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Exhibit 1.1
MCLEODUSA INCORPORATED
11 3/8% Senior Notes Due 2009
Underwriting Agreement
New York, New York
January 4, 2001
To the Representatives
named in Schedule I
hereto of the Under-
writers named in
Schedule II hereto
Ladies and Gentlemen:
McLeodUSA Incorporated, a corporation organized under the laws of the State
of Delaware (the "Company"), proposes to sell to the several underwriters named
in Schedule II hereto (the "Underwriters"), for whom you (the "Representatives")
are acting as representatives, the principal amount of its securities identified
in Schedule I hereto (the "Securities"), to be issued under an indenture, dated
as of January 15, 2001, between the Company and United States Trust Company of
New York, as trustee (the "Trustee"), as supplemented by a first supplemental
indenture, dated January 15, 2001, between the Company and the Trustee (the
indenture and the first supplemental indenture collectively referred to as the
"Indenture"). To the extent there are no additional Underwriters listed on
Schedule I other than you, the term Representatives as used herein shall mean
you, as Underwriters, and the terms Representatives and Underwriters shall mean
either the singular or plural as the context requires. Any reference herein to
the Registration Statement, the Basic Prospectus, any Preliminary Final
Prospectus or the Final Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
which were filed under the Exchange Act on or before the Effective Date of the
Registration Statement or the issue date of the Basic Prospectus, any
Preliminary Final Prospectus or the Final Prospectus, as the case may be; and
any reference herein to the terms "amend", "amendment" or "supplement" with
respect to the Registration Statement, the Basic Prospectus, any Preliminary
Final Prospectus or the Final Prospectus shall be deemed to refer to and include
the filing of any document under the Exchange Act after the Effective Date of
the Registration Statement or the issue date of the Basic Prospectus, any
Preliminary Final Prospectus or the Final Prospectus, as the case may be, deemed
to be incorporated therein by reference. Certain terms used herein are defined
in Section 17 hereof.
1. Representations and Warranties. The Company represents and warrants
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to, and agrees with, each Underwriter as set forth below in this Section 1.
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(a) The Company meets the requirements for use of Form S-3 under the Act
and has prepared and filed with the Commission a registration
statement (the file number of which is set forth in Schedule I hereto)
on Form S-3, including a related basic prospectus, for registration
under the Act of the offering and sale of the Securities. The Company
may have filed one or more amendments thereto, including a Preliminary
Final Prospectus, each of which has previously been furnished to the
Representatives. The Company will next file with the Commission one
of the following: (1) after the Effective Date of such registration
statement, a final prospectus supplement relating to the Securities in
accordance with Rules 430A and 424(b), (2) prior to the Effective Date
of such registration statement, an amendment to such registration
statement (including the form of final prospectus supplement) or (3) a
final prospectus in accordance with Rules 415 and 424(b). In the case
of clause (1), the Company has included in such registration
statement, as amended at the Effective Date, all information (other
than Rule 430A Information) required by the Act and the rules
thereunder to be included in such registration statement and the Final
Prospectus. As filed, such final prospectus supplement or such
amendment and form of final prospectus supplement shall contain all
Rule 430A Information, together with all other such required
information, and, except to the extent the Representatives shall agree
in writing to a modification, shall be in all substantive respects in
the form furnished to you prior to the Execution Time or, to the
extent not completed at the Execution Time, shall contain only such
specific additional information and other changes (beyond that
contained in the Basic Prospectus and any Preliminary Final
Prospectus) as the Company has advised the Representatives, prior to
the Execution Time, will be included or made therein. The Registration
Statement, at the Execution Time, meets the requirements set forth in
Rule 415(a)(1)(x).
(b) On the Effective Date, the Registration Statement did or will, and
when the Final Prospectus is first filed (if required) in accordance
with Rule 424(b) and on the Closing Date (as defined herein), the
Final Prospectus (and any supplement thereto) will, comply in all
material respects with the applicable requirements of the Act, the
Exchange Act and the Trust Indenture Act and the respective rules
thereunder; on the Effective Date and at the Execution Time, the
Registration Statement did not or will not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein not misleading; on the Effective Date and on the
Closing Date the Indenture did or will comply in all material respects
with the applicable requirements of the Trust Indenture Act and the
rules thereunder; and, on the Effective Date, the Final Prospectus, if
not filed pursuant to Rule 424(b), will not, and on the date of any
filing pursuant to Rule 424(b) and on the Closing Date, the Final
Prospectus (together with any amendment or supplement thereto) will
not, include any untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements therein, in
the light of the
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circumstances under which they were made, not misleading;
provided, however, that the Company makes no representations or
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warranties as to (i) that part of the Registration Statement which
shall constitute the Statement of Eligibility and Qualification (Form
T-1) under the Trust Indenture Act of the Trustee or (ii) the
information contained in or omitted from the Registration Statement or
the Final Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with information furnished in writing
to the Company by or on behalf of any Underwriter through the
Representatives specifically for inclusion in the Registration
Statement or the Final Prospectus (or any supplement thereto).
(c) The Company has not taken and will not take, directly or indirectly,
any action prohibited by Regulation M under the Exchange Act in
connection with the offering of the Securities.
(d) The documents filed by the Company under the Exchange Act at the time
they were filed with the Commission, complied in all material respects
with the requirements of the Exchange Act and the rules and
regulations of the Commission thereunder and did not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein, in light of the circumstances under which they
were made, or necessary to make the statements therein not misleading;
and any further documents so filed, when such documents are filed with
the Commission, will conform in all material respects with the
requirements of the Exchange Act and the rules and regulations
thereunder and will not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein, in
light of the circumstances under which they were made, or necessary to
make the statements therein not misleading.
(e) Since the date of the most recent financial statements included or
incorporated by reference in the Registration Statement or the Final
Prospectus, there has been no material adverse change, or any
development which could reasonably be expected to result in a material
adverse change, in the condition (financial or other), or in the
earnings, business affairs or business prospects of the Company and
its subsidiaries, considered as one enterprise, whether or not arising
in the ordinary course of business, except as set forth in or
incorporated by reference in the Registration Statement or Final
Prospectus; and, since the respective dates as of which information is
given or incorporated by reference in the Registration Statement or
Final Prospectus, there has not been any change in the capital stock
(other than pursuant to existing employee stock option plans, 401(k)
plans, other stock options, conversions resulting from acquisitions,
stock ownership plans or stock purchase plans, repurchases by the
Company of its common stock in the ordinary course of business or
conversions of outstanding convertible securities) of the Company or
long-term debt (other than changes as a result of borrowings of the
Company or any of its subsidiaries in the ordinary course of business
not exceeding $75,000,000, borrowings under the Company's Senior
Secured Credit
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Facilities (as defined in the Final Prospectus), maturities, regularly
scheduled payments and payments contemplated as a result of the
application of proceeds of the offering of the Securities as described
in the Registration Statement or Final Prospectus, amortization of
debt discount or currency fluctuations) of the Company or any of its
subsidiaries.
(f) Each of (a) the Company, and (b) McLeodUSA Holdings, Inc., McLeodUSA
Telecommunications Services, Inc., McLeodUSA Network Services, Inc.,
McLeodUSA Community Telephone, Inc., McLeodUSA Publishing Company,
McLeodUSA Media Group, Inc., Illinois Consolidated Telephone Company,
McLeodUSA Information Services, Inc., McLeodUSA Purchasing, L.L.C.,
CapRock Communications Corp., CapRock Telecommunications Corp.,
CapRock Fiber Network, Ltd. and CapRock Network Services, L.P.
(individually a "Subsidiary" and collectively the "Subsidiaries") has
been duly incorporated or organized and is validly existing as a
corporation or, as applicable, limited liability company or limited
partnership in good standing under the laws of the jurisdiction in
which it is chartered or organized, with full corporate or
organizational power and authority to own its properties and conduct
its business as described in or incorporated by reference in the
Registration Statement or the Final Prospectus, and is duly qualified
to do business as a foreign corporation or, as applicable, limited
liability company or limited partnership and is in good standing under
the laws of each jurisdiction which requires such qualification,
except where the failure to be so qualified could not reasonably be
expected to have a material adverse effect on the condition (financial
or other), or on the earnings, business affairs or business prospects
of the Company and its subsidiaries, considered as one enterprise,
whether or not arising in the ordinary course of business (a "Material
Adverse Effect"). Except for the Subsidiaries, the Company has no
subsidiaries which, considered in the aggregate as a single
subsidiary, would constitute a "significant subsidiary" as defined in
Rule 1-02(w) of Regulation S-X promulgated under the Act.
(g) All the outstanding shares of capital stock or other equity interests
of each Subsidiary have been duly and validly authorized and issued
and are fully paid and nonassessable, and, except as otherwise set
forth or incorporated by reference in the Registration Statement or
the Final Prospectus, as amended or supplemented, all outstanding
shares of capital stock or other equity interests of the Subsidiaries
are owned by the Company, either directly or through wholly owned
subsidiaries free and clear of any security interests, claims, liens
or encumbrances (other than pledges, encumbrances or other
arrangements entered into in connection with the Senior Secured Credit
Facilities which have been disclosed in the Final Prospectus).
(h) The Company's authorized equity capitalization is as set forth or
incorporated by reference in the Registration Statement or the Final
Prospectus and the
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outstanding shares of capital stock of the Company have been duly and
validly authorized and issued and are fully paid and nonassessable.
(i) Except as disclosed or incorporated by reference in the Registration
Statement or the Final Prospectus, there is no pending or, to the
Company's knowledge, threatened action, suit or proceeding before any
court or governmental agency, authority or body or any arbitrator
involving the Company or any of its subsidiaries which, if finally
determined adversely to the Company or any of its subsidiaries, would
have a Material Adverse Effect; and the statements in or incorporated
by reference in the Registration Statement or the Final Prospectus
under the headings "Risk Factors - Our Dependence on the Megabells to
Provide Most of our Communication Services Could Make it More
Difficult for us to Offer our Services at a Profit," "Risk Factors -
Actions by the Megabells May Make it More Difficult for us to Offer
our Communications Services," "Business" and "Legal Proceedings"
fairly summarize the actions, suits and proceedings therein described
except for such changes with respect to such actions, suits and
proceedings which could not reasonably be expected to have a Material
Adverse Effect, and the statements in or incorporated by reference in
the Registration Statement or the Final Prospectus concerning
stockholders' agreements to which the Company is a party fairly
summarize the franchises, contracts or other documents therein
described except for such changes with respect to such franchises,
contracts or other documents which could not reasonably be expected to
have a Material Adverse Effect.
(j) This Agreement has been duly authorized, executed and delivered by the
Company.
(k) The Indenture has been duly authorized, and, when duly executed by the
proper officer of the Company and delivered by the Company (assuming
due execution and delivery thereof by the Trustee), will constitute a
valid and binding agreement of the Company enforceable against the
Company in accordance with its terms, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors'
rights generally and general equitable principles (whether considered
in a proceeding in equity or at law).
(l) The Securities have been duly authorized and, when executed and
authenticated in accordance with the provisions of the Indenture and
delivered to and paid for by the Underwriters pursuant to this
Agreement, will constitute valid and binding obligations of the
Company entitled to the benefits of the Indenture and will be
enforceable in accordance with their terms, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors'
rights generally and general equitable principles (whether considered
in a proceeding in equity or at law) and the
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Securities are accurately summarized in all material respects in the
Registration Statement and Final Prospectus.
(m) No consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation by the
Company of the transactions contemplated herein, except for the
declaration of effectiveness of the Registration Statement and except
such as may be required under all applicable state securities and blue
sky laws of any jurisdiction in connection with the purchase and
distribution of the Securities by the Underwriters and such other
approvals as have been obtained.
(n) Neither the issue and sale of the Securities, the execution and
performance of the Indenture or the consummation of any other of the
transactions herein or therein contemplated nor the fulfillment of the
terms hereof, in each case by the Company, will conflict with, result
in a breach or violation of, or constitute a default under the charter
or by-laws of the Company or the terms of any indenture or other
agreement or instrument to which the Company or any of its
Subsidiaries is a party or bound (assuming for purposes of this
subparagraph (n) at the Execution Time that the necessary amendment to
the Senior Secured Credit Facilities (as defined in the Final
Prospectus), has been obtained; provided, however, that this
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parenthetical shall not apply to modify the representation set forth
in this subparagraph (n) when such representation is made at the
Closing Date) or (assuming compliance with all applicable state
securities and blue sky laws and that the Registration Statement has
been declared effective) any law, rule or regulation applicable to the
Company or any of the Subsidiaries or any judgement, order or decree
applicable to the Company or any of its Subsidiaries of any court,
regulatory body, administrative agency, governmental body or
arbitrator having jurisdiction over the Company or any of its
Subsidiaries.
(o) Arthur Andersen LLP, who have reported upon the audited financial
statements incorporated by reference in the Registration Statement or
the Final Prospectus are independent public accountants within the
meaning of the Act and the rules and regulations of the Commission
thereunder.
(p) The consolidated financial statements of the Company and of certain
subsidiaries included or incorporated by reference in the Registration
Statement or the Final Prospectus present fairly in all material
respects the financial position of the Company and its subsidiaries
and such subsidiaries as of the dates indicated and the consolidated
results of the operations and cash flows of the Company and its
subsidiaries and such subsidiaries for the periods specified. Such
financial statements (except as disclosed in the notes thereto or
otherwise stated therein) have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the entire period involved. The financial statement
schedules, if any, included or incorporated by reference in the
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Registration Statement or the Final Prospectus present fairly in all
material respects the information stated therein. The selected
financial data included or incorporated by reference in the
Registration Statement or the Final Prospectus present fairly in all
material respects the information shown therein and have been compiled
on a basis consistent with that of the audited consolidated financial
statements included or incorporated by reference in the Registration
Statement or the Final Prospectus. The pro forma financial statements
and other pro forma financial information included or incorporated by
reference in the Registration Statement or the Final Prospectus
present fairly in all material respects the information shown therein,
have been prepared in accordance with the Commission's rules and
guidelines with respect to pro forma financial statements, have been
properly compiled on the pro forma bases described therein, and, in
the opinion of the Company, the assumptions used in the preparation
thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions or circumstances
referred to therein.
(q) Neither the Company nor any of the Subsidiaries is in violation of its
charter or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any
indenture or other agreement or instrument to which the Company or any
of the Subsidiaries is a party or by which it or any of them may be
bound, or to which any of the property or assets of the Company or any
of the Subsidiaries is subject, other than defaults (considered in the
aggregate) which could not reasonably be expected to have a Material
Adverse Effect.
(r) The Company and the Subsidiaries possess adequate certificates,
authorities or permits issued by the appropriate state, federal or
foreign regulatory agencies or bodies necessary to conduct in all
material respects the business now operated by them and are in
compliance with all such certificates, authorities and permits, other
than such certificates, authorities and permits (and/or noncompliance
therewith) which could not reasonably be expected to have a Material
Adverse Effect. Neither the Company nor any of its subsidiaries has
received any notice of proceedings relating to the revocation or
modification of any such certificate, authority or permit, other than
any such revocation or modification that could not reasonably be
expected to, singly or in the aggregate, have a Material Adverse
Effect.
(s) The Company and its subsidiaries have timely filed all United States
federal income tax returns and all other material tax returns which
are required to be filed by them and have paid all material taxes due
and payable (other than taxes, the payment of which are being
contested in good faith), and no tax liens have been filed and no
claims are being asserted with respect to any such taxes, which could
reasonably be expected to have a Material Adverse Effect. The
provisions for taxes on the books of the Company are adequate in all
material respects for all open years and for its current fiscal
period.
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(t) The Company and the Subsidiaries (A) are in compliance with all
applicable federal, state, local and foreign and other laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (B) have received all permits,
licenses and other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (C) are
in compliance with all terms and conditions of any such permit,
license and approval, except, in each case, where such noncompliance
with Environmental Law, failure to receive required permits, licenses
or other approvals or failure to comply with the terms and conditions
of such permits, licenses or approvals could not reasonably be
expected, singly or in the aggregate, to have a Material Adverse
Effect.
(u) The Company and the Subsidiaries have good and marketable title to all
real property and good and valid title to all personal property owned
by them, in each case free and clear of all liens, encumbrances and
defects, and any real property and buildings held under lease by the
Company and the Subsidiaries are held by them under valid, subsisting
and enforceable leases, except, in each case, for such exceptions as
are set forth or incorporated by reference in the Registration
Statement or the Final Prospectus, or which could not reasonably be
expected to have a Material Adverse Effect.
(v) The Company together with its subsidiaries own and possess all right,
title and interest in and to, or have duly licensed from third parties
a valid, enforceable right to use, all patents, patent rights,
licenses, inventions, copyrights, know-how (including trade secrets
and other unpatented or unpatentable proprietary or confidential
information, systems or procedures), trademarks, service marks and
trade names currently employed in any material respect by the Company
and its subsidiaries in connection with the business conducted by them
(collectively, "Patent and Proprietary Rights") and neither the
Company nor any of its subsidiaries has received notice of
infringement or misappropriation of or conflict with asserted rights
of others with respect to any Patent and Proprietary Rights, or of any
facts which would render any Patent and Proprietary Rights invalid or
inadequate to protect the interest of the Company or of its
subsidiaries therein, and which infringement, misappropriation or
conflict or invalidity or inadequacy, individually or in the
aggregate, could reasonably be expected to result in a Material
Adverse Effect.
(w) The Company has complied with all provisions of Section 1 of Laws of
Florida, Chapter 92-198 Securities-Business with Cuba.
Any certificate signed by any officer of the Company and delivered to the
Representatives or counsel for the Underwriters in connection with the offering
of the Securities
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shall be deemed a representation and warranty by the Company, as to matters
covered thereby, to each Underwriter.
2. Purchase and Sale. Subject to the terms and conditions and in
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reliance upon the representations and warranties herein set forth, the Company
agrees to sell to each Underwriter, and each Underwriter agrees, severally and
not jointly, to purchase from the Company, at the purchase price set forth in
Schedule I hereto the principal amount of the Securities set forth opposite such
Underwriter's name in Schedule II hereto.
3. Delivery and Payment. Delivery of and payment for the Securities
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shall be made on the date and at the time specified in Schedule I hereto or at
such time on such later date not more than three Business Days after the
foregoing date as the Representatives shall designate, which date and time may
be postponed by agreement between the Representatives and the Company or as
provided in Section 9 hereof (such date and time of delivery and payment for the
Securities being herein called the "Closing Date"). Delivery of the Securities
shall be made to the Representatives for the respective accounts of the several
Underwriters against payment by the several Underwriters through the
Representatives of the purchase price thereof to or upon the order of the
Company by wire transfer payable in same-day funds to an account specified by
the Company. Delivery of the Securities shall be made through the facilities of
The Depository Trust Company unless the Representatives shall otherwise
instruct.
4. Offering by Underwriters. It is understood that the several
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Underwriters propose to offer the Securities for sale to the public as set forth
in the Final Prospectus.
5. Agreements. The Company agrees with the several Underwriters that:
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(a) The Company will use its best efforts to cause the Registration
Statement, if not effective at the Execution Time, and any amendment
thereof, to become effective. Prior to the termination of the offering
of the Securities, the Company will not file any amendment of the
Registration Statement or supplement (including the Final Prospectus
or any Preliminary Final Prospectus) to the Basic Prospectus or any
Rule 462(b) Registration Statement unless the Company has furnished
the Representatives a copy for the Representatives' review prior to
filing and will not file any such proposed amendment or supplement to
which the Representatives reasonably object. Subject to the foregoing
sentence, if the Registration Statement has become or becomes
effective pursuant to Rule 430A, or filing of the Final Prospectus is
otherwise required under Rule 424(b), the Company will cause the Final
Prospectus, properly completed, and any supplement thereto to be filed
with the Commission pursuant to the applicable paragraph of Rule
424(b) within the time period prescribed and will provide evidence
satisfactory to the Representatives of such timely filing. The
Company will promptly advise the Representatives (1) when the
Registration Statement, if not effective at the Execution Time, shall
have become effective, (2) when the Final Prospectus, and any
supplement thereto, shall have been filed (if required) with the
Commission
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pursuant to Rule 424(b) or when any Rule 462(b) Registration Statement
shall have been filed with the Commission, (3) when, prior to
termination of the offering of the Securities, any amendment to the
Registration Statement shall have been filed or become effective, (4)
of any request by the Commission or its staff for any amendment of the
Registration Statement, or any Rule 462(b) Registration Statement, or
for any supplement to the Final Prospectus or for any additional
information, (5) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose and (6)
of the receipt by the Company of any notification with respect to the
suspension of the qualification of the Securities for sale in any
jurisdiction or the institution or threatening of any proceeding for
such purpose. The Company will use its best efforts to prevent the
issuance of any such stop order or the suspension of any such
qualification and, if issued, to obtain as soon as possible the
withdrawal thereof.
(b) If, at any time when a prospectus relating to the Securities is
required to be delivered under the Act, any event occurs as a result
of which the Final Prospectus as then supplemented would include any
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein in the light of the
circumstances under which they were made not misleading, or if it
shall be necessary to amend the Registration Statement or supplement
the Final Prospectus to comply with the Act or the Exchange Act or the
respective rules thereunder, the Company promptly will (1) notify the
Representatives of such event, (2) prepare and file with the
Commission, subject to the second sentence of paragraph (a) of this
Section 5, an amendment or supplement which will correct such
statement or omission or effect such compliance and (3) supply any
supplemented Final Prospectus to the Representatives in such
quantities as the Representatives may reasonably request.
(c) As soon as practicable, the Company will make generally available to
its security holders and to the Representatives an earnings statement
or statements of the Company and its subsidiaries which will satisfy
the provisions of Section 11(a) of the Act and Rule 158 under the Act.
(d) The Company will furnish if requested to the Representatives and
counsel for the Underwriters, without charge, signed copies of the
Registration Statement (including exhibits thereto) and to each other
Underwriter a copy of the Registration Statement (without exhibits
thereto) and, so long as delivery of a prospectus by an Underwriter or
dealer may be required by the Act, as many copies of each Preliminary
Final Prospectus and the Final Prospectus and any supplement thereto
as the Representatives may reasonably request. The Company will pay
the expenses of printing or other production of all documents relating
to the offering.
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(e) The Company will arrange, if necessary, for the qualification of the
Securities for sale under the laws of such jurisdictions as the
Representatives may designate, will maintain such qualifications in
effect so long as required for the distribution of the Securities and
will pay any fee of the National Association of Securities Dealers,
Inc., in connection with its review of the offering; provided that in
no event shall the Company be obligated to qualify to do business in
any jurisdiction where it is not now so qualified or to take any
action that would subject it to service of process in suits, other
than those arising out of the offering or sale of the Securities, in
any jurisdiction where it is not now so subject.
(f) Until the Business Day set forth on Schedule I hereto, the Company
will not, without the prior written consent of Salomon Smith Barney,
offer, sell or contract to sell, pledge or otherwise dispose of (or
enter into any transaction which is designed to, or might reasonably
be expected to, result in the disposition (whether by actual
disposition or effective economic disposition due to cash settlement
or otherwise) by the Company or any affiliate of the Company or any
person in privity with the Company or any affiliate of the Company)
directly or indirectly, or announce the offering of, any debt
securities issued or guaranteed by the Company (other than the
Securities).
(g) The Company will not take, directly or indirectly, any action designed
to or which has constituted or which might reasonably be expected to
cause or result, under the Exchange Act or otherwise, in stabilization
or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Securities.
6. Conditions to the Obligations of the Underwriters. The obligations of
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the Underwriters to purchase the Securities shall be subject to the accuracy of
the representations and warranties on the part of the Company contained herein
as of the Execution Time and the Closing Date, to the accuracy of the statements
of the Company made in any certificates pursuant to the provisions hereof, to
the performance by the Company of its obligations hereunder and to the following
additional conditions:
(a) If the Registration Statement has not become effective prior to the
Execution Time, unless the Representatives agree in writing to a later
time, the Registration Statement will become effective not later than
(i) 6:00 PM New York City time, on the date of determination of the
public offering price, if such determination occurred at or prior to
3:00 PM New York City time on such date or (ii) 9:30 AM on the
Business Day following the day on which the public offering price was
determined, if such determination occurred after 3:00 PM New York
City time on such date; if filing of the Final Prospectus, or any
supplement thereto, is required pursuant to Rule 424(b), the Final
Prospectus, and any such supplement, will be filed in the manner and
within the time period required by Rule 424(b); and no stop order
suspending the effectiveness of the Registration Statement shall have
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been issued and no proceedings for that purpose shall have been
instituted or threatened.
(b) the Chief Legal Officer of the Company and Hogan & Hartson LLP,
special counsel to the Company, shall have furnished to the
Representatives their opinions, dated the Closing Date and addressed
to the Representatives, in form and substance satisfactory to the
Representatives, in substantially the forms attached hereto as Annexes
I and II, respectively.
(c) Swidler Berlin Shereff Friedman, LLP, special counsel to the Company,
shall have furnished to the Representatives their opinion, dated the
Closing Date and addressed to the Representatives, in form and
substance satisfactory to the Representatives, in substantially the
form attached hereto as Annex III.
(d) The Underwriters shall have received from Mayer, Brown & Platt,
counsel for the Underwriters, such opinion or opinions, dated the
Closing Date, with respect to the issuance and sale of the Securities,
the Indenture, the Final Prospectus (together with any amendment or
supplement thereof or thereto) and other related matters as the
Underwriters may reasonably require, and the Company shall have
furnished to such counsel such documents as they request for the
purpose of enabling them to pass upon such matters.
(e) The Company shall have furnished to the Representatives a certificate
of the Company, signed by the Chairman of the Board or the President
and the principal financial or accounting officer of the Company,
dated the Closing Date, to the effect that the signers of such
certificate have carefully examined the Registration Statement, the
Final Prospectus, any amendments or supplements to the Final
Prospectus and this Agreement and that:
(i) the representations and warranties of the Company in this
Agreement are true and correct in all material respects on and as of
the Closing Date with the same effect as if made on the Closing Date
and the Company has complied with all the agreements and satisfied all
the conditions on its part to be performed or satisfied under this
Agreement at or prior to the Closing Date;
(ii) the Registration Statement has become effective under the
Act; any required filing of the Final Prospectus and any supplement
thereto, pursuant to Rule 424(b) has been made in the manner and
within the time period required by Rule 424(b); no stop order
suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been instituted or, to
the Company's knowledge, threatened; and
-12-
<PAGE>
(iii) since the date of the most recent financial statements
included or incorporated by reference in the Final Prospectus
(exclusive of any supplement thereto), there has been no Material
Adverse Effect, except as set forth, incorporated by reference or
contemplated in the Final Prospectus (exclusive of any supplement
thereto).
(f) The Company shall have requested and caused Arthur Andersen LLP to
have furnished to the Representatives, at the Execution Time and at
the Closing Date, letters, (which may refer to letters previously
delivered to one or more of the Representatives), dated respectively
as of the Execution Time and as of the Closing Date, in form and
substance satisfactory to the Representatives, in substantially the
form attached hereto as Annex IV.
(g) Subsequent to the Execution Time or, if earlier, the dates as of which
information is given in the Registration Statement (exclusive of any
amendment thereof) and the Final Prospectus (exclusive of any
amendment or supplement thereof or thereto), there shall not have been
(i) any change or decrease specified in the letter or letters referred
to in paragraph (f) of this Section 6 or (ii) any change, or any
development involving a prospective change, in or affecting the
condition (financial or otherwise), earnings, business or properties
of the Company and its subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of business, except
as set forth in or contemplated in the Final Prospectus (exclusive of
any supplement thereto) the effect of which, in any case referred to
in clause (i) or (ii) above, is, in the sole judgment of the
Representatives, so material and adverse as to make it impractical or
inadvisable to proceed with the offering or delivery of the Securities
as contemplated by the Registration Statement (exclusive of any
amendment thereof) and the Final Prospectus (exclusive of any
supplement thereto).
(h) At the Closing Date, the Securities shall be rated not lower than B by
Standard & Poor's Corporation and B-3 by Moody's Investor Service,
Inc. Subsequent to the Execution Time, there shall not have been any
decrease in the rating of any of the Company's debt securities by any
"nationally recognized statistical rating organization" (as defined
for purposes of Rule 436(g) under the Act) or any notice given of any
intended or potential decrease in any such rating or of a possible
change in any such rating that does not indicate the direction of the
possible change.
(i) Prior to the Closing Date, the Company shall have furnished to the
Representatives such further information, certificates and documents
as the Representatives may reasonably request.
(j) The Company shall have furnished to the Representatives a certificate
from The Chase Manhattan Bank, in its capacity as agent for the
lenders under the Senior
-13-
<PAGE>
Secured Credit Facilities, certifying that the Required Lenders (as
defined therein) have executed an amendment thereto in the form
attached hereto as Annex V, with a copy of the executed amendment
attached thereto.
(k) The Company shall have furnished to the Representatives a letter or
letters executed by Forstmann Little & Co. Equity Partnership V, L.P.,
Forstmann Little & Co. Subordinated Debt and Equity Management Buyout
Partnership VI, L.P., and Forstmann Little & Co. Subordinated Debt and
Equity Management Buyout Partnership VII, L.P. (individually, a
"Preferred Stock Purchaser" and, collectively, the "Preferred Stock
Purchasers"), certifying that all of the conditions set forth in
paragraph (c) of Schedule 4.14 to the Stock Purchase Agreement dated
as of August 30, 1999 (as amended) by and between the Preferred Stock
Purchasers and the Company, relating to the incurrence of Indebtedness
(as defined therein) by the Company or by any of its Subsidiaries,
have been met or waived by each of the Preferred Stock Purchasers with
respect to (i) the Indebtedness represented by the Securities, (ii)
Indebtedness under the Senior Secured Credit Facilities (as defined in
the Final Prospectus), and (iii) Indebtedness incurred by the Company
pursuant to the Indenture dated as of December 5, 2000, between the
Company and United States Trust Company of New York with respect to
the 12% Senior Notes Due 2008 and pursuant to the Indenture dated as
of December 5, 2000, between the Company and United States Trust
Company of New York with respect to the 11 1/2% Senior Notes Due 2009.
If any of the conditions specified in this Section 6 shall not have been
fulfilled in all material respects when and as provided in this Agreement, or if
any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Representatives and counsel for the Underwriters, this
Agreement and all obligations of the Underwriters hereunder may be canceled at,
or at any time prior to, the Closing Date by the Representatives. Notice of
such cancellation shall be given to the Company in writing or by telephone or
facsimile confirmed in writing.
The documents required to be delivered by this Section 6 shall be delivered
at the office of Hogan & Hartson, special counsel for the Company, at Columbia
Square, 555 Thirteenth Street, N.W., Washington D.C. 20004, on the Closing Date.
7. Reimbursement of Underwriters' Expenses. If the sale of the
----------------------------------------
Securities provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 6 hereof is not satisfied,
because of any termination pursuant to Section 10(i) hereof or because of any
refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision hereof other than by reason of a
default by any of the Underwriters, the Company will reimburse the Underwriters
severally through Salomon Smith Barney on demand for all reasonable and
documented out-of-pocket expenses (including reasonable fees and disbursements
of counsel) that shall have been incurred by them in connection with the
proposed purchase and sale of the Securities.
-14-
<PAGE>
8. Indemnification and Contribution.
--------------------------------
(a) The Company agrees to indemnify and hold harmless each Underwriter,
the directors, officers and employees of each Underwriter and each
person who controls any Underwriter within the meaning of either the
Act or the Exchange Act against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become
subject under the Act, the Exchange Act or other Federal or state
statutory law or regulation, at common law or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in or
incorporated by reference in the Registration Statement as originally
filed or in any amendment thereof, or in the Basic Prospectus, any
Preliminary Final Prospectus or the Final Prospectus, or in any
amendment thereof or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and agrees to reimburse each such indemnified
party, as incurred, for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that
-------- -------
the Company will not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon
any such untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with
written information furnished to the Company by or on behalf of any
Underwriter through the Representatives specifically for inclusion
therein; and provided, further, that the foregoing indemnity agreement
-------- -------
with respect to the Final Prospectus shall not inure to the benefit of
the Underwriters from whom the person asserting or causing any such
losses, claims, damages or liabilities purchased Securities (or to the
benefit of any person controlling any Underwriter or any directors,
officers, employees and agents of any Underwriter), if a copy of the
Final Prospectus (or the Final Prospectus as amended or supplemented)
(if the Company shall have timely furnished the Underwriters with
sufficient copies thereof) was not sent or given by or on behalf of
the Underwriters to such person at or prior to the written
confirmation of the sale of the Securities to such person and if the
Final Prospectus (or the Final Prospectus as amended or supplemented)
would have cured the defect giving rise to such loss, claim, damage or
liability. This indemnity agreement will be in addition to any
liability which the Company may otherwise have.
(b) Each Underwriter severally and not jointly agrees to indemnify and
hold harmless the Company, each of its directors, each of its officers
who signs the Registration Statement, and each person who controls the
Company within the meaning of either the Act or the Exchange Act, to
the same extent as the foregoing indemnity
-15-
<PAGE>
from the Company to each Underwriter, but only with reference to
written information relating to such Underwriter furnished to the
Company by or on behalf of such Underwriter through the
Representatives specifically for inclusion in the documents referred
to in the foregoing indemnity. This indemnity agreement will be in
addition to any liability which any Underwriter may otherwise have.
The Company acknowledges that the statements set forth in the last
paragraph of the cover page regarding delivery of the Securities and,
under the heading "Underwriting", (i) the second paragraph thereof
containing the list of Underwriters and their respective participation
in the sale of the Securities, (ii) the fourth paragraph thereof
containing sentences related to concessions and reallowances and (iii)
the sixth, seventh and eighth paragraphs thereof related to
stabilization, syndicate covering transactions and penalty bids (other
than the last sentence of paragraph eight) in any Preliminary Final
Prospectus and the Final Prospectus constitute the only information
furnished in writing by or on behalf of the several Underwriters for
inclusion in any Preliminary Final Prospectus or the Final Prospectus.
(c) Promptly after receipt by an indemnified party under this Section 8 of
notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying
party under this Section 8, notify the indemnifying party in writing
of the commencement thereof; but the failure so to notify the
indemnifying party (i) will not relieve it from liability under
paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the
forfeiture by the indemnifying party of substantial rights and
defenses and (ii) will not, in any event, relieve the indemnifying
party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (a) or (b) above.
The indemnifying party shall be entitled to appoint counsel of the
indemnifying party's choice at the indemnifying party's expense to
represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall
not thereafter be responsible for the fees and expenses of any
separate counsel retained by the indemnified party or parties except
as set forth below); provided, however, that such counsel shall be
-------- -------
reasonably satisfactory to the indemnified party. Notwithstanding the
indemnifying party's election to appoint counsel to represent the
indemnified party in an action, the indemnified party shall have the
right to employ separate counsel (including local counsel), and the
indemnifying party shall bear the reasonable fees, costs and expenses
of such separate counsel if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present
such counsel with a conflict of interest, (ii) the actual or potential
defendants in, or targets of, any such action include both the
indemnified party and the indemnifying party and the indemnified party
shall have reasonably concluded that there may be legal defenses
available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, (iii)
the indemnifying
-16-
<PAGE>
party shall not have employed counsel reasonably satisfactory to the
indemnified party to represent the indemnified party within a
reasonable time after notice of the institution of such action or (iv)
the indemnifying party shall provide its prior written authorization
to the indemnified party to employ separate counsel at the expense of
the indemnifying party; provided, however, that the indemnifying party
shall not be required to pay for more than one separate counsel (plus
local counsel for all indemnified parties in any jurisdiction) in any
single action or proceeding. An indemnifying party will not, without
the prior written consent of the indemnified parties, which consent
will not be unreasonably withheld or delayed, settle or compromise or
consent to the entry of any judgment with respect to any pending or
threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or
not the indemnified parties are actual or potential parties to such
claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding. An
indemnifying party shall not be liable under this Section 8 to any
indemnified party regarding any settlement or compromise or consent to
the entry of any judgment with respect to any pending or threatened
claim, action, suit or proceeding in respect of which indemnification
or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or
action) unless such indemnifying party provides prior written consent,
which consent shall not be unreasonably withheld.
(d) In the event that the indemnity provided in paragraph (a) or (b) of
this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and the Underwriters
severally agree to contribute to the aggregate losses, claims, damages
and liabilities (including legal or other expenses reasonably incurred
in connection with investigating or defending same) (collectively
"Losses") to which the Company and one or more of the Underwriters may
be subject in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and by the
Underwriters on the other from the offering of the Securities;
provided, however, that in no case shall any Underwriter (except as
-------- -------
may be provided in any agreement among underwriters relating to the
offering of the Securities) be responsible for any amount in excess of
the underwriting discount or commission applicable to the Securities
purchased by such Underwriter hereunder. If the allocation provided by
the immediately preceding sentence is unavailable for any reason, the
Company and the Underwriters severally shall contribute in such
proportion as is appropriate to reflect not only such relative
benefits but also the relative fault of the Company on the one hand
and of the Underwriters on the other in connection with the statements
or omissions which resulted in such Losses as well as any other
relevant equitable considerations. Benefits received by the Company
shall be deemed to be equal to the total net proceeds from the
offering (before deducting expenses) received by it, and benefits
received by the
-17-
<PAGE>
Underwriters shall be deemed to be equal to the total underwriting
discounts and commissions, in each case as set forth on the cover page
of the Final Prospectus. Relative fault shall be determined by
reference to, among other things, whether any untrue or any alleged
untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information provided by
the Company on the one hand or the Underwriters on the other. The
Company and the Underwriters agree that it would not be just and
equitable if contribution were determined by pro rata allocation or
any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the
provisions of this paragraph (d), no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. For purposes of this Section 8,
each person who controls an Underwriter within the meaning of either
the Act or the Exchange Act and each director, officer, employee and
agent of an Underwriter shall have the same rights to contribution as
such Underwriter, and each person who controls the Company within the
meaning of either the Act or the Exchange Act, each officer of the
Company who shall have signed the Registration Statement and each
director of the Company shall have the same rights to contribution as
the Company, subject in each case to the applicable terms and
conditions of this paragraph (d).
9. Default by an Underwriter. If any one or more Underwriters shall
--------------------------
fail to purchase and pay for any of the Securities agreed to be purchased by
such Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the principal amount of
Securities set forth opposite their names in Schedule II hereto bears to the
aggregate principal amount of Securities set forth opposite the names of all the
remaining Underwriters) the Securities which the defaulting Underwriter or
Underwriters agreed but failed to purchase; provided, however, that in the event
-------- -------
that the aggregate principal amount of Securities which the defaulting
Underwriter or Underwriters agreed but failed to purchase shall exceed 10% of
the aggregate principal amount of Securities set forth in Schedule II hereto,
the remaining Underwriters shall have the right to purchase all, but shall not
be under any obligation to purchase any, of the Securities, and if such
nondefaulting Underwriters do not purchase all the Securities, this Agreement
will terminate without liability to any nondefaulting Underwriter or the
Company. In the event of a default by any Underwriter as set forth in this
Section 9, the Closing Date shall be postponed for such period, not exceeding
five Business Days, as the Representatives shall reasonably determine in order
that the required changes in the Registration Statement and the Final Prospectus
or in any other documents or arrangements may be effected. Nothing contained in
this Agreement shall relieve any defaulting Underwriter of its liability, if
any, to the Company and any nondefaulting Underwriter for damages occasioned by
its default hereunder.
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<PAGE>
10. Termination. This Agreement shall be subject to termination in the
------------
absolute discretion of the Representatives, by notice given to the Company prior
to delivery of and payment for the Securities, if at any time prior to such time
(i) trading in the Company's Class A common stock shall have been suspended by
the Commission or the Nasdaq National Market, (ii) trading in securities
generally on the New York Stock Exchange or the Nasdaq National Market shall
have been suspended or limited or minimum prices shall have been established on
either of such Exchange or National Market, (iii) a banking moratorium shall
have been declared either by Federal or New York State authorities or (iv) there
shall have occurred any outbreak or escalation of hostilities, declaration by
the United States of a national emergency or war, or other calamity or crisis
the effect of which on financial markets is such as to make it, in the sole
judgment of the Representatives, impractical or inadvisable to proceed with the
offering or delivery of the Securities as contemplated by the Final Prospectus
(exclusive of any supplement thereto).
11. Representations and Indemnities to Survive. The respective agreements,
-------------------------------------------
representations, warranties, indemnities and other statements of the Company or
its officers and of the Underwriters set forth in or made pursuant to this
Agreement will remain in full force and effect, regardless of any investigation
made by or on behalf of any Underwriter or the Company or any of the officers,
directors or controlling persons referred to in Section 8 hereof, and will
survive delivery of and payment for the Securities. The provisions of Sections 7
and 8 hereof shall survive the termination or cancellation of this Agreement.
12. Notices. All communications hereunder will be in writing and
--------
effective only on receipt, and, if sent to the Representatives, will be mailed,
delivered or sent by facsimile transmission to the Salomon Smith Barney General
Counsel (fax no.: (212) 816-7912) and confirmed to the General Counsel, Salomon
Smith Barney, at 388 Greenwich Street, New York, New York, 10013, Attention:
General Counsel; or, if sent to the Company, will be mailed, delivered or sent
by facsimile transmission to the Company and confirmed to it at McLeodUSA
Incorporated, McLeodUSA Technology Park, 6400 C Street, SW, P.O. Box 3177, Cedar
Rapids, Iowa 52406, attention General Counsel.
13. Successors. This Agreement will inure to the benefit of and be
-----------
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 8 hereof, and no
other person will have any right or obligation hereunder.
14. Applicable Law. This Agreement will be governed by and construed in
---------------
accordance with the laws of the State of New York applicable to contracts made
and to be performed within the State of New York.
15. Counterparts. This Agreement may be signed in one or more
------------
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.
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<PAGE>
16. Headings. The section headings used herein are for convenience only
---------
and shall not affect the construction hereof.
17. Definitions. The terms which follow, when used in this Agreement,
------------
shall have the meanings indicated.
"Act" shall mean the Securities Act of 1933, as amended and the rules
and regulations of the Commission promulgated thereunder.
"Basic Prospectus" shall mean the prospectus referred to in paragraph
1(a) above contained in the Registration Statement at the Effective Date
including any Preliminary Final Prospectus.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
legal holiday or a day on which banking institutions or trust companies are
authorized or obligated by law to close in New York City.
"Commission" shall mean the Securities and Exchange Commission.
"Effective Date" shall mean each date and time that the Registration
Statement, any post-effective amendment or amendments thereto and any Rule
462(b) Registration Statement became or become effective.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated
thereunder.
"Execution Time" shall mean the date and time that this Agreement is
executed and delivered by the parties hereto.
"Final Prospectus" shall mean the prospectus supplement relating to
the Securities that was first filed pursuant to Rule 424(b) after the
Execution Time, together with the Basic Prospectus.
"Preliminary Final Prospectus" shall mean any preliminary prospectus
supplement to the Basic Prospectus which describes the Securities and the
offering thereof and is used prior to filing of the Final Prospectus,
together with the Basic Prospectus.
"Registration Statement" shall mean the registration statement
referred to in paragraph 1(a) above, including exhibits and financial
statements, as amended at the Execution Time (or, if not effective at the
Execution Time, in the form in which it shall become effective) and, in the
event any post-effective amendment thereto or any Rule 462(b) Registration
Statement becomes effective prior to the Closing Date, shall also mean such
registration statement as so amended or such Rule 462(b) Registration
-20-
<PAGE>
Statement, as the case may be. Such term shall include any Rule 430A
Information deemed to be included therein at the Effective Date as provided
by Rule 430A.
"Rule 415", "Rule 424", "Rule 430A" and "Rule 462" refer to such
rules under the Act.
"Rule 430A Information" shall mean information with respect to the
Securities and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A.
"Rule 462(b) Registration Statement" shall mean a registration
statement and any amendments thereto filed pursuant to Rule 462(b) relating
to the offering covered by the registration statement referred to in
Section 1(a) hereof.
"Trust Indenture Act" shall mean the Trust Indenture Act of 1939, as
amended and the rules and regulations of the Commission promulgated
thereunder.
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<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us the enclosed duplicate hereof, whereupon this
letter and your acceptance shall represent a binding agreement among the Company
and the several Underwriters.
Very truly yours,
MCLEODUSA INCORPORATED
By:
----------------------------------------
Name:
----------------------------------
Title:
----------------------------------
The foregoing Agreement is
hereby confirmed and accepted
as of the date specified in
Schedule I hereto.
Salomon Smith Barney Inc.
By: Salomon Smith Barney Inc.
By:
---------------------------
Name:
----------------------
Title:
----------------------
For themselves and the other
several Underwriters, if any,
named in Schedule II to the
foregoing Agreement.
-22-
<PAGE>
SCHEDULE I
Underwriting Agreement dated January 4, 2001
Registration Statement No. 333-82851
Representative(s): Salomon Smith Barney Inc., Goldman,
Sachs & Co., Chase Securities Inc.
Title, Purchase Price and Description of Securities:
Title: 11 3/8% Senior Notes due 2009
Principal amount: $750,000,000
Purchase price (include accrued
interest or amortization,
if any): $734,250,000
Sinking fund provisions: N/A
Redemption provisions: N/A
Other provisions: N/A
Closing Date, Time and Location: January 16, 2001 at 10:00 a.m. at Hogan &
Hartson's offices in Washington, D.C.
Type of Offering: Non-delayed
Business Day referred to in
Section 5(f) after which the Company
may offer or sell debt securities
issued or guaranteed by the Company
without the consent of the
Representative(s): April 4, 2001
Modification of items to be covered
by the letter from Arthur Andersen
delivered pursuant to Section 6(e)
at the Execution Time: None
-23-
<PAGE>
SCHEDULE II
<TABLE>
<CAPTION>
---------------------------------------------
Principal Amount
of Securities to
Underwriters be Purchased
---------------------------------------------
<S> <C>
Salomon Smith Barney Inc. $412,500,000
---------------------------------------------
Goldman, Sachs & Co. 187,500,000
---------------------------------------------
Chase Securities Inc. 150,000,000
------------
---------------------------------------------
Total $750,000,000
---------------------------------------------
</TABLE>
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