Exhibit 2.2
-----------
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
- - - - - - - - - - - - - - - - - - - - - - - - - - - x
:
In re: :
: Chapter 11
MCLEODUSA INCORPORATED, :
: Case No. 02-10288 (EIK)
Debtor. :
:
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FIRST AMENDED PLAN OF REORGANIZATION
OF MCLEODUSA INCORPORATED
David S. Kurtz
Peter C. Krupp
Seth E. Jacobson
SKADDEN, ARPS, SLATE, MEAGHER
& FLOM (ILLINOIS)
333 West Wacker Drive
Chicago, Illinois 60606-1285
(312) 407-0700
Gregg M. Galardi (I.D. No. 2991)
Eric M. Davis (I.D. No. 3621)
SKADDEN, ARPS, SLATE, MEAGHER
& FLOM LLP
One Rodney Square
P.O. Box 636
Wilmington, Delaware 19899-0636
(302) 651-3000
Attorneys for Debtor and
Debtor-in-Possession
Dated: Wilmington, Delaware
April 4, 2002
TABLE OF CONTENTS
PAGE
INTRODUCTION........................................................................................1
ARTICLE I DEFINED TERMS AND RULES OF INTERPRETATION................................1
A. Scope of Definitions; Rules of Construction................................................1
1.1 Administrative Claim............................................................1
1.2 Allowed.........................................................................2
1.3 Allowed Claim...................................................................2
1.4 Allowed Interest ...............................................................2
1.5 Amended Certificate of Incorporation and By-Laws................................2
1.6 Arrangers.......................................................................2
1.7 Ballot..........................................................................2
1.8 Bank Agents.....................................................................2
1.9 Bankruptcy Code.................................................................3
1.10 Bankruptcy Court................................................................3
1.11 Bankruptcy Rules................................................................3
1.12 Bar Date........................................................................3
1.13 Business Day....................................................................3
1.14 Cash............................................................................3
1.15 Cash Collateral Order...........................................................3
1.16 Certificates of Designation.....................................................3
1.17 Chapter 11 Case.................................................................3
1.18 Claim ..........................................................................3
1.19 Claims Objection Deadline.......................................................4
1.20 Class...........................................................................4
1.21 Class A Common Stock............................................................4
1.22 Class 7/Class 8 Distribution ...................................................4
1.23 Class 7 and Class 8 Notice .....................................................4
1.24 Confirmation Date...............................................................4
1.25 Confirmation Hearing............................................................4
1.26 Confirmation Order..............................................................4
1.27 Credit Agreement................................................................4
1.28 Creditors Committee.............................................................5
1.29 Directors and Officers Claims...................................................5
1.30 Disbursing Agent................................................................5
1.31 Disclosure Statement............................................................5
1.32 Disputed Claim..................................................................5
1.33 Disputed Claim Amount...........................................................5
1.34 Disputed Claims Reserve.........................................................5
1.35 Disputed Interest ..............................................................5
1.36 Disputed Interest Amount........................................................6
1.37 Disputed Interest Reserve ......................................................6
1.38 Distribution Date...............................................................6
1.39 Distribution Record Date........................................................6
1.40 Effective Date..................................................................6
1.41 Estate..........................................................................6
1.42 Exit Facility ..................................................................6
1.43 Exit Lenders ...................................................................6
1.44 Fee Claim.......................................................................6
1.45 File, Filed or Filing...........................................................6
1.46 Final Order.....................................................................7
1.47 Forstmann Little ...............................................................7
1.48 General Unsecured Claim ........................................................7
1.49 Holder..........................................................................7
1.50 Impaired........................................................................7
1.51 Indentures......................................................................7
1.52 Interests.......................................................................7
1.53 Litigation Claims...............................................................8
1.54 Management Incentive Plan.......................................................8
1.55 Master Ballot...................................................................8
1.56 McLeodUSA.......................................................................8
1.57 McLeodUSA Holdings..............................................................8
1.58 New Class B Common Stock........................................................8
1.59 New Class C Common Stock........................................................8
1.60 New Common Stock................................................................8
1.61 New Credit Agreement............................................................8
1.62 New Director Preferred Stock....................................................9
1.63 New Series A Director ..........................................................9
1.64 New Series A Preferred Stock....................................................9
1.65 New Warrants ...................................................................9
1.66 Non-Tax Priority Claim..........................................................9
1.67 Note Claim......................................................................9
1.68 Notes Trustee...................................................................9
1.69 Notes...........................................................................9
1.70 Other Old Equity...............................................................10
1.71 Old Preferred Stock............................................................10
1.72 Old Series A Preferred Stock ..................................................10
1.73 Old Series D Preferred Stock ..................................................10
1.74 Old Series E Preferred Stock ..................................................10
1.75 Other Secured Claim............................................................10
1.76 Petition Date..................................................................11
1.77 Plan...........................................................................11
1.78 Plan Supplement................................................................11
1.79 Priority Tax Claim.............................................................11
1.80 Professional...................................................................11
1.81 Pubco .........................................................................11
1.82 Pubco Stock Purchase Agreement ................................................11
1.83 Purchase Agreement.............................................................11
1.84 Reinstated or Reinstatement....................................................12
1.85 Reorganized McLeodUSA .........................................................12
1.86 Schedules......................................................................12
1.87 Securities Act.................................................................12
1.88 Securities Claim...............................................................12
1.89 Securities Class Actions.......................................................13
1.90 Senior Secured Lender Claims...................................................13
1.91 Senior Secured Lenders ........................................................13
1.92 Solicitation Order.............................................................13
1.93 Sharing Formula................................................................13
1.94 Third Amendment to Credit Agreement............................................14
1.95 Unimpaired Claim ..............................................................14
1.96 Voting Deadline................................................................14
1.97 Voting Record Date ............................................................14
1.98 Warrant Agreement .............................................................14
1.99 Yell Group ....................................................................14
B. Rules of Interpretation...................................................................14
C. Computation of Time.......................................................................15
D. Governing Law.............................................................................15
ARTICLE II CLASSIFICATION OF CLAIMS AND INTERESTS..................................15
2.1 Unclassified Claims............................................................16
2.2 Unimpaired Classes of Claims...................................................16
2.3 Impaired Class of Claims.......................................................16
2.4 Impaired Classes of Interests..................................................16
ARTICLE III TREATMENT OF CLAIMS AND INTERESTS.......................................17
3.1 Unclassified Claims............................................................17
3.2 Unimpaired Classes of Claims...................................................18
3.3 Impaired Class of Note Claims..................................................18
3.4 Impaired Classes of Claims/Interests...........................................19
3.5 Special Provision Regarding Unimpaired Claims..................................20
ARTICLE IV MEANS FOR IMPLEMENTATION OF THE PLAN....................................20
4.1 Continued Corporate Existence and Vesting of Assets in
Reorganized McLeodUSA..........................................................20
4.2 Corporate Governance, Directors and Officers, and Corporate
Action.........................................................................21
4.3 Effectuating Documents and Further Transactions. .............................22
4.4 Sale of Pubco..................................................................23
4.5 Cancellation of Notes, Class A Common Stock and Old
Preferred Stock................................................................23
4.6 Issuance of New Securities. ...................................................23
4.7 New Credit Agreement. ........................................................24
4.8 Management Incentive Plan......................................................24
4.9 Sources of Cash for Plan Distributions.........................................24
4.10 Exemption from Transfer Taxes..................................................24
ARTICLE V ACCEPTANCE OR REJECTION OF THE PLAN.....................................25
5.1 Classes Entitled to Vote.......................................................25
5.2 Acceptance by Impaired Classes.................................................25
5.3 Cramdown.......................................................................25
ARTICLE VI PROVISIONS GOVERNING DISTRIBUTIONS......................................26
6.1 Distributions for Claims or Interests Allowed as of the
Effective Date.................................................................26
6.2 Interest on Claims.............................................................26
6.3 Distributions by Reorganized McLeodUSA.........................................26
6.4 Delivery of Distributions and Undeliverable or Unclaimed
Distributions..................................................................27
6.5 Record Date for Distributions..................................................28
6.6 Allocation of Plan Distributions Between Principal and
Interest.......................................................................28
6.7 Means of Cash Payment..........................................................28
6.8 Withholding and Reporting Requirements.........................................28
6.9 Setoffs........................................................................29
6.10 Surrender of Instruments or Securities.........................................29
6.11 Lost, Stolen, Mutilated or Destroyed Securities................................30
6.12 Fractional Shares..............................................................31
ARTICLE VII PROCEDURES FOR RESOLVING DISPUTED,
CONTINGENT AND UNLIQUIDATED CLAIMS
AND INTERESTS...........................................................31
7.1 Objection Deadline; Prosecution of Objections..................................31
7.2 No Distributions Pending Allowance. ..........................................31
7.3 Disputed Claims Reserve; Disputed Interest Reserve.............................32
7.4 Distributions After Allowance..................................................32
ARTICLE VIII TREATMENT OF EXECUTORY CONTRACTS
AND UNEXPIRED LEASES....................................................33
8.1 Assumption of Executory Contracts and Unexpired Leases.........................33
8.2 Cure of Defaults of Assumed Executory Contracts and
Unexpired Leases...............................................................33
8.3 Indemnification of Directors, Officers and Employees...........................33
8.4 Compensation and Benefit Programs..............................................34
ARTICLE IX CONFIRMATION AND CONSUMMATION OF
THE PLAN................................................................34
9.1 Conditions to Confirmation.....................................................34
9.2 Conditions to Effective Date...................................................34
9.3 Waiver of Conditions...........................................................36
9.4 Consequences of Non-Occurrence of Effective Date...............................37
ARTICLE X EFFECT OF PLAN CONFIRMATION.............................................37
10.1 Binding Effect.................................................................37
10.2 Discharge of Claims and Termination of Interests...............................37
10.3 Injunction.....................................................................38
10.4 Releases.......................................................................39
10.5 Exculpation and Limitation of Liability........................................40
10.6 Injunction Related to Releases and Exculpation.................................40
10.7 Preservation of Rights of Action; Settlement of Litigation
Claims.........................................................................41
10.8 Termination of Subordination Rights and Settlement
of Related Claims..............................................................41
10.9 Term of Bankruptcy Injunction or Stays.........................................42
ARTICLE XI RETENTION OF JURISDICTION...............................................42
ARTICLE XII MISCELLANEOUS PROVISIONS................................................45
12.1 Bar Date for Administrative Claims.............................................45
12.2 Payment of Statutory Fees......................................................45
12.3 Payment of Notes Trustee Fees..................................................45
12.4 Amendment or Modification of the Plan..........................................45
12.5 Severability of Plan Provisions................................................46
12.6 Successors and Assigns.........................................................46
12.7 Plan Supplement................................................................46
12.8 Revocation, Withdrawal or Non-Consummation.....................................47
12.9 Notice.........................................................................47
12.10 Governing Law..................................................................48
12.11 Tax Liability..................................................................48
12.12 Schedules......................................................................48
12.13 Jurisdiction over Reorganized McLeodUSA........................................48
12.14 Filing of Additional Documents.................................................49
INTRODUCTION
McLeodUSA Incorporated ("McLeodUSA") proposes the
following plan of reorganization (the "Plan") for the resolution of the
outstanding claims against and interests in McLeodUSA. Reference is made to
the Disclosure Statement with Respect to Amended Plan of Reorganization of
McLeodUSA Incorporated (the "Disclosure Statement"), distributed
contemporaneously herewith, for a discussion of McLeodUSA's history,
business, properties and operations, projections for those operations, risk
factors, a summary and analysis of the Plan, and certain related matters
including, among other things, the securities to be issued under the Plan.
ARTICLE I
DEFINED TERMS AND RULES OF INTERPRETATION
A. Scope of Definitions; Rules of Construction
For purposes of this Plan, except as expressly provided
or unless the context otherwise requires, all capitalized terms not
otherwise defined shall have the meanings ascribed to them in Article I of
this Plan. Any term used in this Plan that is not defined herein, but is
defined in the Bankruptcy Code or the Bankruptcy Rules, shall have the
meaning ascribed to that term in the Bankruptcy Code or the Bankruptcy
Rules. Whenever the context requires, such terms shall include the plural
as well as the singular number, the masculine gender shall include the
feminine, and the feminine gender shall include the masculine.
1.1 Administrative Claim means a Claim for costs and
expenses of administration of the Chapter 11 Case Allowed under Section
503(b) or 1114(e)(2) of the Bankruptcy Code and entitled to priority
pursuant to Section 507(a)(1) of the Bankruptcy Code, including, but not
limited to: (a) any actual and necessary costs and expenses incurred after
the Petition Date of preserving McLeodUSA's Estate and operating the
businesses of McLeodUSA (such as wages, salaries, commissions for services
and payments for inventories, leased equipment and premises) and Claims of
governmental units for taxes (including tax audit Claims related to tax
years commencing after the Petition Date, but excluding Claims relating to
tax periods, or portions thereof, ending on or prior to the Petition Date);
(b) compensation for legal, financial, advisory, accounting and other
services and reimbursement of expenses Allowed by the Bankruptcy Court
under Section 330, 331 or 503(b) of the Bankruptcy Code to the extent
incurred prior to the Effective Date; and (c) all fees and charges assessed
against McLeodUSA's Estate under Section 1930, Chapter 123 of Title 28,
United States Code.
1.2 Allowed means, when used in reference to a Claim or
Interest within a particular Class, an Allowed Claim or Allowed Interest of
the type described in such Class.
1.3 Allowed Claim means a Claim or any portion thereof
(a) that has been allowed by a Final Order, or (b) as to which, on or by
the Effective Date, (i) no proof of claim has been filed with the
Bankruptcy Court and (ii) the liquidated and noncontingent amount of which
is Scheduled, other than a Claim that is Scheduled at zero, in an unknown
amount, or as disputed, or (c) for which a proof of claim in a liquidated
amount has been timely filed with the Bankruptcy Court pursuant to the
Bankruptcy Code, any Final Order of the Bankruptcy Court or other
applicable bankruptcy law, and as to which either (i) no objection to its
allowance has been filed within the periods of limitation fixed by the
Plan, the Bankruptcy Code or by any order of the Bankruptcy Court or (ii)
any objection to its allowance has been settled, withdrawn, or denied by a
Final Order, or (d) that is expressly allowed in this Plan (regardless
whether such Claim is Scheduled and whether or not a proof of claim is
filed in respect thereof).
1.4 Allowed Interest means any Interest that (a) is
registered as of the Distribution Record Date in a stock register
maintained by or on behalf of McLeodUSA and (b) is not a Disputed Interest.
1.5 Amended Certificate of Incorporation and By-Laws
means Reorganized McLeodUSA's certificate of incorporation and by-laws, as
amended by the Plan or in accordance therewith.
1.6 Arrangers means the Arrangers, as such term is
defined in Annex II to the Third Amendment to Credit Agreement.
1.7 Ballot means each of the ballot forms distributed to
each holder of an Impaired Claim or Impaired Interest on which the holder
is to indicate acceptance or rejection of this Plan.
1.8 Bank Agents means the agents under the Credit
Agreement, including, without limitation, the Arrangers.
1.9 Bankruptcy Code means the Bankruptcy Reform Act of
1978, as codified in Title 11 of the United States Code, 11 U.S.C.
ss. 101-1330, as now in effect or hereafter amended.
1.10 Bankruptcy Court means the United States District
Court having jurisdiction over the Chapter 11 Case and, to the extent any
reference is made pursuant to Section 157 of Title 28 of the United States
Code or the General Order of the District Court pursuant to Section 151 of
Title 28 of the United States Code, the bankruptcy unit of such District
Court.
1.11 Bankruptcy Rules means, collectively, the Federal
Rules of Bankruptcy Procedure and the Official Bankruptcy Forms, as
amended, the Federal Rules of Civil Procedure, as amended, as applicable to
the Chapter 11 Case or proceedings therein, and the Local Rules of the
Bankruptcy Court, as applicable to the Chapter 11 Case or proceedings
therein, as the case may be.
1.12 Bar Date means the date, if any, designated by the
Bankruptcy Court as the last date for filing proofs of Claim or Interest
against McLeodUSA.
1.13 Business Day means any day, other than a Saturday,
Sunday or "legal holiday" (as defined in Bankruptcy Rule 9006(a)).
1.14 Cash means legal tender of the United States of
America and equivalents thereof.
1.15 Cash Collateral Order means the Final Order
Authorizing Use of Cash Collateral and Providing Adequate Protection Under
11 U.S.C.ss. 105, 361 and 363 entered by the Bankruptcy Court on
February 22, 2002.
1.16 Certificates of Designation means those certain
certificates of designation pursuant to which the New Director Preferred
Stock and the New Series A Preferred Stock will be issued.
1.17 Chapter 11 Case means the case under Chapter 11 of
the Bankruptcy Code commenced by McLeodUSA in the Bankruptcy Court.
1.18 Claim means a "claim" as defined in Section 101(5)
of the Bankruptcy Code.
1.19 Claims Objection Deadline means the first Business
Day that is the latest of (a) 120 days after the Effective Date; (b) as to
a particular Claim, 60 days after the filing of a proof of claim for, or
request for payment of, such Claim; or (c) such later date as may be
established by the Bankruptcy Court for cause shown by Reorganized
McLeodUSA.
1.20 Class means a category of holders of Claims or
Interests, as described in Article II of this Plan.
1.21 Class A Common Stock means that certain Class A
common stock, par value $.01, authorized by McLeodUSA prior to the Petition
Date.
1.22 Class 7/Class 8 Distribution means a pro rata share
of 54,775,663 (fifty-four million seven hundred seventy-five thousand six
hundred sixty-three) shares of New Common Stock.
1.23 Class 7 and Class 8 Notice means the notice to
members of Class 7 and Class 8, after a Final Order of the Bankruptcy Court
or other Court of competent jurisdiction, providing that Class 7 and Class
8 are deemed to have rejected the Plan and are not entitled to vote on the
Plan.
1.24 Confirmation Date means the date on which the Clerk
of the Bankruptcy Court enters the Confirmation Order on the docket of the
Bankruptcy Court.
1.25 Confirmation Hearing means the hearing held by the
Bankruptcy Court pursuant to Section 1128 of the Bankruptcy Code to
consider confirmation of this Plan, as such hearing may be adjourned or
continued from time to time.
1.26 Confirmation Order means the order of the Bankruptcy
Court confirming this Plan in accordance with its terms pursuant to Section
1129 of the Bankruptcy Code.
1.27 Credit Agreement means that certain Credit Agreement
dated as of May 31, 2000, among McLeodUSA, as borrower, and the entities
identified as the "Lenders" therein and the Administrative Agent or
Collateral Agent (as defined in the Credit Agreement), and all related
amendments, guarantees, security documents and evidences of indebtedness,
as amended, including, without limitation, the Third Amendment to Credit
Agreement.
1.28 Creditors Committee means the statutory committee
appointed in this case by the Office of the United States Trustee on
February 12, 2002.
1.29 Directors and Officers Claims means those claims as
set forth in Section 8.3 of the Plan.
1.30 Disbursing Agent means Reorganized McLeodUSA, or any
party designated by Reorganized McLeodUSA, to serve as disbursing agent
under the Plan.
1.31 Disclosure Statement means the written disclosure
statement that relates to the Plan, as amended, supplemented, or modified
from time to time, and that is prepared and distributed in accordance with
Section 1125 of the Bankruptcy Code and Fed. R. Bankr. P. 3018.
1.32 Disputed Claim means a Claim, or any portion
thereof, that is not an Allowed Claim and includes, without limitation,
Claims (other than Allowed Claims) that (a) have not been Scheduled by
McLeodUSA or have been Scheduled at zero, or as contingent, unliquidated,
or disputed, or any Securities Claim, or (b) are the subject of an
objection filed in the Bankruptcy Court and which objection has not been
withdrawn or overruled by a Final Order of the Bankruptcy Court.
1.33 Disputed Claim Amount means (a) with respect to
contingent or unliquidated Claims, the amount estimated by the Bankruptcy
Court for purposes of distributions in respect of such Claims in accordance
with Section 502(c) of the Bankruptcy Code; (b) the amount set forth in a
timely Filed proof of claim; or (c) with respect to a Securities Claim, $0.
1.34 Disputed Claims Reserve means the reserve of New
Common Stock, Cash, New Series A Preferred Stock and New Warrants, as
applicable, established and maintained by Reorganized McLeodUSA on account
of Disputed Claims.
1.35 Disputed Interest means an Interest, or any portion
thereof, that is not an Allowed Interest and includes, without limitation,
Interests (other than Allowed Interests) that (a) have not been Scheduled
by McLeodUSA or have been Scheduled at zero, or as contingent,
unliquidated, or disputed, or (b) are the subject of an objection filed in
the Bankruptcy Court and which objection has not been withdrawn or
overruled by a Final Order of the Bankruptcy Court.
1.36 Disputed Interest Amount means, with respect to a
Disputed Interest, the number of shares set forth in a timely Filed proof
of interest.
1.37 Disputed Interest Reserve means the reserve of New
Common Stock established and maintained by Reorganized McLeodUSA on account
of Disputed Interests or Securities Claims that are Disputed Claims.
1.38 Distribution Date means, except with respect to
Claims Reinstated under the Plan, as to which all distributions shall be
timely made in accordance with the terms thereof, the date, within 30 days
after the Effective Date, upon which the initial distributions will be made
to holders of Allowed Claims and Allowed Interests.
1.39 Distribution Record Date means (i) with respect to
each Impaired Class of Claims and Interests, the Confirmation Date, and
(ii) with respect to each Unimpaired Class of Claims and Interests, the
Effective Date.
1.40 Effective Date means the Business Day the Plan
becomes effective as provided in Article IX hereof.
1.41 Estate means the estate of McLeodUSA created under
Section 541 of the Bankruptcy Code.
1.42 Exit Facility means that certain exit revolving
credit facility in the aggregate principal amount of up to $160 million to
be provided to Reorganized McLeodUSA on the Effective Date pursuant to the
terms of the New Credit Agreement.
1.43 Exit Lenders means those entities identified as
"Lenders" with respect to the Exit Facility in the New Credit Agreement and
their respective successors and assigns.
1.44 Fee Claim means an Administrative Claim under
Section 330(a), 331, 503 or 1103 of the Bankruptcy Code for compensation of
a Professional or other entity for services rendered or expenses incurred
in the Chapter 11 Case on or prior to the Effective Date.
1.45 File, Filed or Filing means file, filed or filing
with the Bankruptcy Court or its authorized designee in the Chapter 11
Case.
1.46 Final Order means an order or judgment, the
operation or effect of which has not been stayed, reversed, or amended and
as to which order or judgment (or any revision, modification, or amendment
thereof) the time to appeal or seek review or rehearing has expired and as
to which no appeal or petition for review or rehearing was filed or, if
filed, remains pending.
1.47 Forstmann Little means one or more of Forstmann
Little & Co., Forstmann Little & Co. Equity Partnership-VII, L.P.,
Forstmann Little & Co. Subordinated Debt and Equity Management Buyout
Partnership-VIII, L.P., Forstmann Little & Co. Equity Partnership-V, L.P.,
Forstmann Little & Co. Subordinated Debt and Equity Management Buyout
Partnership-VI, L.P., and Forstmann Little & Co. Subordinated Debt and
Equity Management Buyout Partnership-VII, L.P. or their affiliates.
1.48 General Unsecured Claim means a Claim that is not an
Administrative Claim, Priority Tax Claim, Senior Secured Lender Claim,
Other Secured Claim, Non-Tax Priority Claim, Securities Claim or Note
Claim.
1.49 Holder means an entity holding a Claim or Interest
and, with respect to Note Claims, the beneficial holder as of the
applicable Voting Record Date or any authorized agent who has completed and
executed a Ballot or on whose behalf a Master Ballot has been completed and
executed in accordance with the voting instructions.
1.50 Impaired means, when used in reference to a Claim or
Interest, a Claim or Interest that is impaired within the meaning of
Section 1124 of the Bankruptcy Code.
1.51 Indentures means the Indentures dated as of March 4,
1997, July 21, 1997, March 16, 1998, October 30, 1998, February 22, 1999,
December 5, 2000, and January 15, 2001, between McLeodUSA, as issuer, and
the Note Trustee, as trustee, relating to the Notes, as amended from time
to time.
1.52 Interests means (a) the legal, equitable,
contractual and other rights of any Person with respect to the Class A
Common Stock and Other Old Equity and (b) the legal, equitable, contractual
or other rights of any Person to acquire or receive any of the foregoing.
1.53 Litigation Claims means the claims, rights of
action, suits or proceedings, whether in law or in equity, whether known or
unknown, that McLeodUSA or its Estate may hold against any person.
1.54 Management Incentive Plan means a management
incentive plan to be adopted by the board of directors of Reorganized
McLeodUSA on the Effective Date in accordance with the terms described in
the Disclosure Statement, the Plan Supplement and Section 4.8 of the Plan.
1.55 Master Ballot means the ballot distributed to
nominees or holders of record of the Notes or the Old Preferred Stock, as
applicable, to record the votes, if any, of the beneficial holders of such
instruments.
1.56 McLeodUSA means McLeodUSA Incorporated.
1.57 McLeodUSA Holdings means McLeodUSA Holdings, Inc., a
Delaware corporation.
1.58 New Class B Common Stock means shares of New Class B
Common Stock of Reorganized McLeodUSA to be issued to the holders of Old
Series D Preferred Stock, which New Class B Common Stock is convertible
into New Common Stock pursuant to the Sharing Formula. The New Class B
Common Stock will have voting rights and rights to dividends and upon
liquidation established pursuant to the Sharing Formula.
1.59 New Class C Common Stock means the shares of New
Class C Common Stock of Reorganized McLeodUSA to be issued to the holders
of Old Series E Preferred Stock, which New Class C Common Stock is
convertible into New Common Stock pursuant to the Sharing Formula. The New
Class C Common Stock will have voting rights and rights to dividends and
upon liquidation established pursuant to the Sharing Formula.
1.60 New Common Stock means the shares of new Class A
common stock of Reorganized McLeodUSA.
1.61 New Credit Agreement means that certain credit
agreement governing the Exit Facility between Reorganized McLeodUSA, as
borrower, and the Administrative Agent and Collateral Agent (as that term
is defined in the New Credit Agreement) and Exit Lenders.
1.62 New Director Preferred Stock means 10 shares of new
voting preferred stock of Reorganized McLeodUSA to be issued to Forstmann
Little on the Effective Date with the right to vote to elect two (2)
directors and one (1) observer to Reorganized McLeodUSA's board of
directors.
1.63 New Series A Director means the member of the Board
of Directors of Reorganized McLeodUSA initially selected by the holders of
the Notes, and who is reasonably acceptable to McLeodUSA, and who is
thereafter selected by the holders of the New Series A Preferred Stock in
accordance with the terms of the New Series A Preferred Stock.
1.64 New Series A Preferred Stock means 10,000,000 (ten
million) shares of a series of convertible preferred stock of Reorganized
McLeodUSA, with (i) a liquidation preference of $175 million in the
aggregate, or $17.50 per share, plus accrued and unpaid dividends and (ii)
dividends payable when, as and if declared by Reorganized McLeodUSA at a
rate of 2.5% of the liquidation preference annually. The terms of the New
Series A Preferred Stock are set forth in greater detail in the applicable
Certificate of Designations.
1.65 New Warrants means warrants to purchase 44,318,182
(forty-four million three hundred eighteen thousand one hundred eighty-two)
shares of New Common Stock with such warrants having a five year life and
an aggregate exercise price of $60 million.
1.66 Non-Tax Priority Claim means a Claim, other than an
Administrative Claim or Priority Tax Claim, that is entitled to priority in
payment pursuant to Section 507(a) of the Bankruptcy Code.
1.67 Note Claim means a Claim arising from or related to
the Notes.
1.68 Notes Trustee means The Bank of New York as
successor to United States Trust Company of New York under the Indentures.
1.69 Notes means, collectively, those certain (i) 10 1/2
% Senior Discount Notes due March 1, 2007 issued by McLeodUSA under that
certain Indenture dated March 4, 1997; (ii) 9 1/4 % Senior Notes due July
15, 2007 issued by McLeodUSA under that certain Indenture dated July 21,
1997; (iii) 8 3/8% Senior Notes due March 15, 2008 issued by McLeodUSA
under that certain Indenture dated March 16, 1998; (iv) 9 1/2 % Senior
Notes due November 1, 2008 issued by McLeodUSA under that certain Indenture
dated October 30, 1998; (v) 81/8 % Senior Notes due February 15, 2009
issued by McLeodUSA under that certain Indenture dated February 22, 1999;
(vi) 12% Senior Notes due July 15, 2008 issued by McLeodUSA under that
certain Indenture dated December 5, 2000; (vii) 11 1/2 % Senior Notes due
May 1, 2009 issued by McLeodUSA under that certain Indenture dated December
5, 2000; and (viii) 113/8% Senior Notes due January 1, 2009 issued by
McLeodUSA under that certain Indenture dated January 15, 2001.
1.70 Other Old Equity means all options, warrants, call
rights, puts, awards, or other agreements to acquire Class A Common Stock
outstanding immediately prior to the Petition Date.
1.71 Old Preferred Stock means individually and
collectively, as the case may be, the Old Series A Preferred Stock, the Old
Series D Preferred Stock, and the Old Series E Preferred Stock, including,
without limitation, any and all rights of any entity to purchase or demand
the issuance of such stock, including, without limitation, any and all (a)
conversion, exchange, voting, participation, and dividend rights; (b)
liquidation preferences; (c) stock options, warrants, and put rights; and
(d) share-appreciation rights.
1.72 Old Series A Preferred Stock means that certain
6.75% Series A Cumulative Preferred Stock of McLeodUSA outstanding
immediately prior to the Petition Date.
1.73 Old Series D Preferred Stock means that certain
Series D Convertible Preferred Stock of McLeodUSA outstanding immediately
prior to the Petition Date.
1.74 Old Series E Preferred Stock means that certain
Series E Convertible Preferred Stock of McLeodUSA outstanding immediately
prior to the Petition Date.
1.75 Other Secured Claim means a Claim, other than Senior
Secured Lender Claims, that is secured by a lien on property in which
McLeodUSA's Estate has an interest or that is subject to setoff under
Section 553 of the Bankruptcy Code, to the extent of the value of the Claim
holder's interest in the Estate's interest in such property or to the
extent of the amount subject to setoff, as applicable, as determined
pursuant to Section 506(a) of the Bankruptcy Code or, in the case of
setoff, pursuant to Section 553 of the Bankruptcy Code.
1.76 Petition Date means the date on which McLeodUSA
filed its petition for relief commencing the Chapter 11 Case.
1.77 Plan means this Chapter 11 plan of reorganization,
including the Plan Supplement and all supplements, appendices and schedules
thereto, either in its present form or as the same may be altered, amended
or modified from time to time.
1.78 Plan Supplement means the compilation of documents
and form of documents specified in the Plan to be filed as set forth in
Section 12.7 hereof.
1.79 Priority Tax Claim means a Claim of a governmental
unit of the kind specified in Sections 502(i) and 507(a)(8) of the
Bankruptcy Code.
1.80 Professional means (a) any professional employed in
the Chapter 11 Case pursuant to Section 327 or 1103 of the Bankruptcy Code
or otherwise and (b) any professional or other entity seeking compensation
or reimbursement of expenses in connection with the Chapter 11 Case
pursuant to Section 503(b)(4) of the Bankruptcy Code.
1.81 Pubco means McLeodUSA Media Group, Inc., an Iowa
corporation.
1.82 Pubco Stock Purchase Agreement means that certain
Stock Purchase Agreement dated as of January 19, 2002, between McLeodUSA
Holdings, Inc., as seller, and Yell Group, as buyer, pursuant to which
McLeodUSA Holdings has agreed to sell to Yell Group, and Yell Group has
agreed to purchase from McLeodUSA Holdings, all of the outstanding shares
of capital stock of Pubco.
1.83 Purchase Agreement means that certain Amended and
Restated Purchase Agreement dated as of January 30, 2002, among McLeodUSA,
Forstmann Little & Co. Equity Partnership-VII, L.P., Forstmann Little & Co.
Subordinated Debt and Equity Management Buyout Partnership-VIII, L.P.,
Forstmann Little & Co. Equity Partnership-V, L.P., Forstmann Little & Co.
Subordinated Debt and Equity Management Buyout Partnership-VI, L.P., and
Forstmann Little & Co. Subordinated Debt and Equity Management Buyout
Partnership-VII, L.P., with respect to McLeodUSA's sale of the New Director
Preferred Stock, 74,027,764 (seventy-four million, twenty-seven thousand
seven hundred sixty-four) shares of New Common Stock and one half of the
New Warrants for $175 million in cash as the same may be altered, amended
or modified from time to time.
1.84 Reinstated or Reinstatement means (i) leaving
unaltered the legal, equitable, and contractual rights to which a Claim
entitles the Holder of such Claim so as to leave such Claim unimpaired in
accordance with Section 1124 of the Bankruptcy Code or (ii) notwithstanding
any contractual provision or applicable law that entitles the Holder of
such Claim to demand or receive accelerated payment of such Claim after the
occurrence of a default (a) curing any such default that occurred before or
after the Petition Date, other than a default of a kind specified in
Section 365(b)(2) of the Bankruptcy Code; (b) reinstating the maturity of
such Claim as such maturity existed before such default; (c) compensating
the Holder of such Claim for any damages incurred as a result of any
reasonable reliance by such Holder on such contractual provision or such
applicable law; and (d) not otherwise altering the legal, equitable, or
contractual rights to which such Claim entitles the Holder of such Claim.
1.85 Reorganized McLeodUSA means McLeodUSA or any
successors thereto by merger, consolidation, or otherwise, on or after the
Effective Date.
1.86 Schedules means the schedules of assets and
liabilities and the statements of financial affairs, if any, Filed by
McLeodUSA pursuant to Section 521 of the Bankruptcy Code and Bankruptcy
Rules, as such schedules have been or may be further modified, amended or
supplemented in accordance with Bankruptcy Rule 1009 or orders of the
Bankruptcy Court.
1.87 Securities Act means the Securities Act of 1933, 15
U.S.C. ss.ss. 77c-77aa, as now in effect or hereafter amended.
1.88 Securities Claim means a claim (including, without
limitation, claims asserted in the Securities Class Actions) arising from
rescission of a purchase or sale of a security of the Debtor, for damages
arising from the purchase or sale of such security, or for reimbursement,
indemnity or contribution allowed under Section 502 of the Bankruptcy Code
on account of such Claim; provided, however, that Claims (including,
without limitation, Directors and Officers Claims) arising under Section
8.3 hereof shall not be Securities Claims.
1.89 Securities Class Actions means, collectively, the
following lawsuits: (i) New Millenium Growth Fund LLC v. McLeod USA, Inc.
et al., Civil Action No. C02-1, filed on January 11, 2002; (ii) Colbert
Birnet LP v. McLeod USA, Inc. et al., Civil Action No. C02-6, filed on
January 18, 2002; (iii) Jeffrey Brandes v. McLeod USA, Inc. et al., Civil
Action No. C02-7, filed on January 18, 2002; (iv) Albert R. Currie v.
McLeod USA, Inc. et al., Civil Action No. C02-8, filed on January 18, 2002;
and (v) Randall J. Burns v. McLeod USA, Inc. et al., Civil Action No.
C02-13, filed on January 25, 2002; (vi) Robert Corwin v. McLeodUSA
Incorporated, et al., Civil Action No C02-16, filed January 31, 2002;
(vii) Market Street Securities v. Clark McLeod, et al., Civil Action No.
C02-18, filed on February 4, 2002; (vii) Gary Schnell v. Clark McLeod, et
al., Civil Action No. C02-19, filed on February 5, 2002; and (ix) Kenneth
Rheault v. Clark McLeod, et al., Civil Action No. C02-20, filed on February
7, 2002 and (x) Arnold Olsen v. Clark McLeod, et al., Civil Action No.
C02-23, filed on February 11, 2002.
1.90 Senior Secured Lender Claims means individually, a
Claim of a Senior Secured Lender or Bank Agent under the Credit Agreement
and, collectively, the Claims of the Senior Secured Lenders and the Bank
Agents under the Credit Agreement, including Claims for principal, accrued
but unpaid interest, fees and expenses payable to or incurred by the Senior
Secured Lenders and the Bank Agents, and all of the rights and entitlements
of the Senior Secured Lenders and the Bank Agents under the Cash Collateral
Order. The Senior Secured Lender Claims are hereby Allowed to the full
extent of their rights and entitlements, fixed or contingent, under the
Credit Agreement, including, without limitation, the amount of all
principal and accrued interest payable from time to time under the Credit
Agreement and all current and future rights and entitlements thereunder in
respect of letters of credit issued thereunder.
1.91 Senior Secured Lenders means the entities identified
as "Lenders" under the Credit Agreement and their respective successors and
assigns.
1.92 Solicitation Order means the order entered by the
Bankruptcy Court, if any, establishing procedures with respect to the
solicitation and tabulation of votes to accept or reject this Plan.
1.93 Sharing Formula means the formulas governing the
voting rights and rights of the New Class B Common Stock and New Class C
Common Stock upon liquidation, the payment of any dividend on New Common
Stock or any conversion of the New Class B Common Stock and New Class C
Common Stock, solely as between the New Class B Common Stock and New Class
C Common Stock; provided that the economic terms of, and other rights
pertaining to, the shares of New Class B Common Stock and New Class C
Common Stock, taken together, will be identical to those of the aggregate
number of shares of New Common Stock into which such shares of New Class B
Common Stock and New Class C Common Stock are convertible. The New Class B
Common Stock and the New Class C Common Stock shall be convertible into an
aggregate of 113,750,014 shares of New Common Stock.
1.94 Third Amendment to Credit Agreement means that
certain Third Amendment dated as of November 29, 2001, to the Credit
Agreement dated as of May 31, 2000, among McLeodUSA, as borrower, and the
Lenders.
1.95 Unimpaired Claim means a Claim that is not impaired
within the meaning of Section 1124 of the Bankruptcy Code.
1.96 Voting Deadline means the voting deadline date for
voting to accept or reject this Plan, as determined by the Bankruptcy
Court.
1.97 Voting Record Date means the voting record date for
voting to accept or reject this Plan, as determined by the Bankruptcy
Court.
1.98 Warrant Agreement means the certain warrant
agreements pursuant to which the New Warrants will be issued.
1.99 Yell Group means the Yell Group Limited, a
corporation organized under the laws of England and Wales, or its permitted
assignees.
B. Rules of Interpretation
For purposes of the Plan, (a) any reference in the Plan
to a contract, instrument, release, indenture, or other agreement or
document's being in a particular form or on particular terms and conditions
means that such document shall be substantially in such form or
substantially on such terms and conditions, (b) any reference in the Plan
to an existing document or exhibit filed or to be filed means such document
or exhibit as it may have been or may be amended, modified, or
supplemented, (c) unless otherwise specified, all references in the Plan to
Sections, Articles, Schedules, and Exhibits are references to Sections,
Articles, Schedules, and Exhibits of or to the Plan, (d) the words "herein"
and "hereto" refer to the Plan in its entirety rather than to a particular
portion of the Plan, (e) captions and headings to Articles and Sections are
inserted for convenience of reference only and are not intended to be a
part of or to affect the interpretation of the Plan, and (f) the rules of
construction set forth in section 102 of the Bankruptcy Code and in the
Bankruptcy Rules shall apply.
C. Computation of Time
In computing any period of time prescribed or allowed by
the Plan, the provisions of Bankruptcy Rule 9006(a) shall apply.
D. Governing Law
Unless a rule of law or procedure is supplied by federal
law (including the Bankruptcy Code and Bankruptcy Rules), the laws of (i)
the State of Delaware shall govern the construction and implementation of
the Plan and any agreements, documents, and instruments executed in
connection with the Plan (unless such agreement, document or instrument
provides otherwise) and (ii) the laws of the state of incorporation of
McLeodUSA shall govern corporate governance matters with respect to
McLeodUSA, in either case without giving effect to the principles of
conflicts of law thereof.
ARTICLE II
CLASSIFICATION OF CLAIMS AND INTERESTS
All Claims and Interests, except Administrative Claims
and Priority Tax Claims, are placed in the Classes set forth below. In
accordance with Section 1123(a)(1) of the Bankruptcy Code, Administrative
Claims and Priority Tax Claims, as described below, have not been
classified. A Claim or Interest is placed in a particular Class only to the
extent that the Claim or Interest falls within the description of that
Class and is classified in other Classes to the extent that any portion of
the Claim or Interest falls within the description of such other Classes. A
Claim or Interest is also placed in a particular Class for the purpose of
receiving distributions pursuant to the Plan only to the extent that such
Claim or Interest is an Allowed Claim or Interest in that Class and such
Claim or Interest has not been paid, released or otherwise settled prior to
the Effective Date.
2.1 Unclassified Claims.
(a) Administrative Claims.
(b) Priority Tax Claims.
2.2 Unimpaired Classes of Claims.
(a) Class 1: Class 1 consists of all Senior Secured
Lender Claims.
(b) Class 2: Class 2 consists of all Other Secured
Claims.
(c) Class 3: Class 3 consists of all Non-Tax Priority
Claims.
(d) Class 4: Class 4 consists of all General
Unsecured Claims.
2.3 Impaired Class of Claims.
(a) Class 5: Class 5 consists of all Note Claims.
2.4 Impaired Classes of Interests.
(a) Class 6: Class 6 consists of all Old Preferred
Stock Interests.
(b) Class 7: Class 7 consists of all Class A Common
Stock Interests.
(c) Class 8: Class 8 consists of all Securities
Claims.
(d) Class 9: Class 9 consists of all Other Old
Equity.
ARTICLE III
TREATMENT OF CLAIMS AND INTERESTS
3.1 Unclassified Claims.
(a) Administrative Claims. Subject to the provisions
of Sections 330(a), 331 and 503(b) of the Bankruptcy Code, each
Administrative Claim shall be paid by McLeodUSA, at its election, (a) in
full, in Cash, in such amounts as are incurred in the ordinary course of
business by McLeodUSA, or in such amounts as such Administrative Claim is
Allowed by the Bankruptcy Court upon the later of the Effective Date or the
date upon which there is a Final Order allowing such Administrative Claim,
(b) upon such other terms as may exist in the ordinary course of
McLeodUSA's business, or (c) upon such other terms as may be agreed upon
between the Holder of such Administrative Claim and McLeodUSA.
(i) Professional Fees. All final applications
for Professional Fees for services rendered in connection with the
Chapter 11 Case prior to the Confirmation Date shall be filed no
later than thirty (30) days after the Effective Date.
(b) Priority Tax Claims. The legal and equitable
rights of the holders of Priority Tax Claims are Unimpaired by the Plan.
On, or as soon as reasonably practicable after the later of (i) the
Distribution Date if such Priority Tax Claim is an Allowed Priority Tax
Claim as of the Effective Date or (ii) the date on which such Priority Tax
Claim becomes an Allowed Priority Tax Claim, each holder of an Allowed
Priority Tax Claim shall receive in full satisfaction, settlement and
release of, and in exchange for such Allowed Priority Tax Claim, at the
election of McLeodUSA, (A) Cash equal to the amount of such Allowed
Priority Tax Claim; (B) such other treatment as to which McLeodUSA or
Reorganized McLeodUSA and the holder of such Allowed Priority Tax Claim
shall have agreed upon in writing; or (C) such other treatment so that it
will not be Impaired pursuant to Section 1124 of the Bankruptcy Code;
further provided, any Allowed Priority Tax Claim not due and owing on the
Effective Date will be paid in accordance with this section when such Claim
becomes due and owing.
3.2 Unimpaired Classes of Claims.
(a) Class 1. Senior Secured Lender Claims. The Senior
Secured Lender Claims are Allowed Claims under the Plan to the full extent
of the Senior Secured Lenders' rights and entitlements, fixed or
contingent, under the Credit Agreement, including, without limitation, the
amount of all principal and accrued interest payable from time to time
under the Credit Agreement and all current and future rights and
entitlements of the Senior Secured Lenders in respect of Letters of Credit
issued thereunder. The legal, equitable and contractual rights of the
holders of Allowed Senior Secured Lender Claims are Unimpaired. Without
limiting the generality of the foregoing, the Senior Secured Lender Claims
shall not be discharged and shall be Reinstated on the Effective Date, and
all of the obligations and duties of McLeodUSA under the Credit Agreement
are deemed assumed as of the Effective Date by Reorganized McLeodUSA, and
the Credit Agreement shall be enforceable against Reorganized McLeodUSA in
accordance with its terms. In addition, Reorganized McLeodUSA will cause
all of its affiliates who are parties to the Credit Agreement to perform
their obligations in respect of the Credit Agreement in accordance with
their terms.
(b) Class 2: Other Secured Claims. The legal,
equitable and contractual rights of the holders of Allowed Other Secured
Claims are Unimpaired by the Plan and all such Claims shall be Reinstated
on the Effective Date.
(c) Class 3. Non-Tax Priority Claims. The legal and
equitable rights of the holders of Allowed Non-Tax Priority Claims are
Unimpaired by the Plan and all such Claims shall be Reinstated on the
Effective Date.
(d) Class 4: General Unsecured Claims. The legal,
equitable and contractual rights of the holders of General Unsecured Claims
are Unimpaired by the Plan and all such Claims shall be Reinstated on the
Effective Date.
3.3 Impaired Class of Note Claims.
(a) Class 5: Note Claims. Note Claims are those
Claims held by current Holders of the Notes as of the Voting Record Date
and are Allowed Claims under the Plan in amounts to be agreed upon by
McLeodUSA and the Notes Trustee by the Effective Date. On or as soon as
reasonably practicable after the Distribution Date, each holder of an
Allowed Note Claim shall receive, in full satisfaction, release, and
discharge of its Allowed Note Claim, its pro rata share of (A) $670,000,000
(six hundred seventy million dollars) in Cash, subject to a reduction of
$200,000 per day from May 1, 2002 through the earlier of (i) the date of
closing of the transaction contemplated by the Pubco Stock Purchase
Agreement or (ii) August 1, 2002; (B) the New Series A Preferred Stock,
plus (C) one-half of the New Warrants issued under the terms of this Plan.
3.4 Impaired Classes of Claims/Interests.
(a) Class 6: Old Preferred Stock Interests. Old
Preferred Stock Interests are current Holders of Old Preferred Stock as of
the Voting Record Date and are Allowed Interests under the Plan. On or as
soon as reasonably practicable after the Distribution Date (A) holders of
the Old Series A Preferred Stock shall receive, in full satisfaction,
release, and discharge of their Allowed Old Series A Preferred Stock
Interests, their pro rata share of 33,696,559 (thirty-three million six
hundred ninety-six thousand five hundred fifty-nine) shares of New Common
Stock; and (B) holders of the Old Series D Preferred Stock and holders of
the Old Series E Preferred Stock shall be entitled to receive, in full
satisfaction, release, and discharge of their Allowed Old Series D
Preferred Stock Interests and Allowed Old Series E Preferred Stock
Interests, their pro rata share of an aggregate of 113,750,014 (one hundred
thirteen million seven hundred fifty thousand fourteen) shares of New
Common Stock as follows: (i) holders of Old Series D Preferred Stock shall
receive their pro rata share of 78,203,135 (seventy-eight million two
hundred three thousand one hundred thirty five) shares of New Class B
Common Stock; and (ii) holders of the Old Series E Preferred Stock shall
receive their pro rata share of 35,546,879 (thirty-five million five
hundred forty-six thousand eight hundred seventy-nine) shares of New Class
C Common Stock. The ratio of the number of shares being issued to the
holders of the Old Preferred Stock is equal to the ratio of the respective
liquidation preferences of such Old Preferred Stock.
(b) Class 7: Class A Common Stock Interests. Class A
Common Stock Interests are current Holders of Class A Common Stock as of
the Voting Record Date and are Allowed Interests under the Plan. On or as
soon as reasonably practicable after the Distribution Date, each holder of
an Allowed Class A Common Stock Interest shall receive in full
satisfaction, release, and discharge of its Allowed Class A Common Stock
Interests, its pro rata share of the Class 7/Class 8 Distribution.
(c) Class 8: Securities Claims. On or as soon as
reasonably practicable after the Distribution Date, each Holder of an
Allowed Securities Claim shall receive in full satisfaction, release, and
discharge of its Allowed Securities Claim, its pro rata share of the Class
7/Class 8 Distribution. The Debtor does not believe there are any valid
Securities Claims and, therefore, any Securities Claims filed will be
objected to by the Debtor. However, the plaintiffs in the Securities Class
Actions contend that they have valid Securities Claims.
(d) Class 9: Other Old Equity. On the Effective Date,
the Other Old Equity will be cancelled and the holders of Other Old Equity
shall not receive or retain any distribution on account of such Other Old
Equity Interests under the Plan.
3.5 Special Provision Regarding Unimpaired Claims. Except
as otherwise provided in the Plan, the Confirmation Order, any other order
of the Bankruptcy Court, or any document or agreement enforceable pursuant
to the terms of the Plan, nothing shall affect McLeodUSA's or Reorganized
McLeodUSA's rights and defenses, both legal and equitable, with respect to
any Unimpaired Claims, including, but not limited to, all rights with
respect to legal and equitable defenses to setoff or recoupments against
Unimpaired Claims.
ARTICLE IV
MEANS FOR IMPLEMENTATION OF THE PLAN
4.1 Continued Corporate Existence and Vesting of Assets
in Reorganized McLeodUSA. After the Effective Date, Reorganized McLeodUSA
shall continue to exist in accordance with the laws in the jurisdiction in
which it is incorporated and pursuant to its certificate or articles of
incorporation and by-laws in effect prior to the Effective Date, except to
the extent such certificate or articles of incorporation and by-laws are
amended under this Plan. Except as otherwise provided in the Plan, on and
after the Effective Date, all property of the Estate of McLeodUSA,
including all claims, rights and causes of action and any property acquired
by McLeodUSA or Reorganized McLeodUSA under or in connection with the Plan,
shall vest in Reorganized McLeodUSA free and clear of all Claims, liens,
charges, other encumbrances and Interests except with respect to Claims
that are Unimpaired under the Plan. On and after the Effective Date,
Reorganized McLeodUSA may operate its businesses and may use, acquire and
dispose of property and compromise or settle any Claims without supervision
of or approval by the Bankruptcy Court and free and clear of any
restrictions of the Bankruptcy Code or the Bankruptcy Rules other than
restrictions expressly imposed by the Plan or the Confirmation Order.
Without limiting the foregoing, Reorganized McLeodUSA may pay the charges
that it incurs on or after the Effective Date for Professionals' fees,
disbursements, expenses or related support services without application to
the Bankruptcy Court.
4.2 Corporate Governance, Directors and Officers, and
Corporate Action.
(a) Certificate of Incorporation and By-laws. The
certificate or articles of incorporation and by-laws of McLeodUSA shall be
amended as necessary to satisfy the provisions of the Plan and the
Bankruptcy Code, and shall include, among other things, (i) pursuant to
Section 1123(a)(6) of the Bankruptcy Code, a provision prohibiting the
issuance of non-voting equity securities, but only to the extent required
by Section 1123(a)(6) of the Bankruptcy Code; and (ii) authorize the
issuance of New Common Stock (including New Common Stock issuable upon
exercise of the New Warrants), New Class B Common Stock, New Class C Common
Stock, New Series A Preferred Stock, and New Director Preferred Stock in
amounts not less than the amounts necessary to permit the distributions
thereof required or contemplated by the Plan. After the Effective Date,
Reorganized McLeodUSA may amend and restate the Amended Certificates of
Incorporation and By-laws as permitted by applicable law. The Amended
Certificates of Incorporation and By-laws of Reorganized McLeodUSA shall
be in substantially the form attached to this Plan as Exhibits A and B,
respectively.
(b) Directors and Officers of Reorganized McLeodUSA.
Subject to any requirement of Bankruptcy Court approval pursuant to Section
1129(a)(5) of the Bankruptcy Code, as of the Effective Date, the initial
officers of Reorganized McLeodUSA shall be the officers of McLeodUSA
immediately prior to the Effective Date. On the Effective Date, the Board
of Directors of Reorganized McLeodUSA will consist of up to fifteen (15)
members, including the New Series A Director and the designees of the New
Director Preferred Stock. Mr. Clark E. McLeod will continue to serve as
Chairman of the Board of Directors. Mr. Theodore J. Forstmann will continue
to serve as the Chairman of the Executive Committee. McLeodUSA's by-laws
will be amended as follows: (i) the Board of Directors will include at
least (a) five (5) independent directors and (b) three (3) officers of
McLeodUSA selected by the Board of Directors; provided that each such
officer shall hold one or more of the following titles: Chairperson; Chief
Executive Officer; President; Chief Operating Officer or Chief Financial
Officer and the designees of the New Director Preferred Stock, and (ii) the
Executive Committee of the Board of Directors will consist of no more than
seven (7) members and will include the designees of the New Director
Preferred Stock and the three (3) officers of McLeodUSA who are serving on
the Board of Directors as set forth above. Moreover, Reorganized
McLeodUSA's charter shall be amended to opt out of the provisions of
Section 203 of the Delaware General Corporation Law. Pursuant to Section
1129(a)(5) of the Bankruptcy Code, McLeodUSA will disclose, on or prior to
the Confirmation Date, the identity and affiliations of any other person
proposed to serve on the initial board of directors of Reorganized
McLeodUSA, and, to the extent such person is an insider other than by
virtue of being a director, the nature of any compensation for such person.
The classification and composition of the board of directors of Reorganized
McLeodUSA shall be consistent with the Amended Certificate of Incorporation
and Bylaws. Each such director and officer shall serve from and after the
Effective Date pursuant to the terms of the Amended Certificate of
Incorporation and By-laws, the other constituent documents of Reorganized
McLeodUSA, and applicable law.
(c) Corporate Action. On the Effective Date, the
adoption of the Amended Certificate of Incorporation and By-laws or similar
constituent documents and the Certificates of Designations, the selection
of directors and officers for Reorganized McLeodUSA, and all other actions
contemplated by the Plan shall be authorized and approved in all respects
(subject to the provisions of the Plan). All matters provided for in the
Plan involving the corporate structure of McLeodUSA or Reorganized
McLeodUSA, and any corporate action required by McLeodUSA or Reorganized
McLeodUSA in connection with the Plan (including, without limitation, the
execution, delivery and performance of all agreements and instruments
contemplated by the Plan), shall be deemed to have occurred and shall be in
effect without any requirement of further action by the security holders or
directors of McLeodUSA or Reorganized McLeodUSA. On the Effective Date, the
appropriate officers of Reorganized McLeodUSA and members of the board of
directors of Reorganized McLeodUSA are authorized and directed to issue,
execute and deliver the agreements, documents, securities and instruments
contemplated by the Plan in the name of and on behalf of Reorganized
McLeodUSA.
4.3 Effectuating Documents and Further Transactions. Each
of McLeodUSA, Reorganized McLeodUSA or the Creditors Committee, as
appropriate, is authorized to and, on or prior to the Effective Date, shall
execute, deliver, file or record such contracts, instruments, releases and
other agreements or documents and take such actions as may be necessary or
appropriate to effectuate, implement and further evidence the terms and
conditions of the Plan and any notes or securities issued pursuant to the
Plan.
4.4 Sale of Pubco. On the Effective Date, McLeodUSA
Holdings shall sell to Yell Group, and Yell Group shall purchase from
McLeodUSA Holdings, upon and pursuant to the terms of the Pubco Stock
Purchase Agreement, all of the outstanding shares of capital stock of
Pubco, subject to McLeodUSA Holding's entry into a "Superior Proposal," as
defined in the Pubco Stock Purchase Agreement.
4.5 Cancellation of Notes, Class A Common Stock and Old
Preferred Stock. On the Effective Date, except as otherwise provided for
herein, (i) the Notes, Class A Common Stock, Old Preferred Stock, and any
other notes, bonds (with the exception of surety bonds outstanding),
Indentures or other instruments or documents evidencing or creating any
indebtedness or obligations of McLeodUSA, except such notes or other
instruments evidencing indebtedness or obligations of McLeodUSA that are
Unimpaired, Reinstated, or amended and restated under the Plan, shall be
cancelled, and (ii) the obligations of McLeodUSA under any agreements,
Indentures or certificates of designation governing the Notes, Class A
Common Stock, Old Preferred Stock, and any other notes, bonds, indentures
or other instruments or documents evidencing or creating any indebtedness
or obligations of McLeodUSA, except such notes or other instruments
evidencing indebtedness or obligations of McLeodUSA that are Unimpaired,
Reinstated or amended and restated under the Plan, as the case may be,
shall be discharged; provided, however, that each Indenture or other
agreement that governs the rights of Note Claims shall continue in effect
solely for the purpose of allowing the Notes Trustee to make distributions
on account of such Claims under the Plan.
4.6 Issuance of New Securities. On or as soon as
reasonably practicable after the Effective Date, Reorganized McLeodUSA, in
accordance with the terms of the Plan, shall issue and exchange, as
necessary, for the benefit of holders of the Old Preferred Stock Interests
and Class A Common Stock Interests, such shares of New Common Stock, New
Class B Common Stock and New Class C Common Stock as required by Section
3.4 of the Plan. Reorganized McLeodUSA shall issue, for the benefit of
holders of Note Claims, such shares of New Series A Preferred Stock and New
Warrants as required by Section 3.3 of the Plan. Also on the Effective
Date, Reorganized McLeodUSA shall issue to Forstmann Little (i) the New
Director Preferred Stock, (ii) 74,027,764 (seventy-four million
twenty-seven thousand seven hundred sixty-four) shares of New Common Stock,
and (iii) one-half of the New Warrants authorized to be issued under the
terms of the Plan to Forstmann Little in each case pursuant to the terms of
the Purchase Agreement. The issuance of the New Common Stock, New Class B
Common Stock, New Class C Common Stock, New Series A Preferred Stock, New
Director Preferred Stock and New Warrants is authorized without the need
for any further corporate action. The Certificates of Designation in
connection with the issuance of the New Series A Preferred Stock and the
New Director Preferred Stock shall be in substantially the form attached to
this Plan as Exhibits C and D, respectively. The Warrant Agreement in
connection with the issuance of the New Warrants shall be in substantially
the form attached to this Plan as Exhibit E.
4.7 New Credit Agreement. On the Effective Date,
Reorganized McLeodUSA is authorized and directed to execute and deliver the
New Credit Agreement to govern the Exit Facility, and thereafter shall
perform the New Credit Agreement, and all agreements and instruments
entered into in connection therewith, in accordance with their terms.
4.8 Management Incentive Plan. On the Effective Date,
Reorganized McLeodUSA shall be authorized and directed to establish and
implement the Management Incentive Plan. Sixty-five million one hundred
seventy-three thousand seven hundred and ninety-seven (65,173,797) shares
of New Common Stock will be reserved for issuance under the Management
Incentive Plan. The Management Incentive Plan may be amended or modified by
the board of directors of Reorganized McLeodUSA in accordance with its
terms and any such amendment or modification shall not require an amendment
of this Plan.
4.9 Sources of Cash for Plan Distributions. Except as
otherwise provided in the Plan or the Confirmation Order, all Cash
necessary for Reorganized McLeodUSA to make payments under the Plan shall
be obtained from existing Cash balances and the proceeds from the sale of
Pubco and the sale of shares of New Common Stock, the New Director
Preferred Stock and one-half of the New Warrants pursuant to the terms of
the Purchase Agreement.
4.10 Exemption from Transfer Taxes. Pursuant to Section
1146(c) of the Bankruptcy Code, (a) the issuance, transfer or exchange of
notes or equity securities under the Plan; (b) the creation of any
mortgage, deed of trust, lien, pledge or other security interest; (c) the
making or assignment of any lease or sublease; or (d) the making or
delivery of any deed or other instrument of transfer under, in furtherance
of, or in connection with, the Plan, including, without limitation, any
merger agreements; agreements of consolidation, restructuring, disposition,
liquidation or dissolution; deeds; bills of sale; and transfers of tangible
property, will not be subject to any stamp tax, recording tax, personal
property tax, real estate transfer tax, sales or use tax or other similar
tax. Any transfers from McLeodUSA to Reorganized McLeodUSA or otherwise
pursuant to the Plan shall not be subject to any such taxes, and the
Confirmation Order shall direct the appropriate state or local governmental
officials or agents to forego the collection of any such tax or
governmental assessment and to accept for filing and recordation any of the
foregoing instruments or other documents without the payment of any such
tax or governmental assessment. Unless the Bankruptcy Court orders
otherwise, any and all of the foregoing transactions whether taken on or
after the Effective Date shall be deemed to have been in furtherance of, or
in connection with, the Plan.
ARTICLE V
ACCEPTANCE OR REJECTION OF THE PLAN
5.1 Classes Entitled to Vote. Classes 5, 6, and 7 are
entitled to vote to accept or reject the Plan. By operation of law, each
Unimpaired Class of Claims is deemed to have accepted the Plan and,
therefore, is not entitled to vote to accept or reject the Plan. Classes 1,
2, 3, and 4 are deemed to have accepted the Plan. If the Class 7 and Class
8 Solicitation Order is entered, Class 7 and Class 8 will be deemed to have
rejected the Plan and will not be entitled to vote on the Plan. By
operation of law, Class 9 is deemed to have rejected the Plan and are not
entitled to vote on the Plan.
5.2 Acceptance by Impaired Classes. An Impaired Class of
Claims shall have accepted the Plan if (a) the holders (other than any
holder designated under Section 1126(e) of the Bankruptcy Code) of at least
two-thirds (2/3) in amount of the Allowed Claims actually voting in such
Class have voted to accept the Plan and (b) the holders (other than any
holder designated under Section 1126(e) of the Bankruptcy Code) of more
than one-half (1/2) in number of the Allowed Claims actually voting in such
Class have voted to accept the Plan. An Impaired Class of Interests shall
have accepted the Plan if the holders (other than any holder designated
under Section 1126(e) of the Bankruptcy Code) of at least two-thirds (2/3)
in amount of the Allowed Interests actually voting in such Class have voted
to accept the Plan.
5.3 Cramdown. McLeodUSA will request Confirmation of the
Plan, as it may be modified from time to time, under Section 1129(b) of the
Bankruptcy Code with respect to any Class which rejects, or is deemed to
have rejected, the Plan.
ARTICLE VI
PROVISIONS GOVERNING DISTRIBUTIONS
6.1 Distributions for Claims or Interests Allowed as of
the Effective Date. Except as otherwise provided herein or as ordered by
the Bankruptcy Court, distributions to be made on account of Claims or
Interests that are Allowed as of the Effective Date shall be made on the
Distribution Date or as soon thereafter as is practicable. Except with
respect to Claims Reinstated under the Plan, as to which all distributions
shall be timely made in accordance with the terms thereof, any distribution
to be made pursuant to this Plan shall be deemed as having been made on the
Effective Date if such distribution is made on the Effective Date or as
soon thereafter as is practicable. Any payment or distribution required to
be made under the Plan on a day other than a Business Day shall be made on
the next succeeding Business Day. Distributions on account of Claims or
Interests that first become Allowed Claims or Interests after the Effective
Date shall be made pursuant to Articles III, VI and VII of this Plan.
Notwithstanding the date on which any distribution of securities is made to
a Holder of a Claim or Interest that is an Allowed Claim or Allowed
Interest on the Effective Date, as of the date of the distribution, such
Holder shall be deemed to have the rights of a Holder of such securities
distributed as of the Effective Date.
6.2 Interest on Claims. Unless otherwise specifically
provided for or contemplated in the Plan or Confirmation Order, or required
by applicable bankruptcy law, postpetition interest shall not accrue or be
paid on any Claims, other than Senior Secured Lender Claims as provided in
the Credit Agreement, and no Holder of a Claim, other than Senior Secured
Lender Claims, shall be entitled to interest accruing on or after the
Petition Date on any Claim.
6.3 Distributions by Reorganized McLeodUSA. Reorganized
McLeodUSA or the Disbursing Agent shall make all distributions required to
be distributed under the Plan. However, distributions on account of Senior
Secured Lender Claims shall be made to the Bank Agents, and distributions
on account of Note Claims shall be made to the Notes Trustee. Reorganized
McLeodUSA may employ or contract with other entities to assist in or make
the distributions required by the Plan.
6.4 Delivery of Distributions and Undeliverable or
Unclaimed Distributions.
(a) Delivery of Distributions in General.
Distributions to holders of Allowed Claims and Allowed Interests shall be
made at the addresses set forth in McLeodUSA's records or as otherwise
available to McLeodUSA, the Bank Agents, the Notes Trustee, or any other
agent or servicer, unless such addresses are superseded by any proofs of
claim or transfers of claim that may be filed pursuant to Bankruptcy Rule
3001.
(b) Undeliverable and Unclaimed Distributions.
(i) Holding and Investment of Undeliverable
and Unclaimed Distributions. If the distribution to any Holder of
an Allowed Claim or Interest is returned to the Disbursing Agent
as undeliverable or is otherwise unclaimed, no further
distributions shall be made to such Holder unless and until the
Disbursing Agent is notified in writing of such Holder's then
current address.
(ii) After Distributions Become Deliverable.
Reorganized McLeodUSA shall make all distributions that have
become deliverable or have been claimed since the Distribution
Date as soon as practicable after such distribution has become
deliverable.
(iii) Failure to Claim Undeliverable
Distributions. Any holder of an Allowed Claim or Interest that
does not assert a claim pursuant to the Plan for an undeliverable
or unclaimed distribution within one (1) year after the Effective
Date shall be deemed to have forfeited its claim for such
undeliverable or unclaimed distribution and shall be forever
barred and enjoined from asserting any such claim for an
undeliverable or unclaimed distribution against McLeodUSA or its
Estate, Reorganized McLeodUSA, or their property. In such cases,
any Cash for distribution on account of such claims for
undeliverable or unclaimed distributions shall become the property
of the Estate free of any restrictions thereon and notwithstanding
any federal or state escheat laws to the contrary, subject to the
liens of the Senior Secured Lenders. Any New Common Stock, New
Class B Common Stock or New Class C Common Stock held for
distribution on account of such Claim or Interest shall be
canceled and of no further force or effect. Nothing contained in
the Plan shall require any Disbursing Agent, including, but not
limited to, Reorganized McLeodUSA, to attempt to locate any holder
of an Allowed Claim or Interest.
6.5 Record Date for Distributions. As of the close of
business on the Distribution Record Date, the transfer register for the
Notes, Old Preferred Stock, and the Class A Common Stock, as maintained by
McLeodUSA, the Notes Trustee, any other applicable trustee or their
respective agents shall be closed and the transfer of such securities or
any interest thereon prohibited. Except, in case of Senior Secured Lender
Claims, distributions in respect of which shall be in all respects governed
by the terms of the Credit Agreement, (i) the Disbursing Agent will have no
obligation to recognize the transfer of, or the sale of any participation
in, any Allowed Claim or Interest that occurs after the close of business
on the Distribution Record Date, and will be entitled for all purposes
herein to recognize and distribute only to those holders of Allowed Claims
and Interests who are holders of such Claims or Interest, or participants
therein, as of the close of business on the Distribution Record Date, and
(ii) the Disbursing Agent and Reorganized McLeodUSA shall instead be
entitled to recognize and deal for all purposes under the Plan with only
those record holders stated on any official register as of the close of
business on the Distribution Record Date.
6.6 Allocation of Plan Distributions Between Principal
and Interest. To the extent that any Allowed Claim entitled to a
distribution under the Plan is comprised of indebtedness and accrued but
unpaid interest thereon, such distribution shall, to the extent permitted,
be allocated for income tax purposes to the principal amount of the Claim
first and then, to the extent the consideration exceeds the principal
amount of the claim, to the portion of such Claim representing accrued but
unpaid interest.
6.7 Means of Cash Payment. Payments of Cash made pursuant
to the Plan shall be in U.S. dollars and shall be made, at the option and
in the sole discretion of Reorganized McLeodUSA, by (a) checks drawn on or
(b) wire transfer from a domestic bank selected by Reorganized McLeodUSA.
Cash payments to foreign creditors may be made, at the option of
Reorganized McLeodUSA, in such funds and by such means as are necessary or
customary in a particular foreign jurisdiction.
6.8 Withholding and Reporting Requirements. In connection
with the Plan and all distributions thereunder, Reorganized McLeodUSA shall
comply with all withholding and reporting requirements imposed by any
federal, state, local or foreign taxing authority, and all distributions
hereunder shall be subject to any such withholding and reporting
requirements. Reorganized McLeodUSA shall be authorized to take any and all
actions that may be necessary or appropriate to comply with such
withholding and reporting requirements. Notwithstanding any other provision
of the Plan, (i) each holder of an Allowed Claim or Interest that is to
receive a distribution of New Common Stock, New Class B Common Stock, New
Class C Common Stock, New Series A Preferred Stock, New Director Preferred
Stock or New Warrants shall have sole and exclusive responsibility for the
satisfaction and payment of any tax obligations imposed by any governmental
unit, including income, withholding and other tax obligations, on account
of such distribution, and (ii) no distribution shall be made to or on
behalf of such Holder pursuant to the Plan unless and until such Holder has
made arrangements satisfactory to Reorganized McLeodUSA for the payment and
satisfaction of such tax obligations or has, to Reorganized McLeodUSA's
satisfaction, established an exemption therefrom. Any New Common Stock, New
Class B Common Stock, New Class C Common Stock, New Series A Preferred
Stock, New Director Preferred Stock or New Warrants to be distributed
pursuant to the Plan shall, pending the implementation of such
arrangements, be treated as undeliverable pursuant to Section 6.4 hereof.
6.9 Setoffs. Except as otherwise provided in the Plan,
the Confirmation Order, any other order of the Bankruptcy Court, or the
provisions of the Credit Agreement, as applicable, Reorganized McLeodUSA
may, pursuant to Section 553 of the Bankruptcy Code and applicable
nonbankruptcy law, but shall not be required to, set off against any Claim
and the payments or other distributions to be made pursuant to the Plan in
respect of such Claim, claims of any nature whatsoever that McLeodUSA or
Reorganized McLeodUSA may have against the Holder of such Claim; provided,
however, that, except as so provided, neither the failure to do so nor the
allowance of any Claim hereunder shall constitute a waiver or release by
Reorganized McLeodUSA of any such claim that McLeodUSA or Reorganized
McLeodUSA may have against such Holder.
6.10 Surrender of Instruments or Securities. As a
condition precedent to receiving any distribution pursuant to the Plan on
account of an Allowed Claim or Interest, the Holder of such Claim or
Interest shall tender the applicable instruments, securities or other
documentation evidencing such Claim or Interest to Reorganized McLeodUSA or
the Notes Trustee or their agents, as applicable, unless waived in writing
by Reorganized McLeodUSA or the Notes Trustee. Any New Common Stock, New
Class B Common Stock, New Class C Common Stock or New Series A Preferred
Stock to be distributed pursuant to the Plan on account of any such Claim
or Interest shall, pending such surrender, be treated as an undeliverable
distribution pursuant to Section 6.4(b) of the Plan.
(a) Notes, Class A Common Stock and Old Preferred
Stock. Each holder of a Note Claim, Class A Common Stock or Old Preferred
Stock Interest shall tender its Notes, Class A Common Stock and Old
Preferred Stock relating to such Claim or Interest to Reorganized McLeodUSA
or the Notes Trustee or their agents, as applicable, in accordance with
written instructions to be provided to such holders by Reorganized
McLeodUSA or the Notes Trustee as promptly as practicable following the
Effective Date. Such instructions shall specify that delivery of such
instruments will be affected, and risk of loss and title thereto will pass,
only upon the proper delivery of such instruments with a letter of
transmittal in accordance with such instructions. All surrendered Notes,
Class A Common Stock and Old Preferred Stock shall be marked as cancelled.
(b) Failure to Surrender Instruments. Any holder of
Note Claims, Class A Common Stock Interests or Old Preferred Stock
Interests that fails to surrender or is deemed to have failed to surrender
the applicable Notes, Class A Common Stock or Old Preferred Stock required
to be tendered hereunder within one year after the Effective Date shall
have its Claim or Interest and its distribution pursuant to the Plan on
account of such Notes, Class A Common Stock or Old Preferred Stock
discharged and shall be forever barred from asserting any such Claim or
Interest against Reorganized McLeodUSA or its property. In such cases, any
New Common Stock, New Class B Common Stock or New Class C Common Stock held
for distribution on account of such Claim or Interest shall be disposed of
pursuant to Section 6.4 hereof.
6.11 Lost, Stolen, Mutilated or Destroyed Securities. In
addition to any requirements under the Indentures or any other applicable
agreement, any Holder of a Claim or Interest evidenced by a Note, Class A
Common Stock or Old Preferred Stock that has been lost, stolen, mutilated
or destroyed shall, in lieu of surrendering such Note, Class A Common Stock
or Old Preferred Stock, deliver to Reorganized McLeodUSA or the Notes
Trustee or their agents, as applicable: (i) evidence reasonably
satisfactory to Reorganized McLeodUSA and the Notes Trustee of the loss,
theft, mutilation or destruction; and (ii) such security or indemnity as
may be required by Reorganized McLeodUSA and the Notes Trustee to hold
Reorganized McLeodUSA or the Notes Trustee harmless from any damages,
liabilities or costs incurred in treating such individual as a Holder of an
Allowed Claim or Interest. Upon compliance with this Article VI by a Holder
of a Claim or Interest evidenced by a Note or Old Preferred Stock, such
Holder shall, for all purposes under the Plan, be deemed to have
surrendered such instrument.
6.12 Fractional Shares. No fractional shares of New
Common Stock, New Class B Common Stock, New Class C Common Stock or New
Warrants shall be distributed. The actual issuance shall reflect a rounding
up (in the case of .5000 or more) of such fraction to the nearest whole New
Common Stock share, New Class B Common Stock share, New Class C Common
Stock share or New Warrant or a rounding down of such fraction (in the case
of .4999 or less). Fractional Shares of the New Series A Preferred Stock
may be distributed.
ARTICLE VII
PROCEDURES FOR RESOLVING DISPUTED,
CONTINGENT AND UNLIQUIDATED CLAIMS AND INTERESTS
7.1 Objection Deadline; Prosecution of Objections. No
later than the Claims Objection Deadline (unless extended by an order of
the Bankruptcy Court), McLeodUSA or Reorganized McLeodUSA, as the case may
be, shall file objections to Claims and Interests with the Bankruptcy Court
and serve such objections upon the holders of each of the Claims and
Interests to which objections are made, provided, however, that McLeodUSA
and Reorganized McLeodUSA shall not object to Claims Allowed pursuant to
that Plan. Nothing contained herein, however, shall limit Reorganized
McLeodUSA's right to object to Claims or Interests, if any, that are not
Allowed under the Plan and that are filed or amended after the Claims
Objection Deadline. McLeodUSA and Reorganized McLeodUSA shall be authorized
to, and shall, resolve all Disputed Claims or Interests by withdrawing or
settling such objections thereto, or by litigating to judgment in the
Bankruptcy Court or such other court having jurisdiction over the validity,
nature and/or amount thereof.
7.2 No Distributions Pending Allowance. Notwithstanding
any other provision of the Plan, no payments or distributions shall be made
with respect to all or any portion of a Disputed Claim or Interest unless
and until all objections to such Disputed Claim or Interest have been
settled or withdrawn or have been determined by Final Order and the
Disputed Claim or Interest, or some portion thereof, has become an Allowed
Claim or Interest.
7.3 Disputed Claims Reserve; Disputed Interest Reserve.
On the Effective Date (or as soon thereafter as is practicable),
Reorganized McLeodUSA shall establish the Disputed Claims Reserve and the
Disputed Interest Reserve by withholding from the initial distribution (i)
with respect to the Disputed Claims Reserve, Cash, New Series A Preferred
Stock and New Warrants, as applicable, in amounts equal to one hundred
percent (100%) of the distributions to which holders of Disputed Claims
would be entitled if their Claims were allowed in the Disputed Claim
Amount; and (ii) with respect to the Disputed Interest Reserve, an amount
of New Common Stock in an amount equal to one hundred percent (100%) of the
distributions to which holders of Disputed Class 6 Interests, the Disputed
Class 7 Interests or the Disputed Class 8 Claims would be entitled if their
Interests or Claims were allowed in the Disputed Interest or Disputed Claim
Amount; provided, however, that McLeodUSA and Reorganized McLeodUSA shall
have the right to file a motion seeking to modify any Disputed Claim
Amounts or Disputed Interest Amounts.
7.4 Distributions After Allowance. Reorganized McLeodUSA
shall make payments and distributions from the Disputed Claims Reserve or
Disputed Interest Reserve, as appropriate, to the holder of any Disputed
Claim or Disputed Interest that has become an Allowed Claim or Interest, as
soon as practicable after the date such Disputed Claim or Interest becomes
an Allowed Claim or Interest. Such distributions shall be based upon the
cumulative distributions that would have been made to the holder of such
Claim or Interest under the Plan if the Disputed Claim or Interest had been
Allowed on the Effective Date and shall not be limited by the Disputed
Claim Amounts or Disputed Interest Amounts previously reserved with respect
to such Disputed Claim or Interest to the extent that additional amounts
are available therefor from the Disputed Claims Reserve or the Disputed
Interest Reserve, as appropriate, but only to the extent that such
additional amounts have not yet been distributed to holders of Allowed
Claims or Interest. After a Final Order has been entered, or other final
resolution has been reached, with respect to each Disputed Claim or
Disputed Interest, any cash, New Series A Preferred Stock, New Warrants or
New Common Stock that remains in the Disputed Claims Reserve or Disputed
Interest Reserve, as applicable, shall be distributed as applicable, pro
rata, to (i) with respect to the Disputed Claims Reserve, holders of
Allowed Class 5 Claims; and (ii) with respect to the Disputed Interest
Reserve, holders of Allowed Class 6 Interests, Allowed Class 7 Interests,
and Allowed Class 8 Claims. All distributions made under this Section 7.4
shall be made as if such Allowed Class 5 Claim or Allowed Class 6 Interest,
Allowed Class 7 Interest, and Allowed Class 8 Claims had been Allowed on
the Effective Date.
ARTICLE VIII
TREATMENT OF EXECUTORY CONTRACTS
AND UNEXPIRED LEASES
8.1 Assumption of Executory Contracts and Unexpired
Leases. Immediately prior to the Effective Date, all executory contracts or
unexpired leases of Reorganized McLeodUSA will be deemed assumed in
accordance with the provisions and requirements of Section 365 and 1123 of
the Bankruptcy Code. Entry of the Confirmation Order by the Bankruptcy
Court shall constitute approval of such assumptions and rejections pursuant
to Sections 365(a) and 1123 of the Bankruptcy Code. Each executory contract
and unexpired lease assumed pursuant to this Article 8 shall revest in and
be fully enforceable by Reorganized McLeodUSA in accordance with its terms,
except as modified by the provisions of the Plan, or any order of the
Bankruptcy Court authorizing and providing for its assumption or applicable
federal law.
8.2 Cure of Defaults of Assumed Executory Contracts and
Unexpired Leases. Any monetary amounts by which each executory contract and
unexpired lease to be assumed pursuant to the Plan is in default shall be
satisfied, pursuant to Section 365(b)(1) of the Bankruptcy Code, by payment
of the default amount in Cash on the Effective Date or on such other terms
as the parties to such executory contracts or unexpired leases may
otherwise agree. In the event of a dispute regarding: (1) the amount of any
cure payments, (2) the ability of Reorganized McLeodUSA or any assignee to
provide "adequate assurance of future performance" (within the meaning of
Section 365 of the Bankruptcy Code) under the contract or lease to be
assumed, or (3) any other matter pertaining to assumption, the cure
payments required by Section 365(b)(1) of the Bankruptcy Code shall be made
following the entry of a Final Order resolving the dispute and approving
the assumption.
8.3 Indemnification of Directors, Officers and Employees.
The obligations of McLeodUSA to indemnify ("Director and Officers Claims")
any person or entity serving at any time on or prior to the Effective Date
as one of its directors, officers or employees by reason of such person's
or entity's service in such capacity, or as a director, officer or employee
of any other corporation or legal entity, to the extent provided in
McLeodUSA's constituent documents, or by a written agreement with
McLeodUSA, or pursuant to applicable general corporation law, each as
applicable, shall be deemed and treated as executory contracts that are
assumed by Reorganized McLeodUSA pursuant to the Plan and Section 365 of
the Bankruptcy Code as of the Effective Date. Accordingly, such
indemnification obligations shall be treated as General Unsecured Claims
and shall survive Unimpaired and unaffected by entry of the Confirmation
Order, irrespective of whether such indemnification is owed for an act or
event occurring before or after the Petition Date.
8.4 Compensation and Benefit Programs. Except as
otherwise expressly provided hereunder, all employment and severance
policies, and all compensation and benefit plans, policies, and programs of
McLeodUSA applicable to its employees, retirees and non-employee directors
and the employees and retirees of its subsidiaries, including, without
limitation, all savings plans, retirement plans, healthcare plans,
disability plans, severance benefit plans, incentive plans, and life,
accidental death and dismemberment insurance plans are treated as executory
contracts under the Plan and on the Effective Date will be assumed pursuant
to the provisions of Sections 365 and 1123 of the Bankruptcy Code
(excluding any such policy, plan, program or related agreement or document
or any portion thereof relating to Other Old Equity).
ARTICLE IX
CONFIRMATION AND CONSUMMATION OF THE PLAN
9.1 Conditions to Confirmation. The Bankruptcy Court
shall not enter the Confirmation Order unless and until the Confirmation
Order shall be reasonably acceptable in form and substance to McLeodUSA,
the Creditors Committee, Forstmann Little and the Arrangers.
9.2 Conditions to Effective Date. The Effective Date
shall occur if, and only if, on or prior to the Effective Date:
(a) The Confirmation Order confirming the Plan, as
such Plan may have been modified, shall have been entered and become a
Final Order in form and substance reasonably satisfactory to McLeodUSA, the
Creditors Committee, Forstmann Little and the Arrangers and shall provide
that:
(i) McLeodUSA and Reorganized
McLeodUSA are authorized and directed to take all actions
necessary or appropriate to enter into, implement and consummate
the contracts, instruments, releases, leases, indentures and other
agreements or documents to be executed and/or delivered in
connection with the Plan;
(ii) the provisions of the Confirmation Order
are nonseverable and mutually dependent; and
(iii) Reorganized McLeodUSA is authorized
and directed (a) to issue New Common Stock, New Class B Common
Stock, New Class C Common Stock, New Series A Preferred Stock, New
Director Preferred Stock and New Warrants, (b) to establish and
implement the Management Incentive Plan, and (c) to enter into the
New Credit Agreement.
(b) Reorganized McLeodUSA shall have credit
availability under the Exit Facility in an amount acceptable to Reorganized
McLeodUSA.
(c) The following agreements or instruments, in form
and substance satisfactory to McLeodUSA, the Creditors Committee, Forstmann
Little and the Arrangers, shall have been executed and delivered, and if
applicable all conditions precedent shall have been satisfied:
(i) Amended Certificates of Incorporation and
By-laws of Reorganized McLeodUSA;
(ii) New Credit Agreement and all similar
documents provided for therein or contemplated thereby;
(iii) Pubco Stock Purchase Agreement;
(iv) Purchase Agreement and the ancillary
agreements contemplated thereby;
(v) the Warrant Agreements; and
(vi) Certificates of Designation.
(d) The Amended Certificates of Incorporation,
By-laws and the Certificates of Designations of Reorganized McLeodUSA, as
necessary, shall have been filed with the appropriate authority in
accordance with such jurisdiction's corporation laws.
(e) All actions, documents and agreements necessary
to implement the Plan shall have been effected or executed and will be
reasonably acceptable to McLeodUSA, the Creditors Committee, Forstmann
Little and the Arrangers.
(f) The new board of directors and the executive
committee of Reorganized McLeodUSA shall have been appointed.
(g) All of the conditions set forth in Section 4 of
the Third Amendment to Credit Agreement shall have been satisfied or waived
in accordance with the terms thereof and without violating any contractual
agreements of Reorganized McLeodUSA or any of its subsidiaries so that, on
the Effective Date, the provisions of Section 3 of the Third Amendment to
Credit Agreement shall have become operative.
(h) As of the Effective Date, no unwaived Default (as
defined in the Credit Agreement) shall exist.
(i) McLeodUSA or Reorganized McLeodUSA shall have
obtained necessary approvals from the Federal Communications Commission and
any other Federal regulatory authority for the transactions contemplated
under the Plan.
9.3 Waiver of Conditions. Each of the conditions set
forth in section 9.2 above may be waived in whole or in part by McLeodUSA
with the consent of the Creditors Committee, the Arrangers and Forstmann
Little, which consent shall not be unreasonably withheld, without any other
notice to parties in interest or the Bankruptcy Court and without a hearing
provided, however, that the conditions set forth in Sections 9.2(c)(ii),
9.2 (g) and 9.2(h) relating to the satisfaction of conditions under the
Credit Agreement, the New Credit Agreement, or the Third Amendment to
Credit Agreement shall not be waivable except to the extent the relevant
conditions under such documents have been waived in accordance with the
terms of the Credit Agreement, the New Credit Agreement or the Third
Amendment to Credit Agreement, as the case may be. The failure to satisfy
or waive a condition to the Effective Date may be asserted by McLeodUSA or
Reorganized McLeodUSA regardless of the circumstances giving rise to the
failure of such condition to be satisfied (including any action or inaction
by McLeodUSA or Reorganized McLeodUSA). The failure of McLeodUSA or
Reorganized McLeodUSA to exercise any of the foregoing rights shall not be
deemed a waiver of any other rights, and each right shall be deemed an
ongoing right that may be asserted at any time.
9.4 Consequences of Non-Occurrence of Effective Date. If
the Effective Date does not occur within ninety (90) days of the
Confirmation Date, or by such later date, after notice and hearing, as is
proposed by McLeodUSA, then upon motion by McLeodUSA and upon notice to
such parties in interest as the Bankruptcy Court may direct, the
Confirmation Order will be vacated by the Bankruptcy Court; provided,
however, that, notwithstanding the filing of such motion, the Confirmation
Order may not be vacated if the Effective Date occurs before the Bankruptcy
Court enters an order granting such motion. If the Confirmation Order is
vacated pursuant to this Section 9.4, (a) the Plan shall be null and void
in all respects; and (b) any settlement of Claims and Interests provided
for hereby shall be null and void without further order of the Bankruptcy
Court.
ARTICLE X
EFFECT OF PLAN CONFIRMATION
10.1 Binding Effect. The Plan shall be binding upon and
inure to the benefit of McLeodUSA, all present and former holders of Claims
and Interests, and their respective successors and assigns, including, but
not limited to, Reorganized McLeodUSA.
10.2 Discharge of Claims and Termination of Interests.
(a) Except as provided in the Plan and the
Confirmation Order, pursuant to Section 1141(d) of the Bankruptcy Code, the
rights afforded under this Plan and the treatment of Claims and Interests
under this Plan shall be in exchange for and in complete satisfaction,
discharge and release of all Claims and termination of all Interests,
including any interest accrued on Claims from the Petition Date. Except as
provided in the Confirmation Order or the Plan, Confirmation shall (a)
discharge McLeodUSA from all Claims and other debts that arose before the
Confirmation Date and all debts of the kind specified in Section 502(g),
502(h) or 502(i) of the Bankruptcy Code, whether or not (i) a proof of
claim based on such debt is filed or deemed filed pursuant to Section 501
of the Bankruptcy Code, (ii) a Claim based on such debt is allowed pursuant
to Section 502 of the Bankruptcy Code or (iii) the holder of a Claim based
on such debt has accepted the Plan; and (b) terminate all Interests and
other rights of equity security holders in McLeodUSA.
(b) As of the Confirmation Date, except as provided
in this Plan or the Confirmation Order, all entities shall be precluded
from asserting against McLeodUSA, Reorganized McLeodUSA, their successors
or their property, any other or further claims, debts, rights, causes of
action, liabilities or equity interests based upon any act, omission,
transaction or other activity of any nature that occurred prior to the
Confirmation Date. In accordance with the foregoing, except as provided in
this Plan or the Confirmation Order, the Confirmation Order shall be a
judicial determination of discharge of all such claims and rights of equity
security holders in McLeodUSA, pursuant to Sections 524 and 1141 of the
Bankruptcy Code, and such discharge shall void any judgment obtained
against McLeodUSA at any time to the extent that such judgment relates to a
discharged Claim or Interest.
10.3 Injunction.
(a) Except as otherwise provided in the Plan,
entities who have held, hold or may hold Claims against or Interests in
McLeodUSA are (i) permanently enjoined from taking any of the following
actions against the Estate or any of its property on account of any such
Claims or Interests and (ii) permanently enjoined from taking any of the
following actions against any of McLeodUSA, Reorganized McLeodUSA, or their
property on account of such Claims or Interests: (A) commencing or
continuing, in any manner or in any place, any action or other proceeding;
(B) enforcing, attaching, collecting or recovering in any manner any
judgment, award, decree or order; (C) creating, perfecting or enforcing any
lien or encumbrance; (D) asserting a setoff, right of subrogation or
recoupment of any kind against any debt, liability or obligation due to
McLeodUSA; and (E) commencing or continuing, in any manner or in any place,
any action that does not comply with or is inconsistent with the provisions
of the Plan; provided, however, that (i) the injunctions referred to in
this paragraph shall not apply to the Holders of the Senior Secured Lender
Claims, and (ii) nothing contained herein shall preclude Holders of Claims
and Interests from exercising their rights pursuant to and consistent with
the terms of the Plan.
(b) By accepting distributions pursuant to the Plan,
each holder of an Allowed Claim or Interest will be deemed to have
specifically consented to the injunctions set forth in this Section.
10.4 Releases.
(a) Releases by McLeodUSA. As of the Effective Date,
for good and valuable consideration, the adequacy of which is hereby
confirmed, McLeodUSA and Reorganized McLeodUSA in their individual
capacities and as debtor in possession, will be deemed to forever release,
waive and discharge all claims, obligations, suits, judgments, damages,
demands, debts, rights, causes of action and liabilities (other than the
rights of McLeodUSA or Reorganized McLeodUSA to enforce the Plan and the
contracts, instruments, releases, indentures and other agreements or
documents delivered thereunder) whether liquidated or unliquidated, fixed
or contingent, matured or unmatured, known or unknown, foreseen or
unforeseen, then existing or thereafter arising, in law, equity or
otherwise that are based in whole or in part on any act, omission,
transaction, event or other occurrence taking place on or prior to the
Effective Date in any way relating to McLeodUSA, Reorganized McLeodUSA, the
parties released pursuant to this Section 10.4, the Chapter 11 Case, or the
Plan or the Disclosure Statement, and that could have been asserted by or
on behalf of McLeodUSA or its Estate or Reorganized McLeodUSA against (i)
the current and former directors, officers and employees of McLeodUSA
(other than for money borrowed from or owed to McLeodUSA or its
subsidiaries by any such directors, officers or employees as set forth in
McLeodUSA's books and records) and McLeodUSA's agents, and professionals;
(ii) the Senior Secured Lenders and the Bank Agents, (iii) Forstmann
Little, (iv) the Holders of the Notes, (v) members of the ad hoc
noteholders committee, (vi) the Creditors Committee and its members and
(vii) the respective affiliates and current and former officers, directors,
employees, agents, members, shareholders, partners, advisors, and
professionals of the foregoing.
(b) Releases by Holders of Claims and Interests. On
the Effective Date, (i) each holder of an Impaired Claim or Interest that
voted to accept the Plan and (ii) to the fullest extent permissible under
applicable law, as such law may be extended or interpreted subsequent to
the Effective Date, all other holders of Claims and Interests, as
applicable, in consideration for the obligations of McLeodUSA and
Reorganized McLeodUSA under the Plan and the Cash, New Common Stock, New
Class B Common Stock, New Class C Common Stock, New Series A Preferred
Stock, New Director Preferred Stock, New Warrants and other contracts,
instruments, releases, agreements or documents to be delivered in
connection with the Plan, will be deemed to forever release, waive and
discharge all claims, demands, debts, rights, causes of action or
liabilities (other than the right to enforce McLeodUSA's or Reorganized
McLeodUSA's obligations under the Plan, the Confirmation Order, and the
contracts, instruments, releases, agreements and documents delivered under
the Plan), whether liquidated or unliquidated, fixed or contingent, matured
or unmatured, known or unknown, foreseen or unforeseen, then existing or
thereafter arising, in law, equity or otherwise that are based in whole or
in part on any act or omission, transaction, event or other occurrence
taking place on or prior to the Effective Date in any way relating to
McLeodUSA, the Chapter 11 Case, the Plan or the Disclosure Statement
against (i) the current and former directors, officers and employees of
McLeodUSA and McLeodUSA's agents and professionals; (ii) the Senior Secured
Lenders and the Bank Agents, (iii) Forstmann Little, (iv) the Holders of
the Notes, (v) members of the ad hoc noteholders committee, (vi) the
Creditors Committee and its members and (vii) the respective affiliates and
current and former officers, directors, employees, agents, members,
shareholders, partners, advisors, and professionals of the foregoing.
Nothing contained in this section 10.4(b) shall be deemed a release, waiver
or discharge of any claims, demands, debts, rights, causes of action or
liabilities held by the U.S. Securities and Exchange Commission and the
Holders of Securities Claims pertaining to Class A Common Stock in respect
of their Securities Claims pertaining to Class A Common Stock.
10.5 Exculpation and Limitation of Liability. Neither
McLeodUSA, the Senior Secured Lenders, the Bank Agents, Forstmann Little,
the ad hoc noteholders committee, the Creditors Committee and its members
nor any of their respective present or former members, officers, directors,
shareholders, partners, employees, advisors, attorneys or agents acting in
such capacity, shall have or incur any liability to, or be subject to any
right of action by, any holder of a Claim or an Interest, or any other
party in interest, or any of their respective agents, shareholders,
employees, representatives, financial advisors, attorneys or affiliates, or
any of their successors or assigns, for any act or omission in connection
with, relating to, or arising out of, McLeodUSA's Chapter 11 Case, the
pursuit of confirmation of the Plan, the consummation of the Plan, or the
administration of the Plan or the property to be distributed under the
Plan, except for their willful misconduct or gross negligence, and in all
respects shall be entitled to rely reasonably upon the advice of counsel
with respect to their duties and responsibilities under the Plan.
10.6 Injunction Related to Releases and Exculpation. The
Confirmation Order will permanently enjoin the commencement or prosecution
by any entity, whether directly, derivatively or otherwise, of any claims,
obligations, suits, judgments, damages, demands, debts, rights, causes of
action or liabilities released pursuant to the Plan or any order of the
Bankruptcy Court, including but not limited to the claims, obligations,
suits, judgments, damages, demands, debts, rights, causes of action or
liabilities released in Sections 10.4 and 10.5 of the Plan. Nothing
contained in this Section 10.6 shall be deemed to enjoin any claims,
demands, debts, rights, causes of action or liabilities not released in
Section 10.4(b) held by the Holders of Securities Claims pertaining to
Class A Common Stock in respect of their Securities Claims pertaining to
Class A Common Stock.
10.7 Preservation of Rights of Action; Settlement of
Litigation Claims.
(a) Preservation of Rights of Action. Except as
otherwise provided in the Plan, the Confirmation Order, any other order of
the Bankruptcy Court, the Credit Agreement, or in any document, instrument,
release or other agreement entered into in connection with the Plan, in
accordance with Section 1123(b) of the Bankruptcy Code, McLeodUSA and its
Estate shall retain the Litigation Claims. Reorganized McLeodUSA, as the
successor in interest to McLeodUSA and the Estate, may enforce, sue on,
settle or compromise (or decline to do any of the foregoing) any or all of
the Litigation Claims. Notwithstanding the foregoing, McLeodUSA and
Reorganized McLeodUSA shall not file, commence or pursue any claim, right
or cause of action under Sections 544 through 550 of the Bankruptcy Code;
provided, however, that notwithstanding any statute of limitations
(including, without limitation, Section 544 of the Bankruptcy Code), in the
case of Claims or Interests that have not been Allowed, McLeodUSA and
Reorganized McLeodUSA shall have the right to assert or raise such causes
of action (a) as defenses or counterclaims (up to the amount asserted in
the Claims against McLeodUSA); and (b) in connection with the Claims
objection process, in which case such causes of action can be raised as an
objection to a Claim and not as defenses or counterclaims.
(b) Settlement of Litigation Claims. At any time
after the Confirmation Date and before the Effective Date, notwithstanding
anything in this Plan to the contrary, Reorganized McLeodUSA may settle any
or all of the Litigation Claims with the approval of the Bankruptcy Court
pursuant to Bankruptcy Rule 9019.
10.8 Termination of Subordination Rights and Settlement
of Related Claims.
(a) The classification and manner of satisfying all
Claims and Interests under the Plan take into consideration all
subordination rights, if any, whether arising by contract or under general
principles of equitable subordination, Section 510(b) or 510(c) of the
Bankruptcy Code, or otherwise. All subordination rights that a Holder of a
Claim or Interest may have with respect to any distribution to be made
pursuant to the Plan will be discharged and terminated, and all actions
related to the enforcement of such subordination rights will be permanently
enjoined. Accordingly, distributions pursuant to the Plan to holders of
Allowed Claims or Allowed Interests will not be subject to payment to a
beneficiary of such terminated subordination rights, or to levy,
garnishment, attachment or other legal process by a beneficiary of such
terminated subordination rights.
(b) Pursuant to Bankruptcy Rule 9019 and in
consideration of the distributions and other benefits provided under the
Plan, the provisions of the Plan will constitute a good faith compromise
and settlement of all claims or controversies relating to the subordination
rights that a Holder of a Claim or Interest may have or any distribution to
be made pursuant to the Plan on account of such Claim or Interest. Entry of
the Confirmation Order will constitute the Bankruptcy Court's approval, as
of the Effective Date, of the compromise or settlement of all such claims
or controversies and the Bankruptcy Court's finding that such compromise or
settlement is in the best interests of McLeodUSA, Reorganized McLeodUSA,
their respective properties, and holders of Claims and Interests, and is
fair, equitable and reasonable.
10.9 Term of Bankruptcy Injunction or Stays. All
injunctions or stays provided for in the Chapter 11 Case under Section 105
or 362 of the Bankruptcy Code, or otherwise, and in existence on the
Confirmation Date, shall remain in full force and effect until the
Effective Date.
ARTICLE XI
RETENTION OF JURISDICTION
Pursuant to Sections 105(c) and 1142 of the Bankruptcy
Code and notwithstanding entry of the Confirmation Order and the occurrence
of the Effective Date, the Bankruptcy Court will retain exclusive
jurisdiction over all matters arising out of, and related to, the Chapter
11 Case and the Plan to the fullest extent permitted by law, including,
among other things, jurisdiction to:
(a) Allow, disallow, determine, liquidate, classify,
estimate or establish the priority or secured or unsecured status of any
Claim or Interest that is not yet Allowed, including the resolution of any
request for payment of any Administrative Claim and the resolution of any
objections to the allowance or priority of Claims or Interests;
(b) Resolve any matters related to the assumption,
assumption and assignment, or rejection of any executory contract or
unexpired lease to which McLeodUSA is a party or with respect to which
McLeodUSA or Reorganized McLeodUSA may be liable and to hear, determine
and, if necessary, liquidate any Claims arising therefrom;
(c) Ensure that distributions to holders of Allowed
Claims and Allowed Interests are accomplished pursuant to the provisions of
the Plan;
(d) Decide or resolve any motions, adversary
proceedings, contested or litigated matters and any other matters and grant
or deny any applications involving McLeodUSA that may be pending on the
Effective Date;
(e) Enter such orders as may be necessary or
appropriate to implement or consummate the provisions of the Plan and all
contracts, instruments, releases and other agreements or documents created
in connection with the Plan, the Disclosure Statement or the Confirmation
Order;
(f) Resolve any cases, controversies, suits or
disputes that may arise in connection with the consummation, interpretation
or enforcement of the Plan or any contract, instrument, release or other
agreement or document that is executed or created pursuant to the Plan, or
any entity's rights arising from or obligations incurred in connection with
the Plan or such documents;
(g) Modify the Plan before or after the Effective
Date pursuant to Section 1127 of the Bankruptcy Code or modify the
Disclosure Statement, the Confirmation Order or any contract, instrument,
release or other agreement or document created in connection with the Plan,
the Disclosure Statement or the Confirmation Order, or remedy any defect or
omission or reconcile any inconsistency in any Bankruptcy Court order, the
Plan, the Disclosure Statement, the Confirmation Order or any contract,
instrument, release or other agreement or document created in connection
with the Plan, the Disclosure Statement or the Confirmation Order, in a
manner inconsistent with Section 12.4 as may be necessary or appropriate to
consummate the Plan;
(h) Hear and determine all applications for
compensation and reimbursement of expenses of Professionals under the Plan
or under Sections 330, 331 503(b), and 1103 of the Bankruptcy Code,
provided, however, that from and after the Effective Date, the payment of
fees and expenses of Reorganized McLeodUSA, including counsel fees, shall
be made in the ordinary course of business and shall not be subject to the
approval of the Bankruptcy Court;
(i) Issue injunctions, enter and implement other
orders or take such other actions as may be necessary or appropriate to
restrain interference by any entity with consummation, implementation or
enforcement of the Plan or the Confirmation Order;
(j) Hear and determine causes of action by or on
behalf of McLeodUSA or Reorganized McLeodUSA;
(k) Hear and determine matters concerning state,
local and federal taxes in accordance with Sections 346, 505 and 1146 of
the Bankruptcy Code;
(l) Enter and implement such orders as are necessary
or appropriate if the Confirmation Order is for any reason or in any
respect modified, stayed, reversed, revoked or vacated or distributions
pursuant to the Plan are enjoined or stayed;
(m) Unless such agreement, document, or instrument
provides otherwise, determine any other matters that may arise in
connection with or relate to the Plan, the Disclosure Statement, the
Confirmation Order or any contract, instrument, release or other agreement
or document created in connection with the Plan, the Disclosure Statement
or the Confirmation Order;
(n) Enforce all orders, judgments, injunctions,
releases, exculpations, indemnifications and rulings entered in connection
with the Chapter 11 Case;
(o) Hear and determine all matters related to (i) the
property of the Estate from and after the Confirmation Date and (ii) the
activities of Reorganized McLeodUSA;
(p) Hear and determine such other matters as may be
provided in the Confirmation Order or as may be authorized under the
Bankruptcy Code; and
(q) Enter an order closing the Chapter 11 Case.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1 Bar Date for Administrative Claims. The Confirmation
Order will establish an Administrative Claims Bar Date for filing
Administrative Claims that are not otherwise Allowed. Holders of
Administrative Claims not paid prior to the Effective Date shall submit
proofs of Claim on or before such Administrative Claims Bar Date or forever
be barred from doing so. The notice of Confirmation to be delivered
pursuant to Bankruptcy Rules 3020(c) and 2002(f) will set forth such date
and constitute notice of this Administrative Claims Bar Date. McLeodUSA and
Reorganized McLeodUSA shall have thirty (30) days (or such longer period as
may be allowed by order of the Bankruptcy Court) following the
Administrative Claims Bar Date to review and object to such Administrative
Claims before a hearing for determination of allowance of such
Administrative Claims.
12.2 Payment of Statutory Fees. All fees payable pursuant
to Section 1930 of Title 28, United States Code, as determined by the
Bankruptcy Court at the Confirmation Hearing, shall be paid on the
Effective Date.
12.3 Payment of Notes Trustee Fees. All fees and expenses
payable to the Notes Trustee, including all fees and expenses incurred for
the Notes Trustee's distribution function, shall be paid on the
Distribution Date.
12.4 Amendment or Modification of the Plan. Subject to
Section 1127 of the Bankruptcy Code and, to the extent applicable, Sections
1122, 1123 and 1125 of the Bankruptcy Code, McLeodUSA reserves the right to
alter, amend or modify the Plan with the consent of the Creditors
Committee, Forstmann Little and the Arrangers, which consent shall not be
unreasonably withheld, at any time prior to or after the Confirmation Date
but prior to the substantial consummation of the Plan. A Holder of a Claim
or Interest that has accepted the Plan shall be deemed to have accepted the
Plan, as altered, amended or modified, if the proposed alteration,
amendment or modification does not materially and adversely change the
treatment of the Claim or Interest of such Holder.
12.5 Severability of Plan Provisions. If, prior to the
Confirmation Date, any term or provision of the Plan is determined by the
Bankruptcy Court to be invalid, void or unenforceable, the Bankruptcy Court
will have the power to alter and interpret such term or provision to make
it valid or enforceable to the maximum extent practicable, consistent with
the original purpose of the term or provision held to be invalid, void or
unenforceable, and such term or provision will then be applicable as
altered or interpreted. Notwithstanding any such holding, alteration or
interpretation, the remainder of the terms and provisions of the Plan will
remain in full force and effect and will in no way be affected, impaired or
invalidated by such holding, alteration or interpretation; provided,
however, that after giving effect to such invalidation, avoidance,
alteration or interpretation of such provision, no holder of a Claim or
Interest is adversely affected. The Confirmation Order will constitute a
judicial determination that each term and provision of the Plan, as it may
have been altered or interpreted in accordance with the foregoing, is valid
and enforceable pursuant to its terms.
12.6 Successors and Assigns. The Plan shall be binding
upon and inure to the benefit of McLeodUSA and its successors and assigns,
including, without limitation, Reorganized McLeodUSA. The rights, benefits
and obligations of any entity named or referred to in the Plan shall be
binding on, and shall inure to the benefit of any heir, executor,
administrator, successor or assign of such entity.
12.7 Plan Supplement. The Plan Supplement, which shall
include certain exhibits, lists, schedules, or documents to be executed in
connection with the Plan, shall be filed with the Bankruptcy Court not
later than ten (10) days prior to the Confirmation Hearing. Upon its
filing, the Plan Supplement may be inspected in the office of the clerk of
the Bankruptcy Court or its designee during normal business hours. Holders
of Claims and Interests may obtain a copy of the Plan Supplement upon
written request to McLeodUSA. The documents contained in the Plan
Supplement will be reasonably acceptable to McLeodUSA, the Creditors
Committee, the Arrangers and Forstmann Little shall be approved by the
Bankruptcy Court pursuant to the Confirmation Order.
12.8 Revocation, Withdrawal or Non-Consummation.
McLeodUSA reserves the right to revoke or withdraw the Plan prior to the
Confirmation Date and to file subsequent plans of reorganization. If
McLeodUSA revokes or withdraws the Plan, or if Confirmation or consummation
does not occur, then (a) the Plan shall be null and void in all respects,
(b) any settlement or compromise embodied in the Plan (including the fixing
or limiting to an amount certain any Claim or Interest or Class of Claims
or Interests), assumption or rejection of executory contracts or leases
affected by the Plan, and any document or agreement executed pursuant to
the Plan, shall be deemed null and void, and (c) nothing contained in the
Plan, and no acts taken in preparation for consummation of the Plan, shall
(i) constitute a waiver or release of any Claims by or against, or any
Interests in, McLeodUSA or any other person, (ii) prejudice in any manner
the rights of McLeodUSA or any other person, or (iii) constitute an
admission of any sort by McLeodUSA or any other person.
12.9 Notice. Except as contemplated in agreements,
instruments or other documents binding on Reorganized McLeodUSA, all
notices, requests and demands to or upon McLeodUSA or Reorganized
McLeodUSA, to be effective, shall be in writing and, unless otherwise
expressly provided herein, shall be deemed to have been duly given or made
when actually delivered or, in the case of notice by facsimile
transmission, when received and telephonically confirmed, addressed as
follows:
MCLEODUSA INCORPORATED
6400 C Street SW
Cedar Rapids, Iowa 52404
Telephone: (319) 790-7770
Facsimile: (319) 790-7008
Attn: Chris A. Davis
with copies to:
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM (ILLINOIS)
333 West Wacker Drive
Chicago, Illinois 60606-1285
Telephone: (312) 407-0700
Facsimile: (312) 407-0411
Attn: David S. Kurtz, Esq.
Seth E. Jacobson, Esq.
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM LLP
One Rodney Square
P.O. Box 636
Wilmington, Delaware 19899-0636
Telephone: (302) 651-3000
Facsimile: (302) 651-3001
Attn: Gregg M. Galardi, Esq.
Eric M. Davis, Esq.
12.10 Governing Law. Except to the extent the Bankruptcy
Code, the Bankruptcy Rules or other federal law is applicable, or to the
extent an exhibit or schedule to the Plan provides otherwise, the rights
and obligations arising under this Plan shall be governed by, and construed
and enforced in accordance with, the laws of the state of Delaware, without
giving effect to the principles of conflicts of law of such jurisdiction.
12.11 Tax Liability. Reorganized McLeodUSA is hereby
authorized to request an expedited determination under Section 505(b) of
the Bankruptcy Code of the tax liability of McLeodUSA for all taxable
periods ending after the Petition Date through, and including, the
Effective Date.
12.12 Schedules. All exhibits and schedules to the Plan
and the Plan Supplement are incorporated hereby and are made a part of the
Plan as if set forth in full herein.
12.13 Jurisdiction over Reorganized McLeodUSA.
Notwithstanding the jurisdiction retained in Article XI hereof, from and
after the Effective Date, the Bankruptcy Court shall not have the power to
issue any order which modifies the New Common Stock, New Class B Common
Stock, New Class C Common Stock, New Series A Preferred Stock, New Director
Preferred Stock, New Warrants, the Credit Agreement, the New Credit
Agreement, or the rights of the holders thereof.
12.14 Filing of Additional Documents. On or before
substantial consummation of the Plan, McLeodUSA shall File such agreements
and other documents as may be necessary or appropriate to effectuate and
further evidence the terms and conditions of the Plan.
Dated: Wilmington, Delaware
April 4, 2002
Respectfully submitted,
MCLEODUSA INCORPORATED
By: /s/ RANDALL RINGS
-------------------------------
Randall Rings
Group Vice President-Law,
Secretary and General Counsel
Counsel:
/s/ DAVID S. KURTZ
----------------------------------
David S. Kurtz
Seth E. Jacobson
SKADDEN, ARPS, SLATE, MEAGHER
& FLOM (ILLINOIS)
333 West Wacker Drive
Chicago, Illinois 60606-1285
(312) 407-0700
Gregg M. Galardi (I.D. No. 2991)
Eric M. Davis (I.D. No. 3621)
SKADDEN, ARPS, SLATE, MEAGHER
& FLOM LLP
One Rodney Square
P.O. Box 636
Wilmington, Delaware 19899-0636
(302) 651-3000
ATTORNEYS FOR
MCLEODUSA INCORPORATED
PLAN EXHIBIT A
FORM OF CERTIFICATE OF INCORPORATION OF REORGANIZED McLEODUSA
[To Be Included with the Plan Supplement]
PLAN EXHIBIT B
FORM OF BY-LAWS OF REORGANIZED McLEODUSA
[To Be Included with the Plan Supplement]
PLAN EXHIBIT C
FORM OF CERTIFICATE OF DESIGNATION FOR NEW DIRECTOR PREFERRED
STOCK OF REORGANIZED McLEODUSA
[To Be Included with the Plan Supplement]
PLAN EXHIBIT D
FORM OF CERTIFICATE OF DESIGNATION FOR NEW PREFERRED SERIES A
PREFERRED STOCK OF REORGANIZED McLEODUSA
[To Be Included with the Plan Supplement]
PLAN EXHIBIT E
FORM OF WARRANT AGREEMENT FOR ISSUANCE OF NEW
WARRANTS OF REORGANIZED McLEODUSA
[To Be Included with the Plan Supplement]