-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BwxQ42ECk9EH0mr/ZbvB5PFtyVmAfarwWvEUs2BTvXQZks+RKz7ap9y8pLf4IO9+ ZuOnt/djkUe3/i8FKk/1mA== 0000947871-05-000036.txt : 20050107 0000947871-05-000036.hdr.sgml : 20050107 20050107163654 ACCESSION NUMBER: 0000947871-05-000036 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20050107 DATE AS OF CHANGE: 20050107 GROUP MEMBERS: ICG COMMUNICATIONS, INC. GROUP MEMBERS: MCCC ICG HOLDINGS LLC SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: MPOWER HOLDING CORP CENTRAL INDEX KEY: 0001117042 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 522232143 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-59595 FILM NUMBER: 05518634 BUSINESS ADDRESS: STREET 1: 175 SULLY'S TRAIL STREET 2: STE 300 CITY: PITTSFORD STATE: NY ZIP: 14534 BUSINESS PHONE: 5852186550 MAIL ADDRESS: STREET 1: 175 SULLY'S TRAIL STREET 2: STE 300 CITY: PITTSFORD STATE: NY ZIP: 14534 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: MCCC ICG Holdings LLC CENTRAL INDEX KEY: 0001298454 IRS NUMBER: 201362083 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: C/O COLUMBIA CAPITAL LLC STREET 2: 201 NORTH UNION STREET, SUITE #300 CITY: ALEXANDRIA STATE: VA ZIP: 22334 BUSINESS PHONE: (703) 519-2000 MAIL ADDRESS: STREET 1: C/O COLUMBIA CAPITAL LLC STREET 2: 201 NORTH UNION STREET, SUITE #300 CITY: ALEXANDRIA STATE: VA ZIP: 22334 SC 13D 1 sc13d_010605mpowerh-mccc.txt SCHEDULE 13D - MPOWER HOLDING (MCCC) Schedule 13D Page 1 of 9 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 Mpower Holding Corporation - -------------------------------------------------------------------------------- (Name of Issuer) Common Stock, par value $0.001 per share - -------------------------------------------------------------------------------- (Title of Class of Securities) 62473L 30 9 - -------------------------------------------------------------------------------- (CUSIP Number) Daniel P. Caruso ICG Communications, Inc. MCCC ICG Holdings LLC 161 Inverness Drive West Englewood, CO 80112 (303) 414-5000 COPY TO: David J. Kendall, Esq. Kendall, Koenig & Oelsher PC 1675 Broadway, Suite 750 Denver, CO 80202 (303) 672-0100 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) December 31, 2004 - -------------------------------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 3d-1(e), 13d-1(f) or 13d-1(g), check the following box. [ ] The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall not be subject to all other provisions of the Act (however, see the Notes). Schedule 13D Page 2 of 9 CUSIP No. 62473L 30 9 - -------------------------------------------------------------------------------- 1. Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only). ICG Communications, Inc. - -------------------------------------------------------------------------------- 2. Check the Appropriate Box if a Member of a Group (See Instructions) (a) [ ] (b) [ ] - -------------------------------------------------------------------------------- 3. SEC Use Only - -------------------------------------------------------------------------------- 4. Source of Funds (See Instructions) OO - -------------------------------------------------------------------------------- 5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) - -------------------------------------------------------------------------------- 6. Citizenship or Place of Organization Delaware - -------------------------------------------------------------------------------- Number of 7. Sole Voting Power 0 Shares ---------------------------------------------------------------- Beneficially 8. Shared Voting Power 12,740,030* Owned by ---------------------------------------------------------------- Each 9. Sole Dispositive Power 0 Reporting ---------------------------------------------------------------- Person With 10. Shared Dispositive Power 12,740,030* - -------------------------------------------------------------------------------- 11. Aggregate Amount Beneficially Owned by Each Reporting Person 12,740,030* - -------------------------------------------------------------------------------- 12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) - -------------------------------------------------------------------------------- 13. Percent of Class Represented by Amount in Row (11) 13.66%* - -------------------------------------------------------------------------------- 14. Type of Reporting Person (See Instructions) CO - -------------------------------------------------------------------------------- Schedule 13D Page 3 of 9 CUSIP No. 62473L 30 9 - -------------------------------------------------------------------------------- 1. Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only). MCCC ICG Holdings LLC - -------------------------------------------------------------------------------- 2. Check the Appropriate Box if a Member of a Group (See Instructions) (a) [ ] (b) [ ] - -------------------------------------------------------------------------------- 3. SEC Use Only - -------------------------------------------------------------------------------- 4. Source of Funds (See Instructions) OO - -------------------------------------------------------------------------------- 5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) - -------------------------------------------------------------------------------- 6. Citizenship or Place of Organization Delaware - -------------------------------------------------------------------------------- Number of 7. Sole Voting Power 1,988,894 Shares ---------------------------------------------------------------- Beneficially 8. Shared Voting Power 12,740,030* Owned by ---------------------------------------------------------------- Each 9. Sole Dispositive Power 1,988,894 Reporting ---------------------------------------------------------------- Person With 10. Shared Dispositive Power 12,740,030* - -------------------------------------------------------------------------------- 11. Aggregate Amount Beneficially Owned by Each Reporting Person 14,728,924* - -------------------------------------------------------------------------------- 12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) - -------------------------------------------------------------------------------- 13. Percent of Class Represented by Amount in Row (11) 15.79%* - -------------------------------------------------------------------------------- 14. Type of Reporting Person (See Instructions) OO - -------------------------------------------------------------------------------- - ---------- * See Item 5 below. Item 1. Security and Issuer The class of equity security to which this Statement relates is the Common Stock, par value $0.001 per share (the "Common Stock"), of Mpower Holding Corporation, a Delaware corporation ("Issuer"). The name and address of the principal executive offices of Issuer are 175 Sully's Trail, Pittsford, New York 14534. Item 2. Identity and Background (a), (b), (c) and (f) Schedule 13D Page 4 of 9 This Statement is being filed jointly pursuant to Rule 13d-1(k) promulgated by the Securities and Exchange Commission (the "Commission") pursuant to Section 13 of the Securities Exchange Act of 1934, as amended (the "Exchange Act") by each of MCCC ICG Holdings LLC, a Delaware limited liability company ("MCCC"), and ICG Communications, Inc., a Delaware corporation and wholly owned subsidiary of MCCC ("ICG"). Collectively, the filing persons are referred to herein as the "Reporting Persons." The address of the principal executive offices and place of business of each of ICG and MCCC is 161 Inverness Drive West, Englewood, CO 80112. MCCC is the parent company of ICG, a business communications company that specializes in converged voice and data services. The principal business of MCCC is to transact any or all lawful business for which limited liability companies and corporations, respectively, may be organized under the laws of Delaware, including, but not limited to, holding the capital stock ICG. The name, business address, present principal occupation or employment and citizenship of each officer and director of ICG is set forth in Schedule I hereto and is incorporated herein by reference. The name, business address, present principal occupation or employment and citizenship of each officer of MCCC and each member of MCCC's board of managers is set forth in Schedule I hereto and is incorporated herein by reference. MCCC has the following twelve members: (1) Columbia Capital Equity Partners III (QP), L.P.; (2) Columbia Capital Equity Partners III (Cayman), L.P.; (3) Columbia Capital Equity Partners III (AI), L.P.; (4) Columbia Capital Investors III, L.L.C.; (5) Columbia Capital Employee Investors III, L.L.C. (together with the entities listed in numbers (1) through (4), the "Columbia Members"); (6) M/C Venture Partners V, L.P.; (7) M/C Venture Investors, L.L.C.; (8) Chestnut Venture Partners, L.P. (together with the entities listed in numbers (6) and (7), the "M/C Venture Members"); (9) Daniel P. Caruso; (10) Robert J. Schmiedeler; (11) John Scarano; and (12) Martin Snella (and together with the individuals listed in numbers (9) through (11), the "Individual Members"). The Columbia Members consist of (1) Columbia Capital Equity Partners III (QP), L.P., a Delaware limited partnership ("CC III QP"), which is managed by its general partner, Columbia Capital Equity Partners III, L.P. ("CC III"), whose general partner is Columbia Capital III, L.L.C. ("Columbia"); (2) Columbia Capital Equity Partners III (Cayman), L.P., a Cayman Islands exempted limited partnership ("CC III Cayman"), which is managed by its general partner, Columbia Capital Equity Partners (Cayman) III, Ltd., an exempted company incorporated in the Cayman Islands with limited liability, whose sole shareholder is CC III (together with CCIII and Columbia, the "Columbia Managing Entities"); (3) Columbia Capital Equity Partners III (AI), L.P., a Delaware limited partnership ("CC III AI"), which is managed by its general partner, CC III; (4) Columbia Capital Investors III, L.L.C., a Delaware limited liability company ("CC Investors"), which is managed by its managing member, CC III; and (5) Columbia Capital Employee Investors III, L.L.C., a Delaware limited liability company ("CC Employee Investors"), which is managed by its managing member, CC III. Each of the Columbia Members is controlled by CC III, which is managed by its general partner, Columbia. The M/C Venture Members consist of (1) Chestnut Venture Partners, L.P., a Delaware limited partnership ("Chestnut"), which is managed by its general partner, Chestnut Street Partners, Inc., a Delaware corporation ("Chestnut Street"); (2) M/C Venture Partners V, L.P. , a Delaware limited partnership ("M/C Venture Partners V"), which is managed by its general partner, M/C VP V L.L.C., a Delaware limited liability company ("M/C VP V") and together with Chestnut Street, the "M/C Venture Managing Entities"); and (3) M/C Venture Investors, L.L.C., a Delaware limited liability company. Columbia is the manager of CC III, and conducts such other activities as may be necessary or incidental thereto. Columbia is a venture capital firm that specializes in the communications and Schedule 13D Page 5 of 9 information technology industries. CC III acts as the manager of CC Investors and CC Employee Investors and as the general partner of CC III QP, CC III Cayman and CC III AI, and conducts such other activities as may be necessary or incidental thereto. Each of the Columbia Members was formed (i) to seek income and capital appreciation through the acquisition, holding, management, supervision and sale, exchange, distribution or other disposition of investments and (ii) to conduct such other activities as may be necessary or incidental to the foregoing. The principal business address of each of the Columbia Members and Columbia Managing Entities is 201 North Union Street, Suite 300, Alexandria, VA 22314. M/C VP V and Chestnut Street manage investment companies, such as the M/C Venture Purchasing Entities, which specialize in investing in early-state communications and related information technology companies. M/C VP V is the general partner and manager of M/C Venture Partners V and Chestnut Street is the general partner and manager of Chestnut and each conducts such other activities as may be necessary or incidental thereto. Each of the M/C Venture Members was formed (i) to seek income and capital appreciation through the acquisition, holding, management, supervision and sale, exchange, distribution or other disposition of investments and (ii) to conduct such other activities as may be necessary or incidental to the foregoing. The principal business address of each of the M/C Venture Members and M/C Venture Managing Entities is 75 State Street, Suite 2500, Boston, MA 02109. The principal occupation and business address of each of the Individual Members is set forth on Schedule I hereto, which is incorporated herein by reference. (d) - (e) During the last five years, none of the persons listed in Item 2(a)-(c) above (1) has been convicted in a criminal proceeding or (2) has been party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Item 3. Source and Amount of funds or Other Consideration See Item 4 below, which is incorporated herein by reference. Item 4. Purpose of Transaction On December 31, 2004 at 11:00 pm Mountain Standard Time, MCCC and ICG sold certain assets (the "Asset Sale") associated with ICG's California business (the "Acquired Business") to Communications as contemplated by the that certain Asset Purchase Agreement (the "Purchase Agreement") between MCCC, ICG, Issuer and Mpower Communications Corp., a Nevada corporation ("Communications"). In the Asset Sale, ICG received 10,740,030 shares of Issuer's Common Stock and a warrant to purchase 2,000,000 shares of Issuer's Common Stock (the "Warrant") and Communications assumed certain liabilities associated with the Acquired Business. The warrant is exercisable for five years following the closing of the Asset Sale at an exercise price of $1.383 per share of Common Stock. The number of shares subject to the Warrant and the exercise price of such shares are subject to certain adjustments in the event of stock splits, future dilutive issuances, reorganizations, reclassifications, mergers, consolidations and the like. As further contemplated by the Purchase Agreement, MCCC purchased an additional 1,988,894 shares of Issuer's Common Stock from Issuer (the "Stock Purchase") for an aggregate purchase price of $2,500,000 on January 5, 2005 pursuant to the terms of a Subscription Agreement (the "Subscription Agreement"). The funds used by MCCC to purchase such Common Stock were obtained from the repayment by ICG of approximately $2.46 million in principal and accrued interest under MCCC's Schedule 13D Page 6 of 9 secured debt facility with ICG with the remainder coming from MCCC's available cash and an intercompany transfer from ICG. In connection with the consummation of the Asset Sale and the Stock Purchase, MCCC, ICG and Issuer entered into an Investor Rights Agreement (the "Investor Rights Agreement"). The Investor Rights Agreement provides that MCCC and ICG may not make or solicit any sale of the shares of Common Stock acquired pursuant to the Purchase Agreement or the Subscription Agreement (the "Issuer Stock") for a period of one year following the closing of the Asset Sale; provided however, that one-fourth of the Issuer Stock is free from such restriction six months after the closing of the Asset Sale and; provided, further, that MCCC and ICG may make or solicit a sale to parties that are not competitors of the Issuer during such one year period following the closing of the Asset Sale. Pursuant to the Investor Rights Agreement, the Issuer shall register for resale one-fourth of the Issuer Stock with the Commission within six months following the closing of the Asset Sale and the remaining three-fourths of the Issuer Stock with the Commission within one year following the closing of the Asset Sale. Pursuant to the Investor Rights Agreement, the Issuer has agreed to appoint one individual designated by MCCC to the Issuer's Board of Directors. Issuer has further agreed to recommend for election to its Board of Directors and use its reasonable efforts to solicit proxies for one nominee of MCCC until the first stockholder meeting of the Issuer after the date on which MCCC and its affiliates beneficially hold less than 5% of the Common Stock of the Issuer on a fully-diluted basis (as calculated pursuant to the Investor Rights Agreement). Pursuant to the Investor Rights Agreement, MCCC and ICG agrees that they and their affiliates will vote all of their shares of Issuer's Common Stock in favor of all directors nominated by Issuer's Board of Directors. All references to the Purchase Agreement are qualified in their entirety by reference to the copy of such agreement filed as Exhibit 10.1 to Issuer's 8-K/A filed with the Securities and Exchange Commission (the "Commission") on October 27, 2004, which is incorporated herein by reference. All references to the Warrant are qualified in their entirety by reference to the copy of such agreement filed as Exhibit 4 to this Schedule 13D, which is incorporated herein by reference. All references to the Subscription Agreement are qualified in their entirety by reference to the copy of such agreement filed as Exhibit 10.01 to Issuer's 8-K filed with the Commission on January 6, 2005, which is incorporated herein by reference. All references to the Investor Rights Agreement are qualified in their entirety by reference to the copy of such agreement filed as Exhibit 10.02 to Issuer's 8-K filed with the Commission on January 6, 2005, which is incorporated herein by reference. Other than as described in this Schedule 13D, the Reporting Persons do not have any plan or proposal that relates to or would result in any of the actions described in subparagraphs (a) through (j) of Item 4 of Schedule 13D. Item 5. Interest in Securities of the Issuer (a) and (b) ICG is deemed to beneficially own an aggregate of 12,740,030 shares of Issuer's Common Stock (consisting of the 10,740,030 shares of Common Stock acquired by ICG pursuant to the Asset Sale and the 2,000,000 shares of Common Stock that may be acquired by ICG pursuant to the exercise of the Warrant), representing approximately 13.66% of the Common Stock outstanding (based on 78,524,800 shares of Issuer's Common Stock outstanding on November 4, 2004, as provided in Issuer's quarterly report on Form 10-Q for the quarter ended September 30, 2004 plus the shares issued to MCCC and ICG, including the shares issuable upon exercise of the Warrant). ICG is the direct beneficial owner, and MCCC (as the parent of ICG) may be deemed to be the indirect beneficial owner, of the 12,740,030 shares of Issuer's Common Stock. MCCC disclaims beneficial ownership of the shares of Common Stock directly beneficially owned by ICG (except for its indirect pecuniary interest arising therein). Based upon MCCC's ownership of ICG, MCCC and ICG may be deemed to have shared power to direct Schedule 13D Page 7 of 9 the vote and shared power to direct the disposition of these shares of Common Stock, subject to the requirement that the holder of such shares vote such shares in favor of the directors nominated by the Issuer's Board of Directors pursuant to the Investor Rights Agreement. MCCC is deemed to beneficially own an aggregate of 14,728,924 shares of Issuer's Common Stock (consisting of the 1,988,894 shares of Common Stock acquired by MCCC pursuant to the Subscription Agreement, the 10,740,030 shares of Common Stock acquired by ICG pursuant to the Asset Sale and the 2,000,000 shares of Common Stock that may be acquired by ICG pursuant to the exercise of the Warrant), representing approximately 15.79% of the Common Stock outstanding (based on 78,524,800 shares of Issuer's Common Stock outstanding on November 4, 2004, as provided in Issuer's quarterly report on Form 10-Q for the quarter ended September 30, 2004 plus the shares issued to MCCC and ICG, including the shares issuable upon exercise of the Warrant). MCCC is deemed to be the direct beneficial owner of the 1,988,894 shares of Common Stock acquired pursuant to the Subscription Agreement. MCCC has sole power to direct the vote and sole power to direct the disposition of these shares of Common Stock, subject to the requirement that the holder of such shares vote such shares in favor of the directors nominated by the Issuer's Board of Directors pursuant to the Investor Rights Agreement. (c) Except for the transactions described herein, there have been no other transactions in the securities of the Issuer effected by the Reporting Persons in the last 60 days. (d) Not applicable. (e) Not applicable. Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer Except described above or in responses to Items 3 and 4 of this Schedule 13D, which are hereby incorporated by reference, there are no contracts, arrangements, understandings or relationships between the Reporting Persons and any other person with respect to any securities of the Issuer. Schedule 13D Page 8 of 9 Item 7. Material to Be Filed as Exhibits EXHIBIT DESCRIPTION 99.1. Schedule I 99.2. Schedule 13D Joint Filing Agreement by and among MCCC ICG Holdings LLC and ICG Communications, Inc. 99.3. Asset Purchase Agreement by and among MCCC ICG Holdings LLC, ICG Communications, Inc., Mpower Holding Corporation and Mpower Communications Corp. (1) 99.4. Common Stock Purchase Warrant. 99.5. Subscription Agreement between Mpower Holding Corporation and MCCC ICG Holdings LLC. (2) 99.6. Investor Rights Agreement between Mpower Holding Corporation and MCCC ICG Holdings LLC. (3) - ---------- (1) Incorporated by reference from Exhibit 10.1 to Issuer's Current Report on Form 8-K/A dated October 27, 2004. (2) Incorporated by reference from Exhibit 10.01 to Issuer's Current Report on Form 8-K dated January 6, 2005. (3) Incorporated by reference from Exhibit 10.02 to Issuer's Current Report on Form 8-K dated January 6, 2005. Schedule 13D Page 9 of 9 Signature After reasonable inquiry and to the best of each of the undersigned's knowledge and belief, each of the undersigned certify that the information set forth in this Schedule 13D is true, complete and correct. Dated this 7th day of January, 2005. ICG Communications, Inc. By: /s/ Daniel P. Caruso Name: Daniel P. Caruso Title: President & CEO MCCC ICG Holdings LLC By: /s/ Daniel P. Caruso Name: Daniel P. Caruso Title: President & CEO EX-99.1 2 ex99-1_010605mpowerhmccc.txt SCHEDULE I Exhibit 99.1 Schedule I MCCC ICG Holdings LLC's ("MCCC") officers and members of its board of managers and ICG Communications, Inc.'s ("ICG") officers and directors (each, an "Individual" and collectively, the "Individuals") and the information required by Item 2 of Schedule 13D are listed below, along with the offices held by such Individual. Each Individual is a U.S. citizen. Peter H.O. Claudy Member of Board of Managers of MCCC, Director 75 State Street of ICG and Member of M/C VP V L.L.C. Suite 2500 Boston, MA 02109 John T. Siegel Member of Board of Managers of MCCC, Director 201 North Union Street of ICG and Partner of Columbia Capital Equity Suite 300 Partners III, L.P. Alexandria, VA 22314 Gillis S. Cashman Member of Board of Managers of MCCC, Director 75 State Street of ICG and Member of M/C VP V L.L.C. Suite 2500 Boston, MA 02109 James B. Fleming, Jr. Member of Board of Managers of MCCC, Director 201 North Union Street of ICG and Partner of Columbia Capital Equity Suite 300 Partners III, L.P. Alexandria, VA 22314 Daniel P. Caruso Member of Board of Managers of MCCC, 161 Inverness Drive West President and CEO of MCCC and President and Englewood, CO 80112 CEO of ICG Communications, Inc. ("ICG") Robert J. Schmiedeler CFO and Secretary of MCCC and CFO of ICG 161 Inverness Drive West Englewood, CO 80112 John Scarano Vice President of MCCC and EVP, Corporate 161 Inverness Drive West Development of ICG Englewood, CO 80112 Martin L. Snella Vice President of MCCC and EVP of ICG 161 Inverness Drive West Englewood, CO 80112 EX-99.2 3 ex99-2_010605mpowerhmccc.txt SCHEDULE 13D JOINT FILING AGREEMENT Exhibit 99.2 SCHEDULE 13D JOINT FILING AGREEMENT In accordance with the requirements of Rule 13d-1(k) under the Securities Exchange Act of 1934, as amended, and subject to the limitations set forth therein, the parties set forth below agree to the joint filing of a Statement on Schedule 13D (including any amendments thereto) with respect to the shares of common stock of Mpower Holding Corporation, and further agree that this Joint Filing Agreement be included as an exhibit thereto, and have duly executed this joint filing agreement as of the date set forth below. In addition, each party to this Joint Filing Agreement expressly authorizes each other party to this Agreement to file on its behalf any and all amendments to such Statement. Date: January 7, 2005 ICG Communications, Inc. By: /s/ Daniel P. Caruso Name: Daniel P. Caruso Title: President & CEO MCCC ICG Holdings LLC By: /s/ Daniel P. Caruso Name: Daniel P. Caruso Title: President & CEO EX-99.4 4 ex99-4_010605mpowerhmccc.txt COMMON STOCK PURCHASE WARRANT Exhibit 99.4 NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR REASONABLY ACCEPTABLE TO THE COMPANY TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT. COMMON STOCK PURCHASE WARRANT To Purchase 2,000,000 Shares of Common Stock of Mpower Holding Corporation THIS COMMON STOCK PURCHASE WARRANT (the "Warrant") CERTIFIES that, for value received, ICG COMMUNICATIONS, INC. (the "Holder"), is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, on or prior to the fifth anniversary of the Closing Date (the "Termination Date") but not thereafter, to subscribe for and purchase from Mpower Holding Corporation, a corporation incorporated in the State of Delaware (the "Company"), up to 2,000,000 shares (the "Warrant Shares") of Common Stock, par value $0.001 per share, (the "Common Stock"). For the purposes of this Warrant, a "Trading Day" shall mean (i) a day on which the Common Stock is traded on a Trading Market, or (ii) if the Common Stock is not quoted on a Trading Market, a day on which the Common Stock is quoted in the over-the-counter market as reported by the National Quotation Bureau Incorporated (or any similar organization or agency succeeding its functions of reporting prices); provided, that in the event that the Common Stock is not listed or quoted as set forth in (i) or (ii) hereof, then Trading Day shall mean any day other than Saturday, Sunday or any day on which banks in New York, New York, are required or authorized to be closed; "Trading Market" shall mean the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the OTC Bulletin Board, the American Stock Exchange, the New York Stock Exchange, the Nasdaq National Market or the Nasdaq SmallCap Market; and "VWAP" means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the primary Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg Financial L.P. (based on a Trading Day from 9:30 a.m. ET to 4:02 p.m. Eastern Time) using the VAP function; (b) if the Common Stock is not then 1 listed or quoted on a Trading Market and if prices for the Common Stock are then reported in the "Pink Sheets" published by the National Quotation Bureau Incorporated (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported; or (c) in all other cases, the fair market value of a share of Common Stock as determined in good faith by the Board of Directors. The purchase price of one share of Common Stock (the "Exercise Price") under this Warrant shall be $1.383. The Exercise Price and the number of Warrant Shares for which the Warrant is exercisable shall be subject to adjustment as provided herein. 1. Title to Warrant. Prior to the Termination Date and subject to compliance with applicable laws and Section 7 of this Warrant, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company by the Holder in person or by duly authorized attorney, upon surrender of this Warrant together with the Assignment Form annexed hereto properly endorsed. The transferee shall sign an investment letter in form and substance reasonably satisfactory to the Company. 2. Authorization of Shares. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue). 3. Exercise of Warrant. (a) Exercise of the purchase rights represented by this Warrant may be made at any time or times on or before 5:00 p.m. New York City time on the Termination Date by delivery to the Company of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of such Holder appearing on the books of the Company); provided, however, within 5 Trading Days of the date said Notice of Exercise is delivered to the Company, the Holder shall have surrendered this Warrant to the Company and the Company shall have received payment of the aggregate Exercise Price of the shares thereby purchased by wire transfer or cashier's check drawn on a United States bank. Certificates for shares purchased hereunder shall be delivered to the Holder within the earlier of (i) 5 Trading Days after the date on which the Notice of Exercise shall have been delivered by facsimile copy or (ii) 3 Trading Days from the delivery to the Company of each of the Notice of Exercise Form by facsimile copy, surrender of this Warrant and payment of the aggregate Exercise Price as set forth above ("Warrant Share Delivery Date"); provided, however, in the event the Warrant is not surrendered or the aggregate Exercise Price is not received by the Company within 5 Trading Days after the date on which the Notice of Exercise shall be delivered by facsimile copy, the Warrant Share Delivery Date shall be extended to the extent such 5 Trading Day period is exceeded. This Warrant shall be deemed to have been exercised on the later of the date the Notice of Exercise is delivered to the Company by facsimile copy and the date the Exercise Price is received by the Company. The Warrant Shares shall be deemed to have been issued, and Holder or any other person so 2 designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised by payment to the Company of the Exercise Price and all taxes required to be paid by the Holder, if any, pursuant to Section 5 prior to the issuance of such shares, have been paid. If the Company fails to deliver to the Holder a certificate or certificates representing the Warrant Shares pursuant to this Section 3(a) by the third Trading Day following the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise. In addition to any other rights available to the Holder, if the Company fails to deliver to the Holder a certificate or certificates representing the Warrant Shares pursuant to an exercise by the third Trading Day after the Warrant Share Delivery Date, and if after such day the Holder is required by its broker to purchase (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a "Buy-In"), then the Company shall (1) pay in cash to the Holder the amount by which (x) the Holder's total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (B) the price at which the sell order giving rise to such purchase obligation was executed, and (2) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (1) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In, together with applicable confirmations and other evidence reasonably requested by the Company. Nothing herein shall limit a Holder's right to pursue any other remedies available to it hereunder, at law or in equity, including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company's failure to timely deliver certificates representing shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof. (b) If this Warrant shall have been exercised in part, the Company shall, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant. (c) If, but only if, at any time after one year from the date of issuance of this Warrant there is no effective registration statement registering the resale of the Warrant Shares by the Holder, this Warrant may also be exercised at such time by means of a "cashless exercise" in which the Holder shall be entitled to receive a certificate for the number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where: 3 (A) = the VWAP on the Trading Day immediately preceding the date of such election; (B) = the Exercise Price of the Warrants, as adjusted; and (X) = the number of Warrant Shares issuable upon exercise of the Warrants in accordance with the terms of this Warrant. 4. No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which Holder would otherwise be entitled to purchase upon such exercise, the Company shall pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price. 5. Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. 6. Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof. 7. Transfer, Division and Combination. (a) Subject to compliance with any applicable securities laws and the conditions set forth in Sections 1 and 7(e) hereof and to the provisions of Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled.] A Warrant, if properly assigned, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued. (b) This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 7(a), as to any 4 transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. (c) The Company shall prepare, issue and deliver at its own expense (other than transfer taxes) the new Warrant or Warrants under this Section 7. (d) The Company agrees to maintain, at its aforesaid office, books for the registration and the registration of transfer of the Warrants. (e) If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws, the Company may require, as a condition of allowing such transfer (i) that the Holder or transferee of this Warrant, as the case may be, furnish to the Company a written opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions and reasonably acceptable to the Company) to the effect that such transfer may be made without registration under the Securities Act and under applicable state securities or blue sky laws, (ii) that the holder or transferee execute and deliver to the Company an investment letter in form and substance acceptable to the Company and (iii) that the transferee be an "accredited investor" as defined in Rule 501(a) promulgated under the Securities Act. 8. No Rights as Shareholder until Exercise. This Warrant does not entitle the Holder to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof. Upon the surrender of this Warrant and the payment of the aggregate Exercise Price (or by means of a cashless exercise), the Warrant Shares so purchased shall be and be deemed to be issued to such Holder as the record owner of such shares as of the close of business on the later of the date of such surrender or payment. 9. Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate. 10. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday, Sunday or a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a Saturday, Sunday or legal holiday. 11. Adjustments of Exercise Price and Number of Warrant Shares. (a) Stock Splits, etc. The number and kind of securities purchasable upon the exercise of this Warrant and the Exercise Price shall be subject to adjustment from 5 time to time upon the happening of any of the following. In case the Company shall (i) pay a dividend in shares of Common Stock or make a distribution in shares of Common Stock to holders of its outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock into a greater number of shares, (iii) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock, or (iv) issue any shares of its capital stock in a reclassification of the Common Stock, then the number of Warrant Shares purchasable upon exercise of this Warrant immediately prior thereto shall be adjusted so that the Holder shall be entitled to receive the kind and number of Warrant Shares or other securities of the Company which it would have owned or have been entitled to receive had such Warrant been exercised in advance thereof. Upon each such adjustment of the kind and number of Warrant Shares or other securities of the Company which are purchasable hereunder, the Holder shall thereafter be entitled to purchase the number of Warrant Shares or other securities resulting from such adjustment at an Exercise Price per Warrant Share or other security obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of Warrant Shares purchasable pursuant hereto immediately prior to such adjustment and dividing by the number of Warrant Shares or other securities of the Company resulting from such adjustment. An adjustment made pursuant to this paragraph shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event. (b) Future Dilutive Issuances. In case the Company shall hereafter issue rights, options or warrants to all holders of its Common Stock entitling them to subscribe for or purchase shares of Common Stock or any other security convertible into or exchangeable for shares of Common Stock (such rights, options or warrants not being available on an equivalent basis to Holders of the Warrants upon exercise) at a price per share less than the Current Market Price of the Common Stock on the date fixed for the determination of stockholders entitled to receive such rights, options or warrants (other than pursuant to a dividend reinvestment plan), (i) the Exercise Price in effect immediately prior to the opening of business on the next business day following the date fixed for such determination shall be reduced by multiplying the Exercise Price in effect immediately prior to the close of business on the date fixed for the determination of holders of Common Stock entitled to receive such rights, options or warrants by a fraction of which (A) the numerator shall be the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of Common Stock that the aggregate of the offering price of the total number of shares of Common Stock so offered for subscription or purchase would purchase at such Current Market Price and (B) the denominator shall be the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of Common Stock so offered for subscription or purchase (or such number of shares of Common Stock underlying any convertible securities so offered for subscription or purchase), such reduction to become effective immediately prior to the opening of business on the next business day following the date fixed for such determination, and (ii) if any such rights, options or warrants expire or terminate without having been exercised or are exercised for a consideration different from that utilized in the computation of any adjustment or adjustments on account of such rights, options or warrants, the Exercise Price with respect to any Warrant not theretofore exercised shall be readjusted such that the Exercise Price would be the same as would have resulted had such adjustment been made without regard to the issuance of such expired or terminated rights, 6 options or warrants or based upon the actual consideration received upon exercise thereof, as the case may be, which readjustment shall become effective upon such expiration, termination or exercise, as applicable. The current market price per share of Common Stock (the "Current Market Price") on any day shall be deemed to be the closing price per share on the earlier of the day in question or the day before the Ex Date (as defined below) with respect to the issuance, payment or distribution. For this purpose, the term "Ex Date," when used with respect to any issuance or distribution, shall mean the first date on which the Common Stock trades in a regular way on the applicable securities exchange or in the applicable securities market without the right to receive such issuance or distribution. The closing price for each day shall be the reported last sale price regular way or, in case no such reported sale takes place on such day, the average of the reported closing bid and asked prices regular way, in either case on any Trading Market or, if the Common Stock is not listed or admitted to trading on any Trading Market, the Current Market Price shall be determined in good faith by the Board of Directors. 12. Reorganization, Reclassification, Merger, Consolidation or Disposition of Assets. In case the Company shall reorganize its capital, reclassify its capital stock, consolidate or merge with or into another corporation (where the Company is not the surviving corporation or where there is a change in or distribution with respect to the Common Stock of the Company), or sell, transfer or otherwise dispose of its property, assets or business to another corporation and, pursuant to the terms of such reorganization, reclassification, merger, consolidation or disposition of assets, shares of common stock of the successor or acquiring corporation, or any cash, shares of stock or other securities or property of any nature whatsoever (including warrants or other subscription or purchase rights) in addition to or in lieu of common stock of the successor or acquiring corporation ("Other Property"), are to be received by or distributed to the holders of Common Stock of the Company, then the Holder shall have the right thereafter to receive, upon exercise of this Warrant, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and Other Property receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a Holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event. In case of any such reorganization, reclassification, merger, consolidation or disposition of assets, the successor or acquiring corporation (if other than the Company) shall expressly assume the due and punctual observance and performance of each and every covenant and condition of this Warrant to be performed and observed by the Company and all the obligations and liabilities hereunder, subject to such modifications as may be deemed appropriate (as determined in good faith by resolution of the Board of Directors of the Company) in order to provide for adjustments of Warrant Shares for which this Warrant is exercisable which shall be as nearly equivalent as practicable to the adjustments provided for in this Section 12. For purposes of this Section 12, "common stock of the successor or acquiring corporation" shall include stock of such corporation of any class which is not preferred as to dividends or assets over any other class of stock of such corporation and which is not subject to redemption and shall also include any evidences of indebtedness, shares of stock or other securities which are convertible into or exchangeable for any such stock, either immediately or upon the arrival of a specified date or the happening of a specified event and any warrants or other rights to subscribe for or purchase any such stock. The foregoing 7 provisions of this Section 12 shall similarly apply to successive reorganizations, reclassifications, mergers, consolidations or disposition of assets. 13. Voluntary Adjustment by the Company. The Company may at any time during the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company. 14. Notice of Adjustment. Whenever the number of Warrant Shares or number or kind of securities or other property purchasable upon the exercise of this Warrant or the Exercise Price is adjusted, as herein provided, the Company shall give notice thereof to the Holder, which notice shall state the number of Warrant Shares (and other securities or property) purchasable upon the exercise of this Warrant and the Exercise Price of such Warrant Shares (and other securities or property) after such adjustment, setting forth a brief statement of the facts requiring such adjustment and setting forth the computation by which such adjustment was made. 15. Notice of Corporate Action. If at any time: (a) the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or other distribution, or any right to subscribe for or purchase any evidences of its indebtedness, any shares of stock of any class or any other securities or property, or to receive any other right, or (b) there shall be any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any consolidation or merger of the Company with, or any sale, transfer or other disposition of all or substantially all the property, assets or business of the Company to, another corporation or, (c) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company; then, in any one or more of such cases, the Company shall give to Holder (i) at least 20 days' prior written notice of the date on which a record date shall be selected for such dividend, distribution or right or for determining rights to vote in respect of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, liquidation or winding up, and (ii) in the case of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up, at least 20 days' prior written notice of the date when the same shall take place. Such notice in accordance with the foregoing clause also shall specify (i) the date on which any such record is to be taken for the purpose of such dividend, distribution or right, the date on which the holders of Common Stock shall be entitled to any such dividend, distribution or right, and the amount and character thereof, and (ii) the date on which any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up is to take place and the time, if any such time is to be fixed, as of which the holders of Common Stock shall be entitled to exchange their Warrant Shares for securities or other property deliverable upon such disposition, dissolution, liquidation or winding up. Each such written notice shall be sufficiently given if addressed to 8 Holder at the last address of Holder appearing on the books of the Company and delivered in accordance with Section 17(d). 16. Authorized Shares. The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (a) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (b) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant, and (c) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant. Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof. 17. Miscellaneous. (a) Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Purchase Agreement. (b) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws. (c) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such 9 right or otherwise prejudice Holder's rights, powers or remedies, notwithstanding all rights hereunder terminate on the Termination Date. If the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to Holder such amounts as shall be sufficient to cover any costs and expenses, including, but not limited to, reasonable attorneys' fees, including those of appellate proceedings, incurred by Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder. (d) Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement. (e) Limitation of Liability. No provision hereof, in the absence of any affirmative action by Holder to exercise this Warrant or purchase Warrant Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company. (f) Remedies. Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate. (g) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and shall be enforceable by any such Holder or holder of Warrant Shares. (h) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder. (i) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant. (j) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant. ******************** IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized. Dated: January 1, 2005 MPOWER HOLDING CORPORATION By: /s/ Russell I. Zuckerman Name: Russell I. Zuckerman Title: Senior Vice President, General Counsel and Secretary NOTICE OF EXERCISE To: Mpower Holding Corporation (1) The undersigned hereby elects to purchase ________ Warrant Shares of Mpower Holding Corporation pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any. (2) Payment shall take the form of [ ] in lawful money of the United States; or (3) Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below: ------------------------------- The Warrant Shares shall be delivered to the following: ------------------------------- ------------------------------- ------------------------------- (4) Accredited Investor. The undersigned is an "accredited investor" as defined in Regulation D promulgated under the Securities Act of 1933, as amended. [ ] By: ---------------------------- Name: Title: Dated: ------------------------- ASSIGNMENT FORM (To assign the foregoing warrant, execute this form and supply required information. Do not use this form to exercise the warrant.) FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to whose address is - ---------------------------------------------------- . - ---------------------------------------------------------------------- - ---------------------------------------------------------------------- Dated: ---------------, ------- Holder's Signature: -------------------------------- Holder's Address: -------------------------------- -------------------------------- Signature Guaranteed: --------------------------------------------- NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant. -----END PRIVACY-ENHANCED MESSAGE-----