect the validity of any Noteholder
Consent Fee paid to the Consenting
Noteholders prior to the effective date
of termination and in accordance with
this Term Sheet; however, to the extent
a termination of the Voting Agreement
and this Term Sheet has occurred (except
a termination that has occurred pursuant
to a Consenting Noteholders' Termination
Event set forth under subparagraph n.
above) and a Noteholder Consent Fee has
been paid to Consenting Noteholders, the
amount of the Noteholder Consent Fee
shall be used to offset any future
interest payment due to the Consenting
Noteholders. To the extent that there
has been a termination due to a Company
Termination Event and a Noteholder
Consent Fee has been paid, such
Noteholder Consent Fee shall be promptly
returned to the Company.
o The Company shall have the right to
terminate (a "Company Termination
Event") this Term Sheet and the Voting
Agreement, by providing written notice
to each of the Consenting Noteholders,
if (A) the Voting Agreement or this Term
Sheet are materially breached by a
Consenting Noteholders' Majority or (B)
on a date after the Filing Threshold
Date (the "Below Noteholder Threshold
Date"), the aggregate holdings of the
Consenting Noteholders is, and continues
to be for ten (10) consecutive days
beginning on the Below Noteholder
Threshold Date, less than 60% of the
outstanding principal amount of the
Notes.
o Notwithstanding anything to the contrary
contained in this Term Sheet or the
Voting Agreement, the Company will use
its reasonable best efforts in the
Bankruptcy Case to support the payment
of the Noteholder Consent Fee against
any claim or action. In the event that
the Noteholder Consent Fee is required
to be disgorged from the Noteholders and
returned to the Company,
the Company agrees that it will modify
the terms of the Plan to include an
additional cash distribution to each
Noteholder of its pro rata share of
$19.025 million.
Dated: February 22, 2002
MUTUAL RELEASE AGREEMENT
This Mutual Release Agreement (this "Agreement"), is made by and among (i)
the undersigned, solely in its capacity as a holder of 13% Senior Notes due 2010
(the "Notes"), and (ii) Mpower Holding Corporation ("Holding," together with its
subsidiaries and affiliates, the "Company") (each of the foregoing, a "Party",
and collectively, the "Parties").
WHEREAS, the Company has outstanding approximately $380.5 million in
aggregate principal amount of the Notes, issued pursuant to the an Indenture,
dated as of March 24, 2000, by and among Holding and HSBC Bank USA, as trustee
(the "Indenture"); and
WHEREAS, the undersigned and Holding, along with certain other parties,
have agreed to enter into a Voting Agreement (the "Voting Agreement") which
incorporates the terms of a Term Sheet, dated February __, 2002 (the "Term
Sheet"),1 pursuant to which, among other things, the Parties set forth their
agreements concerning their respective obligations with respect to a transaction
affecting the Notes and the conduct of Holding's voluntary case under chapter 11
of the Bankruptcy Code.
NOW, THEREFORE, in consideration of the foregoing and the agreements set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which the Parties hereby acknowledge, the Parties agree as
follows:
1. RELEASE.
Except as provided for herein, the undersigned, solely in its capacity
as a holder of the Notes, and any of its subsidiaries and affiliates and their
respective successors, assigns, trustees, agents, and their directors, officers,
employees, executives, attorneys, advisors, accountants, and representatives
(collectively, the "Undersigned Released Parties") hereby unequivocally release
and forever discharge the Company and any of its subsidiaries and affiliates and
their respective successors, assigns, trustees, agents, and their directors,
officers, employees, executives, attorneys, advisors, accountants,
representatives, and shareholders, including Providence Equity Partners III LLC,
Providence Equity Operating Partners III L.P. and JK & B Management, LLC, (the
"Company Released Parties") from any and all claims (including but not limited
to claims as defined in 11 U.S.C. ss. 101(5)) arising under or in connection
with the Notes held by the undersigned whether or not asserted or raised and
existing, or alleged to exist or to have existed, or whether known or unknown,
at any time from the beginning of the world to and including the date hereof
(collectively, the "Undersigned Claims"), which the Undersigned Released Parties
ever had or have or may have at this time against any of the Company Released
Parties; provided, however, that the foregoing release shall not apply to any
Undersigned Claims (i) relating to the payment (or non-payment) of any principal
of, or premium or other charges, if any, and interest under the Indenture or
with respect to the Notes, including, without limitation, payment (or
non-payment) of any Noteholder Consent Fee due and
----------
1 Capitalized terms not otherwise defined herein shall have the meanings
ascribed to such terms in the Voting Agreement.
payable in accordance with the terms of the Voting Agreement and Term Sheet, and
any fees or other charges that become due and payable in accordance with the
Indenture or under applicable law or (ii) arising under the terms of the Voting
Agreement, the Term Sheet and this Agreement, including, without limitation, any
claim relating to a Company Released Party's breach of the Voting Agreement, the
Term Sheet or this Agreement or the enforcement of the provisions of such
agreements.
2. RELEASE BY THE COMPANY.
Except as provided for herein, the Company Released Parties hereby
unequivocally release and forever discharge the Undersigned Released Parties
from any and all claims (including but not limited to claims as defined in 11
U.S.C. ss. 101(5)) arising under or in connection with the Notes whether or not
asserted or raised and existing, or alleged to exist or to have existed, or
whether known or unknown, at any time from the beginning of the world to and
including the date hereof (collectively, the "Company Claims"), which the
Company Released Parties ever had or have or may have at this time against any
of the Undersigned Released Parties; provided, however, that the foregoing
release shall not apply to any Company Claims arising under the Voting
Agreement, the Term Sheet, any confidentiality agreement (a "Confidentiality
Agreement") with the Company by which any of the Undersigned Released Parties is
bound and this Agreement, including, without limitation, any claim relating to a
Undersigned Released Party's breach of the Voting Agreement, the Term Sheet, a
Confidentiality Agreement or this Agreement or the enforcement of the provisions
of such agreements.
3. AGREEMENTS.
The Parties understand and agree (a) that neither this Agreement, nor any
part hereof, shall be used or construed as an admission of liability on the part
of any Party, (b) that neither this Agreement, nor any part hereof, shall be
used as evidence by or against any Party for any purpose, and (c) that each
Party has had the opportunity to engage counsel to review this Agreement and
advise such Party with respect thereto.
4. SUCCESSORS AND ASSIGNS.
The terms of this Agreement shall be binding on the Parties and their
respective successors and assigns.
5. TERMINATION.
This Agreement, including any releases provided hereunder, shall terminate
upon any termination of the Voting Agreement and the Term Sheet and shall not
survive any such termination, in which case this Agreement shall be of no
further force or effect, and be deemed null and void and to have never existed
in any form and each of the Parties hereto shall have all of the rights and
remedies available to it as existed immediately prior to the date that the
Parties entered into this Agreement.
6. COUNTERPARTS; FACSIMILE EXECUTION.
This Agreement may be executed in any number of counterparts and by
different Parties on separate counterparts, each of which counterpart, when so
executed and delivered, shall be deemed to be an original and all of which
counterparts, taken together, shall constitute but one and the same agreement.
This Agreement may be executed and delivered by telecopier, provided, however,
that the Parties shall endeavor to deliver original counterpart signatures to
the other Parties as soon thereafter as practicable.
7. EFFECTIVENESS.
This Agreement shall become effective and binding upon each of the Parties
that have executed and delivered counterpart signature pages hereto. The
undersigned acknowledges, by its execution of this Agreement, that the Company
has executed and delivered a counterpart signature page to this Agreement as of
the date hereof.
8. GOVERNING LAW.
THIS MUTUAL RELEASE AGREEMENT AND THE RELEASES CONTAINED HEREIN SHALL BE
GOVERNED BY, ENFORCED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK WITHOUT REFERENCE TO ITS CHOICE OF LAW PRINCIPLES.
IN WITNESS WHEREOF, the Parties have executed this Mutual Release Agreement
as of the latest date written below.
Dated: February __, 2002
MPOWER HOLDING CORPORATION,
behalf of itself and its subsidiaries and affiliates
By:
-----------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx, Esq.
Title: Senior Vice President and
General Counsel
SIGNATURE PAGE TO THE MUTUAL RELEASE AGREEMENT BY
AND AMONG THE UNDERSIGNED AND MPOWER HOLDING CORPORATION AND ITS
SUBSIDIARIES AND AFFILIATES
Dated: February __, 2002
-----------------------------------
PRINT NAME OF CONSENTING NOTEHOLDER
-----------------------------------
Name:
Title:
Address: --------------------------
--------------------------
--------------------------
Attention: ------------------------
Telephone: ------------------------
Facsimile: ------------------------
Aggregate principal amount of Notes
beneficially owned or managed on behalf of
accounts that hold or beneficially own
such Notes:
$ ------------------------------
Aggregate number of shares of issued and
outstanding Common Stock beneficially
owned or managed on behalf of accounts
that hold or beneficially own such
securities:
-------------------------------
SIGNATURE PAGE TO THE MUTUAL RELEASE AGREEMENT BY
AND AMONG THE UNDERSIGNED AND MPOWER HOLDING CORPORATION AND ITS
SUBSIDIARIES AND AFFILIATES
MUTUAL RELEASE AGREEMENT
This Mutual Release Agreement (this "Agreement"), is made by and among (i)
the undersigned, solely in its capacity as a holder of Preferred Stock (defined
below) and (ii) Mpower Holding Corporation ("Holding," together with its
subsidiaries and affiliates, the "Company") (each of the foregoing, a "Party",
and collectively, the "Parties").
WHEREAS, the Company has outstanding approximately $380.5 million in
aggregate principal amount of the 13% Senior Notes due 2010 (the "Notes"),
issued pursuant to the Indenture, dated as of March 24, 2000, by and among
Holding and HSBC Bank USA, as trustee (the "Indenture"); and
WHEREAS, the Company has issued and outstanding approximately 1.25 million
shares of Series C and 3.01 million shares of Series D Preferred Stock
(together, the "Preferred Stock"); and
WHEREAS, the undersigned and Holding, along with certain other parties,
have agreed to enter into a Voting Agreement (the "Voting Agreement") which
incorporates the terms of a Term Sheet, dated February 22, 2002 (the "Term
Sheet"),2 pursuant to which, among other things, the Parties set forth their
agreements concerning their respective obligations with respect to a transaction
affecting the Notes and the Preferred Stock and the conduct of Holding's
voluntary case under chapter 11 of the Bankruptcy Code.
NOW, THEREFORE, in consideration of the foregoing and the agreements set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which the Parties hereby acknowledge, the Parties agree as
follows:
9. RELEASE.
Except as provided for herein, the undersigned, solely in its capacity
as a holder of the Preferred Stock, and any of its subsidiaries and affiliates
and their respective successors, assigns, trustees, agents, and their directors,
officers, employees, executives, attorneys, advisors, accountants, and
representatives (collectively, the "Undersigned Released Parties") hereby
unequivocally release and forever discharge the Company and any of its
subsidiaries and affiliates and their respective successors, assigns, trustees,
agents, and their directors, officers, employees, executives, attorneys,
advisors, accountants, representatives, and shareholders, including Providence
Equity Partners III LLC, Providence Equity Operating Partners III L.P. and JK &
B Management, LLC, (the "Company Released Parties") from any and all claims
(including but not limited to claims as defined in 11 U.S.C. ss. 101(5)) arising
under or in connection with the Preferred Stock held by the undersigned whether
or not asserted or raised and existing, or alleged to exist or to have existed,
or whether known or unknown, at any time from the beginning of the world to and
including the date hereof (collectively, the "Undersigned Claims"), which the
Undersigned Released Parties ever had or have or may have at this time
--------------
2 Capitalized terms not otherwise defined herein shall have the meanings
ascribed to such terms in the Voting Agreement.
against any of the Company Released Parties; provided, however, that the
foregoing release shall not apply to any Undersigned Claims against the Company
(i) relating to the payment (or non-payment) of any accrued and unpaid dividends
on the Preferred Stock under the Series C Certificate of Designation and/or
Series D Certificate of Designation, as the case may be, or (ii) arising under
the terms of the Voting Agreement, the Term Sheet or this Agreement, including,
without limitation, any claim relating to a Company Released Party's breach of
the Voting Agreement, the Term Sheet or this Agreement or the enforcement of the
provisions of such agreements.
10. RELEASE BY THE COMPANY.
Except as provided for herein, the Company Released Parties hereby
unequivocally release and forever discharge the Undersigned Released Parties
from any and all claims (including but not limited to claims as defined in 11
U.S.C. ss. 101(5)) arising under or in connection with the Preferred Stock
whether or not asserted or raised and existing, or alleged to exist or to have
existed, or whether known or unknown, at any time from the beginning of the
world to and including the date hereof (collectively, the "Company Claims"),
which the Company Released Parties ever had or have or may have at this time
against any of the Undersigned Released Parties; provided, however, that the
foregoing release shall not apply to any Company Claims arising under the Voting
Agreement, the Term Sheet or this Agreement, including, without limitation, any
claim relating to a Undersigned Released Party's breach of the Voting Agreement,
the Term Sheet or this Agreement or the enforcement of the provisions of such
agreements.
11. AGREEMENTS.
The Parties understand and agree (a) that neither this Agreement, nor
any part hereof, shall be used or construed as an admission of liability on the
part of any Party, (b) that neither this Agreement, nor any part hereof, shall
be used as evidence by or against any Party for any purpose, and (c) that each
Party has had the opportunity to engage counsel to review this Agreement and
advise such Party with respect thereto.
12. SUCCESSORS AND ASSIGNS.
The terms of this Agreement shall be binding on the Parties and their
respective successors and assigns.
13. TERMINATION.
This Agreement, including any releases provided hereunder, shall terminate
upon any termination of the Voting Agreement or the Term Sheet and shall not
survive any such termination, in which case this Agreement shall be of no
further force or effect, and be deemed null and void and to have never existed
in any form and each of the Parties hereto shall have all of the rights and
remedies available to it as existed immediately prior to the date that the
Parties entered into this Agreement.
14. COUNTERPARTS; FACSIMILE EXECUTION.
This Agreement may be executed in any number of counterparts and by
different Parties on separate counterparts, each of which counterpart, when so
executed and delivered, shall be deemed to be an original and all of which
counterparts, taken together, shall constitute but one and the same agreement.
This Agreement may be executed and delivered by telecopier, provided, however,
that the Parties shall endeavor to deliver original counterpart signatures to
the other Parties as soon thereafter as practicable.
15. EFFECTIVENESS.
This Agreement shall become effective and binding upon each of the
Parties that have executed and delivered counterpart signature pages hereto. The
undersigned acknowledges, by its execution of this Agreement, that the Company
has executed and delivered a counterpart signature page to this Agreement as of
the date hereof.
16. GOVERNING LAW.
THIS MUTUAL RELEASE AGREEMENT AND THE RELEASES CONTAINED HEREIN SHALL BE
GOVERNED BY, ENFORCED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK WITHOUT REFERENCE TO ITS CHOICE OF LAW PRINCIPLES.
IN WITNESS WHEREOF, the Parties have executed this Mutual Release Agreement
as of the latest date written below.
Dated: March __, 2002
MPOWER HOLDING CORPORATION,
behalf of itself and its subsidiaries and affiliates
By:
-----------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx, Esq.
Title: Senior Vice President and
General Counsel
SIGNATURE PAGE TO THE MUTUAL RELEASE AGREEMENT BY
AND AMONG THE UNDERSIGNED AND MPOWER HOLDING CORPORATION AND ITS
SUBSIDIARIES AND AFFILIATES
Dated: March __, 2002
----------------------------------
PRINT NAME OF CONSENTING PREFERRED
STOCKHOLDER
--------------------------
Name:
Title:
Address: -----------------------
-----------------------
-----------------------
Attention:-----------------------
Telephone:-----------------------
Facsimile:-----------------------
Aggregate number of shares of issued and
outstanding Series C Preferred Stock
beneficially owned or managed on behalf of
accounts that hold or beneficially own
such securities:
-------------------------
Aggregate number of shares of issued and
outstanding Series D Preferred Stock
beneficially owned or managed on behalf of
accounts that hold or beneficially own
such securities:
-------------------------
Aggregate number of shares of issued and
outstanding Common Stock beneficially
owned or managed on behalf of accounts
that hold or beneficially own such
securities:
-------------------------
SIGNATURE PAGE TO THE MUTUAL RELEASE AGREEMENT BY
AND AMONG THE UNDERSIGNED AND MPOWER HOLDING CORPORATION AND ITS
SUBSIDIARIES AND AFFILIATES