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Exhibit 4.2    
    

 
 

EXECUTION COPY    
    

 
 

SECURITY AND PLEDGE AGREEMENT    
    dated as of    
    September 28, 2006    
    among    
    MCLEODUSA INCORPORATED,    
    THE GUARANTORS PARTY HERETO    
    and    
    U.S. BANK NATIONAL
ASSOCIATION,    
    as Collateral Agent    
    

 
 
 

TABLE OF CONTENTS    
    

	 
	 	 
	 	Page

	SECTION 1.	 	Definitions.	 	1
	SECTION 2.	 	Grant of Transaction Liens.	 	7
	SECTION 3.	 	General Representations and Warranties	 	8
	SECTION 4.	 	Further Assurances; General Covenants	 	9
	SECTION 5.	 	Accounts	 	11
	SECTION 6.	 	Equipment	 	12
	SECTION 7.	 	Recordable Intellectual Property	 	12
	SECTION 8.	 	Investment Property	 	12
	SECTION 9.	 	Controlled Deposit Accounts	 	14
	SECTION 10.	 	Cash Collateral Accounts	 	15
	SECTION 11.	 	Operation of Collateral Accounts	 	15
	SECTION 12.	 	Transfer Of Record Ownership	 	16
	SECTION 13.	 	Right to Vote Securities	 	16
	SECTION 14.	 	Certain Cash Distributions	 	16
	SECTION 15.	 	Remedies upon Event of Default	 	17
	SECTION 16.	 	Application of Proceeds	 	18
	SECTION 17.	 	Fees and Expenses	 	18
	SECTION 18.	 	Authority to Administer Collateral	 	18
	SECTION 19.	 	Limitation on Duty in Respect of Collateral	 	19
	SECTION 20.	 	General Provisions Concerning the Collateral Agent	 	19
	SECTION 21.	 	Termination Of Transaction Liens; Release Of Lien Grantors and Collateral	 	20
	SECTION 22.	 	Additional Lien Grantors	 	20
	SECTION 23.	 	Notices	 	21
	SECTION 24.	 	No Implied Waivers; Remedies Not Exclusive	 	21
	SECTION 25.	 	Successors and Assigns	 	21
	SECTION 26.	 	Amendments and Waivers	 	21
	SECTION 27.	 	Choice of Law	 	21
	SECTION 28.	 	Waiver of Jury Trial	 	21
	SECTION 29.	 	Severability	 	21
	SECTION 30.	 	Counterparts	 	22
	SECTION 31.	 	Intercreditor Agreement	 	22

	
SCHEDULES:	
 	

 
	 	
 Schedule 1	
 	

Pledged Investment Property Owned by Original Lien Grantors
	
EXHIBITS:	
 	

 
	

 	
 	

 
	 	Exhibit A	 	Security Agreement Supplement
	 	Exhibit B	 	Copyright Security Agreement
	 	Exhibit C	 	Patent Security Agreement
	 	Exhibit D	 	Trademark Security Agreement
	 	Exhibit E	 	Perfection Certificate
	 	Exhibit F	 	Issuer Control Agreement
	 	Exhibit G	 	Securities Account Control Agreement
	 	Exhibit H	 	Deposit Account Control Agreement

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SECURITY AND PLEDGE AGREEMENT    
    

        This SECURITY AND PLEDGE AGREEMENT, dated as of September 28, 2006 (this "Agreement"), is made by and among
MCLEODUSA INCORPORATED, a Delaware corporation (the "Company"), certain of the Company's Domestic Restricted Subsidiaries as identified on the signature
pages hereto as "Other Original Lien Grantors" (together with the Company, the "Original Lien Grantors") and any Guarantor who may hereafter become a
party hereto pursuant to Section 22 (together with the Original Lien Grantors, the "Lien
Grantors"), and U.S. BANK NATIONAL ASSOCIATION ("US Bank"), as collateral agent (in such capacity, the
"Collateral Agent") for the ratable benefit of the Secured Parties (as defined below). 

        WHEREAS,
the Company and the other Original Lien Grantors and US Bank, as Collateral Agent and as trustee (in such capacity, the
"Trustee"), have entered into an Indenture, dated as of the date hereof (as amended, restated, supplemented or otherwise modified from time to time, the
"Indenture"), pursuant to which (i) the Company is issuing $120,000,000 of its 101/2% Senior Second Secured Notes due 2011
(together with any additional notes that may be issued by the Company from time to time thereunder or exchanged therefor or for such additional notes, the
"Notes"); (ii) the Original Lien Grantors (other than the Company) have guaranteed the payment by the Company of its Obligations under the Notes,
the Indenture, the Security Documents and at such times as the Intercreditor Agreement may be in effect, the Intercreditor Agreement; and (iii) each Original Lien Grantor has agreed to become a
party hereto to secure its Obligations under the Indenture, the Notes or its Guarantee, as the case may be, the Security Documents to which it is a party and at such times as the Intercreditor
Agreement may be in effect, the Intercreditor Agreement; and 

        WHEREAS,
it is a condition precedent to the purchase by the initial Holder of the Notes that are to be issued by the Company that the Original Lien Grantors shall have executed and
delivered this Agreement to the Collateral Agent, for the ratable benefit of itself, the Holders and the Trustee (collectively, the "Secured Parties");
and 

        WHEREAS,
the Original Lien Grantors are also entering into this Agreement to induce the Collateral Agent and the Trustee to serve in such respective capacities and enter into the
Indenture, the Security Documents and at such times as the Intercreditor Agreement is to be in effect, the Intercreditor Agreement and to induce the Holders to purchase and/or hold the Notes. 

        NOW,
THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows: 

        SECTION
1. Definitions. 

        (a)   Terms Defined in Indenture. Terms defined in the Indenture and not otherwise defined in  subsection (b) or (c) of
this Section have, as used herein, the respective meanings provided for
therein. 

 

        (b)   Terms Defined in UCC. As used herein, each of the following terms has the meaning specified in the UCC: 

	Term
 
	 	UCC

	Account	 	9-102
	Authenticate	 	9-102
	Certificated Security	 	8-102
	Chattel Paper	 	9-102
	Commodity Account	 	9-102
	Commodity Customer	 	9-102
	Deposit Account	 	9-102
	Document	 	9-102
	Entitlement Holder	 	8-102
	Entitlement Order	 	8-102
	Equipment	 	9-102
	Financial Asset	 	8-102 and 103
	General Intangibles	 	9-102
	Instrument	 	9-102
	Inventory	 	9-102
	Investment Property	 	9-102
	Record	 	9-102
	Securities Account	 	8-501
	Securities Intermediary	 	8-102
	Security	 	8-102 and 103
	Security Entitlement	 	8-102
	Supporting Obligations	 	9-102
	Uncertificated Security	 	8-102

        (c)   Additional Definitions. The following additional terms, as used herein, have the following meanings: 

        "Agreement" has the meaning set forth in the preamble to this Agreement. 

        "ATS Business" means the business operations of the Company and/or its Subsidiaries primarily used in providing voice services, Internet
access and cable services through its Advanced Telecommunications Services division to residential and business customers in Cedar Rapids, Iowa and Marion, Iowa, and transactions related thereto 

        "ATS Lockbox Account" means the account maintained and used by the Company exclusively as a lockbox account for its ATS Business. 

        "Cash Collateral Account" has the meaning set forth in Section 10 of this
Agreement. 

        "Cash Distributions" means dividends, interest and other distributions and payments (including proceeds of liquidation, sale or other
disposition) made or received in cash upon or with respect to any Collateral. 

        "Collateral" means all property, whether now owned or hereafter acquired, on which a Lien is granted or purports to be granted to the
Collateral Agent pursuant to the Security Documents. When used with respect to a specific Lien Grantor, the term "Collateral" means all its property on which such a Lien is granted or purports to be
granted. For the avoidance of doubt, no Collateral shall consist of any "Excluded Collateral". 

        "Collateral Accounts" means the Cash Collateral Accounts, the Controlled Deposit Accounts and the Controlled Securities Accounts. 

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        "Collateral Agent" has the meaning set forth in the preamble to this Agreement. 

        "Company" has the meaning set forth in the preamble to this Agreement. 

        "Control" has the following meanings: 

        (a)   when
used with respect to any Security or Security Entitlement, the meaning specified in UCC Section 8-106; and 

        (b)   when
used with respect to any Deposit Account, the meaning specified in UCC Section 9-104. 

        "Control Agreement" means, when used with respect to (i) a Securities Account, a Securities Account Control Agreement and
(ii) a Deposit Account, a Deposit Account Control Agreement. 

        "Controlled Deposit Account" means a Deposit Account (i) that is subject to a Deposit Account Control Agreement or (ii) as
to which the Collateral Agent is the Depositary Bank's "customer" (as defined in UCC Section 4-104). 

        "Controlled Securities Account" means a Securities Account that (i) is maintained in the name of a Lien Grantor at an office of a
Securities Intermediary located in the United States and (ii) together with all Financial Assets credited thereto and all related Security Entitlements, is subject to a Securities Account
Control Agreement among such Lien Grantor, the Collateral Agent and such Securities Intermediary. 

        "Copyright License" means any agreement now or hereafter in existence granting to any Lien Grantor, or pursuant to which any Lien Grantor
grants to any other Person, any right to use, copy, reproduce, distribute, prepare derivative works, display or publish any records or other materials on which a Copyright is in existence or may come
into existence, including any agreement identified in Schedule 1 to any Copyright Security Agreement, in each case, to the extent assignable by such Lien Grantor under applicable law without
consent of the other parties thereunder. 

        "Copyrights" means all the following: (i) all copyrights under the laws of the United States or any other country (whether or not
the underlying works of authorship have been published), all registrations and recordings thereof, all copyrightable works of authorship (whether or not published), and all applications for copyrights
under the laws of the United States or any other country, including registrations, recordings and applications in the United States Copyright Office or in any similar office or agency of the United
States, any State thereof or any other country or any political subdivision thereof, including those described in Schedule 1 to any Copyright Security Agreement, (ii) all renewals of any
of the foregoing, (iii) all claims for, and rights to sue for, past or future infringements of any of the foregoing, and (iv) all income, royalties, damages and payments now or hereafter
due or payable with respect to any of the foregoing, including damages and payments for past or future infringements thereof. 

        "Copyright Security Agreement" means a Copyright Security Agreement, substantially in the form of  Exhibit B hereto, executed and delivered by a Lien Grantor in
favor of the Collateral Agent for the benefit of the Secured Parties. 

        "Deposit Account Control Agreement" means, with respect to any Deposit Account of any Lien Grantor, a Deposit Account Control Agreement,
substantially in the form of Exhibit H hereto (with any changes that the Collateral Agent shall have approved, such approval not to be
unreasonably withheld), among such Lien Grantor, the Collateral Agent and the relevant Depositary Bank (and if the Intercreditor Agreement is in effect, the First Lien Agent), (i) providing
that such Depositary Bank will comply with instructions originated by at any time that the Intercreditor Agreement is (A) not in effect, the Collateral Agent and (B) in effect, the First
Lien Agent directing disposition of the funds in such 

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Deposit
Account without further consent by such Lien Grantor or any other Person and (ii) subordinating to the relevant Transaction Lien all claims of the Depositary Bank to such Deposit
Account (except its right to deduct and setoff from such Deposit Account its normal operating charges, the amount of any overdrafts and uncollected funds previously credited, in each case, in respect
of any Deposit Account of any Lien Grantor that is maintained with such Depositary Bank). 

        "Depositary Bank" means a bank at which a Controlled Deposit Account is maintained. 

        "Equity Interest" means (i) in the case of a corporation, any shares of its capital stock, (ii) in the case of a limited
liability company, any membership interest therein, (iii) in the case of a partnership, any partnership interest (whether general or limited) therein, (iv) in the case of any other
business entity, any participation or other interest in the equity or profits thereof, (v) any warrant, option or other right to acquire any Equity Interest described in this definition or
(vi) any Security Entitlement in respect of any Equity Interest described in this definition. 

        "Excluded Deposit Account" means any Deposit Account that only contains Excluded Collateral described in clause (vii) of the
definition thereof. 

        "First Lien Agent" has (so long as the Intercreditor Agreement is in effect) the meaning set forth in the Intercreditor Agreement. 

        "First Priority Lenders" has (so long as the Intercreditor Agreement is in effect) the meaning set forth in the Intercreditor Agreement. 

        "Indenture" has the meaning set forth in the first recital to this Agreement. 

        "Indenture Documents" means the Indenture, the Notes, the Guarantees, the Registration Rights Agreement, the Security Documents and at
such times as the Intercreditor Agreement may be in effect, the Intercreditor Agreement. 

        "Intellectual Property Filing" means (i) with respect to any Patent, Patent License, Trademark or Trademark License, the filing of
the applicable Patent Security Agreement or Trademark Security Agreement with the United States Patent and Trademark Office, together with an appropriately completed recordation form, and
(ii) with respect to any Copyright or Copyright License, the filing of the applicable Copyright Security Agreement with the United States Copyright Office, together with an appropriately
completed recordation form, in each case sufficient to record the Transaction Lien granted to the Collateral Agent in such Recordable Intellectual Property. 

        "Intellectual Property Security Agreement" means, as the context may require, a Copyright Security Agreement, a Patent Security Agreement
and/or a Trademark Security Agreement. 

        "Issuer Control Agreement" means an Issuer Control Agreement, substantially in the form of  Exhibit F hereto (with any changes that the Collateral Agent shall have
approved, such approval not to be unreasonably withheld). 

        "Lien Grantors" has the meaning set forth in the preamble to this Agreement. 

        "LLC Interest" means a membership interest or similar interest in a limited liability company. 

        "Notes" has the meaning set forth in the first recital to this Agreement. 

        "Original Lien Grantors" has the meaning set forth in the preamble to this Agreement. 

        "own" refers to the possession of sufficient rights in property to grant a security interest therein as contemplated by UCC
Section 9-203, and "acquire" refers to the acquisition of any such rights. 

        "Partnership Interest" means a partnership interest, whether general or limited. 

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        "Patent License" means any agreement now or hereafter in existence granting to any Lien Grantor, or pursuant to which any Lien Grantor
grants to any other Person, any right with respect to any Patent or any invention now or hereafter in existence, whether patentable or not, whether a patent or application for patent is in existence
on such invention or not, and whether a patent or application for patent on such invention may come into existence or not, including any agreement identified in Schedule 1 to any Patent
Security Agreement, in each case, to the extent assignable by such Lien Grantor under applicable law without consent of the other parties thereunder. 

        "Patents" means (i) all letters patent and design letters patent of the United States or any other country and all applications for
letters patent or design letters patent of the United States or any other country, including applications in the United States Patent and Trademark Office or in any similar office or agency of the
United States, any State thereof or any other country or any political subdivision thereof, including those described in Schedule 1 to any Patent Security Agreement, (ii) all reissues,
divisions, continuations, continuations in part, revisions and extensions of any of the foregoing, (iii) all claims for, and rights to sue for, past or future infringements of any of the
foregoing and (iv) all income, royalties, damages and payments now or hereafter due or payable with respect to any of the foregoing, including damages and payments for past or future
infringements thereof. 

        "Patent Security Agreement" means a Patent Security Agreement, substantially in the form of  Exhibit C hereto, executed and delivered by a Lien Grantor in favor of
the Collateral Agent for the benefit of the Secured Parties. 

        "Perfection Certificate" means, with respect to (i) any Original Lien Grantor, the perfection certificate delivered pursuant to the
purchase agreement referred to in the "Plan of Distribution" section in the Offering Circular, dated as of September 19, 2006, that relates to the issuance of the Notes on the date hereof and
(ii) any other Lien Grantor, a certificate, substantially in the form of Exhibit E hereto, completed and supplemented with the schedules
contemplated thereby to the reasonable satisfaction of the Collateral Agent, and signed by an officer of such Lien Grantor. 

        "Personal Property Collateral" means all property included in the Collateral except Real Property Collateral. 

        "Pledged", when used in conjunction with any type of asset, means at any time an asset of such type that is included (or that creates
rights that are included) in the Collateral at such time. For example, "Pledged Equity Interest" means an Equity Interest that is included in the Collateral at such time,
which for the avoidance of doubt shall not include any Equity Interests of any Subsidiary of the Company. 

        "Proceeds" means all proceeds of, and all other profits, products, rents or receipts, in whatever form, arising from the collection, sale,
lease, exchange, assignment, licensing or other disposition of, or other realization upon, any Collateral, including all claims of the relevant Lien Grantor against third parties for loss of, damage
to or destruction of, or for proceeds payable under, or unearned premiums with respect to, policies of insurance in respect of, any Collateral, and any condemnation or requisition payments with
respect to any Collateral. 

        "Real Property Collateral" means all real property included in the Collateral, which for the avoidance of doubt shall not include any
Excluded Collateral of the type described in clause (iii) of the definition thereof. 

        "Recordable Intellectual Property" means (i) any Patent registered with the United States Patent and Trademark Office, and any
Patent License with respect to a Patent so registered that is reasonably likely to be considered an assignment or transfer of such Patent, (ii) any Trademark registered with the United States
Patent and Trademark Office, and any Trademark License with respect to a Trademark so registered that is reasonably likely to be considered an assignment or transfer of such Trademark, 

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and
(iii) any Copyright registered with the United States Copyright Office and any Copyright License with respect to a Copyright so registered (excluding licenses to standard
off-the-shelf commercial software) that is reasonably likely to be considered an assignment or transfer of such Copyright, and all rights in or under any of the foregoing. 

        "Related Parties" means, with respect to any specified Person, such Person's Affiliates and the respective directors, officers, employees,
agents and advisors of such Person and such Person's Affiliates. 

        "Secured Agreement", when used with respect to any Secured Obligation, refers collectively to each instrument, agreement or other document
that sets forth obligations of a Lien Grantor and/or rights of the holder with respect to such Secured Obligation. 

        "Secured Obligations" means, with respect to any Lien Grantor, all Obligations of such Lien Grantor under the Indenture Documents to which
it is a party. 

        "Secured Parties" has the meaning set forth in the second recital to this Agreement. 

        "Securities Account Control Agreement" means, when used with respect to a Securities Account, a Securities Account Control Agreement,
substantially in the form of Exhibit G hereto (with any changes that the Collateral Agent shall have approved, such approval not to be
unreasonably withheld), among the relevant Securities Intermediary, the relevant Lien Grantor and the Collateral Agent (and if the Intercreditor Agreement is in effect, the First Lien Agent) to the
effect that such Securities Intermediary will comply with Entitlement Orders originated by at any time that the Intercreditor Agreement is (A) not in effect, the Collateral Agent and
(B) in effect, the First Lien Agent with respect to such Securities Account without further consent by the relevant Lien Grantor. 

        "Security Agreement Supplement" means a Security Agreement Supplement, substantially in the form of  Exhibit A hereto (with any changes that the Collateral Agent
shall have approved, such approval not to be unreasonably withheld), signed and
delivered to the Collateral Agent for the purpose of adding a Guarantor as a party hereto pursuant to Section 22 and/or adding additional
property to the Collateral. 

        "Security Documents" means this Agreement, the Security Agreement Supplements, the Deposit Account Control Agreements, the Issuer Control
Agreements, the Securities Account Control Agreements, the Mortgages, the Intellectual Property Security Agreements and all other supplemental or additional security agreements, control agreements,
mortgages or similar instruments delivered pursuant to the Indenture Documents pursuant to which a Lien is granted to the Collateral Agent for the benefit of the Secured Parties to secure the Secured
Obligations. 

        "Trademark License" means any agreement now or hereafter in existence granting to any Lien Grantor, or pursuant to which any Lien Grantor
grants to any other Person, any right to use any Trademark, including any agreement identified in Schedule 1 to any Trademark Security Agreement, in each case, to the extent assignable by such
Lien Grantor under applicable law without consent of the other parties thereunder. 

        "Trademarks" means: (i) all trademarks, trade names, corporate names, company names, business names, fictitious business names,
trade styles, service marks, logos, brand names, trade dress, package and other designs, and all other source or business identifiers, and all general intangibles of like nature, and the rights in any
of the foregoing which arise under applicable law, (ii) the goodwill of the business symbolized thereby or associated with each of them, (iii) all registrations and applications in
connection therewith, including registrations and applications in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or any other
country or any political subdivision thereof, including those described in Schedule 1 to any Trademark Security 

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Agreement,
(iv) all renewals of any of the foregoing, (v) all claims for, and rights to sue for, past or future infringements of any of the foregoing and (vi) all income,
royalties, damages and payments now or hereafter due or payable with respect to any of the foregoing, including damages and payments for past or future infringements thereof. 

        "Trademark Security Agreement" means a Trademark Security Agreement, substantially in the form of  Exhibit D hereto, executed and delivered by a Lien Grantor in
favor of the Collateral Agent for the benefit of the Secured Parties. 

        "Transaction Liens" means the Liens granted by the Lien Grantors under the Security Documents. 

        "Trustee" has the meaning set forth in the first recital to this Agreement. 

        "UCC" means the Uniform Commercial Code as in effect from time to time in the State of New York;  provided that, if perfection or the effect of perfection or
non-perfection or the priority of any Transaction Lien on any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other than New York, "UCC" means the Uniform Commercial Code as in effect from time to time in such other jurisdiction for
purposes of the provisions hereof relating to such perfection, effect of perfection or non-perfection or priority. 

        "US Bank" has the meaning set forth in the preamble to this Agreement. 

        (d)   Terms Generally. The definitions of terms herein (including those incorporated by reference to the UCC or to another
document) apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun includes the corresponding masculine, feminine and neuter forms. The words
"include", "includes" and "including" shall be deemed to
be followed by the phrase "without limitation". The word "will" shall be construed to have the same
meaning and effect as the word "shall". Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or
other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, restated, supplemented or otherwise modified (subject to any
restrictions on such amendments, restatements, supplements or modifications set forth herein), (ii) any reference herein to any Person shall be construed to include such Person's successors and
assigns, (iii) the words "herein", "hereof" and
"hereunder", and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof,
(iv) all references herein to Sections, Exhibits and Schedules shall be construed to refer to Sections of, and Exhibits and Schedules to, this Agreement and (v) the word
"property" shall be construed to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract
rights. 

        SECTION
2. Grant of Transaction Liens. 

        (a)   Each
Lien Grantor, in order to secure its Secured Obligations, grants to the Collateral Agent for the benefit of the Secured Parties a continuing security interest in
all the following property of such Lien Grantor whether now owned or existing or hereafter acquired or arising and regardless of where located: 

          (i)  all
Accounts; 

         (ii)  all
Chattel Paper; 

        (iii)  all
Deposit Accounts; 

        (iv)  all
Documents; 

         (v)  all
Equipment; 

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        (vi)  all
General Intangibles (including any Equity Interests in other Persons that do not constitute Investment Property); 

       (vii)  all
Instruments; 

      (viii)  all
Inventory; 

        (ix)  all
Investment Property; 

         (x)  all
books and records (including customer lists, credit files, computer programs, printouts and other computer materials and records); 

        (xi)  such
Lien Grantor's ownership interest in (A) its Collateral Accounts, (B) all Financial Assets credited to its Collateral Accounts from time to time and
all Security Entitlements in respect thereof, (C) all cash held in its Collateral Accounts from time to time and (D) all other money in the possession of the Collateral Agent; 

       (xii)  all
other personal property and rights of every kind and description and interests therein not otherwise described above; 

      (xiii)  all
Proceeds of the Collateral described in the foregoing clauses (i) through (xii); and 

      (xiv)  all
Proceeds of any FCC license or similar license; 

provided that the Collateral shall not include any Excluded Collateral. Each Lien Grantor shall use all reasonable efforts to obtain any consent
relating to Excluded Collateral of the type described in clause (iv) of the definition thereof that is reasonably obtainable to the extent necessary to cause such Excluded Collateral to
constitute Collateral. 

        (b)   With
respect to each right to payment or performance included in the Collateral from time to time, the Transaction Lien granted therein includes a continuing security
interest in (i) any Supporting Obligation that supports such payment or performance and (ii) any Lien that (x) secures such right to payment or performance or (y) secures
any such Supporting Obligation. 

        (c)   The
Transaction Liens are granted as security only and shall not subject the Collateral Agent or any other Secured Party to, or transfer or in any way affect or modify,
any obligation or liability of any Lien Grantor with respect to any of the Collateral or any transaction in connection therewith. 

        SECTION
3. General Representations and Warranties. Each Original Lien Grantor represents and warrants that: 

        (a)   Such
Lien Grantor is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization. 

        (b)   Schedule 1 hereto lists, as of the Issue Date, (i) all Pledged Securities owned by such Lien Grantor and
(ii) all Securities Accounts to which Financial Assets are credited in respect of which such Lien Grantor owns Security Entitlements. Such Lien Grantor owns no Commodity Account in respect of
which such Lien Grantor is the Commodity Customer. 

        (c)   Such
Lien Grantor has, subject to Permitted Liens, good and marketable title to all its Collateral (subject to exceptions that are, in the aggregate, not material), free
and clear of any Lien other than Permitted Liens. 

        (d)   Such
Lien Grantor has not performed any acts that would prevent the Collateral Agent from enforcing any of the provisions of the Security Documents or that would limit
the Collateral Agent in any such enforcement. No financing statement, security agreement, mortgage or similar or equivalent document or instrument covering all or part of the Collateral owned by such
Lien Grantor is on file or of record in any jurisdiction in which such filing or recording would be effective to perfect or record a 

8

 

Lien
on such Collateral, except financing statements, mortgages or other similar or equivalent documents with respect to (i) Permitted Liens and (ii) Liens of lenders under the Company's
credit facilities that are being terminated as of the Issue Date. After the Issue Date, no Collateral owned by such Lien Grantor will be in the possession or under the Control of any other Person
having a claim thereto or security interest therein, other than a holder of a Permitted Lien. 

        (e)   The
Transaction Liens on all Personal Property Collateral owned by such Lien Grantor (i) have been validly created, (ii) will attach to each item of such
Collateral on the Issue Date (or, if such Lien Grantor first obtains rights thereto on a later date, on such later date) and (iii) when so attached, will secure all the Secured Obligations of
such Lien Grantor. 

        (f)    Such
Lien Grantor has delivered a Perfection Certificate to the Collateral Agent. The information set forth therein is correct and complete in all material respects as
of the Issue Date with respect to the Original Lien Grantors. 

        (g)   When
UCC financing statements describing the Collateral as set forth in such Lien Grantor's Perfection Certificate have been filed in the offices specified in such
Perfection Certificate, the Transaction Liens will constitute perfected security interests in the Personal Property Collateral owned by such Lien Grantor to the extent that a security interest therein
may be perfected by filing pursuant to the UCC, prior to all Liens and rights of others therein except Permitted Liens. When, in addition to the filing of such UCC financing statements, the applicable
Intellectual Property Filings have been made with respect to such Lien Grantor's Recordable Intellectual Property (including any future filings required pursuant to  Section 4(a) and 7(a)), the Transaction Liens will constitute perfected security interests in all
right, title and interest of such Lien Grantor in its Recordable Intellectual Property to the extent that security interests therein may be perfected by such filings, prior to all Liens and rights of
others therein except Permitted Liens. Except for (i) the filing of such UCC financing statements, (ii) such Intellectual Property Filings (including any future filings required pursuant
to Sections 4(a) and 7(a)), (iii) filings required to record or perfect Liens on any Collateral
subject to certificate title statutes and (vi) the due recordation of the Mortgages, no registration, recordation or filing with any governmental body, agency or official is required in
connection with the execution or delivery of the Security Documents or is necessary for the validity or enforceability thereof or for the perfection or due recordation of the Transaction Liens or for
the enforcement of the Transaction Liens. 

        (h)   Such
Lien Grantor has taken, and will continue to take, all actions necessary under the UCC to perfect its interest in any Accounts or Chattel Paper purchased or
otherwise acquired by it, as against its assignors and creditors of its assignors. 

        (i)    Such
Lien Grantor's Collateral is insured as required by Section 4.05(b) ("Maintenance of Properties and
Insurance") of the Indenture. 

        SECTION
4. Further Assurances; General Covenants. Each Lien Grantor covenants as follows: 

        (a)   Such
Lien Grantor will, from time to time, at the Company's expense, execute, deliver, file and record any statement, assignment, instrument, document, agreement or
other paper and take any other action (including any Intellectual Property Filing and any filing of financing or continuation statements under the UCC) that from time to time may be necessary, or that
the Collateral Agent may reasonably request, in order to: 

          (i)  create,
preserve, perfect, confirm or validate the Transaction Liens on such Lien Grantor's Collateral; 

         (ii)  in
the case of Pledged Deposit Accounts and Pledged Investment Property, cause the Collateral Agent to have Control thereof; 

9

 

        (iii)  enable
the Collateral Agent and the other Secured Parties to obtain the full benefits of the Security Documents; or 

        (iv)  enable
the Collateral Agent to exercise and enforce any of its rights, powers and remedies with respect to any of such Lien Grantor's Collateral. 

Each
Lien Grantor hereby authorizes the filing of any financing statements or continuation statements, and amendments to financing statements, in any jurisdictions and with any filing offices as are
necessary or that the Collateral Agent may determine, in its sole discretion, are advisable to perfect the security interests granted to the Collateral Agent in connection herewith. Such financing
statements may describe the collateral in the same manner as described in this Agreement or may contain an indication or description of collateral that describes such property in any other manner as
is necessary or that the Collateral Agent may determine, in its sole discretion, is prudent to ensure the perfection of the security interest in the collateral granted to the Collateral Agent in
connection herewith, including describing such property as "all assets whether now owned or hereafter acquired" or "all personal property whether now owned or hereafter acquired". Such Lien Grantor
constitutes the Collateral Agent as its attorney-in-fact to execute and file all Intellectual Property Filings and other filings required or so requested for the foregoing
purposes, all acts of such attorney being hereby ratified and confirmed; and such power, being coupled with an interest, shall be irrevocable until all the Transaction Liens granted by such Lien
Grantor terminate pursuant to Section 21. The Lien Grantors, jointly and severally, agree to pay the costs of, or incidental to, any Intellectual
Property Filings and any recording or filing of any financing or continuation statements or other documents recorded or filed pursuant hereto. 

        (b)   Such
Lien Grantor will not (i) change its name or corporate structure or (ii) change its location (determined as provided in UCC
Section 9-307), unless it shall, within 30 days following any such change, file or record such financing statements, amendments thereto or other instruments or documents or
take such other action as may be necessary to maintain the validity, perfection and priority of the Transaction Liens and provide the Collateral Agent with evidence of such filing, recordation or
action having been taken. 

        (c)   If
any of its Collateral is in the possession or control of a warehouseman, bailee or agent at any time, such Lien Grantor will (i) notify such warehouseman,
bailee or agent of the relevant Transaction Liens, (ii) instruct such warehouseman, bailee or agent to hold all such Collateral for the Collateral Agent's account subject to the Collateral
Agent's instructions (which shall permit such Collateral to be removed by such Lien Grantor in the ordinary course of business until the Collateral Agent notifies such warehouseman, bailee or agent
that an Event of Default has occurred and is continuing), (iii) cause such warehouseman, bailee or agent to Authenticate a Record acknowledging that it holds possession of such Collateral for
the Collateral Agent's benefit and (iv) make such Authenticated Record available to the Collateral Agent; provided, that this  Section 4(c) shall
not apply to (A) the transfer of Collateral to third parties in connection with sales on consignment so long as the
sale of such Collateral is otherwise described in clause (e) to the proviso to clause (2) of the definition of the term "Asset Sale" or (B) Collateral having an aggregate fair
market value not exceeding $100,000. 

        (d)   Such
Lien Grantor will not sell, lease, exchange, assign or otherwise dispose of, or grant any option with respect to, any of its Collateral;  provided that such Lien Grantor may do any of the foregoing
unless (i) doing so would violate a covenant in the Indenture or (ii) an Event
of Default shall have occurred and be continuing and the Collateral Agent shall have notified such Lien Grantor that its right to do so is terminated, suspended or otherwise limited. Concurrently with
any sale, lease or other disposition (except a sale or disposition to another Lien Grantor or a lease) permitted by the foregoing proviso, the
Transaction Liens on the assets sold or disposed of (but not in any Proceeds 

10

 

arising
from such sale or disposition) will cease immediately without any action by the Collateral Agent or any other Secured Party. The Collateral Agent will, at the Company's expense, execute and
deliver to the relevant Lien Grantor such documents as such Lien Grantor shall reasonably request to evidence the fact that any asset so sold or disposed of is no longer subject to a Transaction Lien. 

        (e)   Such
Lien Grantor will comply with Section 4.05(b) ("Maintenance of Properties and Insurance") of the Indenture.
All insurance referred to in such Section shall (A) name the Collateral Agent, for the ratable benefit of the Secured Parties, as loss payee (to the extent covering risk of loss or damage to
tangible property) and as an additional insured as its interests may appear (to the extent covering any other risk), (ii) provide that no cancellation, material reduction in amount or material
change in coverage thereof shall be effective until at least thirty (30) days after receipt by the Collateral Agent of written notice thereof and (iii) be reasonably satisfactory in all
other respects to the Collateral Agent. On the Issue Date and at such times as may be requested by the Collateral Agent, the Company will furnish to the Collateral Agent information from a reputable
insurance broker with respect to the insurance referred to in this clause (f). 

        (f)    Such
Lien Grantor will, promptly upon request, provide to the Collateral Agent all information and evidence concerning such Lien Grantor's Collateral that the Collateral
Agent may reasonably request from time to time to enable it to enforce the provisions of the Security Documents. 

        SECTION
5. Accounts. Each Lien Grantor represents, warrants and covenants as follows: 

        (a)   Such
Lien Grantor will use commercially reasonable efforts to cause to be collected from its account debtors, when due, all amounts owing under its Accounts (including
delinquent Accounts with respect to which collection will be pursued in accordance with lawful collection procedures) and will apply all amounts collected thereon, forthwith upon receipt thereof, to
the outstanding balances of such Accounts. Subject to the rights of the Collateral Agent and the other Secured Parties hereunder if an Event of Default shall have occurred and be continuing, such Lien
Grantor may allow in the ordinary course of business as adjustments to amounts owing under its Accounts (i) any extension or renewal of the time or times for payment, or settlement for less
than the total unpaid balance, that such Lien Grantor finds appropriate in accordance with sound business judgment and (ii) refunds or credits, all in the ordinary course of business and
consistent with such Lien Grantor's historical collection practices. The costs and expenses (including attorney's fees) of collection, whether incurred by such Lien Grantor or the Collateral Agent,
shall be paid by such Lien Grantor. 

        (b)   If
payments with respect to any of such Lien Grantor's Accounts are received in a lockbox or similar account, such Lien Grantor will (i) (A) at all times cause
such account to be a Controlled Deposit Account and (B) cause the relevant Depositary Bank to subordinate to the relevant Transaction Lien all its claims to such account (except its right to
deduct and setoff from such Controlled Deposit Account its normal operating charges, the amount of any overdrafts and uncollected funds previously credited, in each case, in respect of any Deposit
Account of any Lien Grantor that is maintained with such Depositary Bank) or (ii) cause funds credited thereto to be swept therefrom to the extent necessary to comply with  Section 9(d)
(provided, however, that the applicable Lien Grantor shall not be required to sweep
funds from the ATS Lockbox Account to a Controlled Deposit Account more frequently than twice per week). The Collateral Agent will instruct the relevant Depositary Bank to transfer funds credited to
any such account, as promptly as practicable after receipt thereof, to a Controlled Deposit Account designated by such Lien Grantor; provided that, if
an Event of Default shall have occurred and be continuing, the Collateral Agent may designate the Controlled Deposit Account to which such funds are transferred. 

        (c)   If
an Event of Default shall have occurred and be continuing, such Lien Grantor will, if requested to do so by the Collateral Agent, promptly notify (and such Lien
Grantor authorizes the Collateral Agent so to notify) each account debtor in respect of any of its Accounts that such Accounts 

11

 

have
been assigned to the Collateral Agent hereunder, and that any payments due or to become due in respect of such Accounts are to be made directly to the Collateral Agent or its designee 

        (d)   No
Lien Grantor shall deposit, or direct any other Person to deposit, any funds or other amounts into the ATS Lockbox Account other than payments received from, or made
by, customers in respect of services provided by the ATS Business. 

        SECTION
6. Equipment. Each Lien Grantor covenants that it will not permit any of its Pledged Equipment to become an accession to any
personal property that is not included in the Collateral. 

        SECTION
7. Recordable Intellectual Property. Each Lien Grantor covenants as follows: 

        (a)   On
the Issue Date (in the case of an Original Lien Grantor) or the date on which it signs and delivers its first Security Agreement Supplement (in the case of any other
Lien Grantor), such Lien Grantor will sign and deliver to the Collateral Agent Intellectual Property Security Agreements with respect to all Recordable Intellectual Property then owned by it. Within
30 days after each March 31, June 30, September 30 and December 31 thereafter, it will sign and deliver to the Collateral Agent an appropriate Intellectual Property
Security Agreement covering any Recordable Intellectual Property owned by it on such March 31, June 30, September 30 or December 31 that is not covered by any previous
Intellectual Property Security Agreement so signed and delivered by it. In each case, it will promptly make all Intellectual Property Filings necessary to record the Transaction Liens on such
Recordable Intellectual Property. 

        (b)   Such
Lien Grantor will notify the Collateral Agent promptly if it knows that any application or registration relating to any Recordable Intellectual Property owned or
licensed by it may become abandoned or dedicated to the public, or of any adverse determination or development (including the institution of, or any adverse determination or development in, any
proceeding in the United States Copyright Office, the United States Patent and Trademark Office or any court) regarding such Lien Grantor's ownership of such Recordable Intellectual Property, its
right to register or patent the same, or its right to keep and maintain the same. If any of such Lien Grantor's rights to any Recordable Intellectual Property are infringed, misappropriated or diluted
by a third party, such Lien Grantor will notify the Collateral Agent within 30 days after it learns thereof and will, unless such Lien Grantor shall reasonably determine that such action would
be of negligible value, economic or otherwise, promptly sue for infringement, misappropriation or dilution and to recover any and all damages for such infringement, misappropriation or dilution, and
take such other actions as such Lien Grantor shall reasonably deem appropriate under the circumstances to protect such Recordable Intellectual Property. 

        SECTION
8. Investment Property. Each Lien Grantor represents, warrants and covenants as follows: 

        (a)   Certificated Securities. On the Issue Date (in the case of an Original Lien Grantor) or the date on which it signs and
delivers its first Security Agreement Supplement (in the case of any other Lien Grantor), such Lien Grantor will deliver to the Collateral Agent as Collateral hereunder all certificates representing
Pledged Certificated Securities then owned by such Lien Grantor. Thereafter, whenever such Lien Grantor acquires any other certificate representing a Pledged Certificated Security, such Lien Grantor
will immediately deliver such certificate to the Collateral Agent as Collateral hereunder. 

        (b)   Uncertificated Securities. On the Issue Date (in the case of an Original Lien Grantor) or the date on which it signs and
delivers its first Security Agreement Supplement (in the case of any other Lien Grantor), such Lien Grantor will enter into, and use its commercially reasonable efforts to cause each issuer to enter
into, an Issuer Control Agreement in respect of each Pledged Uncertificated Security then owned by such Lien Grantor and deliver such Issuer Control Agreement to the Collateral Agent (which shall
enter into the same). Thereafter, whenever such Lien Grantor acquires any other Pledged Uncertificated Security, such Lien Grantor will enter into (and cause the relevant issuer to 

12

 

enter
into) an Issuer Control Agreement in respect of such Pledged Uncertificated Security and deliver such Issuer Control Agreement to the Collateral Agent (which shall enter into the same). 

        (c)   Security Entitlements. Within 30 days of the Issue Date (in the case of an Original Lien Grantor) or the date on
which it signs and delivers its first Security Agreement Supplement (in the case of any other Lien Grantor), such Lien Grantor will, with respect to each Security Entitlement then owned by it, enter
into (and cause the relevant Securities Intermediary to enter into) a Securities Account Control Agreement in respect of such Security Entitlement and the Securities Account to which the underlying
Financial Asset is credited and will deliver such Securities Account Control Agreement to the Collateral Agent (which shall enter into the same). Thereafter, whenever such Lien Grantor acquires any
other Security Entitlement, such Lien Grantor will, as promptly as practicable, cause the underlying Financial Asset to be credited to a Controlled Securities Account. 

        (d)   Perfection as to Certificated Securities. When such Lien Grantor delivers the certificate representing any Pledged
Certificated Security owned by it to the Collateral Agent and complies with Section 8(h) in connection with such delivery, (i) the
Transaction Lien on such Pledged Certificated Security will be perfected, subject to no prior Liens or rights of others (other than, if the Intercreditor Agreement is in effect, Permitted Liens
described in clause (16) or (17) of the definition thereof that secure any First Priority Claims and rights of the First Priority Lenders), (ii) the Collateral Agent will have
Control of such Pledged Certificated Security and (iii) if the Intercreditor Agreement is (A) not in effect, the Collateral Agent will be a protected purchaser (within the meaning of UCC
Section 8-303) thereof and (B) in effect, the First Lien Agent will be a protected purchaser (within the meaning of UCC Section 8-303) thereof for the
benefit of the First Priority Lenders and the Collateral Agent for the benefit of the Secured Parties. 

        (e)   Perfection as to Uncertificated Securities. When such Lien Grantor, the Collateral Agent and the issuer of any Pledged
Uncertificated Security owned by such Lien Grantor enter into an Issuer Control Agreement with respect thereto, (i) the Transaction Lien on such Pledged Uncertificated Security will be
perfected, subject to no prior Liens or rights of others (other than, if the Intercreditor Agreement is in effect, Permitted Liens described in clause (16) or (17) of the definition
thereof that secure any First Priority Claims and rights of the First Priority Lenders), (ii) the Collateral Agent will have Control of such Pledged Uncertificated Security and (iii) if
the Intercreditor Agreement is (A) not in effect, the Collateral Agent will be a protected purchaser (within the meaning of UCC Section 8-303) thereof and (B) in
effect, the First Lien Agent will be a protected purchaser (within the meaning of UCC Section 8-303) thereof for the benefit of the First Priority Lenders and the Collateral Agent
for the benefit of the Secured Parties. 

        (f)    Perfection as to Security Entitlements. So long as the Financial Asset underlying any Security Entitlement owned by such
Lien Grantor is credited to a Controlled Securities Account, (i) the Transaction Lien on such Security Entitlement will be perfected, subject to no prior Liens or rights of others (other than
(A) Liens and rights of the relevant Securities Intermediary that are Permitted Liens and (B) if the Intercreditor Agreement is in effect, Permitted Liens described in clause (16)
or (17) of the definition thereof that secure any First Priority Claims and rights of the First Priority Lenders), (ii) the Collateral Agent will have Control of such Security
Entitlement and (iii) no action based on an adverse claim to such Security Entitlement or such Financial Asset, whether framed in conversion, replevin, constructive trust, equitable lien or
other theory, may be asserted against the Collateral Agent or any other Secured Party (other than, if the Intercreditor Agreement is in effect, claims of the First Priority Lenders). 

        (g)   Agreement as to Applicable Jurisdiction. In respect of all Security Entitlements owned by such Lien Grantor, and all
Securities Accounts to which the related Financial Assets are credited, the 

13

 

Securities
Intermediary's jurisdiction (determined as provided in UCC Section 8-110(e)) will at all times be a jurisdiction in which Articles 8 and 9 of the Uniform Commercial Code
is in effect. 

        (h)   Delivery of Pledged Certificates. All Pledged Certificates, when delivered to the Collateral Agent, will be in suitable
form for transfer by delivery, or accompanied by duly executed instruments of transfer or assignment in blank, with signatures appropriately guaranteed, all in form and substance reasonably
satisfactory to the Collateral Agent. 

        (i)    Communications. If requested by the Collateral Agent, each Lien Grantor will promptly give to the Collateral Agent copies
of any material notices and other communications received by it with respect to (i) Pledged Securities registered in the name of such Lien Grantor or its nominee and (ii) Pledged
Security Entitlements as to which such Lien Grantor is the Entitlement Holder. 

        (j)    Compliance with Applicable Foreign Laws. If and so long as the Collateral includes (i) any Equity Interest in, or
other Investment Property issued by, a legal entity organized under the laws of a jurisdiction outside the United States or (ii) any Security Entitlement in respect of a Financial Asset issued
by such a foreign legal entity, the relevant Lien Grantor will take all such action as may be required under the laws of such foreign jurisdiction to ensure that the Transaction Lien on such
Collateral ranks prior to all Liens and rights of others therein. 

        SECTION
9. Controlled Deposit Accounts. Each Lien Grantor represents, warrants and covenants as follows: 

        (a)   All
cash owned by such Lien Grantor (other than cash in any Excluded Deposit Account and all cash and cash equivalents held in payroll, withholding tax and other
fiduciary accounts in accordance with clause (d) below) will be deposited, upon or promptly after the receipt thereof, in one or more Controlled Deposit Accounts
(provided, however, that the applicable Lien Grantor shall not be required to sweep funds from the ATS Lockbox Account to a Controlled Deposit Account
no more frequently than twice per week). Each Controlled Deposit Account will be operated as provided in Section 11.

        (b)   In
respect of each Controlled Deposit Account, the Depositary Bank's jurisdiction (determined as provided in UCC Section 9-304) will at all times be a
jurisdiction in which Article 9 of the Uniform Commercial Code is in effect. 

        (c)   So
long as the Collateral Agent has Control of a Controlled Deposit Account, the Transaction Lien on such Controlled Deposit Account will be perfected, subject to no
prior Liens or rights of others (other than (i) the applicable Depositary Bank's right to deduct and setoff from such Controlled Deposit Account its normal operating charges, the amount of any
overdrafts and uncollected funds previously credited, in each case, in respect of any Deposit Account of any Lien Grantor that is maintained with such Depositary Bank and (ii) if the
Intercreditor Agreement is in effect, Permitted Liens described in clause (16) or (17) of the definition thereof that secure any First Priority Claims and rights of the First Priority
Lenders). 

        (d)   No
Lien Grantor will maintain funds in accounts other than the Collateral Accounts or the Excluded Deposit Accounts (other than (i) lockbox or similar accounts,
Deposit Accounts or Securities Accounts the aggregate closing balance of which does not exceed $100,000 and (ii) the ATS Lockbox Account) except for the purposes specified in the next sentence.
The Lien Grantors shall be permitted to transfer funds to payroll, withholding tax and other fiduciary accounts of the Lien Grantors solely to the extent required to cover immediate disbursement needs
in respect to employee payroll incurred and paid in the ordinary course of business and in accordance with past practice, and, with respect to fiduciary and withholding tax accounts, solely to the
extent necessary to meet legal requirements in respect of such payroll. 

14

 

        SECTION
10. Cash Collateral Accounts. (a) If and when required for purposes hereof, the Collateral Agent will establish an account
(its "Cash Collateral Account"), in the name and under the exclusive Control of the Collateral Agent, into which all amounts that are to be deposited
therein pursuant to the Indenture Documents shall be deposited from time to time. Each Cash Collateral Account will be operated as provided in this Section and  Section 11.

        (b)   The
Collateral Agent shall deposit the following amounts, as and when received by it, in the Cash Collateral Account: 

          (i)  each
Cash Distribution required by Section 14 to be deposited therein; and 

         (ii)  each
amount realized or otherwise received by the Collateral Agent with respect to assets of any Lien Grantor upon any exercise of remedies pursuant to any Security
Document or at such times as the Intercreditor Agreement may be in effect, the Intercreditor Agreement. 

        (c)   The
Collateral Agent shall maintain such records and/or establish such sub-accounts as shall be required to enable it to identify the amounts held in each
Cash Collateral Account from time to time pursuant to each clause of subsection (b) of this Section, as applicable. 

        (d)   Unless
(x) an Event of Default shall have occurred and be continuing and the Holders of a majority of the principal amount of the Notes shall have instructed the
Collateral Agent to stop withdrawing amounts from the Cash Collateral Accounts pursuant to this subsection or (y) all or any portion of the principal of or premium, if any, or accrued interest
on the Notes shall have been accelerated pursuant to Section 6.02 ("Acceleration") of the Indenture, any Cash Distribution deposited pursuant to  Section 14 shall, at the relevant Lien Grantor's request, (x) be withdrawn and applied to pay Secured Obligations that are then due and
payable or (y) if no Event of Default has occurred and is continuing, be withdrawn and returned to such Lien Grantor. 

        SECTION
11. Operation of Collateral Accounts. (a) All Cash Distributions received with respect to assets held in any Collateral
Account shall be deposited therein promptly upon receipt thereof. 

        (b)   Funds
held in any Controlled Securities Account may, until withdrawn, be invested and reinvested in such Cash Equivalents as the relevant Lien Grantor shall request from
time to time; provided that, if an Event of Default shall have occurred and be continuing, the Collateral Agent may select such Cash Equivalents;  provided further, that the Collateral Agent shall not be liable or responsible for any loss resulting from any such investment or reinvestment in any
Cash Equivalents selected by it except for losses caused by Collateral Agent's gross negligence or willful misconduct. 

        (c)   Funds
held in any Controlled Deposit Account or Cash Collateral Account may, until withdrawn, be invested and reinvested in such Cash Equivalents as the relevant Lien
Grantor shall request from time to time; provided that if an Event of Default shall have occurred and be continuing, the Collateral Agent may select
such Cash Equivalents; provided further, that the Collateral Agent shall not be liable or responsible for any loss resulting from any such investment or
reinvestment in any Cash Equivalents selected by it except for losses caused by Collateral Agent's gross negligence or willful misconduct. 

        (d)   With
respect to each Collateral Account (except a Cash Collateral Account, as to which Section 10 applies), the
Collateral Agent will instruct the relevant Securities Intermediary or Depositary Bank that the relevant Lien Grantor may withdraw, or direct the disposition of, funds held therein unless and until
the Collateral Agent rescinds such instruction. The Collateral Agent will not rescind such instructions unless an Event of Default shall have occurred and be continuing. If an Event of Default no
longer exists, the Collateral Agent will reinstate such Lien Grantor's rights. 

        (e)   If
an Event of Default shall have occurred and be continuing, the Collateral Agent may (i) retain, or instruct the relevant Securities Intermediary or Depositary
Bank to retain, all cash and 

15

 

investments
then held in any Collateral Account, (ii) liquidate, or instruct the relevant Securities Intermediary or Depositary Bank to liquidate, any or all investments held therein and/or
(iii) withdraw any amounts held therein and apply such amounts as provided in Section 16.

        (f)    If
immediately available cash on deposit in any Collateral Account is not sufficient to make any distribution or withdrawal to be made pursuant hereto, the Collateral
Agent will cause to be liquidated, as promptly as practicable, such investments held in or credited to such Collateral Account as shall be required to obtain sufficient cash to make such distribution
or withdrawal (provided, that the Collateral Agent shall not be liable or responsible for any loss resulting from any such liquidation except for losses
caused by Collateral Agent's gross negligence or willful misconduct) and, notwithstanding any other provision hereof, such distribution or withdrawal shall not be made until such liquidation has taken
place. 

        SECTION
12. Transfer Of Record Ownership. At any time when an Event of Default shall have occurred and be continuing, the Collateral Agent
may, subject to having obtained any required regulatory approvals, (and to the extent that action by it is required, the relevant Lien Grantor, if directed to do so by the Collateral Agent, will as
promptly as practicable) cause each of the Pledged Securities (or any portion thereof specified in such direction) to be transferred of record into the name of the Collateral Agent or its nominee.
Each Lien Grantor will take any and all actions reasonably requested by the Collateral Agent to facilitate compliance with this Section. If the provisions of this Section are implemented,  Section 8(b) shall not thereafter apply to any Pledged Security that is registered in the name of the Collateral Agent or its nominee. The
Collateral Agent will promptly give to the relevant Lien Grantor copies of any notices and other communications received by the Collateral Agent with respect to Pledged Securities registered in the
name of the Collateral Agent or its nominee. 

        SECTION
13. Right to Vote Securities. (a) Unless an Event of Default shall have occurred and be continuing, each Lien Grantor will
have the right, from time to time, to vote and to give consents, ratifications and waivers with respect to any Pledged Security owned by it and the Financial Asset underlying any Pledged Security
Entitlement owned by it, and the Collateral Agent will, upon receiving a written request from such Lien Grantor, deliver to such Lien Grantor or as specified in such request such proxies, powers of
attorney, consents, ratifications and waivers in respect of any such Pledged
Security that is registered in the name of the Collateral Agent or its nominee or any such Pledged Security Entitlement as to which the Collateral Agent or its nominee is the Entitlement Holder, in
each case as shall be specified in such request and be in form and substance satisfactory to the Collateral Agent. Unless an Event of Default shall have occurred and be continuing, the Collateral
Agent will have no right to take any action which the owner of a Pledged Partnership Interest or Pledged LLC Interest is entitled to take with respect thereto, except the right to receive payments and
other distributions to the extent provided herein. 

        (b)   If
an Event of Default shall have occurred and be continuing, upon written notice from the Collateral Agent to the applicable Lien Grantor, the Collateral Agent will
have the right to the extent permitted by law and subject to having obtained any required regulatory approvals (and, in the case of a Pledged Partnership Interest or Pledged LLC Interest, by the
relevant partnership agreement, limited liability company agreement, operating agreement or other governing document) to vote, to give consents, ratifications and waivers and to take any other action
with respect to the Pledged Investment Property, the other Pledged Equity Interests (if any) and the Financial Assets underlying the Pledged Security Entitlements, with the same force and effect as if
the Collateral Agent were the absolute and sole owner thereof, and each Lien Grantor will take all such action as the Collateral Agent may reasonably request from time to time to give effect to such
right. 

        SECTION
14. Certain Cash Distributions. Cash Distributions with respect to assets held in a Collateral Account shall be deposited and held
therein, or withdrawn therefrom, as provided in 

16

 

 Section 11. Cash Distributions with respect to any Pledged Equity Interest or Pledged Debt that is not held in a Collateral Account (whether held in the name of a Lien
Grantor or in the name of the Collateral Agent or its nominee) shall be deposited, promptly upon receipt thereof, in a Controlled Deposit Account of the relevant Lien Grantor or in any other account
described in Section 9(a) to the extent permitted by Section 9(a);provided that, if an Event of Default shall have
occurred and be continuing, the Collateral Agent may deposit, or direct the recipient thereof to
deposit, each such Cash Distribution in the relevant Lien Grantor's Cash Collateral Account. 

        SECTION
15. Remedies upon Event of Default. (a) If an Event of Default shall have occurred and be continuing, the Collateral Agent
may exercise (or cause its sub-agents to exercise) any or all of the remedies available to it (or to such sub-agents) under the Security Documents or at such times as the
Intercreditor Agreement may be in effect, the Intercreditor Agreement. 

        (b)   Without
limiting the generality of the foregoing, if an Event of Default shall have occurred and be continuing, the Collateral Agent may exercise on behalf of the
Secured Parties all the rights of a secured party under the UCC (whether or not in effect in the jurisdiction where such rights are exercised) with respect to any Personal Property Collateral and, in
addition, the Collateral Agent may, without being required to give any notice, except as herein provided or as may be required by mandatory provisions of law, withdraw all cash held in the Collateral
Accounts and apply such cash as provided in Section 16 and, if there shall be no such cash or if such cash shall be insufficient to pay all the
Secured Obligations in full, sell, lease, license or otherwise dispose of the Collateral or any part thereof. Notice of any such sale or other disposition shall be given to the relevant Lien
Grantor(s) as required by Section 18. The foregoing provisions of this subsection shall apply to Real Property Collateral only to the extent
permitted by applicable law and the provisions of any applicable Mortgage or other document. 

        (c)   Without
limiting the generality of the foregoing, if an Event of Default shall have occurred and be continuing: 

          (i)  the
Collateral Agent may license or sublicense, whether general, special or otherwise, and whether on an exclusive or non-exclusive basis, any Pledged
intellectual property (including any Pledged Recordable Intellectual Property) throughout the world for such term or terms, on such conditions and in such manner as the Collateral Agent shall in its
sole discretion determine; provided that such licenses or sublicenses do not conflict with any existing license of which the Collateral Agent shall have
received a copy; provided further that, in the case of Trademarks, any such licenses or sublicenses shall include appropriate quality control
provisions; 

         (ii)  the
Collateral Agent may (without assuming any obligation or liability thereunder), at any time and from time to time, in its sole and reasonable discretion, enforce
(and shall have the exclusive right to enforce) against any licensee or sublicensee all rights and remedies of any Lien Grantor in, to and under any of its Pledged intellectual property and take or
refrain from taking any action under any thereof, and each Lien Grantor releases the Collateral Agent and each other Secured Party from liability for, and agrees to hold the Collateral Agent and each
other Secured Party free and harmless from and against any claims and expenses arising out of, any lawful action so taken or omitted to be taken with respect thereto, except for claims and expenses
arising from the Collateral Agent's or such Secured Party's gross negligence or willful misconduct; and 

        (iii)  upon
request by the Collateral Agent (which shall not be construed as implying any limitation on its rights or powers), each Lien Grantor will execute and deliver to
the Collateral Agent a power of attorney, in form and substance reasonably satisfactory to the Collateral Agent, for the implementation of any sale, lease, license or other disposition of any of such
Lien Grantor's Pledged intellectual property or any action related thereto. In connection with any such disposition, but subject to any confidentiality restrictions imposed on such Lien Grantor in any 

17

 

license
or similar agreement, such Lien Grantor will supply to the Collateral Agent its know-how and expertise relating to the relevant intellectual property or the products or services
made or rendered in connection with such intellectual property, and its customer lists and other records relating to such intellectual property and to the distribution of said products or services. 

        SECTION
16. Application of Proceeds. (a) If an Event of Default shall have occurred and be continuing, the Collateral Agent may
apply (i) any cash held in the Collateral Accounts and (ii) the proceeds of any sale or other disposition of all or any part of the Collateral, in the order of priorities set forth in
Section 6.09 ("Priorities") of the Indenture. 

        (b)   In
making the payments required by this Section, the Collateral Agent may rely upon information supplied to it pursuant to  Section 20(c). All distributions made by the Collateral Agent pursuant to
this Section shall be final (except in the event of manifest error) and
the Collateral Agent shall have no duty to inquire as to the application by any Secured Party of any amount distributed to it. 

        SECTION
17. Fees and Expenses. (a) The Lien Grantors will, jointly and severally, forthwith upon demand pay to the Collateral
Agent: 

          (i)  the
amount of any taxes that the Collateral Agent may have been required to pay by reason of the Transaction Liens or to free any Collateral from any other Lien
thereon; 

         (ii)  the
amount of any and all reasonable out-of-pocket expenses, including transfer taxes and reasonable fees and expenses of counsel and other
experts, that the Collateral Agent may incur in connection with (x) the administration or enforcement of the Security Documents or at such times as the Intercreditor Agreement may be in effect,
the Intercreditor Agreement, including such expenses as are incurred to preserve the value of the Collateral or the validity, perfection, rank or value of any Transaction Lien, (y) the
collection, sale or other disposition of any Collateral or (z) the exercise by the Collateral Agent of any of its rights or powers under the Security Documents or at such times as the
Intercreditor Agreement may be in effect, the Intercreditor Agreement; and 

        (iii)  the
amount required to indemnify the Collateral Agent for, or hold it harmless and defend it against, any loss, liability or expense (including the reasonable fees and
expenses of its counsel and any experts or sub-agents appointed by it hereunder) incurred or suffered by the Collateral Agent in connection with the Security Documents or at such times as
the Intercreditor Agreement may be in effect, the Intercreditor Agreement, except to the extent that such loss, liability or expense arises from the Collateral Agent's gross negligence or willful
misconduct or a breach of any duty that the Collateral Agent has under this Agreement (after giving effect to Sections 19
and 21). 

Any
such amount not paid to the Collateral Agent on demand will bear interest for each day thereafter until paid at a rate per annum equal to the sum of 2% plus the rate applicable to Notes for such
day. 

        (b)   If
any transfer tax, documentary stamp tax or other tax is payable in connection with any transfer of Collateral or other transaction provided for in the Security
Documents, the Lien Grantors will, jointly and severally, pay such tax and provide any required tax stamps to the Collateral Agent or as otherwise required by law. 

        SECTION
18. Authority to Administer Collateral. Each Lien Grantor irrevocably appoints the Collateral Agent its true and lawful attorney,
with full power of substitution, in the name of such Lien Grantor, any Secured Party or otherwise, for the sole use and benefit of the Secured Parties, but at the Company's expense, to the extent
permitted by law to exercise, at any time and from time to time while 

18

 

an
Event of Default shall have occurred and be continuing, all or any of the following powers with respect to all or any of such Lien Grantor's Collateral: 

        (a)   to
demand, sue for, collect, receive and give acquittance for any and all monies due or to become due upon or by virtue thereof, 

        (b)   to
settle, compromise, compound, prosecute or defend any action or proceeding with respect thereto, 

        (c)   to
sell, lease, license or otherwise dispose of the same or the proceeds or avails thereof, as fully and effectually as if the Collateral Agent were the absolute owner
thereof, and 

        (d)   to
extend the time of payment of any or all thereof and to make any allowance or other adjustment with reference thereto; 

provided that, except in the case of Personal Property Collateral that is perishable or threatens to decline speedily in value or is of a type
customarily sold on a recognized market, the Collateral Agent will give the relevant Lien Grantor at least ten days' prior written notice of the time and place of any public sale thereof or the time
after which any private sale or other intended disposition thereof will be made. Any such notice shall (i) contain the information specified in UCC Section 9-613,
(ii) be Authenticated and (iii) be sent to the parties required to be notified pursuant to UCC Section 9-61l(c); provided
further, that, if the Collateral Agent fails to comply with this sentence in any respect, its liability for such failure shall be limited to the liability (if any) imposed on
it as a matter of law under the UCC. 

        SECTION
19. Limitation on Duty in Respect of Collateral. Beyond the exercise of reasonable care in the custody and preservation thereof,
the Collateral Agent will have no duty as to any Collateral in its possession or Control or in the possession or Control of any sub-agent or bailee or any income therefrom or as to the
preservation of rights against prior parties or any other rights pertaining thereto. The Collateral Agent will be deemed to have exercised reasonable care in the custody and preservation of the
Collateral in its possession or Control if such Collateral is accorded treatment substantially equal to that which it accords its own property, and will not be liable or responsible for any loss or
damage to any Collateral, or for any diminution in the value thereof, by reason of any act or omission of any sub-agent or bailee selected by the Collateral Agent in good faith, except to
the extent that such liability arises from the Collateral Agent's gross negligence or willful misconduct. 

        SECTION
20. General Provisions Concerning the Collateral Agent. (a) Generally. The
provisions of Articles Seven ("Trustee") and Twelve ("Security") of the Indenture shall inure to the
benefit of the Collateral Agent, and shall be binding upon all Lien Grantors and all Secured Parties, in connection with this Agreement, the other Security Documents and at such times as the
Intercreditor Agreement may be in effect, the Intercreditor Agreement. Without limiting the generality of the foregoing, (i) the Collateral Agent shall not be subject to any fiduciary or other
implied duties, regardless of whether an Event of Default has occurred and is continuing, (ii) the Collateral Agent shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly contemplated by the Security Documents, the Indenture or at such times as the Intercreditor Agreement may be in effect, the
Intercreditor Agreement that the Collateral Agent is (subject to Section 7.02 ("Rights of Trustee") of the Indenture) required in writing to
exercise by the Holders pursuant to Section 6.05 ("Control by Majority") or the last sentence of Section 12.09
("Authorization of Actions to Be Taken by the Collateral Agent Under the Intercreditor Agreement and the Collateral Agreements") of the Indenture, and
(iii) except as expressly set forth in the Indenture Documents, the Collateral Agent shall not have any duty to disclose, and shall not be liable for any failure to disclose, any information
relating to any Lien Grantor that is communicated to or obtained by the bank serving as Collateral Agent or any of its Affiliates in any capacity. The Collateral Agent 

19

 

shall
not be responsible for the existence, genuineness or value of any Collateral or for the validity, perfection, priority or enforceability of any Transaction Lien, whether impaired by operation of
law or by reason of any action or omission to act on its part under the Security Documents or at such times as the Intercreditor Agreement may be in effect, the Intercreditor Agreement. The Collateral
Agent shall be deemed not to have knowledge of any Event of Default unless and until written notice thereof is given to the Collateral Agent by the Company or a Secured Party. 

        (b)   Sub-Agents and Related Parties. The Collateral Agent may perform any of its duties and exercise any of its
rights and powers through one or more sub-agents appointed by it. The Collateral Agent and any such sub-agent may perform any of its duties and exercise any of its rights and
powers through its Related Parties. The exculpatory provisions of Section 19 and this Section shall apply to any such sub-agent and
to the Related Parties of the Collateral Agent and any such sub-agent. 

        (c)   Information as to Secured Obligations and Actions by Secured Parties. For all purposes of the Security Documents or at
such times as the Intercreditor Agreement may be in effect, the Intercreditor Agreement, including determining the amounts of the Secured Obligations or whether any action has been taken under any
Secured Agreement, the Collateral Agent will be entitled to rely on information from (i) its own records for information as to the Secured Parties, their Secured Obligations and actions taken
by them, (ii) any Secured Party for information as to its Secured Obligations and actions taken by it, to the extent that the Collateral Agent has not obtained such information from its own
records, and (iii) the Company, to the extent that the Collateral Agent has not obtained information from the foregoing sources. 

        (d)   Refusal to Act. The Collateral Agent may refuse to act on any notice, consent, direction or instruction from any Secured
Parties or any agent, trustee or similar representative thereof that, in the Collateral Agent's opinion, (i) is contrary to law or the provisions of any Security Document or at such times as
the Intercreditor Agreement may be in effect, the Intercreditor Agreement or (ii) may expose the Collateral Agent to liability (unless the Collateral Agent shall have been indemnified, to its
reasonable satisfaction, for such liability by the Secured Parties that gave such notice, consent, direction or instruction). 

        SECTION
21. Termination Of Transaction Liens; Release Of Lien Grantors and Collateral. (a) The Transaction Liens granted by each
Lien Grantor shall terminate as provided in Section 12.06 ("Release upon Satisfaction or Defeasance of all Outstanding Obligations") of the
Indenture. 

        (b)   At
any time before the Transaction Liens granted by the Lien Grantors terminate, the Collateral Agent (i) shall release any Lien Grantor as provided in the last
sentence of Section 5.02 ("Successor Corporation Substituted") or Section 10.02 ("Release of a
Guarantor") of the Indenture or any Collateral as provided in Section 12.05 ("Specified Releases of Collateral") of the
Indenture or if the Intercreditor Agreement is in effect, Section 5.1 ("Releases") of the Intercreditor Agreement or (ii) may, at the
written request of the Company, release any Lien Grantor or any Collateral with the prior written consent of such Holders as are required to consent thereto under Section 9.02
("With Consent of Holders") of the Indenture. 

        (c)   Upon
any termination of a Transaction Lien or release of any Lien Grantor or any Collateral, the Collateral Agent will, at the expense of the relevant Lien Grantor,
execute and deliver to such Lien Grantor such documents as such Lien Grantor shall reasonably request to evidence the termination of such Transaction Lien or the release of such Lien Grantor or such
Collateral, as the case may be. 

        SECTION
22. Additional Lien Grantors. Any Guarantor may become a party hereto by signing and delivering to the Collateral Agent a Security
Agreement Supplement, whereupon such Guarantor shall become a "Lien Grantor" as defined herein. 

20

 

        SECTION
23. Notices. Each notice, request or other communication given to any party hereunder shall be given (i) in the case of any
Lien Grantor, to such Lien Grantor in care of the Company and (ii) in the case of the Collateral Agent, to the Collateral Agent, in each case, in accordance with Section 11.02
("Notices") of the Indenture. 

        SECTION
24. No Implied Waivers; Remedies Not Exclusive. No failure by the Collateral Agent or any Secured Party to exercise, and no delay
in exercising and no course of dealing with respect to, any right
or remedy under any Security Document or at such times as the Intercreditor Agreement may be in effect, the Intercreditor Agreement shall operate as a waiver thereof; nor shall any single or partial
exercise by the Collateral Agent or any Secured Party of any right or remedy under any Indenture Document preclude any other or further exercise thereof or the exercise of any other right or remedy.
The rights and remedies specified in the Indenture Documents are cumulative and are not exclusive of any other rights or remedies provided by law. 

        SECTION
25. Successors and Assigns. This Agreement is for the benefit of the Collateral Agent, the other Secured Parties and their
respective successors and assigns. This Agreement shall be binding on the Lien Grantors and their respective successors and assigns; provided that no
Lien Grantor may assign any of its rights or obligations hereunder except to the extent made in connection with a transaction permitted under Section 5.01 ("Merger,
Consolidation and Sale of Assets") or 10.04 ("Guarantors May Consolidate, etc., on Certain Terms") of the Indenture or with the
consent of the requisite Holders pursuant to Section 9.02 ("With Consent of Holders") of the Indenture. 

        SECTION
26. Amendments and Waivers. Neither this Agreement nor any provision hereof may be waived, amended, modified or terminated except
pursuant to an agreement or agreements in writing entered into by the Collateral Agent pursuant to Article Nine ("Amendments, Supplements and Waivers")
of the Indenture. No such waiver, amendment or modification shall (i) be binding upon any Lien Grantor, except with its written consent, or (ii) affect the rights of a Secured Party
(other than a Holder) hereunder more adversely than it affects the comparable rights of the Holders hereunder, without the consent of such Secured Party. 

        SECTION
27. Choice of Law. This Agreement shall be construed in accordance with and governed by the laws of the State of New York, except
as otherwise required by mandatory provisions of law and except to the extent that remedies provided by the laws of any jurisdiction other than the State of New York are governed by the laws of such
jurisdiction. 

        SECTION
28. Waiver of Jury Trial. EACH PARTY HERETO WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO ANY SECURITY DOCUMENT OR AT SUCH TIMES AS THE INTERCREDITOR AGREEMENT MAY BE IN EFFECT, THE INTERCREDITOR
AGREEMENT OR ANY TRANSACTION CONTEMPLATED THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

        SECTION
29. Severability. If any provision of any Security Document or at such times as the Intercreditor Agreement may be in effect, the
Intercreditor Agreement is invalid or unenforceable in any jurisdiction, then, to the fullest extent permitted by law, (i) the other provisions of the Security Documents and at such times as
the Intercreditor Agreement may be in effect, the Intercreditor Agreement shall remain in full force and effect in such jurisdiction and shall be liberally construed in 

21

 

favor
of the Collateral Agent and the Secured Parties in order to carry out the intentions of the parties thereto as nearly as may be possible and (ii) the invalidity or unenforceability of
such provision in such jurisdiction shall not affect the validity or enforceability thereof in any other jurisdiction. 

        SECTION
30. Counterparts. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original, but all of which when taken together shall constitute a single contract. Delivery of any executed counterpart of a signature page of this Agreement by facsimile
shall be effective as delivery of a manually executed counterpart of this Agreement. 

        SECTION
31. Intercreditor Agreement. At any time that the Intercreditor Agreement shall be in effect, 

        (a)   the
Transaction Liens granted hereunder in favor of the Collateral Agent for the benefit of the Secured Parties in respect of the Collateral and the exercise of any
right related thereto thereby shall be subject, in each case, to the terms of the Intercreditor Agreement; 

        (b)   in
the event of any direct conflict between the express terms and provisions of this Agreement and of the Intercreditor Agreement, the terms and provisions of the
Intercreditor Agreement shall control; and 

        (c)   notwithstanding
anything to the contrary herein, any provision hereof that requires any Lien Grantor to (i) deliver any Collateral that consists of Pledged
Collateral (as defined in the Intercreditor Agreement) to the Collateral Agent may be satisfied by the delivery of such Collateral by such Lien Grantor to the First Lien Agent for the benefit of the
First Priority Lenders and the Collateral Agent in its capacity as the Second Lien Agent (as defined in the Intercreditor Agreement) for the benefit of the Second Priority Lenders (as defined in the
Intercreditor Agreement) pursuant to Section 5.5 of the Intercreditor Agreement; or (ii) provide that the Collateral Agent have Control over such Collateral may be satisfied by causing
the First Lien Agent to be provided with Control with respect to such Collateral of such Lien Grantor for the benefit of the First Priority Lenders and the Collateral Agent in its capacity as the
Second Lien Agent for the benefit of the Second Priority Lenders pursuant to Section 5.5 of the Intercreditor Agreement. 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK] 

22

        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. 

	 	 	COMPANY:

MCLEODUSA INCORPORATED
	

 	
 	

By:	

/s/  BERNARD L. ZUROFF      

	 	 	 	Name:	Bernard L. Zuroff
	 	 	 	Title:	Group Vice President, General Counsel & Secretary
	

 	
 	
OTHER ORIGINAL LIEN GRANTORS:

MCLEODUSA HOLDINGS, INC.
	

 	
 	

By:	

/s/  BERNARD L. ZUROFF      

	 	 	 	Name:	Bernard L. Zuroff
	 	 	 	Title:	Group Vice President, General Counsel & Secretary
	

 	
 	

MCLEODUSA INFORMATION SERVICES, INC.
	

 	
 	

By:	

/s/  BERNARD L. ZUROFF      

	 	 	 	Name:	Bernard L. Zuroff
	 	 	 	Title:	Group Vice President, General Counsel & Secretary
	

 	
 	

MCLEODUSA NETWORK SERVICES, INC.
	

 	
 	

By:	

/s/  BERNARD L. ZUROFF      

	 	 	 	Name:	Bernard L. Zuroff
	 	 	 	Title:	Group Vice President, General Counsel & Secretary
	

 	
 	

MCLEODUSA PURCHASING, L.L.C.
	

 	
 	

By:	

/s/  BERNARD L. ZUROFF      

	 	 	 	Name:	Bernard L. Zuroff
	 	 	 	Title:	Group Vice President, General Counsel & Secretary
	

 	
 	
COLLATERAL AGENT:

U.S. BANK NATIONAL ASSOCIATION,

as Collateral Agent
	

 	
 	

By:	

/s/  RICHARD PROKOSCH      

	 	 	 	Name:	Richard Prokosch
	 	 	 	Title:	Vice President

 
 

SCHEDULE 1    
    

 
 

PLEDGED INVESTMENT PROPERTY
  OWNED BY ORIGINAL LIEN GRANTORS
  (as of the Issue Date)    
    

 
 

PART 1—Securities    
    

	Issuer
 
	 	Jurisdiction of Organization
	 	Owner of Securities
	 	Amount Owned
	 	Type of Security

	    	 	 	 	 	 	 	 	 
	    	 	 	 	 	 	 	 	 
	    	 	 	 	 	 	 	 	 
	    	 	 	 	 	 	 	 	 
	    	 	 	 	 	 	 	 	 
	    	 	 	 	 	 	 	 	 
	    	 	 	 	 	 	 	 	 
	    	 	 	 	 	 	 	 	 
	    	 	 	 	 	 	 	 	 

 
 

PART 2—Securities Accounts    
    

        The Original Lien Grantors own Security Entitlements with respect to Financial Assets credited to the following Securities Accounts: 

	Owner
 
	 	Securities Intermediary
	 	Account Number

	    	 	 	 	 
	    	 	 	 	 
	    	 	 	 	 
	    	 	 	 	 
	    	 	 	 	 
	    	 	 	 	 
	    	 	 	 	 
	    	 	 	 	 
	    	 	 	 	 

QuickLinks

Exhibit 4.2

EXECUTION COPY

SECURITY AND PLEDGE AGREEMENT dated as of September 28, 2006 among MCLEODUSA INCORPORATED, THE GUARANTORS PARTY HERETO and U.S. BANK NATIONAL ASSOCIATION, as Collateral Agent

TABLE OF CONTENTS

SECURITY AND PLEDGE AGREEMENT

SCHEDULE 1

PLEDGED INVESTMENT PROPERTY OWNED BY ORIGINAL LIEN GRANTORS (as of the Issue Date)

PART 1—Securities

PART 2—Securities AccountsQuickLinks
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Exhibit 4.5    
    

 
 

REGISTRATION RIGHTS AGREEMENT    
    
    dated as of    
    
    January 6, 2006    
    
    among    
    
    MCLEODUSA INCORPORATED

and
  THE HOLDERS OF COMMON STOCK
  LISTED ON SCHEDULE I    
    

 
 

TABLE OF CONTENTS    
    

	 
	 	 
	 	PAGE

	ARTICLE 1

DEFINITIONS
	

Section 1.01.	
 	
Definitions	
 	

1
	Section 1.02.	 	Other Definitional and Interpretative Provisions	 	3
	

ARTICLE 2

REGISTRATION RIGHTS
	

Section 2.01.	
 	
Demand Registration	
 	

3
	Section 2.02.	 	Piggyback Registration	 	5
	Section 2.03.	 	Filing Registration Statements; Lock-Up Agreements	 	6
	Section 2.04.	 	Registration Procedures	 	7
	Section 2.05.	 	Indemnification by the Company	 	9
	Section 2.06.	 	Indemnification by Participating Stockholders	 	10
	Section 2.07.	 	Conduct of Indemnification Proceedings	 	10
	Section 2.08.	 	Contribution	 	11
	Section 2.09.	 	Participation in Public Offering	 	12
	Section 2.10.	 	Other Indemnification	 	12
	Section 2.11.	 	Cooperation by the Company	 	12
	Section 2.12.	 	No Transfer of Registration Rights	 	12
	Section 2.13.	 	Purchases and Sales of Securities	 	12
	

ARTICLE 3

CERTAIN COVENANTS AND AGREEMENTS
	

Section 3.01.	
 	
Limitations on Subsequent Registration Rights	
 	

12
	Section 3.02.	 	Charter or Bylaw Provisions	 	13
	Section 3.03.	 	Conflicting Agreements	 	13
	

ARTICLE 4

MISCELLANEOUS
	

Section 4.01.	
 	
Binding Effect; Assignability	
 	

13
	Section 4.02.	 	Notices	 	13
	Section 4.03.	 	Waiver; Amendment	 	14
	Section 4.04.	 	Fees and Expenses	 	14
	Section 4.05.	 	Governing Law	 	14
	Section 4.06.	 	Jurisdiction	 	14
	Section 4.07.	 	WAIVER OF JURY TRIAL	 	14
	Section 4.08.	 	Specific Enforcement	 	15
	Section 4.09.	 	Effectiveness	 	15
	Section 4.10.	 	Entire Agreement	 	15
	Section 4.11.	 	Severability	 	15

  

 
 

REGISTRATION RIGHTS AGREEMENT    
    

        AGREEMENT dated as of January 6, 2006 among (i) McLeodUSA Incorporated, a Delaware corporation (the
"Company"), and (ii) the holders of Common Stock listed on Schedule I hereto and any other Person that acquires any Common Stock for so
long as such Common Stock constitutes Registrable Securities hereunder from any such holders, directly or indirectly (the "Stockholders"). 

 
 

W I T N E S S E T H:    
    

        WHEREAS, on October 28, 2005, the Company and certain of its Subsidiaries filed with the United States Bankruptcy Court for the Northern District of
Illinois (i) voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code and (ii) a Joint Prepackaged Plan of Reorganization (the
"Plan"); 

        WHEREAS,
pursuant to the Plan, the Company has been authorized and directed to enter into this Agreement, and each Holder of an Allowed Class 5 Claim (as such terms are defined in
the Plan) and the Company are bound, and are deemed to be bound, by this Agreement and entitled to the benefit of and the right to enforce this Agreement. 

        WHEREAS,
pursuant to the Plan, each Holder of an Allowed Class 5 Claim (as such terms are defined in the Plan) must execute this Agreement as a condition to receiving its pro rata
distribution of Common Stock (as defined below). 

        WHEREAS,
each Stockholder is on the date hereof the holder of the number of shares of Common Stock as is set forth on Schedule I attached hereto. 

        NOW,
THEREFORE, in accordance with the Plan and in consideration of the covenants and agreements contained herein, the parties hereto agree as follows: 

 
 

ARTICLE 1
  DEFINITIONS    

        Section 1.01.    Definitions.    (a) The following terms, as used herein, have the following meanings: 

        "Affiliate" shall have the meaning ascribed to the term "Affiliated person" in Section 2(a)(3) of the Investment Company Act of
1940, as amended, and shall include any fund or account sharing a common Investment Adviser. The term "Affiliated" shall have the correlative meaning. 

        "Board" means the board of directors of the Company. 

        "Business Day" means any day except a Saturday, Sunday or other day on which commercial banks in New York City are authorized by law to
close. 

        "Common Shares" means shares of Common Stock. 

        "Common Stock" means the common stock, par value $.01 per share, of the Company issued pursuant to the Plan and any stock into which such
Common Stock may hereafter be converted or changed (including by way of recapitalization, merger, consolidation, other reorganization or otherwise). 

        "Company Securities" means (i) the Common Stock, (ii) securities convertible into or exchangeable for Common Stock, and
(iii) options, warrants or other rights to acquire Common Stock. 

        "Effective Date" means the Effective Date of and as defined in the Plan. 

        "Exchange Act" means the Securities Exchange Act of 1934, as amended. 

        "Fidelity" means Fidelity Management & Research Co. and its Affiliates. 

        "First Public Offering" means the first Public Offering after the date hereof. 

1

 

        "Investment Adviser" shall have the meaning ascribed to such term in Section 2(a)(20) of the Investment Company Act of 1940, as
amended. 

        "NASD" means the National Association of Securities Dealers, Inc. 

        "Person" means an individual, corporation, limited liability company, partnership, association, trust or other entity or organization,
including a government or political subdivision or an agency or instrumentality thereof. 

        "Public Offering" means an underwritten public offering of Registrable Securities of the Company pursuant to an effective registration
statement under the Securities Act, other than pursuant to a registration statement on Form S-4 or Form S-8 or any similar or successor form. 

        "Registrable Securities" means, at any time, any Common Shares until (i) a registration statement covering such Common Shares has
been declared effective by the SEC and such Common Shares have been disposed of pursuant to such effective registration statement or (ii) such Common Shares are sold, assigned or otherwise
disposed of, the Company has delivered a new certificate or other evidence of ownership for such Common Shares not bearing the legend required pursuant to the Stockholders Agreement and such Common
Shares may be resold without subsequent registration under the Securities Act. 

        "Registration Expenses" means any and all expenses incident to the performance of or compliance with any registration or marketing of
securities, including all (i) registration, listing and filing fees, and all other fees and expenses payable in connection with the listing of securities on any securities exchange or automated
interdealer quotation system, (ii) fees and expenses of compliance with any securities or "blue sky" laws (including reasonable fees and disbursements of counsel in connection with "blue sky"
qualifications of the securities registered), (iii) expenses in connection with the preparation, printing, mailing and delivery of any registration statements, prospectuses and other documents
in connection therewith and any amendments or supplements thereto, (iv) security engraving and printing expenses, (v) internal expenses of the Company (including all salaries and
expenses of its officers and employees performing legal or accounting duties), (vi) reasonable fees and expenses of counsel for the Company and customary fees and expenses for independent
certified public accountants retained by the Company (including the expenses relating to any comfort letters or costs associated with the delivery by
independent certified public accountants of any comfort letters requested pursuant to Section 2.04(h)), (vii) reasonable fees and expenses of any special experts retained by the Company
in connection with such registration, (viii) reasonable fees and expenses of one counsel for all of the Stockholders participating in the offering (selected by the Stockholders holding the
majority of the Registrable Securities to be sold for the account of all Stockholders in the offering), (ix) fees and expenses in connection with any review by the NASD of the underwriting
arrangements or other terms of the offering, and all fees and expenses of any "qualified independent underwriter," including the fees and expenses of any counsel thereto, (x) fees and
disbursements of underwriters customarily paid by issuers or sellers of securities, but excluding any underwriting fees, discounts and commissions attributable to the sale of Registrable Securities,
(xi) costs of printing and producing any agreements among underwriters, underwriting agreements, any "blue sky" or legal investment memoranda and any selling agreements and other documents in
connection with the offering, sale or delivery of the Registrable Securities, (xii) transfer agents' and registrars' fees and expenses and the fees and expenses of any other agent or trustee
appointed in connection with such offering, (xiii) fees and expenses payable in connection with any ratings of the Registrable Securities, including expenses relating to any presentations to
rating agencies and (xiv) all out-of-pocket costs and expenses incurred by the Company or its appropriate officers in connection with their compliance with
Section 2.04(l). Except as set forth in clause (viii) above, Registration Expenses shall not include any out-of-pocket expenses of any Stockholders (or any agents
who manage their accounts). 

        "Rule 144" means Rule 144 (or any successor provisions) under the Securities Act. 

2

 

        "SEC" means the Securities and Exchange Commission. 

        "Securities Act" means the Securities Act of 1933, as amended. 

        "Stockholders Agreement" means that certain Stockholders Agreement, dated as of the Effective Date of the Plan, among the Company and the
holders of Common Stock listed on Schedule I thereto. 

        "Subsidiary" means, with respect to any Person, any entity of which securities or other ownership interests having ordinary voting power
to elect a majority of the board of directors or other persons performing similar functions are at the time directly or indirectly owned by such Person. 

        Section 1.02.    Other Definitional and Interpretative Provisions.    The words "hereof", "herein" and
"hereunder" and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The captions herein are included for
convenience of reference only and shall be ignored in the construction or interpretation hereof. References to Articles, Sections and Schedules are to Articles, Sections and Schedules of this
Agreement unless otherwise specified. All Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Any capitalized
terms used in any Schedule but not otherwise defined therein, shall have the meaning as defined in this Agreement. Any singular term in this Agreement shall be deemed to include the plural, and any
plural term the singular. Whenever the words "include", "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation", whether or not they
are in fact followed by those words or words of like import. "Writing", "written" and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a
visible form. References to any agreement or contract are to that agreement or contract as amended, modified or supplemented from time to time in accordance with the terms hereof and thereof.
References to any Person include the successors and permitted assigns of that Person. References from or through any date mean, unless otherwise specified, from and including or through and including,
respectively. 

 
 

ARTICLE 2
  REGISTRATION RIGHTS    

        Section 2.01.    Demand Registration.    (a) If at any time following the first anniversary of the
Effective Date, the Company shall receive a request from any Stockholder, or group of Stockholders, that holds in the aggregate 20% (or, if the First Public Offering has occurred, any Stockholder, or
group of Affiliated Stockholders, that holds in the aggregate 10%) or more of the then outstanding Common Stock (the "Requesting Stockholder") that the
Company effect the registration under the Securities Act of all or any portion of such Requesting Stockholder's Registrable Securities, and specifying the intended method of disposition thereof, then
the Company shall promptly give notice of such requested registration (each such request shall be referred to herein as a "Demand Registration") at
least 20 Business Days prior to the anticipated filing date of the registration statement relating to such Demand Registration to the other Stockholders and thereupon shall use its best efforts to
effect, as expeditiously as possible, the registration under the Securities Act of: 

          (i)  all
Registrable Securities for which the Requesting Stockholders have requested registration under this Section 2.01, and 

         (ii)  subject
to the restrictions set forth in Sections 2.01(h) andSection 2.09, all other Registrable Securities that any other Stockholders (all such other Stockholders,
together with the Requesting Stockholders, the "Registering Stockholders") have requested the Company to register by request received by the Company
within 20 Business Days after such Stockholders receive the Company's notice of the Demand Registration (such request shall include all information with respect to such Stockholder required to effect
the registration of such Stockholder's Registrable Securities), 

3

 

all
to the extent necessary to permit the disposition (in accordance with the intended methods thereof as aforesaid) of the Registrable Securities so to be registered,  provided that, subject to
Section 2.01(d)(g), the Company shall not be obligated to effect more than 4 Demand Registrations (at least one of
which shall be available for use after the First Public Offering has occurred), and provided further that the Company shall not be obligated to effect a
Demand Registration unless (i) the aggregate market price or fair value on the date of such request of the Registrable Securities requested to be included in such Demand Registration equals or
exceeds $25,000,000 or (ii) the number of Common Shares requested to be registered pursuant to such Demand Registration equals or exceeds 10% of then outstanding Common Shares on the date of
such request. In no event shall the Company be required to effect more than one Demand Registration hereunder within any six-month period. 

        (b)   Promptly
after the expiration of the 20 Business Day-period referred to in Section 2.01(a)(ii), the Company will notify all Registering Stockholders
of the identities of the other Registering Stockholders and the number of shares of Registrable Securities requested to be included therein. At any time prior to the effective date of the registration
statement relating to such registration, the Requesting Stockholders may revoke such request, without liability to any of the other Registering Stockholders, by providing a notice to the Company
revoking such request. A request, so revoked, shall be considered to be a Demand Registration unless (i) such revocation arose out of the fault of the Company (in which case the Company shall
be obligated to pay all Registration Expenses in connection with such revoked request), or (ii) the Requesting Stockholders reimburse the Company for all Registration Expenses of such revoked
request. 

        (c)   The
Company shall be liable for and pay all Registration Expenses in connection with any Demand Registration, regardless of whether such Registration is effected, except
as set forth in Section 2.01(b). 

        (d)   Any
registration statement filed pursuant to a Demand Registration shall be a shelf registration statement that complies with the provisions of Rule 415 under the
Securities Act, unless otherwise agreed by the Requesting Stockholder and at least one other Stockholder, or group of Affiliated Stockholders, if any, that holds in the aggregate 20% or more of the
then outstanding Registrable Securities (a "Second Large Holder"); provided that the first registration
statement filed pursuant to a Demand Registration after the First Public Offering shall be a shelf registration statement that complies with the provisions of Rule 415 under the Securities Act. 

        (e)   Unless
otherwise agreed with the Requesting Stockholder and at least one Second Large Holder, if any, any registration of the Company's Common Stock pursuant to this
Section 2.01 shall be effected solely for the purpose of registering the offer and sale of the Common Stock held by the Registering Stockholders and shall not be effected for any offer or sale
by the Company of securities by the Company. 

        (f)    If
requested by any Stockholder, or group of Stockholders, that holds in the aggregate 20% (or, if the First Public Offering has occurred, any Stockholder, or group of
Affiliated Stockholders, that holds in the aggregate 10%) or more of the then outstanding Common Stock, the Company shall use its best efforts to have the Common Stock quoted on the Nasdaq National
market or listed on a national securities exchange, in each case as designated by such Requesting Stockholder so long as the Company is subject to the reporting requirements under the Exchange Act,
whether or not as a result of a Demand Registration, and otherwise qualifies for such quotation or listing. 

        (g)   A
Demand Registration shall not be deemed to have occurred: 

          (i)  unless
the registration statement relating thereto (A) has become effective under the Securities Act and (B) has remained effective for a period of at
least 180 days, or in the case of a shelf registration statement, two years (or such shorter period in which all Registrable Securities of the Registering Stockholders included in such
registration have actually been sold thereunder), 

4

 

 provided that such registration statement shall not be considered a Demand Registration if, after such registration statement becomes effective, (1) such registration
statement is interfered with by any stop order, injunction or other order or requirement of the SEC or other governmental agency or court and (2) less than 75% of the Registrable Securities
included in such registration statement have been sold thereunder; or 

         (ii)  if
the Maximum Offering Size is reduced in accordance with Section 2.01(h) such that less than 662/3% of the Registrable Securities of the
Requesting Stockholders sought to be included in such registration are included. 

        (h)   If
a Demand Registration involves an underwritten Public Offering and the managing underwriter advises the Company and the Requesting Stockholders that, in its view, the
number of shares of Registrable Securities requested to be included in such registration (including any securities that the Company proposes to be included that are not Registrable Securities) exceeds
the largest number of shares that can be sold without having an adverse effect on such offering, including the price at which such shares can be sold (the "Maximum Offering
Size"), the Company shall include in such registration, in the priority listed below, up to the Maximum Offering Size: 

          (i)  first,
all Registrable Securities requested to be registered by any Registering Stockholders (allocated, if necessary for the offering not to exceed the Maximum
Offering Size, pro rata among such entities on the basis of the relative number of Registrable Securities so requested to be included in such registration by each), and 

         (ii)  second,
subject to Section 2.01(e), any securities proposed to be registered for the account of the Company. 

        (i)    Upon
notice to each Registering Stockholder, the Company may postpone effecting a registration pursuant to this Section 2.01 on one occasion during any period of
six consecutive months for a reasonable time specified in the notice but not exceeding 60 days (which period may not be extended or renewed), if (i) an investment banking firm of
recognized national standing shall advise the Company and the Requesting Stockholders in writing that effecting the registration would materially and adversely affect an offering of securities of such
Company the preparation of which had then been commenced or (ii) the Company is in possession of material non-public information the disclosure of which during the period specified
in such notice the Company reasonably believes would not be in the best interests of the Company. 

        Section 2.02.    Piggyback Registration.    (a) If the Company, subject to Section 2.03, proposes
to register any Company Securities under the Securities Act (other than a registration on Form S-8 or S-4, or any successor forms, relating to Common Shares issuable
upon exercise of employee stock options or in connection with any employee benefit or similar plan of the Company or in connection with a direct or indirect acquisition by the Company of another
Person), whether or not for sale for its own account, the Company shall each such time give prompt notice at least 30 Business Days prior to the anticipated filing date of the registration statement
relating to such registration to each Stockholder owning any Common Shares, which notice shall set forth such Stockholder's rights under this Section 2.02 and shall offer such Stockholder the
opportunity to include in such registration statement the number of Registrable Securities of the same class or series as those proposed to be registered as each such Stockholder may request (a
"Piggyback Registration"), subject to the provisions of Section 2.02(b). Upon the request of any such Stockholder made within 15 Business Days
after the receipt of notice from the Company (which request shall specify the number of Registrable Securities intended to be registered by such Stockholder), the Company shall use its best efforts to
effect the registration under the Securities Act of all Registrable Securities that the Company has been so requested to register by all such Stockholders, to the extent requisite to permit the
disposition of the Registrable Securities so to be registered, provided that (i) if such registration involves an underwritten Public Offering,
all such Stockholders requesting to be included in the Company's registration must sell 

5

 

their
Registrable Securities to the underwriters selected as provided in Section 2.04(f) on the same terms and conditions as apply to the Company or the Requesting Stockholders, as applicable,
and (ii) if, at any time after giving notice of its intention to register any Company Securities pursuant to this Section 2.02 and prior to the effective date of the registration
statement filed in connection with such registration, the Company shall determine for any reason not to register such securities, the Company shall give notice to all such Stockholders and, thereupon,
shall be relieved of its obligation to register any Registrable Securities in connection with such registration. No registration effected under this Section 2.02 shall relieve the Company of
its obligations to effect a Demand Registration to the extent required by Section 2.01. The Company shall pay all Registration Expenses in connection with each Piggyback Registration. 

        (b)   If
a Piggyback Registration involves an underwritten Public Offering (other than any Demand Registration, in which case the provisions with respect to priority of
inclusion in such offering set forth in Section 2.01(h) shall apply) and the managing underwriter advises the Company that, in its view, the number of Shares that the Company and such
Stockholders intend to include in such registration exceeds the Maximum Offering Size, the Company shall include in such registration, in the following priority, up to the Maximum Offering Size: 

          (i)  first,
so much of the Company Securities proposed to be registered for the account of the Company as would not cause the offering to exceed the Maximum Offering Size, 

         (ii)  second,
all Registrable Securities requested to be included in such registration by any Stockholders pursuant to Section 2.02 (allocated, if necessary for the
offering not to exceed the Maximum Offering
Size, pro rata among such Stockholders on the basis of the relative number of shares of Registrable Securities so requested to be included in such registration by each), and 

        (iii)  third,
any securities proposed to be registered for the account of any other Persons with such priorities among them as the Company shall determine. 

        Section 2.03.    Filing Registration Statements; Lock-Up Agreements.    (a) Prior to the
earlier of (i) the sale, assignment or other disposition by Fidelity of such number of Common Shares held by it that it no longer holds an aggregate of 20% or more of the then outstanding
Common Stock and (ii) eighteen months after the Effective Date, the Company may not file with the SEC any registration statement to register any securities of the Company for the sale for its
own account under the Securities Act (other than a registration on Form S-8 or S-4, or any successor forms, relating to Common Shares issuable upon exercise of employee
stock options or in connection with any employee benefit or similar plan of the Company or in connection with a direct or indirect acquisition by the Company of another Person) and thereafter, the
Company may so file such a registration statement so long as a majority of the members of the Company's Board and a majority of the Stockholders approve such a filing. 

6

  

        (b)   If any registration of Registrable Securities shall be effected in connection with a Public Offering, neither the Company nor any Stockholder shall effect any public
sale or distribution, including any sale pursuant to Rule 144, of any Company Securities or other security of the Company (except as part of such Public Offering) during the period beginning
14 days prior to the effective date of the applicable registration statement until the earlier of (i) such time as the Company and the lead managing underwriter shall agree and
(ii) 90 days (or 180 days if the registration of such Registrable Securities is the First Public Offering). 

        Section 2.04.    Registration Procedures.    Whenever Stockholders request that any Registrable Securities be
registered pursuant to Section 2.01 or 2.02, subject to the provisions of such Sections, the Company shall use its best efforts to effect the registration and the sale of such Registrable
Securities in accordance with the intended method of disposition thereof as quickly as practicable, and, in connection with any such request: 

        (a)   The
Company shall as expeditiously as possible prepare and file with the SEC a registration statement on any form for which the Company then qualifies or that counsel
for the Company shall deem appropriate and which form shall be available for the sale of the Registrable Securities to be registered thereunder in accordance with the intended method of distribution
thereof, and use its best efforts to cause such filed registration statement to become and remain effective continuously for a period of not less than 180 days, or in the case of a shelf
registration statement, two years (or such shorter period in which all of the Registrable Securities of the Registering Stockholders included in such registration statement shall have actually been
sold thereunder). 

        (b)   Prior
to filing a registration statement or prospectus or any amendment or supplement thereto, the Company shall, if requested, furnish to each participating Stockholder
and each underwriter, if any, of the Registrable Securities covered by such registration statement copies of such registration statement as proposed to be filed, and thereafter the Company shall
furnish to such Stockholder and underwriter, if any, such number of copies of such registration statement, each amendment and supplement thereto (in each case including all exhibits thereto and
documents incorporated by reference therein), the prospectus included in such registration statement (including each preliminary prospectus and any summary prospectus) and any other prospectus filed
under Rule 424 or Rule 430A under the Securities Act and such other documents as such Stockholder or underwriter may reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such Stockholder. Each Stockholder shall have the right to request that the Company modify any information contained in such registration statement, amendment and
supplement thereto pertaining to such Stockholder and the Company shall use its best efforts to comply with such request, provided, however, that the
Company shall not have any obligation so to modify any information if the Company reasonably expects that so doing would cause the prospectus to contain an untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make the statements therein not misleading. 

        (c)   After
the filing of the registration statement, the Company shall (i) cause the related prospectus to be supplemented by any required prospectus supplement, and,
as so supplemented, to be filed pursuant to Rule 424 under the Securities Act, (ii) comply with the provisions of the Securities Act with respect to the disposition of all Registrable
Securities covered by such registration statement during the applicable period in accordance with the intended methods of disposition by the Registering Stockholders thereof set forth in such
registration statement or supplement to such prospectus and (iii) promptly notify each Registering Stockholder holding Registrable Securities covered by such registration statement of any stop
order issued or threatened by the SEC or any state securities commission and take all reasonable actions required to prevent the entry of such stop order or to remove it if entered. 

7

 

        (d)   The
Company shall use its best efforts to (i) register or qualify the Registrable Securities covered by such registration statement under such other securities or
"blue sky" laws of such jurisdictions in the United States as any Registering Stockholder holding such Registrable Securities reasonably (in light of such Stockholder's intended plan of distribution)
requests and (ii) cause such Registrable Securities to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and
operations of the Company and do any and all other acts and things that may be reasonably necessary or advisable to enable such Stockholder to consummate the disposition of the Registrable Securities
owned by such Stockholder, provided that the Company shall not be required to (A) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this Section 2.04(d), (B) subject itself to taxation in any such jurisdiction or (C) consent to general service of process in
any such jurisdiction. 

        (e)   The
Company shall immediately notify each Registering Stockholder holding such Registrable Securities covered by such registration statement, at any time when a
prospectus relating thereto is required to be delivered under the Securities Act, of the occurrence of an event requiring the preparation of a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading and promptly prepare and make available to each such Stockholder and file with the SEC any such supplement or amendment. 

        (f)    (i) the
Requesting Stockholders shall have the right to select an underwriter or underwriters in connection with any Public Offering resulting from the exercise
by such Requesting Stockholder of a Demand Registration, which selection shall be subject to the approval of the Company, which approval shall be reasonably given, and (ii) the Company shall
select an underwriter or underwriters in connection with any other Public Offering. In connection with any Public Offering, the Company shall enter into customary agreements (including an underwriting
agreement in customary form) and take such all other actions as are reasonably required in order to expedite or facilitate the disposition of such Registrable Securities in any such Public Offering,
including the engagement of a "qualified independent underwriter" in connection with the qualification of the underwriting arrangements with the NASD. 

        (g)   Upon
execution of confidentiality agreements in form and substance reasonably satisfactory to the Company, the Company shall make available for inspection by any
Registering Stockholder and any underwriter participating in any disposition pursuant to a registration statement being filed by the Company pursuant to this Agreement and any attorney, accountant or
other professional retained by any such Stockholder or underwriter (collectively, the "Inspectors"), all financial and other records, pertinent
corporate documents and properties of the Company (collectively, the "Records") as shall be reasonably necessary or desirable to enable them to exercise
their due diligence responsibility, and cause the Company's officers, directors and employees to supply all information reasonably requested by any Inspectors in connection with such registration
statement. Records that the Company determines, in good faith, to be confidential and that it notifies the Inspectors are confidential shall not be disclosed by the Inspectors unless (i) the
disclosure of such Records is necessary to avoid or correct a misstatement or omission in such registration statement or (ii) the release of such Records is ordered pursuant to a subpoena or
other order from a court of competent jurisdiction. Each Registering Stockholder agrees that information obtained by it as a result of such inspections shall be deemed confidential and shall not be
used by it or its Affiliates as the basis for any market transactions in the Company Securities unless and until such information is made generally available to the public. Each Registering
Stockholder further agrees that, upon learning that disclosure of such Records is sought in a court of competent jurisdiction, it shall give notice to the Company and allow the Company, at its
expense, to undertake appropriate action to prevent disclosure of the Records deemed confidential. 

8

 

        (h)   The
Company shall furnish to each Registering Stockholder and to each such underwriter, if any, a signed counterpart, addressed to such Registering Stockholder or
underwriter, of (i) an opinion or opinions of counsel to the Company and (ii) a comfort letter or comfort letters from the Company's independent public accountants, each in customary
form and covering such matters of the kind customarily covered by opinions or comfort letters, as the case may be, as a majority of such Registering Stockholders or the managing underwriter therefor
reasonably requests. 

        (i)    The
Company shall otherwise use its best efforts to comply with all applicable rules and regulations of the SEC, and make available to its security holders, as soon as
reasonably practicable, an earnings statement or such other document covering a period of 12 months, beginning within three months after the effective date of the registration statement, which
earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder. 

        (j)    The
Company may require each Registering Stockholder promptly to furnish in writing to the Company such information regarding the distribution of the Registrable
Securities as the Company may from time to time reasonably request and such other information as may be legally required in connection with such registration. 

        (k)   Each
Registering Stockholder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 2.04(e), such
Stockholder shall forthwith discontinue disposition of Registrable Securities pursuant to the registration statement covering such Registrable Securities until such Stockholder's receipt of the copies
of the supplemented or amended prospectus contemplated by Section 2.04(e), and, if so directed by the Company, such Stockholder shall deliver to the Company all copies, other than any permanent
file copies then in such Stockholder's possession, of the most recent prospectus covering such Registrable Securities at the time of receipt of such notice. If the Company shall give such notice, the
Company shall extend the period during which such registration statement shall be maintained effective (including the period referred to in Section 2.04(a)) by the number of days during the
period from and including the date of the giving of notice pursuant to Section 2.04(e) to the date when the Company shall make available to such Stockholder a prospectus supplemented or amended
to conform with the requirements of Section 2.04(e). 

        (l)    The
Company shall have appropriate officers of the Company (i) prepare and make presentations at any "road shows" and before analysts and rating agencies, as the
case may be, (ii) take other actions to obtain ratings for any Registrable Securities and (iii) otherwise use their best efforts to cooperate as reasonably requested by the underwriters
in the offering, marketing or selling of the Registrable Securities. 

        (m)  The
Company's obligations under this Section 2.04 shall not be conditioned upon any Registering Stockholder (other than the Requesting Stockholders) meeting the
information requirements of Section 2.01(a)(ii). 

        Section 2.05.    Indemnification by the Company.    The Company agrees to indemnify and hold harmless each
Stockholder holding Registrable Securities covered by a registration statement, its officers, directors, employees, partners and agents, and each Person, if any, who controls such Stockholder within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act from and against any and all losses, claims, damages, liabilities and expenses (including reasonable
expenses of investigation and reasonable attorneys' fees and expenses) ("Damages") caused by or relating to any untrue statement or alleged untrue
statement of a material fact contained in any registration statement or prospectus relating to the Registrable Securities (as amended or supplemented if the Company shall have furnished any amendments
or supplements thereto) or any preliminary prospectus, or caused by or relating to any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, except insofar as such Damages are caused by or related to any such untrue statement or omission or alleged 

9

 

untrue
statement or omission so made based upon information furnished in writing to the Company by such Stockholder or on such Stockholder's behalf expressly for use therein,  provided that, with respect to any
untrue statement or omission or alleged untrue statement or omission made in any preliminary prospectus, or in any
prospectus, as the case may be, the indemnity agreement contained in this paragraph shall not apply to the extent that any Damages result from the fact that a current copy of the prospectus (or such
amended or supplemented prospectus, as the case may be) was not sent or given to the Person asserting any such Damages at or prior to the written confirmation of the sale of the Registrable Securities
concerned to such Person if it is determined that the Company has provided such prospectus to such Stockholder and it was the responsibility of such Stockholder to provide such Person with a current
copy of the prospectus (or such amended or supplemented prospectus, as the case may be) and such current copy of the prospectus (or such amended or supplemented prospectus, as the case may be) would
have cured the defect giving rise to such Damages. The Company also agrees to indemnify any underwriters of the Registrable Securities, their officers and directors and each Person who controls such
underwriters within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act on substantially the same basis as that of the indemnification of the Stockholders
provided in this Section 2.05. 

        Section 2.06.    Indemnification by Participating Stockholders.    Each Stockholder holding Registrable
Securities included in any registration statement agrees, severally but not jointly, to indemnify and hold harmless the Company, its officers, directors and agents and each Person, if any, who
controls the Company within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the foregoing indemnity from the Company to
such Stockholder, but only (i) with respect to information furnished in writing by such Stockholder or on such Stockholder's behalf expressly for use in any registration statement or prospectus
relating to the Registrable Securities, or any amendment or supplement thereto, or any preliminary prospectus or (ii) to the extent that any Damages result from the fact that a current copy of
the prospectus (or such amended or supplemented prospectus, as the case may be) was not sent or given to the Person asserting any such Damages at or prior to the written confirmation of the sale of
the Registrable Securities concerned to such Person if it is determined that it was the responsibility of such Stockholder to provide such Person with a current copy of the prospectus (or such amended
or supplemented prospectus, as the case may be) and such current copy of the prospectus (or such amended or supplemented prospectus, as the case may be) would have cured the defect giving rise to such
loss, claim, damage, liability or expense. Each such Stockholder also agrees to indemnify and hold harmless underwriters of the Registrable Securities, their officers and directors and each Person who
controls such underwriters within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act on substantially the same basis as such Stockholder is
required to indemnify the Company as provided in this Section 2.06. As a condition to including Registrable Securities in any registration statement filed in accordance with Article 2,
the Company may require that it shall have received an undertaking reasonably satisfactory to it from any underwriter to indemnify and hold it harmless to the extent customarily provided by
underwriters with respect to similar securities. No Stockholder shall be liable under this Section 2.06 for any Damages in excess of the net proceeds realized by such Stockholder in the sale of
Registrable Securities of such Stockholder to which such Damages relate. 

        Section 2.07.    Conduct of Indemnification Proceedings.    If any proceeding (including any governmental
investigation) shall be instituted involving any Person in respect of which indemnity may be sought pursuant to this Article 2, such Person (an "Indemnified
Party") shall promptly notify the Person against whom such indemnity may be sought (the "Indemnifying Party") in writing and the
Indemnifying Party shall assume the defense thereof, including the employment of counsel reasonably satisfactory to such Indemnified Party, and shall assume the payment of all fees and expenses,  provided that the failure of any Indemnified Party so to notify the Indemnifying Party shall not relieve the Indemnifying Party of its obligations
hereunder except to the extent that the Indemnifying Party is materially prejudiced by such failure to notify. In any such proceeding, any Indemnified Party shall have 

10

 

the
right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless (i) the Indemnifying Party and the Indemnified Party
shall have mutually agreed to the retention of such counsel or (ii) in the reasonable judgment of such Indemnified Party representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. It is understood that, in connection with any proceeding or related proceedings in the same jurisdiction, the Indemnifying
Party shall not be liable for the reasonable fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) at any time for all such Indemnified Parties, and that all
such fees and expenses shall be reimbursed as they are incurred. In the case of any such separate firm for the Indemnified Parties, such firm shall be designated in writing by the Indemnified Parties.
The Indemnifying Party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent, or if there be a final judgment for the
plaintiff, the Indemnifying Party shall indemnify and hold harmless such Indemnified Parties from and against any loss or liability (to the extent stated above) by reason of such settlement or
judgment. Without the prior written consent of the Indemnified Party, no Indemnifying Party shall effect any settlement of any pending or threatened proceeding in respect of which any Indemnified
Party is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such settlement includes an unconditional release of such Indemnified Party from
all liability arising out of such proceeding. 

        Section 2.08.    Contribution.    If the indemnification provided for in this Article 2 is unavailable
to the Indemnified Parties in respect of any Damages, then each such Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Damages (i) as between the Company and the Stockholders holding Registrable Securities covered by a registration statement on the one hand and the
underwriters on the other, in such proportion as is appropriate to reflect the relative benefits received by the Company and such Stockholders on the one hand and the underwriters on the other, from
the offering of the Registrable Securities, or if such allocation is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits but also the
relative fault of the
Company and such Stockholders on the one hand and of such underwriters on the other in connection with the statements or omissions that resulted in such Damages, as well as any other relevant
equitable considerations and (ii) as between the Company on the one hand and each such Stockholder on the other, in such proportion as is appropriate to reflect the relative fault of the
Company and of each such Stockholder in connection with such statements or omissions, as well as any other relevant equitable considerations. The relative benefits received by the Company and such
Stockholders on the one hand and such underwriters on the other shall be deemed to be in the same proportion as the total proceeds from the offering (net of underwriting discounts and commissions but
before deducting expenses) received by the Company and such Stockholders bear to the total underwriting discounts and commissions received by such underwriters, in each case as set forth in the table
on the cover page of the prospectus. The relative fault of the Company and such Stockholders on the one hand and of such underwriters on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company and such
Stockholders or by such underwriters. The relative fault of the Company on the one hand and of each such Stockholder on the other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by such party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such statement or omission. 

        The
Company and the Stockholders agree that it would not be just and equitable if contribution pursuant to this Section 2.08 were determined by pro rata allocation (even if the
underwriters were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid 

11

 

or
payable by an Indemnified Party as a result of the Damages referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 2.08, no
underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Registrable Securities underwritten by it and distributed to the public were
offered to the public exceeds the amount of any Damages that such underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission,
and no Stockholder shall be required to contribute any amount in excess of the amount by which the total price at which the Registrable Securities of such Stockholder were offered to the public (less
underwriters' discounts and commissions) exceeds the amount of any Damages that such Stockholder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation. Each Stockholder's obligation to contribute pursuant to this Section 2.08 is several in the proportion that the proceeds of the offering received by
such Stockholder bears to the total proceeds of the offering received by all such Stockholders and not joint. 

        Section 2.09.    Participation in Public Offering.    No Stockholder may participate in any Public Offering
permitted under Section 2.01(d) unless such Stockholder (a) agrees to sell such Stockholder's Registrable
Securities on the basis provided in any underwriting arrangements approved by the Company and Stockholders holding at least a majority of the Registrable Securities included in such Public Offering
and (b) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting
arrangements and the provisions of this Agreement in respect of registration rights. 

        Section 2.10.    Other Indemnification.    Indemnification similar to that specified herein (with appropriate
modifications) shall be given by the Company and each Stockholder participating therein with respect to any required registration or other qualification of securities under any federal or state law or
regulation or governmental authority other than the Securities Act. 

        Section 2.11.    Cooperation by the Company.    If any Stockholder shall transfer any Registrable Securities
pursuant to Rule 144, the Company shall cooperate, to the extent commercially reasonable, with such Stockholder and shall provide to such Stockholder such information as such Stockholder shall
reasonably request. 

        Section 2.12.    No Transfer of Registration Rights.    None of the rights of Stockholders under this
Article 2 shall be assignable by any Stockholder to any Person acquiring Securities in any Public Offering. 

        Section 2.13.    Purchases and Sales of Securities.    The Company shall not, and shall use its best efforts to
cause its affiliates (as defined in Rule 405 under the 1933 Act) not to, purchase and then resell or otherwise transfer any Common Shares. 

 
 

ARTICLE 3
  CERTAIN COVENANTS AND AGREEMENTS    

        Section 3.01.    Limitations on Subsequent Registration Rights.    The Company agrees that it shall not enter
into any agreement with any holder or prospective holder of any securities of the Company (a) that would allow such holder or prospective holder to include such securities in any Demand
Registration or Piggyback Registration unless, under the terms of such agreement, such holder or prospective holder may include such securities in any such registration only to the extent that their
inclusion would not reduce the amount of the Registrable Securities of the Stockholders included therein or (b) on terms otherwise more favorable than this Agreement. 

12

 

        Section 3.02.    Charter or Bylaw Provisions.    Each Stockholder agrees to vote its Company Securities or
execute proxies or written consents, as the case may be, to ensure that the Company's certificate of incorporation and bylaws (a) facilitate, and do not at any time conflict with, any provision
of this Agreement and (b) permit each Stockholder to receive the benefits to which each such Stockholder is entitled under this Agreement. 

        Section 3.03.    Conflicting Agreements.    The Company represents that it has not, and agrees that it shall
not, enter into any agreement that is inconsistent with the rights granted to the holders of Registrable Securities in this Agreement or otherwise conflicts with the provisions hereof. 

 
 

ARTICLE 4
  MISCELLANEOUS    

        Section 4.01.    Binding Effect; Assignability.    This Agreement shall be binding upon and enforceable by each
of the parties hereto pursuant to, and in accordance with, the Plan both before and after execution hereof by any such party and shall inure to the benefit of and be binding upon the successors,
assigns and, subject to Section 2.12, transferees of each of the parties, including, without limitation and without the need for an express assignment, subsequent holders of Registrable
Securities. The failure of any party to execute this Agreement shall not prevent them from exercising their rights under this Agreement, subject to their obligations under and the terms and conditions
of this Agreement. If any transferee of any holder of Registrable Securities shall acquire Registrable Securities, in any manner, whether by operation of law or otherwise, such Registrable Securities
shall be held subject to all of the terms of this Agreement, and by taking and holding such Registrable Securities such Person shall be conclusively deemed to have agreed to be bound by and to perform
all of the terms and provisions of this Agreement and such Person shall be entitled to receive the benefits hereof. 

        Section 4.02.    Notices.    All notices, requests and other communications (collectively,
"Communications") to any party shall be in writing and shall be delivered in person, mailed by certified or registered mail, return receipt requested,
or sent by facsimile transmission, 

if
to the Company, to: 

McLeodUSA
Incorporated

6400 C Street SW

P.O. Box 3177

Cedar Rapids, IA 52406 3177

Facsimile: (319) 790 7901

Attn: James E. Thompson, Esq. 

if
to any Stockholder, to: 

        The
address of such Stockholder listed on Schedule I, or such other address as provided by such Stockholder to the Company. 

13

   
        All Communications shall be deemed received on the earliest of (i) the date such Communication is sent by facsimile transmission, (ii) the date such Communication is
delivered in person, (iii) the day after the date such Communication is placed in overnight mail with a national overnight courier service or (iv) three days after the date such
Communication is mailed by certified or registered mail, in each case so long as such day is a Business Day. If such day is not a Business Day, any such Communication shall be deemed not to have been
received until the next succeeding Business Day. Any Communication sent by facsimile transmission shall be confirmed by certified or registered mail, return receipt requested, posted within one
Business Day, or by personal delivery, whether courier or otherwise, made within two Business Days after the date of such facsimile transmissions. 

        Any
Person that becomes a Stockholder shall provide its address and fax number to the Company, which shall, upon request, promptly provide such information to any Stockholder requesting
such information. 

        Section 4.03.    Waiver; Amendment.    No provision of this Agreement may be waived except by an instrument in
writing executed by the party against whom the waiver is to be effective. No provision of this Agreement may be amended or otherwise modified except by an instrument in writing executed by the Company
with approval of (i) a majority of the Board and (ii) Stockholders holding at least two-thirds of the then outstanding Common Shares. 

        Section 4.04.    Fees and Expenses.    Except as may be otherwise provided herein or in any other agreement
between or among any parties hereto, the fees and expenses incurred by any Stockholder in connection with this Agreement, any amendment or waiver hereof and the transactions contemplated hereby and
all matters related hereto shall be paid by such Stockholder, except the Company shall pay all fees and expenses of one counsel for all Stockholders
(selected by Stockholders holding the majority of the Company Securities held by all Stockholders) in connection with any amendment or waiver of this Agreement or any transactions related thereto. 

        Section 4.05.    Governing Law.    This Agreement shall be governed by, and construed in accordance with, the
laws of the State of New York, without regard to the conflicts of laws rules of such state. 

        Section 4.06.    Jurisdiction.    The parties hereby agree that any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby shall be brought in the United States District Court for
the Southern District of New York or any New York State court sitting in New York City, so long as one of such courts shall have subject matter jurisdiction over such suit, action or proceeding, and
that any case of
action arising out of this Agreement shall be deemed to have arisen from a transaction of business in the State of New York, and each of the parties hereby irrevocably consents to the jurisdiction of
such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or
hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding which is brought in any such court has been brought in an
inconvenient form. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the
foregoing, each party agrees that service of process on such party as provided in Section 4.02 shall be deemed effective service of process on such party. 

        Section 4.07.    WAIVER OF JURY TRIAL.    EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. 

14

 

        Section 4.08.    Specific Enforcement.    Each party hereto acknowledges that the remedies at law of the other
parties for a breach or threatened breach of this Agreement would be inadequate and, in recognition of this fact, any party to this Agreement, without posting any bond, and in addition to all other
remedies that may be available, shall be entitled to obtain equitable relief in the form of specific performance, a temporary restraining order, a temporary or permanent injunction or any other
equitable remedy that may then be available. 

        Section 4.09.    Effectiveness.    This Agreement shall become effective upon the Effective Date of and as
defined in the Plan. 

        Section 4.10.    Entire Agreement.    This Agreement and the Stockholders Agreement constitute the entire
agreement among the parties hereto and supersede all prior and contemporaneous agreements and understandings, both oral and written, among the parties hereto with respect to the subject matter hereof
and thereof. 

        Section 4.11.    Severability.    If any term, provision, covenant or restriction of this Agreement is held by
a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such a determination, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an
acceptable
manner so that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible. 

15

 

        IN
WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by its authorized officer and each Stockholder is deemed to have accepted and agreed this Agreement pursuant
to the terms of the Plan, in each case as of the day and year first above written. 

	 	 	MCLEODUSA INCORPORATED
	

 	
 	

/s/  JAMES THOMPSON      

	 	 	Name: James Thompson
	 	 	Title: Group VP & General Counsel & Secretary

16

 

	 	 	STOCKHOLDER:
	

 	
 	

 	

NAME OF INSTITUTION:
	

 	
 	

 	

Aeries Finance-II Ltd.,
    as a Stockholder
	

 	
 	

 	

By:	

Patriarch Partners X, LLC,
 its Managing Agent
	

 	
 	

 	

By:	

/s/ Lynn Tilton

	 	 	 	 	Name:	Lynn Tilton
	 	 	 	 	Title:	Manager

17

 

	 	 	STOCKHOLDER:
	

 	
 	

 	

NAME OF INSTITUTION:
	

 	
 	

 	

McLeod Depository Corp,
    as a Stockholder
	

 	
 	

 	

By:	

/s/ Susan E. Atkins

	 	 	 	 	Name:	Susan E. Atkins
	 	 	 	 	Title:	President

18

 

	 	 	STOCKHOLDER:
	

 	
 	

 	

NAME OF INSTITUTION:
	

 	
 	

 	

3V Capital Master Fund Ltd
    as a Stockholder
	

 	
 	

 	

By:	

/s/ ILLEGIBLE

	 	 	 	 	Name:	 
	 	 	 	 	Title:	 

19

 

	 	 	STOCKHOLDER:
	

 	
 	

 	

NAME OF INSTITUTION:
	

 	
 	

 	

Kennett Capital,
    as a Stockholder
	

 	
 	

 	

By:	

/s/ Chris Goergen

	 	 	 	 	Name:	CHRIS GOERGEN
	 	 	 	 	Title:	Authorized Signatory
	

 	
 	

 	

By:	

/s/ Charles D. Mires

	 	 	 	 	Name:	CHARLES D. MIRES
	 	 	 	 	Title:	Authorized Signatory

20

 

	 	 	STOCKHOLDER:
	

 	
 	

 	

NAME OF INSTITUTION:
	

 	
 	

 	

AIMCO CDO, Series 2000-A
    as a Stockholder
	

 	
 	

 	

By:	

/s/ Chris Goergen

	 	 	 	 	Name:	CHRIS GOERGEN
	 	 	 	 	Title:	Authorized Signatory
	

 	
 	

 	

By:	

/s/ Charles D. Mires

	 	 	 	 	Name:	CHARLES D. MIRES
	 	 	 	 	Title:	Authorized Signatory

21

 

	 	 	STOCKHOLDER:
	

 	
 	

 	

NAME OF INSTITUTION:
	

 	
 	

 	

Banc of America Strategic Solutions, Inc.
    as a Stockholder
	

 	
 	

 	

By:	

/s/ Joshua Podietz

	 	 	 	 	Name:	Joshua Podietz
	 	 	 	 	Title:	Vice President

22

 

	 	 	STOCKHOLDER:
	

 	
 	

 	

NAME OF INSTITUTION:
	

 	
 	

 	

BANC OF AMERICA SECURITIES LLC
    as a Stockholder
	

 	
 	

 	

By:	

/s/ Jonathan M. Barnes

	 	 	 	 	Name:	Jonathan M. Barnes
	 	 	 	 	Title:	Associate

23

 

	 	 	STOCKHOLDER:
	

 	
 	

 	

NAME OF INSTITUTION:
	

 	
 	

 	

Calder & Co.
    as a Stockholder
	

 	
 	

 	

By:	

/s/ Vilma Pindling

	 	 	 	 	Name:	VILMA PINDLING
	 	 	 	 	Title:	SENIOR ASSISTANT AGENT

24

 

	 	 	STOCKHOLDER:
	

 	
 	

 	

NAME OF INSTITUTION:
	

 	
 	

 	

Bayerische Hypo-und Vereinsbank AG, New York Branch
    as a Stockholder
	

 	
 	

 	

By:	

/s/ Salvatore Esposito

	 	 	 	 	Name:	Salvatore Esposito
	 	 	 	 	Title:	Managing Director

25

 

	 	 	STOCKHOLDER:
	

 	
 	

 	

NAME OF INSTITUTION:
	

 	
 	

 	

Bear Stearns & Co. Inc.
    as a Stockholder
	

 	
 	

 	

By:	

/s/ John E. McDermott

	 	 	 	 	Name:	JOHN E. McDERMOTT
	 	 	 	 	Title:	SENIOR MANAGING DIRECTOR

26

 

	 	 	STOCKHOLDER:
	

 	
 	

 	

NAME OF INSTITUTION:
	

 	
 	

 	

CREDIT SUISSE FIRST BOSTON INTERNATIONAL
    as a Stockholder
	

 	
 	

 	

By:	

/s/ Irina Borisova

	 	 	 	 	Name:	Irina Borisova
	 	 	 	 	Title:	Vice President

27

 

	 	 	STOCKHOLDER:
	

 	
 	

 	

NAME OF INSTITUTION:
	

 	
 	

 	

Credit Suisse, acting through its Cayman Branch
    as a Stockholder
	

 	
 	

 	

By:	

/s/ Didier Siffer

	 	 	 	 	Name:	Didier Siffer
	 	 	 	 	Title:	Director
	

 	
 	

 	

By:	

/s/ Carol Flaton

	 	 	 	 	Name:	Carol Flaton
	 	 	 	 	Title:	Managing Director

28

 

	 	 	STOCKHOLDER:
	

 	
 	

 	

NAME OF INSTITUTION:
	

 	
 	

 	
CypressTree Investment Parters I, Ltd.,
	

 	
 	

 	

By:	

CypressTree Investment Management Company, Inc.,

as Portfolio Manager.
	

 	
 	

 	

By:	

/s/ Robert Weeden

	 	 	 	 	Name:	Robert Weeden
	 	 	 	 	Title:	Managing Director

29

 

	 	 	STOCKHOLDER:
	

 	
 	

 	

NAME OF INSTITUTION:
	

 	
 	

 	

SIMSBURY CLO. LIMITED,
    as a Stockholder
	

 	
 	

 	

By:	

Babson Capital Management LLC under delegated authority from Massachusetts Mutual Life Insurance Company as Collateral Manager
	

 	
 	

 	

By:	

/s/ David P. Wells

	 	 	 	 	Name:	David P. Wells, CFA
	 	 	 	 	Title:	Managing Director

30

 

	 	 	STOCKHOLDER:
	

 	
 	

 	

NAME OF INSTITUTION:
	

 	
 	

 	

Commonwealth of Massachusetts Pension Reserves Investment Management Board,

By: Fidelity Management Trust Company, as Investment Manager
    as a Stockholder
	

 	
 	

 	

By:	

/s/ Geoffrey W. Johnson

	 	 	 	 	Name:	 
	 	 	 	 	Title:	 

31

 

	 	 	STOCKHOLDER:
	

 	
 	

 	

NAME OF INSTITUTION:
	

 	
 	

 	

Fidelity Advisor Series I: Fidelity Advisor Leveraged Company Stock Fund
    as a Stockholder
	

 	
 	

 	

By:	

/s/ John H. Costello

	 	 	 	 	Name:	John H. Costello
	 	 	 	 	Title:	Assistant Treasurer

32

 

	 	 	STOCKHOLDER:
	

 	
 	

 	

NAME OF INSTITUTION:
	

 	
 	

 	

Fidelity Advisor Series II: Fidelity Advisor High Income Advantage
    as a Stockholder
	

 	
 	

 	

By:	

/s/ John H. Costello

	 	 	 	 	Name:	John H. Costello
	 	 	 	 	Title:	Assistant Treasurer

33

 

	 	 	STOCKHOLDER:
	

 	
 	

 	

NAME OF INSTITUTION:
	

 	
 	

 	

Fidelity Securities Fund: Fidelity Leveraged Company Stock Fund
    as a Stockholder
	

 	
 	

 	

By:	

/s/ John H. Costello

	 	 	 	 	Name:	John H. Costello
	 	 	 	 	Title:	Assistant Treasurer

34

 

	 	 	STOCKHOLDER:
	

 	
 	

 	

NAME OF INSTITUTION:
	

 	
 	

 	

Pension Investment Committee of General Motors for General Motors Employees Domestic Group Pension Trust
	

 	
 	

 	

By:	

Fidelity Management Trust Company

    as Investment Manager
    as a Stockholder
	

 	
 	

 	

By:	

/s/ Geoffrey W. Johnson

	 	 	 	 	Name:	 
	 	 	 	 	Title:	 

35

 

	 	 	STOCKHOLDER:
	

 	
 	

 	

NAME OF INSTITUTION:
	

 	
 	

 	

ML CLO XII PILGRIM AMERICA (CAYMAN) LTD,
    as a Stockholder
	

 	
 	

 	

By:	

ING Investments, LLC as its investment manager
	

 	
 	

 	

By:	

/s/ Robert Wilson

	 	 	 	 	Name:	Robert Wilson
	 	 	 	 	Title:	Senior Vice President

36

 

	 	 	STOCKHOLDER:
	

 	
 	

 	

Jefferies & Company, LLC
	

 	
 	

 	

By:	

/s/ Robert J. Welch

	 	 	 	 	Name:	Robert J. Welch
	 	 	 	 	Title:	Senior Vice President

37

 

	 	 	STOCKHOLDER:
	

 	
 	

 	

Jefferies Employees Opportunity Fund, LLC
	

 	
 	

 	

By:	

/s/ Robert J. Welch

	 	 	 	 	Name:	Robert J. Welch
	 	 	 	 	Title:	Chief Financial Officer

38

 

	 	 	STOCKHOLDER:
	

 	
 	

 	

Jefferies Partners Opportunity Fund II, LLC
	

 	
 	

 	

By:	

/s/ Robert J. Welch

	 	 	 	 	Name:	Robert J. Welch
	 	 	 	 	Title:	Chief Financial Officer

39

 

	 	 	STOCKHOLDER:
	

 	
 	

 	

Jefferies Partners Opportunity Fund, LLC
	

 	
 	

 	

By:	

/s/ Robert J. Welch

	 	 	 	 	Name:	Robert J. Welch
	 	 	 	 	Title:	Chief Financial Officer

40

 

	 	 	STOCKHOLDER:
	

 	
 	

 	

NAME OF INSTITUTION:
	

 	
 	

 	

KS Capital Parner, L.P.,
    as a Stockholder
	

 	
 	

 	

By:	

/s/ Jack Swain

	 	 	 	 	Name:	Jack Swain
	 	 	 	 	Title:	General Partner

41

 

	 	 	STOCKHOLDER:
	

 	
 	

 	

NAME OF INSTITUTION:
	

 	
 	

 	

KS International, Inc.,
    as a Stockholder
	

 	
 	

 	

By:	

/s/ Jack Swain

	 	 	 	 	Name:	Jack Swain
	 	 	 	 	Title:	General Partner

42

 

	 	 	STOCKHOLDER:
	

 	
 	

 	

NAME OF INSTITUTION:
	

 	
 	

 	

MERRILL LYNCH CREDIT PRODUCTS, LLC,
    as a Stockholder
	

 	
 	

 	

By:	

/s/ Pierre Batrouni

	 	 	 	 	Name:	PIERRE BATROUNI
	 	 	 	 	Title:	Vice President

43

 

	 	 	STOCKHOLDER:
	

 	
 	

 	

NAME OF INSTITUTION:
	

 	
 	

 	

ODYSSEY AMERICA REINSURANCE CORPORATION,
    as a Stockholder
	

 	
 	

 	

By:	

/s/ Donald L. Smith

	 	 	 	 	Name:	Donald L. Smith
	 	 	 	 	Title:	Senior Vice President

44

 

	 	 	STOCKHOLDER:
	

 	
 	

 	

NAME OF INSTITUTION:
	

 	
 	

 	

Centurion CDO II, Ltd.

By: RiverSource Investments, LLC as Collateral Manager,
    as a Stockholder
	

 	
 	

 	

By:	

/s/ Vincent Pham

	 	 	 	 	Name:	Vincent Pham
	 	 	 	 	Title:	Director—Operations

45

 

	 	 	STOCKHOLDER:
	

 	
 	

 	

NAME OF INSTITUTION:
	

 	
 	

 	

Sequils-Centurion V, Ltd.

By: RiverSource Investments, LLC as Collateral Manager,
    as a Stockholder
	

 	
 	

 	

By:	

/s/ Vincent Pham

	 	 	 	 	Name:	Vincent Pham
	 	 	 	 	Title:	Director—Operations

46

 

	 	 	STOCKHOLDER:
	

 	
 	

 	

NAME OF INSTITUTION:
	

 	
 	

 	

JPMorgan Chase Bank, N.A.,
    as a Stockholder
	

 	
 	

 	

By:	

/s/ Andrew Opel

	 	 	 	 	Name:	ANDREW OPEL
	 	 	 	 	Title:	AUTHORIZED SIGNATORY

47

 

	 	 	STOCKHOLDER:
	

 	
 	

 	

NAME OF INSTITUTION:
	

 	
 	

 	

Seneca CBO II, L.P.,
    as a Stockholder
	

 	
 	

 	

By:	

/s/ Tom Haag

	 	 	 	 	Name:	Tom Haag
	 	 	 	 	Title:	PM

48

 

	 	 	STOCKHOLDER:
	

 	
 	

 	

NAME OF INSTITUTION:
	

 	
 	

 	

Seneca CBO III, Limited,
    as a Stockholder
	

 	
 	

 	

By:	

/s/ Tom Haag

	 	 	 	 	Name:	Tom Haag
	 	 	 	 	Title:	PM

49

 

	 	 	STOCKHOLDER:
	

 	
 	

 	

NAME OF INSTITUTION:
	

 	
 	

 	

SOL LOAN FUNDING, LLC,
    as a Stockholder
	

 	
 	

 	

By:	

/s/ Mikus N. Kins

	 	 	 	 	Name:	Mikus N. Kins
	 	 	 	 	Title:	Attorney-in-fact

50

 

	 	 	STOCKHOLDER:
	

 	
 	

 	

NAME OF INSTITUTION:
	

 	
 	

 	

STRATEGIC VALUE MASTER FUND, LTD.

By: Strategic Value Partners, LLC

Its Investment Advisor,
    as a Stockholder
	

 	
 	

 	

By:	

/s/ Vivianne Hernandez

	 	 	 	 	Name:	Vivianne Hernandez
	 	 	 	 	Title:	Authorized Signatory

51

 

	 	 	STOCKHOLDER:
	

 	
 	

 	

NAME OF INSTITUTION:
	

 	
 	

 	

Textron Financial Corporation,
    as a Stockholder
	

 	
 	

 	

By:	

/s/ Matthew J. Colgan

	 	 	 	 	Name:	Matthew J. Colgan
	 	 	 	 	Title:	Senior Vice President

52

 

	 	 	STOCKHOLDER:
	

 	
 	

 	

NAME OF INSTITUTION:
	

 	
 	

 	

Sapphire Special Opportunities Fund, LLC,
    as a Stockholder
	

 	
 	

 	

By:	

Wayzata Investment Partners, LLC,

its Manager
	

 	
 	

 	

By:	

/s/ Joseph M. Deignan

	 	 	 	 	Name:	Joseph M. Deignan
	 	 	 	 	Title:	Authorized Signatory

53

 

	 	 	STOCKHOLDER:
	

 	
 	

 	

NAME OF INSTITUTION:
	

 	
 	

 	

Wayland Distressed Opportunities Fund I-C, LLC,
    as a Stockholder
	

 	
 	

 	

By:	

Wayzata Investment Partners, LLC,

its Manager
	

 	
 	

 	

By:	

/s/ Joseph M. Deignan

	 	 	 	 	Name:	Joseph M. Deignan
	 	 	 	 	Title:	Authorized Signatory

54

 

	 	 	STOCKHOLDER:
	

 	
 	

 	

NAME OF INSTITUTION:
	

 	
 	

 	

Wayland Distressed Opportunities Fund I-A, LLC,
    as a Stockholder
	

 	
 	

 	

By:	

Wayzata Investment Partners, LLC,

its Manager
	

 	
 	

 	

By:	

/s/ Joseph M. Deignan

	 	 	 	 	Name:	Joseph M. Deignan
	 	 	 	 	Title:	Authorized Signatory

55

 

	 	 	STOCKHOLDER:
	

 	
 	

 	

NAME OF INSTITUTION:
	

 	
 	

 	

Wayland Distressed Opportunities Fund I-B, LLC,
    as a Stockholder
	

 	
 	

 	

By:	

Wayzata Investment Partners, LLC,

its Manager
	

 	
 	

 	

By:	

/s/ Joseph M. Deignan

	 	 	 	 	Name:	Joseph M. Deignan
	 	 	 	 	Title:	Authorized Signatory

56

 

	 	 	STOCKHOLDER:
	

 	
 	

 	

NAME OF INSTITUTION:
	

 	
 	

 	

Wayland Recovery Fund, LLC,
    as a Stockholder
	

 	
 	

 	

By:	

Wayzata Investment Partners, LLC,

its Manager
	

 	
 	

 	

By:	

/s/ Joseph M. Deignan

	 	 	 	 	Name:	Joseph M. Deignan
	 	 	 	 	Title:	Authorized Signatory

57

 

	 	 	STOCKHOLDER:
	

 	
 	

 	

NAME OF INSTITUTION:
	

 	
 	

 	

Wayzata Recovery Fund, LLC,
    as a Stockholder
	

 	
 	

 	

By:	

Wayzata Investment Partners, LLC,

its Manager
	

 	
 	

 	

By:	

/s/ Joseph M. Deignan

	 	 	 	 	Name:	Joseph M. Deignan
	 	 	 	 	Title:	Authorized Signatory

58

 
 

SCHEDULE I    
    

	NAME, ADDRESS AND TIN
 
	 	NUMBER OF SHARES

	McLeod Depository Corp.

Susan Atkins

JP Morgan Chase Bank, N.A.

270 Park Avenue, 20th Floor

New York, NY 10017

20-4057039	 	1,396,739
	

	

3V Capital Master Fund Ltd.

Mark Focht

Libertas Holdings LLC

1 Greenwich Office Park North

Greenwich, CT 06831

98-0422169	
 	

402,735
	

	

Kennett Capital Inc.

Tony Gallo

Allstate Investment Mgmt. Co.

3075 Sanders Road., Suite G3B

Northbrook, IL 60062

52-2145989	
 	

72,504
	

	

AIMCO CDO Series 2000-A

Tony Gallo

Allstate Investment Mgmt. Co.

3075 Sanders Road., Suite G3B

Northbrook, IL 60062

Offshore Entity	
 	

72,504
	

	

Banc of America Strategic Solutions, Inc.

Jason Cipriani

Banc of America Strategic Solutions, Inc.

214 N. Tyron St., Floor 17

Charlotte, NC 28255

52-1710675	
 	

1,341,604
	

	

Banc of America Securities LLC

Jon Barnes

Banc of America Securities LLC

214 N. Tryon St.

NC1-027-14-1

Charlotte, NC 28255

56-2058405	
 	

44,295
	

	 	 	 

	

Calder & Co.

Bank of Nova Scotia

Attn: Stephen Levi

1 Liberty Place, Floor 23

New York, NY 10006

98-6000210	
 	

643,235
	

	

Bayerische Hypo-und Vereinsbank AG, New York Branch

HVB Group

Attn: Sal Espisito

150 E. 42nd Street

New York, NY 10017

13-2774123	
 	

1,063,914
	

	

Bear, Stearns and Co. Inc.

Bear Stearns

Attn: Laura Tarrado

383 Madison Avenue, Floor 8

New York, NY 10179

13-3604093	
 	

834,727
	

	

Credit Suisse First Boston, International

CSFB International

Attn: Diane Richards/Melanie Harries

1 Cabot Square

London E14 4QJ

Offshore Entity	
 	

852,595
	

	

Credit Suisse, Cayman Islands Branch

Ryan Delaney

Credit Suisse, New York & Cayman Island Branches

11 Madison Avenue, Floor 10

New York, NY 10010

13-5015677	
 	

918,907
	

	

Cypress Tree Investment Partners I

Cypress Tree Investment Management

Attn: Damien Mount

One Boston Place, Floor 16

Boston, MA 02108

Offshore Entity	
 	

174,009
	

	 	 	 

	

Simsbury CLO, Limited

JP Morgan Chase Bank

4 New York Plaza

New York, NY 10004

Account C39900; FCC 10200733.3

Offshore Entity	
 	

72,504
	

	

Commonwealth of Massachusetts Pension Reserves Investment Management Board

John Roche

Operations Manager

Fidelity Investments

82 Devonshire Street—Z1D

Boston, MA 02109

04-3525740	
 	

484,779
	

	

Fidelity Advisor Series I: Fidelity Advisor Leveraged Company Stock Fund

John Roche

Operations Manager

Fidelity Investments

82 Devonshire Street—Z1D

Boston, MA 02109

04-3533877	
 	

149,007
	

	

Fidelity Advisor Series II: Fidelity Advisor High Income Advantage

John Roche

Operations Manager

Fidelity Investments

82 Devonshire Street—Z1D

Boston, MA 02109

04-2940573	
 	

4,914,174
	

	

Fidelity Securities Fund: Fidelity Leveraged Company Stock Fund

John Roche

Operations Manager

Fidelity Investments

82 Devonshire Street—Z1D

Boston, MA 02109

04-3533868	
 	

1,701,867
	

	 	 	 

	

Pension Investment Committee of General Motors for General Motors Employees Domestic Group Pension Trust

John Roche

Operations Manager

Fidelity Investments

82 Devonshire Street—Z1D

Boston, MA 02109

New York, NY 10004

13-3160892	
 	

2,123,877
	

	

ML CLO XII Pilgrim America (Cayman) Ltd.

ING Pilgrim Investments

Attn: Brian Stevens

7337 East Doubletree Ranch Road

Scottsdale, AZ 85258

Offshore Entity	
 	

116,006
	

	

Jefferies & Company, Inc.

Jefferies & Company, Inc.

Attn: Michael Egan

Metro Center, One Station Place

Stamford, CT 06902

95-2622900	
 	

818,956
	

	

Jefferies Employees Opportunity Fund

Jefferies & Company, Inc.

Attn: Michael Egan

Metro Center, One Station Place

Stamford, CT 06902

06-1567019	
 	

159,242
	

	

Jefferies Partners Opportunity Fund II

Jefferies & Company, Inc.

Attn: Michael Egan

Metro Center, One Station Place

Stamford, CT 06902

95-4736081	
 	

545,971
	

	

Jefferies Partners Opportunity Fund

Jefferies & Company, Inc.

Attn: Michael Egan

Metro Center, One Station Place

Stamford, CT 06902

95-4714499	
 	

750,710
	

	 	 	 

	

KS Capital Partners, LP

Mike Jemal

KS Capital Partners, LP

11 W. 42nd St., 30th Floor

New York, NY 10036

22-3003767	
 	

112,824
	

	

KS International, Inc.

Mike Jemal

KS International, Inc.

11 W. 42nd St., 30th Floor

New York, NY 10036

Offshore Entity	
 	

47,600
	

	

Merrill Lynch Credit Products LLC

Merrill Lynch Credit Products LLC

Attn: Brian Wilson

4 World Financial Center, Floor 22

New York, NY 10080

56-2313907	
 	

153,562
	

	

Odyssey America Reinsurance Corporation

Bank of New York

1 Wall Street, 2nd Floor Window

New York, NY 10286

Attn: Michael Antwi

47-0698507

For Account #357620

Odyssey America RE Corp.	
 	

1,804,369
	

	

Aeries Finance-II Ltd.

Aeries Finance-II Ltd.

c/o U.S. Bank Corporate Trust Services

One Federal Street, 3rd Floor

Boston, MA 02110

FCC: Aeries Finance-II Ltd.

Attn: Jon Warn

Offshore Entity	
 	

14,501
	

	

Centurion CDO II, Ltd.

RiverSource Investments, LLC

Attn: Robin Stancil

100 N. Sepulveda Blvd., Suite 650

El Segundo, CA 90245

13-6062541	
 	

43,502
	

	 	 	 

	

SEQUILS Centurion V, Ltd.

Chase Manhattan Bank

Account G-72953

4 New York Plaza, Ground Floor

New York, NY 10004

Offshore Entity	
 	

43,502
	

	

JP Morgan Chase Bank, N.A.

Andrew Faherty

JP Morgan Chase Bank, N.A.

270 Park Avenue, 17th Floor

New York, NY 10017

13-4994650	
 	

1,438,224
	

	

Seneca CBO II L.P.

Rene Vielmas

Seneca CBO II L.P.

600 Travis St., Floor 4

Houston, TX 77002

Offshore Entity	
 	

145,007
	

	

Seneca CBO III, Limited

Rene Vielmas

Seneca CBO III, Limited

600 Travis St., Floor 4

Houston, TX 77002

Offshore Entity	
 	

145,007
	

	

SOL Loan Funding LLC

LaSalle Bank N.A., as Collateral Administrator

135 S. LaSalle St., Suite 1511

Chicago, IL 60603

Attn: CDO Trust Services-Mikas Kins

13-5266470	
 	

508,551
	

	

Strategic Value Master Fund, Ltd.

Mark Dicintio

Strategic Value Master Fund, Ltd.

80 Field Point Rd.

Greenwich, CT 06830

76-0707813	
 	

22,147
	

	 	 	 

	

Textron Financial Corporation

Don Henderson

Textrou Financial Corporation

40 Westminster St.

Providence, RI 02903

05-6008768	
 	

437,665
	

	

Sapphire Special Opportunities Fund, LLC

Wayzata Investment Partners LLC

Attn: Susan D. Peterson

701 East Lake St., Suite 300

Wayzata, MN 55391

22-3895790	
 	

1,126,953
	

	

Wayland Distressed Opportunities Fund I-C LLC

Wayzata Investment Partners LLC

Attn: Susan D. Peterson

701 East Lake St., Suite 300

Wayzata, MN 55391

20-0984128	
 	

1,423,601
	

	

Wayland Distressed Opportunities Fund I-A, LLC

Wayzata Investment Partners LLC

Attn: Susan D. Peterson

701 East Lake St., Suite 300

Wayzata, MN 55391

11-3693643	
 	

268,933
	

	

Wayland Distressed Opportunities Fund I-B, LLC

Wayzata Investment Partners LLC

Attn: Susan D. Peterson

701 East Lake St., Suite 300

Wayzata, MN 55391

33-1086190	
 	

246,786
	

	

Wayland Recovery Fund, LLC

Wayzata Investment Partners LLC

Attn: Susan D. Peterson

701 East Lake St., Suite 300

Wayzata, MN 55391

22-3875940	
 	

1,114,579
	

	

WAYZATA RECOVERY FUND LLC

Wayzata Investment Partners LLC

Attn: Susan D. Peterson

701 East Lake St., Suite 300

Wayzata, MN 55391

20-1612509	
 	

1,247,826
	

 
 

FIRST AMENDMENT TO
  REGISTRATION RIGHTS AGREEMENT    
    

        This First Amendment to Registration Rights Agreement (the "First Amendment") is entered into as of September 22nd, 2006, by and among
McLeodUSA Incorporated, a Delaware corporation (the "Company"), and the holders of Common Stock who are parties hereto (the "Amending Stockholders"). 

        WHEREAS,
the Company and the holders of Common Stock listed on Schedule I thereto (the "Stockholders") entered into that certain Registration Rights Agreement, dated as of
January 6, 2006 (the "Registration Rights Agreement"); and 

        WHEREAS,
pursuant to Section 4.03 of the Registration Rights Agreement, the Registration Rights Agreement may be amended upon the approval of (i) a majority of the Board of
Directors of the Company (the "Board") and (ii) Stockholders holding at least two-thirds of the outstanding Common Shares; and 

        WHEREAS,
this First Amendment has been approved by the Board and has received the approval of the Amending Stockholders who represent in excess of two-thirds of the
outstanding Common Shares. 

        NOW,
THEREFORE, in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows: 

	1.
	Definitions.    Capitalized terms used but not defined in this First Amendment shall have the respective meanings specified in
the Registration Rights Agreement.

	2.
	Amendment.

	(a)
	Section 2.03(a)
is hereby amended in its entirety as follows: 

        Filing Registration Statements; Lock-Up Agreements.    (a) Prior to the earlier of (i) the sale, assignment
or other disposition by Fidelity of such number of Common Shares held by it that it no longer holds an aggregate of 20% or more of the then outstanding Common Stock and (ii) eighteen months
after the Effective Date, the Company may not file with the SEC any registration statement to register any equity securities of the Company (or securities convertible or exchangeable for equity of the
Company) (collectively, "Equity Securities") for the sale for its own account under the Securities Act (other than a registration on Form S-8 or S-4, or any successor
forms, relating to Common Shares issuable upon exercise of employee stock options or in connection with any employee benefit or similar plan of the Company or in connection with a direct or indirect
acquisition by the Company of another Person) and thereafter, the Company may so file such a registration statement so long as a majority of the members of the Company's Board and a majority of the
Stockholders approve such a filing. 

	(b)
	Section 3.01
is hereby amended in its entirety as follows: 

        Limitations on Subsequent Registration Rights.    The Company agrees that it shall not enter into any agreement (a) with
any holder or prospective holder of any securities of the Company that would allow such holder or prospective holder to include such securities in any Demand Registration unless, under the terms of
such agreement, such holder or prospective holder may include such securities in any such registration only to the extent that their inclusion would not reduce the amount of the Registrable Securities
of the Stockholders included therein, (b) with any holder or prospective holder of any Equity Securities that would allow such holder or prospective holder to include such securities in any
Piggyback Registration unless, under the terms of such agreement, such holder or prospective holder may include such securities in any such registration only to the extent that their inclusion would
not reduce the amount of the Registrable Securities 

 

of
the Stockholders included therein or (c) with any holder or prospective holder of any Equity Securities that is on terms that are otherwise more favorable than this Agreement to such holder
or prospective holder. 

	(c)
	All
references in the Registration Rights Agreement to the term "Agreement" shall be deemed for all purposes to refer to the Registration Rights Agreement, as amended by this First
Amendment.

	3.
	Effectiveness.    Except as specifically provided herein, the Registration Rights Agreement is in all respects unaffected by
this First Amendment. All of the terms, conditions and provisions of the Registration Rights Agreement shall be and remain in full force and effect.

	4.
	Counterparts.    This First Amendment may be executed simultaneously in any number of counterparts, each of which shall be
deemed an original, but all such counterparts shall together constitute one of the same instrument.

	5.
	Governing Law.    This First Amendment shall be governed by, and construed in accordance with, the laws of the State of New
York, without regard to the conflicts of laws rules of such state. 

2

 

        IN
WITNESS WHEREOF, the parties hereto have duly executed and approved this First Amendment as of the date first above written. 

	 	MCLEODUSA INCORPORATED
	

 	

By:	

/s/ Bernard Zuroff

	 	Name:	Bernard Zuroff
	 	Title:	Group Vice President—General Counsel and Secretary

3

 

	 	STOCKHOLDER:
	

 	

NAME OF INSTITUTION:
	

 	

McLeod Depository Corp
 as a Stockholder
	

 	

1,396,739
 Number of Common Shares Held
	

 	

By:	

/s/ Susan E. Atkins

	 	Name:	Susan E. Atkins
	 	Title:	President

4

 

	 	STOCKHOLDER:
	

 	

NAME OF INSTITUTION:
	

 	

JEFFERIES AND COMPANY, INC.
 as a Stockholder
	

 	

1,056,493
 Number of Common Shares Held
	

 	

By:	

/s/ Robert J. Welch

	 	Name:	Robert J. Welch
	 	Title:	Senior Vice President

Jefferies & Co., Inc.

5

 

	 	STOCKHOLDER:
	

 	

NAME OF INSTITUTION:
	

 	

JEFFERIES PARTNERS OPPORTUNITY FUND, LLC
 as a Stockholder
	

 	

798,812
 Number of Common Shares Held
	

 	

By:	

/s/ Robert J. Welch

	 	Name:	Robert J. Welch
	 	Title:	Chief Financial Officer

Jefferies Partners

Opportunity Fund, LLC

6

 

	 	STOCKHOLDER:
	

 	

NAME OF INSTITUTION:
	

 	

JEFFERIES PARTNERS OPPORTUNITY FUND II, LLC
 as a Stockholder
	

 	

566,898
 Number of Common Shares Held
	

 	

By:	

/s/ Robert J. Welch

	 	Name:	Robert J. Welch
	 	Title:	Chief Financial Officer

Jefferies Partners

Opportunity Fund II, LLC

7

 

	 	STOCKHOLDER:
	

 	

NAME OF INSTITUTION:
	

 	

JEFFERIES EMPLOYEES OPPORTUNITY FUND, LLC
 as a Stockholder
	

 	

154,609
 Number of Common Shares Held
	

 	

By:	

/s/ Robert J. Welch

	 	Name:	Robert J. Welch
	 	Title:	Chief Financial Officer

Jefferies Employees

Opportunity Fund, LLC

8

 

	 	STOCKHOLDER:
	

 	

NAME OF INSTITUTION:
	

 	

Wayland Distressed Opportunities Fund I-C, LLC
 as a Stockholder
	

 	

1,423,601
 Number of Common Shares Held
	

 	

By:	

Wayzata Investment Partners LLC,

its Manager
	

 	

By:	

/s/ Steven M. Adams

	 	Name:	Steven M. Adams
	 	Title:	Authorized Signatory

9

 

	 	STOCKHOLDER:
	

 	

NAME OF INSTITUTION:
	

 	

Wayland Distressed Opportunities Fund I-B, LLC
 as a Stockholder
	

 	

246,786
 Number of Common Shares Held
	

 	

By:	

Wayzata Investment Partners LLC,

its Manager
	

 	

By:	

/s/ Steven M. Adams

	 	Name:	Steven M. Adams
	 	Title:	Authorized Signatory

10

 

	 	STOCKHOLDER:
	

 	

NAME OF INSTITUTION:
	

 	

Wayzata Recovery Fund, LLC
 as a Stockholder
	

 	

1,247,826
 Number of Common Shares Held
	

 	

By:	

Wayzata Investment Partners LLC,

its Manager
	

 	

By:	

/s/ Steven M. Adams

	 	Name:	Steven M. Adams
	 	Title:	Authorized Signatory

11

 

	 	STOCKHOLDER:
	

 	

NAME OF INSTITUTION:
	

 	

Wayzata Opportunities Fund Offshore, L.P.
 as a Stockholder
	

 	

37,500
 Number of Common Shares Held
	

 	

By:	

Wayzata Offshore GP, LLC, its General Partner
	 	By:	Wayzata Investment Partners LLC, its Manager
	

 	

By:	

/s/ Steven M. Adams

	 	Name:	Steven M. Adams
	 	Title:	Authorized Signatory

12

 

	 	STOCKHOLDER:
	

 	

NAME OF INSTITUTION:
	

 	

Wayzata Opportunities Fund, LLC
 as a Stockholder
	

 	

4,191,363
 Number of Common Shares Held
	

 	

By:	

Wayzata Investment Partners LLC, its Manager
	

 	

By:	

/s/ Steven M. Adams

	 	Name:	Steven M. Adams
	 	Title:	Authorized Signatory

13

 

	 	STOCKHOLDER:
	

 	

NAME OF INSTITUTION:
	

 	

Fidelity Advisor Series I: Fidelity Advisor Leveraged Company Stock Fund
 as a Stockholder
	

 	

149,007
 Number of Common Shares Held
	

 	

By:	

/s/ John H. Costello

	 	Name:	 
	 	Title:	 

14

 

	 	STOCKHOLDER:
	

 	

NAME OF INSTITUTION:
	

 	

Fidelity Advisor Series II: Fidelity Advisor High Income Advantage Fund
 as a Stockholder
	

 	

4,914,174
 Number of Common Shares Held
	

 	

By:	

/s/ John H. Costello

	 	Name:	 
	 	Title:	 

15

 

	 	STOCKHOLDER:
	

 	

NAME OF INSTITUTION:
	

 	

Fidelity Securities Fund: Fidelity Leveraged Company Stock Fund
 as a Stockholder
	

 	

1,701,867
 Number of Common Shares Held
	

 	

By:	

/s/ John H. Costello

	 	Name:	 
	 	Title:	 

16

 

	 	STOCKHOLDER:
	

 	

NAME OF INSTITUTION:
	

 	

Pension Investment Committee of General Motors for General Motors Employees Domestic Group Pension Trust
 as a Stockholder
	

 	

2,123,877
 Number of Common Shares Held
	

 	

By:	

/s/ Geoffrey W. Johnson

	 	Name:	Geoffrey W. Johnson
	 	Title:	Vice President

17

 

	 	STOCKHOLDER:
	

 	

NAME OF INSTITUTION:
	

 	

Commonwealth of Massachusetts Pension Reserves Investment Management Board
 as a Stockholder
	

 	

484,779
 Number of Common Shares Held
	

 	

By:	

/s/ Geoffrey W. Johnson

	 	Name:	Geoffrey W. Johnson
	 	Title:	Vice President

18

 

	 	STOCKHOLDER:
	

 	

NAME OF INSTITUTION:
	

 	

Banc of America Strategic Solutions, Inc.
 as a Stockholder
	

 	

        
 Number of Common Shares Held
	

 	

By:	

/s/ Robert Lang

	 	Name:	Robert Lang
	 	Title:	Managing Director

19

 

	 	Banc of America Strategic Solutions, Inc.
 as a Stockholder
	 	        
 Number of Common Shares Held
	

 	

By:	

/s/ Robert Lang

	 	Name:	Robert Lang
	 	Title:	Managing Director

20

 

	 	STOCKHOLDER:
	

 	

NAME OF INSTITUTION:
	

 	

SOL Loan Funding LLC
 as a Stockholder
	

 	

508,551
 Number of Common Shares Held
	

 	

By:	

/s/ [ILLEGIBLE]

	 	Name:	 
	 	Title:	 

21

 

	 	STOCKHOLDER:
	

 	

NAME OF INSTITUTION:
	

 	

3V Capital Master Fund Ltd
 as a Stockholder
	

 	

402,735
 Number of Common Shares Held
	

 	

By:	

/s/ Scott A. Stagg

	 	Name:	Scott A. Stagg
	 	Title:	Managing Member

22

 

	 	STOCKHOLDER:
	

 	

NAME OF INSTITUTION:
	

 	

JPMorgan Chase Bank, N.A.
 as a Stockholder
	

 	

1,438,224
 Number of Common Shares Held
	

 	

By:	

/s/ Andrew Opel

	 	Name:	ANDREW OPEL
	 	Title:	AUTHORIZED SIGNATORY

23

 

	 	STOCKHOLDER:
	

 	

NAME OF INSTITUTION:
	

 	

BEAR, STEARNS & CO. INC.
 as a Stockholder
	

 	

1,487,586
 Number of Common Shares Held
	

 	

By:	

/s/ John E. McDermott

	 	Name:	JOHN E. McDERMOTT
	 	Title:	SENIOR MANAGING DIRECTOR

24

QuickLinks

Exhibit 4.5

REGISTRATION RIGHTS AGREEMENT dated as of January 6, 2006 among MCLEODUSA INCORPORATED and THE HOLDERS OF COMMON STOCK LISTED ON SCHEDULE I

TABLE OF CONTENTS

REGISTRATION RIGHTS AGREEMENT

W I T N E S S E T H

ARTICLE 1 DEFINITIONS

ARTICLE 2 REGISTRATION RIGHTS

ARTICLE 3 CERTAIN COVENANTS AND AGREEMENTS

ARTICLE 4 MISCELLANEOUS

SCHEDULE I

FIRST AMENDMENT TO REGISTRATION RIGHTS AGREEMENT

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