Exhibit 4.50
AMENDED AND RESTATED LOCK-UP, SUPPORT,
AND VOTING AGREEMENT
This Amended and Restated Lock-Up, Support, and Voting Agreement
(this "Agreement") is made and entered into as of January 30, 2002, by and
among McLeodUSA Incorporated, a Delaware corporation (the "Company") and
the entities listed on the signature page hereto under the caption
"Investors" (collectively, "Investor"). The Company and Investor are
collectively referred to herein as the "Parties" and individually as a
"Party."
RECITALS
WHEREAS, the Parties are party to that certain Lock-Up, Support,
and Voting Agreement, dated as of December 3, 2001 (the "Original
Agreement");
WHEREAS, since the date of the Original Agreement, the Company and
Investor have engaged in good faith negotiations among themselves and with
the Company's creditors regarding a restructuring of the Company's
obligations and the recapitalization of the Company;
WHEREAS, the Company now intends to file a case (the "Chapter 11
Proceedings") under Chapter 11 of Title 11 of the United States Code, 11
U.S.C. ss. 101, et seq. (the "Bankruptcy Code") in the United States
Bankruptcy Court for the District of Delaware (the "Bankruptcy Court") to
implement a Plan of Reorganization on the terms described in Exhibit A (the
"Plan");
WHEREAS, Investor owns or controls the right to vote 100% of (i)
that certain Series D Convertible Preferred Stock issued by the Company and
(ii) that certain Series E Convertible Preferred Stock issued by the
Company (together, the "Series D and E Preferred Stock"); and
WHEREAS, in order to facilitate the implementation of the Plan,
the Parties hereto desire to amend and restate the Original Agreement in
its entirety.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties hereby agree as follows:
1. Voting in Favor of the Plan.
(a) Agreement to Vote. Investor hereby irrevocably agrees,
during the period commencing on the date of this Agreement and
continuing until the termination of this Agreement as provided for
in Section 6 hereof, to vote timely its Series D and E Preferred
Stock in favor of the Plan with such modifications in the terms of
the Plan that do not materially deviate from the terms set forth
on Exhibit A, by executing ballots in favor of the Plan and agrees
not to revoke or withdraw such vote. Investor's agreement to
support the Plan is expressly conditioned upon the terms of the
Plan being as set forth on Exhibit A and the Plan and all related
documents being consistent with the terms set forth on Exhibit A
with, in each case, such modifications that do not materially
deviate from the terms of Exhibit A. Investor agrees that all
solicitation materials and ballots prepared in connection with the
Plan may indicate its support of the Plan. Solely for purposes of
this Agreement, a reduction in the equity percentage which the
number of shares of New Common Stock (as defined in Exhibit A) to
be received by each of the Investors upon consummation of the Plan
represents of the fully diluted equity (calculated as set forth on
Exhibit A) from the respective percentages set forth on Exhibit A
shall be deemed to be a modification in the terms of the Plan or
restructuring that materially deviates from the terms set forth on
Exhibit A.
(b) Modifications. Notwithstanding any other provision of
this Agreement, the Company may make such changes and
modifications to the Plan as the Company deems are necessary and
appropriate in order to have the Plan approved or implemented;
provided, however, that Investor will not be required to support
any such restructuring that materially deviates from the terms set
forth on Exhibit A unless any such material deviations have been
approved by Investor.
2. Restrictions on Transfer. Investor hereby agrees, so long as this
Agreement remains in effect, not to (i) sell, transfer, assign, pledge, or
otherwise dispose of any of the Series D and E Preferred Stock, in whole or
in part, or any interest therein, or (ii), without limiting the generality
of the Section 2 of this Agreement, grant any proxies, deposit any of the
Series D and E Preferred Stock into a voting trust, or enter into a voting
agreement with respect to any of the Stock.
3. Support of the Plan. As long as this Agreement remains in effect, the
Company will (i) use its reasonable best efforts to obtain confirmation of
the Plan in accordance with the Bankruptcy Code as expeditiously as
possible and (ii) use its reasonable best efforts to achieve confirmation
including, upon approval of the disclosure statement, recommending to the
holders of impaired claims and interests that they vote to approve the
Plan. As long as this Agreement remains in effect, neither Party shall (a)
object to confirmation of the Plan or otherwise commence any proceeding to
oppose or alter the Plan or any other reorganization related documents or
agreements (all such documents and agreements, the "Plan Documents"), so
long as such documents conform to the terms hereof and set forth in Exhibit
A, (b) vote for, consent to, support or participate in the formulation of
any other plan of reorganization or liquidation proposed or filed or to be
proposed or filed in any Chapter 11 or Chapter 7 case commenced in respect
of the Company, (c) directly or indirectly seek, solicit, support or
encourage any other plan, sale, proposal or offer of dissolution, winding
up, liquidation, reorganization, merger or restructuring of the Company or
any of its subsidiaries that could reasonably be expected to prevent, delay
or impede the successful restructuring of the Company as contemplated by
the Plan or the Plan Documents, (d) object to the disclosure statement or
the solicitation of consents to the Plan, or (e) take any other action that
is inconsistent with, or that would delay confirmation of, the Plan;
provided, however, the Investors' obligations pursuant to this Section 3
shall be conditioned upon (i) the Company's filing of the Plan, (ii) the
Company's not withdrawing the Plan or modifying the Plan in a manner that
materially deviates from the terms set forth on Exhibit A and (iii) the
Bankruptcy Court's not rejecting or denying confirmation of the Plan, in
each case with such modifications to the Plan that do not materially
deviate from the term of Exhibit A.
4. Acknowledgment. This Agreement is not and shall not be deemed to be a
solicitation for consents to the Plan. The acceptances of Investor will not
be solicited until it has received the applicable solicitation materials
and/or disclosure statement and related ballots.
5. Termination of Agreement. At any time after August 1, 2002, the Company
and Investor may terminate their obligations hereunder and Investor may
rescind its vote on the Plan (which vote shall be null and void and have no
further force and effect), by giving prior written notice thereof to the
other party.
6. Representations and Warranties. Each Investor represents and warrants
that the following statements are true, correct and complete as of the date
hereof:
(a) Corporate Power and Authority. It is duly organized,
validly existing, and in good standing under the laws of the state
of its organization, and has all requisite corporate, partnership
or LLC power and authority to enter into this Agreement and to
carry out the transactions contemplated by, and perform its
respective obligations under, this Agreement.
(b) Authorization. The execution and delivery of this
Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by all required
actions on the part of Investor and no other proceedings on the
part of such Investor are necessary to authorize this Agreement or
to consummate the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by such Investor
and, assuming this Agreement has been duly authorized, executed
and delivered by the Company, constitutes a valid and binding
agreement of such Investor.
(c) No Conflicts. Neither the execution and delivery of this
Agreement by such Investor nor the consummation by such Investor
of the transactions contemplated hereby nor compliance by such
Investor with any of the provisions hereof will (a) conflict with
or result in any breach of any provision of the charter or by-laws
or similar organization documents of such Investor, (b) result in
a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration) under, any of
the terms, conditions or provisions of any material note, bond,
mortgage, indenture, license, contract, agreement or other
instrument or obligation to which such Investor or any of its
subsidiaries is a party or by which any of them or any of their
properties or assets may be bound or (c) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to such
Investor, any of its subsidiaries or any of their properties or
assets.
(d) Governmental Consents. The execution, delivery and
performance by it of this Agreement do not and shall not require
any registration or filing with consent or approval of, or notice
to, or other action to, with or by, any federal, state or other
governmental authority or regulatory body, other than the approval
of the Bankruptcy Court with respect to the Plan.
(e) Owner of Stock. It is the beneficial owner of, or holder
of investment authority over, the Series D and E Preferred Stock
that it has agreed to vote in favor of the Plan, and beneficially
owns, or has investment authority over, no other interests in the
Company.
7. Further Acquisition of Interests. This Agreement shall in no way be
construed to preclude Investor from acquiring additional interests in the
Company. However, any such additional interests so acquired shall
automatically be deemed to be subject to the terms of this Agreement.
8. Amendments. This Agreement may not be modified, amended or supplemented
without the prior written consent of the Company and Investor.
9. Governing Law; Jurisdiction. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware,
without regard to any conflicts of law provision which would require the
application of the law of any other jurisdiction. By its execution and
delivery of this Agreement, each of the Parties hereto hereby irrevocably
and unconditionally agrees for itself that any legal action, suit or
proceeding against it with respect to any matter under or arising out of or
in connection with this Agreement or for recognition or enforcement of any
judgment rendered in any such action, suit or proceeding, may be brought in
the United States District Court for the District of Delaware. By execution
and delivery of this Agreement, each of the Parties hereto irrevocably
accepts and submits itself to the nonexclusive jurisdiction of such court,
generally and unconditionally, with respect to any such action, suit or
proceeding. Notwithstanding the foregoing consent to jurisdiction, upon the
commencement of any Chapter 11 Proceedings, each of the Parties hereto
hereby agrees that the Bankruptcy Court shall have exclusive jurisdiction
of all matters arising out of or in connection with this Agreement.
10. Specific Performance. It is understood and agreed by each of the
Parties hereto that money damages would not be a sufficient remedy for any
breach of this Agreement by any Party and each non-breaching Party shall be
entitled to specific performance and injunctive or other equitable relief
as a remedy of any such breach.
11. Headings. The headings of the sections, paragraphs and subsections of
this Agreement are inserted for convenience only and shall not affect the
interpretation hereof.
12. 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.
13. Prior Negotiations. This Agreement and Exhibit A supersede all prior
negotiations with respect to the subject matter hereof. Without limiting
the generality of the foregoing, this Agreement supercedes the Original
Agreement.
14. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
shall constitute one and the same Agreement.
15. No Third-Party Beneficiaries. Unless expressly stated herein, this
Agreement shall be solely for the benefit of the Parties hereto and no
other person or entity shall be a third-party beneficiary hereof.
16. Consideration. It is hereby acknowledged by the Parties hereto that no
consideration shall be due or paid to Investor for its agreement to vote to
accept the Plan in accordance with the terms and conditions of this
Agreement other than the Company's agreement to use its reasonable best
efforts to obtain approval of any disclosure statement and reasonable best
efforts to confirm the Plan in accordance with the terms and conditions of
this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed and delivered by its duly authorized officer as of
the date first above written.
McLEODUSA INCORPORATED
By: /s/Chris Davis
______________________________
Name: Chris Davis
Title: Chief Operating and Financial
Officer
INVESTORS:
FORSTMANN LITTLE & CO. EQUITY PARTNERSHIP-
V, L.P.
By: FLC XXX Partnership, L.P.
its general partner
By: /s/Thomas H. Lister
_______________________________
Thomas H. Lister,
a general partner
FORSTMANN LITTLE & CO. SUBORDINATED DEBT
AND EQUITY MANAGEMENT BUYOUT PARTNERSHIP-
VI, L.P.
By: FLC XXIX Partnership, L.P.
its general partner
By: /s/Thomas H. Lister
______________________________
Thomas H. Lister,
a general partner
FORSTMANN LITTLE & CO. SUBORDINATED DEBT
AND EQUITY MANAGEMENT BUYOUT
PARTNERSHIP-VII, L.P.
By: FLC XXXIII Partnership, L.P.
its general partner
By: /s/Thomas H. Lister
________________________
Thomas H. Lister,
a general partner
McLeodUSA Incorporated EXHIBIT A
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SUMMARY TERM SHEET
Company McLeodUSA Incorporated (the "Company").
Parties Subject to Restructure The Company; Forstmann Little &
Company, its affiliates and its
co-investors, if any, (collectively,
"FL" or the "Sponsor"); the banks
participating in the senior credit
agreement (the "Bank Group");
holders ("Noteholders") of the
Company's unsecured notes including
(a) 11.375% Senior Notes due 2009;
(b) 10.500% Senior Discount Notes
due 2007; (c) 9.250% Senior Notes
due 2007; (d) 8.375% Senior Notes
due 2008; (e) 9.500% Senior Notes
due 2008; (f) 8.125% Senior Notes
due 2009; (g) 11.500% Senior Notes
due 2009; and (h) 12.000% Senior
Notes due 2008 (collectively, the
"Notes"); preferred equity holders
("Preferred Holders") of the
Company's class A, D, and E
preferred stock (collectively, the
"Old Preferred Stock"); and the
holders of the Company's current
common stock ("Old Equity").
Overview The Company will restructure its
balance sheet (the "Transaction" or
the "Recapitalization") through,
among other things, exchange of the
Notes for (i) cash, (ii) a senior
convertible preferred stock (the
"New Convertible Preferred Stock"),
and (iii) five-year warrants (the
"New Noteholder Warrants") to
purchase newly issued new common
stock ("New Common Stock"); the
exchange of the Existing Preferred
Stock and the Existing Common Stock
for New Common Stock; and new
investment by FL for New Common
Stock and warrants identical to the
New Noteholder Warrants (the "New FL
Warrants," and together with the New
Noteholder Warrants, the
"Warrants"), through a
pre-negotiated Chapter 11 Plan.
Pursuant to the Transaction:
o The Noteholders will receive
the following:
- $670 million, subject to
adjustment described below, from:
(a) Pubco Proceeds: $570
million from the Pubco sale,
unless the sale of Pubco
closes after April 30, 2002 in
which case the proceeds from
the Pubco sale (and the amount
payable to the Noteholders)
shall be reduced $200,000 per
day from May 1, 2002 through
the earlier of (i) the date of
closing or (ii) August 1,
2002; and
(b) FL Investment: $100
million from the FL
investment, described below.
- $175 million of New
Convertible Preferred Stock,
convertible into 15.0000% of
the New Common Stock on a
fully diluted basis at closing
(after giving effect to the
Recapitalization, but prior to
the exercise of the Warrants
and management options), the
terms set on the term sheet
attached hereto as Exhibit A
(the "Preferred Term Sheet").
It being understood that as of
the closing of the
Recapitalization, the
conversion price of the New
Convertible Preferred Stock
will be calculated as follows:
where:
X = the aggregate number of
shares of New Common
Stock issuable upon
conversion of the New
Convertible Preferred
Stock;
CS = the actual number of
shares of New Common
Stock outstanding
(excluding New Common
Stock underlying New
Convertible Preferred
Stock, Warrants and
management options);
and
LP = the aggregate
liquidation preference
of the New Convertible
Preferred Stock (i.e.,
$175 million)
the number of shares of New
Common Stock issuable upon
conversion of the New
Convertible Preferred Stock is
determined as follows:
X = 15% x ( X + CS)
and the conversion price on a
per share basis of the New
Convertible Preferred Stock
(CP) is determined as follows:
X = LP / CP
and therefore:
CP = LP / X
As an example, where the
Company has 850,000 shares of
New Common Stock actually
outstanding (excluding New
Common Stock underlying New
Convertible Preferred Stock,
Warrants and management
options), the New Convertible
Preferred Stock will convert
into 150,000 shares of New
Common Stock (150,000 = 15% x
(150,000 + 850,000)) and the
conversion price will be
$1,166.667 ($1,166.667 = $175
million / 150,000).
- New Noteholder Warrants to
purchase an aggregate of
6.0000% of the shares of New
Common Stock on a fully
diluted basis at closing
(after giving effect to the
Recapitalization and the
exercise of the Warrants, but
prior to the exercise of any
management options)
exercisable for five years for
aggregate consideration
payable to the Company of $30
million.
o FL Investment: FL will invest
$175 million for (i) 22.7778%
of the New Common Stock on a
fully diluted basis at closing
(after giving effect to the
Recapitalization and the
shares of New Common Stock
underlying the New Convertible
Preferred Stock, but prior to
the exercise of the Warrants
and management options) and
(ii) New FL Warrants, in an
amount and with terms
identical to the New
Noteholder Warrants.
o Series A preferred stock will
receive 10.3682% of the New
Common Stock on a fully
diluted basis at closing
(after giving effect to the
Recapitalization and the
shares of New Common Stock
underlying the New Convertible
Preferred Stock, but prior to
the exercise of the Warrants
and management options).
o Series D preferred stock will
receive 24.0625% of the New
Common Stock on a fully
diluted basis at closing
(after giving effect to the
Recapitalization and the
shares of New Common Stock
underlying the New Convertible
Preferred Stock, but prior to
the exercise of the Warrants
and management options).
o Series E preferred stock will
receive 10.9375% of the New
Common Stock on a fully
diluted basis at closing
(after giving effect to the
Recapitalization and the
shares of New Common Stock
underlying the New Convertible
Preferred Stock, but prior to
the exercise of the Warrants
and management options).
o Existing Common Stock will
receive 16.8540% of the New
Common Stock on a fully
diluted basis at closing
(after giving effect to the
Recapitalization and the
shares of New Common Stock
underlying the New Convertible
Preferred Stock, but prior to
the exercise of the Warrants
and management options).
Additional Noteholder Rights The Company shall agree to list the
New Common Stock and New Convertible
Preferred Stock on a national
securities exchange or the Nasdaq
Stock Market and shall make periodic
filings under the Exchange Act.
Corporate Governance The new Board of Directors will
initially consist of 15 members and
will include 1 member nominated by
the Noteholders. In connection with
the Transaction, the Company shall
cause to be appointed or shall
nominate for election the designee
of the Noteholders. The Noteholders'
initial representative on the Board
of Directors shall be reasonably
acceptable to the Company.
Thereafter, the holders of the New
Convertible Preferred Stock shall be
entitled to select a member of the
Board of Directors to the extent
provided under "Special Voting
Rights" on Exhibit A.
Management Incentive Plan The new Board of Directors will
develop and implement the McLeodUSA
2001 Omnibus Equity Plan (the
"Management Incentive Plan") as
described in the Offering Memorandum
dated December 7, 2001.
Other Conditions The Company agrees to pay for all
reasonable costs and expenses of the
Noteholders (including fees and
expenses for one counsel and one
financial advisor, which shall not
be duplicative of the fees and
expenses to be paid to the advisors
for the unsecured creditors
committee).
The Company will provide cooperation
to the financial advisor and counsel
in due diligence inquiries.
The Company shall use reasonable
efforts to cause FL to execute any
and all documents necessary or
appropriate to allow the Company to
perform all of its obligations
provided in this Term Sheet and
otherwise in connection with the
Company's restructuring.
Other Provisions The Plan of Reorganization shall be
substantially similar to the terms
and provisions of the Plan of
Reorganization included in the
Offering Memorandum dated December
7, 2001 with such modifications
necessary (a) to incorporate the
terms hereof, and (b) to add the
members and advisors of the ad hoc
bondholder committee and any
official creditors committee as
beneficiaries of the Plan of
Reorganization's release provisions.
Exhibit A
NEW CONVERTIBLE PREFERRED TERM SHEET
Note: Capitalized terms not defined herein have the meanings ascribed to
them in the term sheet to which this Preferred Term Sheet is an exhibit.
Issuer McLeodUSA Incorporated.
Liquidation Preference $175 million in the aggregate, plus
accrued and unpaid dividends.
Dividend Rate Cumulative dividends at the
rate of 2.5% per annum. Dividends
cumulate whether or not declared by
the Board (the senior credit
agreement prohibits payment of cash
dividends).
Conversion Convertible at the option of the
holder at any time into a number of
shares of New Common Stock equal to
(a) the Liquidation Preference of
the shares of New Convertible
Preferred Stock being converted
divided by (b) the conversion price
of the New Convertible Preferred
Stock as calculated in accordance
with the above example under
"Overview" at the time of the
closing of the Recapitalization.
Mandatory Conversion Upon a Mandatory Conversion Event
(defined below), then, at the option
of the Company, the New Convertible
Preferred Stock shall be converted
in whole or in part on a pro rata
basis at the then-effective
Conversion Price into shares of New
Common Stock.
"Mandatory Conversion Event" means
any such time following the fourth
anniversary of the issuance of the
New Convertible Preferred Stock that
the closing price of New Common
Stock has equaled or exceeded 135%
of the conversion price of the New
Convertible Preferred Stock for at
least 20 out of any 30 consecutive
trading days.
Mandatory Redemption On the ten-year anniversary of the
Closing Date.
Merger, Consolidation Upon the merger, consolidation or
other sale of the Company, the
Preferred Stock shall be converted
into the same consideration such
preferred stock would have received
had such preferred stock been
converted into New Common Stock
immediately prior to such merger,
consolidation or other sale of the
Company.
Voting Rights The New Convertible Preferred Stock
would be entitled to vote with New
Common Stock as a single class on an
"as converted" basis.
Special Voting Rights The holders of the New Convertible
Preferred Stock will have the right
to elect one member to the Company's
Board of Directors so long as not
less than 33% of the New Convertible
Preferred Stock issued on the
closing of the Transaction remains
outstanding.
Ranking Junior to all existing and future
debt obligations; senior to all
classes of common stock and each
other class of capital stock or
series of preferred stock of the
Company.
Anti-Dilution (i) Customary anti-dilution
protection for stock splits, reverse
splits, and extraordinary dividends
and (ii) customary weighted average
anti-dilution protection for other
issuances below the then market
value of the New Common Stock.
Registration and Other Rights The Company will grant to the
holders of the New Convertible
Preferred Stock customary
information and inspection rights
and, if required, limited, shelf
registration rights to facilitate
resales by any holder of the New
Convertible Preferred Stock who may
be deemed to be an affiliate of the
Company upon the consummation of the
Transaction or as a result of a
holder having a representative on
the Board of Directors of the
Company.
The Company will further grant the
holders of the New Convertible
Preferred Stock the right, for the
period beginning on the closing of
the Recapitalization until the
eighteen month anniversary of such
closing, to participate, on a pro
rata basis, in any purchase by FL,
any affiliate of FL or any person or
entity acting in concert with FL in
one or more series of related
transactions of greater than either
(x) an aggregate of $50,000,000 of
equity securities of the Company or
(y) 10% of the New Common Stock of
the Company on a fully-diluted
basis. The Company may provide this
co-investment right to holders of
the New Convertible Preferred Stock
either simultaneously with FL's
investment or as soon as practicable
following the closing of such
investment as determined by the
Company.