<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 12, 1996
REGISTRATION NO. 333-13885
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
MCLEOD, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 4813 58-421407240
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
221 THIRD AVENUE SE, SUITE 500
CEDAR RAPIDS, IA 52401
(319) 364-0000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
CLARK E. MCLEOD
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
MCLEOD, INC.
221 THIRD AVENUE SE, SUITE 500
CEDAR RAPIDS, IA 52401
(319) 364-0000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
COPIES TO:
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JOSEPH G. CONNOLLY, JR., ESQ.
NANCY J. KELLNER, ESQ. JAMES J. JUNEWICZ, ESQ.
HOGAN & HARTSON L.L.P. MAYER, BROWN & PLATT
555 THIRTEENTH STREET, N.W. 190 SOUTH LASALLE STREET
WASHINGTON, D.C. 20004 CHICAGO, IL 60603
(202) 637-5600 (312) 782-0600
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
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If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act of 1933 registration statement number
of the earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act of 1933 registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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<S> <C> <C> <C> <C>
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) PRICE(2) FEE(3)
<CAPTION>
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Class A Common Stock,
$.01 par value.................... 7,130,000 $30.875 $220,138,750 $66,709
</TABLE>
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(1) Includes 930,000 shares subject to an over-allotment option granted by the
Company to the Underwriters. See "Underwriting."
(2) Estimated solely for purposes of calculating the registration fee.
(3) $67,955 previously paid.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
EXPLANATORY NOTE
This Amendment No. 2 to Form S-1 Registration Statement is being filed to
make certain updates to Part II of the Registration Statement and to file
additional exhibits.
<PAGE> 3
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following are the estimated expenses payable by the Company in
connection with the distribution of the securities hereunder. The Selling
Stockholders are not paying any portion of such expenses.
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<S> <C>
SEC registration fee.................................................... $ 67,955
NASD filing fee......................................................... 22,925
Nasdaq National Market listing fee...................................... 17,500
Accounting fees and expenses............................................ 175,000
Legal fees and expenses................................................. 500,000
Printing and engraving expenses......................................... 195,000
Blue Sky fees and expenses.............................................. 15,000
Transfer Agent fees and expenses........................................ 6,620
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Total......................................................... $ 1,000,000
=======
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Section 145 of the Delaware General Corporation Law ("DGCL"), a
corporation may indemnify its directors, officers, employees and agents and its
former directors, officers, employees and agents and those who serve, at the
corporation's request, in such capacities with another enterprise, against
expenses (including attorneys' fees), as well as judgments, fines and
settlements in nonderivative lawsuits, actually and reasonably incurred in
connection with the defense of any action, suit or proceeding in which they or
any of them were or are made parties or are threatened to be made parties by
reason of their serving or having served in such capacity. The DGCL provides,
however, that such person must have acted in good faith and in a manner such
person reasonably believed to be in (or not opposed to) the best interests of
the corporation and, in the case of a criminal action, such person must have had
no reasonable cause to believe his or her conduct was unlawful. In addition, the
DGCL does not permit indemnification in an action or suit by or in the right of
the corporation, where such person has been adjudged liable to the corporation,
unless, and only to the extent that, a court determines that such person fairly
and reasonably is entitled to indemnity for costs the court deems proper in
light of liability adjudication. Indemnity is mandatory to the extent a claim,
issue or matter has been successfully defended.
The Restated Certificate contains provisions that provide that no director
of the Company shall be liable for breach of fiduciary duty as a director except
for (1) any breach of the directors' duty of loyalty to the Company or its
stockholders; (2) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of the law; (3) liability under
Section 174 of the DGCL; or (4) any transaction from which the director derived
an improper personal benefit. The Restated Certificate contains provisions that
further provide for the indemnification of directors and officers to the fullest
extent permitted by the DGCL. Under the Bylaws of the Company, the Company is
required to advance expenses incurred by an officer or director in defending any
such action if the director or officer undertakes to repay such amount if it is
determined that the director or officer is not entitled to indemnification. In
addition, the Company has entered into indemnity agreements with each of its
directors pursuant to which the Company has agreed to indemnify the directors as
permitted by the DGCL. The Company has obtained directors and officers liability
insurance against certain liabilities, including liabilities under the
Securities Act.
II-1
<PAGE> 4
The Underwriting Agreement provides for indemnification by the Underwriters
of the directors, officers and controlling persons of the Company against
certain liabilities, including liabilities under the Securities Act.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
From the Company's inception on June 6, 1991 through September 30, 1996,
the Company has issued and sold the following securities (as adjusted to give
effect to the 3.75-for-one stock split of the Company's Class A Common Stock and
Class B Common Stock, effective May 2, 1996 (the "Recapitalization")):
(1) In July 1991, the Company issued 18,750 shares of Class A Common
Stock to its founder, Clark E. McLeod. The price per share was $.27, for an
aggregate consideration of $5,000.
(2) In September 1992, the Company granted stock options to five of
its employees to purchase an aggregate of 832,096 shares of Class A Common
Stock pursuant to the 1992 Plan at an exercise price of $.27 per share and
granted Clark E. McLeod stock options to purchase an aggregate of 172,298
shares of Class A Common Stock pursuant to the 1992 Plan at an exercise
price of $.29 per share.
(3) In January 1993, the Company issued an aggregate of 6,356,256
shares of Class A Common Stock to Clark E. McLeod (2,462,334), Mary E.
McLeod (2,481,080), Holly A. McLeod (34,459), James L. Cram (153,548),
Virginia A. Cram (153,548), William A. Cram (18,750), Kristin J. Cram
(18,750), Stephen C. and Sally W. Gray (86,149), Scott L. and Julie A.
Goldberg (68,918), Kirk E. Kaalberg (17,232), and Bruce A. and Susan M.
Thayer (861,488). The price per share was $.27, for an aggregate
consideration of $1,695,000.
(4) Between March and November 1993, the Company granted stock options
to 35 of its employees to purchase an aggregate of 1,193,438 shares of
Class A Common Stock pursuant to the 1992 Plan (198,750) and the 1993 Plan
(994,688), at an exercise price of $.80 per share and granted Clark E.
McLeod stock options to purchase an aggregate of 180,000 shares of Class A
Common Stock pursuant to the 1992 Plan (56,250) and the 1993 Plan
(123,750), at an exercise price of $.88 per share.
(5) In April 1993, the Company issued an aggregate of 5,618,754 shares
of Class A Common Stock to Mary E. McLeod (1,249,999), Clark E. McLeod
(1,250,003), Allsop (2,500,002), David C. Stanard (123,750), Judith A.
Stanard (56,250), Douglas McGowan (153,750), Stephen C. and Sally W. Gray
(18,750), James L. Cram (18,750), Virginia A. Cram (18,750), John D. and
Karleen M. Hagan (18,750), Scott L. and Julie A. Goldberg (18,750), Robert
C. and Deborah B. Taylor (18,750), Mernat & Co. f/b/o Henry Royer IRA
(37,500), Gene L. Hassman (41,250), Stephen Samuel Gray Irrevocable Trust
(3,750), Mernat & Co. f/b/o Joanne H. Collins Trust (45,000), and Mernat &
Co. f/b/o Thomas M. Collins (45,000). The price per share was $.80, for an
aggregate consideration of $4,495,002.
(6) In April 1993, the Company issued 5,625,000 shares of Class B
Common Stock to IES. The price per share was $.80, for an aggregate
consideration of $4,500,000.
(7) In May 1993, the Company granted to four of its directors,
pursuant to the Director Plan, stock options to purchase an aggregate of
150,000 shares of Class A Common Stock at an exercise price of $.80 per
share.
(8) In December 1993, the Company issued an aggregate of 307,096
shares of Class A Common Stock to William A. Cram (14,063), Kristin J. Cram
(14,063), James L. Cram (139,485) and Virginia A. Cram (139,485) in
exchange for 307,096 shares of Class A Common Stock previously issued to
James L. Cram (153,548) and Virginia A. Cram (153,548).
II-2
<PAGE> 5
(9) In December 1993, the Company granted to 44 of its employees,
pursuant to the 1993 Plan, stock options to purchase an aggregate of 40,976
shares of Class A Common Stock at an exercise price of $1.07 per share.
(10) Between January and June 1994, the Company granted to 47 of its
employees, pursuant to the 1993 Plan, stock options to purchase an
aggregate of 535,314 shares of Class A Common Stock at an exercise price of
$1.47 per share.
(11) In February 1994, the Company issued 2,045,457 shares of Class B
Common Stock to IES. The price per share was $1.47, for an aggregate
consideration of $3,000,003.
(12) In February 1994, the Company issued an aggregate of 2,484,720
shares of Class A Common Stock to Allsop (1,022,727), Clark E. McLeod
(511,365), Mary E. McLeod (511,362), Mernat & Co. f/b/o John D. Hagan IRA
(76,875), Bruce A. and Susan M. Thayer (68,183), Judith A. Stanard
(67,500), Mernat & Co. f/b/o Thomas M. Collins (102,274), Mernat & Co.
f/b/o Henry Royer IRA (37,500), Casey D. Mahon (34,092), Dain Bosworth,
Custodian for Casey D. Mahon IRA (34,092), Stephen C. and Sally W. Gray
(15,000), and Robert C. and Deborah B. Taylor (3,750). The price per share
was $1.47, for an aggregate consideration of $3,644,250.
(13) In May 1994, the Company issued an aggregate of 14,478,480 shares
of Class A Common Stock to all existing holders of Class A Common Stock and
an aggregate of 7,670,457 shares of Class B Common Stock to all existing
holders of Class B Common Stock in connection with the reincorporation of
the Company from Iowa to Delaware in August 1993 and in exchange for all
shares of Class A Common Stock and Class B Common Stock previously issued
to such stockholders.
(14) In May 1994, the Company granted to IES, in consideration of the
guaranty executed by IES in connection with the Credit Facility, stock
options to purchase an aggregate of 1,875,000 shares of Class B Common
Stock at an exercise price of $1.47 per share.
(15) Between August 1994 and January 1995, the Company granted to 235
of its employees, pursuant to the 1993 Plan, stock options to purchase an
aggregate of 569,503 shares of Class A Common Stock at an exercise price of
$1.73 per share and granted Clark E. McLeod stock options to purchase an
aggregate of 18,750 shares of Class A Common Stock pursuant to the 1993
Plan at an exercise price of $1.91 per share.
(16) In December 1994, the Company issued an aggregate of 2,482,602
shares of Class A Common Stock to Joni Thornton (3,750), Al and Delores
Lyon (3,750), Aaron McLeod (3,750), Holly McLeod (3,750), Dave and Karen
Lindberg (3,750), Ted McLeod (3,750), Clark E. McLeod (7,500) and Mary E.
McLeod (2,452,602), in exchange for 2,482,602 shares of Class A Common
Stock previously issued to Clark E. McLeod (18,750) and Mary E. McLeod
(2,463,852).
(17) In December 1994, the Company issued an aggregate of 278,972*
shares of Class A Common Stock to William A. Cram (4,688), Kristin J. Cram
(4,688), James L. Cram (134,798) and Virginia A. Cram (134,798) in exchange
for 278,970* shares of Class A Common Stock previously issued to James L.
Cram (139,485) and Virginia A. Cram (139,485).
(18) In January 1995, the Company issued 22,500 shares of Class A
Common Stock to Mernat & Co. f/b/o Stephen C. Gray. The price per share was
$1.73, for an aggregate consideration of $39,000.
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* Differences between the number of shares originally issued and the number of
shares exchanged therefor in the described transaction are due to the rounding
up of all fractional shares resulting from the Recapitalization.
II-3
<PAGE> 6
(19) In January 1995, the Company granted to four of its directors,
pursuant to the Director Plan, stock options to purchase an aggregate of
75,000 shares of Class A Common Stock at an exercise price of $1.73 per
share.
(20) Between March and October 1995, the Company granted stock options
to 452 of its employees to purchase an aggregate of 1,339,474 shares of
Class A Common Stock pursuant to the 1992 Plan (105,000), the 1993 Plan
(953,224) and the 1995 Plan (281,250), at an exercise price of $2.27 per
share, and granted Clark E. McLeod stock options to purchase an aggregate
of 56,250 shares of Class A Common Stock pursuant to the 1995 Plan at an
exercise price of $2.49 per share.
(21) In April 1995, the Company issued 3,676,058 shares of Class B
Common Stock to Midwest Capital Group Inc. The price per share was $2.27,
for an aggregate consideration of $8,332,397.
(22) In April 1995, the Company granted to IES, in consideration of
the guaranty executed by IES in connection with the Credit Facility, stock
options to purchase an aggregate of 1,912,500 shares of Class B Common
Stock at an exercise price of $2.27 per share.
(23) In June 1995, the Company issued 3,529,414 shares of Class B
Common Stock to MWR Investments Inc. The price per share was $2.27, for an
aggregate consideration of $8,000,005.
(24) In June 1995, the Company issued 750,000 shares of Class B Common
Stock to IES. The price per share was $2.27, for an aggregate consideration
of $1,700,000.
(25) In June 1995, the Company issued 3,676,058 shares of Class B
Common Stock to MWR Investments Inc., in exchange for 3,676,058 shares of
Class B Common Stock previously issued to Midwest Capital Group Inc.
(26) In June 1995, the Company issued an aggregate of 929,670* shares
of Class A Common Stock to Bruce A. Thayer (464,835) and Susan M. Thayer
(464,835) in exchange for 929,671* shares of Class A Common Stock
previously issued to Bruce A. and Susan M. Thayer.
(27) In June 1995, the Company issued an aggregate of 1,897,068 shares
of Class A Common Stock to Allsop (171,188), Frank N. and Marilyn Y. Magid
(44,119), Fred L. Wham, III, Trustee, Fred L. Wham, III Profit Sharing U/A
dated 1/1/89 f/b/o Fred L. Wham, III (88,238), Scott G. Byers Partnership
(44,119), Craig M. and Susan M. Byers (44,119), Richard C. Young (44,119),
Ross D. Christensen (44,119), William C. Knapp as trustee of the William C.
Knapp Revocable Trust (88,238), Nelson Investment Company (44,119), John W.
Aalfs (44,119), John D. Hagan (44,119), William J. Stevens (11,625), Tami
Young (22,062), Merrill Lynch f/b/o Michael J. Brown IRA (13,238), Ann
Vermeer Stienstra (13,238), Keith R. Molof (2,250), Central Iowa Energy
Cooperative (330,885), Trust for the Benefit of the Children of Frank Magid
(44,119), Iowa Capital Corporation (154,414), Dain Bosworth f/b/o Thomas M.
Brown IRA (32,363), Thomas M. Brown (8,813), Karen Jacobi (450), Philip
Thrasher Kennedy (6,619), IPC Development Co. (45,000), Trusty (44,119),
S.K.E. Investment Partnership (44,119), Thomas M. Hoyt (44,119), James S.
Cownie (88,238), Mernat & Co. f/b/o Stephen C. Gray IRA (3,750), Stephen C.
Gray (26,352), Gregg D. Miller (44,119), Theodore G. Schwartz (44,119),
Clark E. McLeod (64,163), Mary E. McLeod (64,159), Ibak & Company f/b/o
John W. Colloton (25,875), and John W. Colloton (18,244). The price per
share was $2.27, for an aggregate consideration of $4,299,997.
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* Differences between the number of shares originally issued and the number of
shares exchanged therefor in the described transaction are due to the rounding
up of all fractional shares resulting from the Recapitalization.
II-4
<PAGE> 7
(28) In July 1995, the Company issued an aggregate of 26,352 shares of
Class A Common Stock to Stephen C. Gray (22,602) and Elizabeth Mary
Fletcher Gray Education Trust (3,750) in exchange for 26,352 shares of
Class A Common Stock previously issued to Stephen C. Gray.
(29) In July 1995, the Company granted to six of its directors,
pursuant to the Director Plan, stock options to purchase an aggregate of
112,500 shares of Class A Common Stock at an exercise price of $2.27 per
share.
(30) In October 1995, the Company issued 282 shares of Class A Common
Stock to Kathleen Sanders. The price per share was $1.06, for an aggregate
consideration of $300.
(31) In October 1995, the Company issued an aggregate of 269,596
shares of Class A Common Stock to William A. Cram (3,750), Kristin J. Cram
(3,750), James L. Cram (131,048) and Virginia A. Cram (131,048) in exchange
for 269,596 shares of Class A Common Stock previously issued to James L.
Cram (134,798) and Virginia A. Cram (134,798).
(32) In December 1995, the Company issued an aggregate of 2,462,330
shares of Class A Common Stock to Joni Thornton (3,750), Dave and Karen
Lindberg (3,750), Aaron McLeod (3,750), Holly McLeod (3,750), Clark E.
McLeod (2,437,602) and Mary E. McLeod (9,728), in exchange for 2,462,330
shares of Class A Common Stock previously issued to Clark E. McLeod
(2,445,102) and Mary E. McLeod (17,228).
(33) In December 1995, the Company issued 11,250 shares of Class A
Common Stock to James L. Cram. The price per share was $.27, for an
aggregate consideration of $3,000.
(34) Between December 1995 and February 1996, the Company granted
stock options to 239 of its employees to purchase an aggregate of 1,514,263
shares of Class A Common Stock pursuant to the 1992 Plan (39,752) and the
1993 Plan (1,474,511), at an exercise price of $2.67 per share and granted
Clark E. McLeod stock options to purchase an aggregate of 112,500 shares of
Class A Common Stock pursuant to the 1993 Plan at an exercise price of
$2.93 per share.
(35) In January 1996, the Company granted to six of its directors,
pursuant to the Director Plan, stock options to purchase an aggregate of
112,500 shares of Class A Common Stock at an exercise price of $2.67 per
share.
(36) In February 1996, the Company issued an aggregate of 262,096
shares of Class A Common Stock to William A. Cram (5,625), Kristin J. Cram
(5,625), Thomas W. Burns (3,750), Rita M. Burns (3,750), James L. Cram
(121,673) and Virginia A. Cram (121,673) in exchange for 262,096 shares of
Class A Common Stock previously issued to James L. Cram (131,048) and
Virginia A. Cram (131,048).
(37) In February 1996, the Company issued 23,438 shares of Class A
Common Stock to Blake O. Fisher, Jr. The price per share was $.99, for an
aggregate consideration of $23,125.
(38) In April 1996, as partial consideration for the execution of
employment, confidentiality and non-competition agreements, the Company
granted to the 37 employees signing such agreements options to purchase an
aggregate of 540,500 shares of Class A Common Stock, effective upon
consummation of the Company's initial public offering of Class A Common
Stock, at exercise prices ranging from $20.00 to $22.00.
(39) In June 1996, the Company granted to 176 of its employees,
pursuant to the 1996 Plan, stock options to purchase an aggregate of
223,550 shares of Class A Common Stock at an exercise price of $20.00 per
share.
(40) In June 1996, the Company granted to seven of its employees,
pursuant to the 1996 Plan, stock options to purchase an aggregate of 6,800
shares of Class A Common Stock at an exercise price of $23.75 per share.
II-5
<PAGE> 8
(41) In July 1996, the Company issued an aggregate of 474,807 shares
of Class A Common Stock to Allsop (194,476), Albert P. Ruffalo (73,600),
Joseph P. Cunningham (40,301), Laura L. Dement (37,386), Randy A. Snyder
(18,763), Brian P. Donnelley (18,763), Clark E. McLeod (38,609), Mary E.
McLeod (38,609), Eric Hender (7,150), and Julie Hender (7,150). The 474,807
shares were exchanged for all the shares of Ruffalo, Cody common stock held
by such persons.
(42) In July 1996, in connection with the acquisition of Ruffalo, Cody
and pursuant to the 1996 Plan, the Company granted stock options to
purchase an aggregate of 88,436 shares of Class A Common Stock at an
exercise price of $1.43 to 19 Ruffalo, Cody employees, an aggregate of
29,537 shares of Class A Common Stock at an exercise price of $4.29 to 9
Ruffalo, Cody employees, an aggregate of 14,684 shares of Class A Common
Stock at an exercise price of $8.58 to 14 Ruffalo, Cody employees, an
aggregate of 11,370 shares of Class A Common Stock at an exercise price of
$9.30 to 31 Ruffalo, Cody employees, an aggregate of 6,991 shares of Class
A Common Stock at an exercise price of $8.58 to 1 Ruffalo, Cody independent
contractor, and an aggregate of 6,991 shares of Class A Common Stock at an
exercise price of $9.30 to 1 Ruffalo, Cody independent contractor.
(43) In July 1996, as partial consideration for the execution of
employment, confidentiality and non-competition agreements, the Company
granted to 11 employees signing such agreements options to purchase an
aggregate of 167,000 shares of Class A Common Stock at an exercise price of
$25.25 per share.
(44) In July 1996, the Company granted to two of its employees,
pursuant to the 1996 Plan, stock options to purchase an aggregate of 11,500
shares of Class A Common Stock at an exercise price of $25.25 per share.
(45) In July 1996, the Company granted to 81 of its employees,
pursuant to the 1996 Plan, stock options to purchase an aggregate of 34,100
shares of Class A Common Stock at an exercise price of $24.75 per share.
(46) In August 1996, the Company granted to 62 of its employees,
pursuant to the 1996 Plan, stock options to purchase an aggregate of
129,855 shares of Class A Common Stock at an exercise price of $30.125 per
share.
(47) In September 1996, as partial consideration for the execution of
employment, confidentiality and non-competition agreements, the Company
granted to six employees signing such agreements options to purchase an
aggregate of 225,000 shares of Class A Common Stock at an exercise price of
$33.375 per share.
(48) In September 1996, the Company granted to 541 of its employees,
pursuant to the 1996 Plan, stock options to purchase an aggregate of
191,700 shares of Class A Common Stock at an exercise price of $33.375 per
share.
(49) In September 1996, as partial consideration for the execution of
an employment, confidentiality and non-competition agreement, the Company
granted to one employee signing such agreement options to purchase 10,000
shares of Class A Common Stock at an exercise price of $33.875 per share.
(50) In September 1996, the Company granted to 29 of its employees,
pursuant to the 1996 Plan, stock options to purchase an aggregate of 35,975
shares of Class A Common Stock at an exercise price of $33.875 per share.
(51) In October 1996, the Company granted to 50 of its employees,
pursuant to the 1996 Plan, stock options to purchase an aggregate of 41,600
shares of Class A Common Stock at an exercise price of $30.25 per share.
II-6
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Each issuance of securities described above was made in reliance on the
exemption from registration provided by Section 4(2) of the Securities Act as a
transaction by an issuer not involving any public offering. The recipients of
securities in each such transaction represented their intention to acquire the
securities for investment only and not with a view to or for sale in connection
with any distribution thereof and appropriate legends were affixed to the share
certificates issued in such transactions. All recipients had adequate access,
through their relationships with the Company, to information about the Company.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) EXHIBITS
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EXHIBIT
NUMBER EXHIBIT DESCRIPTION
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**1.1 -- Form of Underwriting Agreement among McLeod, Inc., Salomon Brothers Inc, Bear,
Stearns & Co. Inc., Morgan Stanley & Co. Incorporated, and certain stockholders
of the Company.
2.1 -- Agreement and Plan of Reorganization dated April 28, 1995 among Midwest Capital
Group Inc., MWR Telecom, Inc. and McLeod Inc. (Filed as Exhibit 2.1 to
Registration Statement on Form S-1, File No. 333-3112 ("Initial Form S-1"), and
incorporated herein by reference.)
2.2 -- Agreement and Plan of Reorganization dated July 12, 1996 among Ruffalo, Cody &
Associates, Inc., certain shareholders of Ruffalo, Cody & Associates, Inc. and
McLeod, Inc. (Filed as Exhibit 2 to Current Report on Form 8-K, File No.
0-20763, and incorporated herein by reference.)
2.3 -- Agreement and Plan of Reorganization dated August 15, 1996 among Telecom*USA
Publishing Group, Inc. and McLeod, Inc. (Filed as Exhibit 2 to Current Report on
Form 8-K, File No. 0-20763, and incorporated herein by reference.)
3.1 -- Amended and Restated Certificate of Incorporation of McLeod, Inc. (Filed as
Exhibit 3.1 to Initial Form S-1, and incorporated herein by reference.)
**3.2 -- Amended and Restated Bylaws of McLeod, Inc.
4.1 -- Form of Class A Common Stock Certificate of McLeod, Inc. (Filed as Exhibit 4.1
to Initial Form S-1, and incorporated herein by reference.)
4.2 -- Investor Agreement dated as of April 1, 1996 among McLeod, Inc., IES Investments
Inc., Midwest Capital Group Inc., MWR Investments Inc., Clark and Mary McLeod,
and certain other stockholders. (Filed as Exhibit 4.8 to Initial Form S-1, and
incorporated herein by reference.)
**4.3 -- Amendment No. 1 to Investor Agreement dated as of October 23, 1996 by and among
McLeod, Inc., IES Investments Inc., Midwest Capital Group Inc., MWR Investments
Inc., Clark E. McLeod and Mary E. McLeod.
5.1 -- Opinion of Hogan & Hartson L.L.P.
10.1 -- Credit Agreement dated as of May 16, 1994 among McLeod, Inc., McLeod Network
Services, Inc., McLeod Telemanagement, Inc., McLeod Telecommunications, Inc. and
The First National Bank of Chicago. (Filed as Exhibit 10.1 to Initial Form S-1,
and incorporated herein by reference.)
10.2 -- First Amendment to Credit Agreement dated as of June 17, 1994 among McLeod,
Inc., McLeod Network Services, Inc., McLeod Telemanagement, Inc., McLeod
Telecommunications, Inc. and The First National Bank of Chicago. (Filed as
Exhibit 10.2 to Initial Form S-1, and incorporated herein by reference.)
</TABLE>
II-7
<PAGE> 10
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- --------------------------------------------------------------------------------
<C> <C> <S>
10.3 -- Second Amendment to Credit Agreement dated as of December 1, 1994 among McLeod,
Inc., McLeod Network Services, Inc., McLeod Telemanagement, Inc., McLeod
Telecommunications, Inc. and The First National Bank of Chicago. (Filed as
Exhibit 10.3 to Initial Form S-1, and incorporated herein by reference.)
10.4 -- Third Amendment to Credit Agreement dated as of May 31, 1995 among McLeod, Inc.,
McLeod Network Services, Inc., McLeod Telemanagement, Inc., McLeod
Telecommunications, Inc., MWR Telecom, Inc. and The First National Bank of
Chicago. (Filed as Exhibit 10.4 to Initial Form S-1, and incorporated herein by
reference.)
10.5 -- Fourth Amendment to Credit Agreement dated as of July 28, 1995 among McLeod,
Inc., McLeod Network Services, Inc., McLeod Telemanagement, Inc., McLeod
Telecommunications, Inc., MWR Telecom, Inc. and The First National Bank of
Chicago. (Filed as Exhibit 10.5 to Initial Form S-1, and incorporated herein by
reference.)
10.6 -- Fifth Amendment to Credit Agreement dated as of October 18, 1995 among McLeod,
Inc., McLeod Network Services, Inc., McLeod Telemanagement, Inc., McLeod
Telecommunications, Inc., MWR Telecom, Inc. and The First National Bank of
Chicago. (Filed as Exhibit 10.6 to Initial Form S-1, and incorporated herein by
reference.)
10.7 -- Sixth Amendment to Credit Agreement dated as of March 29, 1996 among McLeod,
Inc., McLeod Network Services, Inc., McLeod Telecommunications, Inc., MWR
Telecom, Inc. and The First National Bank of Chicago. (Filed as Exhibit 10.7 to
Initial Form S-1, and incorporated herein by reference.)
10.8 -- Security Agreement dated as of May 16, 1994 among McLeod, Inc., McLeod Network
Services, Inc., McLeod Telemanagement, Inc., McLeod Telecommunications, Inc. and
The First National Bank of Chicago. (Filed as Exhibit 10.8 to Initial Form S-1,
and incorporated herein by reference.)
10.9 -- First Amendment to Security Agreement dated as of December 1, 1994 among McLeod,
Inc., McLeod Network Services, Inc., McLeod Telemanagement, Inc., McLeod
Telecommunications, Inc. and The First National Bank of Chicago. (Filed as
Exhibit 10.9 to Initial Form S-1, and incorporated herein by reference.)
10.10 -- Support Agreement dated as of December 1, 1994 among IES Diversified Inc.,
McLeod, Inc., McLeod Network Services, Inc., McLeod Telemanagement, Inc., McLeod
Telecommunications, Inc. and The First National Bank of Chicago. (Filed as
Exhibit 10.10 to Initial Form S-1, and incorporated herein by reference.)
10.11 -- Agreement Regarding Support Agreement dated December 1994 between McLeod, Inc.
and IES Diversified Inc. (Filed as Exhibit 10.11 to Initial Form S-1, and
incorporated herein by reference.)
10.12 -- Agreement Regarding Guarantee dated May 16, 1994 between McLeod, Inc. and IES
Diversified Inc. (Filed as Exhibit 10.12 to Initial Form S-1, and incorporated
herein by reference.)
10.13 -- Joinder to and Assumption of Credit Agreement dated as of April 28, 1995 between
McLeod Merging Co. and The First National Bank of Chicago. (Filed as Exhibit
10.13 to Initial Form S-1, and incorporated herein by reference.)
10.14 -- Joinder to and Assumption of Security Agreement dated as of April 28, 1995
between McLeod Merging Co. and The First National Bank of Chicago. (Filed as
Exhibit 10.14 to Initial Form S-1, and incorporated herein by reference.)
10.15 -- Letter from The First National Bank of Chicago to James L. Cram dated April 28,
1995 regarding extension of the termination date under the Credit Agreement.
(Filed as Exhibit 10.15 to Initial Form S-1, and incorporated herein by
reference.)
</TABLE>
II-8
<PAGE> 11
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- --------------------------------------------------------------------------------
<C> <C> <S>
10.16 -- Credit Agreement dated as of March 29, 1996 among McLeod, Inc., McLeod Network
Services, Inc., McLeod Telemanagement, Inc., McLeod Telecommunications, Inc. MWR
Telecom, Inc. and The First National Bank of Chicago. (Filed as Exhibit 10.16 to
Initial Form S-1, and incorporated herein by reference.)
10.17 -- Agreement for Construction Related Services dated as of October 17, 1995 between
City Signal Fiber Services, Inc. and McLeod Network Services, Inc. (Filed as
Exhibit 10.17 to Initial Form S-1, and incorporated herein by reference.)
10.18 -- Construction Services Agreement dated March 27, 1996 between City Signal Fiber
Services, Inc. and McLeod Network Services, Inc. (Filed as Exhibit 10.18 to
Initial Form S-1, and incorporated herein by reference.)
10.19 -- Fiber Optic Use Agreement dated as of February 14, 1996 between McLeod Network
Services, Inc. and Galaxy Telecom, L.P. (Filed as Exhibit 10.19 to Initial Form
S-1, and incorporated herein by reference.)
10.20 -- Agreement dated as of July 11, 1994 between McLeod Network Services, Inc. and
KLK Construction. (Filed as Exhibit 10.20 to Initial Form S-1, and incorporated
herein by reference.)
10.21 -- Lease Agreement dated September 5, 1995 between State of Iowa and MWR Telecom,
Inc. (Filed as Exhibit 10.21 to Initial Form S-1, and incorporated herein by
reference.)
10.22 -- Lease Agreement dated September 5, 1995 between State of Iowa and McLeod Network
Services, Inc. (Filed as Exhibit 10.22 to Initial Form S-1, and incorporated
herein by reference.)
10.23 -- Contract dated September 5, 1995 between Iowa Telecommunications and Technology
Commission and MWR Telecom, Inc. (Filed as Exhibit 10.23 to Initial Form S-1,
and incorporated herein by reference.)
10.24 -- Contract dated June 27, 1995 between Iowa National Guard and McLeod Network
Services, Inc. (Filed as Exhibit 10.24 to Initial Form S-1, and incorporated
herein by reference.)
10.25 -- Addendum Number One to Contract dated September 5, 1995 between Iowa National
Guard and McLeod Network Services, Inc. (Filed as Exhibit 10.25 to Initial Form
S-1, and incorporated herein by reference.)
10.26 -- U S WEST Centrex Plus Service Rate Stability Plan dated October 15, 1993 between
McLeod Telemanagement, Inc. and U S WEST Communications, Inc. (Filed as Exhibit
10.26 to Initial Form S-1, and incorporated herein by reference.)
10.27 -- U S WEST Centrex Plus Service Rate Stability Plan dated July 17, 1993 between
McLeod Telemanagement, Inc. and U S WEST Communications, Inc. (Filed as Exhibit
10.27 to Initial Form S-1, and incorporated herein by reference.)
10.28 -- Ameritech Centrex Service Confirmation of Service Orders dated various dates in
1994, 1995 and 1996 between McLeod Telemanagement, Inc. and Ameritech
Information Industry Services. (Filed as Exhibit 10.28 to Initial Form S-1, and
incorporated herein by reference.)
10.29 -- Lease Agreement dated as of December 28, 1993 between 2060 Partnership and
McLeod Telemanagement, Inc., as amended by Amendments First to Ninth dated as of
July 3, 1994, March 25, 1994, June 22, 1994, August 12, 1994, September 12,
1994, September 20, 1994, November 16, 1994, September 20, 1995 and January 6,
1996, respectively. (Filed as Exhibit 10.29 to Initial Form S-1, and
incorporated herein by reference.)
</TABLE>
II-9
<PAGE> 12
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- --------------------------------------------------------------------------------
<C> <C> <S>
10.30 -- Lease Agreement dated as of May 24, 1995 between 2060 Partnership and McLeod
Telemanagement, Inc. (Filed as Exhibit 10.30 to Initial Form S-1, and
incorporated herein by reference.)
10.31 -- Lease Agreement dated October 31, 1995 between I.R.F.B. Joint Venture and McLeod
Telemanagement, Inc. (Filed as Exhibit 10.31 to Initial Form S-1, and
incorporated herein by reference.)
10.32 -- First Amendment to Lease Agreement dated as of November 20, 1995 between
I.R.F.B. Joint Venture and McLeod Telemanagement, Inc. (Filed as Exhibit 10.32
to Initial Form S-1, and incorporated herein by reference.)
10.33 -- Uniform Purchase Agreement dated July 22, 1993 between McLeod, Inc. and Hill's
Maple Crest Farms Partnership. (Filed as Exhibit 10.33 to Initial Form S-1, and
incorporated herein by reference.)
10.34 -- Master Right-of-Way Agreement dated July 27, 1994 between McLeod Network
Services, Inc. and IES Industries Inc. (Filed as Exhibit 10.34 to Initial Form
S-1, and incorporated herein by reference.)
10.35 -- Master Right-of-Way and Tower Use Agreement dated February 13, 1996 between IES
Industries Inc. and McLeod, Inc. (Filed as Exhibit 10.35 to Initial Form S-1,
and incorporated herein by reference.)
10.36 -- Master Pole, Duct and Tower Use Agreement dated February 20, 1996 between
MidAmerican Energy Company and McLeod, Inc. (Iowa and South Dakota). (Filed as
Exhibit 10.36 to Initial Form S-1, and incorporated herein by reference.)
10.37 -- Master Pole, Duct and Tower Use Agreement dated February 20, 1996 between
MidAmerican Energy Company and McLeod, Inc. (Illinois). (Filed as Exhibit 10.37
to Initial Form S-1, and incorporated herein by reference.)
10.38 -- Settlement Agreement dated March 18, 1996 between U S WEST Communications, Inc.
and McLeod Telemanagement, Inc. (Filed as Exhibit 10.38 to Initial Form S-1, and
incorporated herein by reference.)
10.39 -- Agreement dated August 4, 1995 between Vadacom, Inc. and McLeod Telemanagement,
Inc. (Filed as Exhibit 10.39 to Initial Form S-1, and incorporated herein by
reference.)
10.40 -- McLeod Telecommunications, Inc. 1992 Incentive Stock Option Plan. (Filed as
Exhibit 10.40 to Initial Form S-1, and incorporated herein by reference.)
10.41 -- McLeod, Inc. 1993 Incentive Stock Option Plan. (Filed as Exhibit 10.41 to
Initial Form S-1, and incorporated herein by reference.)
10.42 -- McLeod, Inc. 1995 Incentive Stock Option Plan. (Filed as Exhibit 10.42 to
Initial Form S-1, and incorporated herein by reference.)
10.43 -- McLeod Telecommunications, Inc. Director Stock Option Plan. (Filed as Exhibit
10.43 to Initial Form S-1, and incorporated herein by reference.)
10.44 -- Promissory Note dated July 18, 1995 between Kirk E. Kaalberg and McLeod, Inc.
(Filed as Exhibit 10.44 to Initial Form S-1, and incorporated herein by
reference.)
10.45 -- Promissory Note dated March 29, 1996 between Stephen K. Brandenburg and McLeod,
Inc. (Filed as Exhibit 10.45 to Initial Form S-1, and incorporated herein by
reference.)
10.46 -- Agreement dated April 28, 1995 among McLeod, Inc., McLeod Telecommunications,
Inc., McLeod Telemanagement, Inc., McLeod Network Services, Inc. and Clark E.
McLeod. (Filed as Exhibit 10.46 to Initial Form S-1, and incorporated herein by
reference.)
</TABLE>
II-10
<PAGE> 13
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- --------------------------------------------------------------------------------
<C> <C> <S>
+10.47 -- Telecommunications Services Agreement dated March 14, 1994 between WilTel, Inc.
and McLeod Telemanagement, Inc., as amended. (Filed as Exhibit 10.47 to Initial
Form S-1, and incorporated herein by reference.)
10.48 -- Amendment to Contract Addendum A to Contract No. 2102 dated March 31, 1993
between the Iowa Department of General Services and McLeod Telecommunications,
Inc. (Filed as Exhibit 10.48 to Initial Form S-1, and incorporated herein by
reference.)
10.49 -- Construction Services Agreement dated June 30, 1995 between MFS Network
Technologies, Inc. and MWR Telecom, Inc. (Filed as Exhibit 10.49 to Initial Form
S-1, and incorporated herein by reference.)
10.50 -- First Amendment to Agreement Regarding Support Agreement dated May 14, 1996
among McLeod, Inc., IES Diversified Inc. and IES Investments Inc. (Filed as
Exhibit 10.50 to Initial Form S-1, and incorporated herein by reference.)
10.51 -- First Amendment to Agreement Regarding Guarantee dated May 14, 1996 among
McLeod, Inc., IES Diversified Inc. and IES Investments Inc. (Filed as Exhibit
10.51 to Initial Form S-1, and incorporated herein by reference.)
10.52 -- Amended and Restated Directors Stock Option Plan of McLeod, Inc. (Filed as
Exhibit 10.52 to Initial Form S-1, and incorporated herein by reference.)
10.53 -- Forms of Employment, Confidentiality and Non-Competition Agreement between
McLeod, Inc. and certain employees of McLeod, Inc. (Filed as Exhibit 10.53 to
Initial Form S-1, and incorporated herein by reference.)
10.54 -- Form of Change-of-Control Agreement between McLeod, Inc. and certain employees
of McLeod, Inc. (Filed as Exhibit 10.54 to Initial Form S-1, and incorporated
herein by reference.)
**10.55 -- McLeod, Inc. 1996 Employee Stock Option Plan, as amended.
10.56 -- McLeod, Inc. Employee Stock Purchase Plan. (Filed as Exhibit 10.56 to Initial
Form S-1, and incorporated herein by reference.)
10.57 -- Form of Indemnity Agreement between McLeod, Inc. and certain officers and
directors of McLeod, Inc. (Filed as Exhibit 10.57 to Initial Form S-1, and
incorporated herein by reference.)
10.58 -- License Agreement dated April 24, 1996 between PageMart, Inc. and MWR Telecom,
Inc. (Filed as Exhibit 10.58 to Initial Form S-1, and incorporated herein by
reference.)
**10.59 -- Assignment of Purchase Agreement dated August 15, 1996 by and between Ryan
Properties, Inc. and McLeod, Inc.
**10.60 -- Assignment of Purchase Agreement dated August 14, 1996 by and between Ryan
Properties, Inc. and McLeod, Inc.
**10.61 -- Asset Purchase Agreement dated September 4, 1996 by and between Total
Communication Services, Inc. and McLeod Telemanagement, Inc.
**10.62 -- First Amendment to Asset Purchase Agreement dated September 30, 1996 by and
between Total Communication Services, Inc. and McLeod Telemanagement, Inc.
**10.63 -- McLeod, Inc. Incentive Plan.
**10.64 -- Amended and Restated Credit Agreement dated as of May 5, 1996 by and between
Telecom*USA Publishing Group, Inc., Telecom*USA Publishing Company and
Telecom*USA Neighborhood Directories, Inc. and Norwest Bank Iowa, National
Association.
</TABLE>
II-11
<PAGE> 14
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- --------------------------------------------------------------------------------
<C> <C> <S>
**10.65 -- First Amendment to Amended and Restated Credit Agreement dated as of January 31,
1996 by and between Telecom*USA Publishing Group, Inc., Telecom*USA Publishing
Company and Telecom*USA Neighborhood Directories, Inc. and Norwest Bank Iowa,
National Association.
**10.66 -- Lease Agreement dated as of September 26, 1994 between Ryan Properties, Inc. and
Ruffalo, Cody & Associates, Inc.
**10.67 -- First Lease Amendment dated as of April 12, 1995 between Ryan Properties, Inc.
and Ruffalo, Cody & Associates, Inc.
**10.68 -- Lease Agreement dated as of July 18, 1995 between 2060 Partnership, L.P. and
Telecom*USA Publishing Company.
**10.69 -- Lease Agreement dated April 26, 1995 by and between A.M. Henderson and
Telecom*USA Publishing Company.
**10.70 -- License Agreement dated as of April 19, 1994, between Ameritech Information
Industry Services and Telecom*USA Publishing Company.
**10.71 -- License Agreement dated September 13, 1993 between U S WEST Communications, Inc.
and Telecom*USA Publishing Company.
**10.72 -- Form of McLeod, Inc. Directors Stock Option Plan Stock Option Agreement.
**10.73 -- Forms of McLeod, Inc. 1996 Employee Stock Option Plan Incentive Stock Option
Agreement.
**10.74 -- Forms of McLeod, Inc. 1996 Employee Stock Option Plan Non-Incentive Stock Option
Agreement.
**10.75 -- Option Agreement dated April 27, 1995 between Fronteer Directory Company, Inc.
and Telecom*USA Publishing Company.
**10.76 -- Promissory Note dated May 5, 1995 between Telecom*USA Publishing Company and
Fronteer Directory Company, Inc.
**10.77 -- Security Agreement dated May 5, 1995 between Telecom*USA Publishing Company and
Fronteer Directory Company, Inc.
**10.78 -- Design/Build Construction Contract dated September 17, 1996 by and between Ryan
Construction Company of Minnesota, Inc. and McLeod, Inc.
10.79 -- Guaranty Agreement dated as of October 17, 1996 by McLeod, Inc. in favor of
Kirkwood Community College.
10.80 -- Industrial New Jobs Training Agreement dated as of October 31, 1996 between
Kirkwood Community College and McLeod Telemanagement, Inc.
10.81 -- Industrial New Jobs Training Agreement dated as of October 31, 1996 between
Kirkwood Community College and McLeod Telecommunications, Inc.
10.82 -- Industrial New Jobs Training Agreement dated as of October 31, 1996 between
Kirkwood Community College and McLeod Network Services, Inc.
10.83 -- Industrial New Jobs Training Agreement dated as of October 31, 1996 between
Kirkwood Community College and McLeod, Inc.
10.84 -- Change Order No. 1 to the Construction Services Agreement dated November 22,
1995 by and between MWR Telecom, Inc. and MFS Network Technologies, Inc.
10.85 -- Change Order No. 2 to the Construction Services Agreement dated August 14, 1996
by and between MWR Telecom, Inc. and MFS Network Technologies, Inc.
10.86 -- Change Order No. 3 to the Construction Services Agreement dated October 31, 1996
by and between MWR Telecom, Inc. and MFS Network Technologies, Inc.
10.87 -- Independent Contractor Sales Agreement dated May , 1995 by and between Sprint
Communications Company L.P. and Ruffalo, Cody & Associates, Inc.
</TABLE>
II-12
<PAGE> 15
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- --------------------------------------------------------------------------------
<C> <C> <S>
10.88 -- Second Amendment to Asset Purchase Agreement dated October 31, 1996 between
Total Communication Services, Inc. and McLeod Telemanagement, Inc.
10.89 -- Escrow Agreement dated July 15, 1996 among McLeod, Inc., certain shareholders of
Ruffalo, Cody & Associates, Inc., Albert P. Ruffalo and Norwest Bank N.A.
**11.1 -- Statement regarding Computation of Per Share Earnings.
**21.1 -- Subsidiaries of McLeod, Inc.
23.1 -- Consents of McGladrey & Pullen, LLP.
23.2 -- Consent of Hogan & Hartson L.L.P. (included in Exhibit 5.1 to this Registration
Statement on Form S-1).
**24.1 -- Power of Attorney (included on signature page).
**27.1 -- Financial Data Schedule.
**99.1 -- Purchase Agreement dated as of August 15, 1996 between Iowa Land and Building
Company and Ryan Properties, Inc.
**99.2 -- Purchase Agreement dated as of June 28, 1996 between Donald E. Zvacek, Dennis E.
Zvacek and Robert J. Zvacek and Ryan Properties, Inc.
</TABLE>
- ---------------
** Previously filed.
+ Confidential treatment has been granted. The copy filed as an exhibit omits
the information subject to the confidential treatment request.
(b) FINANCIAL STATEMENT SCHEDULES.
The following financial statement schedule is filed herewith:
Schedule II -- Valuation and Qualifying Accounts
Schedules not listed above have been omitted because they are inapplicable
or the information required to be set forth therein is provided in the Financial
Statements or notes thereto.
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-13
<PAGE> 16
The undersigned registrant hereby further undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-14
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Act, the Company has duly
caused this Amendment to Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Cedar Rapids, Iowa,
on this 12th day of November, 1996.
McLEOD, INC.
By /s/ CLARK E. MCLEOD
------------------------------------
Clark E. McLeod
Chairman and Chief Executive Officer
------------------------
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed
by the following persons, in the capacities indicated below, on this 12th day of
November, 1996.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------------------- ---------------------------------------------
<C> <S>
/s/ CLARK E. MCLEOD Chairman, Chief Executive Officer and
- --------------------------------------------- Director (Principal Executive Officer)
Clark E. McLeod
* President, Chief Operating Officer and
- --------------------------------------------- Director
Stephen C. Gray
* Chief Financial Officer, Executive Vice
- --------------------------------------------- President, Corporate Administration,
Blake O. Fisher, Jr. Treasurer and Director (Principal Financial
Officer)
* Chief Accounting Officer (Principal
- --------------------------------------------- Accounting Officer)
James L. Cram
* Director
- ---------------------------------------------
Russell E. Christiansen
* Director
- ---------------------------------------------
Thomas M. Collins
* Director
- ---------------------------------------------
Paul D. Rhines
* Director
- ---------------------------------------------
Lee Liu
*By: /s/ CLARK E. MCLEOD
- ---------------------------------------------
Clark E. McLeod
Attorney-in-Fact
</TABLE>
II-15
<PAGE> 18
INDEPENDENT AUDITOR'S REPORT
ON THE FINANCIAL STATEMENT SCHEDULES
To the Board of Directors
McLeod, Inc.
Cedar Rapids, Iowa
Our audits were made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. The consolidated
supplemental schedule II is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not a part of the basic
consolidated financial statements. This schedule has been subjected to the
auditing procedures applied in our audits of the basic consolidated financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic consolidated financial statements taken as a whole.
McGLADREY & PULLEN, LLP
Cedar Rapids, Iowa
March 28, 1996
<PAGE> 19
MCLEOD, INC.
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
ADDITIONS
---------------------
BALANCE CHARGED CHARGED BALANCE
AT TO TO AT
BEGINNING COST AND OTHER END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
- ------------------------------------ ---------- ---------- -------- --------- ----------
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1993:
Allowance for uncollectible
accounts and discounts......... $ -- $ -- $ -- $ -- $ --
Valuation reserve on deferred
tax assets..................... -- 789,000 -- -- 789,000
---------- ---------- --- --- ----------
$ -- $ 789,000 $ -- $ -- $ 789,000
========== ========== ======== ========= ==========
Year Ended December 31, 1994:
Allowance for uncollectible
accounts and discounts......... $ -- $ 84,000 $ -- $ -- $ 84,000
Valuation reserve on deferred
tax assets..................... 789,000 4,622,000 -- -- 5,411,000
---------- ---------- --- --- ----------
$ 789,000 $4,706,000 $ -- $ -- $5,495,000
========== ========== ======== ========= ==========
Year Ended December 31, 1995:
Allowance for doubtful accounts
and discounts.................. $ 84,000 $ 135,000 $ -- $ -- $ 219,000
Valuation reserve on deferred
tax assets..................... 5,411,000 3,007,000 -- -- 8,418,000
---------- ---------- --- --- ----------
$5,495,000 $3,142,000 $ -- $ -- $8,637,000
========== ========== ======== ========= ==========
</TABLE>
<PAGE> 20
INDEPENDENT AUDITOR'S REPORT
ON THE FINANCIAL STATEMENT SCHEDULES
To the Board of Directors
Ruffalo, Cody & Associates, Inc.
Cedar Rapids, Iowa
Our audits were made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. The consolidated
supplemental schedule II is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not a part of the basic
consolidated financial statements. This schedule has been subjected to the
auditing procedures applied in our audits of the basic consolidated financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic consolidated financial statements taken as a whole.
McGLADREY & PULLEN, LLP
Cedar Rapids, Iowa
February 9, 1996
<PAGE> 21
RUFFALO, CODY & ASSOCIATES, INC. AND SUBSIDIARY
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
ADDITIONS
-------------------
BALANCE CHARGED CHARGED BALANCE
AT TO TO AT
BEGINNING COST AND OTHER END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
- ---------------------------------------------- --------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1993:
Allowance for doubtful accounts............. $50,000 $ -- $ -- $ -- $50,000
========= ======== ======== ========= ========
Year Ended December 31, 1994:
Allowance for doubtful accounts............. $50,000 $38,072 $ -- $ -- $88,072
========= ======== ======== ========= ========
Year Ended December 31, 1995:
Allowance for doubtful accounts............. $88,072 $ -- $ -- $38,072 $50,000
========= ======== ======== ========= ========
</TABLE>
<PAGE> 22
INDEPENDENT AUDITOR'S REPORT
ON THE FINANCIAL STATEMENT SCHEDULES
To the Board of Directors
Telecom*USA Publishing Group, Inc.
Cedar Rapids, Iowa
Our audits were made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. The consolidated
supplemental schedule II is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not a part of the basic
consolidated financial statements. This schedule has been subjected to the
auditing procedures applied in our audits of the basic consolidated financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic consolidated financial statements taken as a whole.
McGLADREY & PULLEN, LLP
Cedar Rapids, Iowa
September 27, 1996
<PAGE> 23
TELECOM*USA PUBLISHING GROUP, INC. AND SUBSIDIARIES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
ADDITIONS
---------------------
BALANCE CHARGED CHARGED BALANCE
AT TO TO AT
BEGINNING COST AND OTHER END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
- ---------------------------------- ---------- ---------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Year Ended August 31, 1994:
Allowance for doubtful
accounts and adjustments..... $1,662,481 $1,340,069 $ -- $1,131,470 $1,871,080
========== ========== ======== ========== ==========
Year Ended August 31, 1995:
Allowance for doubtful
accounts and adjustments..... $1,871,080 $1,669,478 $ -- $1,206,402 $2,334,156
========== ========== ======== ========== ==========
Year Ended August 31, 1996:
Allowance for doubtful accounts
and adjustments.............. $2,334,156 $2,636,421 $ -- $1,867,654 $3,102,923
========== ========== ======== ========== ==========
</TABLE>
<PAGE> 24
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- --------------------------------------------------------------------------------
<C> <C> <S>
**1.1 -- Form of Underwriting Agreement among McLeod, Inc., Salomon Brothers Inc, Bear,
Stearns & Co. Inc., Morgan Stanley & Co. Incorporated, and certain stockholders
of the Company.
2.1 -- Agreement and Plan of Reorganization dated April 28, 1995 among Midwest Capital
Group Inc., MWR Telecom, Inc. and McLeod Inc. (Filed as Exhibit 2.1 to
Registration Statement on Form S-1, File No. 333-3112 ("Initial Form S-1"), and
incorporated herein by reference.)
2.2 -- Agreement and Plan of Reorganization dated July 12, 1996 among Ruffalo, Cody &
Associates, Inc., certain shareholders of Ruffalo, Cody & Associates, Inc. and
McLeod, Inc. (Filed as Exhibit 2 to Current Report on Form 8-K, File No.
0-20763, and incorporated herein by reference.)
2.3 -- Agreement and Plan of Reorganization dated August 15, 1996 among Telecom*USA
Publishing Group, Inc. and McLeod, Inc. (Filed as Exhibit 2 to Current Report on
Form 8-K, File No. 0-20763, and incorporated herein by reference.)
3.1 -- Amended and Restated Certificate of Incorporation of McLeod, Inc. (Filed as
Exhibit 3.1 to Initial Form S-1, and incorporated herein by reference.)
**3.2 -- Amended and Restated Bylaws of McLeod, Inc.
4.1 -- Form of Class A Common Stock Certificate of McLeod, Inc. (Filed as Exhibit 4.1
to Initial Form S-1, and incorporated herein by reference.)
4.2 -- Investor Agreement dated as of April 1, 1996 among McLeod, Inc., IES Investments
Inc., Midwest Capital Group Inc., MWR Investments Inc., Clark and Mary McLeod,
and certain other stockholders. (Filed as Exhibit 4.8 to Initial Form S-1, and
incorporated herein by reference.)
**4.3 -- Amendment No. 1 to Investor Agreement dated as of October 23, 1996 by and among
McLeod, Inc., IES Investments Inc., Midwest Capital Group Inc., MWR Investments
Inc., Clark E. McLeod and Mary E. McLeod.
5.1 -- Opinion of Hogan & Hartson L.L.P.
10.1 -- Credit Agreement dated as of May 16, 1994 among McLeod, Inc., McLeod Network
Services, Inc., McLeod Telemanagement, Inc., McLeod Telecommunications, Inc. and
The First National Bank of Chicago. (Filed as Exhibit 10.1 to Initial Form S-1,
and incorporated herein by reference.)
10.2 -- First Amendment to Credit Agreement dated as of June 17, 1994 among McLeod,
Inc., McLeod Network Services, Inc., McLeod Telemanagement, Inc., McLeod
Telecommunications, Inc. and The First National Bank of Chicago. (Filed as
Exhibit 10.2 to Initial Form S-1, and incorporated herein by reference.)
10.3 -- Second Amendment to Credit Agreement dated as of December 1, 1994 among McLeod,
Inc., McLeod Network Services, Inc., McLeod Telemanagement, Inc., McLeod
Telecommunications, Inc. and The First National Bank of Chicago. (Filed as
Exhibit 10.3 to Initial Form S-1, and incorporated herein by reference.)
10.4 -- Third Amendment to Credit Agreement dated as of May 31, 1995 among McLeod, Inc.,
McLeod Network Services, Inc., McLeod Telemanagement, Inc., McLeod
Telecommunications, Inc., MWR Telecom, Inc. and The First National Bank of
Chicago. (Filed as Exhibit 10.4 to Initial Form S-1, and incorporated herein by
reference.)
</TABLE>
<PAGE> 25
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- --------------------------------------------------------------------------------
<C> <C> <S>
10.5 -- Fourth Amendment to Credit Agreement dated as of July 28, 1995 among McLeod,
Inc., McLeod Network Services, Inc., McLeod Telemanagement, Inc., McLeod
Telecommunications, Inc., MWR Telecom, Inc. and The First National Bank of
Chicago. (Filed as Exhibit 10.5 to Initial Form S-1, and incorporated herein by
reference.)
10.6 -- Fifth Amendment to Credit Agreement dated as of October 18, 1995 among McLeod,
Inc., McLeod Network Services, Inc., McLeod Telemanagement, Inc., McLeod
Telecommunications, Inc., MWR Telecom, Inc. and The First National Bank of
Chicago. (Filed as Exhibit 10.6 to Initial Form S-1, and incorporated herein by
reference.)
10.7 -- Sixth Amendment to Credit Agreement dated as of March 29, 1996 among McLeod,
Inc., McLeod Network Services, Inc., McLeod Telecommunications, Inc., MWR
Telecom, Inc. and The First National Bank of Chicago. (Filed as Exhibit 10.7 to
Initial Form S-1, and incorporated herein by reference.)
10.8 -- Security Agreement dated as of May 16, 1994 among McLeod, Inc., McLeod Network
Services, Inc., McLeod Telemanagement, Inc., McLeod Telecommunications, Inc. and
The First National Bank of Chicago. (Filed as Exhibit 10.8 to Initial Form S-1,
and incorporated herein by reference.)
10.9 -- First Amendment to Security Agreement dated as of December 1, 1994 among McLeod,
Inc., McLeod Network Services, Inc., McLeod Telemanagement, Inc., McLeod
Telecommunications, Inc. and The First National Bank of Chicago. (Filed as
Exhibit 10.9 to Initial Form S-1, and incorporated herein by reference.)
10.10 -- Support Agreement dated as of December 1, 1994 among IES Diversified Inc.,
McLeod, Inc., McLeod Network Services, Inc., McLeod Telemanagement, Inc., McLeod
Telecommunications, Inc. and The First National Bank of Chicago. (Filed as
Exhibit 10.10 to Initial Form S-1, and incorporated herein by reference.)
10.11 -- Agreement Regarding Support Agreement dated December 1994 between McLeod, Inc.
and IES Diversified Inc. (Filed as Exhibit 10.11 to Initial Form S-1, and
incorporated herein by reference.)
10.12 -- Agreement Regarding Guarantee dated May 16, 1994 between McLeod, Inc. and IES
Diversified Inc. (Filed as Exhibit 10.12 to Initial Form S-1, and incorporated
herein by reference.)
10.13 -- Joinder to and Assumption of Credit Agreement dated as of April 28, 1995 between
McLeod Merging Co. and The First National Bank of Chicago. (Filed as Exhibit
10.13 to Initial Form S-1, and incorporated herein by reference.)
10.14 -- Joinder to and Assumption of Security Agreement dated as of April 28, 1995
between McLeod Merging Co. and The First National Bank of Chicago. (Filed as
Exhibit 10.14 to Initial Form S-1, and incorporated herein by reference.)
10.15 -- Letter from The First National Bank of Chicago to James L. Cram dated April 28,
1995 regarding extension of the termination date under the Credit Agreement.
(Filed as Exhibit 10.15 to Initial Form S-1, and incorporated herein by
reference.)
10.16 -- Credit Agreement dated as of March 29, 1996 among McLeod, Inc., McLeod Network
Services, Inc., McLeod Telemanagement, Inc., McLeod Telecommunications, Inc. MWR
Telecom, Inc. and The First National Bank of Chicago. (Filed as Exhibit 10.16 to
Initial Form S-1, and incorporated herein by reference.)
10.17 -- Agreement for Construction Related Services dated as of October 17, 1995 between
City Signal Fiber Services, Inc. and McLeod Network Services, Inc. (Filed as
Exhibit 10.17 to Initial Form S-1, and incorporated herein by reference.)
</TABLE>
<PAGE> 26
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- --------------------------------------------------------------------------------
<C> <C> <S>
10.18 -- Construction Services Agreement dated March 27, 1996 between City Signal Fiber
Services, Inc. and McLeod Network Services, Inc. (Filed as Exhibit 10.18 to
Initial Form S-1, and incorporated herein by reference.)
10.19 -- Fiber Optic Use Agreement dated as of February 14, 1996 between McLeod Network
Services, Inc. and Galaxy Telecom, L.P. (Filed as Exhibit 10.19 to Initial Form
S-1, and incorporated herein by reference.)
10.20 -- Agreement dated as of July 11, 1994 between McLeod Network Services, Inc. and
KLK Construction. (Filed as Exhibit 10.20 to Initial Form S-1, and incorporated
herein by reference.)
10.21 -- Lease Agreement dated September 5, 1995 between State of Iowa and MWR Telecom,
Inc. (Filed as Exhibit 10.21 to Initial Form S-1, and incorporated herein by
reference.)
10.22 -- Lease Agreement dated September 5, 1995 between State of Iowa and McLeod Network
Services, Inc. (Filed as Exhibit 10.22 to Initial Form S-1, and incorporated
herein by reference.)
10.23 -- Contract dated September 5, 1995 between Iowa Telecommunications and Technology
Commission and MWR Telecom, Inc. (Filed as Exhibit 10.23 to Initial Form S-1,
and incorporated herein by reference.)
10.24 -- Contract dated June 27, 1995 between Iowa National Guard and McLeod Network
Services, Inc. (Filed as Exhibit 10.24 to Initial Form S-1, and incorporated
herein by reference.)
10.25 -- Addendum Number One to Contract dated September 5, 1995 between Iowa National
Guard and McLeod Network Services, Inc. (Filed as Exhibit 10.25 to Initial Form
S-1, and incorporated herein by reference.)
10.26 -- U S WEST Centrex Plus Service Rate Stability Plan dated October 15, 1993 between
McLeod Telemanagement, Inc. and U S WEST Communications, Inc. (Filed as Exhibit
10.26 to Initial Form S-1, and incorporated herein by reference.)
10.27 -- U S WEST Centrex Plus Service Rate Stability Plan dated July 17, 1993 between
McLeod Telemanagement, Inc. and U S WEST Communications, Inc. (Filed as Exhibit
10.27 to Initial Form S-1, and incorporated herein by reference.)
10.28 -- Ameritech Centrex Service Confirmation of Service Orders dated various dates in
1994, 1995 and 1996 between McLeod Telemanagement, Inc. and Ameritech
Information Industry Services. (Filed as Exhibit 10.28 to Initial Form S-1, and
incorporated herein by reference.)
10.29 -- Lease Agreement dated as of December 28, 1993 between 2060 Partnership and
McLeod Telemanagement, Inc., as amended by Amendments First to Ninth dated as of
July 3, 1994, March 25, 1994, June 22, 1994, August 12, 1994, September 12,
1994, September 20, 1994, November 16, 1994, September 20, 1995 and January 6,
1996, respectively. (Filed as Exhibit 10.29 to Initial Form S-1, and
incorporated herein by reference.)
10.30 -- Lease Agreement dated as of May 24, 1995 between 2060 Partnership and McLeod
Telemanagement, Inc. (Filed as Exhibit 10.30 to Initial Form S-1, and
incorporated herein by reference.)
10.31 -- Lease Agreement dated October 31, 1995 between I.R.F.B. Joint Venture and McLeod
Telemanagement, Inc. (Filed as Exhibit 10.31 to Initial Form S-1, and
incorporated herein by reference.)
</TABLE>
<PAGE> 27
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- --------------------------------------------------------------------------------
<C> <C> <S>
10.32 -- First Amendment to Lease Agreement dated as of November 20, 1995 between
I.R.F.B. Joint Venture and McLeod Telemanagement, Inc. (Filed as Exhibit 10.32
to Initial Form S-1, and incorporated herein by reference.)
10.33 -- Uniform Purchase Agreement dated July 22, 1993 between McLeod, Inc. and Hill's
Maple Crest Farms Partnership. (Filed as Exhibit 10.33 to Initial Form S-1, and
incorporated herein by reference.)
10.34 -- Master Right-of-Way Agreement dated July 27, 1994 between McLeod Network
Services, Inc. and IES Industries Inc. (Filed as Exhibit 10.34 to Initial Form
S-1, and incorporated herein by reference.)
10.35 -- Master Right-of-Way and Tower Use Agreement dated February 13, 1996 between IES
Industries Inc. and McLeod, Inc. (Filed as Exhibit 10.35 to Initial Form S-1,
and incorporated herein by reference.)
10.36 -- Master Pole, Duct and Tower Use Agreement dated February 20, 1996 between
MidAmerican Energy Company and McLeod, Inc. (Iowa and South Dakota). (Filed as
Exhibit 10.36 to Initial Form S-1, and incorporated herein by reference.)
10.37 -- Master Pole, Duct and Tower Use Agreement dated February 20, 1996 between
MidAmerican Energy Company and McLeod, Inc. (Illinois). (Filed as Exhibit 10.37
to Initial Form S-1, and incorporated herein by reference.)
10.38 -- Settlement Agreement dated March 18, 1996 between U S WEST Communications, Inc.
and McLeod Telemanagement, Inc. (Filed as Exhibit 10.38 to Initial Form S-1, and
incorporated herein by reference.)
10.39 -- Agreement dated August 4, 1995 between Vadacom, Inc. and McLeod Telemanagement,
Inc. (Filed as Exhibit 10.39 to Initial Form S-1, and incorporated herein by
reference.)
10.40 -- McLeod Telecommunications, Inc. 1992 Incentive Stock Option Plan. (Filed as
Exhibit 10.40 to Initial Form S-1, and incorporated herein by reference.)
10.41 -- McLeod, Inc. 1993 Incentive Stock Option Plan. (Filed as Exhibit 10.41 to
Initial Form S-1, and incorporated herein by reference.)
10.42 -- McLeod, Inc. 1995 Incentive Stock Option Plan. (Filed as Exhibit 10.42 to
Initial Form S-1, and incorporated herein by reference.)
10.43 -- McLeod Telecommunications, Inc. Director Stock Option Plan. (Filed as Exhibit
10.43 to Initial Form S-1, and incorporated herein by reference.)
10.44 -- Promissory Note dated July 18, 1995 between Kirk E. Kaalberg and McLeod, Inc.
(Filed as Exhibit 10.44 to Initial Form S-1, and incorporated herein by
reference.)
10.45 -- Promissory Note dated March 29, 1996 between Stephen K. Brandenburg and McLeod,
Inc. (Filed as Exhibit 10.45 to Initial Form S-1, and incorporated herein by
reference.)
10.46 -- Agreement dated April 28, 1995 among McLeod, Inc., McLeod Telecommunications,
Inc., McLeod Telemanagement, Inc., McLeod Network Services, Inc. and Clark E.
McLeod. (Filed as Exhibit 10.46 to Initial Form S-1, and incorporated herein by
reference.)
+10.47 -- Telecommunications Services Agreement dated March 14, 1994 between WilTel, Inc.
and McLeod Telemanagement, Inc., as amended. (Filed as Exhibit 10.47 to Initial
Form S-1, and incorporated herein by reference.)
</TABLE>
<PAGE> 28
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- --------------------------------------------------------------------------------
<C> <C> <S>
10.48 -- Amendment to Contract Addendum A to Contract No. 2102 dated March 31, 1993
between the Iowa Department of General Services and McLeod Telecommunications,
Inc. (Filed as Exhibit 10.48 to Initial Form S-1, and incorporated herein by
reference.)
10.49 -- Construction Services Agreement dated June 30, 1995 between MFS Network
Technologies, Inc. and MWR Telecom, Inc. (Filed as Exhibit 10.49 to Initial Form
S-1, and incorporated herein by reference.)
10.50 -- First Amendment to Agreement Regarding Support Agreement dated May 14, 1996
among McLeod, Inc., IES Diversified Inc. and IES Investments Inc. (Filed as
Exhibit 10.50 to Initial Form S-1, and incorporated herein by reference.)
10.51 -- First Amendment to Agreement Regarding Guarantee dated May 14, 1996 among
McLeod, Inc., IES Diversified Inc. and IES Investments Inc. (Filed as Exhibit
10.51 to Initial Form S-1, and incorporated herein by reference.)
10.52 -- Amended and Restated Directors Stock Option Plan of McLeod, Inc. (Filed as
Exhibit 10.52 to Initial Form S-1, and incorporated herein by reference.)
10.53 -- Forms of Employment, Confidentiality and Non-Competition Agreement between
McLeod, Inc. and certain employees of McLeod, Inc. (Filed as Exhibit 10.53 to
Initial Form S-1, and incorporated herein by reference.)
10.54 -- Form of Change-of-Control Agreement between McLeod, Inc. and certain employees
of McLeod, Inc. (Filed as Exhibit 10.54 to Initial Form S-1, and incorporated
herein by reference.)
**10.55 -- McLeod, Inc. 1996 Employee Stock Option Plan, as amended.
10.56 -- McLeod, Inc. Employee Stock Purchase Plan. (Filed as Exhibit 10.56 to Initial
Form S-1, and incorporated herein by reference.)
10.57 -- Form of Indemnity Agreement between McLeod, Inc. and certain officers and
directors of McLeod, Inc. (Filed as Exhibit 10.57 to Initial Form S-1, and
incorporated herein by reference.)
10.58 -- License Agreement dated April 24, 1996 between PageMart, Inc. and MWR Telecom,
Inc. (Filed as Exhibit 10.58 to Initial Form S-1, and incorporated herein by
reference.)
**10.59 -- Assignment of Purchase Agreement dated August 15, 1996 by and between Ryan
Properties, Inc. and McLeod, Inc.
**10.60 -- Assignment of Purchase Agreement dated August 14, 1996 by and between Ryan
Properties, Inc. and McLeod, Inc.
**10.61 -- Asset Purchase Agreement dated September 4, 1996 by and between Total
Communication Services, Inc. and McLeod Telemanagement, Inc.
**10.62 -- First Amendment to Asset Purchase Agreement dated September 30, 1996 by and
between Total Communication Services, Inc. and McLeod Telemanagement, Inc.
**10.63 -- McLeod, Inc. Incentive Plan.
</TABLE>
<PAGE> 29
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- --------------------------------------------------------------------------------
<C> <C> <S>
**10.64 -- Amended and Restated Credit Agreement dated as of May 5, 1996 by and between
Telecom*USA Publishing Group, Inc., Telecom*USA Publishing Company and
Telecom*USA Neighborhood Directories, Inc. and Norwest Bank Iowa, National
Association.
**10.65 -- First Amendment to Amended and Restated Credit Agreement dated as of January 31,
1996 by and between Telecom*USA Publishing Group, Inc., Telecom*USA Publishing
Company and Telecom*USA Neighborhood Directories, Inc. and Norwest Bank Iowa,
National Association.
**10.66 -- Lease Agreement dated as of September 26, 1994 between Ryan Properties, Inc. and
Ruffalo, Cody & Associates, Inc.
**10.67 -- First Lease Amendment dated as of April 12, 1995 between Ryan Properties, Inc.
and Ruffalo, Cody & Associates, Inc.
**10.68 -- Lease Agreement dated as of July 18, 1995 between 2060 Partnership, L.P. and
Telecom*USA Publishing Company.
**10.69 -- Lease Agreement dated April 26, 1995 by and between A.M. Henderson and
Telecom*USA Publishing Company.
**10.70 -- License Agreement dated as of April 19, 1994, between Ameritech Information
Industry Services and Telecom*USA Publishing Company.
**10.71 -- License Agreement dated September 13, 1993 between U S WEST Communications, Inc.
and Telecom*USA Publishing Company.
**10.72 -- Form of McLeod, Inc. Directors Stock Option Plan Option Agreement.
**10.73 -- Forms of McLeod, Inc. 1996 Employee Stock Option Plan Incentive Stock Option
Agreement.
**10.74 -- Forms of McLeod, Inc. 1996 Employee Stock Option Plan Non-Incentive Stock Option
Agreement.
**10.75 -- Option Agreement dated April 27, 1995 between Fronteer Directory Company, Inc.
and Telecom*USA Publishing Company.
**10.76 -- Promissory Note dated May 5, 1995 between Telecom*USA Publishing Company and
Fronteer Directory Company, Inc.
**10.77 -- Security Agreement dated May 5, 1995 between Telecom*USA Publishing Company and
Fronteer Directory Company, Inc.
**10.78 -- Design/Build Construction Contract dated September 17, 1996 by and between Ryan
Construction Company of Minnesota, Inc. and McLeod, Inc.
10.79 -- Guaranty Agreement dated as of October 17, 1996 by McLeod, Inc. in favor of
Kirkwood Community College.
10.80 -- Industrial New Jobs Training Agreement dated as of October 31, 1996 between
Kirkwood Community College and McLeod Telemanagement, Inc.
10.81 -- Industrial New Jobs Training Agreement dated as of October 31, 1996 between
Kirkwood Community College and McLeod Telecommunications, Inc.
10.82 -- Industrial New Jobs Training Agreement dated as of October 31, 1996 between
Kirkwood Community College and McLeod Network Services, Inc.
10.83 -- Industrial New Jobs Training Agreement dated as of October 31, 1996 between
Kirkwood Community College and McLeod, Inc.
10.84 -- Change Order No. 1 to the Construction Services Agreement dated November 22,
1995 by and between MWR Telecom, Inc. and MFS Network Technologies, Inc.
</TABLE>
<PAGE> 30
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- --------------------------------------------------------------------------------
<C> <C> <S>
10.85 -- Change Order No. 2 to the Construction Services Agreement dated August 14, 1996
by and between MWR Telecom, Inc. and MFS Network Technologies, Inc.
10.86 -- Change Order No. 3 to the Construction Services Agreement dated October 31, 1996
by and between MWR Telecom, Inc. and MFS Network Technologies, Inc.
10.87 -- Independent Contractor Sales Agreement dated May , 1995 by and between Sprint
Communications Company L.P. and Ruffalo, Cody & Associates, Inc.
10.88 -- Second Amendment to Asset Purchase Agreement dated October 31, 1996 between
Total Communication Services, Inc. and McLeod Telemanagement, Inc.
10.89 -- Escrow Agreement dated July 15, 1996 among McLeod, Inc., certain shareholders of
Ruffalo, Cody & Associates, Inc., Albert P. Ruffalo and Norwest Bank N.A.
**11.1 -- Statement regarding Computation of Per Share Earnings.
**21.1 -- Subsidiaries of McLeod, Inc.
23.1 -- Consents of McGladrey & Pullen, LLP.
23.2 -- Consent of Hogan & Hartson L.L.P. (included in Exhibit 5.1 to this Registration
Statement on Form S-1).
**24.1 -- Power of Attorney (included on signature page).
**27.1 -- Financial Data Schedule.
**99.1 -- Purchase Agreement dated as of August 15, 1996 between Iowa Land and Building
Company and Ryan Properties, Inc.
**99.2 -- Purchase Agreement dated as of June 28, 1996 between Donald E. Zvacek, Dennis E.
Zvacek and Robert J. Zvacek and Ryan Properties, Inc.
</TABLE>
- ---------------
** Previously filed.
+ Confidential treatment has been granted. The copy filed as an exhibit omits
the information subject to the confidential treatment request.
<PAGE> 1
Exhibit 5.1
November 12, 1996
Board of Directors
McLeod, Inc.
221 Third Avenue SE, Suite 500
Cedar Rapids, IA 52401
Gentlemen:
We are acting as special counsel to McLeod, Inc., a Delaware
corporation (the "Company"), in connection with its registration statement on
Form S-1, as amended (File No. 333-13885) (the "Registration Statement") filed
with the Securities and Exchange Commission relating to the proposed public
offering of up to 7,130,000 shares of the Company's Class A Common Stock, par
value $0.01 per share, 6,616,000 of which shares (the "Company Shares") are to
be sold by the Company (including 930,000 shares subject to an over-allotment
option granted to the Underwriters) and 514,000 of which shares (the "Selling
Stockholder Shares") are to be sold by the Selling Stockholders identified in
the Registration Statement . This opinion letter is furnished to you at your
request to enable you to fulfill the requirements of Item 601(b)(5) of
Regulation S-K, 17 C.F.R. Section 229.601(b)(5), in connection with the
Registration Statement.
For purposes of this opinion letter, we have examined copies
of the following documents:
1. An executed copy of the Registration Statement.
2. The Amended and Restated Certificate of Incorporation
of the Company, as certified by the Secretary of
State of the State of Delaware on November 7, 1996
and as certified by the Secretary of the Company on
the date hereof as then being complete, accurate and
in effect.
3. The Amended and Restated By-laws of the Company, as
certified by the Secretary of the Company on the date
hereof as then being complete, accurate and in
effect.
<PAGE> 2
Board of Directors
McLeod, Inc.
November 12, 1996
Page 2
4. The proposed form of the Underwriting Agreement among
the Company, Salomon Brothers Inc, Bear, Stearns &
Co. Inc. and Morgan Stanley & Co. Incorporated, as
representatives of the Underwriters thereunder, and
certain stockholders of the Company, filed as Exhibit
1.1 to the Registration Statement (the "Underwriting
Agreement").
5. Resolutions of the Board of Directors of the Company
adopted on September 26, 1996, as certified by the
Secretary of the Company on the date hereof as then
being complete, accurate and in effect, relating to
the issuance and sale of the Company Shares and
arrangements in connection therewith.
6. Unanimous Consent to Action by the Shareholder and
Director of McLeod Telecommunications, Inc., the
Company's predecessor ("McLeod Telecommunications"),
dated September 21, 1992, as certified by the
Secretary of the Company on the date hereof as then
being complete, accurate and in effect, relating to
the grant by McLeod Telecommunications to certain of
the Selling Stockholders of stock options to purchase
certain of the Selling Stockholder Shares and
arrangements in connection therewith.
7. Unanimous Consent to Action by the Director of McLeod
Telecommunications dated January 1, 1993, as
certified by the Secretary of the Company on the date
hereof as then being complete, accurate and in
effect, relating to the issuance and sale by McLeod
Telecommunications to certain of the Selling
Stockholders of certain of the Selling Stockholder
Shares and arrangements in connection therewith.
8. Resolutions of the Board of Directors of McLeod
Telecommunications adopted on April 1, 1993, as
certified by the Secretary of the Company on the date
hereof as then being complete, accurate and in
effect, relating to the issuance and sale by McLeod
Telecommunications to one of the Selling Stockholders
of certain of the Selling Stockholder Shares and
arrangements in connection therewith.
<PAGE> 3
Board of Directors
McLeod, Inc.
November 12, 1996
Page 3
9. Resolutions of the Board of Directors of McLeod
Telecommunications adopted on July 19, 1993, as
certified by the Secretary of the Company on the date
hereof as then being complete, accurate and in
effect, relating to the grant by McLeod
Telecommunications to one of the Selling Stockholders
of stock options to purchase certain of the Selling
Stockholder Shares and arrangements in connection
therewith.
10. Resolutions of the Board of Directors of the Company
adopted on January 27, 1994, as certified by the
Secretary of the Company on the date hereof as then
being complete, accurate and in effect, relating to
the grant by the Company to one of the Selling
Stockholders of stock options to purchase certain of
the Selling Stockholder Shares and arrangements in
connection therewith.
11. Unanimous Consent of Shareholders and Directors of
the Company dated February 22, 1994, as certified by
the Secretary of the Company on the date hereof as
then being complete, accurate and in effect, relating
to the issuance and sale by the Company to certain of
the Selling Stockholders of certain of the Selling
Stockholder Shares and arrangements in connection
therewith.
12. Resolutions of the Board of Directors of the Company
adopted on July 12, 1996, as certified by the
Secretary of the Company on the date hereof as then
being complete, accurate and in effect, relating to
the issuance and sale by the Company to certain of
the Selling Stockholders of certain of the Selling
Stockholder Shares and arrangements in connection
therewith.
In our examination of the aforesaid documents, we have assumed
the genuineness of all signatures, the legal capacity of natural persons, the
authenticity, accuracy and completeness of all documents submitted to us, and
the conformity with the original documents of all documents submitted to us as
certified, telecopied, photostatic, or reproduced copies. This opinion letter
is given, and all statements herein are made, in the context of the foregoing.
<PAGE> 4
Board of Directors
McLeod, Inc.
November 12, 1996
Page 4
This opinion letter is based as to matters of law solely on
the General Corporation Law of the State of Delaware. We express no opinion
herein as to any other laws, statutes, regulations, or ordinances.
Based upon, subject to and limited by the foregoing, we are of
the opinion that (a) following (i) final action of the Board of Directors of
the Company (or a duly appointed pricing committee thereof) approving the price
of the Company Shares, (ii) execution and delivery by the Company of the
Underwriting Agreement, (iii) effectiveness of the Registration Statement, (iv)
issuance of the Company Shares pursuant to the terms of the Underwriting
Agreement and (v) receipt by the Company of the consideration for the Company
Shares to be sold by the Company specified in the resolutions of the Board of
Directors (or a duly appointed pricing committee thereof) referred to above,
the Company Shares will be validly issued, fully paid and nonassessable under
the General Corporation Law of the State of Delaware; and (b) assuming that at
the time the Selling Stockholder Shares were issued the Company received the
consideration therefor specified in the consents and the resolutions referred
to in paragraphs 7, 8, 11 and 12 above and that at the time the stock options
to purchase certain of the Selling Stockholder Shares are exercised the Company
receives the consideration therefor specified in the consents and the
resolutions referred to in paragraphs 6, 9 and 10 above, the Selling
Stockholder Shares are or will be validly issued, fully paid and nonassessable
under the General Corporation Law of the State of Delaware.
We assume no obligation to advise you of any changes in the
foregoing subsequent to the delivery of this opinion letter. This opinion
letter has been prepared solely for your use in connection with the filing of
the Registration Statement on the date of this opinion letter and should not be
quoted in whole or in part or otherwise be referred to, nor filed with or
furnished to any governmental agency or other person or entity, without the
prior written consent of this firm.
<PAGE> 5
Board of Directors
McLeod, Inc.
November 12, 1996
Page 5
We hereby consent to the filing of this opinion letter as
Exhibit 5.1 to the Registration Statement and to the reference to this firm
under the caption "Legal Matters" in the prospectus constituting a part of the
Registration Statement. In giving this consent, we do not thereby admit that
we are an "expert" within the meaning of the Securities Act of 1933, as
amended.
Very truly yours,
/s/ HOGAN & HARTSON L.L.P.
HOGAN & HARTSON L.L.P.
<PAGE> 1
EXHIBIT 10.79
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT made and entered into as of October
17, 1996, (the "Guaranty"), by MCLEOD, INC ("the Guarantor"), a corporation
duly organized and existing under the laws of the State of Delaware, with
authority to do business in the State of Iowa, in favor of KIRKWOOD COMMUNITY
COLLEGE, ("Kirkwood");
WITNESSETH:
WHEREAS, Kirkwood Community College, Cedar Rapids, Iowa, a
school corporation organized and existing under the Constitution and laws of
the State of Iowa, has entered into or will enter into Industrial New Jobs
Training Agreements to provide education and training to workers in new jobs at
the Iowa facilities of McLeod Telecommunications, Inc., McLeod Telemanagement,
Inc. and McLeod Network Services, Inc. (individually and collectively the
"Employer") pursuant to Industrial New Jobs Training Agreements dated as of
October 17, 1996, (individually and collectively the "Agreements") between
Kirkwood and the respective Employers; and
WHEREAS, Guarantor, as owner of part or all of the issued and
outstanding shares of each Employer is desirous that Kirkwood provide training
to the employees in the new jobs and is willing to enter into this Guaranty in
order to further secure the training, and the payments, covenants, agreements
and conditions of the Employers under the Agreements.
NOW, THEREFORE, in consideration of Kirkwood entering into the
Agreements and providing training as therein provided and as an inducement to
Kirkwood to enter into the Agreements and provide, pursuant to the Agreements,
education and training to workers in new jobs with the respective Employers,
Guarantor does hereby, subject to the terms hereof, covenant and agree with
Kirkwood as follows:
<PAGE> 2
ARTICLE I
REPRESENTATIONS AND WARRANTIES OF GUARANTOR
Guarantor hereby represents and warrants that:
(a) It is a corporation duly organized and in good standing
under the laws of the State of Delaware with authority to do business in the
State of Iowa;
(b) It is not in violation of any provision of its Articles
of Incorporation, as amended, or its Bylaws;
(c) It is not in violation of any law, in any manner
affecting the validity or enforceability of this Guaranty or its financial
ability to perform hereunder;
(d) It has power to enter into this Guaranty, has duly
authorized the execution and delivery of this Guaranty by proper corporate
action and neither this Guaranty nor the agreements herein contained or the
transactions contemplated hereby contravene or constitute a default under any
agreement, instrument or indenture or any provision of its Articles of
Incorporation, as amended, its Bylaws or any other agreement or requirement of
law;
(e) the assumption of the obligations hereunder will result
in a benefit to the Guarantor; and
(f) It has received a copy of the Agreements which the
respective Employers have executed or will (with or without modification)
execute.
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<PAGE> 3
ARTICLE II
COVENANTS AND AGREEMENTS
Section 2.1. Unconditional Guaranty. Guarantor hereby
unconditionally and irrevocably, except upon the mutual agreement of the
Guarantor and Kirkwood and compliance with the requirement of Section 3.2
hereof, guarantees to Kirkwood the prompt and complete performance of all
payments, covenants, agreements and conditions required to be performed by the
respective Employers under the provisions of the Agreements as and when said
payments, covenants, agreements and conditions are therein required to be
performed.
Section 2.2. Notice to Guarantor to Perform Under Guaranty.
If the Revenue Fund, as defined in the Agreements, should at any time fail to
be sufficient to enable Kirkwood to make any of the payments required under the
Agreements and the Resolution as and when said payments become due and payable,
or upon the occurrence of an event of default under the Agreements, the
Guarantor hereby unconditionally covenants that it shall pay to Kirkwood such
sums as the respective Employer is obligated to pay under the Agreements within
the time for making such payments as set forth in a written notice sent to
Guarantor or in the absence of such date specified in the notice within twenty
(20) days of the date of the notice.
Section 2.3. Guaranty to Remain in Force Until Full Payment.
The obligations of Guarantor under this Guaranty shall be absolute,
unconditional and irrevocable and shall remain in full force and effect so long
as the respective Agreements shall be in effect. It being the purpose and
intent of this paragraph that the obligation of Guarantor shall be absolute,
unconditional and irrevocable to the extent herein specified and shall not be
discharged, impaired or varied except upon the payment to Kirkwood from
revenues of the Project, the Employer or the Guarantor all sums necessary to
pay in full the obligations of the respective Employer under the Agreements.
Without limiting any of the other terms or provisions hereof, it is understood
hereunder, there shall be no obligation on the part of Kirkwood to resort in
any manner or form to any other source for payment to Kirkwood or to any other
person, firm or corporation, their properties or estates.
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<PAGE> 4
Section 2.4. Guaranty to Remain in Force Notwithstanding
Happening of Events. The obligation of the Guarantor under this Guaranty shall
not be affected, modified, impaired, or released upon the happening from time
to time of any event, including without limitation, any of the following,
whether or not with notice to, or the consent of Guarantor:
(a) any amendment of the Agreements;
(b) any failure to give notice to Guarantor of the
occurrence of an Event of Default under the Agreements;
(c) the unavailability in whole or in part, for any reason,
of the funds contemplated by Section 2.2 or Article VII of the Agreements;
(d) the waiver of any payment, covenant, agreement or
condition required to be performed by Kirkwood under the Agreements; or
(e) any failure, omission, delay or lack on the part of
Kirkwood to enforce, assert or exercise any right, power or remedy conferred on
Kirkwood by the Agreements or the Resolution.
Section 2.5. Right to Proceed Against Guarantor. In the
event of a default in any payment under the terms of the Agreements when and as
the same shall become due, Kirkwood may proceed hereunder and Kirkwood, in its
sole discretion, shall have the right to proceed first and directly against
Guarantor under this Guaranty without proceeding against or exhausting any
other remedies which it may have and without resorting to any other security
held by Kirkwood.
Section 2.6. Maintenance of Corporate Existence; Merger or
Sale of Assets. During the existence of this Guaranty, Guarantor agrees that it
will maintain its corporate existence and will not dispose of all or
substantially all of its assets nor consolidate with nor merge into another
corporation unless any such corporation with which Guarantor shall consolidate
or into which Guarantor shall merge shall be a corporation organized and
existing
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<PAGE> 5
under the laws of one of the states of the United States of America; shall have
a net worth (computed in accordance with generally accepted accounting
principles) immediately subsequent to such acquisition, consolidation or merger
at least equal to that of Guarantor immediately prior to such acquisition,
consolidation or merger; and shall assume in writing all of the obligations of
Guarantor hereunder.
Section 2.7. Consent to Jurisdiction and Venue. Guarantor
irrevocably, so long as this Guaranty is in force, (a) agrees that any suit,
action or other legal proceeding arising out of this Guaranty may be brought in
any district court of the State of Iowa or the courts of the United States
located in the State of Iowa, (b) consents to the personal jurisdiction of each
such court in any such suit, action or proceeding, and (c) waives any objection
as to venue of any suit, action or proceeding in any of such courts.
ARTICLE III
MISCELLANEOUS
Section 3.1. Obligations Absolute and Unconditional. The
obligations of Guarantor hereunder shall arise absolutely, unconditionally and
irrevocably, upon acceptance hereof by Kirkwood without regard to whether the
Guarantor has received notice of the execution of the Agreements by the
Employer or Kirkwood, or notice of acceptance, by Kirkwood, of this Guaranty.
Section 3.2. Nonexclusive Remedy; Notice; Waiver; Amendment.
No remedy herein conferred upon or reserved to Kirkwood is intended to be
exclusive of any other available remedy or remedies, but each and every such
remedy shall be cumulative and shall be in addition to every other remedy given
under this Guaranty or now or hereafter existing at law or in equity. No delay
or omission to exercise any right or power accruing upon any default, omission
or failure of performance hereunder shall impair any such right or power or
shall be construed to be a waiver thereof. No waiver, amendment, release or
modification of this Guaranty shall be established by conduct, custom or course
of dealing, but solely by an instrument in writing duly executed by Kirkwood.
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<PAGE> 6
Section 3.3. Annual Audit and Financial Statements. The
Guarantor will keep proper books of record and account in accordance with
generally accepted principles of accounting and will furnish to Kirkwood upon
request copies of all quarterly and other interim financial statements as the
Guarantor shall furnish to its stockholders.
Section 3.4. Severability. The invalidity or
unenforceability of any one or more phrases, sentences, clauses or Sections in
this Guaranty shall not affect the validity or enforceability of the remaining
portions of this Guaranty, or any part thereof.
Section 3.5. Release. Upon completion of all obligations of
the respective Employer under the Agreements, this Guaranty shall by its terms
terminate and, upon request by Guarantor, Kirkwood shall release Guarantor from
the provisions of this Guaranty in writing.
Section 3.6. Binding Upon Successors, Heirs and Assigns.
This Guaranty shall inure to the benefit of the successors or assigns of
Kirkwood and shall be binding on the successors, assigns, and legal
representatives of the Guarantor.
Section 3.7. Applicable Law. This Guaranty shall be
governed by and construed in accordance with the laws of the State of Iowa.
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be
executed as of the date first above written.
MCLEOD, INC.
By /s/ STEPHEN C. GRAY
--------------------------------------------
Stephen C. Gray
President and Chief Operating Officer
ATTEST:
/s/ CASEY D. MAHON
- --------------------------
Casey D. Mahon
Secretary
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<PAGE> 1
EXHIBIT 10.80
- --------------------------------------------------------------------------------
INDUSTRIAL NEW JOBS
TRAINING AGREEMENT
between
KIRKWOOD COMMUNITY COLLEGE
Cedar Rapids, Iowa ("Kirkwood")
and
MCLEOD TELEMANAGEMENT, INC.
("Employer")
Dated as of October 31, 1996
- --------------------------------------------------------------------------------
Relating to
$2,295,000
Kirkwood Community College,
Cedar Rapids, Iowa
Industrial New Jobs Training Certificates
(McLeod Telemanagement, Inc. Project)
<PAGE> 2
INDUSTRIAL NEW JOBS
TRAINING AGREEMENT
This Industrial New Jobs Training Agreement (the "Agreement")
made and entered into as of October 31, 1996, between KIRKWOOD COMMUNITY
COLLEGE, (Merged Area X), Cedar Rapids, Iowa, ("Kirkwood") and MCLEOD
TELEMANAGEMENT, INC., ("Employer"), under the following circumstances:
A. Pursuant to the Iowa Industrial New Jobs Training
Act, Iowa Code Chapter 260E, Kirkwood and Employer have determined to enter
into this Agreement for purposes of establishing a Project to educate and train
certain persons employed by Employer in new jobs within the Merged Area.
B. Kirkwood and Employer each have full right and lawful
authority to enter into this Agreement and to perform and observe the
provisions hereof on their respective parts to be performed and observed.
NOW, THEREFORE, in consideration of the premises and the
mutual representations and agreements hereinafter contained, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. "Act" means the Iowa Industrial New Jobs
Training Act, Iowa Code Chapter 260E, as it may be amended from time to time,
and the regulations issued thereunder by the Iowa Department of Economic
Development as the regulations may be amended from time to time.
Section 1.2. "Certificates" means Kirkwood Community
College Industrial New Jobs Training Certificates authorized to be issued
pursuant to the Resolution for purposes of funding the Program Costs.
Section 1.3. "Debt Service" shall mean the payment of
the principal and premium, if any, and interest on the Certificates in
accordance with the Resolution and the terms of the Certificates.
Section 1.4. "Incremental Property Taxes" means
incremental property taxes, as defined in Section 260E.4 of the Act, to be
received or derived from Employer's Taxable Business Property where new jobs
are created as a result of the Project.
Section 1.5. "New Jobs Withholding Credits" means the
new jobs credit from withholding, as defined in Section 260E.5 of the Act, paid
to Kirkwood by Employer.
Section 1.6. "Person" shall include, but not be
limited to, individual, corporate, government or governmental subdivision or
agency, business trust, estate, trust, partnership or association, or any other
legal entity.
Section 1.7. "Program Costs" means all necessary and
incidental costs of providing Program Services for the Project including the
Debt Service and the deferred costs of Certificate issuance. Attached hereto as
Exhibit "B" and incorporated herein by this reference is a tentative budget
relating to the Project.
<PAGE> 3
Section 1.8. "Program Services" for the Project are as
tentatively set forth on Exhibits "B" and "C" attached hereto and incorporated
herein by this reference. Exhibit "C" sets forth the number of new jobs to be
trained, the expected beginning and ending date of the training to be provided,
the length of time each new job category will be provided training, the
estimated costs, the training that will be provided and the expected date by
which the number of new jobs will be filled.
Section 1.9. "Project" shall consist of this training
arrangement to provide Program Services pursuant to this Agreement with respect
to Employer's employees to be employed by Employer in new jobs at the Project
Site in Cedar Rapids, Linn County, Iowa.
Section 1.10. "Project Fund" means a special fund of
Kirkwood into which a portion of the proceeds from the issuance and sale of the
Certificates shall be deposited and which shall be used to pay Program Costs
and for no other purpose.
Section 1.11. "Project Site" means the real estate
(including improvements constructed or to be constructed thereon) described in
Exhibit "A", attached hereto and incorporated herein by reference, where
Employer's facility, where new jobs will be created, is located.
Section 1.12. "Reserve" means a portion of the proceeds
from the issuance and sale of Certificates to be used from time to time to
satisfy Debt Service when due.
Section 1.13. "Resolution" means the Resolution or
Resolutions authorizing the issuance of Industrial New Jobs Training
Certificates adopted by Kirkwood in connection with the Project.
Section 1.14. "Revenue Fund" means the special tax fund
created in the Resolution in order to pay the principal of and interest on
Certificates issued in connection with the Project.
Section 1.15. "Taxable Business Property" means the
Project Site.
Section 1.16. "Training" means the Program Services
exclusive of administrative fees for the new jobs training program, Kirkwood's
legal, underwriting and financial fees, allowable discount, other costs
associated with the Certificates, and the Reserve.
Other terms used in this Agreement shall have the meanings set
out in the Act.
ARTICLE II
PROJECT; PROGRAM SERVICES
Section 2.1. Kirkwood agrees to provide the Program
Services to the extent of funds available for that purpose in the Project Fund.
It is understood and agreed that Employer and Kirkwood will cooperate in the
coordination and programming of the specific expenditures and operation of the
Project within the guidelines set out in this Agreement and Exhibits "B" and
"C". Kirkwood may, in its discretion, subcontract with other entities or
persons to provide all or part of the Training. It is understood and agreed
that the Training set forth on Exhibit "C" is tentative and is subject to
change, within the budget for the Project, upon the mutual agreement of
Kirkwood, acting through its appropriate officials, and Employer.
Section 2.2. Kirkwood and Employer agree that all
necessary and incidental costs, including but not limited to Program Costs and
Debt Service and related costs may be paid from one or a
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<PAGE> 4
combination of the following sources: (a) New Jobs Withholding Credits, (b)
Incremental Property Taxes, and (c) tuition, student fees, or special charges
fixed by the Board of Directors of Kirkwood to defray Program Costs in whole or
in part. New Jobs Withholding Credits and Incremental Property Taxes shall be
placed in the Revenue Fund established in the Resolution and used exclusively
for purposes of the Project. Tuition, student fees or special charges, if any,
shall be placed in the Project Fund and used exclusively for purposes of the
Project. Kirkwood and Employer agree that Employer's Taxable Business Property
includes its current and future interest in the Project Site. Employer
acknowledges that it is not relying on any representations of Kirkwood, its
agents or attorneys, that the foregoing, in fact or law, constitutes Employer's
Taxable Business Property under the Act.
Section 2.3. Kirkwood and Employer agree that the
receipts from the New Jobs Withholding Credits and the Incremental Property
Taxes, and the Revenue Fund into which the same are paid may be irrevocably
pledged by Kirkwood for the payment of the Debt Service. Attached hereto as
Exhibit "D" is a tentative payment schedule for the Certificates. Following
issuance and sale of the Certificates a final payment schedule, if different
from Exhibit D, shall be prepared using the actual rates of interest and
maturities for the Certificates. Such final payment schedule, if prepared,
shall become a part of this Agreement, as Exhibit D, without further action by
Employer or Kirkwood and shall supersede the Exhibit D attached hereto. A copy
of such final payment schedule shall be provided to Employer.
Section 2.4. The term of this Agreement shall not
exceed ten (10) years and shall coincide with the period of time over which the
Certificates mature and the Program Costs are deferred; provided, that this
Agreement shall not terminate and the obligations, representations, warranties,
covenants and agreements of Employer hereunder shall continue until the
Certificates, if any, issued in connection with the Project shall have been
paid in full.
Section 2.5. Kirkwood may revise or expand the
Training from time to time with the consent of Employer; provided that no
revision shall be made which would change the Project to purposes other than
purposes permitted by the Act.
Section 2.6. The Certificates will be issued pursuant
to the Resolution adopted by the Board of Directors of Kirkwood in the
aggregate principal amount, bearing interest (at a rate to be determined at the
time the Certificates are authorized to be issued), maturing, and being
redeemable as set forth in the Resolution.
The proceeds from the sale of the Certificates shall be paid
to Kirkwood and deposited in the Project Fund or other fund established by
Kirkwood. The Project Fund shall be used only for purposes of the Project.
Pending disbursements for Program Services and Program Costs, the proceeds so
deposited in the Project Fund, together with any investment earnings thereon,
shall be subject to a lien in favor of the holders of the Certificates as
provided in the Resolution authorizing the Certificates.
Section 2.7. In the event Certificates are not issued
or sold by Kirkwood, Employer agrees to pay to Kirkwood a sum equal to the
necessary and incidental costs actually incurred by Kirkwood which would have
been paid from the proceeds of the Certificates, or the funds available from
the sources described in Sections 2.2 and 3.4 of this Agreement if the
Certificates had been issued by Kirkwood.
Section 2.8. Investment earnings from any source on
moneys deposited in the Project Fund, Revenue Fund or any other fund shall be
regarded as revenues of the Project and be used for payment of the Debt Service
or such other uses authorized by the Resolution.
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<PAGE> 5
Section 2.9. Employer certifies that the number of
jobs, including formerly existing jobs, on its payroll in Iowa is two hundred
forty-seven (247) as of August 10, 1995. Employer further certifies that the
number of jobs, including formerly existing jobs, on its payroll with respect
to the Project is two hundred forty-seven (247) as of the date set forth in the
preceding sentence.
Section 2.10. The administrative fee of Kirkwood and
the state administrative fee shall be the administrative fee of Kirkwood and
the state administrative fee, respectively, determined as of the date or dates
of issuance of the Certificates. In addition, the necessary Reserve shall be
determined as of the date or dates of issuance of the Certificates. The amount
of money to be provided for Training shall be adjusted to reflect changes in
the foregoing fees and necessary Reserve.
ARTICLE III
PAYMENTS; SECURITY
Section 3.1. Employer agrees to timely pay or cause to
be paid the property taxes on the Taxable Business Property and agrees to
timely pay the New Jobs Withholding Credits to Kirkwood.
Section 3.2. Kirkwood agrees that the Revenue Fund
shall be pledged for the payment of the Debt Service.
Section 3.3 To secure the obligations of Employer
under this Agreement, Employer shall provide Kirkwood with a Financial
Guarantee Bond (the "Bond") in form and from a surety acceptable to Kirkwood.
The Bond must be renewed annually with the form and surety acceptable to
Kirkwood. The Bond shall secure Employer's performance under this Agreement in
an amount equal to the amount of New Jobs Withholding Credits that are
necessary to pay the remaining Debt Service. Kirkwood will cooperate with
Employer to establish such amount on an annual basis. Employer shall provide
Kirkwood with evidence of the renewed Bond at least sixty (60) days prior to
the expiration of each Bond. Failure by Employer to maintain a Bond or to
provide evidence of the renewed Bond at least sixty (60) days prior to the
expiration of each Bond shall be an event of default under this Agreement.
Upon occurrence of any event of default under this Agreement Kirkwood may
exercise all rights under this Agreement and the Bond.
Kirkwood agrees to provide notice to the surety on the Bond,
as renewed, of the occurrence of an event of default under this Agreement.
Kirkwood further agrees to notify Employer of a claim made against the Bond.
Such notice shall be addressed as provided in Section 6.4 with a copy to the
attention of Employer's Legal Department or President.
The Bond and each renewal shall be in lieu of the rights
Kirkwood may have to assert a lien against the property of Employer as provided
in the Act and Iowa law.
Nothing contained herein shall abrogate the collection of, or
any lien for, unpaid property taxes which have attached to real estate pursuant
to Iowa Code chapter 445, including taxes levied against tangible property that
is assessed and taxed as real property pursuant to Iowa Code chapter 427A, or
the collection of, or any lien for, unpaid taxes for which notice of lien has
been property recorded or filed pursuant to Iowa Code section 422.26.
Section 3.4. This Agreement is entered into upon the
expectation that, as set forth in Exhibit "D", sufficient funds from
Incremental Property Taxes and New Jobs Withholding Credits will be generated
to pay the Debt Service. Employer and Kirkwood have designed the Project to
fit within the
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<PAGE> 6
funds expected to be available from the sources of payment set forth in Section
2.2. Exhibit "D" sets forth the minimum annual amount of Incremental Property
Taxes, New Jobs Withholding Credits or tuition and fee payments to be paid for
Program Costs. Employer's projections of gross wages to be paid to employees
in new jobs covered by this Agreement, the estimated assessed value of Project
Site improvements are set forth in Exhibit "E" attached hereto and incorporated
herein.
Section 3.5. If for any reason the funds in the
Project Fund or the Revenue Fund are not sufficient to satisfy the Program
Costs, other than costs of Training, Employer, upon written notice that the
funds in the Project Fund or the Revenue Fund are not sufficient, will,
nonetheless, advance to Kirkwood such amounts as may, from time to time, be
required to satisfy the Program Costs. If Employer should advance any amount
under this Section, it shall not be entitled to any abatement, diminution or
postponement of other payments required; provided, however, to the extent
permitted by law, Employer will be entitled to payment of amounts advanced,
without interest, from the Project Fund or the Revenue Fund when Kirkwood
determines that a surplus exists and that such surplus is not needed to satisfy
other Program Costs and the Debt Service has been paid in full. Any such
advancements received or to be received from Employer under this Section shall
not be pledged to payment of the Certificates under the Resolution. The notice
required hereunder shall specify the date by which Employer is to make the
necessary advance; provided, however, in the absence of such date specified in
the notice, the advance shall be due within fifteen (15) days of the date of
the notice. The obligation of Employer hereunder shall be primary and Kirkwood
may proceed against Employer without proceeding against or exhausting any other
remedies which it may have and without resorting to any other security held by
Kirkwood.
ARTICLE IV
COVENANTS, REPRESENTATIONS AND WARRANTIES
Section 4.1. Representations of Kirkwood. Kirkwood
represents that: (a) it is duly organized and validly existing under the laws
of the State of Iowa; (b) it is not in violation of or in conflict with any
provisions of the laws of the State which would impair its ability to carry out
its obligations hereunder; (c) it is empowered to enter into the transactions
contemplated by this Agreement; and (d) it will do all things in its power
required of it in order to maintain its existence or assure the assumption of
its obligations hereunder by any successor public body.
Section 4.2. Representations, Warranties and Covenants
of Employer. Employer represents, warrants and covenants that:
(a) It is a corporation organized under the
laws of the State of Iowa and is authorized to do business in
the State of Iowa.
(b) It has full power and authority to
execute, deliver and perform this Agreement and all other
instruments given by Employer to secure its performance and to
enter into and carry out the transactions contemplated herein.
Such execution, delivery and performance are not in
contravention of law or Employer's articles of incorporation,
bylaws or any indenture, agreement, mortgage, lease,
undertaking or any other restriction, obligation or instrument
to which Employer is a party or by which it is bound. This
Agreement has by proper action been duly authorized, executed
and delivered by Employer and all steps necessary have been
taken to constitute this Agreement a valid and binding
obligation of Employer.
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<PAGE> 7
(c) There is no litigation or proceeding
pending, or to the knowledge of Employer threatened, against
Employer or any other person affecting in any manner
whatsoever the right of Employer to execute the Agreement or
to otherwise comply with its obligations contained in the
Agreement.
(d) The employees to be trained under this
Agreement have not commenced work for Employer prior to the
date set forth in Section 2.9, and those employees will be
employed in new jobs in connection with the expansion of
Employer's business operations in the merged area. Each of
the employees to be trained under the Agreement will be
employed directly by Employer.
(e) Employer is an industry, as that term is
defined in the Act, and is engaged in providing services
(other than retail, health or professional services) in
interstate commerce.
(f) Each of the jobs covered by this
Agreement is a "new job" as that term is defined in the Act.
(g) Employer has an interest in the Project
Site.
(h) Employer knowingly assumes the obligation
under Section 3.5 hereof in the event the sources of payment
described in Section 2.2 are not sufficient to satisfy the
Program Costs in full.
(i) This Agreement is entered into upon the
expectation that there will not be any revenues from
Incremental Property Taxes and that references herein to
Incremental Property Taxes and Taxable Business Property are
merely for the convenience of the parties and such references
do not imply that revenues from Incremental Property Taxes are
anticipated or that Kirkwood need take any action with regard
to Incremental Property Taxes.
(j) Employer's projections of the annual
gross wages to be paid by Employer to employees in the new
jobs covered by this Agreement are truly and accurately
depicted on Exhibit "E".
(k) The Project Site and Employer's
operations at the Project Site will be in compliance with all
applicable federal, state and local environmental statutes,
laws and regulations. Employer will not conduct its
operations at the Project Site, or elsewhere, in such a manner
as to allow any federal, state or governmental liens or
encumbrances, to enforce the payment or contribution for
environmental damage, injury or cleanup, to be placed on the
Project Site.
ARTICLE V
EVENTS OF DEFAULT
Section 5.1. Events of Default. Each of the following
shall be an "event of default":
(a) Employer shall fail to pay, advance or
deposit any amount required to be made by Employer on or prior
to the date on which such payment, advancement or deposit is
due and payable and continuing for more than five (5) business
days thereafter.
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<PAGE> 8
(b) Employer shall fail to observe and
perform any other agreement, representation, term or condition
contained in this Agreement, if such failure continues for a
period of twenty (20) days after notice of such failure is
given to Employer by Kirkwood, or for such longer period as
Kirkwood may agree to in writing; provided, that if the
failure is other than the payment of money and is of such
nature that it cannot be corrected within the applicable
period, such failure shall not constitute an event of default
so long as Employer institutes curative action within the
applicable period and diligently pursues such action to
completion.
(c) Employer shall: (i) admit in writing its
inability to pay its debts generally as they become due; (ii)
have an order for relief entered in any case commenced by or
against it under the federal bankruptcy laws, as now or
hereafter in effect; (iii) commence a proceeding under any
other federal or state bankruptcy, insolvency, reorganization
or other similar law, or have such a proceeding commenced
against it and either have an order of insolvency or
reorganization entered against it or have the proceeding
remain undismissed and unstayed for ninety (90) days; (iv)
make an assignment for the benefit of creditors; or (v) have a
receiver or trustee appointed for it or for the whole or any
substantial part of its property.
(d) Employer shall (i) close or announce that
it is closing its operations at the Project Site (unless such
operations will be transferred to another facility in the
State of Iowa and as a result Kirkwood will be entitled to
receive the revenue from the sources set forth in Section 2.2
or receives assurance satisfactory to Kirkwood of the receipt
by Kirkwood of payments to satisfy the Debt Service on the
Certificates); or (ii) have failed to make improvements to the
Project Site within the time set forth on Exhibit "E" and for
that reason the Project has not or will not generate
sufficient Incremental Property Taxes to enable Kirkwood to
satisfy the Debt Service from the sources set forth in Section
2.2.
(e) Kirkwood determines from time to time
that, for any reason, sufficient realized or projected
revenue from Incremental Property Taxes and/or New Jobs
Withholding Credits will not be generated by the Project to
enable Kirkwood to satisfy the Debt Service from the sources
set forth in Section 2.2.
(f) Any representation or warranty made by
Employer herein or any statement in any report, certificate,
financial statement or other instrument furnished in
connection with this Agreement or with the sale of the
Certificates shall at any time prove to have been false or
misleading in any material respect when made or given.
(g) Employer acts in a manner contrary to any
provision of this Agreement or fails to act in a manner
required by any provision of this Agreement and Kirkwood
determines as a result of such act or failure to act that
there are not or will not be sufficient funds generated by the
Project to enable Kirkwood to satisfy the Debt Service from
the sources set forth in Section 2.2.
The exercise of remedies upon the occurrence of any event of
default under subsection (c) above shall be subject to any applicable
limitations of federal bankruptcy law affecting or precluding such exercise
during the pendency of or immediately following any bankruptcy, liquidation or
reorganization.
Section 5.2. Whenever an event of default shall have
happened and be subsisting, Kirkwood may, without notice to Employer, withhold
Training and suspend payments to Employer, and apply all or a part of any
remaining funds budgeted for Training to the satisfaction of the Debt Service
on the Certificates. In addition, Kirkwood may take whatever other action at
law or in equity may appear
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<PAGE> 9
necessary or desirable to collect the payments and other amounts then due and
thereafter to become due, or to enforce performance and observance of any other
obligation or agreement of Employer under this Agreement. Notwithstanding the
foregoing, Kirkwood shall not be obligated to take any step which in its
opinion will or might cause it to expend time or money or otherwise incur
liability unless and until a satisfactory indemnity bond has been furnished to
Kirkwood at no cost or expense to Kirkwood. Any amounts collected as payments
or applicable to payments and any other amounts which would be applicable to
payment of principal of and premium, if any, and interest on the Certificates
collected pursuant to action taken under this Section shall be paid by Kirkwood
to the holders of the Certificates.
Section 5.3. Immediately upon the occurrence of an
event of default, there shall be due from Employer to Kirkwood such amount as
will enable Kirkwood to presently satisfy the remaining Debt Service on the
Certificates. Such amount shall be equal to the total amount of the standby
tax levied or required to be levied under Section 260E.6 of the Act to satisfy
the remaining Debt Service on the Certificates determined from Exhibit D
prepared in accordance with Section 2.3. No demand or notice of the amount due
immediately upon the occurrence of an event of default is or shall be required
to fix the liability of Employer or the amount due from Employer. The amount
due hereunder from Employer shall be a debt of Employer to Kirkwood and
Kirkwood may set off against the amount due from Employer any debt or debts of
Kirkwood to Employer. Amounts received by Kirkwood hereunder shall not be
pledged to repayment of the Certificates.
Section 5.4. No remedy conferred upon or reserved to
Kirkwood by this Agreement is intended to be exclusive of any other available
remedy or remedies, but each and every such remedy shall be cumulative and
shall be in addition to every other remedy now or hereafter existing at law, in
equity or by statute. No delay or omission to exercise any right or power
accruing upon any default shall impair any such right or power or shall be
construed to be a waiver thereof, but any such right and power may be exercised
from time to time and as often as may be deemed expedient. In order to entitle
Kirkwood to exercise any remedy reserved to it in this Article, it shall not be
necessary to give any notice, other than such notice as may be expressly
required herein, nor shall it be necessary to make any declaration of an event
of default other than such declaration as may be expressly required herein.
Kirkwood will not perfect the lien provided by Iowa law in accordance with the
terms of Section 3.3.
Section 5.5. In the event any agreement contained in
this Agreement should be breached by either party and thereafter waived by the
other party, such waiver shall be limited to the particular breach so waived
and shall not be deemed to be a waiver of any other breach hereunder.
ARTICLE VI
MISCELLANEOUS
Section 6.1. This Agreement may be executed in any
number of counterparts, each of which shall be regarded as an original and all
of which shall constitute but one and the same instrument.
Section 6.2. If any provision of this Agreement, or
any covenant, stipulation, obligation, agreement, act or action, or part
thereof made, assumed, entered into or taken thereunder or any application
thereof, is for any reason held to be illegal or invalid, such illegality or
invalidity shall not affect any other provision or any other covenant,
stipulation, obligation, agreement, act or action or part thereof, made,
assumed, entered into, or taken, each of which shall be construed and enforced
as if such illegal or invalid portion were not contained herein. Nor shall
such illegality or invalidity of any application thereof affect any legal and
valid application thereof, and each such provision,
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<PAGE> 10
covenant, stipulation, obligation, agreement, act or action, or part shall be
deemed to be effective, operative, made, entered into or taken in the manner
and to the full extent permitted by law.
Section 6.3. This Agreement shall be governed
exclusively by and construed in accordance with the laws of the State of Iowa.
With the exception of the lien provisions of Iowa law as modified by Section
3.3, the applicable provisions of Iowa law, including the Act, are a part of
this Agreement as if set forth herein.
Section 6.4. All notices, requests or other
communications hereunder shall be in writing and shall be deemed to be
sufficiently given when mailed by registered or certified mail, postage
prepaid, addressed to the appropriate Notice Address as follows:
Financial Manager
Financial Services
Kirkwood Community College
P.O. Box 2068
6301 Kirkwood Boulevard, S.W.
Cedar Rapids, Iowa 52406
Tami Young
McLeod Telemanagement, Inc.
221 Third Avenue S.E., Suite 500
Cedar Rapids, IA 52401
Employer and Kirkwood may, by notice given hereunder,
designate any further or different addresses or persons to which subsequent
notices, requests or other communications shall be sent.
Revisions in the Training set forth on Exhibit "C" and an
increase in the number of new jobs covered by this Agreement shall be approved
in writing by the above representatives of Kirkwood and Employer, their
respective successors or such other individuals as either party designates in
the manner set forth herein, provided, however, consent of Employer shall not
be required for a reduction in Training following an event of default.
Section 6.5. All covenants, stipulations, obligations
and agreements of Kirkwood and Employer contained in this Agreement shall be
effective to the extent authorized and permitted by applicable law. No such
covenant, stipulation, obligation or agreement shall be deemed to be a
covenant, stipulation, obligation or agreement of any present or future member,
officer, agent or employee of Kirkwood or the Board of Directors of Kirkwood
other than in their official capacity, and neither the members of the Board of
Directors of Kirkwood nor any official, agent or employee of Kirkwood shall be
liable personally on the Certificates or the covenants, stipulations,
obligations or agreements of Kirkwood contained in this Agreement.
Section 6.6. This Agreement shall inure to the benefit
of and shall be binding in accordance with its terms upon Kirkwood, Employer
and their respective permitted successors and assigns provided that this
Agreement may not be assigned by Employer without the written consent of
Kirkwood and may not be assigned by Kirkwood without the consent of Employer
except as may be necessary to enforce or secure payment of the Debt Service.
Section 6.7. Employer covenants and agrees that it
will not sell, lease, sublease, mortgage or in any manner dispose of its
interest in the facilities described herein or any capital part thereof so as
to remove the same from the tax rolls until satisfaction and discharge of the
Certificates unless
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<PAGE> 11
Employer provides Kirkwood with assurance, in a form acceptable to and approved
by Kirkwood, of future payments necessary to meet the Debt Service on the
Certificates. Employer further covenants and agrees to keep the facilities
continuously insured against loss or damage by fire, lightening, such other
perils as are covered by standard "extended coverage" endorsements, vandalism
and malicious mischief and containing customary loss deductible provisions.
Section 6.8. Kirkwood agrees to use its best efforts
to sell and issue the Certificates, and Employer will cooperate with Kirkwood
to provide necessary financial information in connection with the sale of the
Certificates. It is understood and agreed that should the Certificates not be
marketed or marketable within a reasonable time that this Agreement may be
terminated and the Project terminated, provided, however, the obligation of
Employer under Section 2.7 hereof shall continue following any such
termination.
Section 6.9. Employer covenants that it shall take
such action or shall refrain from taking any action as shall be necessary under
the Internal Revenue Code of 1986, Sections 103, 141-150 and the rulings and
regulations thereunder to maintain any exemption from Federal income taxes of
the interest on the Certificates.
Section 6.10. Disbursements to Employer for Program
Services under this Agreement shall be made only upon approval of vouchers
therefor by the Board of Directors of Kirkwood. Employer agrees that it will
request disbursements only for approved Program Services. Employer agrees that
it will not request disbursements that are prohibited by Sections 6.11, 6.12
and 6.13 hereof. Amounts disbursed to Employer shall be conditional and
subject to subsequent verification and audit of the Project. Requests by
Employer for disbursements, including those requests received by Kirkwood,
shall not constitute a debt of Kirkwood to Employer.
Section 6.11. No monies disbursed from the proceeds of
the Certificates will be used directly or indirectly to finance land,
facilities or depreciable property (or an interest therein) of Employer or
other private Person.
Section 6.12. No monies disbursed from the proceeds of
the Certificates will be used directly or indirectly for the acquisition of any
property (or an interest therein) unless the first use of such property is
pursuant to such acquisition and such property is owned by Kirkwood.
Section 6.13. No monies disbursed from the proceeds of
the Certificates will be used directly or indirectly to provide any airplane,
skybox or other private luxury box, health club facility, facility primarily
used for gambling or a store the principal business of which is the sale of
alcoholic beverages for consumption off premises.
Section 6.14. The provisions of this Agreement and the
provisions of the Resolution are to be construed wherever possible so that they
will not be in conflict. In the event such construction is not possible, the
provisions of the Resolution shall prevail.
Section 6.15. Employer acknowledges that issuance of
the Certificates may be conditioned on receipt by Kirkwood of an opinion of
bond counsel that interest on all or part of the Certificates is exempt from
federal income tax and that such opinion will be predicated on satisfaction of
the applicable provisions of the Internal Revenue Code of 1986 including, but
not limited to, the receipt by Kirkwood of an allocation of the State of Iowa
volume ceiling for the Project.
Section 6.16. Employer acknowledges that pursuant to
Section 260E.6 of the Act, the Resolution adopted by Kirkwood may authorize the
issuance of industrial new jobs training Certificates
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<PAGE> 12
to fund Iowa Code Chapter 260E training programs with other employers.
Employer acknowledges and agrees that the industrial new jobs training
Certificates issued by Kirkwood to fund training programs for multiple
projects, including this Project, will not be identifiable or specifically
attributable to this Project.
References in this Agreement to "Certificates" include a
reference to an undivided portion of industrial new jobs training Certificates
issued by Kirkwood to fund training programs for multiple projects, including
this Project. Employer's obligations, covenants and representations set forth
herein with respect to the Certificates are not and shall not be conditioned on
the issuance of training certificates identifiable or specifically attributable
to this Project.
Section 6.17. This Agreement, including Exhibits,
constitutes the entire agreement between Kirkwood and Employer with respect to
the subject matter hereof and as such supersedes all previous negotiations,
commitments and understandings. Captions and the alignment of the Agreement
are for convenience only and shall not be construed to modify the rights or
obligations of the parties.
ARTICLE VII
SUPPLEMENTAL NEW JOBS CREDIT FROM WITHHOLDING
Certain jobs included in the Project are eligible for a
supplemental new jobs credit from withholding in an amount equal to one and
one-half percent of the gross wages paid by the Employer pursuant to Senate
File 2351 adopted by the 76th General Assembly effective July 1, 1996.
Kirkwood and the Employer agree that the Supplemental Program shall be
administered in the same manner as the remainder of the Project and that all
terms and conditions of this Agreement shall apply to the entire Project
including the Supplemental Program.
Section 7.1. Terms used in this Article shall have the
meanings set out in Article I or this Section 7.1. Other terms used in this
Article shall have the meanings set out in Chapters 15A or 260E, Code of Iowa,
1995, as amended.
- "Average Wage" means the average county wage in the
county where the Project Site is located or the
average regional wage, whichever is lower, as
compiled annually by the Department for the Community
Economic Betterment Program.
- "Starting Wages" or "Wages" means the wage being paid
or to be paid by the Employer under the terms of this
Agreement and which has been determined by Kirkwood
to equal or exceed the Average Wage based upon
criteria established in Section 15A.7 Code of Iowa,
1995, as amended, and rules promulgated by the
Department.
- "Supplemental Program" means that portion of the
Project including Program Services and Program Costs
eligible to be funded from a supplemental new jobs
credit from withholding from jobs created under this
Agreement because the Employer has agreed to pay
Starting Wages as defined in this Agreement.
Section 7.2. The Employer agrees that it shall pay
Wages for the jobs included in the Supplemental Program (and for which the
supplemental new jobs credit from withholding is collected) at least equal to
the Average Wage. In the event the Employer fails to pay Wages for the jobs
included in the Supplemental Program, such failure may constitute an event of
default under this Agreement.
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<PAGE> 13
Section 7.3. The supplemental new jobs credit from
withholding shall be collected, accounted for and may be pledged by Kirkwood in
the same manner as described in Section 2.2 of this Agreement and Section
260E.5 of the Act.
Section 7.4. The number of jobs included in the
Supplemental Program are identified on Exhibit C. The specific jobs are as
identified in writing by the Employer. Kirkwood hereby determines eligibility
of the Supplemental Program and Starting Wages for those jobs shown on Exhibit
C as included in the Supplemental Program.
Section 7.5. To provide funds for the payment of the
costs of the Supplemental Program Kirkwood may borrow money, issue and sell
Certificates and secure the payment of the Certificates in the same manner as
described in Article II of this Agreement and Section 260E.6 of the Act. It is
the intent of the parties that the Supplemental Program shall be funded and
administered in such a manner as to maintain any tax exempt status of the
interest on Certificates issued to fund the Program Services under Chapter
260E.
Section 7.6. The Supplemental Program and the
supplemental new jobs credit from withholding provided for in this Article VII
shall be in addition to and not in lieu of the program and credit authorized in
Article II of this Agreement and Section 260E.5 of the Act. The Program
Services set forth on Exhibits B and C, the tentative payback schedule set
forth on Exhibit D, and the Employer's projections of wages to be paid in those
new jobs qualifying for the supplemental new jobs credit from withholding
includes the Supplemental Program.
IN WITNESS WHEREOF, Kirkwood and Employer have caused this
Agreement to be duly executed all as of the date hereinabove written.
KIRKWOOD COMMUNITY COLLEGE
October 31, 1996 By /s/ WAYNE L. NEWTON
- ---------------------------------- -------------------------------------
Date
ATTEST:
/s/ JUDITH A. GLASS
- ----------------------------------
MCLEOD TELEMANAGEMENT, INC.
221 Third Avenue S.E., Suite 500
Cedar Rapids, IA 52401
October 29, 1996 By /s/ STEPHEN C. GRAY
- ---------------------------------- -------------------------------------
Date Stephen C. Gray, President
ATTEST:
/s/ CASEY D. MAHON
- ----------------------------------
CASEY D. MAHON, Secretary
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<PAGE> 1
EXHIBIT 10.81
- --------------------------------------------------------------------------------
INDUSTRIAL NEW JOBS
TRAINING AGREEMENT
between
KIRKWOOD COMMUNITY COLLEGE
Cedar Rapids, Iowa ("Kirkwood")
and
MCLEOD TELECOMMUNICATIONS, INC.
("Employer")
Dated as of October 31, 1996
- --------------------------------------------------------------------------------
Relating to
$260,000
Kirkwood Community College,
Cedar Rapids, Iowa
Industrial New Jobs Training Certificates
(McLeod Telecommunications, Inc. Project)
<PAGE> 2
INDUSTRIAL NEW JOBS
TRAINING AGREEMENT
This Industrial New Jobs Training Agreement (the "Agreement")
made and entered into as of October 31, 1996, between KIRKWOOD COMMUNITY
COLLEGE, (Merged Area X), Cedar Rapids, Iowa, ("Kirkwood") and MCLEOD
TELECOMMUNICATIONS, INC., ("Employer"), under the following circumstances:
A. Pursuant to the Iowa Industrial New Jobs Training
Act, Iowa Code Chapter 260E, Kirkwood and Employer have determined to enter
into this Agreement for purposes of establishing a Project to educate and train
certain persons employed by Employer in new jobs within the Merged Area.
B. Kirkwood and Employer each have full right and lawful
authority to enter into this Agreement and to perform and observe the
provisions hereof on their respective parts to be performed and observed.
NOW, THEREFORE, in consideration of the premises and the
mutual representations and agreements hereinafter contained, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. "Act" means the Iowa Industrial New Jobs
Training Act, Iowa Code Chapter 260E, as it may be amended from time to time,
and the regulations issued thereunder by the Iowa Department of Economic
Development as the regulations may be amended from time to time.
Section 1.2. "Certificates" means Kirkwood Community
College Industrial New Jobs Training Certificates authorized to be issued
pursuant to the Resolution for purposes of funding the Program Costs.
Section 1.3. "Debt Service" shall mean the payment of the
principal and premium, if any, and interest on the Certificates in accordance
with the Resolution and the terms of the Certificates.
Section 1.4. "Incremental Property Taxes" means
incremental property taxes, as defined in Section 260E.4 of the Act, to be
received or derived from Employer's Taxable Business Property where new jobs
are created as a result of the Project.
Section 1.5. "New Jobs Withholding Credits" means the new
jobs credit from withholding, as defined in Section 260E.5 of the Act, paid to
Kirkwood by Employer.
Section 1.6. "Person" shall include, but not be limited
to, individual, corporate, government or governmental subdivision or agency,
business trust, estate, trust, partnership or association, or any other legal
entity.
Section 1.7. "Program Costs" means all necessary and
incidental costs of providing Program Services for the Project including the
Debt Service and the deferred costs of Certificate issuance. Attached hereto as
Exhibit "B" and incorporated herein by this reference is a tentative budget
relating to the Project.
<PAGE> 3
Section 1.8. "Program Services" for the Project are as
tentatively set forth on Exhibits "B" and "C" attached hereto and incorporated
herein by this reference. Exhibit "C" sets forth the number of new jobs to be
trained, the expected beginning and ending date of the training to be provided,
the length of time each new job category will be provided training, the
estimated costs, the training that will be provided and the expected date by
which the number of new jobs will be filled.
Section 1.9. "Project" shall consist of this training
arrangement to provide Program Services pursuant to this Agreement with respect
to Employer's employees to be employed by Employer in new jobs at the Project
Site in Cedar Rapids, Linn County, Iowa.
Section 1.10. "Project Fund" means a special fund of
Kirkwood into which a portion of the proceeds from the issuance and sale of the
Certificates shall be deposited and which shall be used to pay Program Costs
and for no other purpose.
Section 1.11. "Project Site" means the real estate
(including improvements constructed or to be constructed thereon) described in
Exhibit "A", attached hereto and incorporated herein by reference, where
Employer's facility, where new jobs will be created, is located.
Section 1.12. "Reserve" means a portion of the proceeds
from the issuance and sale of Certificates to be used from time to time to
satisfy Debt Service when due.
Section 1.13. "Resolution" means the Resolution or
Resolutions authorizing the issuance of Industrial New Jobs Training
Certificates adopted by Kirkwood in connection with the Project.
Section 1.14. "Revenue Fund" means the special tax fund
created in the Resolution in order to pay the principal of and interest on
Certificates issued in connection with the Project.
Section 1.15. "Taxable Business Property" means the Project
Site.
Section 1.16. "Training" means the Program Services
exclusive of administrative fees for the new jobs training program, Kirkwood's
legal, underwriting and financial fees, allowable discount, other costs
associated with the Certificates, and the Reserve.
Other terms used in this Agreement shall have the meanings set
out in the Act.
ARTICLE II
PROJECT; PROGRAM SERVICES
Section 2.1. Kirkwood agrees to provide the Program
Services to the extent of funds available for that purpose in the Project Fund.
It is understood and agreed that Employer and Kirkwood will cooperate in the
coordination and programming of the specific expenditures and operation of the
Project within the guidelines set out in this Agreement and Exhibits "B" and
"C". Kirkwood may, in its discretion, subcontract with other entities or
persons to provide all or part of the Training. It is understood and agreed
that the Training set forth on Exhibit "C" is tentative and is subject to
change, within the budget for the Project, upon the mutual agreement of
Kirkwood, acting through its appropriate officials, and Employer.
Section 2.2. Kirkwood and Employer agree that all
necessary and incidental costs, including but not limited to Program Costs and
Debt Service and related costs may be paid from one or a
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<PAGE> 4
combination of the following sources: (a) New Jobs Withholding Credits, (b)
Incremental Property Taxes, and (c) tuition, student fees, or special charges
fixed by the Board of Directors of Kirkwood to defray Program Costs in whole or
in part. New Jobs Withholding Credits and Incremental Property Taxes shall be
placed in the Revenue Fund established in the Resolution and used exclusively
for purposes of the Project. Tuition, student fees or special charges, if any,
shall be placed in the Project Fund and used exclusively for purposes of the
Project. Kirkwood and Employer agree that Employer's Taxable Business Property
includes its current and future interest in the Project Site. Employer
acknowledges that it is not relying on any representations of Kirkwood, its
agents or attorneys, that the foregoing, in fact or law, constitutes Employer's
Taxable Business Property under the Act.
Section 2.3. Kirkwood and Employer agree that the receipts
from the New Jobs Withholding Credits and the Incremental Property Taxes, and
the Revenue Fund into which the same are paid may be irrevocably pledged by
Kirkwood for the payment of the Debt Service. Attached hereto as Exhibit "D"
is a tentative payment schedule for the Certificates. Following issuance and
sale of the Certificates a final payment schedule, if different from Exhibit D,
shall be prepared using the actual rates of interest and maturities for the
Certificates. Such final payment schedule, if prepared, shall become a part of
this Agreement, as Exhibit D, without further action by Employer or Kirkwood
and shall supersede the Exhibit D attached hereto. A copy of such final
payment schedule shall be provided to Employer.
Section 2.4. The term of this Agreement shall not exceed
ten (10) years and shall coincide with the period of time over which the
Certificates mature and the Program Costs are deferred; provided, that this
Agreement shall not terminate and the obligations, representations, warranties,
covenants and agreements of Employer hereunder shall continue until the
Certificates, if any, issued in connection with the Project shall have been
paid in full.
Section 2.5. Kirkwood may revise or expand the Training
from time to time with the consent of Employer; provided that no revision shall
be made which would change the Project to purposes other than purposes
permitted by the Act.
Section 2.6. The Certificates will be issued pursuant to
the Resolution adopted by the Board of Directors of Kirkwood in the aggregate
principal amount, bearing interest (at a rate to be determined at the time the
Certificates are authorized to be issued), maturing, and being redeemable as
set forth in the Resolution.
The proceeds from the sale of the Certificates shall be paid
to Kirkwood and deposited in the Project Fund or other fund established by
Kirkwood. The Project Fund shall be used only for purposes of the Project.
Pending disbursements for Program Services and Program Costs, the proceeds so
deposited in the Project Fund, together with any investment earnings thereon,
shall be subject to a lien in favor of the holders of the Certificates as
provided in the Resolution authorizing the Certificates.
Section 2.7. In the event Certificates are not issued or
sold by Kirkwood, Employer agrees to pay to Kirkwood a sum equal to the
necessary and incidental costs actually incurred by Kirkwood which would have
been paid from the proceeds of the Certificates, or the funds available from
the sources described in Sections 2.2 and 3.4 of this Agreement if the
Certificates had been issued by Kirkwood.
Section 2.8. Investment earnings from any source on moneys
deposited in the Project Fund, Revenue Fund or any other fund shall be regarded
as revenues of the Project and be used for payment of the Debt Service or such
other uses authorized by the Resolution.
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<PAGE> 5
Section 2.9. Employer certifies that the number of jobs,
including formerly existing jobs, on its payroll in Iowa is forty-three (43)
as of August 10, 1995. Employer further certifies that the number of jobs,
including formerly existing jobs, on its payroll with respect to the Project
is forty-three (43) as of the date set forth in the preceding sentence.
Section 2.10. The administrative fee of Kirkwood and the
state administrative fee shall be the administrative fee of Kirkwood and the
state administrative fee, respectively, determined as of the date or dates of
issuance of the Certificates. In addition, the necessary Reserve shall be
determined as of the date or dates of issuance of the Certificates. The amount
of money to be provided for Training shall be adjusted to reflect changes in
the foregoing fees and necessary Reserve.
ARTICLE III
PAYMENTS; SECURITY
Section 3.1. Employer agrees to timely pay or cause to be
paid the property taxes on the Taxable Business Property and agrees to timely
pay the New Jobs Withholding Credits to Kirkwood.
Section 3.2. Kirkwood agrees that the Revenue Fund shall
be pledged for the payment of the Debt Service.
Section 3.3 To secure the obligations of Employer under
this Agreement, Employer shall provide Kirkwood with a Financial Guarantee Bond
(the "Bond") in form and from a surety acceptable to Kirkwood. The Bond must
be renewed annually with the form and surety acceptable to Kirkwood. The Bond
shall secure Employer's performance under this Agreement in an amount equal to
the amount of New Jobs Withholding Credits that are necessary to pay the
remaining Debt Service. Kirkwood will cooperate with Employer to establish
such amount on an annual basis. Employer shall provide Kirkwood with evidence
of the renewed Bond at least sixty (60) days prior to the expiration of each
Bond. Failure by Employer to maintain a Bond or to provide evidence of the
renewed Bond at least sixty (60) days prior to the expiration of each Bond
shall be an event of default under this Agreement. Upon occurrence of any
event of default under this Agreement Kirkwood may exercise all rights under
this Agreement and the Bond.
Kirkwood agrees to provide notice to the surety on the Bond,
as renewed, of the occurrence of an event of default under this Agreement.
Kirkwood further agrees to notify Employer of a claim made against the Bond.
Such notice shall be addressed as provided in Section 6.4 with a copy to the
attention of Employer's Legal Department or President.
The Bond and each renewal shall be in lieu of the rights
Kirkwood may have to assert a lien against the property of Employer as provided
in the Act and Iowa law.
Nothing contained herein shall abrogate the collection of, or
any lien for, unpaid property taxes which have attached to real estate pursuant
to Iowa Code chapter 445, including taxes levied against tangible property that
is assessed and taxed as real property pursuant to Iowa Code chapter 427A, or
the collection of, or any lien for, unpaid taxes for which notice of lien has
been property recorded or filed pursuant to Iowa Code section 422.26.
Section 3.4. This Agreement is entered into upon the
expectation that, as set forth in Exhibit "D", sufficient funds from
Incremental Property Taxes and New Jobs Withholding Credits will be generated
to pay the Debt Service. Employer and Kirkwood have designed the Project to
fit within the
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<PAGE> 6
funds expected to be available from the sources of payment set forth in Section
2.2. Exhibit "D" sets forth the minimum annual amount of Incremental Property
Taxes, New Jobs Withholding Credits or tuition and fee payments to be paid for
Program Costs. Employer's projections of gross wages to be paid to employees
in new jobs covered by this Agreement, the estimated assessed value of Project
Site improvements are set forth in Exhibit "E" attached hereto and incorporated
herein.
Section 3.5. If for any reason the funds in the Project
Fund or the Revenue Fund are not sufficient to satisfy the Program Costs, other
than costs of Training, Employer, upon written notice that the funds in the
Project Fund or the Revenue Fund are not sufficient, will, nonetheless, advance
to Kirkwood such amounts as may, from time to time, be required to satisfy the
Program Costs. If Employer should advance any amount under this Section, it
shall not be entitled to any abatement, diminution or postponement of other
payments required; provided, however, to the extent permitted by law, Employer
will be entitled to payment of amounts advanced, without interest, from the
Project Fund or the Revenue Fund when Kirkwood determines that a surplus exists
and that such surplus is not needed to satisfy other Program Costs and the Debt
Service has been paid in full. Any such advancements received or to be
received from Employer under this Section shall not be pledged to payment of
the Certificates under the Resolution. The notice required hereunder shall
specify the date by which Employer is to make the necessary advance; provided,
however, in the absence of such date specified in the notice, the advance shall
be due within fifteen (15) days of the date of the notice. The obligation of
Employer hereunder shall be primary and Kirkwood may proceed against Employer
without proceeding against or exhausting any other remedies which it may have
and without resorting to any other security held by Kirkwood.
ARTICLE IV
COVENANTS, REPRESENTATIONS AND WARRANTIES
Section 4.1. Representations of Kirkwood. Kirkwood
represents that: (a) it is duly organized and validly existing under the laws
of the State of Iowa; (b) it is not in violation of or in conflict with any
provisions of the laws of the State which would impair its ability to carry out
its obligations hereunder; (c) it is empowered to enter into the transactions
contemplated by this Agreement; and (d) it will do all things in its power
required of it in order to maintain its existence or assure the assumption of
its obligations hereunder by any successor public body.
Section 4.2. Representations, Warranties and Covenants of
Employer. Employer represents, warrants and covenants that:
(a) It is a corporation organized under the laws
of the State of Iowa and is authorized to do business in the
State of Iowa.
(b) It has full power and authority to execute,
deliver and perform this Agreement and all other instruments
given by Employer to secure its performance and to enter into
and carry out the transactions contemplated herein. Such
execution, delivery and performance are not in contravention
of law or Employer's articles of incorporation, bylaws or any
indenture, agreement, mortgage, lease, undertaking or any
other restriction, obligation or instrument to which Employer
is a party or by which it is bound. This Agreement has by
proper action been duly authorized, executed and delivered by
Employer and all steps necessary have been taken to constitute
this Agreement a valid and binding obligation of Employer.
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<PAGE> 7
(c) There is no litigation or proceeding pending,
or to the knowledge of Employer threatened, against Employer
or any other person affecting in any manner whatsoever the
right of Employer to execute the Agreement or to otherwise
comply with its obligations contained in the Agreement.
(d) The employees to be trained under this
Agreement have not commenced work for Employer prior to the
date set forth in Section 2.9, and those employees will be
employed in new jobs in connection with the expansion of
Employer's business operations in the merged area. Each of
the employees to be trained under the Agreement will be
employed directly by Employer.
(e) Employer is an industry, as that term is
defined in the Act, and is engaged in providing services
(other than retail, health or professional services) in
interstate commerce.
(f) Each of the jobs covered by this Agreement is
a "new job" as that term is defined in the Act.
(g) Employer has an interest in the Project Site.
(h) Employer knowingly assumes the obligation
under Section 3.5 hereof in the event the sources of payment
described in Section 2.2 are not sufficient to satisfy the
Program Costs in full.
(i) This Agreement is entered into upon the
expectation that there will not be any revenues from
Incremental Property Taxes and that references herein to
Incremental Property Taxes and Taxable Business Property are
merely for the convenience of the parties and such references
do not imply that revenues from Incremental Property Taxes are
anticipated or that Kirkwood need take any action with regard
to Incremental Property Taxes.
(j) Employer's projections of the annual gross
wages to be paid by Employer to employees in the new jobs
covered by this Agreement are truly and accurately depicted on
Exhibit "E".
(k) The Project Site and Employer's operations at
the Project Site will be in compliance with all applicable
federal, state and local environmental statutes, laws and
regulations. Employer will not conduct its operations at the
Project Site, or elsewhere, in such a manner as to allow any
federal, state or governmental liens or encumbrances, to
enforce the payment or contribution for environmental damage,
injury or cleanup, to be placed on the Project Site.
ARTICLE V
EVENTS OF DEFAULT
Section 5.1. Events of Default. Each of the following
shall be an "event of default":
(a) Employer shall fail to pay, advance or
deposit any amount required to be made by Employer on or prior
to the date on which such payment, advancement or deposit is
due and payable and continuing for more than five (5) business
days thereafter.
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<PAGE> 8
(b) Employer shall fail to observe and perform
any other agreement, representation, term or condition
contained in this Agreement, if such failure continues for a
period of twenty (20) days after notice of such failure is
given to Employer by Kirkwood, or for such longer period as
Kirkwood may agree to in writing; provided, that if the
failure is other than the payment of money and is of such
nature that it cannot be corrected within the applicable
period, such failure shall not constitute an event of default
so long as Employer institutes curative action within the
applicable period and diligently pursues such action to
completion.
(c) Employer shall: (i) admit in writing its
inability to pay its debts generally as they become due; (ii)
have an order for relief entered in any case commenced by or
against it under the federal bankruptcy laws, as now or
hereafter in effect; (iii) commence a proceeding under any
other federal or state bankruptcy, insolvency, reorganization
or other similar law, or have such a proceeding commenced
against it and either have an order of insolvency or
reorganization entered against it or have the proceeding
remain undismissed and unstayed for ninety (90) days; (iv)
make an assignment for the benefit of creditors; or (v) have a
receiver or trustee appointed for it or for the whole or any
substantial part of its property.
(d) Employer shall (i) close or announce that it
is closing its operations at the Project Site (unless such
operations will be transferred to another facility in the
State of Iowa and as a result Kirkwood will be entitled to
receive the revenue from the sources set forth in Section 2.2
or receives assurance satisfactory to Kirkwood of the receipt
by Kirkwood of payments to satisfy the Debt Service on the
Certificates); or (ii) have failed to make improvements to the
Project Site within the time set forth on Exhibit "E" and for
that reason the Project has not or will not generate
sufficient Incremental Property Taxes to enable Kirkwood to
satisfy the Debt Service from the sources set forth in Section
2.2.
(e) Kirkwood determines from time to time that,
for any reason, sufficient realized or projected revenue from
Incremental Property Taxes and/or New Jobs Withholding Credits
will not be generated by the Project to enable Kirkwood to
satisfy the Debt Service from the sources set forth in Section
2.2.
(f) Any representation or warranty made by
Employer herein or any statement in any report, certificate,
financial statement or other instrument furnished in
connection with this Agreement or with the sale of the
Certificates shall at any time prove to have been false or
misleading in any material respect when made or given.
(g) Employer acts in a manner contrary to any
provision of this Agreement or fails to act in a manner
required by any provision of this Agreement and Kirkwood
determines as a result of such act or failure to act that
there are not or will not be sufficient funds generated by the
Project to enable Kirkwood to satisfy the Debt Service from
the sources set forth in Section 2.2.
The exercise of remedies upon the occurrence of any event of
default under subsection (c) above shall be subject to any applicable
limitations of federal bankruptcy law affecting or precluding such exercise
during the pendency of or immediately following any bankruptcy, liquidation or
reorganization.
Section 5.2. Whenever an event of default shall have
happened and be subsisting, Kirkwood may, without notice to Employer, withhold
Training and suspend payments to Employer, and apply all or a part of any
remaining funds budgeted for Training to the satisfaction of the Debt Service
on the Certificates. In addition, Kirkwood may take whatever other action at
law or in equity may appear
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<PAGE> 9
necessary or desirable to collect the payments and other amounts then due and
thereafter to become due, or to enforce performance and observance of any other
obligation or agreement of Employer under this Agreement. Notwithstanding the
foregoing, Kirkwood shall not be obligated to take any step which in its
opinion will or might cause it to expend time or money or otherwise incur
liability unless and until a satisfactory indemnity bond has been furnished to
Kirkwood at no cost or expense to Kirkwood. Any amounts collected as payments
or applicable to payments and any other amounts which would be applicable to
payment of principal of and premium, if any, and interest on the Certificates
collected pursuant to action taken under this Section shall be paid by Kirkwood
to the holders of the Certificates.
Section 5.3. Immediately upon the occurrence of an event
of default, there shall be due from Employer to Kirkwood such amount as will
enable Kirkwood to presently satisfy the remaining Debt Service on the
Certificates. Such amount shall be equal to the total amount of the standby
tax levied or required to be levied under Section 260E.6 of the Act to satisfy
the remaining Debt Service on the Certificates determined from Exhibit D
prepared in accordance with Section 2.3. No demand or notice of the amount due
immediately upon the occurrence of an event of default is or shall be required
to fix the liability of Employer or the amount due from Employer. The amount
due hereunder from Employer shall be a debt of Employer to Kirkwood and
Kirkwood may set off against the amount due from Employer any debt or debts of
Kirkwood to Employer. Amounts received by Kirkwood hereunder shall not be
pledged to repayment of the Certificates.
Section 5.4. No remedy conferred upon or reserved to
Kirkwood by this Agreement is intended to be exclusive of any other available
remedy or remedies, but each and every such remedy shall be cumulative and
shall be in addition to every other remedy now or hereafter existing at law, in
equity or by statute. No delay or omission to exercise any right or power
accruing upon any default shall impair any such right or power or shall be
construed to be a waiver thereof, but any such right and power may be exercised
from time to time and as often as may be deemed expedient. In order to entitle
Kirkwood to exercise any remedy reserved to it in this Article, it shall not be
necessary to give any notice, other than such notice as may be expressly
required herein, nor shall it be necessary to make any declaration of an event
of default other than such declaration as may be expressly required herein.
Kirkwood will not perfect the lien provided by Iowa law in accordance with the
terms of Section 3.3.
Section 5.5. In the event any agreement contained in this
Agreement should be breached by either party and thereafter waived by the other
party, such waiver shall be limited to the particular breach so waived and
shall not be deemed to be a waiver of any other breach hereunder.
ARTICLE VI
MISCELLANEOUS
Section 6.1. This Agreement may be executed in any number
of counterparts, each of which shall be regarded as an original and all of
which shall constitute but one and the same instrument.
Section 6.2. If any provision of this Agreement, or any
covenant, stipulation, obligation, agreement, act or action, or part thereof
made, assumed, entered into or taken thereunder or any application thereof, is
for any reason held to be illegal or invalid, such illegality or invalidity
shall not affect any other provision or any other covenant, stipulation,
obligation, agreement, act or action or part thereof, made, assumed, entered
into, or taken, each of which shall be construed and enforced as if such
illegal or invalid portion were not contained herein. Nor shall such
illegality or invalidity of any application thereof affect any legal and valid
application thereof, and each such provision,
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<PAGE> 10
covenant, stipulation, obligation, agreement, act or action, or part shall be
deemed to be effective, operative, made, entered into or taken in the manner
and to the full extent permitted by law.
Section 6.3. This Agreement shall be governed exclusively
by and construed in accordance with the laws of the State of Iowa. With the
exception of the lien provisions of Iowa law as modified by Section 3.3, the
applicable provisions of Iowa law, including the Act, are a part of this
Agreement as if set forth herein.
Section 6.4. All notices, requests or other communications
hereunder shall be in writing and shall be deemed to be sufficiently given when
mailed by registered or certified mail, postage prepaid, addressed to the
appropriate Notice Address as follows:
Financial Manager
Financial Services
Kirkwood Community College
P.O. Box 2068
6301 Kirkwood Boulevard, S.W.
Cedar Rapids, Iowa 52406
Tami Young
McLeod Telecommunications, Inc.
221 3rd Avenue S.E., Suite 500
Cedar Rapids, IA 52401
Employer and Kirkwood may, by notice given hereunder,
designate any further or different addresses or persons to which subsequent
notices, requests or other communications shall be sent.
Revisions in the Training set forth on Exhibit "C" and an
increase in the number of new jobs covered by this Agreement shall be approved
in writing by the above representatives of Kirkwood and Employer, their
respective successors or such other individuals as either party designates in
the manner set forth herein, provided, however, consent of Employer shall not
be required for a reduction in Training following an event of default.
Section 6.5. All covenants, stipulations, obligations and
agreements of Kirkwood and Employer contained in this Agreement shall be
effective to the extent authorized and permitted by applicable law. No such
covenant, stipulation, obligation or agreement shall be deemed to be a
covenant, stipulation, obligation or agreement of any present or future member,
officer, agent or employee of Kirkwood or the Board of Directors of Kirkwood
other than in their official capacity, and neither the members of the Board of
Directors of Kirkwood nor any official, agent or employee of Kirkwood shall be
liable personally on the Certificates or the covenants, stipulations,
obligations or agreements of Kirkwood contained in this Agreement.
Section 6.6. This Agreement shall inure to the benefit of
and shall be binding in accordance with its terms upon Kirkwood, Employer and
their respective permitted successors and assigns provided that this Agreement
may not be assigned by Employer without the written consent of Kirkwood and may
not be assigned by Kirkwood without the consent of Employer except as may be
necessary to enforce or secure payment of the Debt Service.
Section 6.7. Employer covenants and agrees that it will
not sell, lease, sublease, mortgage or in any manner dispose of its interest in
the facilities described herein or any capital part thereof so as to remove the
same from the tax rolls until satisfaction and discharge of the Certificates
unless
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<PAGE> 11
Employer provides Kirkwood with assurance, in a form acceptable to and approved
by Kirkwood, of future payments necessary to meet the Debt Service on the
Certificates. Employer further covenants and agrees to keep the facilities
continuously insured against loss or damage by fire, lightening, such other
perils as are covered by standard "extended coverage" endorsements, vandalism
and malicious mischief and containing customary loss deductible provisions.
Section 6.8. Kirkwood agrees to use its best efforts to
sell and issue the Certificates, and Employer will cooperate with Kirkwood to
provide necessary financial information in connection with the sale of the
Certificates. It is understood and agreed that should the Certificates not be
marketed or marketable within a reasonable time that this Agreement may be
terminated and the Project terminated, provided, however, the obligation of
Employer under Section 2.7 hereof shall continue following any such
termination.
Section 6.9. Employer covenants that it shall take such
action or shall refrain from taking any action as shall be necessary under the
Internal Revenue Code of 1986, Sections 103, 141-150 and the rulings and
regulations thereunder to maintain any exemption from Federal income taxes of
the interest on the Certificates.
Section 6.10. Disbursements to Employer for Program
Services under this Agreement shall be made only upon approval of vouchers
therefor by the Board of Directors of Kirkwood. Employer agrees that it will
request disbursements only for approved Program Services. Employer agrees that
it will not request disbursements that are prohibited by Sections 6.11, 6.12
and 6.13 hereof. Amounts disbursed to Employer shall be conditional and
subject to subsequent verification and audit of the Project. Requests by
Employer for disbursements, including those requests received by Kirkwood,
shall not constitute a debt of Kirkwood to Employer.
Section 6.11. No monies disbursed from the proceeds of the
Certificates will be used directly or indirectly to finance land, facilities or
depreciable property (or an interest therein) of Employer or other private
Person.
Section 6.12. No monies disbursed from the proceeds of the
Certificates will be used directly or indirectly for the acquisition of any
property (or an interest therein) unless the first use of such property is
pursuant to such acquisition and such property is owned by Kirkwood.
Section 6.13. No monies disbursed from the proceeds of the
Certificates will be used directly or indirectly to provide any airplane,
skybox or other private luxury box, health club facility, facility primarily
used for gambling or a store the principal business of which is the sale of
alcoholic beverages for consumption off premises.
Section 6.14. The provisions of this Agreement and the
provisions of the Resolution are to be construed wherever possible so that they
will not be in conflict. In the event such construction is not possible, the
provisions of the Resolution shall prevail.
Section 6.15. Employer acknowledges that issuance of the
Certificates may be conditioned on receipt by Kirkwood of an opinion of bond
counsel that interest on all or part of the Certificates is exempt from federal
income tax and that such opinion will be predicated on satisfaction of the
applicable provisions of the Internal Revenue Code of 1986 including, but not
limited to, the receipt by Kirkwood of an allocation of the State of Iowa
volume ceiling for the Project.
Section 6.16. Employer acknowledges that pursuant to
Section 260E.6 of the Act, the Resolution adopted by Kirkwood may authorize the
issuance of industrial new jobs training Certificates
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<PAGE> 12
to fund Iowa Code Chapter 260E training programs with other employers.
Employer acknowledges and agrees that the industrial new jobs training
Certificates issued by Kirkwood to fund training programs for multiple
projects, including this Project, will not be identifiable or specifically
attributable to this Project.
References in this Agreement to "Certificates" include a
reference to an undivided portion of industrial new jobs training Certificates
issued by Kirkwood to fund training programs for multiple projects, including
this Project. Employer's obligations, covenants and representations set forth
herein with respect to the Certificates are not and shall not be conditioned on
the issuance of training certificates identifiable or specifically attributable
to this Project.
Section 6.17. This Agreement, including Exhibits,
constitutes the entire agreement between Kirkwood and Employer with respect to
the subject matter hereof and as such supersedes all previous negotiations,
commitments and understandings. Captions and the alignment of the Agreement
are for convenience only and shall not be construed to modify the rights or
obligations of the parties.
ARTICLE VII
SUPPLEMENTAL NEW JOBS CREDIT FROM WITHHOLDING
Certain jobs included in the Project are eligible for a
supplemental new jobs credit from withholding in an amount equal to one and
one-half percent of the gross wages paid by the Employer pursuant to Senate
File 2351 adopted by the 76th General Assembly effective July 1, 1996.
Kirkwood and the Employer agree that the Supplemental Program shall be
administered in the same manner as the remainder of the Project and that all
terms and conditions of this Agreement shall apply to the entire Project
including the Supplemental Program.
Section 7.1. Terms used in this Article shall have the
meanings set out in Article I or this Section 7.1. Other terms used in this
Article shall have the meanings set out in Chapters 15A or 260E, Code of Iowa,
1995, as amended.
- "Average Wage" means the average county wage in the
county where the Project Site is located or the
average regional wage, whichever is lower, as
compiled annually by the Department for the Community
Economic Betterment Program.
- "Starting Wages" or "Wages" means the wage being paid
or to be paid by the Employer under the terms of this
Agreement and which has been determined by Kirkwood
to equal or exceed the Average Wage based upon
criteria established in Section 15A.7 Code of Iowa,
1995, as amended, and rules promulgated by the
Department.
- "Supplemental Program" means that portion of the
Project including Program Services and Program Costs
eligible to be funded from a supplemental new jobs
credit from withholding from jobs created under this
Agreement because the Employer has agreed to pay
Starting Wages as defined in this Agreement.
Section 7.2. The Employer agrees that it shall pay Wages
for the jobs included in the Supplemental Program (and for which the
supplemental new jobs credit from withholding is collected) at least equal to
the Average Wage. In the event the Employer fails to pay Wages for the jobs
included in the Supplemental Program, such failure may constitute an event of
default under this Agreement.
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Section 7.3. The supplemental new jobs credit from
withholding shall be collected, accounted for and may be pledged by Kirkwood in
the same manner as described in Section 2.2 of this Agreement and Section
260E.5 of the Act.
Section 7.4. The number of jobs included in the
Supplemental Program are identified on Exhibit C. The specific jobs are as
identified in writing by the Employer. Kirkwood hereby determines eligibility
of the Supplemental Program and Starting Wages for those jobs shown on Exhibit
C as included in the Supplemental Program.
Section 7.5. To provide funds for the payment of the costs
of the Supplemental Program Kirkwood may borrow money, issue and sell
Certificates and secure the payment of the Certificates in the same manner as
described in Article II of this Agreement and Section 260E.6 of the Act. It is
the intent of the parties that the Supplemental Program shall be funded and
administered in such a manner as to maintain any tax exempt status of the
interest on Certificates issued to fund the Program Services under Chapter
260E.
Section 7.6. The Supplemental Program and the supplemental
new jobs credit from withholding provided for in this Article VII shall be in
addition to and not in lieu of the program and credit authorized in Article II
of this Agreement and Section 260E.5 of the Act. The Program Services set
forth on Exhibits B and C, the tentative payback schedule set forth on Exhibit
D, and the Employer's projections of wages to be paid in those new jobs
qualifying for the supplemental new jobs credit from withholding includes the
Supplemental Program.
IN WITNESS WHEREOF, Kirkwood and Employer have caused this
Agreement to be duly executed all as of the date hereinabove written.
KIRKWOOD COMMUNITY COLLEGE
October 31, 1996 By /s/ WAYNE L. NEWTON
- ---------------------------------- --------------------------------------
Date
ATTEST:
/s/ JUDITH A. GLASS
- ----------------------------------
MCLEOD TELECOMMUNICATIONS, INC.
221 3rd Avenue S.E., Suite 500
Cedar Rapids, IA 52401
October 29, 1996 By /s/ STEPHEN C. GRAY
- ---------------------------------- --------------------------------------
Date Stephen C. Gray, President
ATTEST:
/s/ CASEY D. MANON
- ----------------------------------
CASEY D. MAHON, Secretary
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<PAGE> 1
EXHIBIT 10.82
- --------------------------------------------------------------------------------
INDUSTRIAL NEW JOBS
TRAINING AGREEMENT
between
KIRKWOOD COMMUNITY COLLEGE
Cedar Rapids, Iowa ("Kirkwood")
and
MCLEOD NETWORK SERVICES, INC.
("Employer")
Dated as of October 31, 1996
- --------------------------------------------------------------------------------
Relating to
$390,000
Kirkwood Community College,
Cedar Rapids, Iowa
Industrial New Jobs Training Certificates
(McLeod Network Services, Inc. Project)
<PAGE> 2
INDUSTRIAL NEW JOBS
TRAINING AGREEMENT
This Industrial New Jobs Training Agreement (the "Agreement")
made and entered into as of October 31, 1996, between KIRKWOOD COMMUNITY
COLLEGE, (Merged Area X), Cedar Rapids, Iowa, ("Kirkwood") and MCLEOD NETWORK
SERVICES, INC., ("Employer"), under the following circumstances:
A. Pursuant to the Iowa Industrial New Jobs Training
Act, Iowa Code Chapter 260E, Kirkwood and Employer have determined to enter
into this Agreement for purposes of establishing a Project to educate and train
certain persons employed by Employer in new jobs within the Merged Area.
B. Kirkwood and Employer each have full right and lawful
authority to enter into this Agreement and to perform and observe the
provisions hereof on their respective parts to be performed and observed.
NOW, THEREFORE, in consideration of the premises and the
mutual representations and agreements hereinafter contained, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. "Act" means the Iowa Industrial New Jobs
Training Act, Iowa Code Chapter 260E, as it may be amended from time to time,
and the regulations issued thereunder by the Iowa Department of Economic
Development as the regulations may be amended from time to time.
Section 1.2. "Certificates" means Kirkwood Community
College Industrial New Jobs Training Certificates authorized to be issued
pursuant to the Resolution for purposes of funding the Program Costs.
Section 1.3. "Debt Service" shall mean the payment of
the principal and premium, if any, and interest on the Certificates in
accordance with the Resolution and the terms of the Certificates.
Section 1.4. "Incremental Property Taxes" means
incremental property taxes, as defined in Section 260E.4 of the Act, to be
received or derived from Employer's Taxable Business Property where new jobs
are created as a result of the Project.
Section 1.5. "New Jobs Withholding Credits" means the
new jobs credit from withholding, as defined in Section 260E.5 of the Act, paid
to Kirkwood by Employer.
Section 1.6. "Person" shall include, but not be
limited to, individual, corporate, government or governmental subdivision or
agency, business trust, estate, trust, partnership or association, or any other
legal entity.
Section 1.7. "Program Costs" means all necessary and
incidental costs of providing Program Services for the Project including the
Debt Service and the deferred costs of Certificate issuance. Attached hereto as
Exhibit "B" and incorporated herein by this reference is a tentative budget
relating to the Project.
<PAGE> 3
Section 1.8. "Program Services" for the Project are as
tentatively set forth on Exhibits "B" and "C" attached hereto and incorporated
herein by this reference. Exhibit "C" sets forth the number of new jobs to be
trained, the expected beginning and ending date of the training to be provided,
the length of time each new job category will be provided training, the
estimated costs, the training that will be provided and the expected date by
which the number of new jobs will be filled.
Section 1.9. "Project" shall consist of this training
arrangement to provide Program Services pursuant to this Agreement with respect
to Employer's employees to be employed by Employer in new jobs at the Project
Site in Cedar Rapids, Linn County, Iowa.
Section 1.10. "Project Fund" means a special fund of
Kirkwood into which a portion of the proceeds from the issuance and sale of the
Certificates shall be deposited and which shall be used to pay Program Costs
and for no other purpose.
Section 1.11. "Project Site" means the real estate
(including improvements constructed or to be constructed thereon) described in
Exhibit "A", attached hereto and incorporated herein by reference, where
Employer's facility, where new jobs will be created, is located.
Section 1.12. "Reserve" means a portion of the proceeds
from the issuance and sale of Certificates to be used from time to time to
satisfy Debt Service when due.
Section 1.13. "Resolution" means the Resolution or
Resolutions authorizing the issuance of Industrial New Jobs Training
Certificates adopted by Kirkwood in connection with the Project.
Section 1.14. "Revenue Fund" means the special tax fund
created in the Resolution in order to pay the principal of and interest on
Certificates issued in connection with the Project.
Section 1.15. "Taxable Business Property" means the
Project Site.
Section 1.16. "Training" means the Program Services
exclusive of administrative fees for the new jobs training program, Kirkwood's
legal, underwriting and financial fees, allowable discount, other costs
associated with the Certificates, and the Reserve.
Other terms used in this Agreement shall have the meanings set
out in the Act.
ARTICLE II
PROJECT; PROGRAM SERVICES
Section 2.1. Kirkwood agrees to provide the Program
Services to the extent of funds available for that purpose in the Project Fund.
It is understood and agreed that Employer and Kirkwood will cooperate in the
coordination and programming of the specific expenditures and operation of the
Project within the guidelines set out in this Agreement and Exhibits "B" and
"C". Kirkwood may, in its discretion, subcontract with other entities or
persons to provide all or part of the Training. It is understood and agreed
that the Training set forth on Exhibit "C" is tentative and is subject to
change, within the budget for the Project, upon the mutual agreement of
Kirkwood, acting through its appropriate officials, and Employer.
Section 2.2. Kirkwood and Employer agree that all
necessary and incidental costs, including but not limited to Program Costs and
Debt Service and related costs may be paid from one or a
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<PAGE> 4
combination of the following sources: (a) New Jobs Withholding Credits, (b)
Incremental Property Taxes, and (c) tuition, student fees, or special charges
fixed by the Board of Directors of Kirkwood to defray Program Costs in whole or
in part. New Jobs Withholding Credits and Incremental Property Taxes shall be
placed in the Revenue Fund established in the Resolution and used exclusively
for purposes of the Project. Tuition, student fees or special charges, if any,
shall be placed in the Project Fund and used exclusively for purposes of the
Project. Kirkwood and Employer agree that Employer's Taxable Business Property
includes its current and future interest in the Project Site. Employer
acknowledges that it is not relying on any representations of Kirkwood, its
agents or attorneys, that the foregoing, in fact or law, constitutes Employer's
Taxable Business Property under the Act.
Section 2.3. Kirkwood and Employer agree that the
receipts from the New Jobs Withholding Credits and the Incremental Property
Taxes, and the Revenue Fund into which the same are paid may be irrevocably
pledged by Kirkwood for the payment of the Debt Service. Attached hereto as
Exhibit "D" is a tentative payment schedule for the Certificates. Following
issuance and sale of the Certificates a final payment schedule, if different
from Exhibit D, shall be prepared using the actual rates of interest and
maturities for the Certificates. Such final payment schedule, if prepared,
shall become a part of this Agreement, as Exhibit D, without further action by
Employer or Kirkwood and shall supersede the Exhibit D attached hereto. A copy
of such final payment schedule shall be provided to Employer.
Section 2.4. The term of this Agreement shall not
exceed ten (10) years and shall coincide with the period of time over which the
Certificates mature and the Program Costs are deferred; provided, that this
Agreement shall not terminate and the obligations, representations, warranties,
covenants and agreements of Employer hereunder shall continue until the
Certificates, if any, issued in connection with the Project shall have been
paid in full.
Section 2.5. Kirkwood may revise or expand the
Training from time to time with the consent of Employer; provided that no
revision shall be made which would change the Project to purposes other than
purposes permitted by the Act.
Section 2.6. The Certificates will be issued pursuant
to the Resolution adopted by the Board of Directors of Kirkwood in the
aggregate principal amount, bearing interest (at a rate to be determined at the
time the Certificates are authorized to be issued), maturing, and being
redeemable as set forth in the Resolution.
The proceeds from the sale of the Certificates shall be paid
to Kirkwood and deposited in the Project Fund or other fund established by
Kirkwood. The Project Fund shall be used only for purposes of the Project.
Pending disbursements for Program Services and Program Costs, the proceeds so
deposited in the Project Fund, together with any investment earnings thereon,
shall be subject to a lien in favor of the holders of the Certificates as
provided in the Resolution authorizing the Certificates.
Section 2.7. In the event Certificates are not issued
or sold by Kirkwood, Employer agrees to pay to Kirkwood a sum equal to the
necessary and incidental costs actually incurred by Kirkwood which would have
been paid from the proceeds of the Certificates, or the funds available from
the sources described in Sections 2.2 and 3.4 of this Agreement if the
Certificates had been issued by Kirkwood.
Section 2.8. Investment earnings from any source on
moneys deposited in the Project Fund, Revenue Fund or any other fund shall be
regarded as revenues of the Project and be used for payment of the Debt Service
or such other uses authorized by the Resolution.
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Section 2.9. Employer certifies that the number of
jobs, including formerly existing jobs, on its payroll in Iowa is twelve (12)
as of August 10, 1995. Employer further certifies that the number of jobs,
including formerly existing jobs, on its payroll with respect to the Project
is twelve (12) as of the date set forth in the preceding sentence.
Section 2.10. The administrative fee of Kirkwood and
the state administrative fee shall be the administrative fee of Kirkwood and
the state administrative fee, respectively, determined as of the date or dates
of issuance of the Certificates. In addition, the necessary Reserve shall be
determined as of the date or dates of issuance of the Certificates. The amount
of money to be provided for Training shall be adjusted to reflect changes in
the foregoing fees and necessary Reserve.
ARTICLE III
PAYMENTS; SECURITY
Section 3.1. Employer agrees to timely pay or cause to
be paid the property taxes on the Taxable Business Property and agrees to
timely pay the New Jobs Withholding Credits to Kirkwood.
Section 3.2. Kirkwood agrees that the Revenue Fund
shall be pledged for the payment of the Debt Service.
Section 3.3 To secure the obligations of Employer
under this Agreement, Employer shall provide Kirkwood with a Financial
Guarantee Bond (the "Bond") in form and from a surety acceptable to Kirkwood.
The Bond must be renewed annually with the form and surety acceptable to
Kirkwood. The Bond shall secure Employer's performance under this Agreement in
an amount equal to the amount of New Jobs Withholding Credits that are
necessary to pay the remaining Debt Service. Kirkwood will cooperate with
Employer to establish such amount on an annual basis. Employer shall provide
Kirkwood with evidence of the renewed Bond at least sixty (60) days prior to
the expiration of each Bond. Failure by Employer to maintain a Bond or to
provide evidence of the renewed Bond at least sixty (60) days prior to the
expiration of each Bond shall be an event of default under this Agreement.
Upon occurrence of any event of default under this Agreement Kirkwood may
exercise all rights under this Agreement and the Bond.
Kirkwood agrees to provide notice to the surety on the Bond,
as renewed, of the occurrence of an event of default under this Agreement.
Kirkwood further agrees to notify Employer of a claim made against the Bond.
Such notice shall be addressed as provided in Section 6.4 with a copy to the
attention of Employer's Legal Department or President.
The Bond and each renewal shall be in lieu of the rights
Kirkwood may have to assert a lien against the property of Employer as provided
in the Act and Iowa law.
Nothing contained herein shall abrogate the collection of, or
any lien for, unpaid property taxes which have attached to real estate pursuant
to Iowa Code chapter 445, including taxes levied against tangible property that
is assessed and taxed as real property pursuant to Iowa Code chapter 427A, or
the collection of, or any lien for, unpaid taxes for which notice of lien has
been property recorded or filed pursuant to Iowa Code section 422.26.
Section 3.4. This Agreement is entered into upon the
expectation that, as set forth in Exhibit "D", sufficient funds from
Incremental Property Taxes and New Jobs Withholding Credits will be generated
to pay the Debt Service. Employer and Kirkwood have designed the Project to
fit within the
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<PAGE> 6
funds expected to be available from the sources of payment set forth in Section
2.2. Exhibit "D" sets forth the minimum annual amount of Incremental Property
Taxes, New Jobs Withholding Credits or tuition and fee payments to be paid for
Program Costs. Employer's projections of gross wages to be paid to employees
in new jobs covered by this Agreement, the estimated assessed value of Project
Site improvements are set forth in Exhibit "E" attached hereto and incorporated
herein.
Section 3.5. If for any reason the funds in the
Project Fund or the Revenue Fund are not sufficient to satisfy the Program
Costs, other than costs of Training, Employer, upon written notice that the
funds in the Project Fund or the Revenue Fund are not sufficient, will,
nonetheless, advance to Kirkwood such amounts as may, from time to time, be
required to satisfy the Program Costs. If Employer should advance any amount
under this Section, it shall not be entitled to any abatement, diminution or
postponement of other payments required; provided, however, to the extent
permitted by law, Employer will be entitled to payment of amounts advanced,
without interest, from the Project Fund or the Revenue Fund when Kirkwood
determines that a surplus exists and that such surplus is not needed to satisfy
other Program Costs and the Debt Service has been paid in full. Any such
advancements received or to be received from Employer under this Section shall
not be pledged to payment of the Certificates under the Resolution. The notice
required hereunder shall specify the date by which Employer is to make the
necessary advance; provided, however, in the absence of such date specified in
the notice, the advance shall be due within fifteen (15) days of the date of
the notice. The obligation of Employer hereunder shall be primary and Kirkwood
may proceed against Employer without proceeding against or exhausting any other
remedies which it may have and without resorting to any other security held by
Kirkwood.
ARTICLE IV
COVENANTS, REPRESENTATIONS AND WARRANTIES
Section 4.1. Representations of Kirkwood. Kirkwood
represents that: (a) it is duly organized and validly existing under the laws
of the State of Iowa; (b) it is not in violation of or in conflict with any
provisions of the laws of the State which would impair its ability to carry out
its obligations hereunder; (c) it is empowered to enter into the transactions
contemplated by this Agreement; and (d) it will do all things in its power
required of it in order to maintain its existence or assure the assumption of
its obligations hereunder by any successor public body.
Section 4.2. Representations, Warranties and Covenants
of Employer. Employer represents, warrants and covenants that:
(a) It is a corporation organized under the
laws of the State of Iowa and is authorized to do business in
the State of Iowa.
(b) It has full power and authority to
execute, deliver and perform this Agreement and all other
instruments given by Employer to secure its performance and to
enter into and carry out the transactions contemplated herein.
Such execution, delivery and performance are not in
contravention of law or Employer's articles of incorporation,
bylaws or any indenture, agreement, mortgage, lease,
undertaking or any other restriction, obligation or instrument
to which Employer is a party or by which it is bound. This
Agreement has by proper action been duly authorized, executed
and delivered by Employer and all steps necessary have been
taken to constitute this Agreement a valid and binding
obligation of Employer.
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<PAGE> 7
(c) There is no litigation or proceeding
pending, or to the knowledge of Employer threatened, against
Employer or any other person affecting in any manner
whatsoever the right of Employer to execute the Agreement or
to otherwise comply with its obligations contained in the
Agreement.
(d) The employees to be trained under this
Agreement have not commenced work for Employer prior to the
date set forth in Section 2.9, and those employees will be
employed in new jobs in connection with the expansion of
Employer's business operations in the merged area. Each of
the employees to be trained under the Agreement will be
employed directly by Employer.
(e) Employer is an industry, as that term is
defined in the Act, and is engaged in providing services
(other than retail, health or professional services) in
interstate commerce.
(f) Each of the jobs covered by this
Agreement is a "new job" as that term is defined in the Act.
(g) Employer has an interest in the Project
Site.
(h) Employer knowingly assumes the obligation
under Section 3.5 hereof in the event the sources of payment
described in Section 2.2 are not sufficient to satisfy the
Program Costs in full.
(i) This Agreement is entered into upon the
expectation that there will not be any revenues from
Incremental Property Taxes and that references herein to
Incremental Property Taxes and Taxable Business Property are
merely for the convenience of the parties and such references
do not imply that revenues from Incremental Property Taxes are
anticipated or that Kirkwood need take any action with regard
to Incremental Property Taxes.
(j) Employer's projections of the annual
gross wages to be paid by Employer to employees in the new
jobs covered by this Agreement are truly and accurately
depicted on Exhibit "E".
(k) The Project Site and Employer's
operations at the Project Site will be in compliance with all
applicable federal, state and local environmental statutes,
laws and regulations. Employer will not conduct its
operations at the Project Site, or elsewhere, in such a manner
as to allow any federal, state or governmental liens or
encumbrances, to enforce the payment or contribution for
environmental damage, injury or cleanup, to be placed on the
Project Site.
ARTICLE V
EVENTS OF DEFAULT
Section 5.1. Events of Default. Each of the following
shall be an "event of default":
(a) Employer shall fail to pay, advance or
deposit any amount required to be made by Employer on or
prior to the date on which such payment, advancement or
deposit is due and payable and continuing for more than five
(5) business days thereafter.
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<PAGE> 8
(b) Employer shall fail to observe and perform
any other agreement, representation, term or condition
contained in this Agreement, if such failure continues for a
period of twenty (20) days after notice of such failure is
given to Employer by Kirkwood, or for such longer period
as Kirkwood may agree to in writing; provided, that if the
failure is other than the payment of money and is of such
nature that it cannot be corrected within the applicable
period, such failure shall not constitute an event of default
so long as Employer institutes curative action within the
applicable period and diligently pursues such action to
completion.
(c) Employer shall: (i) admit in writing its
inability to pay its debts generally as they become due; (ii)
have an order for relief entered in any case commenced
by or against it under the federal bankruptcy laws, as now or
hereafter in effect; (iii) commence a proceeding under any
other federal or state bankruptcy, insolvency, reorganization
or other similar law, or have such a proceeding commenced
against it and either have an order of insolvency or
reorganization entered against it or have the proceeding
remain undismissed and unstayed for ninety (90) days; (iv)
make an assignment for the benefit of creditors; or (v) have a
receiver or trustee appointed for it or for the whole or any
substantial part of its property.
(d) Employer shall (i) close or announce that
it is closing its operations at the Project Site (unless such
operations will be transferred to another facility in the
State of Iowa and as a result Kirkwood will be entitled to
receive the revenue from the sources set forth in Section 2.2
or receives assurance satisfactory to Kirkwood of the receipt
by Kirkwood of payments to satisfy the Debt Service on the
Certificates); or (ii) have failed to make improvements to
the Project Site within the time set forth on Exhibit "E" and
for that reason the Project has not or will not generate
sufficient Incremental Property Taxes to enable Kirkwood to
satisfy the Debt Service from the sources set forth in
Section 2.2.
(e) Kirkwood determines from time to time that,
for any reason, sufficient realized or projected revenue from
Incremental Property Taxes and/or New Jobs Withholding Credits
will not be generated by the Project to enable Kirkwood to
satisfy the Debt Service from the sources set forth in
Section 2.2.
(f) Any representation or warranty made by
Employer herein or any statement in any report, certificate,
financial statement or other instrument furnished in
connection with this Agreement or with the sale of the
Certificates shall at any time prove to have been false or
misleading in any material respect when made or given.
(g) Employer acts in a manner contrary to any
provision of this Agreement or fails to act in a manner
required by any provision of this Agreement and Kirkwood
determines as a result of such act or failure to act that
there are not or will not be sufficient funds generated by the
Project to enable Kirkwood to satisfy the Debt Service from
the sources set forth in Section 2.2.
The exercise of remedies upon the occurrence of any event of
default under subsection (c) above shall be subject to any applicable
limitations of federal bankruptcy law affecting or precluding such exercise
during the pendency of or immediately following any bankruptcy, liquidation or
reorganization.
Section 5.2. Whenever an event of default shall have
happened and be subsisting, Kirkwood may, without notice to Employer, withhold
Training and suspend payments to Employer, and apply all or a part of any
remaining funds budgeted for Training to the satisfaction of the Debt Service
on the Certificates. In addition, Kirkwood may take whatever other action at
law or in equity may appear
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<PAGE> 9
necessary or desirable to collect the payments and other amounts then due and
thereafter to become due, or to enforce performance and observance of any other
obligation or agreement of Employer under this Agreement. Notwithstanding the
foregoing, Kirkwood shall not be obligated to take any step which in its
opinion will or might cause it to expend time or money or otherwise incur
liability unless and until a satisfactory indemnity bond has been furnished to
Kirkwood at no cost or expense to Kirkwood. Any amounts collected as payments
or applicable to payments and any other amounts which would be applicable to
payment of principal of and premium, if any, and interest on the Certificates
collected pursuant to action taken under this Section shall be paid by Kirkwood
to the holders of the Certificates.
Section 5.3. Immediately upon the occurrence of an
event of default, there shall be due from Employer to Kirkwood such amount as
will enable Kirkwood to presently satisfy the remaining Debt Service on the
Certificates. Such amount shall be equal to the total amount of the standby
tax levied or required to be levied under Section 260E.6 of the Act to satisfy
the remaining Debt Service on the Certificates determined from Exhibit D
prepared in accordance with Section 2.3. No demand or notice of the amount due
immediately upon the occurrence of an event of default is or shall be required
to fix the liability of Employer or the amount due from Employer. The amount
due hereunder from Employer shall be a debt of Employer to Kirkwood and
Kirkwood may set off against the amount due from Employer any debt or debts of
Kirkwood to Employer. Amounts received by Kirkwood hereunder shall not be
pledged to repayment of the Certificates.
Section 5.4. No remedy conferred upon or reserved to
Kirkwood by this Agreement is intended to be exclusive of any other available
remedy or remedies, but each and every such remedy shall be cumulative and
shall be in addition to every other remedy now or hereafter existing at law, in
equity or by statute. No delay or omission to exercise any right or power
accruing upon any default shall impair any such right or power or shall be
construed to be a waiver thereof, but any such right and power may be exercised
from time to time and as often as may be deemed expedient. In order to entitle
Kirkwood to exercise any remedy reserved to it in this Article, it shall not be
necessary to give any notice, other than such notice as may be expressly
required herein, nor shall it be necessary to make any declaration of an event
of default other than such declaration as may be expressly required herein.
Kirkwood will not perfect the lien provided by Iowa law in accordance with the
terms of Section 3.3.
Section 5.5. In the event any agreement contained in
this Agreement should be breached by either party and thereafter waived by the
other party, such waiver shall be limited to the particular breach so waived
and shall not be deemed to be a waiver of any other breach hereunder.
ARTICLE VI
MISCELLANEOUS
Section 6.1. This Agreement may be executed in any
number of counterparts, each of which shall be regarded as an original and all
of which shall constitute but one and the same instrument.
Section 6.2. If any provision of this Agreement, or
any covenant, stipulation, obligation, agreement, act or action, or part
thereof made, assumed, entered into or taken thereunder or any application
thereof, is for any reason held to be illegal or invalid, such illegality or
invalidity shall not affect any other provision or any other covenant,
stipulation, obligation, agreement, act or action or part thereof, made,
assumed, entered into, or taken, each of which shall be construed and enforced
as if such illegal or invalid portion were not contained herein. Nor shall
such illegality or invalidity of any application thereof affect any legal and
valid application thereof, and each such provision,
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<PAGE> 10
covenant, stipulation, obligation, agreement, act or action, or part shall be
deemed to be effective, operative, made, entered into or taken in the manner
and to the full extent permitted by law.
Section 6.3. This Agreement shall be governed
exclusively by and construed in accordance with the laws of the State of Iowa.
With the exception of the lien provisions of Iowa law as modified by Section
3.3, the applicable provisions of Iowa law, including the Act, are a part of
this Agreement as if set forth herein.
Section 6.4. All notices, requests or other
communications hereunder shall be in writing and shall be deemed to be
sufficiently given when mailed by registered or certified mail, postage
prepaid, addressed to the appropriate Notice Address as follows:
Financial Manager
Financial Services
Kirkwood Community College
P.O. Box 2068
6301 Kirkwood Boulevard, S.W.
Cedar Rapids, Iowa 52406
Tami Young
McLeod Network Services, Inc.
221 3rd Avenue S.E.
Cedar Rapids, IA 52401
Employer and Kirkwood may, by notice given hereunder,
designate any further or different addresses or persons to which subsequent
notices, requests or other communications shall be sent.
Revisions in the Training set forth on Exhibit "C" and an
increase in the number of new jobs covered by this Agreement shall be approved
in writing by the above representatives of Kirkwood and Employer, their
respective successors or such other individuals as either party designates in
the manner set forth herein, provided, however, consent of Employer shall not
be required for a reduction in Training following an event of default.
Section 6.5. All covenants, stipulations, obligations
and agreements of Kirkwood and Employer contained in this Agreement shall be
effective to the extent authorized and permitted by applicable law. No such
covenant, stipulation, obligation or agreement shall be deemed to be a
covenant, stipulation, obligation or agreement of any present or future member,
officer, agent or employee of Kirkwood or the Board of Directors of Kirkwood
other than in their official capacity, and neither the members of the Board of
Directors of Kirkwood nor any official, agent or employee of Kirkwood shall be
liable personally on the Certificates or the covenants, stipulations,
obligations or agreements of Kirkwood contained in this Agreement.
Section 6.6. This Agreement shall inure to the benefit
of and shall be binding in accordance with its terms upon Kirkwood, Employer
and their respective permitted successors and assigns provided that this
Agreement may not be assigned by Employer without the written consent of
Kirkwood and may not be assigned by Kirkwood without the consent of Employer
except as may be necessary to enforce or secure payment of the Debt Service.
Section 6.7. Employer covenants and agrees that it
will not sell, lease, sublease, mortgage or in any manner dispose of its
interest in the facilities described herein or any capital part thereof so as
to remove the same from the tax rolls until satisfaction and discharge of the
Certificates unless
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<PAGE> 11
Employer provides Kirkwood with assurance, in a form acceptable to and approved
by Kirkwood, of future payments necessary to meet the Debt Service on the
Certificates. Employer further covenants and agrees to keep the facilities
continuously insured against loss or damage by fire, lightening, such other
perils as are covered by standard "extended coverage" endorsements, vandalism
and malicious mischief and containing customary loss deductible provisions.
Section 6.8. Kirkwood agrees to use its best efforts
to sell and issue the Certificates, and Employer will cooperate with Kirkwood
to provide necessary financial information in connection with the sale of the
Certificates. It is understood and agreed that should the Certificates not be
marketed or marketable within a reasonable time that this Agreement may be
terminated and the Project terminated, provided, however, the obligation of
Employer under Section 2.7 hereof shall continue following any such
termination.
Section 6.9. Employer covenants that it shall take
such action or shall refrain from taking any action as shall be necessary under
the Internal Revenue Code of 1986, Sections 103, 141-150 and the rulings and
regulations thereunder to maintain any exemption from Federal income taxes of
the interest on the Certificates.
Section 6.10. Disbursements to Employer for Program
Services under this Agreement shall be made only upon approval of vouchers
therefor by the Board of Directors of Kirkwood. Employer agrees that it will
request disbursements only for approved Program Services. Employer agrees that
it will not request disbursements that are prohibited by Sections 6.11, 6.12
and 6.13 hereof. Amounts disbursed to Employer shall be conditional and
subject to subsequent verification and audit of the Project. Requests by
Employer for disbursements, including those requests received by Kirkwood,
shall not constitute a debt of Kirkwood to Employer.
Section 6.11. No monies disbursed from the proceeds of
the Certificates will be used directly or indirectly to finance land,
facilities or depreciable property (or an interest therein) of Employer or
other private Person.
Section 6.12. No monies disbursed from the proceeds of
the Certificates will be used directly or indirectly for the acquisition of any
property (or an interest therein) unless the first use of such property is
pursuant to such acquisition and such property is owned by Kirkwood.
Section 6.13. No monies disbursed from the proceeds of
the Certificates will be used directly or indirectly to provide any airplane,
skybox or other private luxury box, health club facility, facility primarily
used for gambling or a store the principal business of which is the sale of
alcoholic beverages for consumption off premises.
Section 6.14. The provisions of this Agreement and the
provisions of the Resolution are to be construed wherever possible so that they
will not be in conflict. In the event such construction is not possible, the
provisions of the Resolution shall prevail.
Section 6.15. Employer acknowledges that issuance of
the Certificates may be conditioned on receipt by Kirkwood of an opinion of
bond counsel that interest on all or part of the Certificates is exempt from
federal income tax and that such opinion will be predicated on satisfaction of
the applicable provisions of the Internal Revenue Code of 1986 including, but
not limited to, the receipt by Kirkwood of an allocation of the State of Iowa
volume ceiling for the Project.
Section 6.16. Employer acknowledges that pursuant to
Section 260E.6 of the Act, the Resolution adopted by Kirkwood may authorize the
issuance of industrial new jobs training Certificates
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<PAGE> 12
to fund Iowa Code Chapter 260E training programs with other employers.
Employer acknowledges and agrees that the industrial new jobs training
Certificates issued by Kirkwood to fund training programs for multiple
projects, including this Project, will not be identifiable or specifically
attributable to this Project.
References in this Agreement to "Certificates" include a
reference to an undivided portion of industrial new jobs training Certificates
issued by Kirkwood to fund training programs for multiple projects, including
this Project. Employer's obligations, covenants and representations set forth
herein with respect to the Certificates are not and shall not be conditioned on
the issuance of training certificates identifiable or specifically attributable
to this Project.
Section 6.17. This Agreement, including Exhibits,
constitutes the entire agreement between Kirkwood and Employer with respect to
the subject matter hereof and as such supersedes all previous negotiations,
commitments and understandings. Captions and the alignment of the Agreement
are for convenience only and shall not be construed to modify the rights or
obligations of the parties.
ARTICLE VII
SUPPLEMENTAL NEW JOBS CREDIT FROM WITHHOLDING
Certain jobs included in the Project are eligible for a
supplemental new jobs credit from withholding in an amount equal to one and
one-half percent of the gross wages paid by the Employer pursuant to Senate
File 2351 adopted by the 76th General Assembly effective July 1, 1996.
Kirkwood and the Employer agree that the Supplemental Program shall be
administered in the same manner as the remainder of the Project and that all
terms and conditions of this Agreement shall apply to the entire Project
including the Supplemental Program.
Section 7.1. Terms used in this Article shall have the
meanings set out in Article I or this Section 7.1. Other terms used in this
Article shall have the meanings set out in Chapters 15A or 260E, Code of Iowa,
1995, as amended.
- "Average Wage" means the average county wage in the
county where the Project Site is located or the
average regional wage, whichever is lower, as
compiled annually by the Department for the Community
Economic Betterment Program.
- "Starting Wages" or "Wages" means the wage being paid
or to be paid by the Employer under the terms of this
Agreement and which has been determined by Kirkwood
to equal or exceed the Average Wage based upon
criteria established in Section 15A.7 Code of Iowa,
1995, as amended, and rules promulgated by the
Department.
- "Supplemental Program" means that portion of the
Project including Program Services and Program Costs
eligible to be funded from a supplemental new jobs
credit from withholding from jobs created under this
Agreement because the Employer has agreed to pay
Starting Wages as defined in this Agreement.
Section 7.2. The Employer agrees that it shall pay
Wages for the jobs included in the Supplemental Program (and for which the
supplemental new jobs credit from withholding is collected) at least equal to
the Average Wage. In the event the Employer fails to pay Wages for the jobs
included in the Supplemental Program, such failure may constitute an event of
default under this Agreement.
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<PAGE> 13
Section 7.3. The supplemental new jobs credit from
withholding shall be collected, accounted for and may be pledged by Kirkwood in
the same manner as described in Section 2.2 of this Agreement and Section
260E.5 of the Act.
Section 7.4. The number of jobs included in the
Supplemental Program are identified on Exhibit C. The specific jobs are as
identified in writing by the Employer. Kirkwood hereby determines eligibility
of the Supplemental Program and Starting Wages for those jobs shown on Exhibit
C as included in the Supplemental Program.
Section 7.5. To provide funds for the payment of the
costs of the Supplemental Program Kirkwood may borrow money, issue and sell
Certificates and secure the payment of the Certificates in the same manner as
described in Article II of this Agreement and Section 260E.6 of the Act. It is
the intent of the parties that the Supplemental Program shall be funded and
administered in such a manner as to maintain any tax exempt status of the
interest on Certificates issued to fund the Program Services under Chapter
260E.
Section 7.6. The Supplemental Program and the
supplemental new jobs credit from withholding provided for in this Article VII
shall be in addition to and not in lieu of the program and credit authorized in
Article II of this Agreement and Section 260E.5 of the Act. The Program
Services set forth on Exhibits B and C, the tentative payback schedule set
forth on Exhibit D, and the Employer's projections of wages to be paid in those
new jobs qualifying for the supplemental new jobs credit from withholding
includes the Supplemental Program.
IN WITNESS WHEREOF, Kirkwood and Employer have caused this
Agreement to be duly executed all as of the date hereinabove written.
KIRKWOOD COMMUNITY COLLEGE
October 31, 1996 By /s/ WAYNE L. NEWTON
- ------------------------------------ -----------------------------------
Date
ATTEST:
/s/ JUDITH A. GLASS
- ------------------------------------
MCLEOD NETWORK SERVICES, INC.
221 3rd Avenue S.E.
Cedar Rapids, IA 52401
October 29, 1996 By /s/ STEPHEN C. GRAY
- ------------------------------------ -----------------------------------
Date Stephen C. Gray, President
ATTEST:
/s/ CASEY D. MAHON
- ------------------------------------
CASEY D. MAHON, Secretary
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<PAGE> 1
EXHIBIT 10.83
- --------------------------------------------------------------------------------
INDUSTRIAL NEW JOBS
TRAINING AGREEMENT
between
KIRKWOOD COMMUNITY COLLEGE
Cedar Rapids, Iowa ("Kirkwood")
and
MCLEOD, INC.
("Employer")
Dated as of October 31, 1996
- --------------------------------------------------------------------------------
Relating to
$620,000
Kirkwood Community College,
Cedar Rapids, Iowa
Industrial New Jobs Training Certificates
(McLeod, Inc. Project)
<PAGE> 2
INDUSTRIAL NEW JOBS
TRAINING AGREEMENT
This Industrial New Jobs Training Agreement (the "Agreement")
made and entered into as of October 31, 1996, between KIRKWOOD COMMUNITY
COLLEGE, (Merged Area X), Cedar Rapids, Iowa, ("Kirkwood") and MCLEOD, INC.,
("Employer"), under the following circumstances:
A. Pursuant to the Iowa Industrial New Jobs Training
Act, Iowa Code Chapter 260E, Kirkwood and Employer have determined to enter
into this Agreement for purposes of establishing a Project to educate and train
certain persons employed by Employer in new jobs within the Merged Area.
B. Kirkwood and Employer each have full right and lawful
authority to enter into this Agreement and to perform and observe the
provisions hereof on their respective parts to be performed and observed.
NOW, THEREFORE, in consideration of the premises and the
mutual representations and agreements hereinafter contained, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. "Act" means the Iowa Industrial New Jobs
Training Act, Iowa Code Chapter 260E, as it may be amended from time to time,
and the regulations issued thereunder by the Iowa Department of Economic
Development as the regulations may be amended from time to time.
Section 1.2. "Certificates" means Kirkwood Community
College Industrial New Jobs Training Certificates authorized to be issued
pursuant to the Resolution for purposes of funding the Program Costs.
Section 1.3. "Debt Service" shall mean the payment of
the principal and premium, if any, and interest on the Certificates in
accordance with the Resolution and the terms of the Certificates.
Section 1.4. "Incremental Property Taxes" means
incremental property taxes, as defined in Section 260E.4 of the Act, to be
received or derived from Employer's Taxable Business Property where new jobs
are created as a result of the Project.
Section 1.5. "New Jobs Withholding Credits" means the
new jobs credit from withholding, as defined in Section 260E.5 of the Act, paid
to Kirkwood by Employer.
Section 1.6. "Person" shall include, but not be
limited to, individual, corporate, government or governmental subdivision or
agency, business trust, estate, trust, partnership or association, or any other
legal entity.
Section 1.7. "Program Costs" means all necessary and
incidental costs of providing Program Services for the Project including the
Debt Service and the deferred costs of Certificate issuance. Attached hereto as
Exhibit "B" and incorporated herein by this reference is a tentative budget
relating to the Project.
Section 1.8. "Program Services" for the Project are as
tentatively set forth on Exhibits "B" and "C" attached hereto and incorporated
herein by this reference. Exhibit "C" sets forth the number
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of new jobs to be trained, the expected beginning and ending date of the
training to be provided, the length of time each new job category will be
provided training, the estimated costs, the training that will be provided and
the expected date by which the number of new jobs will be filled.
Section 1.9. "Project" shall consist of this training
arrangement to provide Program Services pursuant to this Agreement with respect
to Employer's employees to be employed by Employer in new jobs at the Project
Site in Cedar Rapids, Linn County, Iowa.
Section 1.10. "Project Fund" means a special fund of
Kirkwood into which a portion of the proceeds from the issuance and sale of the
Certificates shall be deposited and which shall be used to pay Program Costs
and for no other purpose.
Section 1.11. "Project Site" means the real estate
(including improvements constructed or to be constructed thereon) described in
Exhibit "A", attached hereto and incorporated herein by reference, where
Employer's facility, where new jobs will be created, is located.
Section 1.12. "Reserve" means a portion of the proceeds
from the issuance and sale of Certificates to be used from time to time to
satisfy Debt Service when due.
Section 1.13. "Resolution" means the Resolution or
Resolutions authorizing the issuance of Industrial New Jobs Training
Certificates adopted by Kirkwood in connection with the Project.
Section 1.14. "Revenue Fund" means the special tax fund
created in the Resolution in order to pay the principal of and interest on
Certificates issued in connection with the Project.
Section 1.15. "Taxable Business Property" means the
Project Site.
Section 1.16. "Training" means the Program Services
exclusive of administrative fees for the new jobs training program, Kirkwood's
legal, underwriting and financial fees, allowable discount, other costs
associated with the Certificates, and the Reserve.
Other terms used in this Agreement shall have the meanings set
out in the Act.
ARTICLE II
PROJECT; PROGRAM SERVICES
Section 2.1. Kirkwood agrees to provide the Program
Services to the extent of funds available for that purpose in the Project Fund.
It is understood and agreed that Employer and Kirkwood will cooperate in the
coordination and programming of the specific expenditures and operation of the
Project within the guidelines set out in this Agreement and Exhibits "B" and
"C". Kirkwood may, in its discretion, subcontract with other entities or
persons to provide all or part of the Training. It is understood and agreed
that the Training set forth on Exhibit "C" is tentative and is subject to
change, within the budget for the Project, upon the mutual agreement of
Kirkwood, acting through its appropriate officials, and Employer.
Section 2.2. Kirkwood and Employer agree that all
necessary and incidental costs, including but not limited to Program Costs and
Debt Service and related costs may be paid from one or a combination of the
following sources: (a) New Jobs Withholding Credits, (b) Incremental Property
Taxes, and (c) tuition, student fees, or special charges fixed by the Board of
Directors of Kirkwood to
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defray Program Costs in whole or in part. New Jobs Withholding Credits and
Incremental Property Taxes shall be placed in the Revenue Fund established in
the Resolution and used exclusively for purposes of the Project. Tuition,
student fees or special charges, if any, shall be placed in the Project Fund
and used exclusively for purposes of the Project. Kirkwood and Employer agree
that Employer's Taxable Business Property includes its current and future
interest in the Project Site. Employer acknowledges that it is not relying on
any representations of Kirkwood, its agents or attorneys, that the foregoing,
in fact or law, constitutes Employer's Taxable Business Property under the Act.
Section 2.3. Kirkwood and Employer agree that the
receipts from the New Jobs Withholding Credits and the Incremental Property
Taxes, and the Revenue Fund into which the same are paid may be irrevocably
pledged by Kirkwood for the payment of the Debt Service. Attached hereto as
Exhibit "D" is a tentative payment schedule for the Certificates. Following
issuance and sale of the Certificates a final payment schedule, if different
from Exhibit D, shall be prepared using the actual rates of interest and
maturities for the Certificates. Such final payment schedule, if prepared,
shall become a part of this Agreement, as Exhibit D, without further action by
Employer or Kirkwood and shall supersede the Exhibit D attached hereto. A copy
of such final payment schedule shall be provided to Employer.
Section 2.4. The term of this Agreement shall not
exceed ten (10) years and shall coincide with the period of time over which the
Certificates mature and the Program Costs are deferred; provided, that this
Agreement shall not terminate and the obligations, representations, warranties,
covenants and agreements of Employer hereunder shall continue until the
Certificates, if any, issued in connection with the Project shall have been
paid in full.
Section 2.5. Kirkwood may revise or expand the
Training from time to time with the consent of Employer; provided that no
revision shall be made which would change the Project to purposes other than
purposes permitted by the Act.
Section 2.6. The Certificates will be issued pursuant
to the Resolution adopted by the Board of Directors of Kirkwood in the
aggregate principal amount, bearing interest (at a rate to be determined at the
time the Certificates are authorized to be issued), maturing, and being
redeemable as set forth in the Resolution.
The proceeds from the sale of the Certificates shall be paid
to Kirkwood and deposited in the Project Fund or other fund established by
Kirkwood. The Project Fund shall be used only for purposes of the Project.
Pending disbursements for Program Services and Program Costs, the proceeds so
deposited in the Project Fund, together with any investment earnings thereon,
shall be subject to a lien in favor of the holders of the Certificates as
provided in the Resolution authorizing the Certificates.
Section 2.7. In the event Certificates are not issued
or sold by Kirkwood, Employer agrees to pay to Kirkwood a sum equal to the
necessary and incidental costs actually incurred by Kirkwood which would have
been paid from the proceeds of the Certificates, or the funds available from
the sources described in Sections 2.2 and 3.4 of this Agreement if the
Certificates had been issued by Kirkwood.
Section 2.8. Investment earnings from any source on
moneys deposited in the Project Fund, Revenue Fund or any other fund shall be
regarded as revenues of the Project and be used for payment of the Debt Service
or such other uses authorized by the Resolution.
Section 2.9. Employer certifies that the number of
jobs, including formerly existing jobs, on its payroll in Iowa is thirty-seven
(37) as of August 10, 1995. Employer further certifies that the
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number of jobs, including formerly existing jobs, on its payroll with respect
to the Project is thirty- seven (37) as of the date set forth in the preceding
sentence.
Section 2.10. The administrative fee of Kirkwood and
the state administrative fee shall be the administrative fee of Kirkwood and
the state administrative fee, respectively, determined as of the date or dates
of issuance of the Certificates. In addition, the necessary Reserve shall be
determined as of the date or dates of issuance of the Certificates. The amount
of money to be provided for Training shall be adjusted to reflect changes in
the foregoing fees and necessary Reserve.
ARTICLE III
PAYMENTS; SECURITY
Section 3.1. Employer agrees to timely pay or cause to
be paid the property taxes on the Taxable Business Property and agrees to
timely pay the New Jobs Withholding Credits to Kirkwood.
Section 3.2. Kirkwood agrees that the Revenue Fund
shall be pledged for the payment of the Debt Service.
Section 3.3 To secure the obligations of Employer
under this Agreement, Employer shall provide Kirkwood with a Financial
Guarantee Bond (the "Bond") in form and from a surety acceptable to Kirkwood.
The Bond must be renewed annually with the form and surety acceptable to
Kirkwood. The Bond shall secure Employer's performance under this Agreement in
an amount equal to the amount of New Jobs Withholding Credits that are
necessary to pay the remaining Debt Service. Kirkwood will cooperate with
Employer to establish such amount on an annual basis. Employer shall provide
Kirkwood with evidence of the renewed Bond at least sixty (60) days prior to
the expiration of each Bond. Failure by Employer to maintain a Bond or to
provide evidence of the renewed Bond at least sixty (60) days prior to the
expiration of each Bond shall be an event of default under this Agreement.
Upon occurrence of any event of default under this Agreement Kirkwood may
exercise all rights under this Agreement and the Bond.
Kirkwood agrees to provide notice to the surety on the Bond,
as renewed, of the occurrence of an event of default under this Agreement.
Kirkwood further agrees to notify Employer of a claim made against the Bond.
Such notice shall be addressed as provided in Section 6.4 with a copy to the
attention of Employer's Legal Department or President.
The Bond and each renewal shall be in lieu of the rights
Kirkwood may have to assert a lien against the property of Employer as provided
in the Act and Iowa law.
Nothing contained herein shall abrogate the collection of, or
any lien for, unpaid property taxes which have attached to real estate pursuant
to Iowa Code chapter 445, including taxes levied against tangible property that
is assessed and taxed as real property pursuant to Iowa Code chapter 427A, or
the collection of, or any lien for, unpaid taxes for which notice of lien has
been property recorded or filed pursuant to Iowa Code section 422.26.
Section 3.4. This Agreement is entered into upon the
expectation that, as set forth in Exhibit "D", sufficient funds from
Incremental Property Taxes and New Jobs Withholding Credits will be generated
to pay the Debt Service. Employer and Kirkwood have designed the Project to
fit within the funds expected to be available from the sources of payment set
forth in Section 2.2. Exhibit "D" sets forth the minimum annual amount of
Incremental Property Taxes, New Jobs Withholding Credits or
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tuition and fee payments to be paid for Program Costs. Employer's projections
of gross wages to be paid to employees in new jobs covered by this Agreement,
the estimated assessed value of Project Site improvements are set forth in
Exhibit "E" attached hereto and incorporated herein.
Section 3.5. If for any reason the funds in the
Project Fund or the Revenue Fund are not sufficient to satisfy the Program
Costs, other than costs of Training, Employer, upon written notice that the
funds in the Project Fund or the Revenue Fund are not sufficient, will,
nonetheless, advance to Kirkwood such amounts as may, from time to time, be
required to satisfy the Program Costs. If Employer should advance any amount
under this Section, it shall not be entitled to any abatement, diminution or
postponement of other payments required; provided, however, to the extent
permitted by law, Employer will be entitled to payment of amounts advanced,
without interest, from the Project Fund or the Revenue Fund when Kirkwood
determines that a surplus exists and that such surplus is not needed to satisfy
other Program Costs and the Debt Service has been paid in full. Any such
advancements received or to be received from Employer under this Section shall
not be pledged to payment of the Certificates under the Resolution. The notice
required hereunder shall specify the date by which Employer is to make the
necessary advance; provided, however, in the absence of such date specified in
the notice, the advance shall be due within fifteen (15) days of the date of
the notice. The obligation of Employer hereunder shall be primary and Kirkwood
may proceed against Employer without proceeding against or exhausting any other
remedies which it may have and without resorting to any other security held by
Kirkwood.
ARTICLE IV
COVENANTS, REPRESENTATIONS AND WARRANTIES
Section 4.1. Representations of Kirkwood. Kirkwood
represents that: (a) it is duly organized and validly existing under the laws
of the State of Iowa; (b) it is not in violation of or in conflict with any
provisions of the laws of the State which would impair its ability to carry out
its obligations hereunder; (c) it is empowered to enter into the transactions
contemplated by this Agreement; and (d) it will do all things in its power
required of it in order to maintain its existence or assure the assumption of
its obligations hereunder by any successor public body.
Section 4.2. Representations, Warranties and Covenants
of Employer. Employer represents, warrants and covenants that:
(a) It is a corporation organized under the
laws of the State of Delaware and is authorized to do business
in the State of Iowa.
(b) It has full power and authority to
execute, deliver and perform this Agreement and all other
instruments given by Employer to secure its performance and to
enter into and carry out the transactions contemplated herein.
Such execution, delivery and performance are not in
contravention of law or Employer's articles of incorporation,
bylaws or any indenture, agreement, mortgage, lease,
undertaking or any other restriction, obligation or instrument
to which Employer is a party or by which it is bound. This
Agreement has by proper action been duly authorized, executed
and delivered by Employer and all steps necessary have been
taken to constitute this Agreement a valid and binding
obligation of Employer.
(c) There is no litigation or proceeding
pending, or to the knowledge of Employer threatened, against
Employer or any other person affecting in any manner
whatsoever the right
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of Employer to execute the Agreement or to otherwise comply
with its obligations contained in the Agreement.
(d) The employees to be trained under this
Agreement have not commenced work for Employer prior to the
date set forth in Section 2.9, and those employees will be
employed in new jobs in connection with the expansion of
Employer's business operations in the merged area. Each of
the employees to be trained under the Agreement will be
employed directly by Employer.
(e) Employer is an industry, as that term is
defined in the Act, and is engaged in providing services
(other than retail, health or professional services) in
interstate commerce.
(f) Each of the jobs covered by this
Agreement is a "new job" as that term is defined in the Act.
(g) Employer has an interest in the Project
Site.
(h) Employer knowingly assumes the obligation
under Section 3.5 hereof in the event the sources of payment
described in Section 2.2 are not sufficient to satisfy the
Program Costs in full.
(i) This Agreement is entered into upon the
expectation that there will not be any revenues from
Incremental Property Taxes and that references herein to
Incremental Property Taxes and Taxable Business Property are
merely for the convenience of the parties and such references
do not imply that revenues from Incremental Property Taxes are
anticipated or that Kirkwood need take any action with regard
to Incremental Property Taxes.
(j) Employer's projections of the annual
gross wages to be paid by Employer to employees in the new
jobs covered by this Agreement are truly and accurately
depicted on Exhibit "E".
(k) The Project Site and Employer's
operations at the Project Site will be in compliance with all
applicable federal, state and local environmental statutes,
laws and regulations. Employer will not conduct its
operations at the Project Site, or elsewhere, in such a manner
as to allow any federal, state or governmental liens or
encumbrances, to enforce the payment or contribution for
environmental damage, injury or cleanup, to be placed on the
Project Site.
ARTICLE V
EVENTS OF DEFAULT
Section 5.1. Events of Default. Each of the following
shall be an "event of default":
(a) Employer shall fail to pay, advance or
deposit any amount required to be made by Employer on or prior
to the date on which such payment, advancement or deposit is
due and payable and continuing for more than five (5) business
days thereafter.
(b) Employer shall fail to observe and
perform any other agreement, representation, term or condition
contained in this Agreement, if such failure continues for a
period of twenty
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(20) days after notice of such failure is given to Employer by
Kirkwood, or for such longer period as Kirkwood may agree to
in writing; provided, that if the failure is other than the
payment of money and is of such nature that it cannot be
corrected within the applicable period, such failure shall not
constitute an event of default so long as Employer institutes
curative action within the applicable period and diligently
pursues such action to completion.
(c) Employer shall: (i) admit in writing its
inability to pay its debts generally as they become due; (ii)
have an order for relief entered in any case commenced by or
against it under the federal bankruptcy laws, as now or
hereafter in effect; (iii) commence a proceeding under any
other federal or state bankruptcy, insolvency, reorganization
or other similar law, or have such a proceeding commenced
against it and either have an order of insolvency or
reorganization entered against it or have the proceeding
remain undismissed and unstayed for ninety (90) days; (iv)
make an assignment for the benefit of creditors; or (v) have a
receiver or trustee appointed for it or for the whole or any
substantial part of its property.
(d) Employer shall (i) close or announce that
it is closing its operations at the Project Site (unless such
operations will be transferred to another facility in the
State of Iowa and as a result Kirkwood will be entitled to
receive the revenue from the sources set forth in Section 2.2
or receives assurance satisfactory to Kirkwood of the receipt
by Kirkwood of payments to satisfy the Debt Service on the
Certificates); or (ii) have failed to make improvements to the
Project Site within the time set forth on Exhibit "E" and for
that reason the Project has not or will not generate
sufficient Incremental Property Taxes to enable Kirkwood to
satisfy the Debt Service from the sources set forth in Section
2.2.
(e) Kirkwood determines from time to time
that, for any reason, sufficient realized or projected revenue
from Incremental Property Taxes and/or New Jobs Withholding
Credits will not be generated by the Project to enable
Kirkwood to satisfy the Debt Service from the sources set
forth in Section 2.2.
(f) Any representation or warranty made by
Employer herein or any statement in any report, certificate,
financial statement or other instrument furnished in
connection with this Agreement or with the sale of the
Certificates shall at any time prove to have been false or
misleading in any material respect when made or given.
(g) Employer acts in a manner contrary to any
provision of this Agreement or fails to act in a manner
required by any provision of this Agreement and Kirkwood
determines as a result of such act or failure to act that
there are not or will not be sufficient funds generated by the
Project to enable Kirkwood to satisfy the Debt Service from
the sources set forth in Section 2.2.
The exercise of remedies upon the occurrence of any event of
default under subsection (c) above shall be subject to any applicable
limitations of federal bankruptcy law affecting or precluding such exercise
during the pendency of or immediately following any bankruptcy, liquidation or
reorganization.
Section 5.2. Whenever an event of default shall have
happened and be subsisting, Kirkwood may, without notice to Employer, withhold
Training and suspend payments to Employer, and apply all or a part of any
remaining funds budgeted for Training to the satisfaction of the Debt Service
on the Certificates. In addition, Kirkwood may take whatever other action at
law or in equity may appear necessary or desirable to collect the payments and
other amounts then due and thereafter to become due, or to enforce performance
and observance of any other obligation or agreement of Employer under
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this Agreement. Notwithstanding the foregoing, Kirkwood shall not be obligated
to take any step which in its opinion will or might cause it to expend time or
money or otherwise incur liability unless and until a satisfactory indemnity
bond has been furnished to Kirkwood at no cost or expense to Kirkwood. Any
amounts collected as payments or applicable to payments and any other amounts
which would be applicable to payment of principal of and premium, if any, and
interest on the Certificates collected pursuant to action taken under this
Section shall be paid by Kirkwood to the holders of the Certificates.
Section 5.3. Immediately upon the occurrence of an
event of default, there shall be due from Employer to Kirkwood such amount as
will enable Kirkwood to presently satisfy the remaining Debt Service on the
Certificates. Such amount shall be equal to the total amount of the standby
tax levied or required to be levied under Section 260E.6 of the Act to satisfy
the remaining Debt Service on the Certificates determined from Exhibit D
prepared in accordance with Section 2.3. No demand or notice of the amount due
immediately upon the occurrence of an event of default is or shall be required
to fix the liability of Employer or the amount due from Employer. The amount
due hereunder from Employer shall be a debt of Employer to Kirkwood and
Kirkwood may set off against the amount due from Employer any debt or debts of
Kirkwood to Employer. Amounts received by Kirkwood hereunder shall not be
pledged to repayment of the Certificates.
Section 5.4. No remedy conferred upon or reserved to
Kirkwood by this Agreement is intended to be exclusive of any other available
remedy or remedies, but each and every such remedy shall be cumulative and
shall be in addition to every other remedy now or hereafter existing at law, in
equity or by statute. No delay or omission to exercise any right or power
accruing upon any default shall impair any such right or power or shall be
construed to be a waiver thereof, but any such right and power may be exercised
from time to time and as often as may be deemed expedient. In order to entitle
Kirkwood to exercise any remedy reserved to it in this Article, it shall not be
necessary to give any notice, other than such notice as may be expressly
required herein, nor shall it be necessary to make any declaration of an event
of default other than such declaration as may be expressly required herein.
Kirkwood will not perfect the lien provided by Iowa law in accordance with the
terms of Section 3.3.
Section 5.5. In the event any agreement contained in
this Agreement should be breached by either party and thereafter waived by the
other party, such waiver shall be limited to the particular breach so waived
and shall not be deemed to be a waiver of any other breach hereunder.
ARTICLE VI
MISCELLANEOUS
Section 6.1. This Agreement may be executed in any
number of counterparts, each of which shall be regarded as an original and all
of which shall constitute but one and the same instrument.
Section 6.2. If any provision of this Agreement, or
any covenant, stipulation, obligation, agreement, act or action, or part
thereof made, assumed, entered into or taken thereunder or any application
thereof, is for any reason held to be illegal or invalid, such illegality or
invalidity shall not affect any other provision or any other covenant,
stipulation, obligation, agreement, act or action or part thereof, made,
assumed, entered into, or taken, each of which shall be construed and enforced
as if such illegal or invalid portion were not contained herein. Nor shall
such illegality or invalidity of any application thereof affect any legal and
valid application thereof, and each such provision, covenant, stipulation,
obligation, agreement, act or action, or part shall be deemed to be effective,
operative, made, entered into or taken in the manner and to the full extent
permitted by law.
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Section 6.3. This Agreement shall be governed
exclusively by and construed in accordance with the laws of the State of Iowa.
With the exception of the lien provisions of Iowa law as modified by Section
3.3, the applicable provisions of Iowa law, including the Act, are a part of
this Agreement as if set forth herein.
Section 6.4. All notices, requests or other
communications hereunder shall be in writing and shall be deemed to be
sufficiently given when mailed by registered or certified mail, postage
prepaid, addressed to the appropriate Notice Address as follows:
Financial Manager
Financial Services
Kirkwood Community College
P.O. Box 2068
6301 Kirkwood Boulevard, S.W.
Cedar Rapids, Iowa 52406
Tami Young
McLeod, Inc.
221 Third Ave. SE, Suite 500
Cedar Rapids, IA 52401
Employer and Kirkwood may, by notice given hereunder,
designate any further or different addresses or persons to which subsequent
notices, requests or other communications shall be sent.
Revisions in the Training set forth on Exhibit "C" and an
increase in the number of new jobs covered by this Agreement shall be approved
in writing by the above representatives of Kirkwood and Employer, their
respective successors or such other individuals as either party designates in
the manner set forth herein, provided, however, consent of Employer shall not
be required for a reduction in Training following an event of default.
Section 6.5. All covenants, stipulations, obligations
and agreements of Kirkwood and Employer contained in this Agreement shall be
effective to the extent authorized and permitted by applicable law. No such
covenant, stipulation, obligation or agreement shall be deemed to be a
covenant, stipulation, obligation or agreement of any present or future member,
officer, agent or employee of Kirkwood or the Board of Directors of Kirkwood
other than in their official capacity, and neither the members of the Board of
Directors of Kirkwood nor any official, agent or employee of Kirkwood shall be
liable personally on the Certificates or the covenants, stipulations,
obligations or agreements of Kirkwood contained in this Agreement.
Section 6.6. This Agreement shall inure to the benefit
of and shall be binding in accordance with its terms upon Kirkwood, Employer
and their respective permitted successors and assigns provided that this
Agreement may not be assigned by Employer without the written consent of
Kirkwood and may not be assigned by Kirkwood without the consent of Employer
except as may be necessary to enforce or secure payment of the Debt Service.
Section 6.7. Employer covenants and agrees that it
will not sell, lease, sublease, mortgage or in any manner dispose of its
interest in the facilities described herein or any capital part thereof so as
to remove the same from the tax rolls until satisfaction and discharge of the
Certificates unless Employer provides Kirkwood with assurance, in a form
acceptable to and approved by Kirkwood, of future payments necessary to meet
the Debt Service on the Certificates. Employer further covenants and agrees to
keep the facilities continuously insured against loss or damage by fire,
lightening, such
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other perils as are covered by standard "extended coverage" endorsements,
vandalism and malicious mischief and containing customary loss deductible
provisions.
Section 6.8. Kirkwood agrees to use its best efforts
to sell and issue the Certificates, and Employer will cooperate with Kirkwood
to provide necessary financial information in connection with the sale of the
Certificates. It is understood and agreed that should the Certificates not be
marketed or marketable within a reasonable time that this Agreement may be
terminated and the Project terminated, provided, however, the obligation of
Employer under Section 2.7 hereof shall continue following any such
termination.
Section 6.9. Employer covenants that it shall take
such action or shall refrain from taking any action as shall be necessary under
the Internal Revenue Code of 1986, Sections 103, 141-150 and the rulings and
regulations thereunder to maintain any exemption from Federal income taxes of
the interest on the Certificates.
Section 6.10. Disbursements to Employer for Program
Services under this Agreement shall be made only upon approval of vouchers
therefor by the Board of Directors of Kirkwood. Employer agrees that it will
request disbursements only for approved Program Services. Employer agrees that
it will not request disbursements that are prohibited by Sections 6.11, 6.12
and 6.13 hereof. Amounts disbursed to Employer shall be conditional and
subject to subsequent verification and audit of the Project. Requests by
Employer for disbursements, including those requests received by Kirkwood,
shall not constitute a debt of Kirkwood to Employer.
Section 6.11. No monies disbursed from the proceeds of
the Certificates will be used directly or indirectly to finance land,
facilities or depreciable property (or an interest therein) of Employer or
other private Person.
Section 6.12. No monies disbursed from the proceeds of
the Certificates will be used directly or indirectly for the acquisition of any
property (or an interest therein) unless the first use of such property is
pursuant to such acquisition and such property is owned by Kirkwood.
Section 6.13. No monies disbursed from the proceeds of
the Certificates will be used directly or indirectly to provide any airplane,
skybox or other private luxury box, health club facility, facility primarily
used for gambling or a store the principal business of which is the sale of
alcoholic beverages for consumption off premises.
Section 6.14. The provisions of this Agreement and the
provisions of the Resolution are to be construed wherever possible so that they
will not be in conflict. In the event such construction is not possible, the
provisions of the Resolution shall prevail.
Section 6.15. Employer acknowledges that issuance of
the Certificates may be conditioned on receipt by Kirkwood of an opinion of
bond counsel that interest on all or part of the Certificates is exempt from
federal income tax and that such opinion will be predicated on satisfaction of
the applicable provisions of the Internal Revenue Code of 1986 including, but
not limited to, the receipt by Kirkwood of an allocation of the State of Iowa
volume ceiling for the Project.
Section 6.16. Employer acknowledges that pursuant to
Section 260E.6 of the Act, the Resolution adopted by Kirkwood may authorize the
issuance of industrial new jobs training Certificates to fund Iowa Code Chapter
260E training programs with other employers. Employer acknowledges and agrees
that the industrial new jobs training Certificates issued by Kirkwood to fund
training programs
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for multiple projects, including this Project, will not be identifiable or
specifically attributable to this Project.
References in this Agreement to "Certificates" include a
reference to an undivided portion of industrial new jobs training Certificates
issued by Kirkwood to fund training programs for multiple projects, including
this Project. Employer's obligations, covenants and representations set forth
herein with respect to the Certificates are not and shall not be conditioned on
the issuance of training certificates identifiable or specifically attributable
to this Project.
Section 6.17. This Agreement, including Exhibits,
constitutes the entire agreement between Kirkwood and Employer with respect to
the subject matter hereof and as such supersedes all previous negotiations,
commitments and understandings. Captions and the alignment of the Agreement
are for convenience only and shall not be construed to modify the rights or
obligations of the parties.
ARTICLE VII
SUPPLEMENTAL NEW JOBS CREDIT FROM WITHHOLDING
Certain jobs included in the Project are eligible for a
supplemental new jobs credit from withholding in an amount equal to one and
one-half percent of the gross wages paid by the Employer pursuant to Senate
File 2351 adopted by the 76th General Assembly effective July 1, 1996.
Kirkwood and the Employer agree that the Supplemental Program shall be
administered in the same manner as the remainder of the Project and that all
terms and conditions of this Agreement shall apply to the entire Project
including the Supplemental Program.
Section 7.1. Terms used in this Article shall have the
meanings set out in Article I or this Section 7.1. Other terms used in this
Article shall have the meanings set out in Chapters 15A or 260E, Code of Iowa,
1995, as amended.
- "Average Wage" means the average county wage in the
county where the Project Site is located or the
average regional wage, whichever is lower, as
compiled annually by the Department for the Community
Economic Betterment Program.
- "Starting Wages" or "Wages" means the wage being paid
or to be paid by the Employer under the terms of this
Agreement and which has been determined by Kirkwood
to equal or exceed the Average Wage based upon
criteria established in Section 15A.7 Code of Iowa,
1995, as amended, and rules promulgated by the
Department.
- "Supplemental Program" means that portion of the
Project including Program Services and Program Costs
eligible to be funded from a supplemental new jobs
credit from withholding from jobs created under this
Agreement because the Employer has agreed to pay
Starting Wages as defined in this Agreement.
Section 7.2. The Employer agrees that it shall pay
Wages for the jobs included in the Supplemental Program (and for which the
supplemental new jobs credit from withholding is collected) at least equal to
the Average Wage. In the event the Employer fails to pay Wages for the jobs
included in the Supplemental Program, such failure may constitute an event of
default under this Agreement.
-11-
<PAGE> 13
Section 7.3. The supplemental new jobs credit from
withholding shall be collected, accounted for and may be pledged by Kirkwood in
the same manner as described in Section 2.2 of this Agreement and Section
260E.5 of the Act.
Section 7.4. The number of jobs included in the
Supplemental Program are identified on Exhibit C. The specific jobs are as
identified in writing by the Employer. Kirkwood hereby determines eligibility
of the Supplemental Program and Starting Wages for those jobs shown on Exhibit
C as included in the Supplemental Program.
Section 7.5. To provide funds for the payment of the
costs of the Supplemental Program Kirkwood may borrow money, issue and sell
Certificates and secure the payment of the Certificates in the same manner as
described in Article II of this Agreement and Section 260E.6 of the Act. It is
the intent of the parties that the Supplemental Program shall be funded and
administered in such a manner as to maintain any tax exempt status of the
interest on Certificates issued to fund the Program Services under Chapter
260E.
Section 7.6. The Supplemental Program and the
supplemental new jobs credit from withholding provided for in this Article VII
shall be in addition to and not in lieu of the program and credit authorized in
Article II of this Agreement and Section 260E.5 of the Act. The Program
Services set forth on Exhibits B and C, the tentative payback schedule set
forth on Exhibit D, and the Employer's projections of wages to be paid in those
new jobs qualifying for the supplemental new jobs credit from withholding
includes the Supplemental Program.
IN WITNESS WHEREOF, Kirkwood and Employer have caused this
Agreement to be duly executed all as of the date hereinabove written.
KIRKWOOD COMMUNITY COLLEGE
October 31, 1996 By /s/ WAYNE L. NEWTON
- ------------------------------- ---------------------------------------
Date
ATTEST:
/s/ JUDITH A. GLASS
- -------------------------------
MCLEOD, INC.
221 Third Ave. SE, Suite 500
Cedar Rapids, IA 52401
October 29, 1996 By /s/ STEPHEN C. GRAY
- ------------------------------- ---------------------------------------
Date Stephen C. Gray,
President and COO
ATTEST:
/s/ CASEY D. MAHON
- -------------------------------
CASEY D. MAHON, Secretary
-12-
<PAGE> 1
EXHIBIT 10.84
CHANGE ORDER NO. 1 TO THE CONSTRUCTION SERVICES AGREEMENT
Basis for Request:
Mutual agreement between Kirk Kaalberg of MWR Telecom, Inc. (MWR) and Stacy
Jenkins of MFS Network Technologies, Inc. (MFSNT) to amend the CSA as follows:
- --------------------------------------------------------------------------------
Scope of Change:
Add the following articles:
Article 4.11 "MATERIAL ONLY PURCHASES" MFS will invoice MWR for MFS' actual
material cost plus a mark-up of 12.5%. Also, the value of this service will
apply toward the Phase I Commitment.
Article 5.5(n) "POLE ATTACHMENT AGREEMENTS" Both parties agree that the costs
associated will obtaining pole attachment agreements and rights-of-way will be
billed as a direct cost under the cost plus billing approach.
Article 5.5(o) "MFS PERFORMED FOTS ROOM WORK" MFS will perform the room
survey and layouts for each end point MFS constructs. The costs associated
with this service will be treated as a direct cost under the cost plus billing
approach.
Article 32.1 "NON-SOLICITATION OF EMPLOYEES" During the term of this
Agreement and for a period of two (2) years following the termination of this
Agreement, MWR Telecom, its parent, affiliates and subsidiaries shall not make
an offer of employment to, nor employ, nor enter into a consulting agreement
with any person who was employed by MFS at any time during the preceding one
(1) year period, except with the prior written consent of MFS. The term of
this provision shall survive the termination of the Agreement for any reason."
During the term of this Agreement and for a period of two (2) years following
the termination of this Agreement, MFS Network Technologies, Inc., its parent,
affiliates and subsidiaries shall not make an offer of employment to, nor
employ, nor enter into a consulting agreement with any person who was employed
by MWR at any time during the preceding one (1) year period, except with the
prior written consent of MWR. The term of this provision shall survive the
termination of the Agreement for any reason."
- --------------------------------------------------------------------------------
Cost Estimate:
Total CSA Amount: $10,000,000.00
Change Order No. 1 Amount: $0.00
New CSA Amount: $10,000,000.00
- --------------------------------------------------------------------------------
Approval:
MWR TELECOM, INC.
/s/ KIRK KAALBERG 11/10/95
- ------------------------------------- ---------------
Kirk Kaalberg, Sr. Vice President Date
MFS NETWORK TECHNOLOGIES, INC.
/s/ STACY V. JENKINS 11/22/95
- ------------------------------------- ----------------
Stacy V, Jenkins, Vice President/ Date
Construction
<PAGE> 1
EXHIBIT 10.85
CHANGE ORDER NO. 2 TO THE CONSTRUCTION SERVICES AGREEMENT
Basis for Request:
Mutual agreement of both parties.
- --------------------------------------------------------------------------------
Scope of Change:
1.) MWR agrees to assume MFS' existing lease at 1935 Blairs Ferry Road,
NE, Cedar Rapids, IA 52402, no later than August 31, 1996 and under terms that
are satisfactory to the landlord.
2.) MWR and MFS agree to delete the last sentence in paragraph 8.7 of the
CSA regarding the maintaining of a management facilities in Cedar Rapids, IA.
- --------------------------------------------------------------------------------
Cost Estimate:
Total CSA Amount $10,000,000.00
Change Order No. 2 Amount: $0.00
New CSA Amount: $10,000,000.00
- --------------------------------------------------------------------------------
Approval:
MWR TELECOM, INC.
/s/ KIRK KAALBERG 8/14/96
- ---------------------------------- -------------
Kirk Kaalberg, Sr. Vice President Date
MFS NETWORK TECHNOLOGIES, INC.
/s/ STACY V. JENKINS 7/9/96
- ---------------------------------- -------------
Stacy V. Jenkins, Vice Date
President/Program Management
<PAGE> 1
EXHIBIT 10.86
CHANGE ORDER NUMBER 3
CONSTRUCTION SERVICES AGREEMENT
THIS CHANGE ORDER NO. 3 to the Construction Services Agreement ("CSA") dated
June 30, 1995, is entered into by and between MWR Telecom, Inc., a wholly owned
subsidiary of McLeod, Inc. ("McLeod") and MFS Network Technologies, Inc.
("MFSNT"). The parties agree as follows:
1. PENDING INVOICES. McLeod shall promptly remit payment of all
current and past due invoices listed in the attached Exhibit "A"
for work completed or material delivered under the CSA, and the
retainage for completed sites. Any expenses, claims or amounts
attributable to mobilization costs, increased construction
costs, and all amounts related to the work performed by MFS or
its agents for the benefit of McLeod pursuant to the CSA, are
considered to have been paid in full upon MFS' receipt of
McLeod's payment of the invoices identified on Exhibit "A" to
this Change Order No. 3 and payment of the Price Adjustment
described in paragraph 2 of this Change Order. MFS and McLeod
have no knowledge of any other expenses, claims or amounts
incurred for or due or owing by the other party with respect to
the fiscal year 1996 and 1997 builds; however, if within thirty
(30) days of the effective date of this change order, either
party determines that a legitimate expense, claim or amount has
not been invoiced, that party may invoice such amount within
such thirty (30) day period. The invoiced party will pay such
invoice(s) within thirty (30) days of receipt of such invoice(s)
for invoiced amounts that represent legitimate expenses, claims
or amounts relating to the fiscal year 1996 or 1997 builds. It
is the intent of the parties to finalize and resolve all
expenses, claims and amounts attributable to the fiscal year
1996 and 1997 builds or the Phase I Commitment, and after the
aforedescribed thirty (30) day period MFS and McLeod shall not
make any further claim, demand or invoice any amounts
attributable to the fiscal year 1996 and 1997 builds or the
Phase I Commitments.
2. PRICE ADJUSTMENT. McLeod shall pay MFSNT One Million Dollars
($1,000,000) in cash ("Price Adjustment" or "Adjustment") as
compensation for the following:
- Acceleration/mobilization charges previously
authorized, invoices and subsequently disputed by
McLeod (invoice numbers E01280009 and E01280048).
- Interest due on late payments as identified in
invoices R01280105 and R01280141.
- Any other claims for the sharing of construction
costs for ICN Part II FY 1996 routes, excluding the
incremental fiber, splicing and route adjustments
previously approved and invoiced. FY 1996 routes
built by
<PAGE> 2
MFSNT are: Denison HS, Lakeland AEA, Emmetsburg HS,
Western Hills AEA, Treynor, Boyer Valley and Harris Park.
FY 1996 routes built by McLeod are: Sheldon Armory,
Sheldon HS, Algona Armory, LeMars Armory, Shenandoah
Armory, Clinton, Mapleton Armory, Estherville HS, Storm
Lake Armory and Fairfield Armory.
- Any other claims for the sharing of construction
costs for ICN Part III FY 1997 routes, excluding the
incremental fiber, splicing and route adjustments
previously approved and invoiced. FY 1997 routes built
by MFSNT are: Laurens Marathon HS, Orange City Floyd, HS,
Orange City Unity Christian HS, Okoboji HS, Charter Oak
Ute HS, Akron Westfield HS, Fremont HS and George Little
Rock HS.
3. PAYMENT TERMS. Payment of the Price Adjustment shall be made
as follows:
(a) Five Hundred Thousand Dollars ($500,000) upon execution
of this Change Order Number 3 by both parties; and
(b) Five Hundred Thousand Dollars ($500,000) on or before
December 31, 1996.
4. PHASE I COMMITMENT. Upon MFSNT's receipt of payment
described in items 1, 2 and 3 above, MFSNT and McLeod agree
that McLeod's obligations for the Phase I Commitment (Article
4.8) under the CSA has been satisfied in full.
5. SHARED ROUTES. McLeod and MFSNT will work together to provide
each other access to routes constructed in the FY 1998 and 1999.
McLeod and MFSNT agree to share construction costs for all
Shared Routes. A "Shared Route" means any fiber optic route
which includes both McLeod and MFSNT fibers. The "Constructing
Party" means the party under obligation to construct the fiber
optic route under its contract with the State of Iowa. The
"Requesting Party" means the party who may designate a route as
a Shared Route. The Constructing Party shall provide the
Requesting Party with the engineered routes for the FY 1998-1999
build. Within two (2) weeks of receipt of the plan documents,
which shall include preliminary route engineering and completion
schedules, the Requesting Party will confirm which routes, or
portions thereof, are to be designated as "Shared Routes." The
Requesting Party shall pay to the Constructing Party an amount
calculated by multiplying the cumulative feet of all Shared
Routes constructed by the Constructing Party for FY 1998-1999
builds by the cost per foot as follows:
<PAGE> 3
Shared Route Cost
(in feet) (per foot)
------------------- -------------
1 - 792,000 $1.25
792,001 - 1,848,000 $1.00
1,848,001 and over $0.90
The Requesting Party shall also pay to the Constructing Party
one hundred percent (100%) of the incremental costs of the
Requesting Party's fibers. The cost-plus alternative will not
apply to the Shared Routes. However, all incremental
construction costs/fees for extension or variation of the FY
1998-1999 build (e.g. fiber, splicing and route adjustments)
("Additional Expenses") will be paid for by the Requesting
Party. Upon the Requesting Party's request, and at its expense,
the Constructing Party shall provide an independent auditor's
certification for any Additional Expenses.
6. TERM. The Construction Services Agreement shall terminate upon
completion of the FY 1998-1999 Shared Routes by both MFSNT and
McLeod and the completion of all obligations respecting Shared
Routes.
7. OTHER AGREEMENTS. McLeod and MFSNT desire to reaffirm their
commitment to other agreements executed by the parties:
(a) The Maintenance Agreement dated June 30, 1995 remains
in full force and effect; and
(b) The parties agree that upon MFSNT's receipt of payment
described in items 1, 2 and 3 above, condition 2(b) of
the Option Agreement dated July 28, 1995 has been
satisfied in full, and that as of the date hereof,
neither party is in breach of the CSA, and that the
Option Agreement remains in full force and effect.
8. RATIFICATION. All provisions of the CSA remain in full force
and effect except as specifically modified by this Change Order
Number 3.
<PAGE> 4
Agreed to this 31st day of October, 1996.
MFS Network Technologies, Inc. MWR Telecom, Inc.
By: /s/ KEVIN P. MOERSCH BY: /s/ STEPHEN C. GRAY
-------------------- ---------------------------
Kevin P. Moersch Stephen C. Gray, President
President and Chief Operating Officer
<PAGE> 1
EXHIBIT 10.87
INDEPENDENT CONTRACTOR SALES AGREEMENT
THIS AGREEMENT (the "Agreement") is entered into this __ day of May, 1995, by
and between SPRINT COMMUNICATIONS COMPANY L.P. ("Sprint") and RUFFALO CODY &
ASSOCIATES, INC. ("Contractor"). Sprint and Contractor are "Parties" hereto.
In consideration of the mutual promises contained herein, the Parties agree as
follows:
1. DEFINITIONS. As used in this Agreement, the following terms shall
have the meanings set forth below. Capitalized terms appearing in these
definitions are defined in this paragraph.
"A-STATUS SALE" means an order for Service obtained by Contractor from
a Sales Prospect and submitted to Sprint that (i) is accepted into
Sprint's CIS system, (ii) is not rejected because it duplicates an
account already in CIS, (iii) is not pending a credit check, and (iv)
is not an Unauthorized Sale.
"CUSTOMER" means a Sprint customer subscribing to Service as a result
of a sale made by Contractor under this Agreement. Customer shall not
include any individual or entity excluded in Subsection 3 of the
attached Exhibit A.
"MONTHLY ACTIVATED ORDERED REVENUE" means the estimated value of
A-Status Sales in a given calendar month. The estimated value of each
A-Status Sale shall be as set forth in Subsection 1(a)(2) of the
attached Exhibit B.
"PERFORMANCE STANDARDS" means the performance standards set forth in
Subsection 2 of the attached Exhibit B that must be met as provided in
Subparagraph 3.6 herein.
"REVENUE DOLLARS" means the total net invoiced revenue posted in the
Compensation Accounting System. Revenue Dollars include: (i) charges
for domestic, international, operator services and travel card; (ii)
charges for equipment, access, installation, ISC (mileage),
maintenance, tele-feature and minimum usage charges; (iii) surcharges
for directory assistance, operator services, and travel surcharge,
(iv) adjustments for bulk service agreements and special pricing
arrangements; and (v) discounts and credit adjustments issued by
Sprint. Revenue Dollars do not include taxes. The measurement month
for Revenue Dollars is a non-calendar period during which time one
posting of each billing cycle is made to the billing system. A
billing cycle is a non-calendar period of approximately 30 days in
which customer traffic is captured and invoiced.
"SALES AREA" means the non-exclusive but restricted sales territory as
set forth in attached Exhibit A.
<PAGE> 2
"SALES PROSPECT" means a prospective Sprint Customer to which
contractor will direct telemarketing efforts hereunder.
"SALES REPRESENTATIVE" means a telemarketing sales representative
employed by Contractor to perform telemarketing services hereunder.
"SERVICE" means Sprint's Tariffed interLATA, and intraLATA where
authorized, commercial telecommunications network service as described
in attached Exhibit A, as modified from time to time at Sprint's
discretion.
"TARIFF" means Sprint's tariffs relating to Service as filed with the
Federal Communications Commission for interstate or international
Service (including Tariff revisions made from time to time) and/or
such tariffs (and revisions) filed with state regulatory commissions
for intrastate Service.
"TELEMARKETING FACILITY" means a telemarketing facility at a
particular geographic location used by Contractor to perform
telemarketing services hereunder.
"UNAUTHORIZED SALE" means a Sales Representative's reported sale of
Service that Sprint, in Sprint's sole discretion, determines is
unauthorized by the Sales Prospect. Unauthorized Sale shall include,
without limitation, a sale invalidated by the Sales Prospect, a LEC or
regulatory commission.
2. RELATIONSHIP OF PARTIES. Contractor shall function hereunder as an
independent contractor with no authority to act on behalf of Sprint except as
expressly provided herein. Sprint shall incur no responsibility or obligation
to Sales Representatives or other employees or agents of Contractor used to
perform services under this Agreement. Such persons shall be employees or
agents of contractor for all purposes.
3. CONTRACTOR TELEMARKETING.
3.1. Sales Representatives shall be trained only by individuals
trained and certified by Sprint.
3.2. Sprint will provide Contractor, at Sprint's expense, with what
Sprint determines to be a sufficient quantity of promotional
materials. Contractor shall not use any other promotional material,
sales scripts, or advertising without obtaining Sprint's prior written
consent.
3.3. Sprint will provide Contractor with names and telephone
numbers of Sales Prospects in quantities reasonably sufficient to
enable Contractor to meet its sales goals. All lists of Sales
Prospects shall remain the exclusive property of Sprint.
2
<PAGE> 3
3.4 Sprint will not request Contractor to perform any service that
violates any applicable law or government regulation.
3.5. Contractor shall telemarket Sprint Service, at Sprint's
Tariffed rates, not of Tariffed promotional offerings, to Sales
Prospects located in the Sales Area. Contractor shall suspend all
sales activities in any geographic portion of the Sales Area upon ten
days written notice from Sprint.
3.6. Contractor shall meet the Performance Specifications specified
in Subsection 2 of the attached Exhibit B.
3.7. Contractor shall use Sprint's telecommunications services
exclusively in performing its obligations hereunder, and shall
promptly pay Sprint all amounts that Contractor is billed for use of
such service.
3.8. Contractor shall not use Telemarketing Facilities to sell
service on behalf of any other interexchange carrier. Sales
Representatives shall not work on any other interexchange carrier
project for Contractor during the term of this Agreement.
3.9. Sprint will provide a reasonably quantity of logo items for
incentives for Contractor.
4. QUALITY CONTROL.
4.1. Sprint may visit and inspect Telemarketing Facilities at any
time during the term of this Agreement.
4.2. Contractor shall provide suitable office space at a
Telemarketing Facility for use by Sprint personnel during visits
thereto.
4.3. Sprint may remotely monitor the activities of Sales
Representatives hereunder. Contractor will provide monitoring
capability via telephone from anywhere in the United States. Sprint
will comply with remote monitoring operating procedures required by
Contractor, provided such procedures are reasonable and provided to
Sprint in writing.
4.4. Sprint may audit all documentation pertaining to the
monitoring of Sales Representative and resolution of customer and/or
regulatory complaints.
5. CONTRACTOR EXPENSES. Except as provided herein, or otherwise agreed
to by the Parties in writing, Contractor is solely responsible for all expenses
and obligations that it incurs in performing under this Agreement.
6. PAYMENT FOR CONTRACTOR SERVICES. Sprint shall pay Contractor for
telemarketing hours in accordance with the schedule in the attached Exhibit B.
3
<PAGE> 4
7. CONTRACTOR REPRESENTATIONS AND WARRANTIES.
7.1. Contractor shall conduct its business and represent Sprint in
a professional, ethical, legal and businesslike manner, and shall
commit no act which would reflect unfavorably on either Party.
7.2. Contractor shall not sponsor or participate in any pyramid or
multilevel marketing system with respect to Sprint Service.
7.3. Contractor shall require all of Sales Representatives,
employees and agents to comply with the terms and conditions or this
Agreement.
7.4. Contractor shall not package any of its business activities in
such a manner that Sprint customers must pay any Contractor-imposed
fee, start-up charge or minimum associated with a Service.
7.5. Contractor shall comply with all laws and government
regulations including, but not limited to, those relating to
telemarketing. Customer shall make no unauthorized representations
concerning Sprint Service to Customers or Sales Prospects.
7.6. Sprint shall notify Contractor of any complaint from a
Customer, Sales Prospect, or regulatory agency. Contractor shall
resolve or respond to such complaints within one work day after
receipt of Sprint's notification.
7.7. Contractor shall comply with all operational procedures set
forth in attached Exhibit C.
8. UNAUTHORIZED SALES. Contractor shall reimburse Sprint, up to $100 per
Unauthorized Sale, for the amount of any PIC dispute fee imposed by a LEC
because of an Unauthorized Sale. This reimbursement shall be accomplished, at
Sprint's option, by (i) Sprint deducting the reimbursement from any amount owed
by Sprint to Contractor for services provided hereunder, or (ii) by submitting
an invoice to Contractor which shall be paid within thirty days.
9. PROVISION OF SERVICE TO CUSTOMERS. Sprint shall service Customers in
accordance with Sprint's standard practices, including billing and collection
for Services. Customers shall be customers of Sprint, and shall remain
customers of Sprint after termination of this Agreement.
10. CONFIDENTIALITY; TRADE SECRETS. Neither Party shall disclose the
following to a third party without the other Party's written consent, except as
required by law: (i) the terms and/or conditions of this Agreement; or (ii) any
confidential information
4
<PAGE> 5
or trade secret of the other Party. Contractor shall not sell, release or
disclose the identity (including name, address and telephone number) of
Customers and Sales Prospects to any third party.
11. TRADEMARKS; SERVICE MARKS; TRADENAMES. Contractor shall sell service
under the tradenames, service marks and trademarks (the "Marks") indicated by
Sprint. Contractor will not display or use any of Sprint's Marks other than in
connection with the sale of Service hereunder. Absent Sprint's prior written
consent, Contractor shall not use any part of a Sprint Mark as part of its own
name, service mark or tradename. Sprint Marks are proprietary to Sprint and
nothing in this Agreement constitutes a general license for their use. Upon
termination of this Agreement, all rights to use Sprint's Marks shall expire
and Contractor shall discontinue the use thereof.
12. TAXES. Contractor shall be liable for all taxes due as a result of
payments made by Sprint to Contractor hereunder. Contractor shall indemnify
Sprint for any attorney's fees and court costs incurred by Sprint in defense of
any claim or demand for such taxes.
13. TERM OF AGREEMENT; TERMINATION.
13.1. Except as otherwise provided herein, the initial term of this
Agreement (the "Initial Term") shall commence on the date first above
written and end nine months thereafter. After the Initial Term, the
Agreement shall remain in full force and effect until otherwise
terminated as provided in this paragraph.
13.2. Either Party may terminate this Agreement at any time after
the Initial Term upon ninety days written notice to the other Party.
13.3. sprint may terminate this Agreement upon ten days written
notice to Contractor as follows:
a) If Contractor's productivity for any month is 65% or
less of the Performance Standards specified in Exhibit B.
b) If Sprint notifies Contractor in writing that
Contractor's productivity for any month is between 65 and 90%
of Performance Standards, and Contractor fails to meet 90% of
Performance Standards within thirty days following such
notice.
c) If, during any month, Contractor submits to Sprint
Unauthorized Sales in excess of 6% of total sales.
d) If Contractor becomes insolvent, or is the subject
of any bankruptcy proceeding, an arrangement with
5
<PAGE> 6
creditors, a corporate reorganization, receivership or
dissolution.
e) If Contractor attempts to assign this Agreement, or
any interest or right therein, without Sprint's prior written
consent.
f) If Contractor undergoes any significant change in
ownership or management without Sprint's prior written
consent.
g) If a judgment is entered against Contractor which, in
Sprint's opinion, adversely affects the interests of either
Party.
13.4. Either Party may terminate this Agreement upon ten days
written notice to the other Party if the other Party breaches a
material provision herein, or in the event of any material change in
state or federal law or governmental regulation that renders
performance hereunder impractical.
14. INSURANCE. Contractor shall secure and maintain the following
insurance in amounts that are the greater of (i) the amounts set forth below or
(ii) such other amounts required by law;
14.1. Worker's Compensation insurance as required by law;
14.2. Comprehensive general liability insurance, including
contractual liability insurance with limit of liability not less than
$1,000,000 per occurrence, combined single limit, for bodily injury
and third party property damage. The policy shall include Sprint as
an additional insured.
14.3. Automobile liability insurance covering use or all owned,
non-owned and hired vehicles with limit of liability not less than
$1,000,000 per occurrence, combined single limit, for bodily injury
and property damage. The policy shall include Sprint as an additional
insured.
Contractor shall furnish certificates to Sprint on the effective date of this
Agreement evidencing the above coverage.
15. LIMITATION OF LIABILITY. IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR
SPECIAL, CONSEQUENTIAL OR EXEMPLARY DAMAGES, OR LOSS OF PROFITS, ARISING FROM
THE CONDUCT OF SUCH PARTY HEREUNDER.
16. INDEMNIFICATION. Each Party shall indemnify, defend and hold harmless
the other from and against any and all liabilities, costs, damages and expenses
(including reasonable attorney's fees) resulting from the indemnifying Party's
(or its employees' or agents') actions hereunder. This indemnification shall
include, without limitation, breach of this Agreement, misrepresentation of
Sprint Service, and unauthorized or illegal acts of the indemnifying Party, its
employees or agents.
6
<PAGE> 7
17. ARBITRATION. Any dispute arising out of or relating to this Agreement
will be finally settled by arbitration in accordance with the rules of the
American Arbitration Association. The arbitration will be governed by the
United States Arbitration Act, 9 U.S.C. Sec. 1, et. seq., and judgment upon the
award rendered by the arbitrator(s) may be entered by any court with
jurisdiction. The arbitration will be held in the Kansas City, MO metropolitan
area.
18. ASSIGNMENT. Neither Party may assign this Agreement without the
written consent of the other Party, which consent shall not be unreasonably
withheld.
l9. NOTICE. All notices given hereunder shall be sufficient if in writing
and delivered in person to the Party to be notified, or sent to the Party to be
notified, addressed as set forth below, postage prepaid, by registered or
certified mail:
If to Sprint: Sprint Communications Company
8140 Ward Parkway
Kansas City, MO 64114
Attention: Vice President Law -
Sales & Marketing
If to Contractor: Ruffalo Cody & Associates
421 4th Ave. SE
Cedar Rapids, IA 52401
Attention: Joseph P. Cunningham
20. SEVERABILITY. If a provision of this Agreement shall for any reason
be held invalid or unenforceable, the remaining provisions hereof shall remain
in full force and effect.
21. GOVERNING LAW. The terms of this Agreement shall be construed and
interpreted under the laws of the State of Kansas.
22. EXCUSABLE DELAY. Neither Party shall be liable for failure to perform
its obligations hereunder due to causes beyond its reasonable control,
including without limitation, acts of God, law or government regulation,
national emergency, or labor difficulty.
23. RULES OF CONSTRUCTION. No rule of construction requiring
interpretation against the draftsman shall apply in the interpretation of this
Agreement.
24. ENTIRE AGREEMENT; WAIVER; MODIFICATION. This Agreement, and the
Exhibits hereto, contain the full understanding of the Parties and supersede
any prior agreement between such Parties. No waiver, alteration or
modification of any provision hereof shall be binding unless in writing and
signed by a duly authorized officer of each Party.
7
<PAGE> 8
IN WITNESS WHEREOF, the Parties have executed this agreement effective the date
first above written.
<TABLE>
<S> <C>
RUFFALO CODY & ASSOCIATES, INC. SPRINT COMMUNICATIONS COMPANY L.P.
By: By:
------------------------------------------ ---------------------------------------------
Title: Title:
--------------------------------------- ------------------------------------------
Date: Date:
---------------------------------------- -------------------------------------------
</TABLE>
8
<PAGE> 9
EXHIBIT A
SERVICE AND SERVICE AREA
1. SERVICE:
a) Business Sense Inbound
b) Business Sense Outbound (w/ card and mobile phone)
c) Sprint Sense (w/ Business Sense only)
d) Clarity Inbound
e) Clarity Outbound (w/ card and mobile phone)
f) The Most for Business Inbound
g) The Most for Business Outbound (w/ card and mobile phone)
h) Sprint Plus
i) Sprint World
2. NON-EXCLUSIVE SALES AREA.
The continental United States
3. CUSTOMER RESTRICTIONS.
Contractor shall not solicit to become Customers, nor shall Contractor
be compensated for any sale, or attempted sale to: (i) National
Accounts as designated by Sprint from time to time; and (ii) Sprint's
installed, existing Customer base.
9
<PAGE> 10
EXHIBIT B
PAYMENT SCHEDULE AND PERFORMANCE STANDARDS
1. PAYMENT SCHEDULE:
a) Sprint shall pay Contractor each month the following:
1) $ 15.00 per hour of training received by a Sales
Representative, and
2) $3.15 times the Monthly Activated Ordered Revenue
produced by Contractor; provided, however, that such rate
shall not be less than than $27.125 per hour, nor greater than
$40.00 per hour, of Sales Representative time devoted to sales
under this Agreement. Monthly Activated Ordered Revenue shall
be calculated by multiplying the number of accounts activated
in the given month by the par value of $50. Sprint may, at
its option, change the amount paid to Contractor per activated
account based on the actual value of activated accounts
submitted to Sprint by Contractor.
b) There shall be no minimum billable Sales Representative hours
or training hours during the term of the Agreement. Maximum billable
Sales Representative hours and training hours shall be as follows:
<TABLE>
<CAPTION>
Maximum Maximum
Agreement Sales Rep Training
Months Hours Hours
--------- --------- ---------
<S> <C> <C>
37 to 46 14,400 376
</TABLE>
c) Contractor shall submit a complete and accurate invoice to
Sprint within five (5) working days after: (i) the 15th of each month;
and (ii) the last working day of each month. Sprint shall pay
Contractor within thirty (30) days after receipt of an approved
invoice. Sprint shall notify Contractor of invoice approval status
within two (2) business days of receipt of such invoice.
d) Sprint shall reconcile the amount of Monthly Activated
Ordered Revenue used to determine the amount paid Contractor in
Subsection 1(a)(2) of this Exhibit against the actual amount of
revenue billed and reported in Sprint's Compensation Accounting
System. Sprint shall reconcile the amount of Monthly Activated
Ordered Revenue against the revenue generated during the measurement
month specified in the following schedule (the "Measurement Month"):
10
<PAGE> 11
<TABLE>
<CAPTION>
Activation Measurement
Month Month
---------- -----------
<S> <C>
January March
February April
March May
April June
May July
June August
July September
August October
September November
October December
November January
December February
</TABLE>
Sprint will notify Contractor of the results of the
reconciliation of Monthly Activated Ordered Revenue to the
actual revenue no later than 30 days after the second invoice
for a given sale month is posted to the Sprint Compensation
Accounting System.
If it is determined as a result of this reconciliation that
Sprint overpaid Contractor for Monthly Activated Ordered
Revenue, Contractor shall refund Sprint the amount of such
overpayment within 30 days from the date Contractor receives
written notice of the reconciliation. If it is determined as a
result of the reconciliation that Sprint underpaid Contractor
for Monthly Activated Ordered Revenue, Sprint shall pay
Contractor the amount of such under payment, up to a maximum
of $125,000, within 30 days from the date Contractor receives
written notice of the reconciliation.
2. PERFORMANCE STANDARDS.
a) Contractor shall complete 0.213 net A-Status Sales per Sales
Representative hour billed to Sprint.
b) The average monthly Revenue Dollars generated during the
"Measurement Period" defined below shall be no less than 90% of the
Revenue Dollars generated during the Measurement Month. The
Measurement Period means the three-month period that begins with the
Measurement Month and includes the two months immediately following
the Measurement Month. Exceptions to this performance standard may be
granted based on anomalies created by the compensation and/or billing
systems.
11
<PAGE> 12
EXHBIT C
OPERATIONAL PROCEDURES
1. Telemarketing by powerdialing is limited to 8:00 AM to 5:00 PM local
time of destination of call, Monday through Friday. No calls will be made on
legal holidays.
2. Sprint will provide a reasonably sufficient quantity of leads on 1600
BPI, 9 track magnetic tape.
3. Contractor will monitor each Sales Representative at least once per
shift.
4. Contractor will provide sales supervisors, at its expense, with a
ratio of no less than 1 supervisor for every 12 Sales Representative.
Additionally, Contractor will provide sales managers to supervise the sales
supervisors at a ratio of no less than 1 sales manager for every 3 sales
supervisors. These ratios must be maintained on an average basis. (It may be
acceptable to have ratios lower than specified for short periods of time.)
5. Contractor shall provide the following written reports to Sprint:
a) A daily sales report in a format specified by Sprint.
b) Weekly and monthly sales forecasts and planned sales
activities reports.
c) Customer complaints and disposition reports as required by
Sprint.
6. Sprint will establish the order in which Contractor will contact Sales
Prospects supplied by Sprint. Contractor may target Sales Prospects by time
zone.
7. Contractor will provide Sprint a monthly, program-specific
reconciliation of work done on Sales Prospects no later than the fifth workday
after the end of the month in which the work is done.
8. Contractor will direct all residential Sales Prospects to the Sprint
residential inbound operation at 1-800-877-4000. Contractor will send all
commercial Sales Prospects to Sprint via the Sprint vendor manager.
9. Contractor will transmit all sales to Sprint nightly, and within 24
hours.
10. Within 24 hours following a request for information made by a
customer, Contractor will notify Sprint of the customer's name, address,
telephone number and type of information requested.
11. Sprint will attempt to verify all sales transmitted by
12
<PAGE> 13
Contractor by making at least 5 verification attempts within 72 hours. If
Sprint cannot contact the customer within 72 hours the sale will be unverified.
Contractor will indicate in the "note field" of the sale transmission any
unusual circumstances that may affect Sprint's ability to verify an account
within 72 hours.
12. Contractor shall provide each Sales Representative at least 36 hours of
Sprint Service training before the representative is allowed to telemarket such
Service.
13. Contractor shall provide at least 4 hours of continuing training for
each Sales Representative who has been selling Sprint service for at least one
full month. Contractor will comply with Sprint's direction regarding the
content of said training. Training will only be provided by trainers certified
by Sprint.
13
<PAGE> 1
EXHIBIT 10.88
SECOND AMENDMENT TO
ASSET PURCHASE AGREEMENT
THIS AMENDMENT effective the 31st day of October, 1996, by and between
TOTAL COMMUNICATION SERVICES, INC., a corporation organized and existing under
the laws of the State of Iowa, ("Seller") and MCLEOD TELEMANAGEMENT, INC., an
Iowa corporation with its principal place of business in Cedar Rapids, Iowa
("Buyer"), is the Second Amendment to that Asset Purchase Agreement dated
September 5, 1996 executed by Seller and Buyer, and modified by the First
Amendment dated September 5, 1996 ("Agreement"), and is joined in by the
shareholders and management of Seller listed on Exhibit "B" to the Agreement for
the limited purpose of agreeing not to compete, all as set forth in the
Agreement.
1. PURCHASE PRICE. The parties hereby agree to revise and finalize the
Asset Purchase Price as a firm, fixed price of Five Hundred Ten Thousand Dollars
($510,000.00) ("Revised Purchase Price"), not subject to the adjustments
contemplated by paragraphs 2(a) and 2(b) of the Agreement. Accordingly,
paragraphs 2(a) and 2(b) are considered deleted from the Agreement and of no
further force and effect. At Closing, the Revised Purchase Price will be
increased to reflect the value of the Seller's Receivables which are being
purchased ("Final Purchase Price"). "Receivables" are defined in paragraph 1(g)
of the Agreement as, "Account receivables due in less than 60 days after the
invoice date on the date of Closing." At Closing the Final Purchase Price shall
be paid in cash or in other immediately available funds, reduced by one Hundred
Sixty Thousand Dollars ($166,000), the amount of the Escrow Funds (excluding
interest on the Escrow Funds). The parties acknowledge and agree that the number
of customer lines stated in paragraph 1(a) of the Agreement have changed, a
revised customer list will be provided at pre-closing and Closing.
2. CLOSING DATE. Buyer and Seller agree that the Closing Date provided
in Paragraph 5 of the Agreement is hereby extended from no later than October
31, 1996 to no later than December 16, 1996. Buyer and Seller agree to read all
other dates or terms contained in the Agreement and its Exhibits A, B, C and D
and which affect the Closing Date to be modified to be consistent with a Closing
Date not later than December 16, 1996.
3. RELEASE OF SECURITY INTEREST. TCSI has entered an agreement with
WilTel in order to obtain a partial termination of UCC No. K623817 whereby
WilTel will release its security interest in the Assets (as defined in the
Agreement) and any proceeds of contemplated transaction.
4. U.S. WEST CONSENT. The parties acknowledge that the consent of US
West has been obtained pursuant to the terms of a Memorandum of Understanding
between US West Communications, Inc. and TCSI dated October 31, 1996, whereby
McLeod agrees to remit $400,000 of the Purchase Price to Michael G. Kulik,
attorney for TCSI, from the closing proceeds, a portion of which has been
assigned to US West.
5. CUSTOMER NOTIFICATION. Upon McLeod's receipt of the WilTel partial
release
<PAGE> 2
described in paragraph 3 above, McLeod shall mail the customer letters prepared
by TCSI pursuant to the October 23, 1996 order of the Iowa Utilities Board
(Docket No. SPU-96-21). McLeod shall provide an affidavit indicating the mailing
date of such letters.
6. RATIFICATION. Except as modified by this Second Amendment, the
Agreement is hereby ratified and confirmed and shall remain in full force and
effect according to the terms of the Agreement.
7. SIGNATURES. Buyer and Seller agree that the execution of this
Amendment may be made by facsimile signatures and facsimile signatures shall be
as binding on the respective parties as original signatures.
IN WITNESS WHEREOF, Buyer and Seller have executed this Second Amendment
to Agreement effective as of the date first above written.
TOTAL COMMUNICATION SERVICES, MCLEOD TELEMANAGEMENT, INC.
INC. ("SELLER") ("BUYER")
By: [Sig] By: /s/ STEPHEN C. GRAY
-------------------------- -----------------------
Its: President Its: President
------------------------ ----------------------
THE SHAREHOLDERS AND MANAGEMENT OF SELLER LISTED ON EXHIBIT "B" ATTACHED TO THE
AGREEMENT FOR THE LIMITED PURPOSE OF AGREEING TO EXECUTE A NON-COMPETITION
AGREEMENT PURSUANT TO THE TERMS OF THE AGREEMENT.
/s/ DONALD WHIPPLE /s/ CHARLES ELDRED
- ----------------------------- ---------------------------
Donald Whipple Charles Eldred
/s/ JOHN BRADY /s/ DWAYNE ANDREW
- ----------------------------- ---------------------------
John Brady Dwayne Andrew
/s/ BRIAN RAMMELSBERG /s/ MICHAEL KNIGHT
- ----------------------------- ---------------------------
Brian Rammelsberg Michael Knight
2
<PAGE> 3
I.S.H., INC. BENTON MARKETING GROUP, L.C.
By: [Sig] By: /s/ DONALD WHIPPLE
-------------------------- -----------------------
Its: President Its: Chairman
------------------------ ----------------------
<PAGE> 1
EXHIBIT 10.89
ESCROW AGREEMENT
This Escrow Agreement (this "AGREEMENT") is made and entered into as of July
15, 1996 (the "EFFECTIVE DATE"), by and among McLeod, Inc., a Delaware
corporation ("MCLEOD"), certain shareholders and option holders of Ruffalo, Cody
& Associates, Inc. who are signatories to this Agreement (the "HOLDERS"), Albert
P. Ruffalo as the representative of the Holders (the "REPRESENTATIVE"), and
Norwest Bank N.A. as escrow agent (the "ESCROW AGENT"). The Effective Date of
this Agreement shall be the same date as the Effective Date of the Agreement and
Plan of Reorganization (as that term is defined below).
RECITALS
A. The Holders are certain shareholders and certain option holders of
Ruffalo Cody & Associates, Inc., an Iowa corporation ("RUFFALO"). Ruffalo,
McLeod and the Holders have entered into an Agreement and Plan of Reorganization
dated as of July 12, 1996 (the "PLAN"), pursuant to which Ruffalo will be merged
with and into McLeod Merging Co., an Iowa corporation that is a wholly-owned
subsidiary of McLeod ("MERGECO"), in a statutory merger (the "MERGER"), with
Mergeco to be the surviving corporation of the Merger. Capitalized terms used in
this Agreement and not otherwise defined herein will have the meanings given to
them in the Plan.
B. Pursuant to the Plan, Fifty thousand Dollars ($50,782) of the amount
to be paid to the Holders and 113,387 shares of the McLeod Class A Common stock
which are to be issued to the Holders are not to be immediately delivered to the
Holders but are to be delivered to Escrow Agent to be held in the escrow created
pursuant to this Agreement (the "Escrow") in an escrow account (an "Escrow
Account") and will be subject to cancellation and forfeiture under certain
conditions as set forth in this Agreement.
The parties agree as follows:
1. ESTABLISHMENT OF ESCROW.
1.1 Delivery of Cash, Escrow Shares and Stock Powers. Upon the
execution of this Agreement by all parties: (a) McLeod will deliver to the
Escrow Agent $50,782 in immediately available funds, and duly authorized and
113,387 executed stock certificates registered in the names of the Holders as
reflected on Exhibit A evidencing the Escrow Shares; and (b) the Holders will
deliver to the Escrow Agent duly executed Stock Powers and Assignments Separate
From Certificate in the form of Exhibit B ("STOCK POWERS"), signed in blank by
each of the Holders. The Escrow Agent agrees to accept delivery of the cash
(the "ESCROW FUND"), certificates evidencing the Escrow Shares and the Stock
Powers and to hold such Escrow Fund, Escrow Shares, the Stock
<PAGE> 2
Powers and all other Escrowed Items (as defined below) in escrow in the Escrow
Account pursuant to the terms and conditions of this Agreement. As used
herein, the term "ESCROWED ITEMS" means, collectively, the cash and interest
earned thereon, the stock certificates and instruments representing all of the
Escrow Shares and any Distributions and Secondary Distributions (as such terms
are defined below) then in the Escrow Account, the Stock Powers and all other
Escrowed Items then in the Escrow Account pursuant to this Agreement.
1.2 Investment of Escrow Funds. The Escrow Agent agrees to invest such
funds, from and after the date of this Agreement unless otherwise directed in a
joint writing by McLeod and the Representative, only in (a) short term
certificates of deposit of the Escrow Agent, overnight repurchase agreements,
United States government securities or securities of agencies in the United
States government which are guaranteed by the United States government or (b)
money market funds which are invested solely in the types of investments
described in clause (a) of this sentence. The Escrow Agent agrees to hold all
interest and other distributions or gains derived from such investments are
reinvestments, if any (collectively the "INTEREST") in escrow and to distribute
the same pursuant to Section 2. The Escrow Agent shall have no liability for
any loss resulting from its investments of the Escrow Fund.
1.3 Dividends, Voting and Rights of Ownership. So long as the Escrow
is in effect and the Escrowed Items have not been delivered and released to the
Holders or to McLeod as provided in Section 2 hereof, any cash dividends,
dividends payable in stock, securities or other property or other distributions
of any kind (including without limitation shares of McLeod Common Stock issued
in connection with a subdivision or split of McLeod's Common Stock) that are
paid, issued or made by McLeod in respect of the Escrow Shares (collectively,
the "DISTRIBUTIONS") or in respect of any such Distributions ("SECONDARY
DISTRIBUTIONS") will be immediately delivered to the Escrow Agent and will be
held in escrow in the Escrow Account on the same terms and conditions as those
applied to the Escrow Shares hereunder and the Holders will promptly sign and
deliver to the Escrow Agent new Stock Powers or other applicable instruments
of transfer for such Distributions and/or Secondary Distributions (duly
executed in blank by the Holders) to be held in escrow in the Escrow Account as
Escrowed Items pursuant to this Agreement. As used herein, the term "Escrow
Shares" shall include all Distributions and Secondary Distributions required to
be placed into the Escrow under this Agreement. The Holders will have the
right to vote the Escrow Shares deposited in the Escrow Account for their
account so long as such Escrow Shares are held in escrow, and McLeod will take
all steps necessary to allow the exercise of such rights. While the Escrow
Shares remain in the Escrow Agent's possession pursuant to this Agreement, the
Holders will (subject to the provisions of Section 1.3 below) retain and be
able to exercise all other incidents of ownership of the Escrow Shares that are
not inconsistent with the terms and conditions of this Agreement.
2
<PAGE> 3
1.4 No Transfer of or Encumbrance on Escrow Shares. No Escrow Shares,
Distributions, Secondary Distributions or other Escrowed Items or any beneficial
interest therein may be sold, assigned, pledged, encumbered or otherwise
transferred (including without limitation by operation of law) by the Holders
or any Holder or be taken or reached by any legal or equitable process in
satisfaction of any debt or other liability of a Holder (other than such
Holder's obligations under this Agreement) prior to the delivery and release to
the Holders of the Escrow Shares and other Escrowed Items by the Escrow Agent
in accordance with the provisions of Section 2 hereof.
1.5 Conditions to Release From Escrow; Purpose of Agreement. The
parties acknowledge and agree that, pursuant to the terms of Section 2 of the
Plan; the Holders are not entitled to receive any of the Escrowed Items out of
the Escrow until the dates referenced in Section 2 and only if between the date
of this Agreement and the dates referenced in Section 2, Mergeco is entitled to
receive an average of at least $450,000 in revenue per month from Sprint
Communications Company L.P. ("SPRINT") under the Independent Contractor Sales
Agreement between Ruffalo and Sprint entered into in May of 1995 ("CONTRACT").
If the average monthly revenues under the Contract do not equal at least
$450,000 then, subject to the provisions of this Agreement, McLeod and the
Escrow Agent will immediately be irrevocably and forever released of any
obligation to deliver any of the Escrow Funds, Escrow Shares or other Escrowed
Items to any of the Holders, the Escrow Fund and Interest, the stock
certificate(s) and other instruments representing the Escrow Shares, the Stock
Powers and other Escrowed Items will be delivered out of the Escrow to McLeod
for cancellation, such stock certificate(s), other instruments and the Escrow
Fund and Escrow Shares will be canceled by McLeod in accordance with this
Agreement, and the Holders will thereby immediately, irrevocably and forever
forfeit any right, title or interest of any kind in or to the Escrow Shares and
all other Escrowed Items.
2. RELEASE OF ESCROWED ITEMS FROM ESCROW.
2.1 Certain Definitions.
(a) First Release Date. As hereinafter used in this Agreement,
the term "FIRST RELEASE DATE" means six (6) months from the Effective Time.
(b) Second Release Date. As hereinafter used in this Agreement,
the term "SECOND RELEASE DATE" means nine (9) months from the Effective Time.
(c) Third Release Date. As hereinafter used in this Agreement,
the term "THIRD RELEASE DATE" means twelve (12) months from the Effective Time.
(d) Fourth Release Date. As hereinafter used in this Agreement,
the term "FOURTH RELEASE DATE" means fifteen (15) months from the Effective
Time.
3
<PAGE> 4
(e) Fifth Release Date. As hereinafter used in this Agreement,
the term "FIFTH RELEASE DATE" means eighteen (18) months from the Effective
Time.
2.2 Action by Escrow Agent. The cash and Interest in the Escrow Fund,
stock certificates representing the Escrow Shares, the Stock Powers and all
other Escrowed Items will be held in the Escrow Account by the Escrow Agent
until required to be released pursuant to Section 2.3 hereof.
2.3 Conditions for Release of Escrow Funds and Escrow Shares.
(a) Release to Holders on First Release Date. On or after the
First Release Date, upon receipt by Escrow Agent of a certificate signed by the
Representative and an officer of McLeod that the conditions of Section 1.5 have
been meet, then Escrow Agent shall promptly release from the Escrow Account the
Escrow Fund, all Interest accrued thereon and the shares of stock of McLeod
Inc., referenced on Exhibit 2.3(a) from the Escrow Shares, the Stock Powers
relating to those shares and any Distributions or Secondary Distributions with
respect to those shares to the Holders named on Exhibit 2.3(a).
(b) Release to Holders on Second Release Date. On or after the
Second Release Date, upon receipt by Escrow Agent of a certificate signed by the
Representative and an officer of McLeod that the conditions of Section 1.5 have
been meet, the Escrow Agent shall promptly release from the Escrow Account the
shares of stock of McLeod Inc., referenced on Exhibit 2.3 (b) from the Escrow
Shares, the Stock Powers relating to those shares and any Distributions or
Secondary Distributions with respect to those shares to the Holders named on
Exhibit 2.3(b).
(c) Release to Holders on Third Release Date. On or after the
Third Release Date, upon receipt by Escrow Agent of a certificate signed by the
Representative and an officer of McLeod that the conditions of Section 1.5 have
been meet, then Escrow Agent shall promptly release from the Escrow Account the
shares of stock of McLeod Inc., referenced on Exhibit 2.3(c) from the Escrow
Shares, the Stock Powers relating to those shares and any Distributions or
Secondary Distributions with respect to those shares to the Holders named on
Exhibit 2.3(c).
(d) Release to Holders on Fourth Release Date. On or after the
Fourth Release Date, upon receipt by Escrow Agent of a certificate signed by the
Representative and an officer of McLeod that the conditions of Section 1.5 have
been meet, then Escrow Agent shall promptly release from the Escrow Account the
shares of stock of McLeod Inc., referenced on Exhibit 2.3(d) from the Escrow
Shares, the Stock Powers relating to those shares and any Distributions or
Secondary Distributions with respect to those shares to the Holders named on
Exhibit 2.3(d).
4
<PAGE> 5
(e) Release to Holders on Fifth Release Date. On or after the
Fifth Release Date, upon receipt by Escrow Agent of a certificate signed by the
Representative and an officer of McLeod that the conditions of Section 1.5 have
been meet, then Escrow Agent shall promptly release from the Escrow Account the
shares of stock of McLeod Inc., referenced on Exhibit 2.3 (e) from the Escrow
Shares, the Stock Powers relating to those shares and any Distributions or
Secondary Distributions with respect to those shares to the Holders named on
Exhibit 2.3(e).
(f) Delivery of Escrow Funds. Delivery of Escrow Funds shall be
by wire transfer and delivery of Escrow Shares and other Escrowed Items by the
Escrow Agent shall be by registered mail or by nationally recognized overnight
courier. The Escrow Agent shall not be responsible for obtaining insurance in
connection with such delivery.
2.4 Power to Transfer Escrow Funds, Escrow Shares and Distributions.
The Escrow Agent is hereby granted the power to effect any transfer of Escrow
Shares, Distributions, Secondary Distributions and other Escrowed Items
contemplated by this Agreement.
3. ARBITRATION OF DISPUTES OVER ESCROW RELEASE. In the event that McLeod
and Representative cannot agree on whether a certificate is to be delivered on
a Release Date, any dispute shall be settled by binding mandatory arbitration
conducted in accordance with the provisions of this Section 3, unless McLeod
and the Holders independently settle such dispute in a written settlement
agreement executed by McLeod and each of the Holders.
3.1 Arbitration Rules. Any arbitration conducted pursuant to this
Agreement shall be held in Linn County, Iowa, and except as herein specifically
stated in accordance with the commercial arbitration rules of the American
Arbitration Association then in effect ("AAA RULES"). However, in all events,
these arbitration provisions shall govern over any conflicting rules which may
now or hereafter be contained in the AAA Rules. The arbitration will be heard
and decided by a single arbitrator who shall be selected as provided in Section
3.2. Any judgment upon the award rendered by the arbitrator may be entered in
any court having jurisdiction over the subject matter thereof. The arbitrator
shall have the authority to grant any equitable and legal remedies that would be
available in any judicial proceeding instituted to resolve the dispute that is
the subject of such arbitration.
3.2 Selection of Arbitrator. The American Arbitration Association will
have the authority to select an arbitrator from a list of arbitrators who are
attorneys-at-law who practice law; provided that the arbitrator cannot have
represented either McLeod or any of the Holders in any previous matter.
5
<PAGE> 6
3.3 Decision and Award. The final decision and award of the
arbitrator will be furnished to the Escrow Agent, the Holders and McLeod in
writing and will constitute a final and conclusive determination of the issue or
issues in question, binding upon the Holders and McLeod.
3.4 Compensation of Arbitrator. Any such arbitration will be
conducted before a single arbitrator, selected as provided above, who will be
compensated for his or her services at a rate to be determined by the parties or
by the American Arbitration Association, but based upon reasonable hourly or
daily consulting rates for the arbitrator in the event the parties are not able
to agree upon his or her rate of compensation.
3.5 Payment of Costs. McLeod, on the one hand, and the Holders, on
the other hand, will each pay 50% of the initial compensation to be paid to the
arbitrator in any such arbitration and 50% of the costs of transcripts and other
normal and regular expenses of the arbitration proceedings; provided, however,
that the prevailing party in any arbitration will be entitled to an award of its
attorneys' fees and costs, and all costs of arbitration, including those
provided for above, will be paid by the losing party, and the arbitrator will be
authorized to make such determinations.
3.6 Burden of Proof. For any claim submitted to an arbitration
hereunder, the burden of proof will be as it would be if the claim were
litigated in a judicial proceeding.
3.7 Award. Upon the conclusion of any arbitration proceedings
hereunder, the arbitrator will render findings of fact and conclusions of law
and a written opinion setting forth the basis and reasons for any decision
reached and will deliver such documents to each party to this Agreement along
with a signed copy of the award.
3.8 Terms of Arbitration. The arbitrator chosen in accordance with
these provisions will not have the power to alter, amend or otherwise affect the
terms of these arbitration provisions or the provisions of this Agreement or the
Non-Competition Agreement.
3.9 Exclusive Remedy. Except as specifically otherwise provided in
this Agreement, arbitration will be the sole and exclusive remedy of the parties
for any dispute arising over the release of Escrowed Items from the Escrow
Account hereunder.
4. LIMITATION OF ESCROW AGENT'S RESPONSIBILITY.
(a) Limitation of Responsibility. The Escrow Agent's duties are
limited to those set forth in this Agreement, and the Escrow Agent, acting as
such under this
6
<PAGE> 7
Agreement, is not charged with knowledge of or any duties or responsibilities
under any other document or agreement, including without limitation the Plan or
the Non-Competition Agreement. The Escrow Agent may execute any of its powers or
hereunder and exercise any rights hereunder either directly or by or response
through its agents or attorneys. Nothing in this Escrow Agreement will be deemed
to impose upon the Escrow Agent any duty to qualify to do business or to act as
a fiduciary or otherwise in any jurisdiction. The Escrow Agent will not be
responsible for, and will not be under a duty to examine into or pass upon, the
validity, binding effect, execution or sufficiency of this Escrow Agreement or
of any agreement amendatory or supplemental hereto.
(b) Limitation of Liability. The Escrow Agent will incur no
liability with respect to any action taken, not taken or suffered by it in
reliance upon any notice, direction, instruction, consent, statement or other
document believed by it to be genuine and duly authorized, nor for any other
action or inaction, except its own willful misconduct or gross negligence. In
all questions arising under this Agreement, the Escrow Agent may rely on the
advice of counsel, and for anything done, omitted or suffered in good faith by
the Escrow Agent based on such advice, the Escrow Agent will not be liable to
anyone. The Escrow Agent will not be required to take any action hereunder
involving any expense unless the payment of such expense is made or provided for
in a manner satisfactory to it. The Escrow Agent will not be liable for any
action taken or omitted to be taken by it in good faith unless a court of
competent jurisdiction determines that the Escrow Agent's willful misconduct or
gross negligence was the primary cause of any loss to McLeod or any Holder. The
Escrow Agent makes no representation or warranty with respect to and is not
responsible for the validity of the Escrow Shares or of any option rights that
may be issued with respect to any Escrow Shares. The Escrow Agent is not
responsible for the receipt of any dividend or other distribution on behalf of
any Holder or for the voting of or exercise of any other rights with respect to
the Escrow Shares. The Escrow Agent will have no duty to solicit any Escrow
Shares or any Distributions. The Escrow Agent will have no obligation with
respect to the Escrow Shares other than either to withhold release of Escrow
Shares from Holders or to release Escrow Shares to McLeod for cancellation, as
appropriate, to the extent expressly provided in this Agreement.
(c) Indemnity. McLeod and each of the Holders (each an "INDEMNIFYING
PARTY" and together the "INDEMNIFYING PARTIES"), each hereby jointly and
severally covenants and agrees to reimburse, indemnify and hold harmless the
Escrow Agent and its employees and agents from and against any loss, damage,
liability or loss suffered, incurred by or asserted against the Escrow Agent
(including amounts paid in settlement of any action, suit, proceeding, or claim
brought or threatened to be brought and including reasonable expenses of legal
counsel) arising out of, in connection with or based upon any act or omission by
the Escrow Agent relating in any way to this Agreement or the Escrow Agent's
services hereunder. This indemnity will not apply to
7
<PAGE> 8
gross negligence or willful misconduct on the Escrow Agent's part. Anything in
this Agreement to the contrary notwithstanding, in no event will the Escrow
Agent be liable for special, indirect or consequential damage or loss of any
kind whatsoever (including but not limited to lost profits), even if the Escrow
Agent has been advised of the likelihood of such loss or damage and regardless
of the form of action.
(d) Participation in Defense of the Escrow Agent. Each Indemnifying
Party may participate at its own expense in the defense of any claim or action
that may be asserted against the Escrow Agent, and if the Indemnifying Parties
so elect, the Indemnifying Parties may assume the defense of such claim or
action; provided, however, that if there exists a conflict of interest that
would make it inappropriate for the same counsel to represent both the Escrow
Agent and the Indemnifying Parties, the Escrow Agent's retention of separate
counsel will be reimbursable as herein above provided. The Escrow Agent's right
to indemnification hereunder will survive the Escrow Agent's resignation or
removal as escrow agent hereunder and will survive the termination of this
Agreement by lapse of time or otherwise.
(e) Notice of Claims against Escrow Agent. The Escrow Agent will
notify each Indemnifying Party by letter, or by telephone or telecopy confirmed
by letter, of any receipt by the Escrow Agent of a written assertion of a claim
against the Escrow Agent, or any action commenced against the Escrow Agent,
within ten (10) business days after the Escrow Agent's receipt of written
notice of such claim. However, the Escrow Agent's failure to so notify each
Indemnifying Party will not operate in any manner whatsoever to relieve an
Indemnifying Party from any liability that it may have otherwise than on
account of this Section 4.
5. SUCCESSOR ESCROW AGENT. In the event the Escrow Agent becomes
unavailable or unwilling to continue in its capacity herewith, the Escrow Agent
may resign and be discharged from its duties or obligations hereunder by giving
notice of its resignation to McLeod and the Representative, specifying a date
not less than ten (10) days following such notice date of when such resignation
will take effect. McLeod will designate a successor Escrow Agent prior to the
expiration of such ten (10) day period by giving written notice to the Escrow
Agent and the Representative. McLeod may appoint a successor Escrow Agent
without the consent of the Holders or the Representative so long as such
successor is a bank with assets of at least $50 million, and may appoint any
other successor Escrow Agent with the consent of the Representative, which will
not be unreasonably withheld. The Escrow Agent will promptly transfer the
Escrow Shares to such designated successor. If no successor is appointed,
Escrow Agent may apply to a court of competent jurisdiction for such
appointment.
6. HOLDERS' REPRESENTATIVE. For purposes of this Agreement, the Holders
have consented to the appointment of the Representative as representative of
the Holders and as the attorney-in-fact for and on behalf of each Holder, and,
subject to the express
8
<PAGE> 9
limitations set forth below, the taking by the Representative of any and all
actions and the making of any decisions required or permitted to be taken by
him under this Agreement, including but not limited to the exercise of the
power to authorize delivery to McLeod of the Escrow Shares and take all actions
necessary in the judgment of the Representative for the accomplishment of the
foregoing and all of the other terms, conditions and limitations of this
Agreement. The Representative will have unlimited authority and power to act
on behalf of each Holder with respect to this Agreement and the disposition,
settlement or other handling of all claims, rights or obligations arising under
this Agreement so long as all Holders are treated in the same manner. The
Holders will be bound by all actions taken by the Representative in connection
with this Agreement, and McLeod will be entitled to rely on any action or
decision of the Representative. In performing his functions hereunder, the
Representative will not be liable to the Holders in the absence of negligence
or willful misconduct. The Representative may resign from such position,
effective upon a new representative being appointed in writing by Holders who
beneficially own a majority of the Escrow Shares.
7. EXPENSES.
(a) Escrow Agent. All fees and expenses of the Escrow Agent incurred
in the ordinary course of performing its responsibilities hereunder will be
paid by McLeod upon receipt of a written invoice by the Escrow Agent. Any
extraordinary fees and expenses, including without limitation any fees or
expenses incurred by the Escrow Agent in connection with a dispute over the
distribution of Escrow Shares, will be paid by McLeod.
(b) Representatives. The Representative will not be entitled to
receive any compensation from McCleod or the Holders in connection with this
Agreement.
8. NOTICES. All notices, instructions and other communications required
or permitted to be given hereunder or necessary or convenient in connection
herewith must be in writing and will be deemed given (1) when personally
delivered or when delivered by telex or facsimile (to the telex or facsimile
number of the person to whom the notice is given), (1i) the first business day
following the date of deposit with an overnight courier service or (i11) on the
earlier of actual receipt or the third business day following the date on which
the notice is deposited in the United States mail, by first class certified or
registered mail, postage prepaid, addressed as follows:
If to the Escrow Agent Norwest Bank, N.A.
101 3rd Avenue SW
Cedar Rapids, Iowa 52404
Attn:
Telecopier:
9
<PAGE> 10
If to McLeod: McLeod, Inc.
221 3rd Avenue SE
Suite 500
Cedar Rapids, Iowa 52401
Attn:
Telecopier: 319-298-7008
If to the Representative: Al Ruffalo
Ruffalo Cody & Associates, Inc.
421 4th Avenue SE
Cedar Rapids, Iowa 52401
Telecopier:
or to such other address as McLeod, the Representative or the Escrow Agent, as
the case may be, designates in a notice given to each of the other parties
hereto in the manner provide herein.
9. GENERAL.
(a) Governing Law, Assigns. This Agreement will be governed by and
construed in accordance with the internal laws of the State of Iowa without
regard to conflict-of-law principles and will be binding upon, and inure to the
benefit of, the parties hereto and their respective successors and permitted
assigns.
(b) Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
(c) Entire Agreement. Except as otherwise set forth in the Plan, this
Agreement (together with the Non-Competition Agreement) constitutes the entire
understanding and agreement of the parties with respect to the subject matter
of this Agreement and supersedes all prior agreements or understandings,
written or oral, between the parties with respect to the subject matter hereof.
(d) Waivers. No waiver by any party hereto of any condition or of any
breach of any provision of this Agreement will be effective unless in writing.
No waiver by any party of any such condition or breach, in any one instance,
will be deemed to be a further or continuing waiver of any such condition or
breach or a waiver of any other condition or breach of any other provision
contained herein.
10
<PAGE> 11
(e) Amendment. This Agreement may be amended by the written agreement
of McLeod, the Escrow Agent and the Holders, provided that, if the Escrow Agent
does not agree to an amendment agreed upon by McLeod and the Holders, the
Escrow Agent will resign (which resignation shall be effective immediately and,
in any event, prior to the effective date of the amendment) and McLeod will
appoint a successor Escrow Agent in accordance with Section 5 above. No such
amendment may treat any one Holder differently from the other Holders unless
consented to in writing by Holders having beneficial ownership in a majority of
the outstanding Escrow Shares, including the consent of any Holder who is to be
treated differently.
(f) Miscellaneous. Escrow Agent may execute any of its powers or
responsibilities hereunder and exercise any rights hereunder either directly or
by or through its agents or attorneys. Nothing in this Escrow Agreement shall
be deemed to impose upon Escrow Agent any duty to qualify to do business or act
as a fiduciary or otherwise in any jurisdiction other than the State of Iowa.
Escrow Agent shall not be responsible for and shall not be under a duty to
examine into or pass upon the validity, binding effect, execution or
sufficiency of this Escrow Agreement or of any agreement amendatory or
supplemental hereto.
(g) Counterparts. This Agreement may be executed in counterparts, all
of which shall together constitute one instrument.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first above written.
MCLEOD ESCROW AGENT
MCLEOD, INC. NORWEST BANK N.A.
BY: /s/ CLARK MCLEOD BY: /s/ GREG NEUMEYER
--------------------- -----------------------
TITLE: TITLE: Sr. Trust Officer
------------------ --------------------
11
<PAGE> 12
THE HOLDERS
ALLSOP VENTURE PARTNERS III,
L.P.
BY: Mark Venture Partners, L.P.
General Partner
/s/ ALBERT P. RUFFALO BY: /s/ PAUL D. RHINES
- ------------------------------- -----------------------------
Albert P. Ruffalo Paul D. Rhines, General Partner
/s/ JOSEPH P. CUNNINGHAM /s/ LAURA L. DEMENT
- ------------------------------- -----------------------------
Joseph P. Cunningham Laura L. Dement
/s/ RANDY A. SNYDER /s/ BRIAN P. DONNELLY
- ------------------------------- ------------------------------
Randy A. Snyder Brian P. Donnelly
/s/ CLARK E. MCLEOD /s/ MARY E. MCLEOD
- ------------------------------- ------------------------------
Clark E. McLeod Mary E. McLeod
/s/ ERIC HENDER /s/ JULIE HENDER
- ------------------------------- ------------------------------
Eric Hender Julie Hender
RUFFALO, CODY & ASSOCIATES, INC.
401(k) and Profit Sharing Plan
BY: /s/ ALBERT P. RUFFALO
----------------------------
Albert P. Ruffalo, Trustee
BY: /s/ JOSEPH P. CUNNINGHAM
----------------------------
Joseph P. Cunningham, Trustee
12
<PAGE> 13
EXHIBIT A
<TABLE>
<CAPTION>
MCLEOD
NAME OF RCAI SHAREHOLDERS: # OF SHARES
- ----------------------------------------------------------------------
<S> <C>
ALLSOP VENTURE PARTNERS III 29,171
ALBERT P. RUFFALO 27,456
JOSEPH P. CUNNINGHAM 14,260
LAURA L. DEMENT 14,316
RANDY A. SNYDER 7,228
BRIAN P. DONNELLY 7,228
CLARK E. MCLEOD 5,792
MARY E. MCLEOD 5,792
ERIC HENDER 1,072
JULIE HENDER 1,072
ART CHRISTOFFERSEN 0
ESOP SHARES 0
-------
113,387
-------
</TABLE>
<PAGE> 14
EXHIBIT 2.3(A)
AT SIX MONTHS
<TABLE>
<CAPTION>
MCLEOD
NAME OF SHAREHOLDERS: CASH # OF SHARES
- ----------------------------------------------------------------------
<S> <C> <C>
ALLSOP VENTURE PARTNERS III 0 29,171
ALBERT P. RUFFALO 0 0
JOSEPH P. CUNNINGHAM 0 0
LAURA L. DEMENT 0 0
RANDY A. SNYDER 0 0
BRIAN P. DONNELLY 0 0
CLARK E. MCLEOD 0 0
MARY E. MCLEOD 0 5,792
ERIC HENDER 0 1,072
JULIE HENDER 0 1,072
ART CHRISTOFFERSEN 0 0
MIKE SEPULVEDA 0 0
DUANE JASPER 0 0
JIM BARNES 0 0
SALLY SIMMONS 0 0
ESOP SHARES 50,782 0
------ ------
TOTALS 50,782 37,107
------ ------
</TABLE>
<PAGE> 15
EXHIBIT 2.3(B)
<TABLE>
<CAPTION>
AT NINE MONTHS
MCLEOD
NAME OF SHAREHOLDERS: # OF SHARES
- ----------------------------------------------------------------------
<S> <C>
ALLSOP VENTURE PARTNERS III 0
ALBERT P. RUFFALO 6,864
JOSEPH P. CUNNINGHAM 3,565
LAURA L. DEMENT 3,579
RANDY A. SNYDER 1,807
BRIAN P. DONNELLY 1,807
CLARK E. MCLEOD 1,448
MARY E. MCLEOD 0
ERIC HENDER 0
JULIE HENDER 0
ART CHRISTOFFERSEN 0
ESOP SHARES 0
-------
19,070
-------
</TABLE>
<PAGE> 16
EXHIBIT 2.3(C)
<TABLE>
<CAPTION>
AT TWELVE MONTHS
MCLEOD
NAME OF SHAREHOLDERS: # OF SHARES
- ----------------------------------------------------------------------
<S> <C>
ALLSOP VENTURE PARTNERS III 0
ALBERT P. RUFFALO 6,864
JOSEPH P. CUNNINGHAM 3,565
LAURA L. DEMENT 3,579
RANDY A. SNYDER 1,807
BRIAN P. DONNELLY 1,807
CLARK E. MCLEOD 1,448
MARY E. MCLEOD 0
ERIC HENDER 0
JULIE HENDER 0
ART CHRISTOFFERSEN 0
ESOP SHARES 0
-------
19,070
-------
</TABLE>
<PAGE> 17
EXHIBIT 2.3(D)
<TABLE>
<CAPTION>
AT FIFTEEN MONTHS
MCLEOD
NAME OF SHAREHOLDERS: # OF SHARES
- ----------------------------------------------------------------------
<S> <C>
ALLSOP VENTURE PARTNERS III 0
ALBERT P. RUFFALO 6,864
JOSEPH P. CUNNINGHAM 3,585
LAURA L. DEMENT 3,579
RANDY A. SNYDER 1,807
BRIAN P. DONNELLY 1,807
CLARK E. MCLEOD 1,448
MARY E. MCLEOD 0
ERIC HENDER 0
JULIE HENDER 0
ART CHRISTOFFERSEN 0
ESOP SHARES 0
-------
19,070
-------
</TABLE>
<PAGE> 18
EXHIBIT 2.3(E)
<TABLE>
<CAPTION>
AT EIGHTEEN MONTHS
MCLEOD
NAME OF SHAREHOLDERS: # OF SHARES
- ----------------------------------------------------------------------
<S> <C>
ALLSOP VENTURE PARTNERS III 0
ALBERT P. RUFFALO 6,864
JOSEPH P. CUNNINGHAM 3,585
LAURA L. DEMENT 3,579
RANDY A. SNYDER 1,807
BRIAN P. DONNELLY 1,807
CLARK E. MCLEOD 1,448
MARY E. MCLEOD 0
ERIC HENDER 0
JULIE HENDER 0
ART CHRISTOFFERSEN 0
ESOP SHARES 0
-------
19,070
-------
</TABLE>
<PAGE> 1
[MCGLADREY & PULLEN, LLP LETTERHEAD]
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
McLeod, Inc.
Cedar Rapids, Iowa
We hereby consent to the use in this Registration Statement of our report,
dated March 28, 1996, except for Note 11, as to which the date is May 29, 1996,
relating to the consolidated financial statements of McLeod, Inc. and
subsidiaries, and to the reference to our Firm under the caption "Experts" and
"Selected Consolidated Financial Data" in the Prospectus.
/s/ MCGLADREY & PULLEN, LLP
-----------------------------
MCGLADREY & PULLEN, LLP
Cedar Rapids, Iowa
November 12, 1996
<PAGE> 2
[MCGLADREY & PULLEN, LLP LETTERHEAD]
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
MWR Telecom Inc.
Cedar Rapids, Iowa
We hereby consent to the use in this Registration Statement of our report,
dated March 15, 1996, relating to the financial statements of MWR Telecom Inc.,
and to the reference to our Firm under the caption "Experts" in the Prospectus.
/s/ MCGLADREY & PULLEN, LLP
-------------------------------
MCGLADREY & PULLEN, LLP
Cedar Rapids, Iowa
November 12, 1996
<PAGE> 3
[MCGLADREY & PULLEN, LLP LETTERHEAD]
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
Ruffalo, Cody & Associates, Inc.
Cedar Rapids, Iowa
We hereby consent to the use in this Registration Statement of our report,
dated February 9, 1996, except for Note 8, as to which the date is July 15,
1996, relating to the consolidated financial statements of Ruffalo, Cody &
Associates, Inc. and subsidiary, and to the reference to our Firm under the
caption "Experts" in the Prospectus.
/s/ MCGLADREY & PULLEN, LLP
--------------------------------
MCGLADREY & PULLEN, LLP
Cedar Rapids, Iowa
November 12, 1996
<PAGE> 4
[MCGLADREY & PULLEN, LLP LETTERHEAD]
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
Telecom*USA Publishing Group, Inc.
Cedar Rapids, Iowa
We hereby consent to the use in this Registration Statement of our report,
dated September 27, 1996, relating to the consolidated financial statements of
Telecom*USA Publishing Group, Inc. and subsidiaries, and to the reference to
our Firm under the caption "Experts" in the Prospectus.
/s/ MCGLADREY & PULLEN, LLP
-----------------------------
MCGLADREY & PULLEN, LLP
Cedar Rapids, Iowa
November 12, 1996
