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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): July 15, 1996
MCLEOD, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-20763 58-421407240
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification
Number)
221 Third Avenue SE, Suite 500, Cedar Rapids, IA 52401
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (319) 364-0000
Exhibit Index on Page: .
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Total Number of Pages: .
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INFORMATION TO BE INCLUDED IN THE REPORT
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On July 15, 1996, McLeod, Inc. (the "Company") consummated the
acquisition (the "Acquisition") of Ruffalo, Cody & Associates, Inc., an Iowa
corporation ("Ruffalo, Cody"), from the shareholders of Ruffalo, Cody by means
of a forward triangular merger pursuant to an Agreement and Plan of
Reorganization, dated as of July 12, 1996 (the "Agreement"), by and among the
Company, Ruffalo, Cody and certain shareholders of Ruffalo, Cody. Pursuant to
the Agreement, (i) McLeod Merging Co., a newly incorporated Iowa corporation
and a wholly owned subsidiary of the Company, was merged with and into Ruffalo,
Cody, with McLeod Merging Co. (which has been renamed "Ruffalo, Cody &
Associates, Inc.") being the surviving corporation, (ii) the outstanding shares
of Ruffalo, Cody common stock were converted into the right to receive cash
and/or shares of the Company's Class A Common Stock (the "Class A Common
Stock"), and (iii) the outstanding options to purchase shares of Ruffalo, Cody
common stock were converted into options to purchase shares of Class A Common
Stock (the "Substitute Options"). Under the Agreement, each issued and
outstanding share of Ruffalo, Cody common stock was converted into the right to
receive a maximum of approximately 0.7 of a share of Class A Common Stock.
As a result of arms'-length negotiations between the Company and
Ruffalo, Cody, and after considering, among other things, the current stage of
development of the Company's business and operations, and the market for the
Company's services, the Company agreed to purchase Ruffalo, Cody for a maximum
aggregate purchase price of approximately $20 million (based on the agreed
value of the Class A Common Stock used in determining the exchange ratio, based
upon the price range of the Class A Common Stock reported by the Nasdaq Stock
Market prior to execution of the Agreement). The maximum consideration to be
paid by the Company consists of approximately $4.9 million in cash, 474,807
shares of Class A Common Stock issuable in exchange for Ruffalo, Cody common
stock, and 158,009 shares of Class A Common Stock issuable upon the exercise
of the Substitute Options. On July 15, 1996, the Company paid an aggregate of
approximately $4.8 million in cash and issued 361,420 shares of Class A Common
Stock to the shareholders of Ruffalo, Cody, and granted to the Ruffalo, Cody
option holders Substitute Options to purchase 158,009 shares of Class A Common
Stock. An additional $50,782 in cash and 113,387 shares of Class A Common
Stock were placed into escrow and will be delivered to the shareholders of
Ruffalo, Cody over a period of 18 months, contingent upon certain conditions
relating to Ruffalo, Cody's ongoing revenues. The Company will record the
Acquisition as a purchase for accounting purposes.
Clark E. McLeod, Chairman, Chief Executive Officer, Director
and stockholder of the Company, is a shareholder of Ruffalo, Cody. Paul D.
Rhines, a Director of the Company, is a Director of Ruffalo, Cody and is a
general partner of
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Allsop Venture Partners III, L.P., a stockholder of the Company and a
shareholder of Ruffalo, Cody. The Company established a Special Committee of
its Board of Directors, consisting of disinterested directors, which was
authorized to, and did, evaluate the terms of the Acquisition as negotiated by
the officers of the Company, including, but not limited to, the fairness of the
Acquisition to, and in the best interests of, the stockholders of the Company.
Other than with respect to Messrs. McLeod and Rhines and arrangements in
connection with the Acquisition, there is no material relationship between
Ruffalo, Cody and the Company or any affiliates, directors or officers of the
Company or any of their associates.
As a result of the Acquisition, Ruffalo, Cody shareholders and
option holders could own a maximum (based on the maximum number of shares of
Class A Common Stock that may be issued to the shareholders of Ruffalo, Cody
pursuant to the Agreement and to the option holders of Ruffalo, Cody upon
exercise of the Substitute Options) of approximately 1.2 percent, in the
aggregate, of the outstanding voting stock of the Company (consisting of the
Class A Common Stock and the Class B Common Stock of the Company). Ruffalo,
Cody is a corporation specialized in a number of direct marketing and
telemarketing services. The Company intends to continue to operate Ruffalo,
Cody in a manner similar to which it was operated prior to the Acquisition.
The source of funds used for the cash portion of the
Acquisition was a portion of the proceeds from the Company's initial public
offering of Class A Common Stock in June 1996.
The foregoing description of the Agreement does not purport to
be complete and is qualified in its entirety by the terms and conditions of the
Agreement, which is filed as Exhibit 2 to this Current Report on Form 8-K and
is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS
(a) Financial Statements of Company Acquired
It is not practicable to provide the required financial
statements for Ruffalo, Cody at this time. The statements will be filed as
soon as they are prepared and not later than 60 days after the date this
Current Report on Form 8-K is required to be filed with the Securities and
Exchange Commission.
(b) Pro Forma Financial Information
It is not practicable to provide the required pro forma
financial statements for the Company at this time. The statements will be
filed as soon as they are prepared and not later than 60 days after the date
this Current Report on Form 8-K is required to be filed with the Securities and
Exchange Commission.
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(c) Exhibits.
2. Agreement and Plan of Reorganization, dated as of July 12,
1996, by and among McLeod, Inc., Ruffalo, Cody & Associates,
Inc., and certain shareholders of Ruffalo, Cody & Associates,
Inc.
99. Press Release, dated July 15, 1996, regarding the agreement to
acquire Ruffalo, Cody & Associates, Inc.
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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.
Date: July 29, 1996 McLEOD, INC.
By: /s/ BLAKE O. FISHER, JR.
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Blake O. Fisher, Jr.
Chief Financial Officer and
Treasurer
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EXHIBIT INDEX
PAGE NUMBER IN
EXHIBIT NUMBER EXHIBIT SEQUENTIAL NUMBERING SYSTEM
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2. Agreement and Plan of Reorganization, dated
as of July 12, 1996, by and among McLeod,
Inc., Ruffalo, Cody & Associates, Inc., and
certain shareholders of Ruffalo, Cody &
Associates, Inc.
99. Press Release, dated July 15, 1996, regarding
the agreement to acquire Ruffalo, Cody &
Associates, Inc.
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