EXHIBIT 4.4
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS NOTE, AGREES FOR
THE BENEFIT OF THE COMPANY AND THE INITIAL PURCHASERS OF THIS NOTE THAT THIS
NOTE MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE THIRD
ANNIVERSARY OF THE ISSUANCE HEREOF (OR A PREDECESSOR NOTE HERETO) OR (Y) BY ANY
HOLDER THAT WAS AN AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS
PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE OTHER THAN (1) TO THE
COMPANY, (2) SO LONG AS THIS NOTE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A
UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" WITHIN THE MEANING OF RULE 144A
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR
ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS NOTE), (3) IN AN OFFSHORE
TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT (AS
INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON
THE REVERSE OF THIS NOTE), AND, IF SUCH TRANSFER IS BEING EFFECTED BY CERTAIN
TRANSFERORS SPECIFIED IN THE INDENTURE (AS DEFINED BELOW) PRIOR TO THE
EXPIRATION OF THE "40-DAY RESTRICTED PERIOD" (WITHIN THE MEANING OF RULE
903(C)(3) OF REGULATION S UNDER THE SECURITIES ACT), A CERTIFICATE WHICH MAY BE
OBTAINED FROM THE COMPANY OR THE TRUSTEE IS DELIVERED BY THE TRANSFEREE TO THE
COMPANY AND THE TRUSTEE, (4) TO AN INSTITUTION THAT IS AN "ACCREDITED INVESTOR"
AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT (AS
INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON
THE REVERSE OF THIS NOTE) THAT IS ACQUIRING THIS NOTE FOR INVESTMENT PURPOSES
AND NOT FOR DISTRIBUTION, AND A CERTIFICATE IN THE FORM ATTACHED TO THIS NOTE IS
DELIVERED BY THE TRANSFEREE TO THE COMPANY AND THE TRUSTEE (PROVIDED THAT
CERTAIN HOLDERS SPECIFIED IN THE INDENTURE MAY NOT TRANSFER THIS NOTE PURSUANT
TO THIS CLAUSE (4) PRIOR TO THE EXPIRATION OF THE "40-DAY RESTRICTED PERIOD"
(WITHIN THE MEANING OF RULE 903(C)(3) OF REGULATION S UNDER THE SECURITIES
ACT)), (5) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT, OR (6) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES. AN INSTITUTIONAL ACCREDITED INVESTOR HOLDING THIS NOTE AGREES IT WILL
FURNISH TO THE COMPANY AND THE TRUSTEE SUCH CERTIFICATES AND OTHER INFORMATION
AS THEY MAY REASONABLY REQUIRE TO CONFIRM THAT ANY TRANSFER BY IT OF THIS NOTE
COMPLIES WITH THE FOREGOING RESTRICTIONS. THE HOLDER HEREOF, BY PURCHASING THIS
NOTE, REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A
"QUALIFIED INSTITUTIONAL BUYER" WITHIN THE MEANING OF RULE 144A OR (2) AN
INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(A)(1), (2),
(3) OR (7) UNDER THE SECURITIES ACT AND THAT IT IS HOLDING THIS NOTE FOR
INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION OR (3) A NON-U.S. PERSON OUTSIDE
THE UNITED STATES WITHIN THE MEANING OF (OR AN ACCOUNT SATISFYING THE
REQUIREMENTS OF PARAGRAPH (O)(2) OF RULE 902 UNDER) REGULATION S UNDER THE
SECURITIES ACT.
THIS NOTE WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT. FOR PURPOSES OF SECTIONS
1272, 1273 AND 1275 OF THE UNITED STATES INTERNAL REVENUE CODE OF 1986, AS
AMENDED, THE ISSUE PRICE OF THIS NOTE IS 60.00% OF ITS PRINCIPAL AMOUNT, THE
AMOUNT OF ORIGINAL ISSUE DISCOUNT IS $400 PER $1,000 OF STATED FACE AMOUNT, THE
ISSUE DATE IS MARCH 4, 1997 AND THE YIELD TO MATURITY IS 10.50%.
10.50% SENIOR DISCOUNT NOTES DUE MARCH 1, 2007
CUSIP NO. 582266AB8
No. ________ $___________
McLeod, Inc., a corporation duly organized and existing under the laws of
Delaware (herein called the "Company", which term includes any successor Person
under the Indenture hereinafter referred to), for value received, hereby
promises to pay to ____________________, or registered assigns, the principal
sum of ____________________ Dollars ($__________) on March 1, 2007, and to pay
interest thereon from March 1, 2002 or from the most recent Interest Payment
Date to which interest has been paid or duly provided for, semi-annually on
March 1 and September 1 in each year, commencing September 1, 2002 at the rate
of 10.50% per annum, until the principal hereof is paid or made available for
payment; provided, however, that if (i) the Company has not filed a registration
statement (the "Exchange Offer Registration Statement") under the Securities Act
of 1933, as amended (the "Act"), registering a security substantially identical
to this Note (except that such Note will not contain terms with respect to the
Special Interest payments described below or transfer restrictions) pursuant to
an exchange offer (the "Registered Exchange Offer") (or, in lieu thereof, a
registration statement registering this Note for resale (a "Shelf Registration
Statement")) by June 2, 1997, or (ii) the Exchange Offer Registration Statement
relating to the Registered Exchange Offer has not become or been declared
effective by August 1, 1997, or (iii) neither the Registered Exchange Offer has
been consummated nor the Shelf Registration Statement has been declared
effective prior to September 1, 1997, or (iv) either the Exchange Offer
Registration Statement or, if applicable, the Shelf Registration Statement is
filed and declared effective (except as specifically permitted therein) but
shall thereafter cease to be effective without being succeeded promptly by an
additional
registration statement filed and declared effective, in each case (i) through
(iv) upon the terms and conditions set forth in the Registration Agreement (each
such event referred to in clauses (i) through (iv), a "Registration Default"),
then interest will accrue (in addition to the original issue discount and any
stated interest on the Notes) (the "Step-Up") at a rate of 0.5% per annum,
determined daily, on the Accreted Value of the Notes, during the 90-day period
from and including the date on which any such Registration Default shall occur
to but excluding the date on which all Registration Defaults have been cured and
shall increase by 0.25% per annum at the end of each subsequent 90-day period,
but in no event shall such rate exceed 2.00% per annum, in the aggregate,
regardless of the number of Registration Defaults. Interest accruing as a result
of the Step-Up is referred to herein as "Special Interest." Accrued Special
Interest, if any, shall be paid semi-annually on March 1 and September 1 in each
year; and the amount of accrued Special Interest shall be determined on the
basis of the number of days actually elapsed. Any accrued and unpaid interest
(including Special Interest) on this Note upon the issuance of an Exchange Note
(as defined in the Indenture) in exchange for this Note shall cease to be
payable to the Holder hereof but such accrued and unpaid interest (including
Special Interest) shall be payable on the next Interest Payment Date for such
Exchange Note to the Holder thereof on the related Regular Record Date. The
interest so payable, and punctually paid or duly provided for, on any Interest
Payment Date will, as provided in such Indenture, be paid to the Person in whose
name this Note (or one or more Predecessor Notes) is registered at the close of
business on the Regular Record Date for such interest, which shall be February
15 or August 15 (whether or not a Business Day), as the case may be, immediately
preceding such Interest Payment Date. Any such interest not so punctually paid
or duly provided for will forthwith cease to be payable to the Holder on such
Regular Record Date and may either be paid to the Person in whose name this Note
(or one or more Predecessor Notes) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be fixed by
the Trustee, notice whereof shall be given to Holders of Notes not more than 15
calendar days and not less than 10 calendar days prior to such Special Record
Date, or be paid at any time in any other lawful manner not inconsistent with
the requirements of any securities exchange on which the Notes may be listed,
and upon such notice as may be required by such exchange, all as more fully
provided in said Indenture.
The principal of this Note shall not accrue interest (other than Special
Interest, if any) until March 1, 2002, except in the case of a default in
payment of principal and premium, if any, upon acceleration or redemption, in
which case interest shall be payable pursuant to the preceding paragraph on such
overdue principal (and premium, if any), such interest shall be payable on
demand and, if not so paid on demand, such interest shall itself bear interest
at the rate of 11.50% per annum (to the extent that the payment of such interest
shall be legally enforceable), and shall accrue from the date of such demand for
payment to the date payment of such interest has been made or duly provided for,
and such interest on unpaid interest shall also be payable on demand.
Payment of the principal of (and premium, if any) and interest on this Note
will be made at the corporate trust office of the Trustee and at the office or
agency of the Company maintained for that purpose in the Borough of Manhattan,
The City of New York, New York, and at any other office or agency maintained by
the Company for such purpose, in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts; provided, however, that at the option of the Company payment of
interest may be made by check mailed to the address of the Person entitled
thereto as such address shall appear in the Note Register.
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Note shall
not be entitled to any benefit under the Indenture or be valid or obligatory for
any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
Dated:
MCLEOD, INC.
By____________________________
Attest:
______________________________
This is one of the Notes referred to in the within-mentioned Indenture.
Dated:
UNITED STATES TRUST COMPANY
OF NEW YORK,
as Trustee
By_________________________
Authorized Signatory.
This Note is one of a duly authorized issue of Notes of the Company
designated as its 10.50% Senior Discount Notes due March 1, 2007 (the "Notes")
issued under an Indenture, dated as of March 4, 1997 (herein called the
"Indenture"), between the Company and United States Trust Company of New York,
as trustee (herein called the "Trustee", which term includes any successor
trustee under the Indenture). The Notes are limited in aggregate principal
amount at maturity to $500,000,000. Reference is hereby made to the Indenture
and all indentures supplemental thereto for a statement of the respective
rights, limitations of rights, duties and immunities thereunder of the Company,
the Trustee and the Holders of the Notes and of the terms upon which the Notes
are, and are to be, authenticated and delivered.
The Notes are subject to redemption upon not less than 30 nor more than 60
days' notice by mail to each Holder of Notes to be redeemed at such Holder's
address appearing in the Note Register, in amounts of $1,000 or an integral
multiple of $1,000, at any time on or after March 1, 2002 and prior to maturity,
as a whole or in part, at the election of the Company, at the following
Redemption Prices (expressed as percentages of the principal amount) plus
accrued interest to but excluding the Redemption Date (subject to the right of
Holder on the relevant Regular Record Date to receive interest due on an
Interest Payment Date that is on or prior to the Redemption Date), if redeemed
during the 12-month period beginning March 1, of each of the years indicated
below:
Redemption
Year Price
---- --------
2002 105.250%
2003 103.500%
2004 101.750%
and thereafter at a Redemption Price equal to 100% of the principal amount,
together in the case of any such redemption with accrued interest to but
excluding the Redemption Date, but interest installments whose Stated Maturity
is on or prior to such Redemption Date will be payable to the Holders of such
Notes, or one or more Predecessor Notes, of record at the close of business on
the relevant Regular Record Dates referred to on the face hereof, all as
provided in the Indenture.
The Notes are further subject to redemption prior to March 1, 2000 only in
the event that the Company receives net proceeds from any sale of its Common
Stock in a Strategic Equity Investment on or before March 1, 2000, in which case
the Company may, at its option, use all or a portion of any such net proceeds to
redeem Notes in a principal amount of up to an aggregate amount equal to 33 1/3%
of the original principal amount of the Notes, provided, however, that Notes in
an amount equal to at least 66 2/3% of the original principal amount of the
Notes remain outstanding after such redemption. Such redemption must occur on a
Redemption Date within 90 days of any such sale and upon not less than 30 nor
more than 60 days' notice by mail to each Holder of Notes to be redeemed at such
Holder's address appearing in the Note Register, in amounts of $1,000 or an
integral multiple of $1,000 at a Redemption Price of 110.5% of the Accreted
Value of the Notes to but excluding the Redemption Date.
The Notes do not have the benefit of any sinking fund obligations.
The Indenture provides that, subject to certain conditions, if (i) a Change
of Control (as defined in the Indenture) occurs or (ii) certain Excess Proceeds
are available to the Company as a result of any Asset Sale, the Company shall be
required to make a Change of Control Offer or an Asset Sale Offer, as the case
may be, for all or a specified portion of the Notes.
In the event of redemption or purchase pursuant to an Asset Sale Offer of
this Note in part only, a new Note or Notes of like tenor for the unredeemed or
unpurchased portion hereof will be issued in the name of the Holder hereof upon
the cancellation hereof.
If an Event of Default shall occur and be continuing, the principal of all
the Notes may be declared due and payable in the manner and with the effect
provided in the Indenture.
The Indenture contains provisions for defeasance at any time of (i) the
entire indebtedness of this Note, or (ii) certain restrictive covenants and
Events of Default with respect to this Note, in each case upon compliance with
certain conditions set forth therein.
Unless the context otherwise requires, the Original Notes (as defined in
the Indenture) and the Exchange Notes (as defined in the Indenture) shall
constitute one series for all purposes under the Indenture, including without
limitation, amendments, waivers, redemptions, Change of Control Offers and Asset
Sale Offers.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Notes under the Indenture at any
time by the Company and the Trustee with the consent of the Holders of a
majority in aggregate principal amount of the Notes at the time outstanding.
The Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Notes at the time outstanding,
on behalf of the Holders of all the Notes, to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Note shall be conclusive and binding upon such Holder and upon all future
Holders of this Note and of any Note issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Note.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Note at the times, place and rate, and in the coin or currency,
herein prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Note is registrable in the Note Register, upon
surrender of this Note for registration of transfer at the office or agency of
the Company in the Borough of Manhattan, The City of New York, New York, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Note Registrar duly executed by, the Holder
hereof or his attorney duly authorized in writing, and thereupon one or more new
Notes, of authorized denominations and like tenor and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
The Notes are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Notes are
exchangeable for a like tenor and aggregate principal amount of Notes of a
different authorized denomination, as requested by the Holder surrendering the
same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
Interest on this Note shall be computed on the basis of a 360-day year of
twelve 30-day months; provided, however, that Special Interest shall be computed
on the basis of a 365- or 366-day year, as the case may be, and the number of
days actually elapsed.
THE INDENTURE AND THE NOTES, INCLUDING THIS NOTE, SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE.
All terms used in this Note which are defined in the Indenture shall have
the meanings assigned to them in the Indenture.
CERTIFICATE OF TRANSFER
The transferor hereof (the "Transferor") hereby certifies in connection
with the transfer of this Note as follows:
(Please check one)
[_] The Transferor has requested that this Note be transferred to a person
(the "Transferee") who will take delivery in the form of a Regulation S Note.
In connection with such transfer, the Transferor hereby certifies that, unless
such transfer is being effected pursuant to an effective registration statement
under the Securities Act, it is being effected in accordance with Rule 904 or
Rule 144 under the Securities Act and with all applicable securities laws of the
states of the United States and other jurisdictions. Accordingly, the
Transferor hereby further certifies as follows:
(1) Rule 904 Transfers. If the transfer is being effected in
------------------
accordance with Rule 904:
(A) the Transferor is not a distributor of the Notes, an
affiliate of the Company or any such distributor or a person acting on
behalf of any of the foregoing;
(B) the offer of this Note was not made to a person in the
United States;
(C) either:
(i) at the time the buy order was originated, the
Transferee was outside the United States or the Transferor and
any person acting on its behalf reasonably believed that the
Transferee was outside the United States, or
(ii) the transaction is being executed in, on or through
the facilities of the Eurobond market, as regulated by the
Association of International Bond Dealers, or another designated
offshore securities market and neither the Owner nor any person
acting on its behalf knows that the transaction has been
prearranged with a buyer in the United States;
(D) no directed selling efforts have been made in the United
States by or on behalf of the Transferor or any affiliate thereof;
(E) if the Transferor is a dealer in securities or has received
a selling concession, fee or other remuneration in respect of this
Note, and the transfer is to occur during the Restricted Period, then
the requirements of Rule 904(c)(1) have been satisfied; and
(F) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act.
(2) Rule 144 Transfers. If the transfer is being effected pursuant
------------------
to Rule 144:
(A) the transfer is occurring after a holding period of at least
two years (computed in accordance with paragraph (d) of Rule 144) has
elapsed since this Note was last acquired from the Company or from an
affiliate of the Company, whichever is later, and is being effected in
accordance with the applicable amount, manner of sale and notice
requirements of Rule 144; or
(B) the transfer is occurring after a holding period of at least
three years has elapsed since this Note was last acquired from the
Company or from an affiliate of the Company, whichever is later, and
the Transferor is not, and during the preceding three months has not
been, an affiliate of the Company.
[_] The Transferor has requested that this Note be transferred to the
Transferee who will take delivery in the form of a Restricted Note. In
connection with such transfer, the Transferor hereby certifies that, unless such
transfer is being effected pursuant to an effective registration statement under
the Securities Act, it is being effected in accordance with Rule 144A, Rule 144
or to an Institutional Accredited Investor under Rule 501(a)(1), (2), (3) or (7)
under the Securities Act and in compliance with all applicable securities laws
of the states of the United States and other jurisdictions. Accordingly, the
Transferor hereby further certifies as follows:
(1) Rule 144A Transfers. If the transfer is being effected in
-------------------
accordance with Rule 144A:
(A) this Note is being transferred to a person that the
Transferor and any person acting on its behalf reasonably believe is a
"qualified institutional buyer" within the meaning of Rule 144A,
acquiring for its own account or for the account of a qualified
institutional buyer; and
(B) the Transferor and any person acting on its behalf have
taken reasonable steps to ensure that the Transferee is aware that the
Transferor may be relying on Rule 144A in connection with the
transfer; and
(2) Rule 144 Transfers. If the transfer is being effected pursuant
------------------
to Rule 144:
(A) the transfer is occurring after a holding period of at least
two years (computed in accordance with paragraph (d) of Rule 144) has
elapsed since this Note was last acquired from the Company or from an
affiliate of the Company, whichever is later, and is being effected in
accordance with the applicable amount, manner of sale and notice
requirements of Rule 144; or
(B) the transfer is occurring after a holding period of at least
three years has elapsed since this Note was last acquired from the
Company or from an affiliate of the Company, whichever is later, and
the Transferor is not, and during the preceding three months has not
been, an affiliate of the Company.
(3) Institutional Accredited Investor Transfers. If the transfer is
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being effected to an Institutional Accredited Investor as defined under
Rule 501(a)(1), (2), (3) or (7), this
Note is being transferred to such an Institutional Accredited Investor as
therein so defined who is purchasing for investment purposes and not for
distribution.
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company pursuant to
Section 4.07 or 4.08 of the Indenture, check the box:
[_]
If you want to elect to have only a part of this Note purchased by the
Company pursuant to Section 4.07 or 4.08 of the Indenture, state the amount:
$_________________
Dated:____________________ Your Signature:______________________
(Sign exactly as name appears
on the other side of this Note)
Signature Guarantee:____________________________________________________________
Notice: Signature(s) must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Note Registrar which
requirements will include membership or participation in STAMP or such
other "signature guarantee program" as may be determined by the
Trustee in addition to, or in substitution for STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.