SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
UNDER
THE SECURITIES EXCHANGE ACT OF 1934
McLEODUSA INCORPORATED
(Name of Issuer)
CLASS A COMMON STOCK
(Title of class of securities)
582266 10 2
(CUSIP Number)
The Lumpkin Foundation
c/o Steven L. Grissom
121 South 17th Street
Mattoon, Illinois 61938
217-235-4410
(Name, Address, and Telephone Number of person
authorized to receive notices and communications)
September 24, 1997
(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition which is the subject of this Schedule
13D, and is filing this schedule because of Rule 13d-1 (b)(3) or (4),
check the following box: [__].
Note. Six copies of this statement, including all
exhibits, should be filed with the Commission. See Rule
13d-1 (a) for other parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class
of securities, and for any subsequent amendment containing information
which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the
Securities Exchange Act of 1934 ("Act") or otherwise subject to the
liabilities of that section of the Act but shall be subject to all
other provisions of the Act (however, see the Notes).<PAGE>
CUSIP No. 582266 10 2 13D Page 2
1. Name of Reporting Persons / I.R.S. Identification Nos. of Above
Persons (Entities Only)
The Lumpkin Foundation
2. Check the appropriate box if a member of a group: (a) [x]
(b) [_]
3. SEC Use Only
4. Source of Funds: 00
5. Check box if disclosure of legal proceedings is required pursuant
to Item 2(d) or 2(e): [_]
6. Citizenship or Place of Organization:
Illinois
Number of Shares Beneficially Owned By Each Reporting Person
With:
7. Sole Voting Power: 219,280
8. Shared Voting Power: 0
9. Sole Dispositive Power: 219,280
10. Shared Dispositive Power: 0
11. Aggregate Amount Beneficially Owned By Each Reporting Person:
219,280
12. Check box if the aggregate amount in Row (11) excludes certain
shares:
[_]
13. Percent of Class represented by amount in Row (11): 0.4% See
Item 5.
14. Type of Reporting Person: CO<PAGE>
CUSIP No. 582266 10 2 13D Page 3
Item 1. Security and Issuer.
This statement relates to the Class A Common Stock, $.01 par
value (the "Common Stock"), of McLeodUSA Incorporated, a Delaware
corporation (the "Company"), whose principal executive offices are
located at 6400 C Street, S.W., P.O. Box 3177, Cedar Rapids, Iowa
52406-3177.
Item 2. Identity and Background.
This statement is being filed by The Lumpkin Foundation, an
Illinois not-for-profit corporation (the "Reporting Person" or the
"Foundation").
The name, residence or business address and present
principal occupation or employment of each executive officer and
director of the Foundation and of each other Former CCI Shareholder
(as defined in Item 5 below) are set forth in Schedule A hereto. To
the Foundation's knowledge, none of such persons has, during the past
five years, been (i) convicted in a criminal proceeding (excluding
traffic violations and similar misdemeanors) or (ii) a party to a
civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state
securities laws or finding any violation with respect to such laws.
During the past five years, the Foundation has not been (i)
convicted in a criminal proceeding (excluding traffic violations and
similar misdemeanors) or (ii) a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a
result of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or
finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
The Reporting Person acquired the shares of Common Stock set
forth opposite its name in Item 5 below in exchange for shares of
common stock of Consolidated Communications Inc., an Illinois
corporation ("CCI"), pursuant to an Agreement and Plan of
Reorganization dated as of June 14, 1997 by and among CCI, the Company
and Eastside Acquisition Co. (the "Merger Agreement"). A copy of the
Merger Agreement was filed as Exhibit 2.2 to the Company's Current
Report on Form 8-K filed June 26, 1997.
Item 4. Purpose of Transaction.
The Reporting Person acquired the Common Stock for
investment purposes. After the issuance of the Common Stock pursuant<PAGE>
CUSIP No. 582266 10 2 13D Page 4
to the Merger Agreement, Richard A. Lumpkin and Robert J. Currey, who
were previously directors and executive officers of CCI, were elected
directors and executive officers of the Company. Subject to the
restrictions on disposition of Common Stock existing under the
Stockholders Agreement described below, any or all of the shares of
Common Stock beneficially owned by the Reporting Person may be sold or
otherwise disposed of from time to time. The Reporting Person has no
other plans or proposals which relate to or would result in any of the
matters enumerated in paragraphs (a) through (j) of Item 4 of Schedule
13D. See Item 6 below.
Item 5. Interest in Securities of Issuer.
(a) The Reporting Person beneficially owns an aggregate of
219,280 shares of Common Stock, which represents approximately 0.4
percent of the estimated number of shares of Common Stock outstanding
on September 24, 1997. For this purpose, the number of outstanding
shares is estimated to be 61,153,651, which number is based on the
52,665,055 shares of Common Stock reported as outstanding at July 31,
1997, in the Company's most recent Quarterly Report on Form 10-Q, as
adjusted for the 8,488,596 shares of Common Stock issued pursuant to
the Merger Agreement.
The Reporting Person, together with the other former
shareholders of CCI who acquired shares of Common Stock pursuant to
the Merger Agreement (collectively, the "Former CCI Shareholders"),
MWR Investments Inc. ("MWR"), Midwest Capital Group, Inc., IES
Investments Inc. ("IES"), Clark E. McLeod and Mary E. McLeod,
(collectively, the "Principal Stockholders"), are parties to a
Stockholders' Agreement dated as of June 14, 1997 and effective
September 24, 1997, as amended by Amendment No. 1 to Stockholders'
Agreement dated as of September 19, 1997 (together, the "Stockholders
Agreement") and, accordingly, comprise a group within the meaning of
Section 13(d)(3) of the Securities Exchange Act of 1934.
Collectively, insofar as is known to the Reporting Person, this group
beneficially owns a total of 36,188,651 shares of Common Stock, which
represents 59.2 percent of such estimated number of shares of Common
Stock outstanding on September 24, 1997.
The following table sets forth information regarding the
shares of Common Stock beneficially owned by the Reporting Person, by
the other Former CCI Shareholders and by the other Principal
Stockholders. Except as indicated, beneficial ownership by the other
Former CCI Shareholders reflects their status as trustees of the
respective trusts set forth opposite their names in the table. The
information shown in the table with respect to each Principal
Stockholder who is not a Former CCI Shareholder is based on the most
recent Schedule 13D or Amendment thereto filed by such person that has
come to the attention of the Reporting Person. Reference is made to
such filings for further information as to such other Principal
Stockholders.<PAGE>
CUSIP No. 582266 10 2 13D Page 5
<TABLE>
<CAPTION>
Reporting Person Voting and Number of Percent of
and Other Former Dispositive Shares of Outstanding
CCI Shareholders Trust Powers Common Stock Common Stock
<S> <C> <C> <C> <C>
Richard A. Lumpkin Trust Agreement dated May 13, Sole 311,127 0.5
(settlor and trustee) 1978 f/b/o Richard Anthony
Lumpkin
Mary Lee Sparks Trust Agreement dated May 13, Shared 332,209 0.5
(settlor), Richard A. 1978 f/b/o Mary Lee Sparks
Lumpkin and Christina
Sparks Duncan
Richard A. Lumpkin Richard Adamson Lumpkin Sole 23,603 0.00
Grandchildren's Trust dated
9/5/80 f/b/o Joseph John Keon
III
Richard A. Lumpkin Richard Adamson Lumpkin Sole 23,603 0.00
Grandchildren's Trust dated
9/5/80 f/b/o Katherine
Stoddert Keon
Richard A. Lumpkin Richard Adamson Lumpkin Sole 23,603 0.00
Grandchildren's Trust dated
9/5/80 f/b/o Lisa Anne Keon
Richard A. Lumpkin Richard Adamson Lumpkin Sole 23,603 0.00
Grandchildren's Trust dated
9/5/80 f/b/o Margaret Lynley
Keon
Richard A. Lumpkin Richard Adamson Lumpkin Sole 23,603 0.00
Grandchildren's Trust dated
9/5/80 f/b/o Pamela Keon
Vitale
Richard A. Lumpkin Richard Adamson Lumpkin Sole 23,603 0.00
Grandchildren's Trust dated
9/5/80 f/b/o Susan Tamara Keon
Richard A. Lumpkin Richard Adamson Lumpkin Sole 55,088 0.1
Grandchildren's Trust dated
9/5/80 f/b/o Benjamin Iverson
Lumpkin
Richard A. Lumpkin Richard Adamson Lumpkin Sole 55,088 0.1
Grandchildren's Trust dated
9/5/80 f/b/o Elizabeth
Arabella Lumpkin<PAGE>
CUSIP No. 582266 10 2 13D Page 6
Reporting Person Voting and Number of Percent of
and Other Former Dispositive Shares of Outstanding
CCI Shareholders Trust Powers Common Stock Common Stock
Richard A. Lumpkin Richard Adamson Lumpkin Sole 31,476 0.1
Grandchildren's Trust dated
9/5/80 f/b/o Anne Romayne
Sparks
Richard A. Lumpkin Richard Adamson Lumpkin Sole 31,476 0.1
Grandchildren's Trust dated
9/5/80 f/b/o Barbara Lee
Sparks
Richard A. Lumpkin Richard Adamson Lumpkin Sole 31,476 0.1
Grandchildren's Trust dated
9/5/80 f/b/o Christina Louise
Sparks
Richard A. Lumpkin Richard Adamson Lumpkin Sole 31,476 0.1
Grandchildren's Trust dated
9/5/80 f/b/o John Woodruff
Sparks
Richard A. Lumpkin Trust named for Joseph John Keon Sole 256,291 0.4
III created under the Mary
Green Lumpkin Gallo Trust
Agreement dated December 29,
1989
Richard A. Lumpkin Trust named for Katherine Sole 256,291 0.4
Stoddert Keon created under
the Mary Green Lumpkin Gallo
Trust Agreement dated December
29, 1989
Richard A. Lumpkin Trust named for Lisa Anne Keon Sole 256,291 0.4
created under the Mary Green
Lumpkin Gallo Trust Agreement
dated December 29, 1989
Richard A. Lumpkin Trust named for Margaret Lynley Sole 256,291 0.4
Keon created under the Mary
Green Lumpkin Gallo Trust
Agreement dated December 29,
1989
Richard A. Lumpkin Trust named for Pamela Keon Sole 256,291 0.4
Vitale created under the Mary
Green Lumpkin Gallo Trust
Agreement dated December 29,
1989<PAGE>
CUSIP No. 582266 10 2 13D Page 7
Reporting Person Voting and Number of Percent of
and Other Former Dispositive Shares of Outstanding
CCI Shareholders Trust Powers Common Stock Common Stock
Richard A. Lumpkin Trust named for Susan Tamara Keon Sole 256,291 0.4
created under the Mary Green
Lumpkin Gallo Trust Agreement
dated December 29, 1989
Richard A. Lumpkin Trust named for Benjamin Iverson Sole 410,965 0.7
Lumpkin created under the Mary
Green Lumpkin Gallo Trust
Agreement dated December 29,
1989
Richard A. Lumpkin Trust named for Elizabeth Sole 410,965 0.7
Arabella Lumpkin created under
the Mary Green Lumpkin Gallo
Trust Agreement dated
December 29, 1989
Richard A. Lumpkin Trust named for Anne Romayne Sole 294,959 0.5
Sparks created under the Mary
Green Lumpkin Gallo Trust
Agreement dated December 29,
1989
Richard A. Lumpkin Trust named for Barbara Lee Sole 294,959 0.5
Sparks created under the Mary
Green Lumpkin Gallo Trust
Agreement dated December 29,
1989
Richard A. Lumpkin Trust named for Christina Louise Sole 294,959 0.5
Sparks created under the Mary
Green Lumpkin Gallo Trust
Agreement dated December 29,
1989
Richard A. Lumpkin Trust named for John Woodruff Sole 294,959 0.5
Sparks created under the Mary
Green Lumpkin Gallo Trust
Agreement dated December 29,
1989<PAGE>
CUSIP No. 582266 10 2 13D Page 8
Reporting Person Voting and Number of Percent of
and Other Former Dispositive Shares of Outstanding
CCI Shareholders Trust Powers Common Stock Common Stock
Benjamin I. Lumpkin Richard Anthony Lumpkin 1993 Shared 96,656 0.2
and Elizabeth A. Grantor Retained Annuity Trust
Lumpkin, Richard A.
Lumpkin's spouse
(right until 12/31/97
to acquire corpus of
trust for equivalent
value)
Mary Lee Sparks N/A Sole 196,678 0.3
Anne Sparks Whitten, Mary Lee Sparks 1993 Grantor Shared 89,438 0.1
Barbara Sparks Retained Annuity Trust
Federico, Christina
Sparks Duncan and
John W. Sparks,
Richard A. Lumpkin
(right until 12/31/97
to acquire corpus of
trust for equivalent
value)
Margaret L. Keon Margaret Lumpkin Keon Trust dated Sole 508,061 0.8
(settlor and trustee) May 13, 1978
Pamela K. Vitale and Margaret Lumpkin Keon 1993 Shared 96,346 0.2
Joseph J. Keon III, Grantor Retained Annuity Trust
Richard A. Lumpkin
(right until 12/31/97
to acquire corpus of
trust for equivalent
value)
Robert J. Currey and Margaret L. Keon 1990 Personal Shared 77,337 0.1
David R. Hodgman Income Trust for the Benefit
of Joseph John Keon III dated
April 20, 1990
Robert J. Currey and Margaret L. Keon 1990 Personal Shared 77,337 0.1
David R. Hodgman Income Trust for the Benefit
of Katherine Stoddert Keon
dated April 20, 1990
Robert J. Currey and Margaret L. Keon 1990 Personal Shared 77,337 0.1
David R. Hodgman Income Trust for the Benefit
of Lisa Anne Keon dated April
20, 1990<PAGE>
CUSIP No. 582266 10 2 13D Page 9
Reporting Person Voting and Number of Percent of
and Other Former Dispositive Shares of Outstanding
CCI Shareholders Trust Powers Common Stock Common Stock
Robert J. Currey and Margaret L. Keon 1990 Personal Shared 77,337 0.1
David R. Hodgman Income Trust for the Benefit
of Margaret Lynley Keon dated
April 20, 1990
Robert J. Currey and Margaret L. Keon 1990 Personal Shared 77,337 0.1
David R. Hodgman Income Trust for the Benefit
of Pamela Keon Vitale dated
April 20, 1990
Robert J. Currey and Margaret L. Keon 1990 Personal Shared 77,337 0.1
David R. Hodgman Income Trust for the Benefit
of Susan Tamara Keon
DeWyngaert dated April 20,
1990
Robert J. Currey and Richard Anthony Lumpkin 1990 Shared 734,701 1.2
David R. Hodgman Personal Income Trust for the
Benefit of Benjamin Iverson
Lumpkin dated April 20, 1990
Robert J. Currey and Richard Anthony Lumpkin 1990 Shared 734,701 1.2
David R. Hodgman Personal Income Trust for the
Benefit of Elizabeth Arabella
Lumpkin dated April 20, 1990
Robert J. Currey and Mary Lee Sparks 1990 Personal Shared 154,674 0.3
David R. Hodgman Income Trust for the Benefit
of Anne Romayne Sparks dated
April 20, 1990
Robert J. Currey and Mary Lee Sparks 1990 Personal Shared 154,674 0.3
David R. Hodgman Income Trust for the Benefit
of Barbara Lee Sparks dated
April 20, 1990
Robert J. Currey and Mary Lee Sparks 1990 Personal Shared 154,674 0.3
David R. Hodgman Income Trust for the Benefit
of Christina Louise Sparks
dated April 20, 1990
Robert J. Currey and Mary Lee Sparks 1990 Personal Shared 154,674 0.3
David R. Hodgman Income Trust for the Benefit
of John Woodruff Sparks dated
April 20, 1990<PAGE>
CUSIP No. 582266 10 2 13D Page 10
Reporting Person Voting and Number of Percent of
and Other Former Dispositive Shares of Outstanding
CCI Shareholders Trust Powers Common Stock Common Stock
Bank One, Texas NA; Richard Anthony Lumpkin Trust Shared 1,822 0.00
Richard A. Lumpkin under the Trust Agreement
(power to direct dated February 6, 1970
investments)
Bank One, Texas NA; Margaret Anne Keon Trust under Shared 60,619 0.1
Richard A. Lumpkin the Trust Agreement dated
(power to direct February 6, 1970
investments)
Bank One, Texas NA; Mary Lee Sparks Trust under the Shared 107,030 0.2
Richard A. Lumpkin Trust Agreement dated February
(power to direct 6, 1970
investments)
The Lumpkin N/A Sole 219,280 0.4
Foundation
Voting and Number of Percent of
Other Principal Dispositive Shares of Outstanding
Stockholders Trust Powers Common Stock Common Stock
Clark E. McLeod and N/A Sole and 9,249,126 14.2
Mary E. McLeod Shared
IES Investments, Inc. N/A Sole 10,245,457 15.7
MWR Investments, Inc. N/A Sole 8,205,472 12.6
</TABLE>
(b) The number of shares of Common Stock which the
Reporting Person has:
(i) sole power to vote or direct the vote 219,280
(ii) shared power to vote or direct the vote 0
(iii) sole power to dispose or direct the disposition 219,280
(iv) shared power to dispose or direct the disposition 0<PAGE>
CUSIP No. 582266 10 2 13D Page 11
(c) The Reporting Person and the other Former CCI
Shareholders acquired an aggregate of 8,488,596 shares of Common Stock
as set forth in the table in Item 5(a) above on September 24, 1997,
pursuant to the Merger Agreement. Except for this acquisition, the
Reporting Person has not, and to its knowledge, none of the other
Former CCI Shareholders has, effected any transaction in the Common
Stock during the past 60 days. The Reporting Person has no
information as to whether any of the other Principal Stockholders has
effected transactions in the Common Stock during the past 60 days.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships
With Respect to Securities of the Issuer.
The Reporting Person and each of the other Principal
Stockholders and the Company have, with respect to the respective
shares of capital stock of the Company owned by each such Principal
Stockholder, entered into the Stockholders Agreement, effective
September 24, 1997. The Stockholders Agreement provides that each
Principal Stockholder, for so long as such Principal Stockholder owns
at least 10% (treating Richard A. Lumpkin and the Former CCI
Shareholders as a single Principal Stockholder for this purpose) of
the outstanding capital stock of the Company (but in no event longer
than three years), shall vote such Principal Stockholder's stock and
take all action within its power to: (i) establish the size of the
Board of Directors of the Company at up to eleven directors; (ii)
cause to be elected to the Board of Directors of the Company one
director designated by IES (for so long as IES owns at least 10% of
the outstanding capital stock of the Company); (iii) cause to be
elected to the Board of Directors of the Company one director
designated by MWR (for so long as MWR owns at least 10% of the
outstanding capital stock of the Company); (iv) cause Richard A.
Lumpkin to be elected to the Board of Directors of the Company (for so
long as Mr. Lumpkin and the Former CCI Shareholders collectively own
at least 10% of the outstanding capital stock of the Company); (v)
cause to be elected to the Board of Directors of the Company three
directors who are executive officers of the Company designated by
Clark E. McLeod (for so long as Clark E. McLeod and Mary E. McLeod own
at least 10% of the outstanding capital stock of the Company); and
(vi) cause to be elected to the Board of Directors of the Company four
non-employee directors nominated by the Board of Directors of the
Company.
The Stockholders Agreement also provides that, for the
period ending September 24, 1998, subject to certain exceptions, the
Reporting Person (and all other Principal Stockholders) will not sell
or otherwise dispose of any equity securities of the Company without
the consent of the Board of Directors of the Company. If the Company<PAGE>
CUSIP No. 582266 10 2 13D Page 12
consents to any sale or other disposition by a party to the
Stockholders Agreement, the other parties to the Stockholders
Agreement (treating the Former CCI Shareholders as a single party for
this purpose)are permitted to sell or otherwise dispose of an equal
percentage of the total number of shares of Common Stock beneficially
owned by such other party. Likewise, if the Company grants a party to
the Stockholders Agreement an opportunity to register Common Stock for
sale under the Securities Act of 1933, as amended, the Company will
grant each other party (treating the Former CCI Shareholders as a
single party for this purpose) the opportunity to register a
corresponding percentage of such party's shares for transfer under the
Securities Act.
The foregoing description of the Stockholders Agreement is
qualified in its entirety by reference to the Stockholders Agreement
filed as an exhibit to this Schedule and incorporated herein by
reference.
Item 7. Materials to be Filed as Exhibits.
1. Stockholders Agreement dated as of June 14, 1997, among the
Company, the Reporting Person and the other Former CCI Shareholders,
IES, Midwest Capital Group, Inc., MWR, Clark E. McLeod and Mary E.
McLeod, together with Amendment No. 1 to Stockholders' Agreement dated
as of September 19, 1997.<PAGE>
CUSIP No. 582266 10 2 13D Page 13
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is
true, complete and correct.
Date: October 3, 1997
THE LUMPKIN FOUNDATION
By: Richard A. Lumpkin,
Treasurer<PAGE>
CUSIP No. 582266 10 2 13D Page 14
SCHEDULE A
The following information sets forth the name, business or
residence address and present principal occupation of each of the
Reporting Persons and other Former CCI Shareholders and includes each
of the directors and executive officers of The Lumpkin Foundation (the
"Foundation"). Except as set forth in Item 5 of this Schedule 13D,
none of the directors or executive officers of the Foundation is the
beneficial owner of any Common Stock of the Company.
<TABLE>
<CAPTION>
Name Occupation Address
<S> <C> <C>
Robert J. Currey President of the McLeodUSA Incorporated
Telecommunications subsidiary of 6400 C Street, S.W.
McLeodUSA Incorporated P.O. Box 3177
Cedar Rapids, Iowa
52406-3177
Christina Sparks Duncan Homemaker; (Director of the 194 North Bald Hill Road
Foundation) New Canaan, Connecticut 06840
Barbara Sparks Federico Homemaker 4840 Ashville Bay Road
Ashville, New York 14710
David R. Hodgman Attorney Schiff Hardin & Waite, 7200 Sears
Tower, Chicago, Illinois 60606
Joseph J. Keon III Owner of Parissound c/o Keon Associates
Communications, Author/ 16 Miller Avenue, Suite 203
Filmmaker Mill Valley, California 94941
Margaret L. Keon Owner of Keon Associates, Career c/o Keon Associates
Consultant; (Director and Vice 16 Miller Avenue, Suite 203
President of the Foundation) Mill Valley, California 94941
Benjamin I. Lumpkin Investments Casilla 52908
Correo Central
Santiage, Chile
Elizabeth A. Lumpkin Graduate Student; (Director of 109 S. Humphrey Avenue,
the Foundation) #3N
Oak Park, Illinois 60302
Richard A. Lumpkin Chief Executive Officer of Illinois Consolidated
Illinois Consolidated Telephone Telephone Company
Company; Vice Chairman of 121 South 17th Street
McLeodUSA Incorporated (Director Mattoon, Illinois 61938
and Treasurer of the Foundation)<PAGE>
CUSIP No. 582266 10 2 13D Page 15
Name Occupation Address
John W. Sparks Owner of Knave of All Trades, 229 Saavedra, S.W.
Cabinet Maker/Construction Albuquerque, New Mexico 87105
Mary Lee Sparks Homemaker; (Director and 2438 Campbell Road, N.W.
President of the Foundation) Albuquerque, New Mexico 87104
Pamela Keon Vitale Keon Associates, Career c/o Keon Associates
Consultant; (Director of the 16 Miller Avenue, Suite 203
Foundation) Mill Valley, California 94941
Anne Sparks Whitten Homemaker 38 Goodhue Road
Windham, New Hampshire 03087
/TABLE
<PAGE>
CUSIP No. 582266 10 2 13D Page 16
EXHIBIT 1
STOCKHOLDERS' AGREEMENT
This Stockholders' Agreement (this "Agreement") is entered into
as of June 14 1997, and will be effective as of the date the Merger
(as defined below) is consummated (the "Effective Date") by and among
McLeodUSA Incorporated, a Delaware corporation (the "Company"); IES
Investments Inc., an Iowa corporation ("IES"); Midwest Capital Group,
Inc. ("MCG"); MWR Investments Inc. ("MWR"); Clark E. McLeod
("McLeod"); Mary E. McLeod (collectively with McLeod, the "McLeods");
and Richard A. Lumpkin ("Lumpkin") on behalf of each of the
shareholders of Consolidated Communications Inc. ("CCI") listed in
Schedule I hereto (the "CCI Shareholders"). IES, MCG, MWR, and the
McLeods are referred to herein collectively as the "Original Principal
Stockholders" and individually as an "Original Principal Stockholder"
and IES, MCG, MWR, the McLeods, Lumpkin and the CCI Shareholders are
referred to herein collectively as the "Principal Stockholders" and
individually as a "Principal Stockholder."
WHEREAS, the Original Principal Stockholders and certain other
stockholders of the Company are parties to a certain Investor
Agreement, dated as of April 1, 1996 (the "Original Investor
Agreement"), as amended by Amendment No. 1 to Investor Agreement among
the Original Principal Stockholders dated October 23, 1996 (the
"Amendment," and together with the Original Investor Agreement, the
"Investor Agreement");
WHEREAS, upon consummation of the merger of CCI with and into
Eastside Acquisition Co., a newly formed Delaware corporation and a
wholly owned subsidiary of the Company (the "Merger"), Lumpkin and the
CCI Shareholders will become stockholders of the Company and the
Principal Stockholders desire to enter into this Agreement to set
forth certain arrangements among the Principal Stockholders;
WHEREAS, the Company and the Original Principal Stockholders
intend that, as among them, this Agreement will supersede and replace
the agreements contained in Section 1, Section 2, Section 3, Section 7
and Section 8 of the Original Investor Agreement as amended by the
Amendment, as those sections apply to the Company and the Original
Principal Stockholders.
NOW, THEREFORE, for and in consideration of the foregoing and of
the mutual covenants and agreements contained herein, the parties
hereto agree as follows:
1. VOTING AGREEMENT
1.1 Board of Directors<PAGE>
CUSIP No. 582266 10 2 13D Page 17
For a period of three years commencing on the Effective
Date, each Original Principal Stockholder, for so long as such
Original Principal Stockholder beneficially owns at least 10% of the
outstanding Class A common stock, $.01 par value per share, of the
Company (the "Class A Common Stock"), determined on a fully diluted
basis (that is, all outstanding Class A Common Stock and all
outstanding options and other securities convertible into, or
exercisable for, Class A Common Stock), and Lumpkin and the CCI
Shareholders, for so long as they collectively beneficially own at
least 10% of the outstanding Class A Common Stock (determined on a
fully diluted basis), shall take or cause to be taken all such action
within their respective power and authority as may be required:
(a) to establish and maintain the authorized size of the
Board of Directors of the Company (the "Board") up to
eleven directors;
(b) to cause to be elected to the Board one director
designated by IES, subject to the provisions of Section
1.2, for so long as IES beneficially owns at least 10%
of the outstanding Class A Common Stock (determined on
a fully diluted basis);
(c) to cause to be elected to the Board one director
designated by MWR, subject to the provisions of Section
1.2, for so long as MWR beneficially owns at least 10%
of the outstanding Class A Common Stock (determined on
a fully diluted basis);
(d) to cause Lumpkin to be elected to the Board, for so
long as Lumpkin and the CCI Shareholders collectively
beneficially own at least 10% of the outstanding Class
A Common Stock (determined on a fully diluted basis);
(e) to cause to be elected to the Board three directors who
are executive officers of the Company designated by
McLeod, for so long as the McLeods collectively
beneficially own at least 10% of the outstanding Class
A Common Stock (determined on a fully diluted basis);
and
(f) to cause to be elected to the Board four non-employee
directors nominated by the Board of Directors of the
Company.
1.2 Certain Transactions
1.2.1 Company Capital Stock Owned by MWR
In the event IES becomes the Beneficial Owner of 50% or more
of the shares of capital stock of the Company beneficially owned by<PAGE>
CUSIP No. 582266 10 2 13D Page 18
MWR, (a) the provisions of Section 1.1(c) shall be null and void and
of no further force and effect, (b) at all meetings or votes, consents
or authorizations of the Company's stockholders through the Expiration
Date, IES shall vote, or use its best efforts to direct the voting of,
all Excess Shares beneficially owned by IES with respect to the
election of directors and all other matters either (i) in accordance
with the recommendations of the Board of Directors of the Company or
(ii) for or against or abstaining in the same proportion as the shares
owned by all other stockholders (excluding IES and its Affiliates and
Associates) are voted or abstained from voting with respect to such
matter, (c) IES shall cause, or use its best efforts to cause, all
shares of capital stock of the Company beneficially owned by IES to be
represented in person or by proxy at all meetings of the Company's
stockholders through the Expiration Date, and (d) IES shall not, and
shall use its best efforts to cause its Affiliates and Associates not
to, deposit any such shares of capital stock of the Company in a
voting trust or enter into a voting agreement or other agreement of
similar effect with any other person prior to the Expiration Date.
1.2.2 Company Capital Stock Owned by IES
In the event MWR becomes the Beneficial Owner of 50% or more
of the shares of capital stock of the Company beneficially owned by
IES, (a) the provisions of Section 1.1(b)) shall be null and void and
of no further force and effect, (b) at all meetings or votes, consents
or authorizations of the Company's stockholders through the Expiration
Date, MWR shall vote, or use its best efforts to direct the voting of,
all Excess Shares beneficially owned by MWR with respect to the
election of directors and all other matters either (i) in accordance
with the recommendations of the Board of Directors of the Company or
(ii) for or against or abstaining in the same proportion as the shares
owned by all other stockholders (excluding MWR and its Affiliates and
Associates) are voted or abstained from voting with respect to such
matter, (c) MWR shall cause, or use its best efforts to cause, all
shares of capital stock of the Company beneficially owned by MWR to be
represented in person or by proxy at all meetings of the Company's
stockholders through the Expiration Date, and (d) MWR shall not, and
shall use its best efforts to cause its Affiliates and Associates not
to, deposit any such shares of capital stock of the Company m a voting
trust or enter into a voting agreement or other agreement of similar
effect with any other person prior to the Expiration Date.
1.2.3 Company Capital Stock Owned by MWR and IES
In the event a third party becomes the Beneficial Owner of
50% or more of the shares of capital stock of the Company beneficially
owned by IES and 50% or more of the shares of capital stock of the
Company beneficially owned by MWR, (a) the provisions of Sections
1.1(b) and 1.1(c) shall be null and void and of no further force and
effect, (b)at all meetings or votes, consents or authorizations of the
Company's stockholders through the Expiration Date, IES and MWR shall<PAGE>
CUSIP No. 582266 10 2 13D Page 19
vote, or use their respective best efforts to direct the voting of,
all Excess Shares of capital stock of the Company beneficially owned
by such third party with respect to the election of directors and all
other matters either (i) in accordance with the recommendations of the
Board of Directors of the Company or (ii) for or against or abstaining
in the same proportion as the shares owned by all other stockholders
(excluding IES, MWR and their respective Affiliates and Associates)
are voted or abstained from voting with respect to such matter, (c)
IES and MWR shall cause, or use their best efforts to cause, all
shares of capital stock of the Company beneficially owned by them to
be represented in person or by proxy at all meetings of the Company's
stockholders through the Expiration Date, and (d) IES and MWR shall
not, and shall use their best efforts to cause their respective
Affiliates and Associates not to, deposit any such shares of capital
stock of the Company in a voting trust or enter into a voting
agreement or other agreement of similar effect with any other person
prior to the Expiration Date.
1.2.4 Definitions
For purposes of this Agreement, the following terms have the
meanings indicated:
(a) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 under the
Securities Exchange Act of 1934, as amended (the "Exchange
Act").
(b) A person shall be deemed the "Beneficial Owner" of and
shall be deemed to "beneficially own" any securities:
(i) which such person or any of such person's
Affiliates or Associates, directly or indirectly,
has the right to acquire (whether such right is
exercisable immediately or only after the passage
of time) pursuant to any agreement, arrangement or
understanding (whether or not in writing), or upon
the exercise of conversion rights, exchange
rights, other rights, warrants or options, or
otherwise;
(ii) which such person or any of such person's
Affiliates or Associates, directly or indirectly,
has the right to vote or dispose of or has
"beneficial ownership" of (as determined pursuant
to Rule 13d-3 under the Exchange Act), including
pursuant to any agreement, arrangement or
understanding, whether or not in writing; or
(iii) which are beneficially owned, directly or
indirectly, by any other person (or any<PAGE>
CUSIP No. 582266 10 2 13D Page 20
Affiliate or Associate thereof) with which
such person or any of such person's
Affiliates or Associates has any agreement,
arrangement or understanding (whether or not
in writing), for the purpose of acquiring,
holding, voting or disposing of any voting
securities of the Company.
(c) "Excess Shares" shall mean, with respect to the shares
of capital stock of the Company beneficially owned by a
person, any shares of capital stock of the Company
beneficially owned by such person that, when aggregated
with all shares of capital stock of the Company
beneficially owned by such person and any of such
person's Affiliates or Associates, represent more than
25% of the voting power of the outstanding capital
stock of the Company.
(d) "Expiration Date" shall mean October 23, 1999.
2. STANDSTILL
Each of IES, MWR and MCG (each a "Strategic Investor" and
collectively, the "Strategic Investors") hereby severally agrees that
prior to June 10, 1999, none of such Strategic Investors nor any
Affiliate thereof, will (and each such Strategic Investor will not
assist or encourage others to), directly or indirectly, acquire or
agree, offer, seek or propose to acquire, or cause to be acquired,
ownership (including, but not limited to, beneficial ownership) of any
securities issued by the Company or any of its subsidiaries, or any
rights or options to acquire such ownership (including from a third
party), except (a) to the extent expressly set forth in this
Agreement, (b)as consented prior thereto in writing by the Company's
Board of Directors, (c) upon conversion of any Class B common stock,
$.01 par value per share, of the Company into Class A Common Stock
pursuant to the terms thereof, (d) with respect to transfers of equity
securities between or among a Strategic Investor and such party's
wholly owned subsidiaries, parent corporation, or other wholly owned
subsidiaries of such parent corporation, (e) in connection with a
business combination between or among Strategic Investors, or (f) in
the case of IES (or any Affiliate thereof), with respect to the grant,
vesting or exercise of stock options.
3. TRANSFERS OF SECURITIES
3.1 Restrictions on Transfers
(a) Each Principal Stockholder hereby severally agrees that
until the earlier of (i) the first anniversary of the Effective Date
and (ii) March 31, 1999, such Principal Stockholder will not offer,
sell, contract to sell, grant any option to purchase, or otherwise<PAGE>
CUSIP No. 582266 10 2 13D Page 21
dispose of, directly or indirectly ("Transfer"), any equity securities
of the Company or any other securities convertible into or exercisable
for such equity securities ("Securities") beneficially owned by such
Principal Stockholder (or, in the case of a Principal Stockholder that
is a trust, the trustee thereof) without the prior written consent of
the Company provided however that any CCI Shareholder may transfer
Securities to any other CCI Shareholder (or a trust for the primary
benefit of any CCI Shareholder), or, in the case of a CCI Shareholder
that is a trust, to any beneficiary of such trust (or a trust for the
primary benefit of such beneficiary), in each case provided that (i)
such transfer is done in accordance with the transfer restrictions
applicable to such Securities under federal and state securities laws
and (ii) the transferee agrees to be bound by the terms hereof as a
Principal Stockholder, and any such transfer shall not constitute a
"'Transfer" for purposes of this Agreement.
(b) In the event that the Company consents to any Transfer
of Securities by a Principal Stockholder (a "Transferring
Stockholder"), each other Principal Stockholder shall, notwithstanding
the provisions of Section 3.1(a), have the right to Transfer a
percentage of the total amount of Securities beneficially owned by
such Principal Stockholder (or, in the case of a Principal Stockholder
that is a trust, the trustee thereof) equal to the percentage of the
total number of Securities beneficially owned by the Transferring
Stockholder that the Company has consented may be Transferred by such
Transferring Stockholder.
(c) For purposes of this Section 3.1, MWR and MCG shall be
deemed to be a single Principal Stockholder, and Lumpkin and all of
the CCI Shareholders shall be deemed to be a single Principal
Stockholder.
3.2 Registration Rights
(a) In the event that the Company pursuant to Section 3.1
grants a Transferring Stockholder the opportunity to register
Securities for Transfer under the Securities Act of 1933, as amended
(the "Securities Act"), the Company shall grant each other Principal
Stockholder, notwithstanding Section 3.1(a), the opportunity (subject
to reduction in the event the registered Transfer is underwritten) to
register for Transfer under the Securities Act a percentage of the
total amount of Securities beneficially owned by such Principal
Stockholder (or, in the case of a Principal Stockholder that is a
trust, the trustee thereof) equal to the percentage of the total
number of Securities beneficially owned by the Transferring
Stockholder that such Transferring Stockholder is registering for
Transfer under the Securities Act, on the same terms and conditions as
the Transferring Stockholder (such Transferring Stockholder and any
Principal Stockholder registering any Securities for Transfer under
the Securities Act pursuant hereto being a "Registering Transferor").<PAGE>
CUSIP No. 582266 10 2 13D Page 22
(b) If the Board establishes a committee (a "Pricing
Committee") to authorize and approve the price and any other terms of
any Transfer of Securities registered under the Securities Act
pursuant to this Section 3.2 in which Lumpkin or any CCI Shareholder
is participating as a Registering Transferor, the Company will use its
best efforts to cause Lumpkin to be nominated to such Pricing
Committee.
(c) For purposes of this Section 3.2, MWR and MCG shall be
deemed to be a single Principal Stockholder, and Lumpkin and all of
the CCI Shareholders shall be deemed to be a single Principal
Stockholder.
4. REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of Non-individual
Stockholders.
Each non-individual Principal Stockholder hereby represents
and warrants, as of the date of this Agreement, to the Company and to
each other Principal Stockholder as follows:
4.1.1 Authorization
Such Principal Stockholder has taken all action necessary
for it to enter into this Agreement and to consummate the transactions
contemplated hereby.
4.1.2. Binding Obligation
This Agreement constitutes a valid and binding obligation of
such Principal Stockholder, enforceable in accordance with its terms,
except to the extent that such enforceability may be limited by
bankruptcy, insolvency, and similar laws affecting the rights and
remedies of creditors generally, and by general principles of equity
and public policy; and each document and instrument to be executed by
such Stockholder pursuant hereto, when executed and delivered in
accordance with the provisions hereof, shall be a valid and binding
obligation of such Principal Stockholder, enforceable in accordance
with its terms (with the aforesaid exceptions).
4.2 Representations and Warranties of Individual
Stockholders
Each Principal Stockholder who is an individual hereby
represents and warrants, as of the date of this Agreement, to the
Company and to each other Principal Stockholder as follows:
4.2.1. Power and Authority<PAGE>
CUSIP No. 582266 10 2 13D Page 23
Such Principal Stockholder has the legal capacity and all
other necessary power and authority necessary to enter into this
Agreement and to consummate the transactions contemplated hereby.
4.2.2 Binding Obligation
This Agreement constitutes a valid and binding obligation of
such Principal Stockholder, enforceable in accordance with its terms,
except to the extent that such enforceability may be limited by
bankruptcy, insolvency, and similar laws affecting the rights and
remedies of creditors generally, and by general principles of equity
and public policy; and each document and instrument to be executed by
such Principal Stockholder pursuant hereto, when executed and
delivered in accordance with the provisions hereof, shall be a valid
and binding obligation of such Principal Stockholder, enforceable in
accordance with its terms (with the aforesaid exceptions).
4.3 Representations and Warranties of the Company
The Company hereby represents and warrants, as of the date
of this Agreement, to each Principal Stockholder as follows:
4.3.1. Authorization
The Company has taken all corporate action necessary for it
to enter into this Agreement and to consummate the transactions
contemplated hereby.
4.3.2. Binding Obligation
This Agreement constitutes a valid and binding obligation of
the Company, enforceable in accordance with its terms, except to the
extent that such enforceability may be limited by bankruptcy,
insolvency, and similar laws affecting the rights and remedies of
creditors generally, and by general principles of equity and public
policy; and each document and instrument to be executed by the Company
pursuant hereto, when executed and delivered in accordance with the
provisions hereof, shall be a valid and binding obligation of the
Company, enforceable in accordance with its terms (with the aforesaid
exceptions).
5. MISCELLANEOUS
5.1 Additional Actions and Documents
Each of the parties hereto hereby agrees to take or cause to
be taken such further actions, to execute, deliver and file or cause
to be executed, delivered and filed such further documents and
instruments, and to obtain such consents, as may be necessary or as
may be reasonably requested in order to fully effectuate the purposes,<PAGE>
CUSIP No. 582266 10 2 13D Page 24
terms and conditions of this Agreement, whether before, at or after
the effective time of this Agreement.
5.2 Entire Agreement; Amendment
This Agreement constitutes the entire agreement among the
parties hereto as of the date hereof with respect to the matters
contemplated herein, and it supersedes all prior oral or written
agreements, commitments or understandings with respect to the matters
provided for herein (including the agreements, commitments or
understandings with respect to the matters provided for herein in the
Investor Agreement). No amendment, modification or discharge of this
Agreement shall be valid or binding unless set forth in writing and
duly executed by the party against whom enforcement of the amendment,
modification, or discharge is sought.
5.3 Limitation on Benefit
It is the explicit intention of the parties hereto that no
person or entity other than the parties hereto is or shall be entitled
to bring any action to enforce any provision of this Agreement against
any of the parties hereto, and the covenants, undertakings and
agreements set forth in this Agreement shall be solely for the benefit
of, and shall be enforceable only by, the parties hereto or their
respective successors, heirs, executors, administrators, legal
representatives and permitted assigns.
5.4 Binding Effect; Specific Performance
This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors, heirs,
executors, administrators, legal representatives and permitted
assigns. No party shall assign this Agreement without the written
consent of the other parties hereto; and such consent shall not be
unreasonably withheld The parties hereto agree that irreparable damage
would occur in the event any provision of this Agreement was not
performed in accordance with the terms hereof and that the parties
shall be entitled to specific performance of the terms hereof, in
addition to any other remedy at law or in equity.
5.5 Governing Law
This Agreement, the rights and obligations of the parties
hereto, and any claims or disputes relating thereto, shall be governed
by and construed in accordance with the laws of Delaware (excluding
the choice of law rules thereof).
5.6 Notices
All notices, demands, requests, or other communications
which may be or are required to be given, served, or sent by any party<PAGE>
CUSIP No. 582266 10 2 13D Page 25
to any other party pursuant to this Agreement shall be in writing and
shall be hand-delivered or mailed by first- class, registered or
certified mail, return receipt requested, postage prepaid, or
transmitted by telegram, telecopy, facsimile transmission or telex,
addressed as follows:
(i) if to the Company or to the McLeods:
McLeodUSA Incorporated
McLeodUSA Technology Park
6400 C Street, SW, P.O. Box 3177
Cedar Rapids, IA 52406-3177
Attention: Casey D. Mahon
Facsimile: (319) 298-7901
(ii) If to IES:
IES Investments Inc.
200 1st Street SE
Cedar Rapids, IA 52401
Attention: Peter W. Dietrich
Facsimile: (319) 398-4483
(iii) If to MWR:
MWR Investments Inc.
666 Grand Avenue
P.O. Box 657
Des Moines, IA 50306-9244
Attention: Alan Wells, President
Facsimile: (515) 242-4038
(iv) If to Lumpkin:
5 Lafayette Avenue
Mattoon, IL 61938
Facsimile:
(v) If to any CCI Shareholder:
c/o Mr. Richard A. Lumpkin
5 Lafayette Avenue
Mattoon, IL 61938
Each party may designate by notice in writing a new address
to which any notice, demand, request or communication may thereafter
be so given, served or sent. Each notice, demand, request, or
communication which shall be hand- delivered, mailed, transmitted,
telecopied or telexed in the manner described above, or which shall be
delivered to a telegraph company, shall be deemed sufficiently given,
served, sent, received or delivered for all purposes at such time as<PAGE>
CUSIP No. 582266 10 2 13D Page 26
it is delivered to the addressee (with the return receipt, the
delivery receipt, or the answerback being deemed conclusive, but not
exclusive, evidence of such delivery) or at such time as delivery is
refused by the addressee upon presentation.
5.7 Execution in Counterparts
To facilitate execution, this Agreement may be executed in
as many counterparts as may be required; and it shall not be necessary
that the signatures of, or on behalf of, each party, or that the
signatures of all persons required to bind any party, appear on each
counterpart; but it shall be sufficient that the signature of, or on
behalf of, each party, or that the signatures of the persons required
to bind any party, appear on one or more of the counterparts. All
counterparts shall collectively constitute a single agreement. It
shall not be necessary in making proof of this Agreement to produce or
account for more than a number of counterparts containing the
respective signatures of, or on behalf of, all of the parties hereto.<PAGE>
CUSIP No. 582266 10 2 13D Page 27
IN WITNESS WHEREOF, the undersigned have duly executed this
Agreement, or have caused this Agreement to be duly executed on their
behalf, as of the day and year first hereinabove set forth.
MCLEODUSA INCORPORATED MWR INVESTMENTS INC.
By: s/ Clark E. McLeod By: s/ Alan Wells
Name: Name: Alan Wells
Title: Title: President
IES INVESTMENTS INC. MIDWEST CAPITAL
GROUP, INC.
By: s/ Stephen W. Southwick By: s/ Alan Wells
Name: Stephen W. Southwick Name: Alan Wells
Title: Secretary Title: President
s/ Clark E. McLeod s/ Mary E. McLeod
Clark E. McLeod Mary E. McLeod
s/ Richard A. Lumpkin Richard A. Lumpkin
By and on Behalf of Each
of the Shareholders Named
on SCHEDULE I hereto
s/ Richard A. Lumpkin
Name:
Title:<PAGE>
CUSIP No. 582266 10 2 13D Page 28
SCHEDULE I
Margaret Lumpkin Keon, as Trustee under the Margaret Lumpkin Keon
Trust dated May 13, 1978
Richard Anthony Lumpkin, as Trustee under the Richard Anthony
[Lumpkin] Trust Agreement dated May 13, 1978
Richard Anthony Lumpkin and Harris Trust and Savings Bank as Trustees
under the Richard Adamson Lumpkin Trust February 6, 1970 and the
Supplemental Trust Agreement dated November 6, 1976
The Lumpkin Foundation
Richard Anthony Lumpkin, as Trustee under twelve trusts created under
the Richard Adamson Lumpkin Grandchildren's Trust dated September 5,
1980,, one for the benefit of each of Joseph John Keon III, Katherine
Stoddert Keon, Lisa Anne Keon, Margaret Lynley Keon, Pamela Keon
Vitale, Susan Tamara Keon DeWyngaert, Benjamin Iverson Lumpkin,
Elizabeth Arabella Lumpkin, Anne Romayne Sparks, Barbara Lee Sparks,
Christina Louise Sparks, and John Woodruff Sparks
Margaret L. Keon, as Trustee under the Margaret L. Keon 1990 Dynasty
Trust
Richard Anthony Lumpkin, as Trustee under the twelve trusts created
under the Mary Green Lumpkin Gallo Trust Agreement dated December 29,
1989, one for the benefit of each of Joseph John Keon III, Katherine
Stoddert Keon, Lisa Anne Keon, Margaret Lynley Keon, Pamela Keon
Vitale, Susan Tamara Keon DeWyngaert, Benjamin Iverson Lumpkin,
Elizabeth Arabella Lumpkin, Anne Romayne Sparks, Barbara Lee Sparks,
Christina Louise Sparks, and John Woodruff Sparks
David R. Hodgman and Robert J. Currey, under the twelve 1990 Personal
Income Trusts established by Margaret L. Keon, Mary Lee Sparks, and
Richard Anthony Lumpkin, each dated April 20, 1990, one for the
benefit of each of Joseph John Keon III, Katherine Stoddert Keon, Lisa
Ann Keon, Margaret Lynley Keon, Pamela Keon Vitale, Susan Tamara Keon
DeWyngaert, Benjamin Iverson Lumpkin, Elizabeth Arabella Lumpkin, Anne
Romayne Sparks, Barbara Lee Sparks, Christina Louise Sparks, and John
Woodruff Sparks
Richard Anthony Lumpkin, as Trustee under the Richard Anthony Lumpkin
Trust 1990 Dynasty Trust
Mary Lee Sparks, individually
Richard Anthony Lumpkin, as Trustee under the Mary Lee Sparks 1990
Dynasty Trust<PAGE>
CUSIP No. 582266 10 2 13D Page 29
AMENDMENT NO. 1 TO
STOCKHOLDERS' AGREEMENT
This Amendment No. 1 to Stockholders' Agreement ("Amendment") is
entered into as of September 19, 1997 by and among McLeodUSA
Incorporated, a Delaware corporation (the "Company"); IES Investments
Inc., an Iowa corporation ("IES"); Midwest Capital Group, Inc.
("MCG"); MWR Investments Inc. ("MWR"); Clark E. McLeod ("McLeod");
Mary E. McLeod (collectively with McLeod, the "McLeods"); and Richard
A. Lumpkin ("Lumpkin") on his own behalf and on behalf of each of the
shareholders of Consolidated Communications Inc. ("CCI") listed in
SCHEDULE I to the Stockholders' Agreement (as defined below) (the
"Original CCI Shareholders"). IES, MCG, MWR, the McLeods and the
Original CCI Shareholders are referred to herein collectively as the
"Original Parties."
WHEREAS, the Original Parties are parties to a certain
Stockholders' Agreement, dated as of June 14, 1997, by and among the
Original Parties (the "Stockholders' Agreement");
WHEREAS, Section 5.2 of the Stockholders' Agreement provides that
no amendment of the Stockholders' Agreement shall be valid or binding
unless set forth in writing and duly executed by the party against
whom enforcement of the amendment is sought;
WHEREAS, the Original Parties desire to join certain additional
CCI Shareholders (the "New Parties") as parties to the Stockholders'
Agreement; and
WHEREAS, the New Parties desire to be joined as parties to, and
CCI Shareholders under, the Stockholders' Agreement, and have granted
Lumpkin a power of attorney to sign the Stockholders' Agreement on
their behalf;
NOW, THEREFORE, for and in consideration of the foregoing and of
the mutual covenants and agreements contained herein and in the
Stockholders' Agreement, as amended hereby, the parties hereto agree
as follows:
1. SCHEDULE I to the Stockholders' Agreement is hereby replaced
in its entirety by REVISED SCHEDULE I attached hereto.
2. The New Parties hereby agree to be bound by the terms of the
Stockholders' Agreement, as amended by this Amendment. Except as
expressly amended by this Amendment, all terms of the Stockholders'
Agreement shall remain in full force and effect.
3. All capitalized terms used but not defined in this Amendment
shall have the meaning given to them in the Stockholders' Agreement.<PAGE>
CUSIP No. 582266 10 2 13D Page 30
4. This Amendment may be signed in any number of counterparts,
each of which shall constitute an original and all of which together
shall constitute one and the same instrument.<PAGE>
CUSIP No. 582266 10 2 13D Page 31
IN WITNESS WHEREOF, the undersigned have duly executed this
Amendment, or have caused this Amendment to be duly executed on their
behalf, as of the day and year first hereinabove set forth.
MCLEODUSA INCORPORATED MWR INVESTMENTS INC.
By: s/ Clark E. McLeod By: s/ PJ Leighton
================================= =================================
Name: Clark E. McLeod Name: PJ Leighton
Title: Chairman and Chief Title: Secretary
Executive Officer
IES INVESTMENTS INC. MIDWEST CAPITAL GROUP, INC.
By: s/ Lee Liu By: s/ PJ Leighton
================================= =================================
Name: Lee Liu Name: PJ Leighton
Title: Chairman and CEO Title: Secretary
s/ Clark E. McLeod s/ Mary E. McLeod
================================= =================================
Clark E. McLeod Mary E. McLeod
/s Richard A. Lumpkin Richard A. Lumpkin
================================= by and on behalf of each
Richard A. Lumpkin of the CCI Shareholders
named on REVISED SCHEDULE I
attached hereto
s/ Richard A. Lumpkin
=================================<PAGE>
CUSIP No. 582266 10 2 13D Page 32
REVISED
SCHEDULE I
Margaret Lumpkin Keon, as Trustee under the Margaret Lumpkin Keon
Trust dated May 13, 1978
Richard Anthony Lumpkin, as Trustee under the Richard Anthony
[Lumpkin] Trust Agreement dated May 13, 1978
Richard Anthony Lumpkin and Harris Trust and Savings Bank as Trustees
under the Richard Adamson Lumpkin Trust February 6, 1970 and the
Supplemental Trust Agreement dated November 6, 1976
The Lumpkin Foundation
Richard Anthony Lumpkin, as Trustee under twelve trusts created under
the Richard Adamson Lumpkin Grandchildren's Trust dated September 5,
1980,, one for the benefit of each of Joseph John Keon III, Katherine
Stoddert Keon, Lisa Anne Keon, Margaret Lynley Keon, Pamela Keon
Vitale, Susan Tamara Keon DeWyngaert, Benjamin Iverson Lumpkin,
Elizabeth Arabella Lumpkin, Anne Romayne Sparks, Barbara Lee Sparks,
Christina Louise Sparks, and John Woodruff Sparks
Margaret L. Keon, as Trustee under the Margaret L. Keon 1990 Dynasty
Trust
Richard Anthony Lumpkin, as Trustee under the twelve trusts created
under the Mary Green Lumpkin Gallo Trust Agreement dated December 29,
1989, one for the benefit of each of Joseph John Keon III, Katherine
Stoddert Keon, Lisa Anne Keon, Margaret Lynley Keon, Pamela Keon
Vitale, Susan Tamara Keon DeWyngaert, Benjamin Iverson Lumpkin,
Elizabeth Arabella Lumpkin, Anne Romayne Sparks, Barbara Lee Sparks,
Christina Louise Sparks, and John Woodruff Sparks
David R. Hodgman and Robert J. Currey, under the twelve 1990 Personal
Income Trusts established by Margaret L. Keon, Mary Lee Sparks, and
Richard Anthony Lumpkin, each dated April 20, 1990, one for the
benefit of each of Joseph John Keon III, Katherine Stoddert Keon, Lisa
Ann Keon, Margaret Lynley Keon, Pamela Keon Vitale, Susan Tamara Keon
DeWyngaert, Benjamin Iverson Lumpkin, Elizabeth Arabella Lumpkin, Anne
Romayne Sparks, Barbara Lee Sparks, Christina Louise Sparks, and John
Woodruff Sparks
Richard Anthony Lumpkin, as Trustee under the Richard Anthony Lumpkin
Trust 1990 Dynasty Trust
Mary Lee Sparks, individually
Richard Anthony Lumpkin, as Trustee under the Mary Lee Sparks 1990
Dynasty Trust<PAGE>
CUSIP No. 582266 10 2 13D Page 33
Richard Anthony Lumpkin and Christina Louise Sparks, as Trustees under
the Mary Lee Sparks Trust dated May 13, 1978
Benjamin Iverson Lumpkin and Elizabeth Arabella Lumpkin, as Trustees
under the Richard Anthony Lumpkin 1993 Grantor Retained Annuity Trust
Pamela K. Vitale and Joseph John Keon III, as Trustees under the
Margaret L. Keon 1993 Grantor Retained Annuity Trust
Anne Romayne Sparks, Barbara Lee Sparks, Christina Louise Sparks and
John Woodruff Sparks, as Trustees under the Mary Lee Sparks 1993
Grantor Retained Annuity Trust
<PAGE>
