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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED):
NOVEMBER 18, 1998
MCLEODUSA INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 0-20763 42-1407240
(STATE OR OTHER (COMMISSION (IRS EMPLOYER
JURISDICTION FILE NUMBER) IDENTIFICATION
OF INCORPORATION) NUMBER)
MCLEODUSA TECHNOLOGY PARK 52406-3177
6400 C STREET, S.W., P.O. BOX 3177,
CEDAR RAPIDS, IA
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(319) 364-0000
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INFORMATION TO BE INCLUDED IN THE REPORT
ITEM 5. OTHER EVENTS
On November 18, 1998, McLeodUSA Incorporated (the "Company") entered into a
Stockholders' Agreement (the "Stockholders' Agreement") with IES Investments
Inc., which owns approximately 9,022,600 shares of the outstanding Class A
Common Stock, par value $.01 per share, of the Company (the "Class A Common
Stock"); Clark E. McLeod, Chairman and Chief Executive Officer of the Company,
and Mary E. McLeod (together, the "McLeods") who together own approximately
9,179,582 shares of the outstanding Class A Common Stock; and Richard A.
Lumpkin, Vice Chairman of the Company, Gail G. Lumpkin and certain other
parties affiliated or related thereto (collectively, the "Lumpkins," and
together with IES and the McLeods, the "Principal Stockholders") who
collectively own approximately 6,166,876 shares of the outstanding Class A
Common Stock. 1/
The Stockholders' Agreement provides that until December 31, 2001 (the
"Expiration Date"), the Principal Stockholders will not offer, sell, contract
to sell, grant any option to purchase or otherwise dispose of, directly or
indirectly, ("Transfer"), any equity securities of the Company, or any other
securities convertible into or exercisable for such equity securities,
beneficially owned by such Principal Stockholder without receiving the prior
written consent of the Board of Directors of the Company, except for certain
permitted transfers as provided under the Stockholders' Agreement. The
Stockholders' Agreement further provides that the Board of Directors shall
determine on a quarterly basis commencing with the quarter ending December 31,
1998 and ending on the Expiration Date, the aggregate number, if any, of
shares of Class A Common Stock (not to exceed in the aggregate 150,000 shares
per quarter) that the Principal Stockholders may Transfer during certain
designated trading periods following the release of the Company's quarterly or
annual financial results.
The Stockholders' Agreement provides that to the extent the Board of
Directors grants registration rights to a Principal Stockholder in connection
with a Transfer of securities of the Company by such Principal Stockholder, it
will grant similar registration rights to the other parties as set forth in
the Stockholders' Agreement. In addition, the Stockholders' Agreement provides
that the Board of Directors shall determine on an annual basis commencing with
the year ending December 31, 1999 and ending on the Expiration Date (each such
year, an "Annual Period"), the aggregate number, if any, of shares of Class A
Common Stock (not to exceed in the aggregate on an annual basis a number of
shares equal to 15% of the total number of shares of Class A Common Stock
beneficially owned by the Principal Stockholders as of December 31, 1998) (the
"Registrable Amount"), to be registered by the Company under the Securities
Act of 1933, as amended (the "Securities Act"), for Transfer by the Principal
Stockholders. The Stockholders' Agreement also provides that in any
underwritten primary offering (other than pursuant to a registration statement
on Form S-4 or Form S-8 or any successor forms thereto or other form which
would not permit the inclusion of shares of Class A Common Stock of the
Principal Stockholders), the Company will give written notice of such offering
to the Principal Stockholders and will undertake to register the shares of
Class A Common Stock of such parties up to the Registrable Amount, if any, as
determined by the Board. The Stockholders' Agreement provides that the Company
may subsequently determine not to register any shares of the Principal
Stockholders under the Securities Act and may either not file a registration
statement or otherwise withdraw or abandon a registration statement previously
filed.
The Stockholders' Agreement terminates on the Expiration Date. In addition,
if during any Annual Period the Company has not provided a Principal
Stockholder a reasonable opportunity to Transfer pursuant to the registration
of securities under the Securities Act or pursuant to certain other provisions
of the Stockholders' Agreement on the terms therein specified an aggregate
number of shares of Class A Common Stock equal to not less than 15% of the
total number of shares of Class A Common Stock beneficially owned by such
Principal Stockholder as of December 31, 1998, then such Principal Stockholder
may terminate the Stockholders' Agreement as applied to such Principal
Stockholder within 10 business days following the end of any such Annual
Period.
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1/ The foregoing share ownership information is as of the date of the
Stockholder's Agreement and does not include options held by the parties
exercisable for Class A Common Stock.
The Company, the Principal Stockholders and certain other stockholders are
parties to a Stockholders' Agreement entered into as of June 14, 1997, as
amended on September 19, 1997 (the "Original Stockholders' Agreement"). The
Original Stockholders' Agreement provides, among other things, that the
parties thereto will undertake certain actions with respect to the designation
and election of directors to the Company's Board of Directors. The
Stockholders' Agreement also contains provisions relating to the designation
and election of directors to the Company's Board of Directors which provisions
take effect on the terms and under the circumstances specified therein.
Enclosed as Exhibit 99.1 to this Current Report on Form 8-K, and
incorporated by reference herein, is the Stockholders' Agreement.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits.
99.1 Stockholders' Agreement, entered into as of November 18, 1998, by and
among McLeodUSA Incorporated, IES Investments Inc., Clark E. McLeod, Mary
E. McLeod, Richard A. Lumpkin, Gail G. Lumpkin and certain of the former
shareholders of Consolidated Communications Inc. ("CCI") and certain
permitted transferees of the former CCI shareholders in each case who are
listed in Schedule I thereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
McLeodUSA Incorporated
Date: November 18, 1998 By: /s/ J. Lyle Patrick
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Name: J. Lyle Patrick
Title:Group Vice President, Chief
Financial Officer and
Treasurer
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99.1 Stockholders' Agreement, entered into as of
November 18, 1998, by and among McLeodUSA
Incorporated, IES Investments Inc., Clark E.
McLeod, Mary E. McLeod, Richard A. Lumpkin, Gail
G. Lumpkin and certain of the former
shareholders of Consolidated Communications Inc.
("CCI") and certain permitted transferees of the
former CCI shareholders in each case who are
listed in Schedule I thereto.