UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)*
McLeodUSA Incorporated
(Name of Issuer)
Class A Common Stock
(Title of Class of Securities)
582266 10 2
(CUSIP Number)
Edward M. Gleason
Interstate Energy Corporation
222 West Washington Avenue, Madison, Wisconsin 53703
(608) 252-3311
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
April 21, 1998
(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 which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box |_|.
Check the following box if a fee is being paid with the statement |_|. (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d- 1(a) for other parties to whom copies are to be
sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
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 be subject to all other provisions of the Act (however, see the
Notes).
Page 1 of 19 Pages
Exhibit Index is on Page 19
<PAGE>
- --------------------------- ------------------------
CUSIP No. 582266 10 2 Page 2 of 19 Pages
- --------------------------- ------------------------
================================================================================
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Interstate Energy Corporation
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |X|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
00 (See Item 3)
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) OR 2(e) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Wisconsin
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
0
SHARES --------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
10,323,288 (See Item 5)
OWNED BY
--------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
PERSON --------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
10,323,288 (See Item 5)
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
10,323,288 (See Item 5)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* |_|
Not Applicable
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
15.99%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
- --------------------------- ------------------------
CUSIP No. 582266 10 2 Page 3 of 19 Pages
- --------------------------- ------------------------
================================================================================
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Alliant Industries, Inc.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |X|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
Not Applicable
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) OR 2(e) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Wisconsin
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
0
SHARES --------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
10,278,288 (See Item 5)
OWNED BY
--------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
PERSON --------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
10,278,288 (See Item 5)
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
10,278,288 (See Item 5)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* |_|
Not Applicable
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
15.92%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
- --------------------------- ------------------------
CUSIP No. 582266 10 2 Page 4 of 19 Pages
- --------------------------- ------------------------
================================================================================
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
IES Investments Inc.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |X|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
Not Applicable
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) OR 2(e) |_|
Not Applicable
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Iowa
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
0
SHARES --------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
10,278,288 (See Item 5)
OWNED BY
--------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
PERSON --------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
10,278,288 (See Item 5)
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
10,278,288 (See Item 5)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* |_|
Not Applicable
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
15.92%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
- --------------------------- ------------------------
CUSIP No. 582266 10 2 Page 5 of 19 Pages
- --------------------------- ------------------------
================================================================================
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Interstate Power Company
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |X|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
Not Applicable
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) OR 2(e) |_|
Not Applicable
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
0
SHARES --------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
45,000 (See Item 5)
OWNED BY
--------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
PERSON --------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
45,000 (See Item 5)
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
45,000 (See Item 5)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* |_|
Not Applicable
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
.07%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Item 1. Security and Issuer
This statement relates to the Class A Common Stock, $.01 par value, of
McLeodUSA Incorporated, a Delaware corporation (the "Company"), whose principal
executive offices are located at 6400 C Street SW, P.O. Box 3177, Cedar Rapids,
Iowa 52406-3177.
Item 2. Identity and Background
This statement is filed on behalf of the following entities:
(1) Interstate Energy Corporation, a Wisconsin corporation formerly
known as WPL Holdings, Inc. ("IEC"), whose principal executive offices are
located at 222 West Washington Avenue, Madison, Wisconsin 53703. IEC is a
registered public utility holding company with both utility (including electric
and natural gas) and nonutility (including energy-related, transportation and
real estate development) businesses.
(2) Alliant Industries, Inc., a Wisconsin corporation and wholly-owned
subsidiary of IEC ("Alliant"), whose principal executive offices are located at
222 West Washington Avenue, Madison, Wisconsin 53703. Alliant is the holding
company for all nonutility businesses of IEC. Alliant's subsidiaries are engaged
in business development in environmental and engineering services, affordable
housing and energy services and energy-related, transportation and real estate
development businesses.
(3) IES Investments Inc., an Iowa corporation and direct wholly-owned
subsidiary of Alliant and indirect wholly-owned subsidiary of IEC ("IES
Investments"), whose principal executive offices are located at Alliant Tower,
200 First Street, S.E., Cedar Rapids, Iowa 52401. The principal business of IES
Investments is to invest in, develop and/or manage investment and financial
business ventures.
(4) Interstate Power Company, a Delaware corporation and subsidiary of
IEC ("IPC"), whose principal executive offices are located at 1000 Main Street,
P.O. Box 769, Dubuque, Iowa 52004. IPC is an operating public utility engaged in
the generation, purchase, transmission, distribution and sale of electricity.
IPC also engages in the distribution and sale of natural gas.
(a)-(c) and (f) The name, business address, present principal
occupation or employment, citizenship and the name, principal business and
address of any corporation or other organization in which such employment is
conducted of each executive officer and director of IEC, Alliant, IES
Investments and IPC, respectively, is set forth below.
INTERSTATE ENERGY CORPORATION (IEC)
Each of the directors and executive officers of IEC is a citizen of the
United States of America. The business address of each of the directors and
executive officers of IEC is 222 West Washington Avenue, Madison, Wisconsin
53703, except as otherwise indicated.
-6-
<PAGE>
Name/Address Title
------------ ------
Executive Officers
Erroll B. Davis, Jr. President and Chief Executive Officer
William D. Harvey Executive Vice President-Generation
Thomas M. Walker Executive Vice President and Chief
Financial Officer
Michael R. Chase Executive Vice President-Corporate
1000 Main Street Services
P.O. Box 769
Dubuque, Iowa 52004
James E. Hoffman Executive Vice President-Business
Alliant Tower Development
200 First Street, S.E.
Cedar Rapids, IA 52401
Eliot G. Protsch Executive Vice President-Energy Delivery
Alliant Tower
200 First Street, S.E.
Cedar Rapids, IA 52401
Barbara J. Swan Executive Vice President and General
Counsel
Pamela J. Wegner Executive Vice President-Corporate
Services
John E. Ebright Vice President-Controller
Edward M. Gleason Vice President-Treasurer and Corporate
Secretary
Directors
Alan B. Arends Chairman of the Board of Directors of
P.O. Box 1206 Alliance Benefit Group Financial Services
Albert Lea, MN 56007 Corp., an employee benefits company
Erroll B. Davis, Jr. President and Chief Executive Officer of
IEC
Rockne G. Flowers Chief Executive officer of Nelson
P.O. Box 600 Industries, Inc., a muffler filler,
Stoughton, WI 53589 industrial silencer, and active sound and
vibration control technology and
manufacturing firm
-7-
<PAGE>
Name/Address Title
------------ ------
Joyce L. Hanes Director and Chairman of Midwest
15936 310th Street Wholesale Inc.
Mason City, IA 50401
Lee Liu Chairman of the Board of IEC
Alliant Tower
200 First Street, S.E.
Cedar Rapids, IA 52401
Katharine C. Lyall President, University of Wisconsin
University of Wisconsin System System, Madison, Wisconsin
1720 Van Hise Hall
1220 Linden Drive
Madison, WI 53706
Arnold M. Nemirow Chairman, President and Chief Executive
P.O. Box 1028 Officer of Bowater, Inc., a pulp and
Greenville, SC 29602 paper manufacturer.
Milton E. Neshek Special Consultant to the Kikkoman
1335 Geneva National Avenue, Corporation, and General Counsel,
North Secretary and Manager, New Market
Lake Geneva, WI 53147 Development, Kikkoman Foods, Inc., a
food products manufacturer
Jack R. Newman Partner of Morgan, Lewis & Bockius, an
Morgan, Lewis & Bockius international law firm
1800 M Street NW
Washington, DC 20036
Judith D. Pyle Vice Chair of The Pyle Group, a
The Pyle Group financial services company
3500 Corben Court
Madison, WI 53704
Robert D. Ray Retired President and Chief Executive
300 Walnut Street Officer of IASD Health Services Inc., an
Suite 807 insurance firm
Des Moines, IA 50309
David Q. Reed Independent practitioner of law
Mark Twain Tower
Suite 1210
106 West 11th Street
Kansas City, Missouri 64105
-8-
<PAGE>
Name/Address Title
------------ ------
Robert W. Schlutz President of Schlutz Enterprises, a
Schlutz Enterprises diversified farming and retailing business
14812 N. Avenue
P.O. Box 269
Columbus Junction, Iowa 52738
Wayne H. Stoppelmoor Vice Chairman of the Board of IEC
1000 Main Street
P.O. Box 769
Dubuque, IA 52004
Anthony R. Weiler Senior Vice President, Merchandising,
Heilig-Meyers Company for Heilig-Meyers Company, a national
12560 West Creek Parkway furniture retailer
Richmond, Virginia 23230
ALLIANT INDUSTRIES, INC. (ALLIANT)
Each of the directors and executive officers of Alliant is a citizen of
the United States of America. The business address of each of the directors and
executives officers of Alliant is 222 West Washington Avenue, Madison, Wisconsin
53703, except as otherwise indicated.
Name/Address Title
------------ ------
Executive Officers
Erroll B. Davis, Jr. Chief Executive Officer
James E. Hoffman President
Alliant Tower
200 First Street, S.E.
Cedar Rapids, IA 52401
Claire Fulenwider Vice President-Business Development &
Planning
Thomas L. Aller Vice President
Alliant Tower
200 First Street, S.E.
Cedar Rapids, IA 52401
John E. Ebright Vice President-Controller
Edward M. Gleason Vice President-Treasurer & Corporate
Secretary
-9-
<PAGE>
Name/Address Title
------------ ------
Directors
The directors of Alliant are the
same as the directors of IEC
(see above).
IES INVESTMENTS INC. (IES INVESTMENTS)
Each of the directors and executive officers of IES Investments is a
citizen of the United States of America. The business address of each of the
directors and executive officers of IES Investments is Alliant Tower, 200 First
Street, S.E., Cedar Rapids, IA 52401, except as otherwise indicated.
Name/Address Title
------------ ------
Executive Officers
James E. Hoffman President
Thomas L. Aller Vice President
Edward M. Gleason Treasurer and Secretary
222 West Washington Avenue
Madison, WI 53703
Directors
Erroll B. Davis, Jr. President and Chief Executive Officer of
222 West Washington Avenue IEC
Madison, WI 53703
James E. Hoffman President of IES Investments
Thomas L. Aller Vice President of IES Investments
INTERSTATE POWER COMPANY (IPC)
Each of the directors and executive officers of IPC is a citizen of the
United States of America. The business address of each of the directors and
executive officers of IPC is 1000 Main Street, P.O. Box 769, Dubuque, IA 52004,
except as otherwise indicated.
-10-
<PAGE>
Name/Address Title
------------ ------
Executive Officers
Erroll B. Davis, Jr. Chief Executive Officer
222 West Washington Avenue
Madison, WI 53703
Michael R. Chase President
Barbara J. Swan Executive Vice President and General
222 West Washington Avenue Counsel
Madison, WI 53703
Pamela J. Wegner Executive Vice President-Corporate
222 West Washington Avenue Secretary
Madison, WI 53703
Dean E. Ekstrom Vice President-Sales and Services
Alliant Tower
200 First Street, S.E.
Cedar Rapids, IA 52401
Dale R. Sharp Vice President Engineering & Standards
John E. Ebright Vice President-Controller
222 West Washington Avenue
Madison, WI 53703
Edward M. Gleason Vice President-Treasurer & Corporate
222 West Washington Avenue Secretary
Madison, WI 53703
Directors
The directors of IPC are the
same as the directors of IEC
(see above).
(d)-(e) During the last five years neither IEC, Alliant, IES
Investments nor IPC and, to the best of their knowledge, none of their
respective executive officers and directors named above, (i) has been convicted
in a criminal proceeding (excluding traffic violations or similar misdemeanors)
or (ii) has been a 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.
-11-
<PAGE>
Item 3. Source and Amount of Funds or Other Consideration
On April 21, 1998, the three-way business combination (the "Merger")
between WPL Holdings, Inc., a holding company incorporated under the laws of the
State of Wisconsin ("WPLH"), IES Industries Inc., a holding company incorporated
under the laws of the State of Iowa ("IES Industries"), and IPC, was consummated
in accordance with the terms of an Agreement and Plan of Merger, dated as of
November 10, 1996 (as amended on May 22, 1996 and August 16, 1996) by and among
WPLH, IES Industries and IPC, among others. In the Merger, WPLH, as the
surviving holding company, changed its name to Interstate Energy Corporation and
is currently doing business as Alliant Corporation. IEC is now the parent
holding company of Wisconsin Power and Light Company, IES Utilities Inc., IPC
and Alliant. Following the Merger, IES Investments, which prior to the Merger
was an indirect wholly-owned subsidiary of IES Industries, continued as an
indirect wholly-owned subsidiary of IEC as the surviving holding company. As a
result of the Merger, IEC may be deemed to beneficially own the shares of the
Company's Class A Common Stock held by IPC and IES Investments. IPC and IES
Investments continue as the record holders of such shares following the Merger.
Item 4. Purpose of Transaction
Shares of the Company's Class A Common Stock were acquired by IEC as a
result of the Merger. IES Investments and IPC acquired the shares for investment
purposes. The acquisitions were made prior to and not in connection with the
Merger.
Item 5. Interest in Securities of the Issuer
(a)-(b) As of October 31, 1998, IES Investments beneficially owned
10,278,288 shares of the Company's Class A Common Stock, which represents
approximately 15.92% of the outstanding shares of the Company's Class A Common
Stock. Alliant, as the direct parent corporation of IES Investments, may be
deemed to beneficially own the shares of the Company's Class A Common Stock
beneficially owned by IES Investments.
As of October 31, 1998, IPC beneficially owned 45,000 shares of the
Company's Class A Common Stock, which represents approximately .07% of the
outstanding shares of the Company's Class A Common Stock.
IEC, as the parent holding company of IES Investments and IPC, may be
deemed to beneficially own the shares of the Company's Class A Common Stock
beneficially owned by IES Investments and IPC, all of which constitutes
10,323,288 shares of the Company's Class A Common Stock (approximately 15.99% of
the outstanding shares of the Company's Class A Common Stock).
Each of the executive officers and directors of IEC, Alliant, IES
Investments and IPC beneficially owns the aggregate number of shares of the
Company's Class A Common Stock set forth below after his or her name. Except as
indicated in the footnotes, the persons listed below have sole voting and
investment power over the shares beneficially owned. The shares
-12-
<PAGE>
held by each of the persons listed below represent less than 0.10% of the
outstanding shares of the Company's Class A Common Stock.
Number of Shares of Class A
Name Common Stock Beneficially Owned
---- -------------------------------
Thomas L. Aller 1,825(1)
Alan B. Arends 200
Michael R. Chase 500
Erroll B. Davis, Jr. 1,000
John E. Ebright 1,100(2)
Dean E. Ekstrom 0
Rockne G. Flowers 0
Claire Fulenwider 0
Edward M. Gleason 0
Joyce L. Hanes 0
William D. Harvey 0
James E. Hoffman 250
Lee Liu 46,575(3)
Katharine C. Lyall 0
Arnold M. Nemirow 0
Milton E. Neshek 0
Jack R. Newman 1,291(4)
Eliot G. Protsch 500
Judith D. Pyle 0
Robert D. Ray 1,000
David Q. Reed 600
Robert W. Schlutz 5,050
Dale R. Sharp 0
Wayne H. Stoppelmoor 500
Barbara J. Swan 0
Thomas M. Walker 0
Pamela Wegner 0
Anthony R. Weiler 0
- --------------------
(1) Includes 475 shares held by Mr. Aller's wife and 200 shares held by his
daughter.
(2) Represents shares held by Mr. Ebright's wife.
(3) Includes 7,200 shares held by Mr. Liu's wife and options to acquire 34,375
shares.
(4) Includes 41 shares held by Mr. Newman's wife.
(c) See Item 4. Except as provided in Item 4, to the reporting persons'
knowledge, none of the persons named in response to Item 5(a) have effected any
transactions in shares of the Company's Class A Common Stock during the past
sixty days.
(d) Not applicable
-13-
<PAGE>
(e) Not applicable
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
IES Investments, Clark E. McLeod and Mary E. McLeod, Midwest Capital
Group, Inc. and MWR Investments Inc. (collectively, the "Investor Stockholders")
and the Company have, with respect to the respective shares of capital stock
owned by each such Investor Stockholder, entered into an investment agreement,
as amended (the "Investor Agreement"), effective as of June 10, 1996, which
provides that each Investor Stockholder, for so long as each Investor
Stockholder owns at least 10% of the outstanding capital stock of the Company
(but in no event longer than three years), shall vote such Investor
Stockholder's stock and take all action within its power to: (i) establish the
size of the Board of Directors of the Company at nine directors; (ii) cause to
be elected to the Board of Directors of the Company one director designated by
IES Investments (for so long as IES Investments owns at least 10% of the
outstanding capital stock of the Company); (iii) cause to be elected to the
Board of Directors of the Company one director designated by Midwest Capital
Group, Inc. (for so long as Midwest Capital Group, Inc. owns at least 10% of the
outstanding capital stock of the Company); (iv) cause to be elected to the Board
of Directors of the Company three directors who are executive offices of the
Company designated by Clark E. McLeod (for so long as Clark E. McLeod and Mary
E. McLeod own at least 10% of the outstanding capital stock of the Company); and
(v) cause to be elected to the Board of Directors of the Company four
independent directors nominated by the Board of Directors of the Company
(subject to certain exceptions).
On June 14, 1997, certain shareholders of Consolidated Communications
Inc. ("CCI") (collectively, the "CCI Shareholders"), the Company and the
Investor Stockholders entered into a Stockholders' Agreement (as amended, the
"1997 Stockholders' Agreement"), which became effective on September 24, 1997.
Pursuant to the 1997 Stockholders' Agreement, which amends and restates certain
agreements contained in the Investor Agreement among the parties thereto, each
Investor Stockholder and the CCI Shareholders, for so long as each such party
owns at least 10% of the outstanding Class A Common Stock, shall, for a period
of three years after the effective date of the 1997 Stockholders' Agreement
(subject to certain exceptions), vote such party's shares and take all action
within its power to (i) establish the size of the Board at up to eleven
directors; (ii) cause to be elected to the Board one director designated by IES
(for so long as IES owns at least 10% of the outstanding Class A Common Stock);
(iii) cause to be elected to the Board one director designated by MidAmerican
(for so long as MidAmerican owns at least 10% of the outstanding Class A Common
Stock); (iv) cause to be elected to the Board three directors who are executive
officers of the Company designated by Clark E. McLeod (for so long as Clark and
Mary McLeod collectively own at least 10% of the Class A Common Stock); (v)
cause Richard A. Lumpkin to be elected to the Board (for so long as the CCI
Shareholders collectively own at least 10% of the outstanding Class A Common
Stock); and (vi) cause to be elected to the Board four non-employee directors
nominated by the Board. The 1997 Stockholders' Agreement also provides that,
until the earlier of the first anniversary of the effective date of the 1997
Stockholders' Agreement or March 31, 1999, and subject to certain exceptions, no
Investor Stockholder or CCI Shareholder will sell or otherwise dispose of any
equity securities of the Company without the consent of the Board. In addition,
-14-
<PAGE>
the 1997 Stockholders' Agreement provides that if the Company grants any
Investor Stockholder or CCI Shareholder the opportunity to register equity
securities of the Company under the Securities Act of 1933, the Company will
grant all other Investor Stockholders and CCI Shareholders the same opportunity
to register their pro rata portion of the Company equity securities owned by
them. The other operative provisions of the Investor Agreement remain unchanged
in the 1997 Stockholders' Agreement.
On November 18, 1998, the former CCI Shareholders and certain permitted
transferees of such shareholders (collectively, the "Former CCI Shareholders"),
the Company, IES Investments, Clark E. McLeod, Mary E. McLeod and Richard A.
Lumpkin, entered into a Stockholders' Agreement (the "1998 Stockholders'
Agreement"), which supersedes, as provided therein, the 1997 Stockholders'
Agreement. Pursuant to the 1998 Stockholders' Agreement, IES Investments, Clark
E. McLeod, Mary E. McLeod and Richard A. Lumpkin (collectively, the "Principal
Stockholders"), for so long as each such party owns at least 4,000,000 shares of
the Class A Common Stock, shall, for the period ending on December 31, 2001,
vote such party's shares and take all action within its power to (i) establish
the size of the Board at up to eleven directors; (ii) cause to be elected to the
Board one director designated by IES (for so long as IES owns at least 4,000,000
shares of the Class A Common Stock); (iii) cause to be elected to the Board
three directors who are executive officers of the Company designated by Clark E.
McLeod (for so long as Clark and Mary McLeod collectively beneficially and
continuously own at least 4,000,000 shares of the Class A Common Stock); (iv)
cause Richard A. Lumpkin to be elected to the Board (for so long as the Former
CCI Shareholders and Richard A. Lumpkin collectively beneficially and
continuously own at least 4,000,000 shares of the Class A Common Stock); (v)
cause to be elected to the Board a director nominated by the Board to replace a
director designated by a Principal Stockholder, as provided above, because the
director no longer can or will serve as a director; and (vi) cause to be elected
to the Board up to six non-employee directors nominated by the Board. The 1998
Stockholders' Agreement provides that until December 31, 2001, IES and its
affiliates will not directly or indirectly acquire any Company securities,
except as permitted by the 1998 Stockholders' Agreement. The 1998 Stockholders'
Agreement further provides that, until December 31, 2001, and subject to certain
exceptions, no Principal Stockholder will sell or otherwise dispose of any
equity securities of the Company without the consent of the Board. In addition,
the Stockholders' Agreement provides that if the Company grants any Principal
Stockholder the opportunity to register equity securities of the Company under
the Securities Act of 1933, the Company will grant all other Principal
Stockholders the same opportunity to register their pro rata portion of the
Company equity securities owned by them. Certain sections of the 1997
Stockholders' Agreement are superseded on the terms contemplated in the 1998
Stockholders' Agreement.
On January 7, 1999, the former CCI Shareholders and certain permitted
transferees of such shareholders (collectively, the "Former CCI Shareholders"),
the Company, IES Investments, Clark E. McLeod, Mary E. McLeod, Richard A.
Lumpkin and M/C Investors LLC and Media/Communications Partners III Limited
Partnership (collectively, the "New Stockholders"), entered into a Stockholders'
Agreement (the "1999 Stockholders' Agreement"). IES Investments, the McLeods,
Lumpkin and the Former CCI Shareholders are referred to collectively as the
"1998 Stockholders." Pursuant to the 1999 Stockholders' Agreement, each 1998
Stockholder, for so long as each such party owns at least 4,000,000 shares of
the Class A Common Stock, shall, for the period ending on December 31, 2001,
vote
-15-
<PAGE>
such party's shares and take all action within its power to (i) establish the
size of the Board at up to eleven directors; (ii) cause to be elected to the
Board one director designated by the New Stockholders (for so long as the New
Stockholders own at least 2,500,000 shares of the Class A Common Stock); (iii)
cause to be elected to the Board a director nominated by the Board to replace a
director designated by the New Stockholders, as provided above; (iv) establish
and maintain the size of the Board at up to eleven directors; and (v) cause to
be elected to the Board up to five non-employee directors nominated by the
Board. Pursuant to the 1999 Agreement, the New Stockholders, for so long as they
collectively and continuously own at least 2,500,000 shares of Class A Common
Stock, shall, for the period ending on December 31, 2001, vote their shares and
take all action with their power to (i) establish and maintain the size of the
Board at up to eleven directors; (ii) cause to be elected to the Board one
director designated by IES Investments (for so long as IES Investments owns at
least 4,000,000 shares of Class A Common Stock); (iii) cause to be elected to
the Board three directors who are executive officers of the Company designated
by Clark E. McLeod (for so long as Clark and Mary McLeod collectively
beneficially and continuously own at least 4,000,000 shares of the Class A
Common Stock); (iv) cause Richard A. Lumpkin to be elected to the Board (for so
long as the Former CCI Shareholders and Richard A. Lumpkin collectively
beneficially and continuously own at least 4,000,000 shares of the Class A
Common Stock); (v) cause to be elected to the Board a director nominated by the
Board to replace a director designated by a Principal Stockholder, as provided
above, because the director no longer can or will serve as a director; (vi)
cause to be elected to the Board up to five non-employee directors nominated by
the Board; and (vii) cause to be elected to the Board one director designated by
the New Stockholders (for so long as the New Stockholders collectively
beneficially and continuously own at least 2,500,000 shares of Class A Common
Stock). The 1999 Stockholders' Agreement further provides that, until December
31, 2001, and subject to certain exceptions, no New Stockholder will sell or
otherwise dispose of any equity securities of the Company without the consent of
the Board. In addition, the 1999 Stockholders' Agreement provides that if the
Company grants any Principal Stockholder the opportunity to register equity
securities of the Company under the Securities Act of 1933, the Company will
grant all other Principal Stockholders the same opportunity to register their
pro rata portion of the Company equity securities owned by them.
The foregoing descriptions of the Investor Agreement, the 1997
Stockholders' Agreement, the 1998 Stockholders' Agreement and the 1999
Stockholders' Agreement are qualified in their entirety by reference to the
Investor Agreement and 1997 Stockholders' Agreement, which were previously filed
as exhibits to this Schedule and are incorporated herein by reference, and the
1999 Stockholders' Agreement and 1998 Stockholders' Agreement, which are filed
as exhibits to this Schedule and are incorporated herein by reference.
Item 7. Materials to be Filed as Exhibits
1. Form of Investor Agreement dated as of April 1, 1996 among the
Company, IES Investments, Midwest Capital Group, Inc., MWR Investments Inc.,
Clark E. McLeod and Mary E. McLeod and certain other stockholders (previously
filed with the Securities and Exchange Commission as Exhibit 4.8 to the
Company's Form S-1 Registration Statement, as amended, dated June 7, 1996,
Registration No. 333-3112 and incorporated by reference herein).
-16-
<PAGE>
2. Stockholders' Agreement dated as of June 14, 1997 among the Company,
certain shareholders of Consolidated Communications Inc., IES Investments,
Midwest Capital Group, Inc., MWR Investments Inc., Clark E. McLeod and Mary E.
McLeod and certain other stockholders (previously filed with the Securities and
Exchange Commission as Exhibit 4.12 to the Company's Amendment No. 2 to Form S-4
Registration Statement, as filed on July 25, 1997, Registration No. 333-27647
and incorporated by reference herein).
3. Stockholders' Agreement dated as of November 18, 1998 among the
Company, the former shareholders of Consolidated Communications Inc. and certain
permitted transferees of such shareholders, IES Investments, Clark E. McLeod,
Mary E. McLeod and Richard A. Lumpkin.
4. Stockholders' Agreement dated as of January 7, 1999 among the
Company, the former shareholders of Consolidated Communication Inc. and certain
permitted transferees of such shareholders, IES Investments, Clark E. McLeod,
Mary E. McLeod, Richard A. Lumpkin, M/C Investors LLC and Media/Communications
Partners III Limited Partnership.
-17-
<PAGE>
SIGNATURES
After reasonable inquiry and to the best of its knowledge and belief,
each of the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Date: March 17, 1999.
INTERSTATE ENERGY
CORPORATION
By: /s/ Edward M. Gleason
Edward M. Gleason
Vice President-Treasurer and
Corporate Secretary
ALLIANT INDUSTRIES, INC.
By: /s/ Edward M. Gleason
Edward M. Gleason
Vice President-Treasurer and
Corporate Secretary
IES INVESTMENTS INC.
By: /s/ Edward M. Gleason
Edward M. Gleason
Treasurer and Secretary
INTERSTATE POWER COMPANY
By: /s/ Edward M. Gleason
Edward M. Gleason
Vice President-Treasurer and
Corporate Secretary
-18-
<PAGE>
EXHIBIT INDEX
Exhibit
1. Investor Agreement dated April 1,
1996 *
2. Stockholders' Agreement dated
June 14, 1997 *
3. Stockholders' Agreement dated Exhibit 3
November 18, 1998
4. Stockholders' Agreement dated Exhibit 4
January 7, 1999
- ---------------
* Incorporated by reference.
-19-
STOCKHOLDERS' AGREEMENT
This Stockholders' Agreement (this "Agreement") is entered into as of
November 18, 1998, by and among McLeodUSA Incorporated, a Delaware corporation
(the "Company"); IES Investments Inc., an Iowa corporation ("IES"); Clark E.
McLeod ("McLeod"); Mary E. McLeod (together with McLeod, the "McLeods"); and
Richard A. Lumpkin ("Lumpkin") and each of the former shareholders of
Consolidated Communications Inc. ("CCI") and certain permitted transferees of
the former CCI shareholders in each case who are listed in Schedule I hereto
(the "CCI Shareholders"). IES, the McLeods, Lumpkin and the CCI Shareholders are
referred to herein collectively as the "Principal Stockholders" and individually
as a "Principal Stockholder."
WHEREAS, the Company, the Principal Stockholders and certain other
stockholders are parties to a Stockholders' Agreement entered into as of June
14, 1997, as amended on September 19, 1997 (the "Original Stockholders'
Agreement");
WHEREAS, Section 3 of the Original Stockholders' Agreement has expired in
accordance with its terms and certain other provisions thereof will expire in
accordance with their terms; and
WHEREAS, the Company and the Principal Stockholders deem it to be in the
best interests of the Company and its stockholders to enter into a new agreement
to continue to provide for the continuity and stability of the business and
policies of the Company on the terms and conditions hereinafter set forth;
NOW, THEREFORE, for and in consideration of the foregoing and of the
mutual covenants and agreements contained herein, the parties hereto agree as
follows:
1. VOTING AGREEMENT
1.1 Board of Directors
For the period commencing on the Voting Agreement Effective Date (as
defined in Section 1.2) and ending on the Expiration Date (as defined in Section
1.2), each Principal Stockholder, for so long as such Principal Stockholder
beneficially and continuously owns at least four million (4,000,000) shares of
the
<PAGE>
Company's Class A common stock, $.01 par value per share (the "Class A Common
Stock"), subject to adjustment pursuant to Section 5.1, shall take or cause to
be taken all such action within their respective power and authority as may be
required:
(a) to establish and maintain the authorized size of the Board
of Directors of the Company (the "Board of Directors" or
the "Board") at up to eleven (11) directors;
(b) to cause to be elected to the Board one (1) director
designated by IES, for so long as IES beneficially and
continuously owns at least four million (4,000,000) shares
of the Class A Common Stock (subject to adjustment pursuant
to Section 5.1);
(c) to cause Lumpkin to be elected to the Board, for so long as
Lumpkin and the CCI Shareholders collectively beneficially
and continuously own at least four million (4,000,000)
shares of the Class A Common Stock (subject to adjustment
pursuant to Section 5.1);
(d) to cause to be elected to the Board three (3) directors who
are executive officers of the Company designated by McLeod,
for so long as the McLeods collectively beneficially and
continuously own at least four million (4,000,000) shares
of the Class A Common Stock (subject to adjustment pursuant
to Section 5.1);
(e) to cause to be elected to the Board a director or directors
nominated by the Board to replace a director or directors
designated pursuant to paragraphs (b) through (d) above
upon the earlier to occur of such designated director's or
directors' resignation (and the acceptance of such
resignation by the Board) and the expiration of such
director's or directors' term as a result of any party or
parties identified in paragraphs (b) through (d) above no
longer beneficially owning at least four million
(4,000,000) shares of the Class A Common Stock (subject to
adjustment pursuant to Section 5.1) at any time during the
period commencing on the Voting Agreement Effective Date
and ending on the Expiration Date; it being understood that
within three (3) business days following such time as the
party or parties identified in paragraphs (b) through (d)
above no longer beneficially and continuously own at least
four million (4,000,000) shares
-2-
<PAGE>
of the Class A Common Stock (subject to adjustment pursuant
to Section 5.1) during such period, such party or parties
shall use its or their respective best efforts to cause the
director or directors designated by such party or parties
to tender their immediate resignation to the Board which
the Board may accept or reject; and
(f) to cause to be elected to the Board, if and as nominated by
the Board, up to six (6) non-employee directors;
provided, however, notwithstanding any other provision of this Agreement, if any
Principal Stockholder hereto would not be entitled to have a director elected to
the Board with respect to such Principal Stockholder under the Original
Stockholders' Agreement but would be entitled to have a director elected to the
Board with respect to such Principal Stockholder pursuant to Section 1.1 of this
Agreement except that the Voting Agreement Effective Date hereunder has not
occurred, then this Agreement shall be applied with respect to the election of
the director of such Principal Stockholder as if the Voting Agreement Effective
Date has occurred and each party hereto shall act under this Agreement to cause
the election of the director of such Principal Stockholder.
The parties hereto agree that Section 1.1 and Section 1.2 of the Original
Stockholders' Agreement shall terminate and be of no force or effect with
respect to the rights and obligations of the parties hereto amongst each other
as of the Voting Agreement Effective Date. For purposes of Section 1.1, Lumpkin
and all of the CCI Shareholders shall be deemed to be a single Principal
Stockholder, and a CCI Shareholder shall be deemed to own shares "continuously"
as long as the shares of such CCI Shareholder are owned by such CCI Shareholder
or by a CCI Permitted Transferee (as defined in Section 3.1).
1.2 Definitions
For purposes of this Agreement, the following terms have the meanings
indicated:
(a) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 under the
Securities Exchange Act of 1934, as amended (the "Exchange
Act").
(b) A person shall be deemed the "Beneficial Owner" of and
shall be deemed to "beneficially own" any securities:
-3-
<PAGE>
(i) which such person or any of such person's Affiliates
or Associates, directly or indirectly, has the right
to acquire (whether such right is exercisable
immediately or only after the passage of time)
pursuant to any agreement, arrangement or
understanding (whether or not in writing), or upon
the exercise of conversion rights, exchange rights,
other rights, warrants or options, or otherwise;
(ii) which such person or any of such person's Affiliates
or Associates, directly or indirectly, has the right
to vote or dispose of or has "beneficial ownership"
of (as determined pursuant to Rule 13d-3 under the
Exchange Act), including pursuant to any agreement,
arrangement or understanding, whether or not in
writing; or
(iii)which are beneficially owned, directly or indirectly,
by any other person (or any Affiliate or Associate
thereof) with which such person or any of such
person's Affiliates or Associates has any agreement,
arrangement or understanding (whether or not in
writing), for the purpose of acquiring, holding,
voting or disposing of any voting securities of the
Company.
For purposes of the definition of "Beneficial Owner" and
"beneficially own," the terms "agreement," "arrangement"
and "understanding" shall not include this Agreement or the
Original Stockholders' Agreement.
(c) "Expiration Date" shall mean December 31, 2001.
(d) "Voting Agreement Effective Date" shall mean the
date which falls on the earliest to occur of (i) the
termination of the Original Stockholders' Agreement,
(ii) the expiration of Section 1.1 of the Original
Stockholders' Agreement in accordance with its terms
and (iii) MWR Investments Inc. ("MWR") no longer
being entitled to have a director designated by MWR
elected to the Board in accordance with the terms
and conditions of Section 1.1 of the Original
Stockholders' Agreement.
2. STANDSTILL
IES hereby agrees that, prior to the Expiration Date, neither IES nor any
Affiliate of IES will (and IES will not assist or encourage others to), directly
or
-4-
<PAGE>
indirectly, acquire or agree, offer, seek or propose to acquire, or cause to be
acquired, ownership (including, but not limited to, beneficial ownership) of any
securities issued by the Company or any of its subsidiaries, or any rights or
options to acquire such ownership (including from a third party), except (a) to
the extent expressly set forth in this Agreement, (b) as consented prior thereto
in writing by the Board of Directors, (c) upon conversion of any Class B common
stock, $.01 par value per share, of the Company into Class A Common Stock
pursuant to the terms thereof, (d) with respect to transfers of equity
securities between or among IES and IES's wholly owned subsidiaries, parent
corporation, or other wholly owned subsidiaries of such parent corporation, or
(e) with respect to the grant, vesting or exercise of stock options.
3. TRANSFERS OF SECURITIES
3.1 Restrictions on Transfers
(a) Except as otherwise provided in this Section 3.1 or Section
3.2, each Principal Stockholder hereby severally agrees that until the
Expiration Date, such Principal Stockholder will not offer, sell, contract to
sell, grant any option to purchase, or otherwise dispose of, directly or
indirectly, ("Transfer"), any equity securities of the Company or any other
securities convertible into or exercisable for such equity securities
("Securities") beneficially owned by such Principal Stockholder without
submitting a written request to, and receiving the prior written consent of, the
Board of Directors, provided, however, that any CCI Shareholder may transfer
Securities to any other CCI Shareholder, the spouse of a CCI Shareholder, or a
lineal descendant of a CCI Shareholder (or a trust for the primary benefit of
any one or more of a CCI Shareholder, the spouse of a CCI Shareholder, or a
lineal descendant of a CCI Shareholder or a partnership or limited liability
company owned and managed solely by one or more CCI Shareholders, spouses of CCI
Shareholders and lineal descendants of CCI Shareholders), or, in the case of a
CCI Shareholder that is a trust, to any beneficiary of such trust (or a trust
for the primary benefit of such beneficiary or a partnership or limited
liability company owned and managed solely by one or more CCI Shareholders,
spouses of CCI Shareholders and lineal descendants of CCI Shareholders), in each
case provided that (i) such transfer is done in accordance with the transfer
restrictions applicable to such Securities under federal and state securities
laws and (ii) the transferee agrees to be bound by the terms hereof as a
Principal Stockholder with respect to the shares being transferred pursuant to
this Section, and any such transfer shall not constitute a "Transfer" for
purposes of this Agreement (any such CCI transferee pursuant to this proviso, a
"CCI Permitted Transferee"). In the event that the Board of Directors consents
to any Transfer of Securities by a Principal Stockholder pursuant to the written
request of such Principal Stockholder (a "Transferring Stockholder") and except
as otherwise provided in Section 3.1(b) and Section 3.2, each other Principal
Stockholder shall,
-5-
<PAGE>
notwithstanding the provisions of this Section 3.1(a), have the right to
Transfer a percentage of the total number of Securities beneficially owned by
such Principal Stockholder equal to the percentage of the total number of
Securities beneficially owned by the Transferring Stockholder that the Board of
Directors has consented may be Transferred by such Transferring Stockholder. The
parties acknowledge that any Transfer pursuant to this Section 3.1(a) to which
the Board of Directors has consented may be in connection with, or as part of, a
private placement by the Company of, or other transaction involving, its
Securities.
(b) In addition to the provisions of Section 3.1(a), commencing
for the quarter ending December 31, 1998 and ending on the Expiration Date, the
Board shall determine prior to the public release of the Company's consolidated
financial results with respect to the end of each financial reporting quarter,
the aggregate number, if any, of shares of Class A Common Stock (not to exceed
in the aggregate one hundred fifty thousand (150,000) shares of Class A Common
Stock per quarter, subject to adjustment pursuant to Section 5.1) that may be
Transferred by the Principal Stockholders (the "Transfer Amount") during the
period commencing on the third (3rd) business day and ending on the twenty-third
(23rd) business day following such public release of the Company's quarterly or
annual financial results or such other trading period designated or permitted by
the Board with respect to the purchase and sale of its Securities (each such
period, a "Transfer Period"). Notwithstanding the provisions of Section 3.1(a),
each Principal Stockholder shall be entitled to Transfer during each Transfer
Period, provided such Transfer is effected in accordance with all applicable
federal and state securities laws, a number of shares of Class A Common Stock
equal to thirty-three and one-third percent (33 1/3%) of the Transfer Amount, if
any, for such Transfer Period (rounding down in the case of any fractional
amount). Any portion of any Principal Stockholder's share of the Transfer Amount
that such Principal Stockholder elects not to transfer during a Transfer Period
shall be reallocated equally among the remaining Principal Stockholders who
intend to Transfer shares of Class A Common Stock during such Transfer Period,
and such remaining Principal Stockholders shall be entitled to Transfer such
additional shares of Class A Common Stock during the Transfer Period, provided
such Transfer is effected in accordance with all applicable federal and state
securities laws. In no event shall any portion of a Transfer Amount that is not
utilized by a Principal Stockholder during a Transfer Period be reallocated or
otherwise credited to any subsequent Transfer Periods. The parties acknowledge
that the Company has determined that the Transfer Amount that may be Transferred
by the Principal Stockholders during the Transfer Period for the quarter ended
September 30, 1998 pursuant to this Section 3.1(b) shall be an aggregate of one
hundred fifty thousand (150,000) shares of Class A Common Stock.
(c) Commencing for the quarter ending December 31, 1998 and ending
on the Expiration Date, the Company shall give each Principal Stockholder prompt
written notice (in any event no later than fifty (50) days prior to the
-6-
<PAGE>
beginning of the applicable Transfer Period) of its determination of any
Transfer Amount. Within seven (7) days of receipt of such notice, any Principal
Stockholder that desires to Transfer shares of Class A Common Stock during such
Transfer Period pursuant to Section 3.1(b) shall provide written notice to the
Company of the number of shares such Principal Stockholder desires to Transfer.
Not later than seven (7) days after receipt of such responses, the Company shall
notify all remaining Principal Stockholders of any Principal Stockholder's
election not to Transfer the total number of shares of Class A Common Stock that
such Principal Stockholder is entitled to Transfer during such Transfer Period.
Any Principal Stockholder that desires to Transfer additional shares of Class A
Common Stock equal to all or part of the remaining Transfer Amount shall notify
the Company within seven (7) days of receipt of the Company's second notice. The
Company shall allocate the remaining Transfer Amount in accordance with the
provisions of Section 3.1(b) and shall notify the appropriate Principal
Stockholders of such allocation no later than ten (10) days prior to the
beginning of the Transfer Period.
(d) For purposes of this Section 3.1, Lumpkin and all of the CCI
Shareholders shall be deemed to be a single Principal Stockholder.
3.2 Registration Rights
(a) In the event that the Board of Directors consents pursuant to
Section 3.1(a) to a Principal Stockholder's request for a Transfer and in
connection therewith, the Company agrees to register Securities with respect to
such Transfer under the Securities Act of 1933, as amended (the "Securities
Act"), the Company shall grant each other Principal Stockholder the opportunity
(subject to reduction in the event the registered Transfer is underwritten) to
register for Transfer under the Securities Act a percentage of the total number
of Securities beneficially owned by such Principal Stockholder equal to the
percentage of the total number of Securities beneficially owned by the
Transferring Stockholder that such Transferring Stockholder is registering for
Transfer under the Securities Act, on the same terms and conditions as the
Transferring Stockholder (each Principal Stockholder registering, or indicating
a desire to register, any Securities for Transfer under the Securities Act
pursuant to this Section 3.2 being a "Registering Transferor").
(b) To the extent that the Company grants pursuant to Section
3.1(b) a Principal Stockholder the opportunity to register shares of Class A
Common Stock for Transfer under the Securities Act, the Company shall grant each
other Principal Stockholder the opportunity (subject to reduction in the event
the registered Transfer is underwritten) to register an equal number of shares
of Class A Common Stock for Transfer under the Securities Act on the same terms
and conditions.
(c) In the event the Company proposes to register any shares of
Class A Common Stock under the Securities Act pursuant to an underwritten
-7-
<PAGE>
primary offering (other than pursuant to a registration statement on Form S-4 or
Form S-8 or any successor forms thereto or other form which would not permit the
inclusion of the shares of Class A Common Stock of the Principal Stockholders),
the Company, as determined by the Board of Directors, shall give written notice
to all Principal Stockholders of its intention to effect such a registration.
Following any such notice, the Board of Directors shall undertake to determine
the aggregate number, if any, of shares of Class A Common Stock held by the
Principal Stockholders (not to exceed in the aggregate on a per year basis a
number of shares of Class A Common Stock equal to fifteen percent (15%) of the
total number of shares of Class A Common Stock beneficially owned by the
Principal Stockholders as of December 31, 1998, subject to adjustment pursuant
to Section 5.1) to be registered by the Company under the Securities Act (the
"Registrable Amount") for Transfer by the Principal Stockholders in connection
with such offering. If the Board determines to register shares of Class A Common
Stock held by the Principal Stockholders pursuant to this Section 3.2(c), the
Company will promptly give written notice of such determination to all Principal
Stockholders, and thereupon the Company will use commercially reasonable efforts
to effect the registration of that portion of the Registrable Amount that the
Registering Transferors indicate a desire to register. In the event the
Registering Transferors indicate a desire to register a number of shares of
Class A Common Stock that, in the aggregate, exceeds the Registrable Amount, the
number of shares of Class A Common Stock that each Registering Transferor shall
be entitled to register shall be reduced to the extent such number exceeds such
Registering Transferor's pro rata share of the Registrable Amount based upon the
ratio of the total number of Securities beneficially owned by such Registering
Transferor to the total number of Securities beneficially owned by all Principal
Shareholders. To the extent any portion of the Registrable Amount remains
unallocated after such reductions, each Registering Transferor who has indicated
a desire to register additional shares of Class A Common Stock shall be entitled
to register an additional amount of Class A Common Stock equal to such
Registering Transferor's pro rata portion of the remaining Registrable Amount
based upon the ratio of the total number of Securities beneficially owned by
such Registering Transferor to the total number of Securities beneficially owned
by all Registering Transferors who have indicated a desire to register
additional shares of Class A Common Stock. The reallocation procedure described
in the preceding sentence shall be repeated until the entire Registrable Amount
is allocated. All terms, conditions and rights with respect to such registration
(including but not limited to any determination to reduce the Registrable
Amount) shall be determined by the Board, provided that (i) the representations
and warranties of a Principal Stockholder shall be customary taking into
account, among other things, the nature of the offering and such Principal
Stockholder's relationship with the Company, and (ii) the Company shall be
responsible for all expenses with respect to such registration other than
underwriting discounts and commissions allocable to the Class A Common Stock of
the Registering Transferors, which underwriting discounts and commissions shall
be the responsibility of the Registering Transferors.
-8-
<PAGE>
(d) In addition to the registration rights granted pursuant to
Sections 3.2(a), (b) and (c), no more frequently than once during each of the
calendar years ending December 31, 1999, 2000 and 2001 (each such year, an
"Annual Period"), and upon either (i) the receipt of a written request of one or
more Principal Stockholders or (ii) a determination by the Board of Directors,
the Board shall undertake to determine the Registrable Amount, if any, for
Transfer by the Principal Stockholders. If the Board determines to register
shares of Class A Common Stock held by the Principal Stockholders pursuant to
this Section 3.2(d), the Company will promptly give written notice of such
determination to all Principal Stockholders, and thereupon the Company will use
commercially reasonable efforts to effect the registration of that portion of
the Registrable Amount that the Registering Transferors indicate a desire to
register. In the event the Registering Transferors indicate a desire to register
a number of shares of Class A Common Stock that, in the aggregate, exceeds the
Registrable Amount, the number of shares of Class A Common Stock that each
Registering Transferor shall be entitled to register shall be reduced to the
extent such number exceeds such Registering Transferor's pro rata share of the
Registrable Amount based upon the ratio of the total number of Securities
beneficially owned by such Registering Transferor to the total number of
Securities beneficially owned by all Principal Stockholders. To the extent any
portion of the Registrable Amount remains unallocated after such reductions,
each Registering Transferor who has indicated a desire to register additional
shares of Class A Common Stock shall be entitled to register an additional
amount of Class A Common Stock equal to such Registering Transferor's pro rata
portion of the remaining Registrable Amount based upon the ratio of the total
number of Securities beneficially owned by such Registering Transferor to the
total number of Securities beneficially owned by all Registering Transferors who
have indicated a desire to register additional shares of Class A Common Stock.
The reallocation procedure described in the preceding sentence shall be repeated
until the entire Registrable Amount is allocated. All terms, conditions and
rights with respect to such registration (including but not limited to any
determination to reduce the Registrable Amount) shall be determined by the
Board, provided that (i) the representations and warranties of a Principal
Stockholder shall be customary taking into account, among other things, the
nature of the offering and such Principal Stockholder's relationship with the
Company, and (ii) the Company shall be responsible for all expenses with respect
to such registration other than underwriting discounts and commissions, which
underwriting discounts and commissions shall be the responsibility of the
Registering Transferors.
(e) If the Board establishes a committee (a "Pricing Committee")
to authorize and approve the price and any other terms of any Transfer of
Securities registered under the Securities Act pursuant to this Section 3.2 in
which Lumpkin or any CCI Shareholder is participating as a Registering
Transferor, the Company will use its best efforts to cause Lumpkin to be
nominated to such Pricing
-9-
<PAGE>
Committee. Notwithstanding any other provision of this Agreement, to the extent
the Company has undertaken to register Securities of the Principal Stockholders
pursuant to this Section 3.2, the Company may subsequently determine not to
register such Securities and may either not file a registration statement or
otherwise withdraw or abandon a registration statement previously filed with
respect to the registration of such Securities.
(f) For purposes of this Section 3.2, Lumpkin and all of the CCI
Shareholders shall be deemed to be a single Principal Stockholder.
4. REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of Non-individual Stockholders
Each non-individual Principal Stockholder hereby represents and
warrants, as of the date of this Agreement, to the Company and to each other
Principal Stockholder as follows:
4.1.1 Authorization
Such Principal Stockholder has taken all action necessary for it
to enter into this Agreement and to consummate the transactions contemplated
hereby.
4.1.2 Binding Obligation
This Agreement constitutes a valid and binding obligation of such
Principal Stockholder, enforceable in accordance with its terms, except to the
extent that such enforceability may be limited by bankruptcy, insolvency, and
similar laws affecting the rights and remedies of creditors generally, and by
general principles of equity and public policy; and each document and instrument
to be executed by such Principal Stockholder pursuant hereto, when executed and
delivered in accordance with the provisions hereof, shall be a valid and binding
obligation of such Principal Stockholder, enforceable in accordance with its
terms (with the aforesaid exceptions).
4.2 Representations and Warranties of Individual Stockholders
Each Principal Stockholder who is an individual hereby represents
and warrants, as of the date of this Agreement, to the Company and to each other
Principal Stockholder as follows:
-10-
<PAGE>
4.2.1 Power and Authority
Such Principal Stockholder has the legal capacity and all other
necessary power and authority necessary to enter into this Agreement and to
consummate the transactions contemplated hereby.
4.2.2 Binding Obligation
This Agreement constitutes a valid and binding obligation of such
Principal Stockholder, enforceable in accordance with its terms, except to the
extent that such enforceability may be limited by bankruptcy, insolvency, and
similar laws affecting the rights and remedies of creditors generally, and by
general principles of equity and public policy; and each document and instrument
to be executed by such Principal Stockholder pursuant hereto, when executed and
delivered in accordance with the provisions hereof, shall be a valid and binding
obligation of such Principal Stockholder, enforceable in accordance with its
terms (with the aforesaid exceptions).
4.3 Representations and Warranties of the Company
The Company hereby represents and warrants, as of the date of this
Agreement, to each Principal Stockholder as follows:
4.3.1 Authorization
The Company has taken all corporate action necessary for it to
enter into this Agreement and to consummate the transactions contemplated
hereby.
4.3.2 Binding Obligation
This Agreement constitutes a valid and binding obligation of the
Company, enforceable in accordance with its terms, except to the extent that
such enforceability may be limited by bankruptcy, insolvency, and similar laws
affecting the rights and remedies of creditors generally, and by general
principles of equity and public policy; and each document and instrument to be
executed by the Company pursuant hereto, when executed and delivered in
accordance with the provisions hereof, shall be a valid and binding obligation
of the Company, enforceable in accordance with its terms (with the aforesaid
exceptions).
5. MISCELLANEOUS
5.1 Effect of Changes in Capitalization
All share amounts of the Company's capital stock referred to in
this Agreement shall be appropriately and proportionally adjusted for any
-11-
<PAGE>
recapitalization, reclassification, stock split-up, combination of shares,
exchange of shares, stock dividend or other distribution payable in capital
stock, or other increase or decrease in such shares effected without receipt of
consideration by the Company, occurring after the date of this Agreement.
5.2 Additional Actions and Documents
Each of the parties hereto hereby agrees to take or cause to be
taken such further actions, to execute, deliver and file or cause to be
executed, delivered and filed such further documents and instruments, and to
obtain such consents, as may be necessary or as may be reasonably requested in
order to fully effectuate the purposes, terms and conditions of this Agreement,
whether before, at or after the effective time of this Agreement.
5.3 Entire Agreement; Amendment
This Agreement constitutes the entire agreement among the parties
hereto as of the date hereof with respect to the matters contemplated herein,
except with respect to Sections 1.1, 1.2.1, 1.2.2, 1.2.3 and to the extent
applicable Section 1.2.4 of the Original Stockholders' Agreement which Sections
shall be superseded on the terms contemplated hereby with respect to the rights
and obligations of the parties hereto amongst each other as of the Voting
Agreement Effective Date. No amendment, modification or discharge of this
Agreement shall be valid or binding unless set forth in writing and duly
executed by the party against whom enforcement of the amendment, modification,
or discharge is sought.
5.4 Limitation on Benefit
It is the explicit intention of the parties hereto that no person
or entity other than the parties hereto is or shall be entitled to bring any
action to enforce any provision of this Agreement against any of the parties
hereto, and the covenants, undertakings and agreements set forth in this
Agreement shall be solely for the benefit of, and shall be enforceable only by,
the parties hereto or their respective successors, heirs, executors,
administrators, legal representatives and permitted assigns.
5.5 Binding Effect; Specific Performance
This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors, heirs, executors,
administrators, legal representatives and permitted assigns. No party shall
assign this Agreement without the written consent of the other parties hereto;
and such consent shall not be unreasonably withheld. The parties hereto agree
that irreparable damage would occur in the event any provision of this Agreement
was not performed in accordance
-12-
<PAGE>
with the terms hereof and that the parties shall be entitled to specific
performance of the terms hereof, in addition to any other remedy at law or in
equity.
5.6 Governing Law
This Agreement, the rights and obligations of the parties hereto,
and any claims or disputes relating thereto, shall be governed by and construed
in accordance with the laws of Delaware (excluding the choice of law rules
thereof).
5.7 Notices
All notices, demands, requests, or other communications which may
be or are required to be given, served, or sent by any party to any other party
pursuant to this Agreement shall be in writing and shall be hand-delivered or
mailed by first-class, registered or certified mail, return receipt requested,
postage prepaid, or transmitted by telegram, telecopy, facsimile transmission or
telex, addressed as follows:
(i) If to the Company or to the McLeods:
McLeodUSA Incorporated
McLeodUSA Technology Park
6400 C Street, SW, P.O. Box 3177
Cedar Rapids, IA 52406-3177
Attention: Randall Rings
Facsimile: (319) 298-7901
(ii) If to IES:
IES Investments Inc.
200 1st Street SE
Cedar Rapids, IA 52401
Attention: James E. Hoffman
Facsimile: (319) 398-4204
(iii) If to Lumpkin or any CCI Shareholder:
P.O. Box 1234
Mattoon, IL 61938
Attention: Richard A. Lumpkin
Facsimile: (217) 234-9934
-13-
<PAGE>
with a copy to :
Schiff Hardin & Waite
6600 Sears Tower
Chicago, Illinois 60606
Attention: David R. Hodgman, Esq.
Facsimile: (312) 258-5600
Each party may designate by notice in writing a new address to
which any notice, demand, request or communication may thereafter be so given,
served or sent. Each notice, demand, request, or communication which shall be
hand-delivered, mailed, transmitted, telecopied or telexed in the manner
described above, or which shall be delivered to a telegraph company, shall be
deemed sufficiently given, served, sent, received or delivered for all purposes
at such time as it is delivered to the addressee (with the return receipt, the
delivery receipt, or the answerback being deemed conclusive, but not exclusive,
evidence of such delivery) or at such time as delivery is refused by the
addressee upon presentation.
5.8 Termination
Notwithstanding any other provision of this Agreement, if during
any Annual Period the Board of Directors has not provided a Principal
Stockholder a reasonable opportunity to Transfer Securities pursuant to Section
3.2 or consented to the written request of such Principal Stockholder or
otherwise provided such Principal Stockholder a reasonable opportunity to
Transfer (other than a transfer by a CCI Shareholder to a CCI Permitted
Transferee) pursuant to Section 3.1(a) an aggregate number of shares of Class A
Common Stock equal to not less than fifteen percent (15%) of the total number of
shares of Class A Common Stock beneficially owned by such Principal Stockholder
as of December 31, 1998, subject to adjustment pursuant to Section 5.1, then
such Principal Stockholder may terminate this Agreement as it applies to such
terminating party by providing written notice of termination to all other
parties no later than ten (10) business days following the end of such Annual
Period, such that all rights and obligations hereunder shall cease, and this
Agreement shall be of no further force or effect, with respect to the
terminating party. Unless otherwise previously terminated by the Principal
Stockholders pursuant to this Section 5.8, this Agreement shall terminate on the
Expiration Date. For purposes of this Section 5.8, Lumpkin and all of the CCI
Shareholders shall be deemed to be a single Principal Stockholder.
5.9 Publicity
Each of the Principal Stockholders will use its reasonable best
efforts to consult with the Company prior to issuing any press release, making
any filing
-14-
<PAGE>
with any governmental entity or national securities exchange or making any other
public dissemination of information by such Principal Stockholder within which
this Agreement or the contents hereof are referenced or described.
5.10 Appointment of Representative
Each of the CCI Shareholders hereby appoints Lumpkin, with power
of substitution, as its exclusive agent to act on its behalf with respect to any
and all actions to be taken under or amendments or modifications to be made to
this Agreement (the "Representative"). The Representative shall take, and the
CCI Shareholders agree that the Representative shall take, any and all actions
which the Representative believes are necessary or advisable under this
Agreement for and on behalf of each of the CCI Shareholders, as fully as if each
of the CCI Shareholders were acting on its own behalf, including, without
limitation, dealing with the Company and the other parties hereto with respect
to all matters arising under this Agreement, entering into any amendment or
modification to this Agreement deemed advisable by the Representative and taking
any and all other actions specified in or contemplated by this Agreement. The
Company and the other parties hereto shall have the right to rely upon all
actions taken or not taken by the Representative pursuant to this Agreement, all
of which actions or omissions shall be legally binding upon each of the CCI
Shareholders.
5.11 Execution in Counterparts
To facilitate execution, this Agreement may be executed in as many
counterparts as may be required; and it shall not be necessary that the
signatures of, or on behalf of, each party, or that the signatures of all
persons required to bind any party, appear on each counterpart; but it shall be
sufficient that the signature of, or on behalf of, each party, or that the
signatures of the persons required to bind any party, appear on one or more of
the counterparts. All counterparts shall collectively constitute a single
agreement. It shall not be necessary in making proof of this Agreement to
produce or account for more than a number of counterparts containing the
respective signatures of, or on behalf of, all of the parties hereto.
-15-
<PAGE>
IN WITNESS WHEREOF, the undersigned have duly executed and
delivered this Agreement, or have caused this Agreement to be duly executed and
delivered on their behalf, as of the day and year first hereinabove set forth.
MCLEODUSA INCORPORATED IES INVESTMENTS INC.
By: /s/ J. Lyle Patrick By: /s/ James E. Hoffman
Name: J. Lyle Patrick Name: James E. Hoffman
Title: Group Vice President, Title: President
Chief Financial Officer and
Treasurer
/s/ Clark E. McLeod /s/ Mary E. McLeod
Clark E. McLeod Mary E. McLeod
/s/ Richard A. Lumpkin /s/ Gail G. Lumpkin
Richard A. Lumpkin Gail G. Lumpkin
Margaret Lumpkin Keon Trust Mary Lee Sparks Trust
dated May 13, 1978 dated May 13, 1978
/s/ Margaret Lumpkin Keon /s/ Mary Lee Sparks
Margaret Lumpkin Keon, as Trustee Mary Lee Sparks, as Trustee
/s/ Steve L. Grissom
Steven L. Grissom, as Trustee
/s/ Mary Lee Sparks
Mary Lee Sparks
-16-
<PAGE>
The twelve trusts created under the Mary Green Lumpkin Gallo Trust Agreement
dated December 29, 1989 one for the benefit of each of:
Joseph John Keon III,
Katherine Stoddert Keon,
Lisa Anne Keon,
Margaret Lynley Keon,
Pamela Keon Vitale,
Susan Tamara Keon DeWyngaert,
Benjamin Iverson Lumpkin,
Elizabeth Arabella Lumpkin,
Anne Romayne Sparks,
Barbara Lee Sparks,
Christina Louise Sparks, and
John Woodruff Sparks
Bank One, Texas, N.A., Trustee
/s/ Frank A. Glispin
By: Frank A. Glispin, Vice President
The twelve trusts created under the Richard Adamson Lumpkin Grandchildren's
Trust dated September 5, 1980, one for the benefit of each of:
Joseph John Keon III,
Katherine Stoddert Keon,
Lisa Anne Keon,
Margaret Lynley Keon,
Pamela Keon Vitale,
Susan Tamara Keon DeWyngaert,
Benjamin Iverson Lumpkin,
Elizabeth Arabella Lumpkin,
Anne Romayne Sparks,
Barbara Lee Sparks,
Christina Louise Sparks, and
John Woodruff Sparks
Bank One, Texas, N.A., Trustee
/s/ Frank A. Glispin
By: Frank A. Glispin, Vice President
-17-
<PAGE>
The three trusts established by Richard Adamson Lumpkin under Trust Agreement
dated February 6, 1970, one for the benefit of each of:
Richard Anthony Lumpkin,
Margaret Anne Keon, and
Mary Lee Sparks
Bank One, Texas, N.A., Trustee
/s/ Frank A. Glispin
By: Frank A. Glispin, Vice President
The twelve 1990 Personal Income Trusts established by Margaret L. Keon, Mary Lee
Sparks, and Richard A. Lumpkin, each dated April 20, 1990, one for the benefit
of each of:
Joseph John Keon III,
Katherine Stoddert Keon,
Lisa Anne Keon,
Margaret Lynley Keon,
Pamela Keon Vitale,
Susan Tamara Keon DeWyngaert,
Benjamin Iverson Lumpkin,
Elizabeth Arabella Lumpkin,
Anne Romayne Sparks,
Barbara Lee Sparks,
Christina Louise Sparks, and
John Woodruff Sparks
/s/ David R. Hodgman
David R. Hodgman, Trustee
/s/ Steve L. Grissom
Steven L. Grissom, Trustee
-18-
<PAGE>
SCHEDULE I
Richard A. Lumpkin
Gail G. Lumpkin
Margaret Lumpkin Keon, as Trustee under the Margaret Lumpkin Keon Trust dated
May 13, 1978
Mary Lee Sparks and Steven L. Grissom, as Trustees of the Mary Lee Sparks
Trust dated May 13, 1978
Bank One, Texas, N.A., as Trustee of the twelve trusts created under the Mary
Green Lumpkin Gallo Trust Agreement dated December 29, 1989, one for the benefit
of each of Joseph John Keon III, Katherine Stoddert Keon, Lisa Anne Keon,
Margaret Lynley Keon, Pamela Keon Vitale, Susan Tamara Keon DeWyngaert, Benjamin
Iverson Lumpkin, Elizabeth Arabella Lumpkin, Anne Romayne Sparks, Barbara Lee
Sparks, Christina Louise Sparks, and John Woodruff Sparks
Bank One, Texas, N.A., as Trustee of the twelve trusts created under the Richard
Adamson Lumpkin Grandchildren's Trust dated September 5, 1980, one for the
benefit of each of Joseph John Keon III, Katherine Stoddert Keon, Lisa Anne
Keon, Margaret Lynley Keon, Pamela Keon Vitale, Susan Tamara Keon DeWyngaert,
Benjamin Iverson Lumpkin, Elizabeth Arabella Lumpkin, Anne Romayne Sparks,
Barbara Lee Sparks, Christina Louise Sparks, and John Woodruff Sparks
Bank One, Texas, N.A., as Trustee of the three trusts established by Richard
Adamson Lumpkin under the Trust Agreement dated February 6, 1970, one for the
benefit of each of Richard Anthony Lumpkin, Margaret Anne Keon, and Mary Lee
Sparks
David R. Hodgman and Steven L. Grissom, as Trustees of the twelve 1990 Personal
Income Trusts established by Margaret L. Keon, Mary Lee Sparks, and Richard A.
Lumpkin, each dated April 20, 1990, one for the benefit of each of Joseph John
Keon III, Katherine Stoddert Keon, Lisa Anne Keon, Margaret Lynley Keon, Pamela
Keon Vitale, Susan Tamara Keon DeWyngaert, Benjamin Iverson Lumpkin, Elizabeth
Arabella Lumpkin, Anne Romayne Sparks, Barbara Lee Sparks, Christina Louise
Sparks, and John Woodruff Sparks
STOCKHOLDERS' AGREEMENT
This Stockholders' Agreement (this "Agreement") is entered into as of
January 7, 1999, by and among McLeodUSA Incorporated, a Delaware corporation
(the "Company"); IES Investments Inc., an Iowa corporation ("IES"); Clark E.
McLeod ("McLeod"); Mary E. McLeod (together with McLeod, the "McLeods"); Richard
A. Lumpkin ("Lumpkin") and each of the former stockholders of Consolidated
Communications Inc. ("CCI") and certain permitted transferees of the former CCI
shareholders in each case who are listed in Schedule I hereto (the "CCI
Shareholders"); and M/C Investors L.L.C. ("M/C Investors") and
Media/Communications Partners III Limited Partnership, a Delaware limited
partnership ("M/C Partners" and together with M/C Investors, the "New
Stockholders"). IES, the McLeods, Lumpkin and the CCI Shareholders party hereto
are referred to herein collectively as the "1998 Stockholders" and individually
as a "1998 Stockholder."
WHEREAS, the Company and the 1998 Stockholders are parties to a
Stockholders' Agreement entered into as of November 18, 1998 (the "1998
Stockholders' Agreement");
WHEREAS, in order to induce the Company and Bravo Acquisition
Corporation, a wholly owned subsidiary of the Company, to enter into an
Agreement and Plan of Merger (the "Merger Agreement") to which the New
Stockholders and certain others are a party, the New Stockholders, concurrent
with the execution and delivery of the Merger Agreement, are entering into this
Agreement;
WHEREAS, upon the closing of the Merger Agreement and the transactions
contemplated thereby, the New Stockholders will become stockholders of the
Company; and
WHEREAS, the Company, the 1998 Stockholders and the New Stockholders deem
it to be in the best interests of the Company and its stockholders to enter into
this Agreement to continue to provide for the continuity and stability of the
business and policies of the Company on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, for and in consideration of the foregoing and of the
mutual covenants and agreements contained herein, the parties hereto agree as
follows:
<PAGE>
1. [INTENTIONALLY DELETED]
2. VOTING AGREEMENT
2.1 Board of Directors
(i) For the period commencing on the Effective Date (as defined in
Section 2.2) and ending on the Expiration Date (as defined in Section 2.2), each
1998 Stockholder, for so long as such 1998 Stockholder beneficially and
continuously owns at least four million (4,000,000) shares of the Company's
Class A common stock, $.01 par value per share (the "Class A Common Stock"),
subject to adjustment pursuant to Section 5.1, shall take or cause to be taken
all such action within their respective power and authority as may be required:
(a) to cause to be elected to the Board of Directors of the
Company (the "Board of Directors" or the "Board") one (1)
director designated by the New Stockholders, for so long as
the New Stockholders collectively beneficially and
continuously own at least two million five hundred thousand
(2,500,000) shares of Class A Common Stock (subject to
adjustment pursuant to Section 5.1);
(b) (b) to cause to be elected to the Board a director
nominated by the Board to replace a director designated
pursuant to paragraph (i)(a) above upon the earlier to
occur of such designated director's resignation (and the
acceptance of such resignation by the Board) and the
expiration of such director's term as a result of the New
Stockholders no longer collectively beneficially and
continuously owning at least two million five hundred
thousand (2,500,000) shares of Class A Common Stock
(subject to adjustment pursuant to Section 5.1) at any time
during the period commencing on the Effective Date and
ending on the Expiration Date; it being understood that
within three (3) business days following such time as the
New Stockholders no longer collectively beneficially and
continuously own at least two million five hundred thousand
(2,500,000) shares of Class A Common Stock (subject to
adjustment pursuant to Section 5.1) at any time during such
period, the New Stockholders shall use their best efforts
to cause the director designated by the New Stockholders to
tender its immediate resignation to the Board which the
Board may accept or, if consented to by such director,
reject;
-2-
<PAGE>
(c) to establish and maintain the authorized size of the Board
at up to eleven (11) directors; and
(d) to cause to be elected to the Board, if and as nominated by
the Board, up to five (5) non-employee directors.
(ii) For the period commencing on the Effective Date and ending on the
Expiration Date, the New Stockholders, for so long as the New Stockholders
collectively beneficially and continuously own at least two million five hundred
thousand (2,500,000) shares of Class A Common Stock, subject to adjustment
pursuant to Section 5.1, shall take or cause to be taken all such action within
their respective power and authority as may be required:
(a) to establish and maintain the authorized size of the Board
of Directors at up to eleven (11) directors;
(b) to cause to be elected to the Board one (1) director
designated by IES, for so long as IES beneficially and
continuously owns at least four million (4,000,000) shares
of Class A Common Stock (subject to adjustment pursuant to
Section 5.1);
(c) to cause Lumpkin to be elected to the Board, for so long as
Lumpkin and the CCI Shareholders collectively beneficially
and continuously own at least four million (4,000,000)
shares of Class A Common Stock (subject to adjustment
pursuant to Section 5.1);
(d) to cause to be elected to the Board three (3) directors who
are executive officers of the Company designated by McLeod,
for so long as the McLeods collectively beneficially and
continuously own at least four million (4,000,000) shares
of Class A Common Stock (subject to adjustment pursuant to
Section 5.1);
(e) to cause to be elected to the Board one (1) director
designated by the New Stockholders, for so long as the New
Stockholders collectively beneficially and continuously own
at least two million five hundred thousand (2,500,000)
shares of Class A Common Stock (subject to adjustment
pursuant to Section 5.1);
(f) to cause to be elected to the Board a director or directors
nominated by the Board to replace a director or directors
designated pursuant to paragraphs (ii)(b) through (ii)(e)
above upon the earlier to occur of such designated
-3-
<PAGE>
director's or directors' resignation (and the acceptance of
such resignation by the Board) and the expiration of such
director's or directors' term as a result of any party or
parties identified in paragraphs (ii)(b) through (ii)(e)
above no longer beneficially owning the specified number of
shares of Class A Common Stock as set forth in paragraphs
(ii)(b) through (ii)(e), as the case may be, at any time
during the period commencing on the Effective Date and
ending on the Expiration Date; it being understood that
within three (3) business days following such time as the
party or parties identified in paragraphs (ii)(b) through
(ii)(e) above no longer beneficially and continuously own
the specified number of shares of Class A Common Stock as
set forth in paragraphs (ii)(b) through (ii)(e), as the
case may be, during such period, such party or parties
shall use its or their respective best efforts to cause the
director or directors designated by such party or parties
to tender their immediate resignation to the Board which
the Board may accept or reject; and
(g) to cause to be elected to the Board, if and as nominated by
the Board, up to five (5) non-employee directors.
For purposes of this Section 2.1, (i) the New Stockholders shall
be deemed to be a single stockholder of the Company, and a New Stockholder shall
be deemed to own shares "continuously" as long as the shares of such New
Stockholder are owned by such New Stockholder or a New Stockholder Permitted
Transferee (as defined in Section 3.1) and (ii) Lumpkin and all of the CCI
Shareholders shall be deemed to be a single stockholder of the Company, and a
CCI Shareholder shall be deemed to own shares "continuously" as long as the
shares of such CCI Shareholder are owned by such CCI Shareholder or a CCI
Permitted Transferee (as defined in the 1998 Stockholders' Agreement).
2.2 Definitions
For purposes of this Agreement, the following terms have the
meanings indicated:
(a) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 under the
Securities Exchange Act of 1934, as amended (the "Exchange
Act").
(b) A person shall be deemed the "Beneficial Owner" of and
shall be deemed to "beneficially own" any securities:
-4-
<PAGE>
(i) which such person or any of such person's
Affiliates or Associates, directly or
indirectly, has the right to acquire (whether
such right is exercisable immediately or only
after the passage of time) pursuant to any
agreement, arrangement or understanding
(whether or not in writing), or upon the
exercise of conversion rights, exchange
rights, other rights, warrants or options, or
otherwise;
(ii) which such person or any of such person's
Affiliates or Associates, directly or
indirectly, has the right to vote or dispose
of or has "beneficial ownership" of (as
determined pursuant to Rule 13d-3 under the
Exchange Act), including pursuant to any
agreement, arrangement or understanding,
whether or not in writing; or
(iii) which are beneficially owned, directly or
indirectly, by any other person (or any
Affiliate or Associate thereof) with which
such person or any of such person's
Affiliates or Associates has any agreement,
arrangement or understanding (whether or not
in writing), for the purpose of acquiring,
holding, voting or disposing of any voting
securities of the Company.
For purposes of the definition of "Beneficial Owner" and
"beneficially own," the terms "agreement," "arrangement"
and "understanding" shall not include this Agreement, the
1998 Stockholders' Agreement or the Stockholders'
Agreement, dated as of June 14, 1997, as amended on
September 19, 1997 (the "1997 Stockholders' Agreement").
(c) "Effective Date" shall mean the date on which the
Merger (as defined in the Merger Agreement) is consummated
in accordance with the terms and conditions of the Merger
Agreement.
(d) "Expiration Date" shall mean December 31, 2001.
3. TRANSFERS OF SECURITIES
3.1 Restrictions on Transfers
(a) Except as otherwise provided in this Section 3.1 or Section
3.2, the New Stockholders hereby agree that until the Expiration Date, the New
-5-
<PAGE>
Stockholders will not offer, sell, contract to sell, grant any option to
purchase, or otherwise dispose of, directly or indirectly, ("Transfer"), any
equity securities of the Company or any other securities convertible into or
exercisable for such equity securities ("Securities") beneficially owned by such
New Stockholders as a result of the Merger (including distributions of
Securities with respect to such Securities and Securities acquired as a result
of a stock split with respect to such Securities) without submitting a written
request to, and receiving the prior written consent of, the Board of Directors;
provided, however, that a New Stockholder may transfer Securities to any
beneficial owner or Affiliate of such New Stockholder, in each case provided
that (i) such transfer is done in accordance with the transfer restrictions
applicable to such Securities under federal and state securities laws and (ii)
the transferee agrees to be bound by the terms hereof as a New Stockholder with
respect to the shares being transferred pursuant to this Section (any such New
Stockholder transferee pursuant to this proviso, a "New Stockholder Permitted
Transferee"), and any such transfer shall not constitute a "Transfer" for
purposes of this Agreement. Notwithstanding the foregoing, no party hereto shall
avoid the provisions of this Agreement by making one or more transfers to one or
more New Stockholder Permitted Transferees and then disposing of all or any
portion of such party's interest in any such New Stockholder Permitted
Transferee. In the event that the Board of Directors consents to any Transfer of
Securities by a Principal Stockholder (for purposes of this Agreement, the term
"Principal Stockholder" shall have the same meaning as ascribed to such term in
the 1998 Stockholders' Agreement) pursuant to the written request of such
Principal Stockholder (the "Transferring Principal Stockholder") during the
period commencing on January 1, 2000 and ending on the Expiration Date and
except as otherwise provided in Section 3.1(b) and Section 3.2, the New
Stockholders shall notwithstanding the provisions of this Section 3.1(a), have
the right to Transfer a percentage of the total number of Securities
beneficially owned by the New Stockholders equal to the percentage of the total
number of Securities beneficially owned by the Transferring Principal
Stockholder that the Board of Directors has consented may be Transferred by such
Transferring Principal Stockholder. In the event the Board of Directors consents
to any Transfer of Securities by the New Stockholders pursuant to the written
request of the New Stockholders (the "Transferring New Stockholders"), and
except as otherwise provided in Section 3.1(b) and Section 3.2 of the 1998
Stockholders' Agreement, each Principal Stockholder shall, notwithstanding the
provisions of Section 3.1(a) of the 1998 Stockholders' Agreement, have the right
to Transfer a percentage of the total number of Securities beneficially owned by
such Principal Stockholder equal to the percentage of the total number of
Securities beneficially owned by the Transferring New Stockholders that the
Board of Directors has consented may be Transferred by such Transferring New
Stockholders.
(b) In addition to the provisions of Section 3.1(a), for the
period commencing for the quarter ending December 31, 1999 and ending on the
Expiration Date, the Board shall determine prior to the public release of the
-6-
<PAGE>
Company's consolidated financial results with respect to each such financial
reporting quarter during such period, the aggregate number, if any, of shares of
Class A Common Stock (not to exceed in the aggregate fifty thousand (50,000)
shares of Class A Common Stock per quarter, subject to adjustment pursuant to
Section 5.1) that may be Transferred by the New Stockholders (the "Transfer
Amount") during the period commencing on the third (3rd) business day and ending
on the twenty-third (23rd) business day following such public release of the
Company's quarterly or annual financial results or such other trading period
designated or permitted by the Board with respect to the purchase and sale of
its Securities (each such period, a "Transfer Period"). Notwithstanding the
provisions of Section 3.1(a), the New Stockholders shall be entitled to Transfer
during each Transfer Period, provided such Transfer is effected in accordance
with all applicable federal and state securities laws, a number of shares of
Class A Common Stock equal to the Transfer Amount, if any, for such Transfer
Period. In no event shall any portion of a Transfer Amount that is not utilized
by the New Stockholders during a Transfer Period be reallocated or otherwise
credited to any subsequent Transfer Periods. Notwithstanding the foregoing
provisions of this Section 3.1(b), to the extent that the Company permits the
Principal Stockholders the opportunity to Transfer shares of Class A Common
Stock pursuant to Section 3.1(b) of the 1998 Stockholders' Agreement during the
period commencing on January 1, 2000 and ending on the Expiration Date, the
Company shall grant the New Stockholders the opportunity to Transfer on the same
terms and conditions a number of shares of Class A Common Stock equal to the
number of shares which each Principal Stockholder is entitled to Transfer
pursuant to such Section 3.1(b), without considering those provisions of Section
3.1(b) of the 1998 Stockholders' Agreement relating to the reallocation of
amounts among the Principal Stockholders. To the extent the Board determines a
Transfer Amount with respect to the New Stockholders for any particular quarter,
the Board shall determine an equal Transfer Amount for such quarter with respect
to each Principal Stockholder pursuant to Section 3.1(b) of the 1998
Stockholders' Agreement.
(c) For the period commencing for the quarter ending December 31,
1999 and ending on the Expiration Date, the Company shall give the New
Stockholders prompt written notice (in any event no later than fifty (50) days
prior to the beginning of the applicable Transfer Period) of its determination
of any Transfer Amount. Within seven (7) days of receipt of such notice, the New
Stockholders shall provide written notice to the Company of the number of shares
of Class A Common Stock that the New Stockholders desire to Transfer pursuant to
Section 3.1(b).
(d) During the year ending December 31, 1999, to the extent the
Company participates in a strategic transaction with an outside investor(s)
pursuant to which such investor(s) acquires Securities of the Company at a
premium to the then average trading price of the Company's Securities, and after
the Company has been paid or otherwise received its consideration or proceeds
from
-7-
<PAGE>
such transaction as determined by the Company, the Principal Stockholders and
the New Stockholders may be entitled to participate in such transaction on a pro
rata basis as determined by the Board of Directors.
(e) For purposes of this Section 3.1, the New Stockholders shall
be deemed to be a single stockholder of the Company, and Lumpkin and all of the
CCI Shareholders shall be deemed to be a single Principal Stockholder.
3.2 Registration Rights
(a) In the event that the Board of Directors consents pursuant to
Section 3.1(a) of the 1998 Stockholders' Agreement to a Principal Stockholder's
request for a Transfer during the period commencing on January 1, 2000 and
ending on the Expiration Date and in connection therewith, the Company agrees to
register Securities with respect to such Transfer under the Securities Act of
1933, as amended (the "Securities Act"), the Company shall grant the New
Stockholders the opportunity (subject to reduction in the event the registered
Transfer is underwritten) to register for Transfer under the Securities Act a
percentage of the total number of Securities beneficially owned by the New
Stockholders equal to the percentage of the total number of Securities
beneficially owned by the Transferring Principal Stockholder that such
Transferring Principal Stockholder is registering for Transfer under the
Securities Act, on the same terms and conditions as the Transferring Principal
Stockholder. In the event that the Board of Directors consents pursuant to
Section 3.1(a) of this Agreement to the New Stockholders' request for a
Transfer, and in connection therewith the Company agrees to register Securities
with respect to such Transfer under the Securities Act, the Company shall grant
each Principal Stockholder pursuant to Section 3.1(a) of the 1998 Stockholders'
Agreement the opportunity (subject to reduction in the event the registered
Transfer is underwritten) to register for Transfer under the Securities Act a
percentage of the total number of Securities beneficially owned by such
Principal Stockholder equal to the percentage of the total number of Securities
beneficially owned by the Transferring New Stockholders that such Transferring
New Stockholders are registering under the Securities Act, on the same terms and
conditions as the Transferring New Stockholders.
(b) To the extent that the Company grants pursuant to Section
3.1(b) of the 1998 Stockholders' Agreement a Principal Stockholder the
opportunity to register shares of Class A Common Stock for Transfer under the
Securities Act during the period commencing on January 1, 2000 and ending on the
Expiration Date, the Company shall grant the New Stockholders the opportunity
(subject to reduction in the event the registered Transfer is underwritten) to
register an equal number of shares of Class A Common Stock for Transfer under
the Securities Act on the same terms and conditions, without considering those
provisions of Section 3.1(b) of the 1998 Stockholders' Agreement relating to the
reallocation of amounts among the Principal Stockholders. To the extent that the
Company grants
-8-
<PAGE>
pursuant to Section 3.1(b) of this Agreement the New Stockholders the
opportunity to register shares of Class A Common Stock for Transfer under the
Securities Act, the Company shall grant each Principal Stockholder pursuant to
Section 3.1(b) of the 1998 Stockholders' Agreement the opportunity (subject to
reduction in the event the registered Transfer is underwritten) to register an
equal number of shares of Class A Common Stock for Transfer under the Securities
Act on the same terms and conditions.
(c) For the period commencing on January 1, 2000 and ending on the
Expiration Date, in the event the Company proposes to register any shares of
Class A Common Stock under the Securities Act pursuant to an underwritten
primary offering (other than pursuant to a registration statement on Form S-4 or
Form S-8 or any successor forms thereto or other form which would not permit the
inclusion of the shares of Class A Common Stock of the New Stockholders), the
Company, as determined by the Board of Directors, shall give written notice to
the New Stockholders of its intention to effect such a registration. Following
any such notice, the Board of Directors shall undertake to determine the
aggregate number, if any, of shares of Class A Common Stock held by the New
Stockholders (not to exceed in the aggregate on a per year basis a number of
shares of Class A Common Stock equal to fifteen percent (15%) of the total
number of shares of Class A Common Stock beneficially owned by the New
Stockholders as of the Effective Date) to be registered by the Company under the
Securities Act (the "Registrable Amount") for Transfer by the New Stockholders
in connection with such offering during such period. If the Board determines to
register shares of Class A Common Stock held by the New Stockholders pursuant to
this Section 3.2(c), the Company will promptly give written notice of such
determination to the New Stockholders, and thereupon the Company will use
commercially reasonable efforts to effect the registration of that portion of
the Registrable Amount that the New Stockholders indicate a desire to register.
All terms, conditions and rights with respect to such registration (including
but not limited to any determination to reduce the Registrable Amount) shall be
determined by the Board, provided that (i) the representations and warranties of
the New Stockholders shall be customary taking into account, among other things,
the nature of the offering and the New Stockholders' relationship with the
Company, and (ii) the Company shall be responsible for all expenses with respect
to such registration other than underwriting discounts and commissions allocable
to the Class A Common Stock of the New Stockholders, which underwriting
discounts and commissions shall be the responsibility of the New Stockholders.
Notwithstanding the foregoing provisions of this Section 3.2(c), to the extent
that the Company grants pursuant to Section 3.2(c) of the 1998 Stockholders'
Agreement the Principal Stockholders the opportunity to register shares of Class
A Common Stock for Transfer under the Securities Act during the period
commencing on January 1, 2000 and ending on the Expiration Date, the Company
shall grant the New Stockholders the opportunity to register shares of Class A
Common Stock on a substantially similar basis. To the extent that the Company
grants pursuant to Section 3.2(c) of this Agreement the New
-9-
<PAGE>
Stockholders the opportunity to register shares of Class A Common Stock for
Transfer under the Securities Act, the Company shall grant each Principal
Stockholder pursuant to Section 3.2(c) of the 1998 Stockholders' Agreement the
opportunity to register shares of Class A Common Stock on a substantially
similar basis.
(d) In addition to the registration rights granted pursuant to
Sections 3.2(a), (b) and (c), no more frequently than once during each of the
calendar years ending December 31, 2000 and 2001 (each such year, an "Annual
Period"), and upon either (i) the receipt of a written request of the New
Stockholders or (ii) a determination by the Board of Directors, the Board shall
undertake to determine the Registrable Amount, if any, for Transfer by the New
Stockholders. If the Board determines to register shares of Class A Common Stock
held by the New Stockholders pursuant to this Section 3.2(d), the Company will
promptly give written notice of such determination to the New Stockholders, and
thereupon the Company will use commercially reasonable efforts to effect the
registration of that portion of the Registrable Amount that the New Stockholders
indicate a desire to register. All terms, conditions and rights with respect to
such registration (including but not limited to any determination to reduce the
Registrable Amount) shall be determined by the Board, provided that (i) the
representations and warranties of the New Stockholders shall be customary taking
into account, among other things, the nature of the offering and the New
Stockholders' relationship with the Company, and (ii) the Company shall be
responsible for all expenses with respect to such registration other than
underwriting discounts and commissions allocable to the Class A Common Stock of
the New Stockholders, which underwriting discounts and commissions shall be the
responsibility of the New Stockholders. Notwithstanding the foregoing provisions
of this Section 3.2(d), to the extent that the Company grants pursuant to
Section 3.2(d) of the 1998 Stockholders' Agreement the Principal Stockholders
the opportunity to register shares of Class A Common Stock for Transfer under
the Securities Act during the period commencing on January 1, 2000 and ending on
the Expiration Date, the Company shall grant the New Stockholders the
opportunity to register shares of Class A Common Stock on a substantially
similar basis. To the extent that the Company grants pursuant to Section 3.2(d)
of this Agreement the New Stockholders the opportunity to register shares of
Class A Common Stock for Transfer under the Securities Act, the Company shall
grant each Principal Stockholder pursuant to Section 3.2(d) of the 1998
Stockholders' Agreement the opportunity to register shares of Class A Common
Stock on a substantially similar basis.
(e) For purposes of this Section 3.2, the New Stockholders shall
be deemed to be a single stockholder of the Company, and Lumpkin and all of the
CCI Shareholders shall be deemed to be a single Principal Stockholder.
(f) Notwithstanding any other provision of this Agreement, to the
extent the Company has undertaken to register Securities of the New Stockholders
-10-
<PAGE>
pursuant to this Section 3.2, the Company may subsequently determine not to
register such Securities and may either not file a registration statement or
otherwise withdraw or abandon a registration statement previously filed with
respect to the registration of such Securities; provided that to the extent the
Principal Stockholders are also participating in such registration, the New
Stockholders and the Principal Stockholders will be treated on a substantially
similar basis with respect to any such determination not to register Securities
or the withdrawal or abandonment of a registration statement previously filed as
contemplated by this Section 3.2(f).
4. REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of Non-individual Stockholders
Each non-individual party to this Agreement hereby represents and
warrants, as of the date of this Agreement, to the Company and to each other
party as follows:
4.1.1 Authorization
Such party has taken all action necessary for it to enter into
this Agreement and to consummate the transactions contemplated hereby.
4.1.2 Binding Obligation
This Agreement constitutes a valid and binding obligation of such
party, enforceable in accordance with its terms, except to the extent that such
enforceability may be limited by bankruptcy, insolvency, and similar laws
affecting the rights and remedies of creditors generally, and by general
principles of equity and public policy; and each document and instrument to be
executed by such party pursuant hereto, when executed and delivered in
accordance with the provisions hereof, shall be a valid and binding obligation
of such party, enforceable in accordance with its terms (with the aforesaid
exceptions).
4.2 Representations and Warranties of Individual Stockholders
Each party to this Agreement who is an individual hereby
represents and warrants, as of the date of this Agreement, to the Company and to
each other party as follows:
-11-
<PAGE>
4.2.1 Power and Authority
Such party has the legal capacity and all other power and
authority necessary to enter into this Agreement and to consummate the
transactions contemplated hereby.
4.2.2 Binding Obligation
This Agreement constitutes a valid and binding obligation of such
party, enforceable in accordance with its terms, except to the extent that such
enforceability may be limited by bankruptcy, insolvency, and similar laws
affecting the rights and remedies of creditors generally, and by general
principles of equity and public policy; and each document and instrument to be
executed by such party pursuant hereto, when executed and delivered in
accordance with the provisions hereof, shall be a valid and binding obligation
of such party, enforceable in accordance with its terms (with the aforesaid
exceptions).
4.3 Representations and Warranties of the Company
The Company hereby represents and warrants, as of the date of this
Agreement, to each party as follows:
4.3.1 Authorization
The Company has taken all corporate action necessary for it to
enter into this Agreement and to consummate the transactions contemplated
hereby.
4.3.2 Binding Obligation
This Agreement constitutes a valid and binding obligation of the
Company, enforceable in accordance with its terms, except to the extent that
such enforceability may be limited by bankruptcy, insolvency, and similar laws
affecting the rights and remedies of creditors generally, and by general
principles of equity and public policy; and each document and instrument to be
executed by the Company pursuant hereto, when executed and delivered in
accordance with the provisions hereof, shall be a valid and binding obligation
of the Company, enforceable in accordance with its terms (with the aforesaid
exceptions).
5. MISCELLANEOUS
5.1 Effect of Changes in Capitalization
All share amounts of the Company's capital stock referred to in
this Agreement shall be appropriately and proportionally adjusted for any
recapitalization, reclassification, stock split-up, combination of shares,
exchange of
-12-
<PAGE>
shares, stock dividend or other distribution payable in capital stock, or other
increase or decrease in such shares effected without receipt of consideration by
the Company, occurring after the date of this Agreement.
5.2 Additional Actions and Documents
Each of the parties hereto hereby agrees to take or cause to be
taken such further actions, to execute, deliver and file or cause to be
executed, delivered and filed such further documents and instruments, and to
obtain such consents, as may be necessary or as may be reasonably requested in
order to fully effectuate the purposes, terms and conditions of this Agreement,
whether before, at or after the Effective Date.
5.3 Entire Agreement; Amendment
This Agreement constitutes the entire agreement among the parties
hereto as of the date hereof with respect to the specific matters contemplated
herein (except with respect to the 1998 Stockholders, as set forth in the 1998
Stockholders' Agreement and the 1997 Stockholders' Agreement). No amendment,
modification or discharge of this Agreement shall be valid or binding unless set
forth in writing and duly executed by the Company and by the party against whom
enforcement of the amendment, modification or discharge is sought. Any
amendment, modification or discharge of this Agreement to be enforced against
the New Stockholders shall be valid and binding with respect to all New
Stockholders if such amendment, modification or discharge is executed by those
New Stockholders holding a majority of the shares of Class A Common Stock issued
to the New Stockholders in the Merger (including distributions of Securities
with respect to such Securities and Securities acquired as a result of a stock
split with respect to such Securities).
5.4 Limitation on Benefit; Parties
It is the explicit intention of the parties hereto that no person
or entity other than the parties hereto is or shall be entitled to bring any
action to enforce any provision of this Agreement against any of the parties
hereto, and the covenants, undertakings and agreements set forth in this
Agreement shall be solely for the benefit of, and shall be enforceable only by,
the parties hereto or their respective successors, heirs, executors,
administrators, legal representatives and permitted assigns. For purposes of
this Agreement and notwithstanding any other provision hereof, a "party" to or
of this Agreement shall be deemed to mean only those individuals or entities
that have executed and delivered this Agreement.
-13-
<PAGE>
5.5 Binding Effect; Specific Performance
This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors, heirs, executors,
administrators, legal representatives and permitted assigns. No party shall
assign this Agreement without the written consent of the other parties hereto;
and such consent shall not be unreasonably withheld. The parties hereto agree
that irreparable damage would occur in the event any provision of this Agreement
was not performed in accordance with the terms hereof and that the parties shall
be entitled to specific performance of the terms hereof, in addition to any
other remedy at law or in equity.
5.6 Governing Law
This Agreement, the rights and obligations of the parties hereto,
and any claims or disputes relating thereto, shall be governed by and construed
in accordance with the laws of Delaware (excluding the choice of law rules
thereof).
5.7 Notices
All notices, demands, requests, or other communications which may
be or are required to be given, served, or sent by any party to any other party
pursuant to this Agreement shall be in writing and shall be hand-delivered or
mailed by first-class, registered or certified mail, return receipt requested,
postage prepaid, or transmitted by telegram, telecopy, facsimile transmission or
telex, addressed as follows:
(i) If to the Company or to the McLeods:
McLeodUSA Incorporated
McLeodUSA Technology Park
6400 C Street, SW, P.O. Box 3177
Cedar Rapids, IA 52406-3177
Attention: Randall Rings
Facsimile: (319) 298-7901
(ii) If to IES:
IES Investments Inc.
200 1st Street SE
Cedar Rapids, IA 52401
Attention: James E. Hoffman
Facsimile: (319) 398-4204
-14-
<PAGE>
(iii) If to Lumpkin or any CCI Shareholder:
P.O. Box 1234
Mattoon, IL 61938
Attention: Richard A. Lumpkin
Facsimile: (217) 234-9934
with a copy to :
Schiff Hardin & Waite
6600 Sears Tower
Chicago, Illinois 60606
Attention: David R. Hodgman, Esq.
Facsimile: (312) 258-5600
(iv) If to the New Stockholders:
c/o Media/Communications Partners III
Limited Partnership
75 State Street
Boston, Massachusetts 02109
Attention: James F. Wade
Facsimile: (617) 345-7201
with a copy to:
Edwards & Angell, LLP
101 Federal Street
Boston, MA 02110
Attention: Stephen O. Meredith, Esq.
Facsimile: (617) 439-4170
Each party may designate by notice in writing a new address to
which any notice, demand, request or communication may thereafter be so given,
served or sent. Each notice, demand, request or communication which shall be
hand-delivered, mailed, transmitted, telecopied or telexed in the manner
described above, or which shall be delivered to a telegraph company, shall be
deemed sufficiently given, served, sent, received or delivered for all purposes
at such time as it is delivered to the addressee (with the return receipt, the
delivery receipt, or the answerback being deemed conclusive, but not exclusive,
evidence of such delivery) or at such time as delivery is refused by the
addressee upon presentation.
5.8 Termination
(a) This Agreement shall terminate and be of no further force or
effect as to a 1998 Stockholder (and not as to the Company and the New
-15-
<PAGE>
Stockholders) at such time as the 1998 Stockholders' Agreement shall terminate
and be of no further force or effect with respect to such 1998 Stockholder.
(b) If (i) during any Annual Period the Board of Directors has not
provided the New Stockholders a reasonable opportunity to Transfer shares of
Class A Common Stock pursuant to the registration of such shares under the
Securities Act pursuant to Section 3.2 in an aggregate amount equal to not less
than fifteen percent (15%) of the total number of shares of Class A Common Stock
beneficially owned by the New Stockholders as of the Effective Date or (ii)
after January 1, 2000, the 1998 Stockholders' Agreement has been terminated by
all parties thereto, then the New Stockholders may terminate this Agreement by
providing written notice of termination to all other parties (x) in the case of
clause (b)(i) above, no later than thirty (30) days following the end of such
Annual Period and (y) in the case of cause (b)(ii) above, at any time after
January 1, 2000, such that all rights and obligations hereunder shall cease, and
this Agreement shall be of no further force or effect.
(c) Unless otherwise previously terminated by the New Stockholders
pursuant to Section 5.8(b), this Agreement shall terminate on the earlier to
occur of (i) the termination of the Merger Agreement in accordance with the
terms thereof and (ii) the Expiration Date.
(d) For purposes of this Section 5.8, the New Stockholders shall
be deemed to be a single stockholder of the Company, and Lumpkin and all of the
CCI Shareholders shall be deemed to be a single stockholder of the Company.
5.9 Publicity
The New Stockholders will use their reasonable best efforts to
consult with the Company prior to issuing any press release, making any filing
with any governmental entity or national securities exchange or making any other
public dissemination of information by the New Stockholders within which this
Agreement or the contents hereof are referenced or described.
5.10 Appointment of Representative
(a) Each of the New Stockholders hereby appoints
Media/Communications Partners III Limited Partnership, with power of
substitution, as its exclusive agent to act on its behalf with respect to any
and all actions to be taken under or amendments or modifications to be made to
this Agreement (the "M/C Representative"). The M/C Representative shall take,
and the New Stockholders agree that the M/C Representative shall take, any and
all actions which the M/C Representative believes are necessary or advisable
under this Agreement for and on behalf of each of the New Stockholders, as fully
as if each of
-16-
<PAGE>
the New Stockholders was acting on its own behalf, including, without
limitation, dealing with the Company and the other parties hereto with respect
to all matters arising under this Agreement, entering into any amendment or
modification to this Agreement deemed advisable by the M/C Representative and
taking any and all other actions specified in or contemplated by this Agreement.
The Company and the other parties hereto shall have the right to rely upon all
actions taken or not taken by the M/C Representative pursuant to this Agreement,
all of which actions or omissions shall be legally binding upon each of the New
Stockholders.
(b) Each of the CCI Shareholders hereby appoints Lumpkin, with
power of substitution, as its exclusive agent to act on its behalf with respect
to any and all actions to be taken under or amendments or modifications to be
made to this Agreement (the "CCI Representative"). The CCI Representative shall
take, and the CCI Shareholders agree that the CCI Representative shall take, any
and all actions which the CCI Representative believes are necessary or advisable
under this Agreement for and on behalf of each of the CCI Shareholders, as fully
as if each of the CCI Shareholders was acting on its own behalf, including,
without limitation, dealing with the Company and the other parties hereto with
respect to all matters arising under this Agreement, entering into any amendment
or modification to this Agreement deemed advisable by the CCI Representative and
taking any and all other actions specified in or contemplated by this Agreement.
The Company and the other parties hereto shall have the right to rely upon all
actions taken or not taken by the CCI Representative pursuant to this Agreement,
all of which actions or omissions shall be legally binding upon each of the CCI
Shareholders.
5.11 Execution in Counterparts
To facilitate execution, this Agreement may be executed in as many
counterparts as may be required; and it shall not be necessary that the
signatures of, or on behalf of, each party, or that the signatures of all
persons required to bind any party, appear on each counterpart; but it shall be
sufficient that the signature of, or on behalf of, each party, or that the
signatures of the persons required to bind any party, appear on one or more of
the counterparts. All counterparts shall collectively constitute a single
agreement. It shall not be necessary in making proof of this Agreement to
produce or account for more than a number of counterparts containing the
respective signatures of, or on behalf of, all of the parties hereto. It is the
express understanding of the parties hereto that this Agreement shall be binding
and enforceable with respect to the parties hereto on the terms herein set forth
even if one or more of the CCI Shareholders do not sign this Agreement.
-17-
<PAGE>
IN WITNESS WHEREOF, the undersigned have duly executed and
delivered this Stockholders' Agreement, or have caused this Stockholders'
Agreement to be duly executed and delivered on their behalf, as of the day and
year first hereinabove set forth.
MCLEODUSA INCORPORATED
By: /s/ J. Lyle Patrick
Name: J. Lyle Patrick
Title: Group Vice President,
Chief Financial Officer and
Treasurer
M/C INVESTORS L.L.C.
By: /s/ James F. Wade
Name: James F. Wade
Title:
MEDIA/COMMUNICATIONS PARTNERS III LIMITED PARTNERSHIP
By: M/C III L.L.C., its General Partner
By: /s/ James F. Wade
Name: James F. Wade
Title:
/s/ Clark E. McLeod /s/ Mary E. McLeod
Clark E. McLeod Mary E. McLeod
-18-
<PAGE>
/s/ Richard A. Lumpkin /s/ Gail G. Lumpkin
Richard A. Lumpkin Gail G. Lumpkin
IES INVESTMENTS INC.
By: /s/ James E. Hoffman
Name: James E. Hoffman
Title: President
Margaret Lumpkin Keon Trust Mary Lee Sparks Trust
dated May 13, 1978 dated May 13, 1978
Margaret Lumpkin Keon, as Trustee Mary Lee Sparks, as Trustee
Steven L. Grissom, as Trustee
Mary Lee Sparks
-19-
<PAGE>
The twelve trusts created under the Mary Green Lumpkin Gallo Trust Agreement
dated December 29, 1989 one for the benefit of each of:
Joseph John Keon III,
Katherine Stoddert Keon,
Lisa Anne Keon,
Margaret Lynley Keon,
Pamela Keon Vitale,
Susan Tamara Keon DeWyngaert,
Benjamin Iverson Lumpkin,
Elizabeth Arabella Lumpkin,
Anne Romayne Sparks,
Barbara Lee Sparks,
Christina Louise Sparks, and
John Woodruff Sparks
Bank One, Texas, N.A., Trustee
By:
The twelve trusts created under the Richard Adamson Lumpkin Grandchildren's
Trust dated September 5, 1980, one for the benefit of each of:
Joseph John Keon III,
Katherine Stoddert Keon,
Lisa Anne Keon,
Margaret Lynley Keon,
Pamela Keon Vitale,
Susan Tamara Keon DeWyngaert,
Benjamin Iverson Lumpkin,
Elizabeth Arabella Lumpkin,
Anne Romayne Sparks,
Barbara Lee Sparks,
Christina Louise Sparks, and
John Woodruff Sparks
Bank One, Texas, N.A., Trustee
By:
-20-
<PAGE>
The three trusts established by Richard Adamson Lumpkin under Trust Agreement
dated February 6, 1970, one for the benefit of each of:
Richard Anthony Lumpkin,
Margaret Anne Keon, and
Mary Lee Sparks
Bank One, Texas, N.A., Trustee
By:
The twelve 1990 Personal Income Trusts established by Margaret L. Keon, Mary Lee
Sparks, and Richard A. Lumpkin, each dated April 20, 1990, one for the benefit
of each of:
Joseph John Keon III,
Katherine Stoddert Keon,
Lisa Anne Keon,
Margaret Lynley Keon,
Pamela Keon Vitale,
Susan Tamara Keon DeWyngaert,
Benjamin Iverson Lumpkin,
Elizabeth Arabella Lumpkin,
Anne Romayne Sparks,
Barbara Lee Sparks,
Christina Louise Sparks, and
John Woodruff Sparks
David R. Hodgman, Trustee
Steven L. Grissom, Trustee
-21-
<PAGE>
SCHEDULE I
Gail G. Lumpkin
Margaret Lumpkin Keon, as Trustee under the Margaret Lumpkin Keon Trust dated
May 13, 1978
Mary Lee Sparks and Steven L. Grissom, as Trustees of the Mary Lee Sparks
Trust dated May 13, 1978
Bank One, Texas, N.A., as Trustee of the twelve trusts created under the Mary
Green Lumpkin Gallo Trust Agreement dated December 29, 1989, one for the benefit
of each of Joseph John Keon III, Katherine Stoddert Keon, Lisa Anne Keon,
Margaret Lynley Keon, Pamela Keon Vitale, Susan Tamara Keon DeWyngaert, Benjamin
Iverson Lumpkin, Elizabeth Arabella Lumpkin, Anne Romayne Sparks, Barbara Lee
Sparks, Christina Louise Sparks, and John Woodruff Sparks
Bank One, Texas, N.A., as Trustee of the twelve trusts created under the Richard
Adamson Lumpkin Grandchildren's Trust dated September 5, 1980, one for the
benefit of each of Joseph John Keon III, Katherine Stoddert Keon, Lisa Anne
Keon, Margaret Lynley Keon, Pamela Keon Vitale, Susan Tamara Keon DeWyngaert,
Benjamin Iverson Lumpkin, Elizabeth Arabella Lumpkin, Anne Romayne Sparks,
Barbara Lee Sparks, Christina Louise Sparks, and John Woodruff Sparks
Bank One, Texas, N.A., as Trustee of the three trusts established by Richard
Adamson Lumpkin under the Trust Agreement dated February 6, 1970, one for the
benefit of each of Richard Anthony Lumpkin, Margaret Anne Keon, and Mary Lee
Sparks
David R. Hodgman and Steven L. Grissom, as Trustees of the twelve 1990 Personal
Income Trusts established by Margaret L. Keon, Mary Lee Sparks, and Richard A.
Lumpkin, each dated April 20, 1990, one for the benefit of each of Joseph John
Keon III, Katherine Stoddert Keon, Lisa Anne Keon, Margaret Lynley Keon, Pamela
Keon Vitale, Susan Tamara Keon DeWyngaert, Benjamin Iverson Lumpkin, Elizabeth
Arabella Lumpkin, Anne Romayne Sparks, Barbara Lee Sparks, Christina Louise
Sparks, and John Woodruff Sparks
