<PAGE>
As filed with the Securities and Exchange Commission on July 14, 1999
Registration No. 333-
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
McLeodUSA Incorporated
(Exact name of registrant as specified in its charter)
Delaware McLeodUSA Technology Park 42-1407240
(State or other 6400 C Street SW, P.O. Box 3177 (I.R.S. Employer
jurisdiction of Cedar Rapids, IA 52406-3177 Identification Number)
incorporation or (319) 364-0000
organization)
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
----------------
Clark E. McLeod
Chairman and Chief Executive Officer
McLeodUSA Incorporated
McLeodUSA Technology Park
6400 C Street SW, P.O. Box 3177
Cedar Rapids, IA 52406-3177
(319) 364-0000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
----------------
Copies to:
Joseph G. Connolly, Jr., Esq. James J. Junewicz, Esq.
Hogan & Hartson L.L.P. Mayer, Brown & Platt
555 Thirteenth Street, N.W. 190 South LaSalle Street
Washington, D.C. 20004 Chicago, Illinois 60603
(202) 637-5600 (312) 782-0600
----------------
Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, please check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
----------------
CALCULATION OF REGISTRATION FEE
<TABLE>
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- ---------------------------------------------------------------------------------------
<CAPTION>
Proposed Proposed
maximum maximum
Amount to be offering aggregate Amount of
Title of each class of registered price per offering price registration
securities to be registered (1)(2)(3) unit(1)(2)(3)(4) (1)(3)(5) fee(6)
<S> <C> <C> <C> <C>
Class A common stock...
Preferred stock........
Debt securities........
Depositary shares......
Warrants...............
Subscription rights....
Stock purchase
contracts and stock
purchase units.........
Total: $1,750,000,000 $486,500
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</TABLE>
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(1) In U.S. dollars or the equivalent thereof in one or more foreign
currencies or currency units or composite currencies, including the
European Currency Unit.
(2) Such indeterminate number of amount of Class A common stock, preferred
stock, debt securities, depositary shares, warrants, subscription rights
and stock purchase contracts and stock purchase units, as may from time to
time be issued at indeterminate prices, but with an aggregate initial
offering price not to exceed $1,750,000,000, plus such indeterminate
number of shares of Class A common stock and preferred stock as may be
issued in exchange for, or upon conversion of, debt securities or other
preferred stock registered hereunder. Debt securities may be issued with
original issue discount such that the aggregate initial public offering
price, together with the other securities issued hereunder, will not
exceed $1,750,000,000.
(3) Omitted pursuant to General Instruction II.D of Form S-3.
(4) The proposed maximum initial offering price per unit will be determined,
from time to time, by the Registrant.
(5) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o). In no event will the aggregate initial offering
price of all primary securities issued from time to time pursuant to this
Registration Statement exceed $1,750,000,000.
(6) Calculated pursuant to Rule 457 of the rules and regulations under the
Securities Act of 1933.
----------------
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933, or until the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities and it is not soliciting an offer to buy these +
+securities in any state or jurisdiction where the offer or sale is not +
+permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion, Dated July , 1999
P R O S P E C T U S [LOGO OF McLEODUSA APPEARS HERE]
$1,750,000,000
McLeodUSA Incorporated
Class A Common Stock, Preferred Stock, Depositary Shares, Debt Securities,
Warrants, Subscription Rights, Stock Purchase Contracts and Stock Purchase Units
We may offer, from time to time, in one or more series or classes the
following securities:
. Class A common stock
. preferred stock
. preferred stock represented by depositary shares
. debt securities
. warrants to purchase debt securities, Class A common stock, preferred stock
or depositary shares
. subscription rights to purchase any of the above securities
. stock purchase contracts and stock purchase units
The aggregate initial offering price of these securities will not exceed
$1,750,000,000.
Our Class A common stock is listed on the Nasdaq National Market under the
symbol "MCLD." On July [ ], 1999, the last reported sale price of our Class A
common stock on the Nasdaq National Market was $[ ].
We will provide you with specific terms of the applicable offered securities
in supplements to this prospectus. The terms of the securities will include the
initial offering price, aggregate amount of the offering, listing on any
securities exchange or market, risk factors and the agents, dealers or
underwriters, if any, to be used in connection with the sale of these
securities.
You should read this prospectus and any prospectus supplement carefully
before you decide to invest. This prospectus may not be used to consummate
sales of the offered securities unless it is accompanied by a prospectus
supplement describing the method and terms of the offering of those offered
securities.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these offered securities or
determined if this prospectus is truthful or complete. It is illegal for
any person to tell you otherwise.
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The date of this Prospectus is July , 1999.
<PAGE>
You should rely only on the information provided or incorporated by reference
in this prospectus or any applicable prospectus supplement. We have not
authorized anyone to provide you with different or inconsistent information.
You should assume that the information in this prospectus or any applicable
prospectus supplement is accurate only as of the date on the front cover of
such documents. Our business, financial information, results of operations and
prospects may have changed since those dates.
If it is against the law in any state to make an offer to sell these
securities (or to solicit an offer from someone to buy these securities), then
this offer does not apply to any person in that state, and no offer or
solicitation is made by this prospectus to any such person.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
About This Prospectus....................................................... 1
Where You Can Find More Information......................................... 1
Cautionary Note Regarding Forward-Looking Statements........................ 2
About McLeodUSA............................................................. 3
Ratio of Earnings to Fixed Charges.......................................... 5
Use of Proceeds............................................................. 5
Pro Forma Financial Data.................................................... 6
Description of Common Stock................................................. 9
Description of Preferred Stock.............................................. 14
Description of Depositary Shares............................................ 17
Description of Debt Securities.............................................. 20
Description of Warrants..................................................... 31
Description of Stock Purchase Contracts and Stock Purchase Units............ 33
Description of Subscription Rights.......................................... 34
Plan of Distribution........................................................ 35
Legal Matters............................................................... 36
Experts..................................................................... 36
</TABLE>
<PAGE>
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission using a "shelf" registration process. Under
the shelf process, we may sell any combination of the securities described in
this prospectus in one or more offerings up to a total dollar amount of
$1,750,000,000. This prospectus provides you with a general description of the
securities we may offer. Each time we sell securities, we will provide a
prospectus supplement that will contain specific information about the terms of
that offering. The prospectus supplement also may add, update or change
information contained in this prospectus. You should read both this prospectus
and any prospectus supplement, together with the additional information
described below under the heading "Where You Can Find More Information."
As used in this prospectus, "McLeodUSA," "the company," "we," "us," and "our"
refer to McLeodUSA Incorporated, a Delaware corporation, and its subsidiaries.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement of which this prospectus forms a part.
The registration statement, including the attached exhibits and schedules,
contains additional relevant information about us and the securities offered by
this prospectus. The rules and regulations of the SEC allow us to omit some of
the information included in the registration statement from this prospectus and
any applicable prospectus supplement.
We file reports, proxy statements and other information with the SEC under
the Securities Exchange Act of 1934. You may read and copy any of this
information at the following locations of the SEC:
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, New York 10048 Suite 1400
Chicago, Illinois 60661-2511
You may obtain information on the operation of the SEC's Public Reference
Room in Washington, D.C. by calling the SEC at 1-800-SEC-0330. The SEC file
number for our documents filed under the Securities Exchange Act is 0-20763.
The SEC also maintains an Internet Web site that contains reports, proxy
statements and other information regarding issuers, like McLeodUSA, that file
electronically with the SEC. The address of that site is http://www.sec.gov.
The SEC allows us to "incorporate by reference" information into this
prospectus. This means we can disclose important information to you by
referring you to another document filed separately with the SEC. The
information incorporated by reference is considered to be a part of this
prospectus, except for any such information that is superseded by information
included directly in this document or any prospectus supplement.
This prospectus incorporates by reference the documents listed below that we
have previously filed or will file with the SEC. They contain important
information about us and our financial condition.
. Our Annual Report on Form 10-K for our fiscal year ended December 31,
1998, filed on March 24, 1999, as amended by Form 10-K/A filed on April
22, 1999
. Our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
1999, filed on May 17, 1999
. Our Current Reports on Form 8-K filed on April 15, 1999, April 16, 1999,
June 17, 1999 and July 2, 1999
1
<PAGE>
. All documents filed subsequent to the date of this prospectus pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act
until all of the securities offered by this prospectus are sold,
effective the date such documents are filed
. The description of our Class A common stock set forth in our
registration statement filed under Section 12 of the Securities Exchange
Act on Form 8-A on May 24, 1996, including any amendment or report filed
with the SEC for the purpose of updating such description
. The consolidated financial statements of Ovation Communications, Inc.
and subsidiaries appearing on pages F-1 through F-17 of our definitive
prospectus dated March 24, 1999 and filed with the SEC on March 26, 1999
pursuant to Rule 424(b) under the Securities Act of 1933 as part of our
Registration Statement on Form S-4 (Registration No. 333-71811)
In the event of conflicting information in these documents, the information
in the latest filed document should be considered correct.
You can obtain any of the documents listed above from the SEC, through the
SEC's Web site at the address described above, or directly from us, by
requesting them in writing or by telephone at the following address:
McLeodUSA Incorporated
McLeodUSA Technology Park
6400 C Street SW, P.O. Box 3177
Cedar Rapids, IA 52406-3177
Attn: General Counsel
Telephone (319) 364-0000
We will provide a copy of any of these documents without charge, excluding
any exhibits unless the exhibit is specifically listed as an exhibit to the
registration statement of which this prospectus forms a part. If you request
any documents from us, we will mail them to you by first class mail, or another
equally prompt means, within two business days after we receive your request.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the information incorporated by reference in it include
"forward-looking statements" within the meaning of Section 27A of the
Securities Act and Section 21E of the Securities Exchange Act. We intend the
forward-looking statements to be covered by the safe harbor provisions for
forward-looking statements in these sections. All statements regarding our
expected financial position and operating results, our business strategy, our
financing plans, our future capital requirements, forecasted demographic and
economic trends relating to our industry, our ability to complete acquisitions,
to realize anticipated cost savings and other benefits from acquisitions and to
recover acquisition-related costs, and similar matters are forward-looking
statements. These statements are subject to known and unknown risks,
uncertainties and other factors that could cause our actual results to differ
materially from the statements. The forward-looking information is based on
various factors and was derived using numerous assumptions. In some cases, you
can identify these statements by our use of forward-looking words such as
"may," "will," "should," "anticipate," "estimate," "expect," "plan," "believe,"
"predict," "potential" or "intend." You should be aware that these statements
only reflect our predictions. Actual events or results may differ
substantially. Important factors that could cause our actual results to be
materially different from our expectations include those discussed in the
applicable prospectus supplement under the caption "Risk Factors." We undertake
no obligation to update or revise publicly any forward-looking statements,
whether as a result of new information, future events or otherwise.
2
<PAGE>
ABOUT McLEODUSA
The following summary highlights selected information regarding McLeodUSA. It
does not contain all of the information that is important to you. You should
carefully read this entire prospectus and any prospectus supplement, together
with the other documents to which this prospectus and any prospectus supplement
refers you. In addition, you should carefully consider the factors set forth
under the caption "Risk Factors" in the applicable prospectus supplement.
Unless otherwise indicated, dollar amounts over $1 million have been rounded to
one decimal place and dollar amounts less than $1 million have been rounded to
the nearest thousand.
Our Company
We provide communications services to business and residential customers in
the Midwestern and Rocky Mountain regions of the United States. We offer local,
long distance, Internet access, data, voice mail and paging services, from a
single company on a single bill. We believe we are the first company in many of
our markets to offer one-stop shopping for communications services tailored to
customers' specific needs.
Our approach makes it easier for both our business and our residential
customers to satisfy their communications needs. It also allows businesses to
receive customized services, such as competitive long distance pricing and
enhanced calling features, that might not otherwise be directly available on a
cost-effective basis. As of March 31, 1999, we served over 494,700 local lines
in 408 cities and towns.
In addition to our core business of providing competitive local, long
distance and related communications services, we also derive revenue from:
. sale of advertising space in telephone directories
. traditional local telephone company services in east central Illinois and
southeast South Dakota
. special access, private line and data services
. communications network maintenance services
. telephone equipment sales, leasing, service and installation
. video services
. telemarketing services
. computer networking services
. other communications services, including cellular, operator, payphone,
mobile radio, paging services and Web site development and hosting
In most of our markets, we compete with the existing local phone company by
leasing its lines and switches. In other markets, primarily in east central
Illinois and southeast South Dakota, we operate our own lines and switches. We
provide long distance services by using our own communications network
facilities and leasing capacity from long distance and local communications
providers. We are constructing fiber optic communications networks in Iowa,
Illinois, Wisconsin, Indiana, Missouri, Michigan, Minnesota, South Dakota,
North Dakota, Colorado and Wyoming to carry additional communications traffic
on our own network.
Our Strategy
We want to be the leading and most admired provider of communications
services in our markets. To achieve this goal, we are:
. aggressively capturing customer share and generating revenue using leased
communications network capacity
. concurrently building our own communications network
. migrating customers to our communications network to provide enhanced
services and to reduce our operating costs
The principal elements of our business strategy are to:
Provide integrated communications services. We believe we can rapidly
penetrate our target markets and build customer loyalty by providing an
integrated product offering to business and residential customers.
3
<PAGE>
Build customer share through branding. We believe we will create and
strengthen brand awareness in our target markets by branding our communications
services with the trade name McLeodUSA in combination with the distinctive
black-and-yellow motif of our telephone directories.
Provide outstanding customer service. Our customer service representatives
are available 24 hours a day, seven days a week, to answer customer calls. Our
customer-focused software and systems allow our representatives immediate
access to our customer and network data, enabling a rapid and effective
response to customer requests.
Emphasize small and medium sized businesses. We primarily target small and
medium sized businesses because we believe we can rapidly capture customer
share by providing face-to-face business sales and strong service support to
these customers.
Expand our fiber optic communications network. We are building a state-of-
the-art fiber optic communications network to deliver multiple services and
reduce operating costs.
Expand our intra-city fiber optic communications network. Within selected
cities, we plan to extend our network directly to our customers' locations.
This will allow us to provide expanded services and reduce the expense of
leasing communications facilities from the existing local telephone company.
Explore acquisitions and strategic alliances. We plan to pursue acquisitions,
joint ventures and strategic alliances that expand or complement our business.
Leverage proven management team. Our executive management team consists of
veteran telecommunications managers who successfully implemented similar
customer-focused telecommunications strategies in the past.
----------------
As of June 30, 1999, based on our business plan, capital requirements and
growth projections as of that date, we estimated that we would require
approximately $1.4 billion through 2001 to fund our planned capital
expenditures and operating expenses. Our estimated aggregate capital
requirements include the projected cost of:
. building our fiber optic communications network, including intra-city
fiber optic networks
. expanding operations in existing and new markets
. developing wireless services
. funding general corporate expenses
. integrating recent acquisitions
. constructing, acquiring, developing or improving telecommunication assets
We expect to use the following to address our capital needs:
. approximately $475.0 million of cash and investments on hand at June 30,
1999
. projected operating cash flow
. additional issuances of debt or equity securities
Our estimate of future capital requirements is a forward-looking statement
within the meaning of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. The actual amount and timing of our future
capital requirements is subject to risks and uncertainties and may differ
materially from our estimates. Accordingly, we may need additional capital to
continue to expand our markets, operations, facilities, network and services.
----------------
Our principal executive offices are located at McLeodUSA Technology Park,
6400 C Street SW, P.O. Box 3177, Cedar Rapids, Iowa 52406-3177, and our phone
number is (319) 364-0000.
4
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
For each of the years ended December 31, 1994, 1995, 1996, 1997 and 1998,
earnings were insufficient to cover fixed charges by $11.4 million, $11.4
million, $22.6 million, $84.4 million and $135.5 million, respectively. For the
three months ended March 31, 1998 and 1999, earnings were insufficient to cover
fixed charges by $32.0 million and $51.7 million, respectively. For the purpose
of calculating the ratio of earnings to fixed charges, earnings consist of net
loss before income taxes plus fixed charges (excluding capitalized interest).
Fixed charges consist of interest on all debt (including capitalized interest),
amortization of debt discount and deferred loan costs and the portion of rental
expense that is representative of the interest component of rental expense
(deemed to be one-third of rental expense which management believes is a
reasonable approximation of the interest component).
USE OF PROCEEDS
Unless otherwise indicated in the applicable prospectus supplement, we will
use the net proceeds from the sale of shares of Class A common stock, preferred
stock, debt securities, depositary shares, warrants, subscription rights, stock
purchase contracts and stock purchase units along with funds available from
prior offerings and from other financing sources: (1) to fund development and
construction costs of our fiber optic network, including intra-city fiber optic
networks, and construction, acquisition, development and improvement of
telecommunications assets; (2) to fund market expansion activities in existing
and new markets as well as acquisitions, joint ventures and strategic
alliances; (3) to fund development, construction and operations necessary to
include wireless services as part of our communications services; and (4) for
additional working capital and other general corporate purposes, including
funding operating deficits and net losses.
5
<PAGE>
PRO FORMA FINANCIAL DATA
The following unaudited pro forma financial information has been prepared to
give effect to:
. the issuance of $300 million aggregate principal amount of our 8 3/8% senior
notes in March 1998
. the issuance of $300 million aggregate principal amount of our 9 1/2% senior
notes in October 1998
. the issuance of $500 million aggregate principal amount of our 8 1/8% senior
notes in February 1999
. our acquisition of Ovation Communications, Inc. in March 1999
The Unaudited Pro Forma Condensed Consolidated Statements of Operations
reflects the Ovation acquisition using the purchase method of accounting, and
assumes that the Ovation acquisition and the issuance of the 8 3/8% senior
notes, the 9 1/2% senior notes and the 8 1/8% senior notes were consummated at
the beginning of 1998. The unaudited pro forma financial information is derived
from and should be read in conjunction with our consolidated financial
statements, Ovation's consolidated financial statements and the related notes
thereto incorporated by reference in this prospectus. The pro forma adjustments
are based upon available information and assumptions that management believes
to be reasonable. Depreciation and amortization were adjusted to include
amortization of intangibles acquired in the Ovation acquisition. The acquired
intangibles will be amortized over periods ranging from 3 to 30 years. For
purposes of this pro forma presentation, the issuance of the 8 3/8% senior
notes, the 9 1/2% senior notes and the 8 1/8% senior notes are collectively
referred to as the "Notes Offerings."
The adjustments for the Ovation acquisition reflect the preliminary
allocation of the net purchase price of Ovation to the assets of Ovation,
including intangible assets, and record the payment of $121.3 million in cash
and the issuance of 11,193,234 shares of our Class A common stock (as adjusted
for the two-for-one stock split described below) valued at $16.88 per share (as
adjusted for the two-for-one stock split described below). The value of $16.88
per share represents the average closing price of our Class A common stock on
the Nasdaq National Market for the eleven trading days beginning five days
prior to the date the agreement was announced, January 7, 1999, and ending five
days after such announcement. The adjustments include the elimination of the
Ovation equity components, including common stock, treasury stock, other
capital and retained deficit.
On June 30, 1999, we announced that our board of directors had declared a
two-for-one stock split to be effected in the form of a stock dividend. The
record date for the stock split was July 12, 1999. Stockholders of record at
the market close on that date will receive one additional share of our Class A
common stock for each share held. Distribution of the additional shares will
take place on July 26, 1999.
We have provided this unaudited pro forma financial data for informational
purposes only. This data does not necessarily indicate the operating results
that would have occurred had the Ovation acquisition been consummated at the
beginning of 1998, nor does it necessarily indicate future operating results or
financial position.
6
<PAGE>
McLeodUSA Incorporated and Subsidiaries
Unaudited Pro Forma Condensed
Consolidated Statements of Operations
(In thousands, except per share information)
<TABLE>
<CAPTION>
Year Ended December 31, 1998
----------------------------------------------------------------
Adjustments Pro Forma Adjustments
for the for the for the
Notes Notes Ovation
McLeodUSA Offerings Offerings Ovation Acquisition Total
--------- ----------- --------- ------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Operations Statement Data:
Revenue............................... $ 604,146 $ -- $ 604,146 $21,035 $ -- $ 625,181
--------- -------- --------- ------- -------- ---------
Operating Expenses:
Cost of service...................... 323,208 -- 323,208 6,319 -- 329,527
Selling, general and administrative.. 260,931 -- 260,931 13,489 -- 274,420
Depreciation and amortization........ 89,107 -- 89,107 5,383 15,230 109,720
Other................................ 5,575 -- 5,575 -- -- 5,575
--------- -------- --------- ------- -------- ---------
Total opertaing expenses............ 678,821 -- 678,821 25,191 15,230 719,242
========= ======== ========= ======= ======== =========
Operating loss........................ (74,675) -- (74,675) (4,156) (15,230) (94,061)
Interest expense, net................. (52,234) (32,056) (84,290) (1,608) -- (85,898)
Other non-operating income............ 1,997 -- 1,997 -- -- 1,997
Income taxes.......................... -- -- -- -- -- --
--------- -------- --------- ------- -------- ---------
Net loss............................. $(124,912) $(32,056) $(156,968) $(5,764) $(15,230) $(177,962)
========= ======== ========= ======= ======== =========
Loss per common share(2).............. $ (0.99) $ (1.25) $ (1.30)
========= ========= =========
Weighted average common shares
outstanding(2)....................... 125,614 125,614 136,808
========= ========= =========
Other Financial Data:
EBITDA(1)............................. $ 20,007 $ -- $ 20,007 $ 1,227 $ -- $ 21,234
</TABLE>
- --------
(1) EBITDA consists of operating loss before depreciation, amortization and
other nonrecurring operating expenses. We have included EBITDA data because
it is a measure commonly used in the industry. EBITDA is not a measure of
financial performance under generally accepted accounting principles and
should not be considered an alternative to net income as a measure of
performance or to cash flows as a measure of liquidity.
(2) As adjusted to reflect the two-for-one stock split of our Class A common
stock for stockholders of record as of July 12, 1999. Distribution of the
additional shares will take place on July 26, 1999.
7
<PAGE>
McLeodUSA Incorporated and Subsidiaries
Unaudited Pro Forma Condensed
Consolidated Statements of Operations
(In thousands, except per share information)
<TABLE>
<CAPTION>
Three Months Ended March 31, 1999
---------------------------------------------------------------
Adjustments Pro Adjustments
for the Forma for for the
Notes the Notes Ovation
McLeodUSA Offerings Offerings Ovation Acquisition Total
--------- ----------- --------- ------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Operations Statement
Data
Revenue................ $181,109 $ -- $181,109 $19,696 $ -- $200,805
-------- ------- -------- ------- ------- --------
Operating expenses:
Cost of service....... 92,459 -- 92,459 7,338 -- 99,797
Selling, general and
administrative....... 79,811 -- 79,811 10,880 -- 90,691
Depreciation and
amortization......... 35,110 -- 35,110 2,829 3,741 41,680
Other................. -- -- -- -- -- --
-------- ------- -------- ------- ------- --------
Total operating
expenses............ 207,380 -- 207,380 21,047 3,741 232,168
-------- ------- -------- ------- ------- --------
Operating loss........ (26,271) -- (26,271) (1,351) (3,741) (31,363)
Interest expense,
net.................. (21,204) (2,487) (23,691) (2,388) -- (26,074)
Other non-operating
income............... (1) -- (1) -- -- (1)
Income taxes.......... -- -- -- -- -- --
-------- ------- -------- ------- ------- --------
Net loss.............. $(47,476) $(2,487) $(49,963) $(3,734) $(3,741) $(57,438)
======== ======= ======== ======= ======= ========
Loss per common
share(2)............. $ (0.36) $ (0.38) $ (0.40)
======== ======== ========
Weighted average
common shares
outstanding(2)....... 132,242 132,242 143,436
======== ======== ========
Other Financial Data:
EBITDA(1).............. $ 8,839 $ -- $ 8,839 $ 1,478 $ -- $ 10,317
</TABLE>
- --------
(1) EBITDA consists of operating loss before depreciation, amortization and
other nonrecurring operating expenses. We have included EBITDA data
because it is a measure commonly used in the industry. EBITDA is not a
measure of financial performance under generally accepted accounting
principles and should not be considered an alternative to net income as a
measure of performance or to cash flows as a measure of liquidity.
(2) As adjusted to reflect the two-for-one stock split of our Class A common
stock for stockholders of record as of July 12, 1999. Distribution of the
additional shares will take place on July 26, 1999.
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DESCRIPTION OF COMMON STOCK
The following summary description of our capital stock is based on the
provisions of our certificate of incorporation and bylaws and the applicable
provisions of the Delaware General Corporation Law. For information on how to
obtain copies of our certificate of incorporation and bylaws, see "Where You
Can Find More Information."
General
Under our certificate of incorporation, we have authority to issue
274,000,000 shares of capital stock, consisting of 250,000,000 shares of Class
A common stock, 22,000,000 shares of Class B common stock and 2,000,000 shares
of preferred stock. We have declared a two-for-one stock split to be effected
in the form of a stock dividend for our Class A common stock. The record date
for the stock split was July 12, 1999 and distribution of the additional shares
will take place on July 26, 1999. Giving effect to this stock split, we had
issued and outstanding as of July 1, 1999, 150,417,738 shares of our Class A
common stock, no shares of our Class B common stock and no shares of our
preferred stock.
The rights of the holders of our Class A common stock and our Class B common
stock discussed below are subject to such rights as our board of directors may
from time to time confer on holders of our preferred stock that may be issued
in the future. Such rights may adversely affect the rights of holders of our
Class A common stock or our Class B common stock, or both.
Class A Common Stock
Voting Rights. Each holder of our Class A common stock is entitled to attend
all special and annual meetings of our stockholders and, together with the
holders of all other classes of stock entitled to vote at such meetings, to
vote upon any matter, including, without limitation, the election of directors.
Holders of our Class A common stock are entitled to one vote per share.
Liquidation Rights. In the event of any dissolution, liquidation or winding
up of McLeodUSA, whether voluntary or involuntary, the holders of our Class A
common stock, the holders of our Class B common stock and the holders of any
class or series of stock entitled to participate with our Class A and Class B
common stock, will become entitled to participate in the distribution of any of
our assets remaining after we have paid, or provided for payment of, all of our
debts and liabilities and after we have paid, or set aside for payment, to the
holders of any class of stock having preference over our Class A common stock
in the event of dissolution, liquidation or winding up, the full preferential
amounts, if any, to which they are entitled.
Dividends. Dividends may be paid on our Class A common stock, our Class B
common stock and on any class or series of stock entitled to participate with
our Class A and Class B common stock when and as declared by our board of
directors. We have never paid, however, any cash dividends and the indentures
governing our outstanding debt securities prohibit us from paying cash
dividends.
No Preemptive or Conversion Rights. The holders of our Class A common stock
have no preemptive or subscription rights to purchase additional securities
issued by us nor any rights to convert their Class A common stock into other of
our securities or to have their shares redeemed by us.
Class B Common Stock
Voting Rights. Each holder of our Class B common stock is entitled to attend
all special and annual meetings of our stockholders and, together with the
holders of all other classes of stock entitled to vote at such meetings, to
vote upon any matter or thing, including, without limitation, the election of
directors. Holders of our Class B common stock are entitled to .40 vote per
share.
Liquidation Rights. In the event of any dissolution, liquidation or winding
up of McLeodUSA, whether voluntary or involuntary, the holders of our Class B
common stock, the holders of our Class A common stock
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and the holders of any class or series of stock entitled to participate with
our Class B and Class A common stock, will become entitled to participate in
the distribution of any of our assets remaining after we have paid, or provided
for payment of, all of our debts and liabilities and after we have paid, or set
aside for payment, to the holders of any class of stock having preference over
our Class B common stock in the event of dissolution, liquidation or winding up
the full preferential amounts, if any, to which they are entitled.
Dividends. Dividends may be paid on our Class B common stock, our Class A
common stock and on any class or series of stock entitled to participate with
our Class B and Class A common stock when and as declared by our board of
directors.
Conversion into Our Class A Common Stock; No Other Preemptive or Conversion
Rights. The shares of our Class B common stock may be converted at any time at
the option of the holder into fully paid and nonassessable shares of our Class
A common stock at the rate of one share of our Class A common stock for each
share of Class B common stock, as adjusted for any stock split. Except for this
conversion right, the holders of our Class B common stock have no preemptive or
subscription rights to purchase additional securities issued by us nor any
rights to convert their Class B common stock into other of our securities or to
have their shares redeemed by us.
Certain Charter and Statutory Provisions
Classified Board. Our certificate of incorporation provides for the division
of our board of directors into three classes of directors, serving staggered
three-year terms. Our certificate of incorporation further provides that the
approval of the holders of at least two-thirds of the shares entitled to vote
thereon and the approval of a majority of our entire board of directors are
necessary for the alteration, amendment or repeal of certain sections of our
certificate of incorporation relating to the election and classification of our
board of directors, limitation of director liability, indemnification and the
vote requirements for such amendments to our certificate of incorporation.
These provisions may have the effect of deterring hostile takeovers or delaying
changes in control or management of our company.
Certain Statutory Provisions. We are subject to the provisions of Section 203
of the Delaware General Corporation Law. In general, this statute prohibits a
publicly held Delaware corporation like us from engaging in a business
combination with an interested stockholder for a period of three years after
the date of the transaction in which the person became an interested
stockholder, unless
. before such date, the corporation's board of directors approved either
the business combination or the transaction that resulted in the
stockholder becoming an interested stockholder,
. upon consummation of the transaction that resulted in such person
becoming an interested stockholder, the interested stockholder owned at
least 85% of the voting stock of the corporation outstanding at the time
the transaction commenced, excluding, for purposes of determining the
number of shares outstanding, shares owned by certain directors or
certain employee stock plans, or
. on or after the date the stockholder became an interested stockholder,
the business combination is approved by the corporation's board of
directors and authorized by the affirmative vote, and not by written
consent, of at least two-thirds of the outstanding voting stock of the
corporation excluding that stock owned by the interested stockholder.
A "business combination" includes a merger, asset sale or other transaction
resulting in a financial benefit to the interested stockholder. An "interested
stockholder" is a person, other than the corporation and any direct or indirect
wholly owned subsidiary of the corporation, who together with affiliates and
associates, owns or, as an affiliate or associate, within three years prior,
did own 15% or more of the corporation's outstanding voting stock.
Section 203 expressly exempts from the requirements described above any
business combination by a corporation with an interested stockholder who became
an interested stockholder at a time when the section did not apply to the
corporation. As permitted by the Delaware General Corporation Law, our original
certificate of incorporation provided that it would not be governed by Section
203. Several of our stockholders, including
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Clark E. and Mary E. McLeod and Interstate Energy Corporation became interested
stockholders within the meaning of Section 203 while that certificate of
incorporation was in effect. Accordingly, future transactions between us and
any of these stockholders will not be subject to the requirements of Section
203.
Our certificate of incorporation empowers our board of directors to redeem
any of our outstanding capital stock at a price determined by our board of
directors, which price will be at least equal to the lesser of
. fair market value, as determined in accordance with our certificate of
incorporation, or
. in the case of a "Disqualified Holder," such holder's purchase price, if
the stock was purchased within one year of such redemption,
to the extent necessary to prevent the loss or secure the reinstatement of any
license, operating authority or franchise from any governmental agency. A
"Disqualified Holder" is any holder of shares of our capital stock whose
holding of such stock may result in the loss of, or failure to secure the
reinstatement of, any license or franchise from any governmental agency held by
us or any of our subsidiaries to conduct any portion of our business or the
business of any of our subsidiaries. Under the Telecommunications Act of 1996,
non-U.S. citizens or their representatives, foreign governments or their
representatives, or corporations organized under the laws of a foreign country
may not own, in the aggregate, more than 20% of a common carrier licensee or
more than 25% of the parent of a common carrier licensee if the Federal
Communications Commission, or FCC, determines that the public interest would be
served by prohibiting such ownership. Additionally, the FCC's rules may under
some conditions limit the size of investments by foreign telecommunications
carriers in U.S. international carriers.
Limitation of Liability and Indemnification
Limitations of Director Liability. Section 102(b)(7) of the Delaware General
Corporation Law authorizes corporations to limit or eliminate the personal
liability of directors to corporations and their stockholders for monetary
damages for breach of directors' fiduciary duty of care. Although Section
102(b)(7) does not change directors' duty of care, it enables corporations to
limit available relief to equitable remedies such as injunction or rescission.
Our certificate of incorporation limits the liability of our directors to us or
our stockholders to the full extent permitted by Section 102(b)(7).
Specifically, our directors are not personally liable for monetary damages to
us or our stockholders for breach of the director's fiduciary duty as a
director, except for liability for:
.any breach of the director's duty of loyalty to us or our stockholders
. acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law
. unlawful payments of dividends or unlawful stock repurchases or
redemptions as provided in Section 174 of the Delaware General
Corporation Law
. any transaction from which the director derived an improper personal
benefit
Indemnification. To the maximum extent permitted by law, our bylaws provide
for mandatory indemnification of our directors and officers against any
expense, liability or loss to which they may become subject, or which they may
incur as a result of being or having been a director or officer of McLeodUSA.
In addition, we must advance or reimburse directors and officers for expenses
incurred by them in connection with indemnifiable claims. We also maintain
directors' and officers' liability insurance.
Transfer Agent and Registrar
The transfer agent and registrar for our Class A common stock is Norwest Bank
Minnesota, N.A.
Stockholders' Agreements
On November 18, 1998, we entered into a stockholders' agreement (the
"Stockholders' Agreement") with several of our significant stockholders
consisting of IES Investments Inc. (a subsidiary of Interstate Energy), Clark
E. and Mary E. McLeod, and Richard A. and Gail G. Lumpkin and several other
parties related to the Lumpkins.
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The Stockholders' Agreement provides, among other things, that:
. until December 31, 2001, the parties will not sell any of our equity
securities without receiving the prior written consent of our board of
directors, except for transfers specifically permitted by the
Stockholders' Agreement
. our board of directors will determine on a quarterly basis starting with
the quarter ending December 31, 1998 and ending on December 31, 2001, the
aggregate number, if any, of shares of our Class A common stock, not to
exceed in the aggregate 150,000 shares per quarter, that the parties may
sell during designated trading periods following the release of our
quarterly or annual financial results
. to the extent our board of directors grants registration rights to a
party to the agreement in connection with a sale of our securities by
such party, it will grant similar registration rights to the other
parties
. our board of directors will determine on an annual basis commencing with
the year ending December 31, 1999 and ending on December 31, 2001 (each
such year, an "Annual Period"), the aggregate number, if any, of shares
of our Class A common stock, not to exceed in the aggregate on an annual
basis a number of shares equal to 15% of the total number of shares of
Class A common stock beneficially owned by the parties as of December 31,
1998 (the "Registrable Amount"), to be registered by us under the
Securities Act for sale by the parties
. in any underwritten offering of shares of Class A common stock by us,
other than an offering on a registration statement on Form S-4 or Form S-
8 or any other form which would not permit the inclusion of shares of our
Class A common stock owned by the parties, we will undertake to register
the shares of our Class A common stock of such parties up to the
Registrable Amount, if any, as determined by our board of directors
. we may subsequently determine not to register any shares of the parties
under the Securities Act and may either not file a registration statement
or otherwise withdraw or abandon a registration statement previously
filed
The Stockholders' Agreement terminates on December 31, 2001. If during any
Annual Period we have not provided a party a reasonable opportunity to sell an
aggregate number of shares of Class A common stock equal to not less than 15%
of the total number of shares of Class A common stock beneficially owned by
such party as of December 31, 1998, then such party may terminate the
Stockholders' Agreement as it applies to such party.
Under the Stockholders' Agreement, each party also agreed, until such party
owns less than 4 million shares of Class A common stock or until December 31,
2001, whichever occurs first, to vote such party's shares and take all action
within its power to:
. establish the size of our board of directors at up to 11 directors
. cause to be elected to our board of directors one director designated by
Interstate Energy for so long as IES Investments owns at least 4 million
shares of Class A common stock
. cause to be elected to our board of directors three directors who are
executive officers of McLeodUSA designated by Clark McLeod for so long as
Clark and Mary McLeod collectively own at least 4 million shares of Class
A common stock
. cause Richard Lumpkin to be elected to our board of directors for so long
as the former stockholders of Consolidated Communications, Inc. who are a
party to the agreement collectively own at least 4 million shares of
Class A common stock
. cause to be elected to our board of directors up to six non-employee
directors nominated by our board
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On January 7, 1999, in connection with the Ovation acquisition, M/C Investors
L.L.C. and Media/Communications Partners III Limited Partnership (collectively,
"M/C") entered into a separate stockholders' agreement (the "Ovation
Stockholders' Agreement") with the parties to the Stockholders' Agreement.
The Ovation Stockholders' Agreement provides that, until December 31, 2001,
M/C will not sell any of our equity securities without receiving the prior
written consent of our board of directors. The Ovation Stockholders' Agreement
also contains various provisions intended to insure that M/C is treated on a
basis similar to the parties to the Stockholders' Agreement in connection with
permitted sales of our securities under the Stockholders' Agreement generally
starting December 31, 1999. In addition, for so long as M/C owns at least 2.5
million shares of our Class A common stock, M/C has agreed to vote its shares
in accordance with the voting agreement contained in the Stockholders'
Agreement and the other partries have agreed to vote their shares to cause to
be elected to our board of directors one director designated by M/C.
The Ovation Stockholders' Agreement terminates on December 31, 2001. In
addition, if (1) during each of the years ending December 31, 2000 and December
31, 2001, we have not provided M/C a reasonable opportunity to register under
the Securities Act for sale an aggregate number of shares of our Class A common
stock equal to not less than 15% of the total number of shares of Class A
common stock beneficially owned by M/C as of March 31, 1999, or (2) after
January 1, 2000, the Stockholders' Agreement has been terminated by all parties
to such agreement, then M/C may terminate the Ovation Stockholders' Agreement.
The Ovation Stockholders' Agreement will be terminated with respect to all
parties other than M/C and us at such time as the Stockholders' Agreement is
terminated.
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DESCRIPTION OF PREFERRED STOCK
The following description is a general summary of the terms of the preferred
stock which we may issue. The description below and in any prospectus
supplement does not purport to be complete and is subject to and qualified in
its entirety by reference to our certificate of incorporation, the applicable
certificate of designation to our certificate of incorporation which will
determine the terms of the related series of preferred stock and our bylaws,
each of which will be made available upon request.
General
Our certificate of incorporation authorizes our board of directors, from time
to time and without further stockholder action, to provide for the issuance of
up to 2,000,000 shares of preferred stock, par value $.01 per share, in one or
more series, and to fix the relative rights and preferences of the shares,
including voting powers, dividend rights, liquidation preferences, redemption
rights and conversion privileges. As of the date of this prospectus, no shares
of preferred stock are outstanding and our board of directors has not provided
for the issuance of any series of preferred stock. As a result of its broad
discretion with respect to the creation and issuance of preferred stock without
stockholder approval, the board of directors could adversely affect the voting
power of the holders of our Class A common stock and Class B common stock and,
by issuing shares of preferred stock with certain voting, conversion and/or
redemption rights, may discourage any attempt to obtain control of us.
The rights, preferences, privileges and restrictions of the preferred stock
of each series will be fixed by the certificate of designations relating to
such issues. You should refer to the prospectus supplement relating to the
class or series of preferred stock being offered for the specific terms of that
class or series, including:
(1) the title and stated value of the preferred stock being offered
(2) the number of shares of preferred stock being offered, their
liquidation preference per share, if any, and their purchase price
(3) the dividend rate(s), period(s) and/or payment date(s) or method(s) of
calculating the payment date(s) applicable to the preferred stock
being offered
(4) whether dividends shall be cumulative or non-cumulative and, if
cumulative, the date from which dividends on the preferred stock being
offered shall accumulate
(5) the procedures for any auction and remarketing, if any, for the
preferred stock being offered
(6) the provisions for a sinking fund, if any, for the preferred stock
being offered
(7) the provisions for redemption, if applicable, of the preferred stock
being offered
(8) any listing of the preferred stock being offered on any securities
exchange or market
(9) the terms and conditions, if applicable, upon which the preferred
stock being offered will be convertible into, or exchangeable for, our
Class A common stock or debt securities, including the conversion or
exchange price, or the manner of calculating the price, and the
conversion or exchange period
(10) voting rights, if any, of the preferred stock being offered
(11) whether interests in the preferred stock being offered will be
represented by depositary shares
(12) a discussion of any material and/or special United States federal
income tax considerations applicable to the preferred stock being
offered
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(13) the relative ranking and preferences of the preferred stock being
offered as to dividend rights and rights upon liquidation,
dissolution or winding up of our affairs
(14) any limitations on the issuance of any class or series of preferred
stock ranking senior to or on a parity with the series of preferred
stock being offered as to dividend rights and rights upon
liquidation, dissolution or winding up of our affairs
(15) any other specific terms, preferences, rights, limitations or
restrictions of the preferred stock being offered
Rank
Unless otherwise specified in the applicable prospectus supplement, the
preferred stock will, with respect to distribution rights and rights upon
liquidation, dissolution or winding up of McLeodUSA, rank:
(1) senior to all of our classes or series of common stock and to all
equity securities the terms of which specifically provide that such
equity securities rank junior to the preferred stock being offered
(2) on a parity with all equity securities we have issued, other than
those referred to in clauses (1) and (3) of this subheading
(3) junior to all equity securities we have issued, the terms of which
specifically provide that such equity securities rank senior to the
preferred stock being offered
For purposes of this description, the term "equity securities" does not include
convertible debt securities.
Distributions
Holders of the preferred stock of each series will be entitled to receive,
when, as and if declared by our board of directors, out of our assets legally
available for payment to stockholders, cash distributions, or distributions in
kind or in other property if expressly permitted and described in the
applicable prospectus supplement, at such rates and on such dates as will be
set forth in the applicable prospectus supplement. Each such distribution shall
be payable to holders of record as they appear on our stock transfer books on
such record dates as shall be fixed by our board of directors. Distributions on
any series of preferred stock, if cumulative, will be cumulative from and after
the date set forth in the applicable prospectus supplement.
Redemption
The terms and conditions, if any, upon which the preferred stock will be
subject to mandatory redemption or redemption at our option, either in whole or
in part, will be described in the applicable prospectus supplement.
Liquidation Preference
Upon any voluntary or involuntary liquidation, dissolution or winding up of
our affairs, then, before any distribution or payment shall be made to the
holders of any Class A common stock or Class B common stock or any other class
or series of shares of our capital stock ranking junior to the preferred stock
in the distribution of assets upon any liquidation, dissolution or winding up
of our company, the holders of each series of preferred stock shall be entitled
to receive out of our assets legally available for distribution to stockholders
liquidating distributions in the amount of the liquidation preference set forth
in the applicable prospectus supplement, plus an amount equal to all
accumulated and unpaid distributions. After payment of the full amount of the
liquidating distributions to which they are entitled, the holders of shares of
preferred stock will have no right or claim to any of our remaining assets. If,
upon any such voluntary or involuntary liquidation, dissolution or winding up,
our available assets are insufficient to pay the amount of the liquidating
distributions on all outstanding shares of preferred stock and the
corresponding amounts payable on all shares of other classes or series of our
shares of capital stock ranking on a parity with the preferred stock in the
distribution of assets, then the holders of the preferred stock and all other
such classes or series of shares of capital stock shall share ratably in any
such distribution of assets in proportion to the full liquidating distributions
to which they would otherwise be respectively entitled.
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If liquidating distributions shall have been made in full to all holders of
preferred stock, our remaining assets shall be distributed among the holders of
any other classes or series of shares of capital stock ranking junior to the
preferred stock upon liquidation, dissolution or winding up, according to their
respective rights and preferences and in each case according to their
respective number of shares. For such purposes, our consolidation or merger
with or into any other corporation, trust or entity, or the sale, lease or
conveyance of all or substantially all of our property or business, shall not
be deemed to constitute a liquidation, dissolution or winding up of our
company.
Voting Rights
Holders of preferred stock will have the voting rights as indicated in the
applicable prospectus supplement.
Conversion Rights
The terms and conditions, if any, upon which any series of preferred stock is
convertible into Class A common stock will be set forth in the applicable
prospectus supplement relating thereto. Such terms will include the number of
shares of Class A common stock into which the shares of preferred stock are
convertible, the conversion price or the manner of calculating the conversion
price, the conversion date(s) or period(s), provisions as to whether conversion
will be at the option of the holders of the preferred stock or at our option,
the events requiring an adjustment of the conversion price and provisions
affecting conversion in the event of the redemption of such series of preferred
stock.
Transfer Agent and Registrar
The transfer agent and registrar for the preferred stock will be set forth in
the applicable prospectus supplement.
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DESCRIPTION OF DEPOSITARY SHARES
General
We may issue depositary receipts for depositary shares, each of which will
represent a fractional interest of a share of a particular series of preferred
stock, as specified in the applicable prospectus supplement. Shares of
preferred stock of each series represented by depositary shares will be
deposited under a separate Deposit Agreement between the "depositary" named in
the Deposit Agreement and us. Subject to the terms of the Deposit Agreement,
each owner of a depositary receipt will be entitled, in proportion to the
fractional interest of a share of a particular series of preferred stock
represented by the depositary shares evidenced by that depositary receipt, to
all the rights and preferences of the preferred stock represented by those
depositary shares, including dividend, voting, conversion, redemption and
liquidation rights.
The depositary shares will be evidenced by depositary receipts issued
pursuant to the applicable Deposit Agreement. Immediately following the
issuance and delivery of our preferred stock to the depositary, we will cause
the depositary to issue, on our behalf, the depositary receipts. Copies of the
applicable form of Deposit Agreement and depositary receipt may be obtained
from us upon request, and the statements made in this summary relating to the
Deposit Agreement and the depositary receipts to be issued under the Deposit
Agreement are summaries of provisions of the Deposit Agreement and the related
depositary receipts. This summary does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, all of the
provisions of the applicable Deposit Agreement and related depositary receipts.
Dividends and Other Distributions
The depositary will distribute all cash dividends or other cash distributions
received in respect of the preferred stock to the record holders of depositary
receipts evidencing the related depositary shares in proportion to the number
of such depositary receipts owned by such holders, subject to the obligations
of holders to file proofs, certificates and other information and to pay some
charges and expenses to the depositary.
In the event of a distribution other than in cash, the depositary will
distribute property received by it to the record holders of depositary receipts
entitled to that property, subject to the obligations of holders to file
proofs, certificates and other information and to pay some charges and expenses
to the depositary, unless the depositary determines that it is not feasible to
make the distribution, in which case the depositary may, with our approval,
sell the property and distribute the net proceeds from the sale to the holders.
No distribution will be made in respect of any depositary share to the extent
that it represents any preferred stock converted into other securities.
Withdrawal of Preferred Stock
Upon surrender of the depositary receipts at the corporate trust office of
the depositary, unless the related depositary shares have previously been
called for redemption or converted into other securities, the holders of those
depositary receipts will be entitled to delivery at the corporate trust office,
to or upon the holder's order, of the number of whole or fractional shares of
the preferred stock and any money or other property represented by the
depositary shares evidenced by the depositary receipts. Holders of depositary
receipts will be entitled to receive whole or fractional shares of the related
preferred stock on the basis of the proportion of preferred stock represented
by the depositary share as specified in the applicable prospectus supplement,
but holders of the shares of preferred stock will not thereafter be entitled to
receive depositary shares therefor. If the depositary receipts delivered by the
holder evidence a number of depositary shares in excess of the number of
depositary shares representing the number of shares of preferred stock to be
withdrawn, the depositary will deliver to the holder at the same time a new
depositary receipt evidencing the excess number of depositary shares.
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Redemption of Depositary Shares
Whenever we redeem shares of preferred stock held by the depositary, the
depositary will redeem, as of the same redemption date, the number of
depositary shares representing shares of the preferred stock so redeemed,
provided we have paid in full to the depositary the redemption price of the
preferred stock to be redeemed plus an amount equal to any accrued and unpaid
dividends thereon to the date fixed for redemption. The redemption price per
depositary share will be equal to the corresponding proportion of the
redemption price and any other amounts per share payable with respect to the
preferred stock. If fewer than all the depositary shares are to be redeemed,
the depositary shares to be redeemed will be selected pro rata, as nearly as
may be practicable without creating fractional depositary shares, or by another
equitable method.
From and after the date fixed for redemption, all dividends in respect of the
shares of preferred stock called for redemption will cease to accrue, the
depositary shares called for redemption will no longer be deemed to be
outstanding and all rights of the holders of the depositary receipts evidencing
the depositary shares called for redemption will cease, except the right to
receive any moneys payable upon the redemption and any money or other property
to which the holders of the depositary receipts were entitled upon the
redemption and surrender thereof to the depositary.
Voting of the Preferred Stock
Upon receipt of notice of any meeting at which the holders of the preferred
stock are entitled to vote, the depositary will mail the information contained
in the notice of meeting to the record holders of the depositary receipts
evidencing the depositary shares which represent such preferred stock. Each
record holder of depositary receipts evidencing depositary shares on the record
date, which will be the same date as the record date for the preferred stock,
will be entitled to instruct the depositary as to the exercise of the voting
rights pertaining to the amount of preferred stock represented by the holder's
depositary shares. The depositary will vote the amount of preferred stock
represented by the depositary shares in accordance with the instructions, and
we will agree to take all reasonable action which may be deemed necessary by
the depositary in order to enable the depositary to do so. The depositary will
abstain from voting the amount of preferred stock represented by the depositary
shares to the extent it does not receive specific instructions from the holders
of depositary receipts evidencing the depositary shares. The depositary shall
not be responsible for any failure to carry out any instruction to vote, or for
the manner or effect of any such vote made, as long as such action or non-
action is in good faith and does not result from negligence or willful
misconduct of the depositary.
Liquidation Preference
In the event of our liquidation, dissolution or winding up, whether voluntary
or involuntary, the holders of each depositary receipt will be entitled to the
fraction of the liquidation preference accorded each share of preferred stock
represented by the depositary shares evidenced by such depositary receipt, as
set forth in the applicable prospectus supplement.
Conversion of Preferred Stock
The depositary shares, as such, are not convertible into our common stock or
any of our other securities or property. Nevertheless, if specified in the
applicable prospectus supplement relating to an offering of depositary shares,
the depositary receipts may be surrendered by their holders to the depositary
with written instructions to the depositary to instruct us to cause conversion
of the preferred stock represented by the depositary shares evidenced by the
depositary receipts into whole shares of our Class A common stock, other shares
of our preferred stock or other of our equity or debt securities, and we have
agreed that upon receipt of those instructions and any amounts payable in
respect thereof, we will cause the conversion thereof utilizing the same
procedures as those provided for delivery of preferred stock to effect such
conversion. If the depositary shares evidenced by a depositary receipt are to
be converted in part only, a new depositary receipt or receipts will be issued
for any depositary shares not to be converted. No fractional shares of Class A
common stock will be issued upon conversion, and if such conversion would
result in a fractional share being issued, we will pay an amount in cash equal
to the value of the fractional interest based upon the average of the closing
prices of the Class A common stock for a specified period of time prior to the
conversion.
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Amendment and Termination of the Deposit Agreement
The form of depositary receipt evidencing the depositary shares which
represent the preferred stock and any provision of the Deposit Agreement may
at any time be amended by agreement between the depositary and us. However,
any amendment that materially and adversely alters the rights of the holders
of depositary receipts or that would be materially and adversely inconsistent
with the rights granted to the holders of the related preferred stock will not
be effective unless such amendment has been approved by the existing holders
of at least a majority of the depositary shares evidenced by the depositary
receipts then outstanding. No amendment shall impair the right, subject to
certain exceptions in the Deposit Agreement, of any holder of depositary
receipts to surrender any depositary receipt with instructions to deliver to
the holder the related preferred stock and all money and other property, if
any, represented thereby, except in order to comply with law. Every holder of
an outstanding depositary receipt at the time any such amendment becomes
effective shall be deemed, by continuing to hold such receipt, to consent and
agree to such amendment and to be bound by the Deposit Agreement as amended
thereby.
Unless specified otherwise in the applicable prospectus supplement, we may
terminate the Deposit Agreement upon not less than 30 days prior written
notice to the depositary if a majority of each class of depositary shares
affected by such termination consents, whereupon the depositary shall deliver
or make available to each holder of depositary receipts, upon surrender of the
depositary receipts held by such holder, such number of whole or fractional
shares of preferred stock as are represented by the depositary shares
evidenced by such depositary receipts together with any other property held by
the depositary with respect to such depositary receipt. In addition, the
Deposit Agreement will automatically terminate if:
(1) all outstanding depositary shares shall have been redeemed
(2) there shall have been a final distribution in respect of the related
preferred stock in connection with any liquidation, dissolution or
winding up of our company and such distribution shall have been
distributed to the holders of depositary receipts evidencing the
depositary shares representing such preferred stock
(3) each share of the related preferred stock shall have been converted
into our securities not represented by depositary shares
Charges of Preferred Stock Depositary
We will pay all transfer and other taxes and governmental charges arising
solely from the existence of the Deposit Agreement. In addition, we will pay
the fees and expenses of the depositary in connection with the performance of
its duties under the Deposit Agreement. However, holders of depositary
receipts will pay the fees and expenses of the depositary for any duties
requested by such holders to be performed which are outside of those expressly
provided for in the Deposit Agreement.
Miscellaneous
The depositary will forward to holders of depositary receipts any reports
and communications from us which are received by the depositary with respect
to the related preferred stock.
Unless specified otherwise in the applicable prospectus supplement, neither
we nor the depositary will be liable if either of us is prevented from or
delayed in, by law or any circumstances beyond its control, performing its
obligations under the Deposit Agreement. The obligations of the depositary and
our company under the Deposit Agreement will be limited to performing their
duties thereunder in good faith and without negligence, in the case of any
action or inaction in the voting of preferred stock represented by the
depositary shares, gross negligence or willful misconduct, and we and the
depositary will not be obligated to prosecute or defend any legal proceeding
in respect of any depositary receipts, depositary shares or shares of
preferred stock represented thereby unless satisfactory indemnity is
furnished. We and the depositary may rely on written advice of counsel or
accountants, or information provided by persons presenting shares of preferred
stock represented thereby for deposit, holders of depositary receipts or other
persons believed in good faith to be competent to give such information, and
on documents believed in good faith to be genuine and signed by a proper
party.
In the event the depositary shall receive conflicting claims, requests or
instructions from any holders of depositary receipts, on the one hand, and us,
on the other hand, the depositary shall be entitled to act on such claims,
requests or instructions received from us.
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DESCRIPTION OF DEBT SECURITIES
The following discussion describes certain general provisions of the debt
securities to which this prospectus and any applicable prospectus supplement
may relate. The particular terms of the debt securities being offered and the
extent to which these general provisions may apply will be set forth in the
indenture or supplemental indenture under which the particular debt securities
are issued, and will be described in a prospectus supplement relating to such
debt securities. A form of the senior indenture and a form of the subordinated
indenture under which the debt securities may be issued have been filed as
exhibits to the registration statement of which this prospectus is a part. All
section references appearing in this prospectus are to sections of each
indenture unless otherwise indicated, and capitalized terms used but not
defined below shall have the respective meanings set forth in each Indenture.
General
Our debt securities will be unsecured general obligations and may be either
senior debt securities, which we refer to as Senior Securities, or subordinated
debt securities, which we refer to as Subordinated Securities. The debt
securities will be issued pursuant to a written agreement, known as an
Indenture, to be entered into by us and an independent third party, known as a
Trustee, who will be legally obligated to carry out the terms of the Indenture.
Senior Securities and Subordinated Securities will be issued under separate
indentures referred to as a Senior Indenture and a Subordinated Indenture,
respectively. The statements made under this heading relating to the debt
securities and the Indentures are summaries of their anticipated provisions, do
not purport to be complete and are qualified in their entirety by reference to
the Indentures and the debt securities themselves.
The indebtedness represented by Subordinated Securities will be subordinated
in right of payment to the prior payment in full of our Senior Indebtedness
(which term includes our Senior Securities), as described below under "--
Ranking."
All of our operations are conducted through subsidiaries. Our subsidiaries
are separate and distinct legal entities and have no obligation, contingent or
otherwise, to pay any amounts due pursuant to the debt securities or to make
any funds available therefor, whether by dividends, loans or other payments,
other than as expressly provided in a guarantee. The payment of dividends or
the making of loans and advances to us by our subsidiaries may be subject to
contractual, statutory or regulatory restrictions, which, if material, would be
disclosed in the applicable prospectus supplement. Moreover, such payments,
loans and advances would be contingent upon the earnings of the subsidiaries.
Any right we may have to receive assets of any of our subsidiaries upon
liquidation or recapitalization of the subsidiaries (and the consequent right
of the holders of debt securities to participate in those assets) will be
subject to the claims of the subsidiaries' creditors. In the event that we are
recognized as a creditor of a subsidiary, our claims would still be subject to
any security interest in the assets of such subsidiary and any indebtedness of
such subsidiary senior to that of the debt securities, and would be dependent
primarily upon the receipt of funds from our subsidiaries.
Except as set forth in the applicable Indenture or in one or more
supplemental indentures and described in an applicable prospectus supplement,
the debt securities may be issued without limit as to aggregate principal
amount, in one or more series, in each case as established from time to time in
or under authority granted by a resolution of our board of directors or as
established in the applicable Indenture or in one or more supplemental
indentures. All debt securities of one series need not be issued at the same
time and, unless otherwise provided, a series may be reopened, without the
consent of the holders of the debt securities of such series, for issuances of
additional debt securities of such series.
It is expected that each Indenture will provide that there may be more than
one Trustee thereunder, each with respect to one or more series of debt
securities. Any Trustee under an Indenture may resign or be removed with
respect to one or more series of debt securities, and a successor Trustee may
be appointed to act with
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respect to such series. In the event that two or more persons are acting as
Trustee with respect to different series of debt securities, each such Trustee
will be a trustee of a trust under the applicable Indenture separate and apart
from the trust administered by any other Trustee, and, except as otherwise
provided in the Indenture or supplemental indenture, any action permitted to be
taken by each Trustee may be taken by each such Trustee with respect to, and
only with respect to, the one or more series of debt securities for which it is
Trustee under the applicable Indenture.
The applicable prospectus supplement will describe the specific terms of any
series of debt securities being offered, including:
(1) The title of such debt securities and whether such debt securities are
Senior Securities or Subordinated Securities
(2) The aggregate principal amount of such debt securities and any limit
on such aggregate principal amount
(3) The percentage of the principal amount at which such debt securities
will be issued and, if other than the full principal amount thereof,
the portion of the principal amount payable upon declaration of
acceleration of the maturity thereof
(4) The date or dates, or the method for determining such date or dates,
on which the principal of such debt securities will be payable and the
amount of principal payable thereon
(5) The rate or rates (which may be fixed or variable), or the method by
which such rate or rates will be determined, at which such debt
securities will bear interest, if any
(6) The date or dates, or the method for determining such date or dates,
from which any such interest will accrue, the dates on which any such
interest will be payable, the regular record dates for such interest
payment dates, or the method by which record dates may be determined,
the persons to whom such interest will be payable, and the basis upon
which interest is to be calculated if other than a 360-day year of
twelve 30-day months
(7) The place or places where the principal of (and premium, if any) and
interest, if any, on such debt securities will be payable, where such
debt securities may be surrendered for registration of transfer or
exchange and where notices or demands to or upon us in respect of such
debt securities and the applicable Indenture may be served
(8) The period or periods within which, the price or prices at which, and
the other terms and conditions upon which, such debt securities may be
redeemed, in whole or in part, at our option if we have such an option
(9) Our obligation, if any, to redeem, repay or purchase such debt
securities pursuant to any sinking fund or analogous provision or at
the option of a holder thereof, and the period or periods within
which, the date and dates on which, the price or prices at which, and
the other terms and conditions upon which, such debt securities will
be redeemed, repaid or purchased, in whole or in part, pursuant to
such obligation
(10) If other than U.S. dollars, the currency or currencies in which such
debt securities are denominated or in which the principal of (and
premium, if any) or interest or Additional Amounts, if any, on the
debt securities is payable, which may be a foreign currency or units
of two or more foreign currencies or a composite currency or
currencies, and the terms and conditions relating thereto
(11) Whether the amount of payments of principal of (and premium, if any)
or interest or Additional Amounts, if any, on such debt securities
may be determined with reference to an index, formula or other method
(which index, formula or method may, but need not be, based on a
currency, currencies, currency unit or units or composite currency or
currencies) and the manner in which such amounts are to be determined
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(12) Whether the principal of (and premium, if any) or interest or
Additional Amounts, if any, on the debt securities are to be payable,
at our election or a holder thereof, in a currency or currencies,
currency unit or units or composite currency or currencies other than
that in which such debt securities are denominated or stated to be
payable, the period or periods within which (including the election
date), and the terms and conditions upon which, such election may be
made, and the time and manner of, and identity of the exchange rate
agent with responsibility for, determining the exchange rate between
the currency or currencies, currency unit or units or composite
currency or currencies in which such debt securities are denominated
or stated to be payable and the currency or currencies, currency unit
or units or composite currency or currencies in which such debt
securities are to be so payable
(13) Any additions to, modifications of or deletions from the terms of
such debt securities with respect to events of default, amendments,
merger, consolidation and sale of assets or covenants set forth in
the applicable Indenture
(14) Whether such debt securities will be issued in certificate or book-
entry form
(15) Whether such debt securities will be in registered or bearer form
and, if in registered form, the denominations thereof if other than
$1,000 and any integral multiple thereof and, if in bearer form, the
denominations thereof if other than $5,000, and terms and conditions
relating thereto
(16) The applicability, if any, of the defeasance and covenant defeasance
provisions of the Indenture and any additional or different terms on
which such series of debt securities may be defeased
(17) Whether and under what circumstances we will pay any additional
amounts (which we refer to as Additional Amounts) on such debt
securities to a holder that is not a United States person in respect
of any tax, assessment or governmental charge and, if so, whether we
will have the option to redeem such debt securities in lieu of making
such payment
(18) Whether and the extent to which the payment of principal of, and
premium, if any and interest on such debt securities are guaranteed
by one or more of our Subsidiaries or by other persons
(19) Whether and under what circumstances the debt securities are
convertible into our Class A common stock, our preferred stock or
other debt securities
(20) If the debt securities are to be issued upon the exercise of debt
warrants, the time, manner and place for such debt securities to be
authenticated and delivered
(21) Any other terms of such debt securities not inconsistent with the
provisions of the applicable Indenture (Section 301)
The debt securities may provide for less than the entire principal amount
thereof to be payable upon declaration of acceleration of the maturity thereof
or bear no interest or bear interest at a rate which at the time of issuance is
below market rates, which we refer to as Original Issue Discount Securities.
Special U.S. federal income tax, accounting and other considerations applicable
to Original Issue Discount Securities will be described in the applicable
prospectus supplement.
Except as set forth in the applicable Indenture or in one or more
supplemental indentures, the applicable Indenture will not contain any
provisions that would limit our ability to incur indebtedness or that would
afford you protection in the event of a highly leveraged or similar transaction
involving us or in the event of a change of control. You should refer to the
applicable prospectus supplement for information with respect to any deletions
from, modifications of or additions to the Events of Default or our covenants
that are described below, including any addition of a covenant or other
provision providing event risk or similar protection.
For the purposes of certain Events of Default described below and any
additional covenants or other provisions that may be set forth in one or more
supplemental indentures, we may designate certain of our Subsidiaries as
"Unrestricted Subsidiaries." All Subsidiaries that are not designated as
Unrestricted Subsidiaries will be "Restricted Subsidiaries." The terms and
conditions, if any, under which a Subsidiary may be designated as an
Unrestricted Subsidiary will be set forth in the applicable supplemental
indenture and described in the applicable prospectus supplement.
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We refer to a corporation, partnership, limited liability company, joint
venture or similar entity in which we or one or more of our other Subsidiaries
own or control, directly or indirectly, a majority of the outstanding voting
stock, partnership interests, membership interests or similar interests, as the
case may be, as a "Subsidiary." For the purposes of this definition, "voting
stock" means stock or other equity interests having voting power for the
election of directors, or comparable governing body, as the case may be,
whether at all times or only so long as no senior class of stock has such
voting power by reason of any contingency.
Denomination, Interest, Registration and Transfer
Unless otherwise described in the applicable prospectus supplement, dollar-
denominated debt securities that are in registered form will be issuable in
denominations of $1,000 and any integral multiple thereof (except for
registered debt securities issued in global form, which may be of any
denomination), and dollar-denominated debt securities that are in bearer form
will be issuable in denominations of $5,000 (except for bearer debt securities
issued in global form, which may be of any denomination) (Section 302).
Unless otherwise specified in the applicable prospectus supplement, the
principal of (and applicable premium, if any) and interest (and Additional
Amounts, if any) on any series of debt securities that are in registered form
will be payable at the corporate trust office of the Trustee, the address of
which will be stated in the applicable prospectus supplements. At our option,
payment of interest on debt securities that are in registered form may be made
by check mailed to the address of the person entitled thereto as it appears in
the applicable register for such debt securities or by wire transfer of funds
to such person at an account maintained within the United States. Unless
otherwise specified in the applicable prospectus supplement, payment of the
principal of (and applicable premium, if any) and interest (and Additional
Amounts, if any) on any debt securities that are in bearer form will be made
only at an office or agency of ours located outside the United States (Sections
301, 305, 306, 307 and 1002).
Any interest not punctually paid or duly provided for on any interest payment
date with respect to a debt security, which we refer to as Defaulted Interest,
will forthwith cease to be payable to the holder on the applicable regular
record date and may either be paid to the person in whose name such debt
security is registered at the close of business on a special record date, which
we refer to as the Special Record Date, for the payment of such Defaulted
Interest to be fixed by the Trustee, notice whereof is to be given to the
holder of such debt security not less than ten days before such Special Record
Date, or may be paid at any time in any other lawful manner, all as more
completely described in the applicable Indenture or supplemental indenture
(Section 307).
Subject to certain limitations imposed upon debt securities issued in book-
entry form, the debt securities of any series will be exchangeable for other
debt securities of the same series and of a like aggregate principal amount and
tenor of different authorized denominations upon surrender of such debt
securities at the corporate trust office of the applicable Trustee. In
addition, subject to certain limitations imposed upon debt securities issued in
book-entry form, the debt securities of any series may be surrendered for
registration of transfer or exchange thereof at the corporate trust office of
the applicable Trustee. Every debt security surrendered for registration of
transfer or exchange must be duly endorsed or accompanied by a written
instrument of transfer. No service charge will be made for any registration of
transfer or exchange of any debt securities, but we may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith (Section 305). If the applicable prospectus supplement
refers to any transfer agent (in addition to the applicable Trustee) initially
designated by us with respect to any series of debt securities, we may at any
time rescind the designation of such transfer agent or approve a change in the
location through which any such transfer agent acts, except that we will be
required to maintain a transfer agent in each place of payment for such series.
We may at any time designate additional transfer agents with respect to any
series of debt securities (Section 1002).
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Neither we nor any Trustee will be required to:
(1) issue, register the transfer of or exchange debt securities of any
series during a period beginning at the opening of business 15 days
before any selection of debt securities of that series to be redeemed
and ending at the close of business on the day of mailing of the
relevant notice of redemption
(2) register the transfer of or exchange any debt security, or portion
thereof, called for redemption, except the unredeemed portion of any
debt security being redeemed in part, or
(3) issue, register the transfer of or exchange any debt security that has
been surrendered for repayment at the option of the holder, except the
portion, if any, of such debt security not to be repaid (Section 305)
Merger, Consolidation or Sale of Assets
We will be permitted to consolidate with, or sell, lease or convey all or
substantially all of our assets to, or merge with or into, any other entity,
provided that:
(1) either we are the continuing entity, or the successor entity (if other
than us) formed by or resulting from any such consolidation or merger
or which has received the transfer of such assets is an entity
organized or existing under the laws of the United States, any state
thereof or the District of Columbia and expressly assumes payment of
the principal of (and premium, if any), interest on, and all other
amounts payable in connection with, all of the outstanding debt
securities and the due and punctual performance and observance of all
of the covenants and conditions contained in each Indenture
(2) immediately after giving effect to such transaction and treating any
indebtedness that becomes an obligation of us or any Subsidiary as a
result thereof as having been incurred by us or a Subsidiary at the
time of such transaction, no Event of Default under the Indentures or
supplemental indentures, and no event which, after notice or the lapse
of time, or both, would become such an Event of Default, will have
occurred and be continuing, and
(3) an officer's certificate and legal opinion covering such conditions
are delivered to each Trustee (Sections 801 and 803)
Certain Covenants
Existence. Except as described above under "Merger, Consolidation or Sale of
Assets," we will be required to do or cause to be done all things necessary to
preserve and keep in full force and effect its existence, rights (by
certificate of incorporation, by-laws and statute) and franchises, but we will
not be required to preserve any right or franchise if we determine that the
preservation of such right or franchise is no longer desirable in the conduct
of our business and that the loss of such right or franchise is not
disadvantageous in any material respect to the holders of the debt securities
(Section 1004).
Maintenance of Properties. We will be required to cause all of our properties
used or useful in the conduct of our business or the business of any Subsidiary
to be maintained and kept in good condition, repair and working order and
supplied with all necessary equipment and to cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof, all as
in our judgment may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times, but we and
our Subsidiaries will not be prevented from selling or otherwise disposing of
our properties for value in the ordinary course of our business (Section 1005).
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Insurance. We will be required to, and will be required to cause each of our
Subsidiaries to, keep all of our insurable properties insured against loss or
damage at least equal to their then full insurable value with financially sound
and reputable insurance companies (Section 1006).
Payment of Taxes and Other Claims. We will be required to pay or discharge or
cause to be paid or discharged, before the same become delinquent:
(1) all material taxes, assessments and governmental charges levied or
imposed upon us or any Subsidiary or upon our income, profits or
property or that of any Subsidiary and
(2) all material lawful claims for labor, materials and supplies that, if
unpaid, might by law become a lien upon our property or that of any
Subsidiary; but we will not be required to pay or discharge or cause
to be paid or discharged any such tax, assessment, charge or claim
whose amount, applicability or validity is being contested in good
faith in appropriate proceedings (Section 1007)
Additional Covenants and/or Modifications to the Covenants Described Above
Any additional covenants and/or modifications to the covenants described
above with respect to any series of our debt securities, including any
covenants relating to limitations on incurrence of indebtedness or other
financial covenants, will be set forth in the applicable Indenture or
supplemental indenture and described in the related prospectus supplement.
Events of Default, Notice and Waiver
Each Indenture will provide that the following events are "Events of Default"
with respect to any series of debt securities issued thereunder, subject to any
modifications, additions or deletions provided in any supplemental indenture
with respect to any series of debt securities:
(1) default for 30 days in the payment of any installment of interest on
or any Additional Amounts payable in respect of any debt security of
such series
(2) default in the payment of principal of (or premium, if any, on) any
debt security of such series when such amount becomes due and payable,
whether upon its maturity, declaration of acceleration, call for
redemption or otherwise
(3) default in making any sinking fund payment as required for any debt
security of such series
(4) default in the performance, or breach, of any of our other covenants
or warranties contained in the applicable Indenture (other than a
covenant added to the Indenture solely for the benefit of a series of
debt securities issued thereunder other than such series), continued
for 60 days after written notice as provided in the applicable
Indenture
(5) certain events of bankruptcy, insolvency or reorganization, or court
appointment of a receiver, liquidator or trustee of us or any
Significant Subsidiary or either of their property
(6) any other Event of Default provided with respect to a particular
series of debt securities (Section 501)
If an Event of Default under any Indenture with respect to debt securities of
any series at the time outstanding occurs and is continuing, then in every such
case, unless the principal amount of all of the outstanding debt securities of
such series has already become due and payable, the applicable Trustee or,
generally, the holders of not less than 25% of the principal amount of the
outstanding debt securities of that series will have the right to declare the
principal amount (or, if the debt securities of that series are Original Issue
Discount Securities or indexed securities, such portion of the principal amount
as may be specified in the terms thereof) of all the debt securities of that
series to be due and payable immediately by written notice thereof to us (and
to the applicable Trustee if given by the holders). At any time after such a
declaration of acceleration with respect to debt securities of such series (or
of all debt securities then outstanding under any Indenture, as the case may
be) has been made, but before a judgment or decree for payment of the money due
has been obtained by the applicable Trustee, however, the holders of not less
than a majority in principal amount of the outstanding debt securities of such
series (or of all debt
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securities then outstanding under the applicable Indenture, as the case may be)
may rescind and annul such declaration and its consequences if:
(1) we have deposited with the applicable Trustee all required payments of
the principal of (and premium, if any) and interest and Additional
Amounts, if any, on the debt securities of such series (or of all debt
securities then outstanding under the applicable Indenture, as the
case may be), plus certain fees, expenses, disbursements and advances
of the applicable Trustee, and
(2) all events of default, other than the non-payment of accelerated
principal (or specified portion thereof), with respect to debt
securities of such series (or of all debt securities then outstanding
under the applicable Indenture, as the case may be) have been cured or
waived as provided in such Indenture (Section 502)
Each Indenture also will provide that the holders of not less than a majority
in principal amount of the outstanding debt securities of any series (or of all
debt securities then outstanding under the applicable Indenture, as the case
may be) may waive any past default with respect to such series and its
consequences, except a default:
(1) in the payment of the principal of (or premium, if any) or interest or
Additional Amounts, if any, on any debt security of such series, or
(2) in respect of a covenant or provision contained in the applicable
Indenture that cannot be modified or amended without the consent of
the holder of each outstanding debt security affected thereby (Section
513)
Each Trustee will be required to give notice to the holders of the applicable
debt securities within 90 days of a default under the applicable Indenture
unless such default has been cured or waived; but the Trustee may withhold
notice of any default (except a default in the payment of the principal of (or
premium, if any) or interest or Additional Amounts, if any, on such debt
securities or in the payment of any sinking fund installment in respect of such
debt securities) if specified responsible officers of such Trustee consider
such withholding to be in the interest of such holders (Section 601).
Each Indenture will provide that no holders of debt securities of any series
may institute any proceedings, judicial or otherwise, with respect to such
Indenture or for any remedy thereunder, except in the cases of failure of the
applicable Trustee, for 60 days, to act after it has received a written request
to institute proceedings in respect of an Event of Default from the holders of
not less than 25% in principal amount of the outstanding debt securities of
such series, as well as an offer of indemnity reasonably satisfactory to it
(Section 507). This provision will not prevent any holder of debt securities
from instituting suit for the enforcement of payment of the principal of (and
premium, if any) and interest and Additional Amounts, if any, on such debt
securities at the respective due dates thereof (Section 508).
Subject to provisions in each Indenture relating to its duties in case of
default, no Trustee will be under any obligation to exercise any of its rights
or powers under an Indenture at the request or direction of any holders of any
series of debt securities then outstanding under such Indenture, unless such
holders offer to the Trustee reasonable security or indemnity (Section 602).
The holders of not less than a majority in principal amount of the outstanding
debt securities of any series (or of all debt securities then outstanding under
an Indenture, as the case may be) will have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
applicable Trustee, or of exercising any trust or power conferred upon such
Trustee. A Trustee may refuse, however, to follow any direction that is in
conflict with any law or with the applicable Indenture or that may involve such
Trustee in personal liability or may be unduly prejudicial to the holders of
debt securities of such series not joining therein (Section 512).
Within 120 days after the close of each fiscal year, we will be required to
deliver to each Trustee a certificate, signed by one of several specified
officers, stating whether or not such officer has knowledge of any default
under the applicable Indenture and, if so, specifying each such default and the
nature and status thereof (Section 1008).
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Modification of the Indentures
Modifications and amendments of an Indenture will be permitted to be made
only with the consent of the holders of not less than a majority in principal
amount of all outstanding debt securities issued under such Indenture that are
affected by such modification or amendment; but no such modification or
amendment may, without the consent of the holder of each such debt security
affected thereby:
(1) change the stated maturity of the principal of (or the premium, if
any), or any installment of interest (or Additional Amounts, if any)
on, any such debt security
(2) reduce the principal amount of, or the rate or amount of interest on,
or any premium payable on redemption of, or any Additional Amounts
payable with respect to, any such debt security, or reduce the amount
of principal of an Original Issue Discount Security that would be due
and payable upon declaration of acceleration of the maturity thereof
or would be provable in bankruptcy, or adversely affect any right of
repayment of the holder of any such debt security
(3) change the place of payment, or the coin or currency for payment, of
principal (or premium, if any) or interest or Additional Amounts, if
any, on any such debt security
(4) impair the right to institute suit for the enforcement of any payment
on or with respect to any such debt security
(5) release any guarantors from their guarantees of any such debt
securities, or, except as contemplated in any supplemental indenture,
make any change in a guarantee of such debt securities that would
adversely affect the interests of the holders thereof, or
(6) modify the ranking or priority of such debt securities (Section 902)
The holders of not less than a majority in principal amount of the
outstanding debt securities of each series affected thereby will have the right
to waive compliance by us with certain covenants in such Indenture (Section
1010).
Modifications and amendments of an Indenture will be permitted to be made by
us and the Trustee thereunder without the consent of any holder of debt
securities for any of the following purposes:
(1) to evidence the succession of another person to us as obligor under
such Indenture or to evidence the addition of any guarantor in
accordance with the Indenture or any supplemental indenture
(2) to add to our covenants for the benefit of the holders of all or any
series of debt securities or to surrender any right or power conferred
upon us in the Indenture
(3) to add Events of Default for the benefit of the holders of all or any
series of debt securities
(4) to add or change any provisions of an Indenture to facilitate the
issuance of, or to liberalize certain terms of, debt securities in
bearer form, or to permit or facilitate the issuance of debt
securities in uncertificated form, provided that such action shall not
adversely affect the interests of the holders of the debt securities
of any series in any material respect
(5) to change or eliminate any provisions of an Indenture, if such change
or elimination becomes effective only when there are no debt
securities outstanding of any series created prior thereto that are
entitled to the benefit of such provision
(6) to secure the debt securities
(7) to establish the form or terms of debt securities of any series
(8) to provide for the acceptance of appointment by a successor Trustee or
facilitate the administration of the trusts under an Indenture by more
than one Trustee
(9) to cure any ambiguity, defect or inconsistency in an Indenture
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<PAGE>
(10) to supplement any of the provisions of an Indenture to the extent
necessary to permit or facilitate defeasance and discharge of any
series of such debt securities, if such action does not adversely
affect the interests of the holders of the debt securities of any
series in any material respect, or
(11) to make any change that does not adversely affect the legal rights
under an Indenture of any holder of debt securities of any series
issued thereunder (Section 901)
Ranking
The Senior Securities will constitute part of our Senior Indebtedness (as
defined below) and will rank pari passu with all of our outstanding senior
debt. Except as set forth in the applicable prospectus supplement, the
Subordinated Securities will be subordinated, in right of payment, to the prior
payment in full of the Senior Indebtedness, including the Senior Securities.
However, our obligation to pay the principal of (and premium, if any) and
interest and Additional Amounts (if any) on such Subordinated Securities will
not otherwise be impaired (Section 1603 of the Subordinated Indenture).
In the event of any distribution of our assets in connection with any
dissolution, winding up, liquidation or reorganization of us, whether in a
bankruptcy, insolvency, reorganization or receivership proceeding or upon an
assignment for the benefit of creditors or any other marshalling of our assets
and liabilities or otherwise, except a distribution in connection with a
merger, consolidation or sale of assets that complies with the requirements
described above under "Merger, Consolidation or Sale of Assets," the holders of
all Senior Indebtedness will first be entitled to receive payment of the full
amount due thereon before the holders of any of the Subordinated Securities
will be entitled to receive any payment in respect of the Subordinated
Securities. If a payment default occurs and is continuing with respect to any
amount payable in respect of any Senior Indebtedness, or if any event occurs
that would permit the holders of any Senior Indebtedness to accelerate the
maturity thereof, the holders of all Senior Indebtedness will first be entitled
to receive payment of the full amount due thereon before the holders of any of
the Subordinated Securities will be entitled to receive any payment in respect
of the Subordinated Securities. If the principal amount of the Subordinated
Securities of any series is declared due and payable pursuant to the
Subordinated Indenture and such declaration has not been rescinded and
annulled, the holders of all Senior Indebtedness outstanding at the time of
such declaration will first be entitled to receive payment of the full amount
due thereon before the holders of any of the Subordinated Securities will be
entitled to receive any payment in respect of the Subordinated Securities
(Section 1601 of the Subordinated Indenture).
After all Senior Indebtedness is paid in full and until the Subordinated
Securities are paid in full, holders of Subordinated Securities will be
subrogated to the right of holders of Senior Indebtedness to the extent that
distributions otherwise payable to holders of Subordinated Securities have been
applied to the payment of Senior Indebtedness (Section 1602 of the Subordinated
Indenture). By reason of such subordination, in the event of a distribution of
assets upon insolvency, certain of our general creditors may recover more,
ratably, than holders of Subordinated Securities.
Senior Indebtedness will be defined in the Subordinated Indenture as the
principal of (and premium, if any) and interest and Additional Amounts, if any,
on, or substantially similar payments to be made by us in respect of, the
following, whether outstanding at the date of execution of the applicable
Indenture or thereafter incurred, created, guaranteed or assumed:
(1) our indebtedness for money borrowed or represented by purchase-money
obligations
(2) our indebtedness evidenced by notes, debentures, or bonds or other
securities issued under the provisions of an indenture, fiscal agency
agreement or other agreement
(3) our obligations as lessee under leases of property either made as part
of a sale and leaseback transaction to which we are a party or otherwise
(4) indebtedness of partnerships and joint ventures which is included in
our consolidated financial statements
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<PAGE>
(5) indebtedness, obligations and liabilities of others in respect of which
we are liable contingently or otherwise to pay or advance money or
property or as guarantor, endorser or otherwise or which we have agreed
to purchase or otherwise acquire
(6) any binding commitment by us to fund a real estate investment or to
fund an investment in an entity making a real estate investment
(7) our obligations in respect of derivative products such as forward
contracts, futures contracts, swaps, options, future options or other
financial agreements or arrangements (including caps, floors, collars and
similar agreements) relating to, or the value of which is dependent upon,
interest rates or currency exchange rates or indices
(8) renewals, extensions and refundings of any such indebtedness,
obligation or liability
(9) interest or obligations in respect of any such indebtedness accruing
after the commencement of any bankruptcy, insolvency or similar
proceedings
in each case other than (i) any such indebtedness, obligation or liability
referred to in clauses (1) through (9) above as to which, in the instrument
creating or evidencing the same pursuant to which the same is outstanding, it
is provided that such indebtedness, obligation or liability is not superior in
right of payment to the Subordinated Securities or ranks equally with the
Subordinated Securities, (ii) any such indebtedness, obligation or liability
which is subordinated to our indebtedness to substantially the same extent as
or to a greater extent than the Subordinated Securities are subordinated, and
(iii) the Subordinated Securities.
As used in the preceding sentence, the term "purchase money obligations" is
defined to mean indebtedness or obligations evidenced by a note, debenture,
bond or other instrument (whether or not secured by a lien or other security
interest but excluding indebtedness or obligations for which recourse is
limited to the property purchased) issued or assumed as all or a part of the
consideration for the acquisition of property, whether by purchase, merger,
consolidation or otherwise, but does not include any trade accounts payable.
There will not be any restrictions in an Indenture relating to Subordinated
Securities upon the creation of additional Senior Indebtedness.
Discharge, Defeasance and Covenant Defeasance
We may be permitted under the applicable Indenture to discharge certain
obligations to holders of any series of debt securities issued thereunder that
have not already been delivered to the applicable Trustee for cancellation and
that either have become due and payable or will become due and payable within
one year (or scheduled for redemption within one year) by irrevocably
depositing with the applicable Trustee, in trust, funds in such currency or
currencies, currency unit or units or composite currency or currencies in which
such debt securities are payable in an amount sufficient to pay the entire
indebtedness on such debt securities in respect of principal (and premium, if
any) and interest and Additional Amounts, if any, to the date of such deposit
(if such debt securities have become due and payable) or to the stated maturity
or redemption date, as the case may be (Section 401).
Each Indenture will provide that, if the provisions relating to defeasance
and covenant defeasance are made applicable to the debt securities of or within
any series, we may elect either:
(1) to defease and be discharged from any and all obligations with respect to
such debt securities, which we refer to as defeasance (except for the
obligation to pay additional amounts, if any, upon the occurrence of
certain events of tax, assessment or governmental charge with respect to
payments on such debt securities, and the obligations to register the
transfer or exchange of such debt securities, to replace temporary or
mutilated, destroyed, lost or stolen debt securities, to maintain an
office or agency in respect of such debt securities and to hold moneys
for payment in trust) (Section 1402), or
(2) to be released from its obligations with respect to such debt securities
under certain specified sections of Article Ten of such Indenture as
described in the applicable prospectus supplement and any
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<PAGE>
omission to comply with such obligations shall not constitute an Event
of Default with respect to such debt securities, which we refer to as
covenant defeasance (Section 1403)
in either case upon the irrevocable deposit by us with the applicable Trustee,
in trust, of an amount, in such currency or currencies, currency unit or units
or composite currency or currencies in which such debt securities are payable
at stated maturity, or government obligations, or both, applicable to such
debt securities which through the scheduled payment of principal and interest
in accordance with their terms will provide money in an amount sufficient
without reinvestment to pay the principal of (and premium, if any) and
interest on such debt securities, and any mandatory sinking fund or analogous
payments thereon, on the scheduled due dates therefor.
Such a trust will only be permitted to be established if, among other
things, we have delivered to the applicable Trustee an opinion of counsel (as
specified in the applicable Indenture) to the effect that the holders of such
debt securities will not recognize income, gain or loss for federal income tax
purposes as a result of such defeasance or covenant defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such defeasance or covenant
defeasance had not occurred, and such opinion of counsel, in the case of
defeasance, will be required to refer to and be based upon a ruling of the
Internal Revenue Service or a change in applicable U.S. federal income tax law
occurring after the date of the Indenture (Section 1404).
The applicable prospectus supplement may further describe the provisions, if
any, permitting such defeasance or covenant defeasance, including any
modifications to the provisions described above, with respect to the debt
securities of or within a particular series.
Conversion and Exchange
The terms, if any, on which debt securities of any series are convertible
into or exchangeable for Class A common stock, preferred stock, or other debt
securities, including the initial conversion price or conversion rate, any
adjustments to such conversion price or conversion rate and the conversion
period, and the conditions upon which such conversion will be effected, will
be set forth in the applicable prospectus supplement. Such terms may include
provisions for conversion or exchange to be either mandatory or at the option
of the holders or ourselves.
Redemption and Repurchase
The debt securities may be redeemable at our option, may be subject to
mandatory redemption pursuant to a sinking fund or otherwise, or may be
subject to repurchase by us at the option of the holders, in each case upon
the terms, at the times and at the prices set forth in the applicable
prospectus supplement.
Global Securities
The debt securities of a series may be issued in whole or in part in the
form of one or more global securities, which we refer to as the Global
Securities, to be deposited with, or on behalf of, a depository identified in
the applicable prospectus supplement relating to such series. Global
Securities may be issued in either registered or bearer form and in either
temporary or permanent form. The specific terms of the depository arrangement
with respect to a series of debt securities will be described in the
applicable prospectus supplement relating to such series.
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DESCRIPTION OF WARRANTS
General
We may issue, together with other securities or separately, warrants to
purchase our debt securities, Class A common stock, Class B common stock,
preferred stock or depositary shares. We will issue the warrants under Warrant
Agreements to be entered into between us and a bank or trust company, as
warrant agent, all as shall be set forth in the applicable prospectus
supplement. The warrant agent will act solely as our agent in connection with
the warrants of the series being offered and will not assume any obligation or
relationship of agency or trust for or with any holders or beneficial owners
of warrants.
The applicable prospectus supplement will describe the following terms,
where applicable, of warrants in respect of which this prospectus is being
delivered:
(1) the title of the warrants
(2) the designation, amount and terms of the securities for which the
warrants are exercisable and the procedures and conditions relating to
the exercise of such warrants
(3) the designation and terms of the other securities, if any, with which
the warrants are to be issued and the number of warrants issued with
each such security
(4) the price or prices at which the warrants will be issued
(5) the aggregate number of warrants
(6) any provisions for adjustment of the number or amount of securities
receivable upon exercise of the warrants or the exercise price of the
warrants
(7) the price or prices at which the securities purchasable upon exercise
of the warrants may be purchased
(8) if applicable, the date on and after which the warrants and the
securities purchasable upon exercise of the warrants will be
separately transferable
(9) if applicable, a discussion of the material United States federal
income tax considerations applicable to the exercise of the warrants
(10) any other terms of the warrants, including terms, procedures and
limitations relating to the exchange and exercise of the warrants
(11) the date on which the right to exercise the warrants shall commence,
and the date on which the right shall expire
(12) the maximum or minimum number of warrants which may be exercised at
any time
(13) information with respect to book-entry procedures, if any
Exercise of Warrants
Each warrant will entitle the holder thereof to purchase for cash the amount
of debt securities, shares of preferred stock, shares of Class A common stock,
shares of Class B common stock or depositary shares at the exercise price as
shall in each case be set forth in, or be determinable as set forth in, the
applicable prospectus supplement. Warrants may be exercised at any time up to
the close of business on the expiration date set forth in the applicable
prospectus supplement. After the close of business on the expiration date,
unexercised warrants will become void.
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Warrants may be exercised as set forth in the applicable prospectus
supplement relating to the warrants offered thereby. Upon receipt of payment
and the warrant certificate properly completed and duly executed at the
corporate trust office of the warrant agent or any other office indicated in
the applicable prospectus supplement, we will, as soon as practicable, forward
the purchased securities. If less than all of the warrants represented by the
warrant certificate are exercised, a new warrant certificate will be issued for
the remaining warrants.
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DESCRIPTION OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITS
We may issue stock purchase contracts, including contracts obligating holders
to purchase from us, and obligating us to sell to the holders, a specified
number of shares of Class A common stock, Class B common stock or preferred
stock at a future date or dates. The price per share of Class A common stock,
Class B common stock or preferred stock may be fixed at the time the stock
purchase contracts are issued or may be determined by a specific reference to a
formula set forth in the stock purchase contracts. The stock purchase contracts
may be issued separately or as part of stock purchase units consisting of (1) a
stock purchase contract and (2) debt securities, preferred securities or debt
obligations of third parties, including U.S. Treasury securities, securing the
holders' obligations to purchase the Class A common stock, Class B common stock
or the preferred stock under the stock purchase contracts. The stock purchase
contracts may require us to make periodic payments to the holders of the stock
purchase units or vice versa, and such payments may be unsecured or prefunded
on some basis. The stock purchase contracts may require holders to secure their
obligations thereunder in a specified manner.
Unless otherwise specified in the applicable prospectus supplement, the
securities related to the stock purchase contracts will be pledged to a
collateral agent, for our benefit, pursuant to a pledge agreement. The pledged
securities will secure the obligations of holders of stock purchase contracts
to purchase Class A common stock, Class B common stock or preferred stock under
the related stock purchase contracts. The rights of holders of stock purchase
contracts to the related pledged securities will be subject to our security
interest in those pledged securities. That security interest will be created by
the pledge agreement. No holder of stock purchase contracts will be permitted
to withdraw the pledged securities related to such stock purchase contracts
from the pledge arrangement except upon the termination or early settlement of
the related stock purchase contracts. Subject to that security interest and the
terms of the purchase contract agreement and the pledge agreement, each holder
of a stock purchase contract will retain full beneficial ownership of the
related pledged securities.
Except as described in the applicable prospectus supplement, the collateral
agent will, upon receipt of distributions on the pledged securities, distribute
such payments to us or a purchase contract agent, as provided in the pledge
agreement. The purchase contract agent will in turn distribute payments it
receives as provided in the stock purchase contract. The applicable prospectus
supplement will describe the terms of any stock purchase contracts or stock
purchase units.
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DESCRIPTION OF SUBSCRIPTION RIGHTS
General
We may issue subscription rights to purchase our debt securities, Class A
common stock, Class B common stock, preferred stock, depositary shares or
warrants to purchase debt securities, preferred stock, Class A common stock or
Class B common stock. We may issue subscription rights independently or
together with any other offered security. The subscription rights may or may
not be transferable by the purchaser receiving the subscription rights. In
connection with any subscription rights offering to our stockholders, we may
enter into a standby underwriting arrangement with one or more underwriters
pursuant to which the underwriter(s) will purchase any offered securities
remaining unsubscribed for after the subscription rights offering. In
connection with a subscription rights offering to our stockholders,
certificates evidencing the subscription rights and a prospectus supplement
will be distributed to our stockholders on the record date for receiving
subscription rights in the subscription rights offering set by us.
The applicable prospectus supplement will describe the following terms of
subscription rights in respect of which this prospectus is being delivered:
(1) the title of the subscription rights
(2) the securities for which the subscription rights are exercisable
(3) the exercise price for the subscription rights
(4) the number of subscription rights issued to each stockholder
(5) the extent to which the subscription rights are transferable
(6) if applicable, a discussion of the material United States federal
income tax considerations applicable to the issuance or exercise of
the subscription rights
(7) any other terms of the subscription rights, including terms,
procedures and limitations relating to the exchange and exercise of
the subscription rights
(8) the date on which the right to exercise the subscription rights shall
commence, and the date on which the right shall expire
(9) the extent to which the subscription rights include an over-
subscription privilege with respect to unsubscribed securities
(10) if applicable, the material terms of any standby underwriting
arrangement entered into by us in connection with the subscription
rights offering
Exercise Of Subscription Rights
Each subscription right will entitle the holder of subscription rights to
purchase for cash the principal amount of debt securities, shares of preferred
stock, depositary shares, Class A common stock, Class B common stock, warrants
or any combination thereof, at the exercise price as shall in each case be set
forth in, or be determinable as set forth in, the applicable prospectus
supplement. Subscription rights may be exercised at any time up to the close of
business on the expiration date for such subscription rights set forth in the
applicable prospectus supplement. After the close of business on the expiration
date, all unexercised subscription rights will become void.
Subscription rights may be exercised as set forth in the applicable
prospectus supplement. Upon receipt of payment and the subscription rights
certificate properly completed and duly executed at the corporate trust office
of the subscription rights agent or any other office indicated in the
prospectus supplement, we will, as soon as practicable, forward the debt
securities, shares of preferred stock, Class A common stock or Class B common
stock, depositary shares or warrants purchasable upon such exercise. In the
event that not all of the subscription rights issued in any offering are
exercised, we may determine to offer any unsubscribed offered securities
directly to persons other than stockholders, to or through agents, underwriters
or dealers or through a combination of such methods, including pursuant to
standby underwriting arrangements, as set forth in the applicable prospectus
supplement.
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PLAN OF DISTRIBUTION
The following summary of our plan for distributing the securities offered
under this prospectus will be supplemented by a description of our specific
plan for each offering in the applicable prospectus supplement relating to
such offering. Such description will include, among other things, the terms of
the underwriting arrangements applicable to such offering.
We may sell the securities in any of the following ways, or in any
combination thereof, as follows:
. through underwriters or dealers
. directly to one or more purchasers
. through agents
A prospectus supplement will set forth the terms of the offering of the
securities offered thereby, including:
. the name or names of any underwriters and the respective amounts of such
securities underwritten or purchased by each of them
. the purchase price of such securities and the proceeds to us
. any discounts, commissions or concessions allowed or paid to dealers
constituting underwriters' compensation, to the purchase price
. any securities exchanges or markets on which such securities may be listed
or quoted
If underwriters are used in the sale of any securities, such securities will
be acquired by the underwriters for their own account and may be resold from
time to time in one or more transactions, including negotiated transactions,
at a fixed public offering price or at varying prices determined at the time
of sale. Such securities may be either offered to the public through
underwriting syndicates represented by one or more managing underwriters, or
directly by one or more underwriters. Only underwriters named in such
prospectus supplement are deemed to be underwriters in connection with the
securities offered thereby. Unless otherwise set forth in the applicable
prospectus supplement, the obligations of the underwriters to purchase such
securities will be subject to certain conditions precedent and the
underwriters will be obligated to purchase all of such securities if any are
purchased. Any purchase price and any discounts or concessions allowed or paid
to dealers may be changed from time to time.
The securities may be sold directly by us or through agents designated by us
from time to time. Any agent involved in the offer or sale of the securities
in respect of which a prospectus supplement is delivered will be named, and
any commissions payable by us to such agent will be set forth, in the
prospectus supplement. Unless otherwise indicated in the prospectus
supplement, any such agent will be acting on a best efforts basis for the
period of its appointment.
If so indicated in the applicable prospectus supplement, we will authorize
underwriters, dealers or agents to solicit offers by institutional investors
to purchase the securities from us at the public offering price set forth in
the prospectus supplement pursuant to delayed delivery contracts providing for
payment and delivery on a specified date in the future. There may be
limitations on the minimum amount which may be purchased by any such
institutional investor or on the portion of the aggregate principal amount of
the particular securities which may be sold pursuant to such arrangements.
Institutional investors to which such offers may be made, when authorized,
include commercial and savings banks, insurance companies, pension funds,
investment companies, educational and charitable institutions, and such other
institutions as may be approved by us. The obligations of any such purchasers
pursuant to such delayed delivery and payment arrangements will be subject
only to those
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conditions set forth in the prospectus supplement, and the prospectus
supplement will set forth the commission payable for solicitation of such
contracts. Underwriters, dealers or agents will not have any responsibility in
respect of the validity of such arrangements or the performance of McLeodUSA or
such institutional investors thereunder.
Securities offered other than Class A common stock may be a new issue of
securities with no established trading market. Unless otherwise indicated in
the applicable prospectus supplement, we do not intend to list any offered
securities other than our Class A common stock on any securities exchange or
other market. Any underwriters to whom such securities are sold by us for
public offering and sale may make a market in such securities, but such
underwriters will not be obligated to do so and may discontinue any market
making at any time without notice. No assurance can be given as to the
liquidity of or the trading markets for any such securities.
Agents and underwriters may be entitled under agreements entered into with us
to indemnification by us against certain civil liabilities, including
liabilities under the Securities Act of 1933, or to contribution with respect
to payments which the agents, dealers or underwriters may be required to make
in respect thereof. Agents, dealers and underwriters may be customers of,
engage in transactions with, or perform services for us in the ordinary course
of business.
LEGAL MATTERS
The legality of the securities offered hereby will be passed upon for
McLeodUSA by Hogan & Hartson L.L.P., Washington, D.C., special counsel for
McLeodUSA.
EXPERTS
The consolidated financial statements and schedule of McLeodUSA and
subsidiaries as of December 31, 1998 and 1997, and for each of the three years
in the period ended December 31, 1998, incorporated by reference in this
registration statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their reports with respect thereto, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in giving said reports.
The consolidated financial statements of Ovation Communications, Inc. as of
December 31, 1998 and 1997 and for the period from March 27, 1997 (inception)
to December 31, 1997 and the year ended December 31, 1998 incorporated by
reference in this registration statement have been audited by Ernst & Young
LLP, independent auditors, as set forth in their report, and are incorporated
by reference herein in reliance upon such report given upon the authority of
said firm as experts in accounting and auditing.
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McLeodUSA Incorporated
[LOGO OF McLEODUSA APPEARS HERE]
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P R O S P E C T U S
Dated July , 1999
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth the estimated expenses to be incurred in
connection with the issuance and distribution of the securities being
registered.
<TABLE>
<S> <C>
SEC Registration Fee............................................. $486,500
Fees of Rating Agencies.......................................... 20,000
Printing and Duplicating Expenses................................ 150,000
Legal Fees and Expenses.......................................... 150,000
Accounting Fees and Expenses..................................... 50,000
NASD Fees........................................................ 35,000
Blue Sky Fees and Expenses....................................... 15,000
Miscellaneous.................................................... 43,500
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Total.......................................................... $950,000
</TABLE>
Item 15. Indemnification of Directors and Officers
Under Section 145 of the Delaware General Corporation Law ("DGCL"), a
corporation may indemnify its directors, officers, employees and agents and
its former directors, officers, employees and agents and those who serve, at
the corporation's request, in such capacities with another enterprise, against
expenses (including attorneys' fees), as well as judgments, fines and
settlements in nonderivative lawsuits, actually and reasonably incurred in
connection with the defense of any action, suit or proceeding in which they or
any of them were or are made parties or are threatened to be made parties by
reason of their serving or having served in such capacity. The DGCL provides,
however, that such person must have acted in good faith and in a manner such
person reasonably believed to be in (or not opposed to) the best interests of
the corporation and, in the case of a criminal action, such person must have
had no reasonable cause to believe his or her conduct was unlawful. In
addition, the DGCL does not permit indemnification in an action or suit by or
in the right of the corporation, where such person has been adjudged liable to
the corporation, unless, and only to the extent that, a court determines that
such person fairly and reasonably is entitled to indemnity for costs the court
deems proper in light of liability adjudication. Indemnity is mandatory to the
extent a claim, issue or matter has been successfully defended.
The Amended and Restated Certificate of Incorporation of the Company (the
"Restated Certificate") contains provisions that provide that no director of
the Company shall be liable for breach of fiduciary duty as a director except
for (1) any breach of the directors' duty of loyalty to the Company or its
stockholders; (2) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of the law; (3) liability under
Section 174 of the DGCL; or (4) any transaction from which the director
derived an improper personal benefit. The Restated Certificate contains
provisions that further provide for the indemnification of directors and
officers to the fullest extent permitted by the DGCL. Under the Bylaws of the
Company, the Company is required to advance expenses incurred by an officer or
director in defending any such action if the director or officer undertakes to
repay such amount if it is determined that the director or officer is not
entitled to indemnification. In addition, the Company has entered into
indemnity agreements with each of its directors pursuant to which the Company
has agreed to indemnify the directors as permitted by the DGCL. The Company
has obtained directors and officers liability insurance against certain
liabilities, including liabilities under the Securities Act.
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits
II-1
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description
------- -------------------
<C> <S>
*1.1 Form of Debt Securities Underwriting Agreement.
*1.2 Form of Common Stock Underwriting Agreement.
*1.3 Form of Preferred Stock Underwriting Agreement.
*1.4 Form of Depositary Shares Underwriting Agreement.
*1.5 Form of Warrants Underwriting Agreement.
*1.6 Form of Subscription Rights Underwriting Agreement.
3.1 Amended and Restated Certificate of Incorporation of McLeod, Inc.
(Filed as Exhibit 3.1 to Registration Statement on Form S-1, File No.
333-3112 ("Initial Form S-1"), and incorporated herein by reference).
3.2 Amended and Restated Bylaws of McLeod, Inc. (Filed as Exhibit 3.2 to
Registration Statement on Form S-1, File No. 333-13885 (the "November
1996 Form S-1"), and incorporated herein by reference).
3.3 Certificate of Amendment of Amended and Restated Certificate of
Incorporation of McLeod Inc. (Filed as Exhibit 3.3 to Registration
Statement on Form S-4, File No. 333-27647 (the "July 1997 Form S-4"),
and incorporated herein by reference).
3.4 Certificate of Change of Registered Agent and Registered Office of
McLeodUSA Incorporated. (Filed as Exhibit 3.4 to Annual Report on
Form 10-K, File No. 0-20763, filed with the Commission on March 6,
1998 (the "1997 Form 10-K") and incorporated herein by reference).
4.1 Form of Class A Common Stock Certificate of McLeod, Inc. (Filed as
Exhibit 4.1 to Initial Form S-1 and incorporated herein by
reference).
4.2 Indenture dated March 4, 1997 between McLeod, Inc. and United States
Trust Company of New York, as Trustee, relating to the 10 1/2% Senior
Discount Notes Due 2007 of McLeod, Inc. (Filed as Exhibit 4.2 to
Annual Report on Form 10-K, File No. 0-20763, filed with the
Commission on March 31, 1997 (the "1996 Form 10-K") and incorporated
herein by reference).
4.3 Initial Global 10 1/2% Senior Discount Note Due March 1, 2007 of
McLeod, Inc., dated March 4, 1997. (Filed as Exhibit 4.3 to the 1996
Form 10-K and incorporated herein by reference).
4.4 Form of Certificated 10 1/2% Senior Discount Note Due March 1, 2007
of McLeod, Inc. (Filed as Exhibit 4.4 to the 1996 Form 10-K and
incorporated herein by reference).
4.5 Investor Agreement dated as of April 1, 1996 among McLeod, Inc., IES
Investments Inc., Midwest Capital Group Inc., MWR Investments Inc.,
Clark and Mary McLeod, and certain other stockholders. (Filed as
Exhibit 4.8 to Initial Form S-1 and incorporated herein by
reference).
4.6 Amendment No. 1 to Investor Agreement dated as of October 23, 1996 by
and among McLeod, Inc., IES Investments Inc., Midwest Capital Group
Inc., MWR Investments Inc., Clark E. McLeod and Mary E. McLeod.
(Filed as Exhibit 4.3 to the November 1996 Form S-1 and incorporated
herein by reference).
4.7 Form of 10 1/2% Senior Discount Exchange Note Due 2007 of McLeodUSA
Incorporated. (Filed as Exhibit 4.8 to the July 1997 Form S-4 and
incorporated herein by reference).
4.8 Indenture dated as of July 21, 1997 between McLeodUSA Incorporated
and United States Trust Company of New York, as Trustee, relating to
the 9 1/4% Senior Notes Due 2007 of McLeodUSA Incorporated. (Filed as
Exhibit 4.9 to the July 1997 Form S-4 and incorporated herein by
reference).
4.9 Form of Initial Global 9 1/4% Senior Note Due 2007 of McLeodUSA
Incorporated. (Filed as Exhibit 4.10 to the July 1997 Form S-4 and
incorporated herein by reference).
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description
------- -------------------
<C> <S>
4.10 Stockholders' Agreement dated June 14, 1997 among McLeodUSA
Incorporated, IES Investments Inc., Midwest Capital Group, Inc., MWR
Investments Inc., Clark E. McLeod, Mary E. McLeod and Richard A.
Lumpkin on behalf of each of the shareholders of Consolidated
Communications Inc. listed on Schedule 1 of the Stockholders'
Agreement. (Filed as Exhibit 4.12 to the July 1997 Form S-4 and
incorporated herein by reference).
4.11 Amendment No. 1 to Stockholders' Agreement dated as of September 19,
1997 by and among McLeodUSA Incorporated, IES Investments Inc.,
Midwest Capital Group, Inc., MWR Investments Inc., Clark E. McLeod,
Mary E. McLeod and Richard A. Lumpkin on behalf of each of the
shareholders of Consolidated Communications Inc. listed in Schedule I
thereto. (Filed as Exhibit 4.1 to the Quarterly Report on Form 10-Q,
File No. 0-20763, filed with the Commission on November 14, 1997 and
incorporated herein by reference).
4.12 Form of 9 1/4% Senior Exchange Note Due 2007 of McLeodUSA
Incorporated. (Filed as Exhibit 4.14 to the 1997 Form 10-K and
incorporated herein by reference).
4.13 Indenture dated as of March 16, 1998 between McLeodUSA Incorporated
and United States Trust Company of New York, as Trustee, relating to
the 8 3/8% Senior Notes Due 2008 of McLeodUSA Incorporated. (Filed as
Exhibit 4.15 to Registration Statement on Form S-4, File No. 333-
52793 (the "May 1998 Form S-4") and incorporated herein by
reference).
4.14 Form of Global 8 3/8% Senior Note Due 2008 of McLeodUSA Incorporated
(Filed as Exhibit 4.16 to the May 1998 Form S-4 and incorporated
herein by reference).
4.15 Stockholders' Agreement dated as of November 18, 1998 by and among
McLeodUSA Incorporated, IES Investments Inc., Clark E. McLeod, Mary
E. McLeod and Richard A. Lumpkin, Gail G. Lumpkin and certain of the
former shareholders of Consolidated Communications Inc. ("CCI") and
certain permitted transferees of the former CCI shareholders in each
case who are listed in Schedule I thereto. (Filed as Exhibit 99.1 to
the Current Report on Form 8-K, File No. 0-20763, filed with the
Commission on November 19, 1998 and incorporated herein by
reference).
4.16 Indenture dated as of October 30, 1998 between McLeodUSA Incorporated
and United States Trust Company of New York, as Trustee, relating to
the 9 1/2% Senior Notes Due 2008 of McLeodUSA Incorporated (Filed as
Exhibit 4.19 to Registration Statement on Form S-4, File No. 333-
69621 (the "December 1998 Form S-4") and incorporated herein by
reference).
4.17 Form of Global 9 1/2% Senior Note Due 2008 of McLeodUSA Incorporated
(Filed as Exhibit 4.20 to the December 1998 Form S-4 and incorporated
herein by reference).
4.18 Stockholders' Agreement dated as of January 7, 1999, by and among
McLeodUSA Incorporated, IES Investments Inc., Clark E. McLeod, Mary
E. McLeod, Richard A. Lumpkin, Gail G. Lumpkin, M/C Investors L.L.C.
and Media/Communications Partners III Limited Partnership (Filed as
Exhibit 4.1 to the Current Report on Form 8-K, File No. 0-20763,
filed with the Commission on January 14, 1999 and incorporated herein
by reference).
4.19 Indenture dated as of February 22, 1999 between McLeodUSA
Incorporated and United States Trust Company of New York, as Trustee,
relating to the 8 1/8% Senior Notes Due 2009 of McLeodUSA
Incorporated (Filed as Exhibit 4.22 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1998, File No. 0-20763,
filed with the Commission on March 24, 1999 (the "1998 Form 10-K")
and incorporated herein by reference).
4.20 Form of Global 8 1/8% Senior Note Due 2009 of McLeodUSA Incorporated
(Filed as Exhibit 4.23 to the 1998 Form 10-K and incorporated herein
by reference).
**4.21 Form of Senior Debt Securities Indenture.
**4.22 Form of Subordinated Debt Securities Indenture.
*4.23 Form of Deposit Agreement.
**5.1 Opinion of Hogan & Hartson L.L.P.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description
------- -------------------
<C> <S>
11.1 Statement regarding Computation of Per Share Earnings (Filed as
Exhibit 11.1 to the Quarterly Report on Form 10-Q, File No. 0-20763,
filed with the Commission on May 13, 1998 and incorporated herein by
reference).
21.1 Subsidiaries of McLeodUSA Incorporated (Filed as Exhibit 21.1 to the
1998 Form 10-K and incorporated herein by reference).
23.1 Consent of Hogan & Hartson L.L.P. (included in Exhibit 5.1).
23.2 Consent of Arthur Andersen LLP.
23.3 Consent of Ernst & Young LLP.
24.1 Power of attorney (included on signature page).
*24.2 Statement on Form T-1 of Eligibility of Trustee.
27.1 Financial Data Schedule (Filed as Exhibit 27.1 to the Quarterly Report
on Form 10-Q, File No. 0-20763, filed with the Commission on May 13,
1998 and incorporated herein by reference).
</TABLE>
- --------
* To be incorporated by reference herein in connection with the offering of
each series of securities.
** To be filed by amendment.
(b) Financial Statement Schedules.
The following financial statement schedule was filed with the Company's
Annual Report on Form 10-K (File No. 0-20763), filed with the Commission on
March 24, 1999, as amended by Form 10-K/A filed on April 22, 1999 and is
incorporated herein by reference:
Schedule II--Valuation and Qualifying Accounts
Schedules not listed above have been omitted because they are inapplicable
or the information required to be set forth therein is contained, or
incorporated by reference, in the Consolidated Financial Statements of the
Company or notes thereto.
Item 17. Undertakings
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this registration statement or any
material change to such information in this registration statement;
provided, however, that subparagraphs (i) and (ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in the periodic reports filed by the Registrant
pursuant to Section 13 or Section 15(d) of the Securities Act of 1934 that are
incorporated by reference in this registration statement.
(2) That for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the Securities offered herein, and the
offering of such Securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the Securities being registered which remain unsold at the termination of
the offering.
The undersigned Registrant hereby undertakes that, for the purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
registration statement shall be
II-4
<PAGE>
deemed to be a new registration statement relating to the securities offered
herein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes to supplement the prospectus,
after the expiration of the subscription period, to set forth the results of
the subscription offer, the transactions by the underwriters during the
subscription period, the amount of unsubscribed securities to be purchased by
the underwriters, and the terms of any subsequent reoffering thereof. If any
public offering by the underwriters is to be made on terms differing from
those set forth on the cover page of the prospectus, a post-effective
amendment will be filed to set forth the terms of such offering.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance under Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act of 1933 shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 15 above or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted against the Registrant by such
director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of each issue.
The undersigned Registrant hereby undertakes to file an application for
purposes of determining the eligibility of the trustee to act under subsection
(a) of Section 310 of the Trust Indenture Act in accordance with the rules and
regulations prescribed by the Commission under Section 305(b)(2) of the Act.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Company has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Cedar Rapids, Iowa, on
this 14th day of July, 1999.
McLeodUSA Incorporated
/s/ Clark E. McLeod
By: _________________________________
Clark E. McLeod
Chairman and Chief Executive
Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Clark E. McLeod, Stephen C. Gray and Blake O.
Fisher, Jr., jointly and severally, each in his own capacity, his true and
lawful attorneys-in-fact, with full power of substitution, for him and his
name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents with full power and authority to do so
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said attorneys-
in-fact, or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed below by the following persons, in the capacities
indicated below, on this 14th day of July, 1999.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Clark E. McLeod Chairman, Chief Executive Officer
______________________________________ and Director (Principal Executive
Clark E. McLeod Officer)
/s/ Richard A. Lumpkin Vice Chairman and Director
______________________________________
Richard A. Lumpkin
/s/ Stephen C. Gray President, Chief Operating Officer
______________________________________ and Director
Stephen C. Gray
/s/ Blake O. Fisher, Jr. Group Vice President and Director
______________________________________
Blake O. Fisher, Jr.
/s/ J. Lyle Patrick Group Vice President, Chief
______________________________________ Financial Officer and Treasurer
J. Lyle Patrick (Principal Financial Officer and
Principal Accounting Officer)
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Peter H.O. Claudy Director
______________________________________
Peter H.O. Claudy
/s/ Thomas M. Collins Director
______________________________________
Thomas M. Collins
/s/ Robert J. Currey Director
______________________________________
Robert J. Currey
/s/ Lee Liu Director
______________________________________
Lee Liu
/s/ Paul D. Rhines Director
______________________________________
Paul D. Rhines
/s/ Roy A. Wilkens Director
______________________________________
Roy A. Wilkens
</TABLE>
II-7
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description
------- -------------------
<C> <S>
*1.1 Form of Debt Securities Underwriting Agreement.
*1.2 Form of Common Stock Underwriting Agreement.
*1.3 Form of Preferred Stock Underwriting Agreement.
*1.4 Form of Depositary Shares Underwriting Agreement.
*1.5 Form of Warrants Underwriting Agreement.
*1.6 Form of Subscription Rights Underwriting Agreement.
3.1 Amended and Restated Certificate of Incorporation of McLeod, Inc.
(Filed as Exhibit 3.1 to Registration Statement on Form S-1, File No.
333-3112 ("Initial Form S-1"), and incorporated herein by reference).
3.2 Amended and Restated Bylaws of McLeod, Inc. (Filed as Exhibit 3.2 to
Registration Statement on Form S-1, File No. 333-13885 (the "November
1996 Form S-1"), and incorporated herein by reference).
3.3 Certificate of Amendment of Amended and Restated Certificate of
Incorporation of McLeod Inc. (Filed as Exhibit 3.3 to Registration
Statement on Form S-4, File No. 333-27647 (the "July 1997 Form S-4"),
and incorporated herein by reference).
3.4 Certificate of Change of Registered Agent and Registered Office of
McLeodUSA Incorporated. (Filed as Exhibit 3.4 to Annual Report on
Form 10-K, File No. 0-20763, filed with the Commission on March 6,
1998 (the "1997 Form 10-K") and incorporated herein by reference).
4.1 Form of Class A Common Stock Certificate of McLeod, Inc. (Filed as
Exhibit 4.1 to Initial Form S-1 and incorporated herein by
reference).
4.2 Indenture dated March 4, 1997 between McLeod, Inc. and United States
Trust Company of New York, as Trustee, relating to the 10 1/2% Senior
Discount Notes Due 2007 of McLeod, Inc. (Filed as Exhibit 4.2 to
Annual Report on Form 10-K, File No. 0-20763, filed with the
Commission on March 31, 1997 (the "1996 Form 10-K") and incorporated
herein by reference).
4.3 Initial Global 10 1/2% Senior Discount Note Due March 1, 2007 of
McLeod, Inc., dated March 4, 1997. (Filed as Exhibit 4.3 to the 1996
Form 10-K and incorporated herein by reference).
4.4 Form of Certificated 10 1/2% Senior Discount Note Due March 1, 2007
of McLeod, Inc. (Filed as Exhibit 4.4 to the 1996 Form 10-K and
incorporated herein by reference).
4.5 Investor Agreement dated as of April 1, 1996 among McLeod, Inc., IES
Investments Inc., Midwest Capital Group Inc., MWR Investments Inc.,
Clark and Mary McLeod, and certain other stockholders. (Filed as
Exhibit 4.8 to Initial Form S-1 and incorporated herein by
reference).
4.6 Amendment No. 1 to Investor Agreement dated as of October 23, 1996 by
and among McLeod, Inc., IES Investments Inc., Midwest Capital Group
Inc., MWR Investments Inc., Clark E. McLeod and Mary E. McLeod.
(Filed as Exhibit 4.3 to the November 1996 Form S-1 and incorporated
herein by reference).
4.7 Form of 10 1/2% Senior Discount Exchange Note Due 2007 of McLeodUSA
Incorporated. (Filed as Exhibit 4.8 to the July 1997 Form S-4 and
incorporated herein by reference).
4.8 Indenture dated as of July 21, 1997 between McLeodUSA Incorporated
and United States Trust Company of New York, as Trustee, relating to
the 9 1/4% Senior Notes Due 2007 of McLeodUSA Incorporated. (Filed as
Exhibit 4.9 to the July 1997 Form S-4 and incorporated herein by
reference).
4.9 Form of Initial Global 9 1/4% Senior Note Due 2007 of McLeodUSA
Incorporated. (Filed as Exhibit 4.10 to the July 1997 Form S-4 and
incorporated herein by reference).
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description
------- -------------------
<C> <S>
4.10 Stockholders' Agreement dated June 14, 1997 among McLeodUSA
Incorporated, IES Investments Inc., Midwest Capital Group, Inc., MWR
Investments Inc., Clark E. McLeod, Mary E. McLeod and Richard A.
Lumpkin on behalf of each of the shareholders of Consolidated
Communications Inc. listed on Schedule 1 of the Stockholders'
Agreement. (Filed as Exhibit 4.12 to the July 1997 Form S-4 and
incorporated herein by reference).
4.11 Amendment No. 1 to Stockholders' Agreement dated as of September 19,
1997 by and among McLeodUSA Incorporated, IES Investments Inc.,
Midwest Capital Group, Inc., MWR Investments Inc., Clark E. McLeod,
Mary E. McLeod and Richard A. Lumpkin on behalf of each of the
shareholders of Consolidated Communications Inc. listed in Schedule I
thereto. (Filed as Exhibit 4.1 to the Quarterly Report on Form 10-Q,
File No. 0-20763, filed with the Commission on November 14, 1997 and
incorporated herein by reference).
4.12 Form of 9 1/4% Senior Exchange Note Due 2007 of McLeodUSA
Incorporated. (Filed as Exhibit 4.14 to the 1997 Form 10-K and
incorporated herein by reference).
4.13 Indenture dated as of March 16, 1998 between McLeodUSA Incorporated
and United States Trust Company of New York, as Trustee, relating to
the 8 3/8% Senior Notes Due 2008 of McLeodUSA Incorporated. (Filed as
Exhibit 4.15 to Registration Statement on Form S-4, File No. 333-
52793 (the "May 1998 Form S-4") and incorporated herein by
reference).
4.14 Form of Global 8 3/8% Senior Note Due 2008 of McLeodUSA Incorporated
(Filed as Exhibit 4.16 to the May 1998 Form S-4 and incorporated
herein by reference).
4.15 Stockholders' Agreement dated as of November 18, 1998 by and among
McLeodUSA Incorporated, IES Investments Inc., Clark E. McLeod, Mary
E. McLeod and Richard A. Lumpkin, Gail G. Lumpkin and certain of the
former shareholders of Consolidated Communications Inc. ("CCI") and
certain permitted transferees of the former CCI shareholders in each
case who are listed in Schedule I thereto. (Filed as Exhibit 99.1 to
the Current Report on Form 8-K, File No. 0-20763, filed with the
Commission on November 19, 1998 and incorporated herein by
reference).
4.16 Indenture dated as of October 30, 1998 between McLeodUSA Incorporated
and United States Trust Company of New York, as Trustee, relating to
the 9 1/2% Senior Notes Due 2008 of McLeodUSA Incorporated (Filed as
Exhibit 4.19 to Registration Statement on Form S-4, File No. 333-
69621 (the "December 1998 Form S-4") and incorporated herein by
reference).
4.17 Form of Global 9 1/2% Senior Note Due 2008 of McLeodUSA Incorporated
(Filed as Exhibit 4.20 to the December 1998 Form S-4 and incorporated
herein by reference).
4.18 Stockholders' Agreement dated as of January 7, 1999, by and among
McLeodUSA Incorporated, IES Investments Inc., Clark E. McLeod, Mary
E. McLeod, Richard A. Lumpkin, Gail G. Lumpkin, M/C Investors L.L.C.
and Media/Communications Partners III Limited Partnership (Filed as
Exhibit 4.1 to the Current Report on Form 8-K, File No. 0-20763,
filed with the Commission on January 14, 1999 and incorporated herein
by reference).
4.19 Indenture dated as of February 22, 1999 between McLeodUSA
Incorporated and United States Trust Company of New York, as Trustee,
relating to the 8 1/8% Senior Notes Due 2009 of McLeodUSA
Incorporated (Filed as Exhibit 4.22 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1998, File No. 0-20763,
filed with the Commission on March 24, 1999 (the "1998 Form 10-K")
and incorporated herein by reference).
4.20 Form of Global 8 1/8% Senior Note Due 2009 of McLeodUSA Incorporated
(Filed as Exhibit 4.23 to the 1998 Form 10-K and incorporated herein
by reference).
**4.21 Form of Senior Debt Securities Indenture.
**4.22 Form of Subordinated Debt Securities Indenture.
*4.23 Form of Deposit Agreement.
**5.1 Opinion of Hogan & Hartson L.L.P.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description
------- -------------------
<C> <S>
11.1 Statement regarding Computation of Per Share Earnings (Filed as
Exhibit 11.1 to the Quarterly Report on Form 10-Q, File No. 0-20763,
filed with the Commission on May 13, 1998 and incorporated herein by
reference).
21.1 Subsidiaries of McLeodUSA Incorporated (Filed as Exhibit 21.1 to the
1998 Form 10-K and incorporated herein by reference).
23.1 Consent of Hogan & Hartson L.L.P. (included in Exhibit 5.1).
23.2 Consent of Arthur Andersen LLP.
23.3 Consent of Ernst & Young LLP.
24.1 Power of attorney (included on signature page).
*24.2 Statement on Form T-1 of Eligibility of Trustee.
27.1 Financial Data Schedule (Filed as Exhibit 27.1 to the Quarterly Report
on Form 10-Q, File No. 0-20763, filed with the Commission on May 13,
1998 and incorporated herein by reference).
</TABLE>
- --------
* To be incorporated by reference herein in connection with the offering of
each series of securities.
** To be filed by amendment.
3
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Form S-3 Registration Statement of our McLeodUSA Incorporated
reports dated January 27, 1999 (except with respect to the matter discussed in
Note 16, as to which the date is March 5, 1999) and to all references to our
Firm included in or made a part of this Registration Statement.
/s/ Arthur Andersen LLP
Chicago, Illinois
July 14, 1999
<PAGE>
Exhibit 23.3
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of McLeodUSA
Incorporated to the incorporation by reference therein of our report dated
February 26, 1999, with respect to the consolidated financial statements of
Ovation Communications, Inc. as of December 31, 1998 and 1997 and for the period
from March 27, 1997 (inception) to December 31, 1997 and the year ended December
31, 1998, included in the Registration Statement on Form S-4 (No. 333-71811) of
McLeodUSA Incorporated filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
-------------------------
Minneapolis, Minnesota
July 14, 1999
