**Exhibit10.1**

**REAL ESTATE PURCHASE CONTRACTAND ESCROW INSTRUCTIONS**

 

**BETWEEN**

 

**McLeodusaincorporated****A delaware corporation(“SELLER”)**

 

**AND**

 

**LIFEINVESTORS INSURANCE COMPANY OF AMERICA,****AN IOWA CORPORATION****(“BUYER”)**

 

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**REAL ESTATE PURCHASE CONTRACT ANDESCROW INSTRUCTIONS**

** **

**October 28, 2005**

** **

**6400 C Street SW, Cedar Rapids,IA 52404 and Related Real Property**

** **

**McLeodUSA Incorporated, aDelaware corporation, as Seller**

** **

**Life Investors Insurance Companyof America, an Iowa corporation, as Buyer**

** **

**TABLE OF CONTENTS**

** **
| 1.                   | DEFINITIONS                                        |   |
|----------------------|----------------------------------------------------|--------|
|                 |                                               |   |
| 2.                   | PROPERTY; LEASES TO SELLER                         |   |
|                 |                                               |   |
| 3.                   | CONSIDERATION                                      |   |
|                 |                                               |   |
| 4.                   | ESCROW                                             |   |
|                 |                                               |   |
| 5.                   | DUE DILIGENCE PERIOD                               |   |
|                 |                                               |   |
| 6.                   | CLOSING                                            |   |
|                 |                                               |   |
| 7.                   | REPRESENTATIONS AND WARRANTIES;  COVENANTS         |   |
|                 |                                               |   |
| 8.                   | BREACH                                             |   |
|                 |                                               |   |
| 9.                   | TAKING BY EMINENT DOMAIN                           |   |
|                 |                                               |   |
| 10.                  | INSURANCE;  DAMAGE OR DESTRUCTION PRIOR TO CLOSING |   |
|                 |                                               |   |
| 11.                  | AGENTS                                             |   |
|                 |                                               |   |
| 12.                  | INDEMNIFICATION  FOLLOWING CLOSING                 |   |
|                 |                                               |   |
| 13.                  | NOTICES                                            |   |
|                 |                                               |   |
| 14.                  | ASSIGNS                                            |   |
|                 |                                               |   |
| 15.                  | GOVERNING LAW                                      |   |
|                 |                                               |   |
| 16.                  | COUNTERPARTS                                       |   |
|                 |                                               |   |
| 17.                  | WAIVER                                             |   |
|                 |                                               |   |
| 18.                  | CONSTRUCTION                                       |   |
|                 |                                               |   |
| 19.                  | ATTORNEYS’ FEES                               |   |
|                 |                                               |   |
| 20.                  | CONFIDENTIALITY                                    |   |
|                 |                                               |   |
| 21.                  | ENTIRE AGREEMENT                                   |   |
|                 |                                               |   |
| 22.                  | NEGOTIATIED TERMS                                  |   |
|                 |                                               |   |
| 23.                  | TIME IS OF THE ESSENCE                             |   |
|                 |                                               |   |
| SCHEDULE OF EXHIBITS |                                               |

 

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**REAL ESTATE PURCHASE CONTRACTAND ESCROW INSTRUCTIONS**

** **

This **REAL ESTATE PURCHASE CONTRACT AND ESCROW INSTRUCTIONS** (the **“Contract”**) is made and entered into as of October 28, 2005,by and between **McLeodUSA Incorporated**, a Delaware corporation****(**“Seller”**), and **Life Investors InsuranceCompany of America**, an Iowacorporation (**“Buyer”**).

# **DEFINITIONS**

## Defined terms used in this Contract shall have thefollowing meanings:

### **“363 Sale Motion”**shall have the meaning set forth in Section 7.5.

### **“AAA”** shall have the meaning set forth in Section 12.5.

### **“Additional Encumbrances”** shall have the meaning set forth in Section 5.2.

### **“Arbitrator”** shall have the meaning set forth in Section 12.5.

### **“Assigned Property”**shall have the meaning set forth in Section 2.1(c).

### **“Bankruptcy Code”**means Title 11 and applicable portions of Titles 18 and 28 of the UnitedStates Code, as amended from time to time.

### **“Bankruptcy Court”** means the U.S. Bankruptcy Court for the Northern District of Illinois(Eastern Division).

### **“Bill of Sale”** means the Bill of Sale duly executed by Seller and Buyer in the formattached hereto as Exhibit F, dated as of the Closing Date and conveying toBuyer the Personal Property and the Assigned Property.

### **“Building”** shall have the meaning set forth in Section 2.1(b).

### **“Business Day”** means any day other than (i) a Saturday or Sunday, or (ii) a day onwhich banking institutions in Cedar Rapids, Iowa are authorized or obligated bylaw to be closed.

### **“City”** shall have the meaning set forth in Section 5.5.

### **“Claims Response”** shall have the meaning set forth in Section 12.5.

### **“Closing”** and “ClosingDate” shall have the meanings set forth in Section 6.1.

### **“Code”** shall have the meaning set forth in Section 7.1(x).

### **“Confirmation Order”** shall have the meaning set forth in Section 7.5.

### **“Contract Inspector”** shall have the meaning set forth in Section 5.3(c).

### **“Deed”** means a Deed in substantially the form attached to this Contract asExhibit E, fully executed and acknowledged by Seller, dated as of the ClosingDate, conveying the Real Property to Buyer.

### **“Deposit”** means an earnest money deposit in the form of cash and in the amount ofFive Hundred Fifty Thousand and No/100 Dollars ($550,000.00).

### **“Disputed Item”** shall have the meaning set forth in Section 12.5.

### **“Disputes”** shall have the meaning set forth in Section 12.5.

### **“Due Diligence Period”**shall mean, subject to the provisions of Section 5.1, theperiod expiring at 5:00 PM Central Standard Time on November 28, 2005.

### **“Elected OperatingContracts”** shall have the meaning set forthin Section 5.6.

### **“Encumbrances”** means all liens, claims, interests, security interests, restrictions,reservations (including mineral rights reserved to a third party), easements,rights-of-way, encroachments and other matters affecting title to the Property.

 

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### **“Environmental Laws”**means all laws, statutes, ordinances, regulations and orders of anyGovernmental Authority in effect as of the Closing Date to the extent that theypertain to pollution or protection of human health or the environment,including, without limitation, the Comprehensive Environmental Response,Compensation, and Liability Act, as amended by the Superfund Amendments andReauthorization Act of 1986, 42 U.S.C. §9601 *et seq*.,the Resource Conservation and Recovery Act, 42 U.S.C. §6901 *et seq*., the Federal Water Pollution Control Act, as amendedby the Clean Water Act, 33 U.S.C. §1251 *et seq*., theClean Air Act, 42 U.S.C. §7401 *et seq*., theToxic Substances Control Act, 15 U.S.C. §2601 *et seq*.,all similar state statutes and local ordinances, and all regulationspromulgated under any of those statutes.

### **“Environmental Reports”**means all tests, studies, reports or surveys with respect to theenvironmental condition of the Property which were made by or on behalf ofSeller or are otherwise in Seller’s possession or readily available to Seller,including, without limitation, all environmental site assessments.

### **“Escrow”**means the Republic Title of Texas, Inc. escrow opened or to be opened forthe purpose of accumulating and distributing funds and documents of the partiesin connection with the conveyance of the Property by Seller to Buyer.

### **“Escrow Money”**means the Deposit plus all interest accrued thereon.

### **“Financing Encumbrance”**means an Encumbrance evidencing an obligation to pay money, including,without limitation, mortgages, collateral and other assignments of rent,security agreements, financing statements, mechanics’ liens, and judgmentliens.

### **“Governmental Authority”** means any federal, state or local agency with jurisdiction to decide,regulate, or affect the ownership, construction, use, occupancy, possession, operation,maintenance, alteration, repair, demolition or reconstruction of any portion orelement of the Real Property.

### **“Hazardous Material”**means any substance defined as a “Hazardous Substance”, “Oil”, “Pollutant”or “Contaminant” in the National Oil and Hazardous Substances Contingency Plan,40 C.F.R. §300.5.

### **“Holdback Account”**shall have the meaning set forth in Section 12.5.

### **“Holdback Amount”**shall have the meaning set forth in Section 12.5.

### **“Holdback Claims”** shall have the meaning set forth in Section 12.5.

### **“Holdback Expiration Date”** shall have the meaning set forth in Section 12.5.

### **“Improvements”** shall have the meaning set forth in Section 2.1(a).

### **“Land”** shall have the meaning set forth in Section 2.1.

### **“Leases”** shall have the meaning set forth in Section 2.2.

### **“Martha’s Way Building”** shall have the meaning set forth in Section 2.2.

### **“Martha’s Way Lease”**shall have the meaning set forth in Section 2.2.

### **“Office Building”** shall have the meaning set forth in Section 2.1(a).

### **“Operating Contracts”** means all contracts between Seller and any third party relating to theoperation, maintenance or repair of the Property, including, but not limitedto, maintenance, service and utility contracts; and guarantees and warrantiesof manufacturers, contractors, subcontractors, servicers, suppliers andinstallers.

### **“Panel”** shall have the meaning set forth in Section 12.5.

### **“Permitted Encumbrances”** means (i) zoning and building laws or ordinances, provided that none ofthe same are violated by the Real Property or the use thereof; (ii) the liensof current real estate taxes and water and sewer charges, all of which shall beprorated at Closing; (iii) any other matter approved by Buyer pursuant to theprovisions of Section 5.2 and (iv) Encumbrances that will be released at or

 

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### **prior to Closing by payment ororder of the Bankruptcy Court (whether contained in the Confirmation Order orotherwise).**

### **“Personal Property”** shall have the meaning set forth in Exhibit B.

### **“Plan**” shall have the meaning set forth in Section 7.5.

### **“Premises”** shall have the meaning set forth in Section 2.2.

### **“Property”** means, collectively, the Real Property, the Personal Property and theAssigned Property.

### **“Property Information”** shall have the meaning set forth in Exhibit D.

### **“Property Lease”** shall have the meaning set forth in Section 2.2.

### **“Purchase Price”** shall have the meaning set forth in Section 3.

### **“Real Property”** means, collectively, the Land and the Improvements.

### **“Redevelopment AgreementAssignment”** shall have the meaning set forthin Section 5.5.

### **“Remaining HoldbackAmount”** shall have the meaning set forth in Section 12.5.

### **“Reorganized Seller”**means any successor to Seller by merger, consolidation, or otherwise, onor after the effective date of the Plan, after giving effect to thetransactions occurring on such effective date.

### **“Sale Order”** shall have the meaning set forth in Section 7.5.

### **“Seller Response Date”**shall have the meaning set forth in Section 5.2.

### **“Seller’s Damage Notice”** shall have the meaning set forth in Section 10.2(a).

### **“Seller’s Knowledge”** shall have the meaning set forth in Section 7.1.

### **“Seller’s Lenders”** means, collectively, the holders of all outstanding loans to Seller thatare permitted or have a right to vote with respect to the Plan.

### **“Seller’s Response”** shall have the meaning set forth in Section 5.2

### **“Seller’s SurvivingObligations”** shall have the meaning set forthin Section 12.5.

### **“Space Lease”** means any lease, license agreement or other instrument permitting anyTenant the right to use or occupy any portion of the Real Property for anypurpose.

### **“Staging Plan”** shall have the meaning set forth in Section 6.7.

### **“Steering Committee”** means, collectively, the six members of the lenders’ steering committeeformed in connection with the contemplated Bankruptcy Case.

### **“Survey”**means an Urban ALTA/ACSM Land Title Survey of the Real Property to beobtained by Buyer, as provided in Section 5.2.

### **“Tenant”** means any party having any use or occupancy rights with respect to anyportion of the Real Property, including, without limitation, tenants,subtenants, and licensees, but excluding any party that has rights to use theReal Property or any portion thereof pursuant to a recorded instrument.

### **“Title Company”** means Republic Title, of Texas, Inc., at its office located at 1909Woodall Rodgers Freeway, Suite 400, Dallas, Texas 75201, Attn: Joe Stoutt,Telephone Number (214) 754-7000; Telecopier Number (214) 303-0935.

### **“Title Policy”**means an ALTA Owner’s Policy of Title Insurance, in an amount equal tothe Purchase Price, issued by Title Company, insuring that Buyer is the ownerof fee simple title to the Real Property and including such customaryendorsements as may be required by Buyer (to the extent the same are availablein the State of Iowa), subject only to the Permitted Encumbrances.

### **“Title Report”** means a new preliminary title report or title commitment from TitleCompany for the Real Property, together with copies of all documents referredto therein.

 

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### **“Title Review Period”**shall have the meaning set forth in Section 5.2.

### **“Title Review Deadline”**shall have the meaning set forth in Section 5.2.

### **“Warehouse”**shall have the meaning set forth in Section 2.1(a).

# **2.**                                      PROPERTY; LEASES TO SELLER

#### ***2.1*****                              **PROPERTY TO BE CONVEYED

##### Subject to the terms,provisions and conditions hereinafter set forth, Buyer hereby agrees to buy andSeller hereby agrees to sell the Property. The Property includes marketabletitle in fee simple to that parcel of land comprising approximately 168.92acres commonly referred to as McLeodUSA Technology Park situated in the City ofCedar Rapids, State of Iowa and more fully described in **Exhibit A**and all rights, titles and interests appurtenant thereto (collectively, the **“Land”**), together with all of Seller’s right, title andinterest in and to the following:

###### *(a)*                               Improvements

All improvementssituated on the Land (collectively, **“Improvements”**),including that certain office building comprising approximately 316,800 grosssquare feet and having an address of 6400 C Street SW (the “**Office Building**”) and that certainwarehouse containing approximately 36,000 square feet (the “**Warehouse**”);

###### *(b)*                               Personal Property

All of thePersonal Property; and

###### *(c)*                                Assigned Property

All ElectedOperating Contracts; all development, construction and engineering plans,specifications, drawings and survey materials for all existing Improvements andall other contemplated improvements on the Real Property; to the extentassignable, all licenses, permits and certificates of occupancy affecting theownership, maintenance, or operation of the Real Property; and all otherintangible rights relating to the ownership, maintenance or operation of theReal Property (but excluding any intellectual property of Seller or itsaffiliates, including its or their patents, copyrights, tradenames, trademarks,service marks, logos, slogans, internet domain names, licenses and software)(collectively, the **“Assigned Property”**).

##### All of the Property shallbe conveyed by Seller to Buyer, free and clear of all Encumbrances (except forthe Permitted Encumbrances) and pursuant to the Confirmation Order or the SaleOrder, as applicable.

#### ***2.2*****                              ** LEASES TO SELLER

##### Concurrently with theClosing, Buyer and Seller shall enter into a lease agreement in substantiallythe form attached hereto as Exhibit G (the “**PropertyLease**”) with respect to (i) the areas of the Office Buildingcommonly known as (A) the Central Office, (B) the Data Center, (C) the NetworkControl Center, (D) the ATS Headend Premises, and (E) the Second Floor Space,(ii) the building located on the Land and commonly known as the OSP Building,and (iii) the area of the Land commonly known as the Antenna Farm.  In addition, concurrently with the Closing,Buyer and Seller shall enter into a lease agreement in substantially the formattached hereto as Exhibit H (the “**Martha’s Way Lease**”and collectively with the Property Lease, the “**Leases**”)with respect to the building owned by Buyer located at 1 Martha’s Way inHiawatha, Iowa (the “**Martha’s Way Building**”).  The premises to be leased by Seller fromBuyer pursuant to the Leases are hereinafter referred to as the “Premises”.  Exhibit G and Exhibit H set forth the termsand conditions of the respective Leases, including, without limitation, theterm, rent, extension options and, in the case of the Martha’s Way Lease, the 

 

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##### tenant improvementallowance, and such terms and conditions may not be modified without thewritten consent of Seller and Buyer.

# **3.**                                      CONSIDERATION

## The price (**“Purchase Price”**)to be paid by Buyer to Seller for the Property shall be Twenty-Seven MillionThree Hundred Forty-Four Thousand Dollars ($27,344,000.00), which amount shallbe allocated among the Real Property and the Personal Property in a manner tobe reasonably determined by Buyer and Seller. Buyer and Seller shall provide the Title Company with the results ofsuch determination prior to Closing. After applying the Escrow Money, and aftermaking all adjustments and prorations and paying any closing costs provided forin this Contract (as reflected on the closing statement to be executed anddelivered by Seller and Buyer at the Closing), the balance of the PurchasePrice shall be payable in cash at Closing.

# **4.**                                      ESCROW

## Unless this Contract is terminated by Buyer inaccordance with **Section 5.7**,within two (2) Business Days following the earlier of the (i) the expiration ofthe Due Diligence Period and (ii) the entry of the Confirmation Order by theBankruptcy Court, Buyer shall deliver the Deposit to Title Company.  The Deposit shall be placed by Title Companyin an interest bearing escrow account, and except as otherwise provided in thisContract, all interest earned on the Deposit shall remain the property ofBuyer. The cost of the investment of the Deposit shall be paid from theinterest earned thereon.  If the Closingdoes not occur, the Escrow Money shall be disbursed in accordance with theterms of this Agreement.  At Closing, theTitle Company shall pay the Escrow Money to Seller and credit Buyer toward thePurchase Price in the amount of the Deposit. Seller acknowledges and agrees that, so long as the Escrow Money isdeposited with the Title Company and until such time as Seller shall have theright to such Escrow Money pursuant to this Contract, Seller shall have nolegal or equitable interest in the Escrow Money, as such term is defined inSection 541(d) of the Bankruptcy Code, including, without limitation, anyresidual or other interest in the Escrow Money. Seller and Buyer shall execute any separate escrow instructions as shallbe required by Title Company in connection with the holding and disbursement ofthe Escrow Money.

# **5.**                                      DUE DILIGENCE PERIOD

#### ***5.1*****                              **DELIVERY OF DOCUMENTS

##### Seller has, prior to thedate of this Agreement and at its sole cost and expense, delivered or cause tobe delivered to Buyer all of the Property Information. Buyer shall treat theProperty Information and any documentation obtained by Buyer in connection withits inspection of the Property in accordance with the remainder of this **Article  5**on a confidential basis and shall use such information only in connection withthe transaction contemplated under this Contract, except as required by law oras needed in connection with the prosecution or defense of a dispute betweenBuyer and Seller with respect to this Contract or the transactions contemplatedhereby. Notwithstanding the foregoing, Buyer may, to the extent reasonably andactually necessary to Buyer’s investigation of the Property and properperformance of Buyer’s obligations under this Contract, disclose the PropertyInformation and such other Property-related documentation to Buyer’sconsultants, legal counsel, experts or engineers (provided that suchconsultants, legal counsel, experts and engineers use the Property Informationand such other Property-related documentation only in connection with servicesrendered to Buyer in connection with the transaction contemplated under thisContract and maintain the confidentiality of the Property Information and suchother Property-related documentation). The obligations of Buyer under this **Section 5.1**shall survive the termination of this Contract;provided, however, such obligations shall expire upon the consummation of theClosing, except as may otherwise be agreed by the parties.   In the event that the Closing is notconsummated, Buyer shall promptly return to Seller the Property Information andany other documents relating to the Property as have been provided to Buyer bySeller.  Buyer hereby acknowledges that,except as expressly provided in **Section 7.1** ofthis Contract, neither Seller, nor any agents, representatives, employees orattorneys of Seller have made any representations or warranties, direct orimplied, verbal or written, with respect to the accuracy, completeness orreliability of 

 

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##### the Property Information.During the Due Diligence Period, Buyer shall be allowed the use of reasonablyacceptable, secure office space in the Office Building from which Buyer mayconduct its due diligence efforts with respect to the Property in accordancewith this Agreement.

#### ***5.2*****                              **TITLE AND SURVEY OBJECTIONS

##### Buyer shall order theTitle Report within two (2) Business Days following receipt of the updatedabstract of title to the Property from Seller.  Buyer shall order the Survey not later than two (2) Business Daysfollowing the date of this Contract. Buyer shall deliver or cause to bedelivered copies of the Title Report and the Survey to Seller promptlyfollowing Buyer’s receipt thereof.   Nolater than ten (10) Business Days following the date hereof (the **“Title Review Period”**), Buyer shall notify Seller in writing(the **“Title Objection Notice”**) of anyobjections Buyer may have with respect to the Encumbrances disclosed by theSurvey or the Title Report. All Encumbrances disclosed in the Title Reportand/or Survey to which Buyer does not timely object in writing shall be deemedto be Permitted Encumbrances; however, Buyer shall be deemed to have timelyobjected to all Financing Encumbrances, and Seller covenants and agrees thatall Financing Encumbrances shall be removed at or prior to Closing, whether bypayment, pursuant to the Confirmation Order or otherwise.******All Encumbrances which are not Financing Encumbrancesand to which Buyer timely objects in writing are referred to herein as **“Additional Encumbrances”**.   Within five (5) Business Days followingreceipt of the Title Objection Notice (the **“Seller Response Date”**),Seller shall notify Buyer in writing (**“Seller’s Response”**)of its election to either (i) cause each Additional Encumbrance to be removedfrom the Title Report on or before Closing (or, in the alternative, and subjectto Buyer’s prior written consent, to have the Title Company commit to insure,at Seller’s cost and expense, against any and all loss or damage that may beoccasioned by such Additional Encumbrance) or (ii) not so cause such AdditionalEncumbrance to be removed from the Title Report on or before Closing (orinsured over). Seller’s failure to timely give Seller’s Election with respectto any particular Additional Encumbrance shall be conclusively presumed to beSeller’s election not to cause such Additional Encumbrance to be removed (orinsured over). If Seller elects not to cause the removal of (or insurance over)any Additional Encumbrance, then Buyer may elect to either (a) proceed with thepurchase of the Property on or before the Closing Date, subject to suchAdditional Encumbrances as Seller has elected not to remove, without any causeof action or claim against Seller (including any abatement or reduction in thePurchase Price) arising out of such Additional Encumbrances; or (b) terminatethis Contract by written notice to Seller, whereupon the Escrow Money shall bereturned to Buyer by Title Company and neither party shall have any furtherrights or obligations under this Contract except for those rights which by theterms of this Contract expressly survive termination. Buyer’s election toterminate pursuant to the foregoing clause (b) may be made any time prior tothe date that is ten (10) calendar days following Buyer’s receipt of Seller’sResponse (the **“Title Review Deadline”**). If Buyerfails to timely notify Seller of its election to terminate this Contract inaccordance with the foregoing clause (b) on or before the Title ReviewDeadline, then Buyer shall be deemed to have elected to proceed with theClosing as set forth in the foregoing clause (a).  If Seller elects to cause the removal of (orinsurance over) any Additional Encumbrance, then such removal (or insurance)shall be accomplished on or prior to Closing, and upon a failure of theforegoing, Buyer may either (i) remove or insure over the AdditionalEncumbrances at Seller’s expense, or (ii) elect to terminate this Contract bywritten notice to Seller on or before the scheduled date of Closing, whereuponthe Escrow Money shall be returned to Buyer by Title Company and neither partyshall have any further rights or obligations hereunder except those which areexpressly provided in this Contract to survive termination. If Buyer does notso elect to terminate this Contract, Buyer shall consummate the purchase of theProperty and, at the Closing, Buyer shall receive a credit to the PurchasePrice in the amount of all costs incurred by Buyer to remove the AdditionalEncumbrances.

 

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#### ***5.3*****                              **PHYSICAL INSPECTION

###### *(a)*                               Inspections

During the DueDiligence Period, Buyer, its engineers and other representatives, shall bepermitted to inspect the physical condition of the Property, including allstructural, mechanical and other components and systems thereof. All fees andexpenses incurred by Buyer in the making of such inspections shall be the soleresponsibility of Buyer. Seller shall fully cooperate with Buyer in connectionwith such inspections and shall provide access to all relevant documents andrecords relating to the Property in Seller’s possession or control for on-siteinspection and copying. Buyer shall have the right to interview any personsinvolved in the management or operation of the Property, provided that Sellershall have the right to have a designated representative available at any suchinterview. All inspections shall take place during normal business hours, andBuyer shall notify Seller not less than twenty-four (24) hours in advance ofmaking any inspection and shall not unreasonably disrupt the conduct of Seller’sbusiness at the Property in connection with any inspections.   Buyer shall provide to Seller copies of anyreports generated by or at the direction of Buyer and relating to the physicalcondition of the Property.

###### *(b)*                               Environmental Inspection

Prior toexpiration of the Due Diligence Period, Buyer shall have the right to conduct aPhase I Environmental Report on the Real Property. The scope of anyenvironmental inspection shall not include any intrusive testing or soilsampling without the prior written consent of Seller.  Buyer shall deliver a copy of any Phase IEnvironmental Report to Seller and shall maintain the confidentiality of anysuch report in accordance with **Section 5.1**aboveand **Section 20** below.

###### *(c)*                                Indemnification and Insurance

Buyer shallindemnify, defend, protect and hold Seller harmless from any and all liens,claims, liabilities, damages or expenses (including reasonable attorneys’fees), sustained by or threatened against Seller to the extent arising out of(i) physical damage caused to the Real Property or injury sustained by anyperson caused by (a) the occupancy and use of the office spaces pursuant to thelast sentence of **Section 5.1**by****Buyer, its employees and agents, includingrepresentatives with whom Buyer contracts for the performance of any suchinspection at the Property (each, a **“Contract Inspector”**),and (b) the undertaking of the inspections described in this **Section 5.3** by Buyer, its employees andagents, including any Contract Inspector and (ii) liens filed against the RealProperty because of Buyer’s nonpayment of any Contract Inspector retained byBuyer to perform inspections hereunder or otherwise resulting from suchinspections. Upon the request of Seller, Buyer shall cause any ContractInspector to furnish to Seller a certificate of insurance evidencingcomprehensive general liability insurance insuring such Contract Inspector andlisting Seller and Buyer as additional insureds thereunder.  The indemnification obligations set forth inthis clause (c) shall survive the Closing or the termination of this Contract.

#### ***5.4*****                              **ADDITIONAL PROPERTY DOCUMENTATION

##### During the Due DiligencePeriod, upon reasonable notice and during normal business hours, Buyer shallhave the right to inspect, and Seller shall make available to Buyer, allproperty tax, insurance, maintenance, repair, utility, and other expense orcost records relating to the Property****andall agreements and documents relating to the construction, maintenance andoperation of the Property and in the possession or control of, or readilyavailable to, Seller and/or its property manager and/or any of their respectiveaffiliates.  No****original****records,agreements or documents shall be removed from the Office Building without theprior consent of Seller, but Buyer may

 

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##### remove copies of any suchrecords, agreements or documents from the Office Building, subject tocompliance with the confidentiality provisions set forth in Section 5.1 above.

#### ***5.5*****                              **CITY FINANCIAL INCENTIVES; ASSIGNMENT OFREDEVELOPMENT AGREEMENT

##### Upon request of Buyer,Seller will assist Buyer in its negotiations with the City of Cedar Rapids  (the **“City”**) withrespect to financial incentives by furnishing information relating to theProperty (to the extent in Seller’s possession) which may be useful inobtaining such financial incentives, provided that the confidentiality of anysuch information is maintained by the City. In addition, Seller and Buyer shall jointly negotiate with the Cityduring the Due Diligence Period to obtain the commitment of the City to executean Assignment of Rights Pursuant to Amended and Restated Agreement for PrivateRedevelopment (Phase II) AND Termination substantially in the form of Exhibit Jattached hereto (the **“Redevelopment AgreementAssignment”**).  In the eventthat the City shall agree to execute the Redevelopment Agreement Assignment inthe form of Exhibit J (any modifications thereto requiring the approval of eachof Seller and Buyer) and the Closing shall be consummated, Seller and Buyershall each execute and deliver the Redevelopment Agreement Assignment at theClosing.

#### ***5.6*****                              **ELECTED OPERATING CONTRACTS

##### Not later than theexpiration of the Due Diligence Period, Buyer shall provide a written notice(the “**Elected Operating Contract List**”) toSeller listing the Operating Contracts which Buyer designates to be assumed bySeller and assigned to Buyer at the Closing (the “**ElectedOperating Contracts**”).

#### ***5.7*****                              **EXPIRATION OF DUE DILIGENCE PERIOD

##### Buyer may, at its option,to be exercised in its sole and absolute discretion, terminate this Contract bygiving written notice thereof to Seller at any time prior to the expiration of theDue Diligence Period, in which event neither party shall have any furtherrights or obligations hereunder, except for such rights and obligations whichexpressly survive the Closing or the termination of this Contract.  If Buyer fails to notify Seller in writing ofsuch termination prior to the expiration of the Due Diligence Period, Buyer’sright to terminate this Contract in accordance with this **Section 5.7**shall automatically expire and terminate.

# **6.**                                      CLOSING

#### ***6.1*****                              **TIME OF CLOSING

##### The close of Escrow (**“Closing”**) shall occur after all conditions precedent setforth in this Contract have been met, on a day and at a time agreed by theparties, at the offices of Title Company or at such other place as the partiesshall agree (provided that, to the extent practicable, the Closing may beconducted via mail and without personal attendance by the parties).  In the event that the Closing Date fails tooccur on or before December 31, 2005, unless such failure results from a defaultby either of Seller or Buyer pursuant to this Contract, this Contract shallautomatically terminate effective at 11:59 PM Central Standard Time on December31, 2005, the Escrow Money shall be refunded to Buyer and neither party shallhave any further rights or obligations hereunder, except for such rights andobligations which expressly survive the termination of this Contract; provided,however, that Buyer shall have the right to extend the Closing Date as providedin **Section 7.5**.  The actual date of Closing is hereinafterreferred to as the **“Closing Date.”**

#### ***6.2*****                              **DELIVERY OF SELLER’S CLOSING ITEMS

##### At or prior to Closing,Seller, at its sole cost and expense, shall deliver or cause to be delivered toBuyer, all documents and instruments listed on **Exhibit C**, each of which shall be in form and substancereasonably acceptable to each of Seller and Buyer (provided that Seller andBuyer agree and acknowledge that the form of any document or instrument whichis attached to this Contract as an exhibit is reasonably acceptable to eachsuch party).

 

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#### ***6.3*****                              **DELIVERY OF BUYER’S CLOSING ITEMS

##### At or prior to Closing,Buyer, at its sole cost and expense, shall deliver the following to Sellerthrough Escrow: (i) after application of the Escrow Money and a credit to Buyerfor the amount of the Security Deposits and current Rent (each as defined inthe Leases), and subject to the adjustments and prorations set forth herein andto be reflected on the closing statement, the balance of the Purchase Price bywire transfer (which transfer shall be made no later than 11:00 a.m. CentralStandard Time on the day of Closing); and (ii) executed counterparts of aclosing statement, the Bill of Sale, the Leases, the Redevelopment AgreementAssignment (subject to the terms and provisions of Section 5.5 of theContract), real estate transfer declarations (if applicable) and such otherdocuments as may be reasonably required by Title Company in order to issue theTitle Policy and to otherwise consummate the Closing.

#### ***6.4*****                              **PRORATIONS

##### All real estate taxes,assessments, utilities expenses, trash pickup and other services (if Buyercontinues such services) and amounts payable pursuant to the Elected OperatingAgreements, and all other periodic expenses of the Property shall be prorated asof the Closing Date.  All prorationsshall be made such that Buyer is credited or debited with all items for the dayon which the Closing occurs. If, following Closing, either party discovers thatany item prorated, charged, or credited pursuant to the provisions of this **Section 6.4** was erroneous or was based uponan inaccurate estimate, then such party shall notify the other party of sucherror and an appropriate adjustment shall be made between the parties so thatany such item will have been correctly and accurately prorated, charged, orcredited between the parties. Any such amount shall be due and payable ten (10)days following demand for payment thereof accompanied by such documents as mayreasonably be required to establish the accuracy of such adjustment. In theevent that real estate taxes to be prorated are not known on the Closing Date,such prorations shall be based upon the most recent ascertainable real estatetaxes and the parties agree to reprorate such real estate taxes when theamounts thereof become known (and the party owing the other party any amountsin connection with such reproration shall pay such amounts to the other partywith ten (10) days following the completion of such reproration).  Except as otherwise provided in this **Section 6.4**, all prorations are final andthere shall be no reprorations.  Theprovisions of this **Section 6.4**shall survive the Closing.

#### ***6.5*****                              **CLOSING COSTS

##### Each party shall pay itsown attorneys’ fees and costs relating to the preparation and negotiation ofthis Contract and the closing documents hereunder. Buyer shall pay (i) anyexpenses in connection with obtaining the Survey, (ii) with respect to theTitle Policy, the difference between the premium cost for a standard owner’spolicy of title insurance and the premium cost payable for an Owner’s ALTAextended coverage policy of title insurance, (iii) any endorsements to theTitle Policy requested by Buyer, (iv) recording costs for the Deed and (v)one-half of any escrow  or closing fees.Seller shall pay (A) all fees and expenses in connection with the issuance ofthe Title Report, (B) with respect to the Title Policy, all premiums for astandard owner’s policy of title insurance, (C) recording costs (other thanwith respect to the Deed), (D) any transfer tax or documentary stampsapplicable to the transaction contemplated by this Contract (to the extent thesame are not exempted pursuant to the Confirmation Order) and (E) one-half ofany escrow and closing fees. Title Company shall allocate any other Closing costsbetween Buyer and Seller in the manner set forth in **Section 6.4**. Buyer and Seller shall review a preliminaryclosing statement no later than the Business Day immediately preceding theClosing Date, and shall advise Title Company of any adjustments to be madethereto.

#### ***6.6*****                              **TRANSFER OF TITLE AND DELIVERY OFPOSSESSION

##### On the Closing date,Seller shall transfer and convey title to the Property to Buyer free and clearof Encumbrances, other than Permitted Encumbrances.  Seller shall deliver possession of the Propertyto Buyer at Closing.  The Real Propertyshall be tendered to Buyer at Closing in the

 

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##### same condition as itexists on the date of this Contract (ordinary wear and tear and alterations toprepare the Premises for occupancy by Seller excepted and except as provided in**Section 9**and **Section 10** below), but subject to theProperty Lease. With the exception of the Premises leased to Seller pursuant tothe Property Lease and any property of Seller located in easements which arePermitted Encumbrances, all furniture, fixtures, equipment and other personalproperty of Seller, its predecessors or affiliates which is not a part of theProperty being conveyed to Buyer under this Contract (such excluded property, the“**Seller’s Property**”) shall have beenremoved from the Real Property prior to Closing. Any such property which is notso removed shall be deemed to have been abandoned by Seller, and Buyer mayremove, sell, discard or otherwise dispose of such property (at Seller’sexpense)  or use the same as Buyer seesfit and without any further notice to, or ownership interest in, Seller.

#### ***6.7*****                              **STAGING PLAN

##### Notwithstanding theprovisions of **Section 6.6** above,during the Due Diligence Period, Seller and Buyer shall cooperate in good faithto agree upon a staging plan to accommodate the move of Seller’s employees fromthe Property to the Martha’s Way Building and other facilities and Buyer’semployees from the Martha’s Way Building and other Buyer facilities to theProperty (the **“Staging Plan”**).  The Staging Plan shall incorporate the termsand provisions set forth in Exhibit I attached hereto.  The Staging Plan shall be attached to bothProperty Leases and shall bind the parties to the agreed schedule, provided,however, the parties may amend the Staging Plan, from time to time, as they mayagree by amendment in writing. ** **As reflected in Exhibit I, Sellershall complete its relocation from the first floor of the Building (other thanportions thereof that will be leased by Seller pursuant to the Property Lease)to the second floor of the Building on or before December 31, 2005 (suchobligation to survive the Closing in the event that the Closing occurs prior toDecember 31, 2005).  Seller shall keepBuyer apprised as to the progress of such relocation and, upon a request byBuyer, Seller shall permit Buyer to enter the Building to review such progress,provided that any such review shall take place during normal business hours andBuyer shall not unreasonably disrupt the conduct of Seller’s business at theProperty in connection therewith.

#### ***6.8*****                              **JOINT SECURITY ALTERATIONS

##### It is anticipated thatSeller may commence certain Joint Security Alterations (as defined in Section48.3 of the Property Lease attached hereto as Exhibit H).  Buyer shall reimburse Seller for one-half ofthe costs and expenses of such Joint Security Alterations (either at Closing,if a Closing shall occur, or otherwise within ten (10) days after receipt byBuyer of an invoice therefore accompanied by reasonable backup documentation)in the event that any of the following shall occur:  (i) the Closing shall be consummated, (ii)Buyer shall exercise its right to terminate this Contract in accordance with **Section 5.7** or (iii) the Closing Date fails to occur as a resultof a default on the part of Buyer under any other provision of thisContract.  The provisions of this **Section 6.8** shall survive the Closing or the termination ofthis Contract.

# **7.**                                      REPRESENTATIONS AND WARRANTIES;COVENANTS

#### ***7.1*****                              **SELLER’S REPRESENTATIONS AND WARRANTIES

##### Subject to the provisionsof **Section 7.5**, Seller makes thefollowing representations and warranties as of the date hereof, agrees that allsuch representations and warranties shall be true and correct on the ClosingDate, and acknowledges that Buyer is relying on said representations andwarranties. Buyer acknowledges that the term **“Seller’sKnowledge,”** as used herein, means the actual knowledge, withoutindependent investigation or duty of inquiry, of Roy McGraw, Group VicePresident of Material Management, and Alex Mills, Manager of Facility SiteEngineering, who Seller represents to be the person most likely to have currentinformation regarding the items addressed.  All representations and warranties of Seller set forth in this **Section 7.1** shall survive the Closing orthe termination of this Contract to the extent provided

 

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##### in **Section 12** and shall be binding upon Seller’ssuccessors and assigns, including the Reorganized Seller.

| (I)    |   | There are no  Space Leases relating to the Real Property or any part thereof, and to  Seller’s Knowledge, no person has any option, right of first refusal or other  right to acquire any ownership or occupancy interest in the Property which  has not been waived in writing with respect to the transaction contemplated  by this Contract prior to the date hereof.                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| (II)   |   | There are no  contracts or agreements affecting the Property or its operation which will  survive the Closing except the Operating Contracts (and, upon their execution  and delivery at the Closing, the Property Leases);                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| (iii)  |   | There are no  claims, actions, suits or other proceedings, including condemnation  proceedings or boundary disputes, pending or, to Seller’s Knowledge,  threatened, by any Governmental Authority or any other corporation,  partnership, entity or person, regarding the ownership, use or possession of  the Property;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| (iv)   |   | Seller has  received no written notice alleging any violations of (A) applicable zoning,  land use, building codes and fire safety codes or other applicable laws,  regulations and ordinances (including, without limitation, the Americans With  Disabilities Act), (B) administrative or judicial orders or (C) covenants  affecting the Property which have not been cured by Seller prior to the date  of this Contract; and, to Seller’s Knowledge, there are no such uncured  violations;                                                                                                                                                                                                                                                                                                                             |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| (v)    |   | The execution  and delivery of this Contract and each instrument or document required to be  executed and delivered by Seller pursuant hereto and the consummation of the  transactions contemplated hereby, upon execution, delivery and consummation  thereof, will be duly authorized and approved by all requisite corporate  actions and no other authorization or approval will be necessary in order to enable  Seller to enter into or to perform this Contract (other than the approval of  the Bankruptcy Court pursuant to the Confirmation Order);                                                                                                                                                                                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| (vi)   |   | Neither (x) the  execution and delivery of this Contract or the other documents called for  hereunder, (y) the consummation of any of the transactions herein or therein  contemplated, nor (z) compliance with the terms and provisions hereof or with  the terms and provision thereof will contravene any provision of law,  statute, rule or regulation to which Seller is subject or will conflict or be  inconsistent with, or result in any breach of any of the terms, conditions,  covenants or provisions of, or constitute a default under or result in the  creation or imposition of, any Encumbrance upon the Property pursuant to the  terms of any indenture, mortgage, deed of trust, articles of incorporation,  by-laws or other instrument to which Seller is a party or by which the  Property may be bound; |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| (vii)  |   | Seller has paid  or will pay in full by the due date or the Closing Date (whichever is  earlier) for all labor performed at, and materials, machinery, fixtures and  tools delivered to, furnished to or incorporated into the Real Property prior  to Closing, other than items contracted for by Buyer;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| (viii) |   | Seller has  received no written notice of any, and to Seller’s Knowledge there is no,  planned reevaluation of the Real Property which will or could result in  higher real estate taxes on the Real Property, other than the normal periodic  reevaluations and any reevaluation of Seller’s tax increment financing which  may result from the consummation of the transaction contemplated hereunder;                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| (ix)   |   | To Seller’s  Knowledge, there are no planned street or other improvements which may result  in special assessments against the Property or any part thereof or which may  alter or disrupt ingress and egress from the Property;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |

 

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| (x)    |   | Seller is not a  foreign corporation, foreign partnership, foreign trust, foreign estate or  foreign person, as those terms are defined in the Internal Revenue Code of  1954, as amended, and the Income Tax Regulations promulgated thereunder  (collectively, the “**Code**”), and  no taxes or withholding under the Code shall be assessed or applied to Buyer  in connection with the transaction contemplated hereby;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| (xi)   |   | Seller is the  owner of fee simple title to the Real Property;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| (xii)  |   | Seller is the  owner of marketable title to the Personal Property, and Seller’s title to the  Personal Property is (or will be at Closing) free and clear of any and all  Encumbrances, other than Permitted Encumbrances;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| (xiii) |   | Seller has not  produced, generated, stored, treated, disposed of or otherwise handled any  Hazardous Materials on the Real Property in violation of any Environmental  Laws.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| (xiv)  |   | To Seller’s  Knowledge, all Environmental Reports are identified on **Schedule  D-1**. Except as may be disclosed in the Environmental Reports or on  **Schedule D-1**, to Seller’s Knowledge:  (i) the Property is in material compliance with all Environmental Laws, and  there has been no material noncompliance by Seller with such Environmental  Laws, (ii) Seller has not received in the past three (3) years any written  notice from any Governmental Authority or other person that Seller or any  former operator of the Property is not or has not been in compliance with the  Environmental Laws, or that Seller or any former owner of the Property has  any liability with respect thereto, (iii) there is no administrative  regulatory or judicial proceeding pending or threatened in writing against  Seller or any former owner of the Property pursuant to, or alleging any  violation of or liability under, any Environmental Laws, (iv) no part of the  Property is being used or has been used as a storage or disposal site (whether  temporary or permanent) for any Hazardous Materials, and (v) there are no  underground storage tanks at the Property nor have any underground storage  tanks ever been removed from the Property; |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| (xv)   |   | All Operating  Contracts affecting the Property or any part thereof are identified on **Schedule D-2** attached hereto.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| (xvi)  |   | As of October  14, 2005, the Steering Committee represented not less than sixty percent 60% of the outstanding principal  amount of the loans made to Seller and then outstanding. Based solely on the  letter delivered to Seller by the Steering Committee (which letter is  attached hereto as Exhibit K), prior to the date hereof, the Steering  Committee has (A) reviewed an unexecuted copy of this Contract, (B) approved  the terms and provisions of this Contract and (C) confirmed their support for  the entry of an order by the Bankruptcy Court approving the sale of the  Property to Buyer pursuant to this Contract.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| (xvii) |   | As of the date hereof, Seller has received ballots in favor of the Plan  from Seller’s Lenders sufficient to satisfy 11 U.S.C. § 1126(c).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |

#### *** ***

#### ***7.2*****                              **SELLER’S COVENANTS PRIOR TO CLOSING

##### Seller hereby covenantsto Buyer as follows:

| (i)    |   | From and after  the date of this Contract through the Closing Date, Seller will promptly  notify Buyer in writing, to the extent Seller has knowledge thereof, of any  and all material changes in (A) the condition of the Property, (B) any of the  information required under this Contract to be furnished to Buyer and/or (C)  circumstances which would render any of the representations and warranties of  Seller set forth in **Section 7.1**false  or misleading. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| (ii)   |   | Seller will  continue, through Closing, to pay all of the debts and obligations of the  Property as they become due (with interest and penalties thereon, if any) or,  in the event that such amounts are not paid by Seller on or prior to the  Closing Date and are                                                                                                                                                                                                       |

 

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|   |   | reasonably  certain, such amounts shall be reflected as a credit to the Purchase Price in  the closing statement executed by the parties at Closing and Buyer shall  thereafter have sole responsibility for the payment thereof;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| (iii)  |   | Seller shall not  change in any material respect the condition of the Property prior to the  Closing and, subject to the provisions of **Section  9** and **Section 10** of  this Contract, and **subsection 7.2(v)**  below, Seller shall maintain the Property in the same condition as at the  date of execution of this Contract, reasonable wear and tear excepted;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| (iv)   |   | From and after  the date of this Contract, Seller shall not, without the prior written  consent of Buyer (which consent may be given or withheld in Buyer’s sole  discretion), convey any interest in the Property, enter into any Space Lease  or subject any portion of the Property to any Encumbrances which shall not be  released or removed prior to Closing;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| (v)    |   | Seller shall  give Buyer prior written notice of any alterations intended by Seller to be  made from and after the date of this Contract, including copies of the plans  and specifications therefor (if applicable) and contracts for performance  thereof. Any such alterations shall be subject to Buyer’s prior written  approval, which approval may be given or withheld in Buyer’s sole discretion  (except that, in the case of alterations conducted in accordance with the  general terms of the Staging Plan set forth on Exhibit I, Buyer shall not  unreasonably withhold, delay or condition its consent to such alterations).                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| (vi)   |   | In the event  that Buyer states in its written notice approving any alterations made by  Seller in accordance with the foregoing paragraph that Seller shall be  required to remove such alterations prior to Closing, Seller shall so remove  such alteration prior to Closing and restore the Property to the condition  existing prior to the making of such alterations. In the event any  alterations are made to the Premises pursuant to the Property Lease, the  terms of the Property Lease shall govern the obligation of Seller to remove  such alterations and to restore the Premises. Any work performed on the  Property shall be accomplished in a good, workmanlike manner by appropriately  skilled and licensed (as required by law) workmen. At Closing, Seller shall  deliver to Buyer and/or the Title Company lien waivers from contractors and  suppliers that are party to any contract concerning work on the Property  (including any repairs or maintenance) which was completed within ninety (90)  days prior to the Closing or which is unfinished as of the Closing Date; |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| (vii)  |   | From and after  the date of this Contract, Seller shall not enter into any new Operating  Contracts which will survive the Closing or modify or amend any of the  Operating Contracts without Buyer’s prior written consent (which consent  shall not be unreasonably withheld, conditioned or delayed until the date of  the expiration or waiver of the Due Diligence Period, but may be withheld in  Buyer’s sole discretion after such date); and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| (viii) |   | From and after  the date of this Contract, Seller shall timely perform and comply with all  obligations under each Operating Contract, and Seller shall immediately  deliver to Buyer copies of all notices, correspondence, demands and other  written documents delivered or received in connection with any of such  Operating Contracts.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |

#####  

##### Satisfaction of each ofthe foregoing covenants shall be a condition to Closing.

#### ***7.3*****                              **BUYER’S REPRESENTATIONS AND WARRANTIES

| (ix) |   | The execution  and delivery of this Contract and each instrument or document required to be  executed and delivered by Buyer pursuant hereto and the consummation of the  transactions contemplated hereby, upon execution, delivery and consummation  thereof, will be duly authorized and approved by all requisite corporate  actions and no other |
|------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

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|   |   | authorization or  approval will be necessary in order to enable Buyer to enter into or to  perform this Contract; and this Contract creates legal, valid and binding  obligation of Buyer, enforceable in accordance with its terms;                                                                                                                                                       |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                       |
| (x)    |   | Neither (x) the  execution and delivery of this Contract or the other documents called for  hereunder, (y) the consummation of any of the transactions herein or therein  contemplated, nor (z) compliance with the terms and provisions hereof or with  the terms and provision thereof will contravene any provision of law,  statute, rule or regulation to which Buyer is subject; and |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                       |
| (xi)   |   | Buyer has the  financial resources to consummate the transactions contemplated herein and  pay the Purchase Price.                                                                                                                                                                                                                                                                         |

#### *** ***

#### ***7.4*****                              **CONDITIONS

| (a) |   | Buyer’s  obligation to purchase the Property from Seller and to consummate the Closing  is subject to each of the following conditions: |
|-----|--------|----------------------------------------------------------------------------------------------------------------------------------------------|

###### * *

| *(i)*    | * * | *Representations  and Warranties*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|----------|----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|     |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|     |     | All representations and  warranties of Seller set forth in this Contract shall be true and correct in  all material respects on and as of the Closing Date, irrespective of whether  Seller or Buyer has any knowledge of the untruth or inaccuracy of the factual  basis of such representations or warranties.                                                                                                                                                                                                                             |
|     | * * | * *                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| (ii)     | * * | *Covenants*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|     |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|     |     | All covenants of Seller  under this Contract required to have been performed on or before the Closing  Date shall have been timely and duly performed in all material respects.                                                                                                                                                                                                                                                                                                                                                              |
| * * | * * | * *                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| *(iii)*  | * * | *Closing  Documents*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|     |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|     |     | Seller shall have  delivered to Title Company all documents and instruments set forth in **Exhibit C.**                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| * * | * * | * *                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| *(iv)*   | * * | *Bankruptcy  Court Approval*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|     |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|     |     | The Bankruptcy Court  shall have entered the Confirmation Order or the Sale Order, as applicable,  and the time to appeal the applicable order shall be expired or any appeal  from such order shall have been denied or dismissed with prejudice in a final  non-appealable order.                                                                                                                                                                                                                                                          |
| * * | * * | * *                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| *(v)*    | * * | *Title  Policy*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| * * | * * | * *                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| * * | * * | *Upon recordation of the Deed, the  Title Company shall be irrevocably and unconditionally prepared to issue the  Title Policy to Buyer in accordance with the approved Title Report, subject  only to the Permitted Encumbrances, subject to payment by Buyer of its share  of any costs and expenses related thereto, as set forth in **Section 6.5**, and submission by Buyer of  any affidavits, corporate documentation or other materials required by the  Title Company to be submitted by Buyer in order to issue the Title Policy.* |

#####  

##### If any of the foregoingconditions have not occurred or been satisfied (or waived by Buyer) within theperiods and strictly in accordance with the terms set forth in this Contract,then Buyer shall have the right to terminate this Contract by written notice toSeller, in which event the Escrow Money shall be returned to Buyer by the TitleCompany, all obligations of the parties hereunder shall thereupon cease andthis Contract shall be of no further force and effect (except for those rightsand obligations of the parties which by the express terms of this Contract areintended to survive termination), unless failure of the condition constitutesor is caused by a default on the part of Buyer under any other provision ofthis Contract.

 

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##### (b)                                     Seller’s obligation to sell the Propertyto Buyer and to consummate the Closing is subject to each of the followingconditions:

| *(i)*    | * * | *Representations and  Warranties*                                                                                                                                                                                                                                                                               |
|----------|----------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|     |     |                                                                                                                                                                                                                                                                                                            |
|     |     | All representations and warranties of Buyer set forth in this  Contract shall be true and correct in all material respects on and as of the  Closing Date, irrespective of whether Seller or Buyer has any knowledge of  the untruth or inaccuracy of the factual basis of such representations or  warranties. |
|     | * * | * *                                                                                                                                                                                                                                                                                                        |
| (ii)     | * * | *Covenants*                                                                                                                                                                                                                                                                                                     |
|     |     |                                                                                                                                                                                                                                                                                                            |
|     |     | All covenants of Buyer under this Contract required to have been  performed on or before the Closing Date shall have been timely and duly  performed in all material respects.                                                                                                                                  |
| * * | * * | * *                                                                                                                                                                                                                                                                                                        |
| *(iii)*  | * * | *Closing Documents*                                                                                                                                                                                                                                                                                             |
|     |     |                                                                                                                                                                                                                                                                                                            |
|     |     | Buyer shall have delivered to Title Company the documents and  instruments set forth in **Section 6.3.**                                                                                                                                                                                                        |
| * * | * * | * *                                                                                                                                                                                                                                                                                                        |
| *(iv)*   | * * | *Bankruptcy Court  Approval*                                                                                                                                                                                                                                                                                    |
|     |     |                                                                                                                                                                                                                                                                                                            |
|     |     | The Bankruptcy Court shall have entered the Confirmation Order or the  Sale Order, as applicable, and the time to appeal the applicable order shall  be expired or any appeal from such order shall have been denied or dismissed  with prejudice in a final non-appealable order.                              |

#####  

##### If any of the foregoingconditions have not occurred or been satisfied (or waived by Seller) within theperiods and strictly in accordance with the terms set forth in this Contract,then, unless failure of the condition constitutes or is caused by a default onthe part of Seller under any other provision of this Contract, Seller shallhave the right to terminate this Contract by written notice to Buyer, in whichevent, provided that the failure of the condition does not constitute and isnot caused by a default on the part of Buyer under any other provision of thisContract, (A) the Escrow Money shall be returned to Buyer by the Title Companyand (B) all obligations of the parties hereunder shall thereupon cease and thisContract shall be of no further force and effect (except for those rights andobligations of the parties which by the express terms of this Contract areintended to survive termination).

#### ***7.5*****                              **CONFIRMATION ORDER OR SALE  ORDER

##### Within one (1) BusinessDay after the execution of this Contract by Seller, provided that Buyer shallhave also executed this Contract, Seller shall file with the Bankruptcy Court(A) a voluntary petition for relief under Chapter 11 of the Bankruptcy Code and(B) a Joint Prepackaged Plan of Reorganization of McLeodUSA Incorporated andits Affiliated Debtors (the “Plan”). Prior to Closing, Seller shall obtain a final non-appealable order ofthe Bankruptcy Court confirming the Plan pursuant to section 1129 of theBankruptcy Code (the “Confirmation Order”); provided, however, that ifthe provisions of the next succeeding paragraph become applicable and if Buyershall make an election pursuant thereto, Seller shall obtain a finalnon-appealable order of the Bankruptcy Court, in a form reasonably acceptableto Buyer, approving the transaction pursuant to the terms of this Contract andauthorizing the sale of the Property to Buyer pursuant to Section 363 of theBankruptcy Code, free and clear of Encumbrances (the “Sale Order”).  The Plan shall provide for the sale of theProperty by Seller “free and clear” of Encumbrances for the PurchasePrice.  Not later than the earlier tooccur of the date that is (a) five (5) Business Days after the expiration ofthe Due Diligence Period (or such earlier date upon which Buyer delivers toSeller a written waiver of its right to terminate this Contract pursuant to **Section 5.7**) or (b) five (5) Business Daysprior to the date set for the confirmation hearing for the Plan, Seller shallfile a supplement to the Plan disclosing and attaching this Contract (includingthe Leases and all other exhibits thereto). The Confirmation 

#####  

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##### 

#####  

##### Order or Sale Order (asapplicable) shall include provisions, in form and substance reasonablyacceptable to Buyer, (i) approving this Agreement and the sale of the Propertyto Buyer in accordance with the terms and provisions hereof “free and clear” ofEncumbrances and (ii) providing for the assumption of the Elected OperatingContracts and the assignment of the same to Buyer, with Seller being solely andexclusively responsible for any cure costs associated with such ElectedOperating Contracts and solely responsible for the termination of, and/orpayment of amounts due pursuant to, the Operating Contracts that are notElected Operating Contracts, (iii) approving the Leases and the securitydeposit required thereunder, and specifically stating that, during the pendencyof the bankruptcy case, Tenant shall have no legal, equitable, or residualinterest in the Security Deposit and providing that Buyer shall have anadministrative expense claim pursuant to Section 503(b)(1) of the BankruptcyCode for any obligations under the Leases, (iv) providing that Buyer shall haveadditional administrative expense claims pursuant to Section 503(b)(1) of theBankruptcy Code for any claims it may have against Seller for any damages itmay suffer as a result of Seller’s breach of this Agreement; and (v) providingthat this Agreement and all of Seller’s representations and other obligationsto Buyer hereunder shall be fully enforceable against the Seller and theReorganized Seller and shall otherwise survive Seller’s bankruptcy case.  Seller shall provide proper notice of thePlan (in the event that a Confirmation Order is applicable) or the 363 SaleMotion (as defined below)(in the event that a Sale Order is applicable) to allparties who may claim to have an Encumbrance on the Property or are otherwiserequired to be given notice under the Bankruptcy Code.

##### If the Confirmation Orderis not entered on or before December 15, 2005, Buyer, in its sole and absolutediscretion, may elect by written notice delivered to Seller prior to the entryof the Confirmation Order, to require Seller to file a motion in its bankruptcycase to sell the Property to Buyer pursuant to Section 363 of the BankruptcyCode and the terms of this Contract (a “363 Sale Motion”), such 363 SaleMotion to be filed by Seller within five (5) Business Days after receipt ofBuyer’s written notice of such election. The 363 Sale Motion shall provide that, in the event that Buyer is notthe successful bidder in any auction conducted pursuant to the 363 Sale Motion,Buyer shall be entitled to a termination payment in the amount of Five HundredFifty Thousand and No/100 Dollars ($550,000.00).  Seller shall use reasonable efforts to obtainan expedited hearing with respect to any such 363 Sale Motion.  If Seller fails to timely file the 363 SaleMotion other than for reasons that are outside of Seller’s and/or Seller’sLenders’ control (in which case Seller shall file such 363 Sale Motionimmediately upon the removal of the impediment to filing), it shall be deemedto have rejected this Contract and shall be required to pay liquidated damagesto Buyer pursuant to **Section 8.3**below.  In the event that Buyer makes an election in accordance with theforegoing and directs Seller to file a 363 Sale Motion, Buyer may elect, bywritten notice to Seller  (a “363Closing Extension Notice”) on orprior to December 30, 2005, to extend the Closing Date to the date that is five(5) Business Days after the satisfaction of the condition precedent set forthin **Section 7.4(a)(iv)** and **Section7.4(b)(iv)**.  Buyer may specify in its 363 Closing ExtensionNotice a date which shall be deemed the outside date for Closing (the “363Outside Closing Date”).  At any timeprior to the Business Day immediately preceding the 363 Outside Closing Date,if the condition precedent set forth in **Section7.4(a)(iv)** and **Section 7.4(b)(iv)**has not then been satisfied,  Buyer shallhave the right to deliver one or more additional 363 Closing ExtensionNotice(s) and to specify therein a new 363 Outside Closing Date (but not beyondDecember 31, 2006) and the provisions of this sentence shall be applicable withrespect to such new date.  In the eventthat (i) the Closing Date has not occurred by the 363 Outside Closing Date,(ii) Buyer has not timely extended such date in accordance with the foregoingand (iii) neither party is in default under this Contract, this Contract shallautomatically terminate effective at 11:59 PM Central Standard Time onthe 363 Outside Closing Date, theEscrow Money shall be refunded to Buyer and neither party shall have anyfurther rights or obligations hereunder, except for such rights and obligationswhich expressly survive the termination of this Contract.

#####  

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##### 

#####  

##### If the Confirmation Orderhas not been entered on or prior to December 31, 2005 and Buyer has notdelivered written notice to Seller of its election for the filing of a 363 SaleMotion pursuant to the foregoing paragraph, this Contract shall terminate inwhich event the Escrow Money shall be returned to Buyer and neither party shallhave any further liability hereunder (except for that which by the expressterms of this Contract survives the expiration hereof), or which has accruedprior to such expiration.  Notwithstanding the foregoing, Buyer may elect,by written notice to Seller  (a “ConfirmationClosing Extension Notice”) on orprior to December 30, 2005, to extend the Closing Date to the date that is five(5) Business Days after the satisfaction of the condition precedent set forthin **Section 7.4(a)(iv)** and **Section7.4(b)(iv)**.  Buyer may specify in its Confirmation ClosingExtension Notice a date which shall be deemed the outside date for Closing (the“ Confirmation Outside Closing Date”). At any time prior to the Business Day immediately preceding theConfirmation Outside Closing Date, if the condition precedent set forth in **Section 7.4(a)(iv)**and **Section 7.4(b)(iv)** has not then been satisfied,  Buyer shall have the right to deliver one ormore additional Confirmation Closing Extension Notice(s) and to specify thereina new Confirmation Outside Closing Date (but not beyond December 31, 2006) andthe provisions of this sentence shall be applicable with respect to such newdate.  In the event that (i) the ClosingDate has not occurred by the Confirmation Outside Closing Date, (ii) Buyer hasnot timely extended such date in accordance with the foregoing and (iii)neither party is in default under this Contract, this Contract shallautomatically terminate effective at 11:59 PM Central Standard Time on theConfirmation Outside Closing Date, theEscrow Money shall be refunded to Buyer and neither party shall have anyfurther rights or obligations hereunder, except for such rights and obligationswhich expressly survive the termination of this Contract.

# **8.**                                      BREACH

#### ***8.1*****                              **BY SELLER

##### If any of Seller’srepresentations or warranties herein shall not be true and correct in allmaterial respects when made, or if Seller defaults in the performance of any ofits covenants or obligations hereunder for any reason (other than thetermination of this Contract by Seller or Buyer pursuant to a right toterminate expressly set forth in this Contract or as a result of Buyer’sfailure to perform its obligations under this Contract) and fails to cure suchdefault within five (5) days after obtaining knowledge thereof, then Buyer, atits option, shall have the right to either:

| (i)    |   | Terminate this  Contract by giving written notice thereof to Seller, whereupon the Escrow  Money shall be returned to Buyer by Title Company and Buyer may pursue an  action against Seller for damages; or |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                        |
| (ii)   |   | Seek specific  performance by Seller of its obligations under this Contract.                                                                                                                                |

 

Buyershall not be entitled to record a lien or *lis pendens*against the Property other than in connection and concurrently with the filingof a specific performance action.

#### ***8.2*****                              **BY BUYER.

##### **IF ANYOF BUYER’S REPRESENTATIONS OR WARRANTIES HEREIN SHALL NOT BE TRUE AND CORRECTIN ALL MATERIAL RESPECTS WHEN MADE, OR IF BUYER DEFAULTS IN THE PERFORMANCE ANYOF ITS COVENANTS OR OBLIGATIONS HEREUNDER FOR ANY REASON (OTHER THAN THETERMINATION OF THIS CONTRACT BY SELLER OR BUYER PURSUANT TO A RIGHT TOTERMINATE EXPRESSLY SET FORTH IN THIS CONTRACT OR AS A RESULT OF SELLER’SFAILURE TO PERFORM ITS OBLIGATIONS UNDER THIS CONTRACT) AND FAILS TO CURE SUCHDEFAULT WITHIN FIVE (5) DAYS AFTER OBTAINING WRITTEN NOTICE THEREOF, THEN SELLER, AS ITS SOLE AND EXCLUSIVE REMEDY, SHALLHAVE THE RIGHT TO TERMINATE THIS CONTRACT BY****GIVINGWRITTEN NOTICE THEREOF TO BUYER, WHEREUPON**

#####  

##### 17

##### 

#####  

##### **THEESCROW MONEY SHALL BE DELIVERED TO SELLER AS LIQUIDATED DAMAGES FREE AND CLEAROF ALL RIGHTS AND CLAIMS WITH RESPECT THERETO BY BUYER, AND NEITHER PARTY SHALLHAVE ANY FURTHER RIGHTS OR OBLIGATIONS HEREUNDER****EXCEPT FOR THOSE RIGHTSAND OBLIGATIONS WHICH BY THE EXPRESS TERMS HEREOF ARE INTENDED TO SURVIVETERMINATION.  ****SUCHAMOUNT IS AGREED UPON BY AND BETWEEN SELLER AND BUYER AS LIQUIDATED DAMAGES DUETO THE DIFFICULTY AND INCONVENIENCE OF ASCERTAINING AND MEASURING ACTUALDAMAGES, AND THE UNCERTAINTY THEREOF; SELLER AND BUYER AGREE THAT SUCH AMOUNTIS A REASONABLE ESTIMATE OF SELLER’S POTENTIAL DAMAGES; AND NO OTHER DAMAGES,RIGHTS OR REMEDIES SHALL IN ANY CASE BE COLLECTIBLE, ENFORCEABLE OR AVAILABLETO SELLER OTHER THAN SUCH LIQUIDATED DAMAGES, BUT SELLER SHALL ACCEPT SAIDPAYMENT OF THE ESCROW MONEY AS SELLER’S TOTAL DAMAGES AND RELIEF.**

#### ***8.3*****                              **REJECTION OR TERMINATION DAMAGES CLAIM

##### **IF (A)SELLER OR SELLER’S LENDERS SEEK BANKRUPTCY COURT APPROVAL TO REJECT THISCONTRACT, (B) SELLER OR SELLER’S LENDERS FAIL TO SUPPORT ENTRY OF THECONFIRMATION ORDER BY THE BANKRUPTCY COURT OR (C) IF THE PROVISIONS OF THESECOND PARAGRAPH OF SECTION 7.5 ABOVE BECOME APPLICABLE AND EITHER (I) SELLERFAILS TO TIMELY FILE A 363 SALE MOTION AS REQUIRED THEREBY OR (II) BUYER IS NOTTHE SUCCESSFUL BIDDER IN ANY AUCTION CONDUCTED PURSUANT TO THE 363 SALE MOTION,BUYER SHALL BE ENTITLED TO LIQUIDATED DAMAGES FROM SELLER OF FIVE HUNDRED FIFTYTHOUSAND DOLLARS ($550,000) WHICH REPRESENTS THE PARTIES’ GOOD FAITH ESTIMATEOF THE COMPENSATORY DAMAGES WHICH WILL BE SUFFERED BY BUYER AS A RESULT OF ANYACTION, INACTION, OR OCCURRENCE SPECIFIED IN CLAUSES (A) THROUGH (C)ABOVE. ****SUCH AMOUNT IS AGREED UPON BY ANDBETWEEN SELLER AND BUYER AS LIQUIDATED DAMAGES DUE TO THE DIFFICULTY ANDINCONVENIENCE OF ASCERTAINING AND MEASURING ACTUAL DAMAGES, AND THE UNCERTAINTYTHEREOF; SELLER AND BUYER AGREE THAT SUCH AMOUNT IS A REASONABLE ESTIMATE OFBUYER’S POTENTIAL ACTUAL DAMAGES; AND IN THE EVENT OF****ANYACTION OR INACTION SPECIFIED IN CLAUSES (A) THROUGH (C) ABOVE****, NO OTHER DAMAGES, RIGHTS ORREMEDIES SHALL IN ANY CASE BE COLLECTIBLE, ENFORCEABLE OR AVAILABLE TO BUYEROTHER THAN SUCH LIQUIDATED DAMAGES, EXCEPT THAT,  IN ADDITION TO THE PAYMENT OF SUCH LIQUIDATEDDAMAGES, THE ESCROW MONEY SHALL BE RETURNED TO BUYER FREE AND CLEAR OF ALLRIGHTS AND CLAIMS BY SELLER OR DEBTOR WITH RESPECT THERETO.**

#####  

##### /s/ Stan Springel                                                               /s/David L. Blankenship                        Seller                                                                                  Buyer

# **9.**                                      TAKING BY EMINENTDOMAIN

## Seller and Buyer agree that if all or any portion ofthe Real Property is taken or threatened to be taken by eminent domain prior tothe Closing, then Buyer shall have the right, by notice in writing to Seller,given within ten (10) days after Buyer receives notification in writing of suchtaking, to either (i) require Seller to perform its obligations under thisContract and to assign and deliver to Buyer all of the award for such taking,or (ii) to terminate all obligations of the parties under this Contract (exceptfor those which by the express terms of this 

##  

## 18

## 

##  

## Contract are intended to survive such termination) andto require the return of the Escrow Money; provided, however, if such takingdoes not involve a “material portion” of the Real Property (which shall meaneither (1) any part of the Real Property reasonably required for the operationof the Real Property in manner operated on the date of this Contract or (2) anyportion or portions of the Land in excess of five (5) acres in the aggregate),Buyer shall be permitted to proceed only pursuant to the foregoing clause (i).If Buyer fails to provide any notice to Seller within the ten (10) day period,Buyer shall not be deemed to have made an election for either clause (i) orclause (ii) above; however, Seller shall have the right in such event to demandby written notice to Buyer, that Buyer makes such election. If Buyer fails tomake an election by notice in writing to Seller within five (5) daysthereafter, Buyer shall be deemed to have elected to terminate this Contractpursuant to clause (ii) above.

# **10.**                               INSURANCE; DAMAGE OR DESTRUCTIONPRIOR TO CLOSING

#### ***10.1*****                       **SELLER’S INSURANCE

##### Seller shall maintain ineffect through the Closing Date worker’s compensation insurance as required bylaw and commercial general liability insurance with commercially reasonablelimits but in no event less than Five Million Dollars ($5,000,000.00). Sellershall also maintain all-risk property insurance on the Improvements with limitsat replacement value. Seller shall, within ten (10) days of the date hereof,provide Buyer with ACORD 27 (property) and ACORD 25 (liability) certificates ofinsurance, issued by a duly authorized agent, evidencing the insurance requiredhereunder. No such policy shall be subject to cancellation or modificationexcept upon at least thirty (30) days prior written notice to Buyer. Sellershall have the right to provide any of its required insurance under blanketpolicies, but only upon furnishing Buyer with a “per location” endorsement confirmingthat the insurance coverages required hereunder shall in no way be limited,diminished, or reduced.

#### ***10.2*****                       **DAMAGE OR DESTRUCTION

###### *(a)*                               Seller’s Notice of Damage; Closing Date

If, prior to theClosing, any of the Improvements or Personal Property are destroyed or damagedby fire or other casualty, Seller shall provide Buyer with written notice ofsuch event within ten (10) days of the damage, which notice shall include thereasonably estimated cost of repair or replacement and written confirmation ofthe amount of insurance proceeds Seller’s insurer has agreed to pay as a resultof such loss, as evidenced by written confirmation from such insurer(collectively, **“Seller’s Damage Notice”**). In theevent of any such damage or destruction, provided Buyer has not elected toterminate this Contract as permitted herein, the Closing shall occur on thelater of (i) the date the Closing would have been required to occur in theabsence of any such damage or (ii) thirty (30) days following Buyer’s receiptof Seller’s notice of the casualty as required above.

###### *(b)*                               Repair Cost $250,000 or Less

If such damage isrequired hereunder to be insured against by Seller and the repair orreplacement of the damaged Property would cost Two Hundred Fifty ThousandDollars ($250,000.00) or less, (i) Buyer shall proceed with the Closing, (ii)Seller shall assign the all risk casualty insurance proceeds to Buyer and (iii)Buyer shall be credited with the amount of (A) any insurance deductibles notpaid by Seller for repairs prior to Closing, (B) any insurance proceeds paid toSeller prior to Closing, and (C) in the event that Seller fails to maintain theall risk casualty insurance required pursuant to **Section 10.1**, all uninsured restoration expenses which wouldhave been covered by such insurance had the same been maintained bySeller.  If the damage is not required tobe insured against by Seller and Seller does not elect to credit Buyer atClosing with the uninsured restoration expenses (which election shall be setforth in Seller’s Damage Notice), Buyer may elect to terminate the Contract bywritten notice to Seller within ten (10) days following Buyer’s receipt ofSeller’s Damage Notice or proceed to Closing 

 

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without a creditfor such uninsured restoration expenses. If Buyer timely elects to terminate this Contract as aforesaid, then theEscrow Money shall be returned to Buyer and neither party shall have anyfurther liability hereunder (except for that which by the express terms of thisContract is intended to survive such termination).  In the event Buyer elects to proceed withClosing notwithstanding the existence of uninsured restoration expenses whichSeller is not required to, and has not elected to, credit to Buyer at theClosing, Buyer shall thereafter have no right to require Seller to pay  or reimburse any such expenses.

###### *(c)*                                Repair Cost Over $250,000

If the cost ofsuch repair or restoration exceeds Two Hundred Fifty Thousand Dollars($250,000.00), then Buyer shall have the option, which must be exercised by itwithin twenty (20) days after its receipt of Seller’s Damage Notice, to eitherterminate this Contract or proceed with the Closing.  If Buyer elects to terminate this Contract,then the Escrow Money shall be returned to Buyer and neither party shall haveany further liability hereunder (except for that which by the express terms ofthis Contract is intended to survive such termination). If Buyer elects toproceed with the Closing, then, as conditions to Closing, (i) Seller shall takesuch action as is necessary to assign all of the all risk casualty insuranceproceeds and Seller’s right to receive same to Buyer prior to Closing, and (ii)Buyer shall be credited with (A) any insurance deductibles not paid by Sellerfor repairs prior to Closing, (B) any insurance proceeds paid to Seller priorto Closing, and (C) in the event that Seller fails to maintain the all riskcasualty insurance required pursuant to **Section10.1**, all uninsured restoration expenses which would have been coveredby such insurance had the same been maintained by Seller.

#### ***10.3*****                       **BUYER’S FAILURE TO PROVIDE NOTICE

##### If Buyer fails to providethe notice to Seller within the ten (10) day period set forth in **Section 10.2(b)** above or the twenty (20)day period set forth in **Section 10.2(c)**above, as applicable, Buyer shall not be deemed to have made an election foreither terminating the Contract or proceeding with the Closing; however, Sellershall have the right in such event to demand by written notice to Buyer, that Buyermake such election. If Buyer fails to make an election by notice in writing toSeller within five (5) days thereafter, Buyer shall be deemed to have electedto terminate this Contract.

# **11.**                               AGENTS

## Each of Seller and Buyer represents and warrants tothe other that it has not dealt with any brokers, finders or agents withrespect to the transactions contemplated by this Agreement.  If any broker or finder claims any commissionor finder’s fee in connection herewith, the party upon whose acts such claim restsshall be responsible therefore. Each party hereby agrees to indemnify, defend,protect and hold harmless the other party against any and all claims of anyagent, broker, finder or other similar party to the extent such claims ariseout of the acts of the indemnifying party. The provisions of this **Section 11** shall survive the Closing.

# **12.**                               INDEMNIFICATION FOLLOWING CLOSING

#### ***12.1*****                       **BY SELLER

##### Seller agrees toindemnify and hold Buyer harmless from and against any and all liabilities,claims, demands, and expenses, of any kind or nature accruing prior to theClosing Date and which are in any way related to the ownership, maintenance, oroperation of the Property by Seller, and all expenses related thereto,including, without limitation, court costs and reasonable attorneys’ fees.  Notwithstanding the foregoing, in no eventshall Seller be obligated to indemnify Buyer for any liability, claim, demandor expense arising out of any breach of any of Buyer’s representations,warranties or other obligations hereunder.

#### * *

##### 20

##### 

#####  

#### ***12.2*****                       **BY BUYER

##### Buyer agrees to indemnifyand hold Seller harmless from and against any and all liabilities, claims,demands and expenses of any kind or nature accruing after the Closing Date andwhich are in any way related to the ownership, maintenance or operation of theProperty by Buyer, and all expenses related thereto, including withoutlimitation, court costs and reasonable attorneys’ fees. Notwithstanding theforegoing, in no event shall Buyer be obligated to indemnify Seller for anyliability, claim, demand or expense arising out of (i) any breach of any ofSeller’s representations, warranties or other obligations hereunder; or (ii)any obligation of Seller under the Leases.

#### ***12.3*****                       **CLAIMS PROCEDURES; SURVIVAL

##### In the event either partyhereto receives notice of a claim or demand against which it is entitled toindemnification pursuant to this **Section 12**,such party shall promptly give notice thereof to the other party. The partyobligated to indemnify shall immediately take such measures as may bereasonably required to properly and effectively defend such claim, and maydefend same with counsel of its own choosing approved by the other party (whichapproval shall not be unreasonably withheld or delayed). In the event the partyobligated to indemnify refuses to defend such claim or fails to properly andeffectively defend such claim, then the party entitled to indemnification maydefend such claim with counsel of its own choosing at the expense of the partyobligated to indemnify. In such event, the indemnified party may settle suchclaim without the consent of the indemnifying party.

#### ***12.4*****                       **SURVIVAL OF REPRESENTATIONS

##### All representations andwarranties made by the parties under this Contract shall survive the Closingfor a period of six (6) months following the Closing, except for Seller’srepresentations set forth in **Section 7.1(xiv)**which shall survive indefinitely.  Anyproceeding relating to the breach of any representations and warranties (otherthan the representations set forth in **Section7.1(xiv)**) shall be commenced, if at all, within six (6) monthsfollowing the Closing.

#### ***12.5*****                       **ESCROW

##### Three Hundred Thousandand No/100 Dollars ($300,000.00) (the “**Holdback Amount**”)of the Purchase Price shall be deposited into an account with Title Company(the “**Holdback Account**”) at the Closing tosecure Seller’s obligations hereunder that survive Closing (collectively, “**Seller’s Surviving Obligations**”) and shall be held by theTitle Company in accordance with this **Section12.5** (and any separate agreement required by the TitleCompany).  Buyer shall make all claimsfor monies from the Holdback Account in respect of a breach by Seller of Seller’sSurviving Obligations (**“Holdback Claims”**)in writing to both the Escrow Agent and to Seller on or before the date that issix (6) months after the Closing Date (the “**HoldbackExpiration Date**”).   Allmonies left in the Holdback Account after payment of any Holdback Claims timelymade by Buyer in accordance with the foregoing and determined to be due toBuyer in accordance with this **Section 12.5**(including any interest earned on the Holdback Amount) shall be disbursed toSeller and the Holdback Account shall be terminated.  If no Holdback Claims are timely made byBuyer, the Holdback Escrow Amount, together with any interest earned thereon,shall be disbursed to Seller on the Holdback Expiration Date.  All Holdback Claims shall itemize (i) allmatters Buyer reasonably believes constitute a breach of Seller’s SurvivingObligations, (ii) Buyer’s estimated cost of correcting or curing each suchbreach, and (iii) the amount of each such repair or cure cost (identified peritem) which Buyer proposes should be refunded to Buyer out of the HoldbackAccount. Within twenty (20) days following Seller’s receipt of the Claim,Seller shall provide Buyer and Title Company with written notice (the **“Claim Response”**) specifying, for each line item, (A)whether Seller approves or disapproves of the amount Buyer proposes should bededucted from the Holdback Amount for such line item, and (B) for eachdisapproved line item, Seller’s reason for such disapproval and the alternativeamount which Seller would be willing to accept as a deduction 

#####  

##### 21

##### 

#####  

##### from the Holdback Amountfor such line item, if any. Seller shall be deemed to have provided a HoldbackClaim Response approving each line item in the Holdback Claim (and Buyer’sproposed deduction from the Holdback Amount) to which Seller does not timelyspecify its disapproval in accordance with the foregoing requirements, and theTitle Company shall, within three (3) business days following receipt of theClaim Response, release to Buyer that portion of the Holdback Amount which isequal to the aggregate cost of repairing the line items which Seller hasapproved (including any alternative amounts specified by Seller). Each lineitem specified in the Holdback Claim to which Seller has expressed disapprovalin Seller’s Claim Response (whether by disapproving the line item entirely orby proposing an alternative amount for the correction of such item) is referredto herein as a “**Disputed Item**”.  The amount of the Holdback Amount allocableto any Disputed Item shall be held in the Escrow Account until jointinstructions to release the amount are received by Title Company from Sellerand Buyer or until the Disputed Item is resolved in arbitration in accordancewith this **Section 12.5**. Buyer and Seller shall negotiatewith each other in good faith to reach a mutually satisfactory solution withrespect to any and all Disputed Items, and, within thirty (30) days followingBuyer’s receipt of Seller’s Claim Response, shall issue a joint instruction toTitle Company confirming, with respect to each line item, what portion of theHoldback Amount should be (A) released to Buyer, or (B) retained by TitleCompany pending further Holdback Claims or resolution of Disputed Item(s). Theportion of the Holdback Amount retained by Title Company from time to time ishereinafter referred to as the **“Remaining HoldbackAmount.”** In the event that Seller and Buyer are not able to reach amutually acceptable resolution of any Disputed Item within the aforesaid thirty(30) day period (or, if both such parties shall agree, any shorter period),after using good faith efforts to do so, the remaining Disputed Items shallcontinue to be held in the Holdback Account and shall be submitted to bindingarbitration in accordance with the terms of the remainder of this **Section 12.5**.  Any fees and costs awarded to Buyer in anyarbitration pursuant to this **Section 12.5**,or incurred by Buyer in connection with enforcing any arbitration award againstSeller following entry of judgment thereon, are included in and shall berecoverable against the Holdback Amount.

###### *(a)*                               Agreement to Arbitrate

The parties agreethat all disputes and disagreements regarding the allocation of the HoldbackAmount with respect to all Disputed Items which are not resolved (as evidencedby a joint instruction delivered to, and in form and substance acceptable to,Title Company) specified in the foregoing paragraph (collectively, the **“Disputes”**), shall be resolved by binding arbitrationadministered by the American Arbitration Association (**“AAA”**)through its offices in Minneapolis, Minnesota, in accordance with itscommercial arbitration rules. Notwithstanding the foregoing, the parties intendto depart from the AAA commercial arbitration rules to the extent any provisionof this **Section 12.5**conflictswith such rules. Buyer and Seller agree that arbitration shall be the sole andexclusive method, means and procedure to resolve the Disputes. The partiesirrevocably waive any and all rights to the contrary, shall conduct themselvesin strict, full, complete and timely accordance with the provisions of theremainder of this **Section 12.5**,and agree that any attempt to circumvent the provisions hereof shall be nulland void and of no force or effect whatsoever, provided, however, if theHoldback Amount comes, at any time, under the jurisdiction of the BankruptcyCourt or other state or Federal jurisdiction which does not honor thisarbitration agreement, the other party (the party not subject to suchjurisdiction) shall be released from this agreement to arbitrate and may pursueany remedy available to it under law or equity.

###### *(b)*                               Arbitration Panel

The arbitrationshall take place before a panel (the **“Panel”**) ofthree (3) arbitrators (each, an **“Arbitrator”**).The Panel shall be selected in accordance with the AAA’s procedures therefor,provided, that the Panel shall be comprised of (i) a certified public 

 

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accountant, (ii)an attorney, and (iii) an engineer or general contractor. Each Arbitrator shallhave had at least ten (10) years experience with commercial real estatetransactions, and at least three (3) years of arbitration experience. If anArbitrator refuses to act or becomes incapable of acting before the Panel makesits award, and the parties fail to agree in writing on the appointment of areplacement Arbitrator, either party may serve on the other a notice demandingsuch agreement, and if such appointment is not made within twenty (20) daysfollowing delivery of such notice, then the remaining Arbitrators shall havepower, following the written request of either party, to appoint suchreplacement Arbitrator who shall have the same authority in the arbitration asif such Arbitrator were a part of the original Panel. The Panel shall be atliberty to proceed *ex parte*incase of the nonattendance of any party or its witnesses after ten (10) daysprior written notice from the Panel specifying the time and place to appear.

###### *(c)*                                Rules of Procedure

The Panel shallfix and establish any and all rules as it shall consider appropriate in itssole and absolute discretion to govern the arbitration, including any and allrules of evidence, discovery and procedure. The Panel shall not be bound bystrict rules of evidence and may hear such evidence as may seem right andproper to it. The Panel shall schedule a pre-hearing conference to resolveprocedural matters, arrange for the exchange of information, obtainstipulations, and narrow the issues. The parties shall submit proposeddiscovery schedules to the Panel at the pre-hearing conference. The scope andduration of discovery will be within the sole discretion of the Panel, and anyapplicable statute limiting the scope of discovery in arbitration proceedingsis hereby waived. The Panel’s discretion shall be exercised in favor ofdiscovery reasonable under the circumstances. The arbitration shall beconducted in Linn County, Iowa. Any party may be represented by counsel orother authorized representative. In rendering its decision, the Panel shalldetermine the rights and obligations of the parties according to the substantiveand procedural laws of Iowa and the terms and provisions of this Contract. ThePanel’s decision shall be based on the evidence introduced at the hearing,including all logical and reasonable inferences therefrom. All evidencereceived by the Panel shall be recorded by a certified court reporter and thewritten record thereof shall be made available to the Panel and to the parties.

###### *(d)*                               Conclusiveness of Decision

The award of thePanel shall be final and binding. Either party shall have the *ex parte* right to cause the award to be entered as a finaljudgment in the District Court of Linn County, Iowa, and execution maythereupon be issued on such judgment. Such judgment may not be appealed unless(i) the award was fraudulently obtained; (ii) the Panel determined the award onthe basis of a material error of applicable law, and the award would have beensubstantially more beneficial to the appealing party in the absence of sucherror; or (iii) the Panel was arbitrary or capricious in determining the award,and the award would have been substantially more beneficial to the appealingparty had the Panel not been arbitrary or capricious. Any such permitted appealshall be filed, if at all, no later than thirty (30) days following the datethe Panel delivers the award to the parties. If any controversy arisesfollowing issuance of the award as to whether the award has been complied with,such controversy shall be determined by the same Panel, and such Panel shallretain jurisdiction over the Disputes until the award has been fullyimplemented. No suit at law or in equity based on any Dispute shall beinstituted by either party hereto other than to enforce the award followingentry of judgment thereon.

###### * *

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###### *(e)*                                Scope of Arbitration; Requirements ofAward

The scope of thearbitration shall be limited to allocating the Remaining Holdback Amountbetween the parties (which allocation shall be made in accordance with theapplicable terms of this Contract), and awarding reasonable attorneys’ fees andcosts (including the cost of the arbitration) to the prevailing party in thearbitration. The Panel shall have no authority to reform the Contract, todetermine the parties’ respective rights and obligations as to any matter arisingunder the Contract other than the Disputes, or to award punitive, consequentialor other damages; the Panel shall, however, have power to order that theparties or either of them shall execute, acknowledge and deliver such releasesor other documents as may, in the sole discretion of the Panel, be necessary toimplement the Award, and the party so directed shall promptly perform all suchacts. The award shall be in writing, and shall specify (i) the legal andfactual bases for the award; (ii) which portion, if any, of the RemainingHoldback Amount shall be payable to Buyer in connection with each Disputed Itemset forth in Seller’s Claim Response, (iii) the aggregate portions of theRemaining Holdback Amount to be released to Buyer and/or Seller (if the HoldbackExpiration Date has occurred), and (iv) the amount of fees and costs (and theparties to whom such amounts are owed) payable by each of the parties. If thePanel determines that there is no clearly prevailing party, the Panel shall, inits sole and absolute discretion, allocate responsibility for such fees andcosts between the parties. The award shall be delivered by the Panel to bothparties and to Title Company.

###### *(f)*                                   Implementation

Within three (3)business days following receipt thereof, Title Company shall distribute theRemaining Holdback Amount as directed by the terms of the award. If the awardprovides that any portion of the Remaining Holdback Amount is to be released toa party responsible for the payment of any fees and costs, such fees and costsshall be debited by Title Company from such party’s share of the RemainingHoldback Amount prior to release of such party’s share of the RemainingHoldback Amount, and Title Company shall directly pay such fees and costs inthe manner directed by the award. If the amount of such fees and costs to bepaid by such party exceeds such party’s share of the Remaining Holdback Amount,then the award shall specify which of such fees and costs shall be paid byTitle Company out of such party’s share of the Remaining Holdback Amount, andwhich shall be paid by such party directly (provided, however, if such party isresponsible for any fees and costs of the opposing party, the responsible party’sshare, if any, of the Remaining Holdback Amount shall be allocated first to thefees and costs of the opposing party). The parties acknowledge and agree thatTitle Company shall be authorized to rely on and comply with the award withoutmaking any independent investigation into the matters determined therein, andeach of them hereby waives all claims against Title Company arising out of suchcompliance.

###### *(g)*                               Holdback Amount Not a Limitation

Notwithstandinganything to the contrary contained in this **Section 12.5**,the Holdback Amount shall not (i) limit Seller’s liability for Seller’sSurviving Obligations, (ii) shorten any statute of limitations applicable toBuyer’s time to make claims relating to Seller’s Surviving Obligations or (iii) require Buyer to subject suchclaims to arbitration.  The provisions ofthis **Section 12.5** apply only to claims fordisbursement of the Holdback Amount. Subject to **Section 15**below, Buyer, in its sole discretion, may pursue any claims (other than claimsfor disbursements of the Holdback Amount) against Seller for Seller’s breach ofSeller’s Surviving Obligations in any court having jurisdiction, including anyclaims for award(s) not fully paid from the Holdback Amount.

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#### ***12.6*****                       **SURVIVAL

##### The provisions of this **Section 12** shall survive the termination ofthis Contract and the Closing.

# **13.**                               NOTICES

## Any notice required or permitted hereunder shall be inwriting, addressed as provided below and with copies as provided below. Noticeshall be deemed effective: (i) upon receipt by the party to be notified; or(ii) five (5) days following deposit in the United States mail, postageprepaid, registered or certified mail, return receipt requested; or (iii) thenext Business Day following deposit with Federal Express or other overnight aircourier with instructions to deliver on the next Business Day, or (iv) as tofacsimile transmission on the day received provided that receipt is on aBusiness Day between the hours of 9:00 a.m. to 5:00 p.m. at the destination,otherwise delivery shall be deemed made on the next Business Day.  Either party may change its address fornotice upon at least three (3) days prior written notice to the other party.

##### If to Seller:

                McLeodUSA Incorporated                                  15 E. Fifth Street                Tulsa, Oklahoma  74103                Attn: Roy McGraw                Fax Number:  (918) 419-3304

 

With a copy to:

McLeodUSA Incorporated                

6400 C Street, SW

Cedar Rapids, Iowa 52404

Attn: General Counsel

Fax Number: (319)790-7901

 

With a copy (whichshall not constitute notice hereunder) to:

                Skadden, Arps, Slate, Meagher& Flom LLP                333 West Wacker Drive                Chicago, Illinois 60606                Attn: Matthew A. Shebuski                               Fax Number:  (312) 407-8593

 

If to Buyer:

                Life Investors Insurance Companyof America                              c/o AEGON USA RealtyAdvisors, Inc.                           4333 Edgewood Road NE                   Cedar Rapids, IA52499-5556                             Attn:       Dennis Ford                                          MaureenDeWald                                Fax Number: (319) 369-2188

 

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With a copy (which shall not constitute notice hereunder) to

                                Freeborn & Peters

                                311 South Wacker Drive, Suite 3000

                                Chicago, Illinois  60606

                                Attn: Steven M. Hartmann

                                Fax Number: (312) 360-6573

 

# **14.**                               ASSIGNS

## This Contract shall inure to the benefit of, and shallbe binding upon, the parties hereto and their respective successors andassigns, including, as to Seller, Reorganized Seller. This Contract may betransferred or assigned by Buyer to any other entity affiliated with Buyer ator prior to Closing upon written notice to Seller, provided that such transferor assignment shall not relieve Buyer of any of its obligations under this Contractand the Buyer and such transferee/assignee shall thereafter be jointly liablewith respect to such obligations.  In theevent of any permitted assignment hereof by either party hereto, any referenceherein to such party shall refer to such party’s assignee.

# **15.**                               GOVERNING LAW; JURISDICTION

## This Contract shall be governed by and construed inaccordance with the laws of the State of Iowa. The parties agree that, from and after the filing of the Plan, theBankruptcy Court shall retain jurisdiction over the enforcement of thisContract.

# **16.**                               COUNTERPARTS

## It is specifically agreed that this Contract may beexecuted in one or more counterparts, all of which shall be taken together toconstitute but one and the same instrument and shall be binding upon each partywho may sign a counterpart of this instrument.

# **17.**                               WAIVER

The waiver by any partyhereto of any right granted to it hereunder shall not be deemed to be a waiverof any other right granted herein, nor shall same be deemed to be a waiver ofany subsequent right obtained by reason of the continuation of any matterpreviously waived. Any waiver must be in writing to be enforceable.

# **18.**                               CONSTRUCTION

## References in this Contract to sections, paragraphs orexhibits pertain to sections, paragraphs or exhibits of this Contract unlessotherwise specified. The term “including” shall not be considered in a limitingnature, but shall be construed to mean “including, without limitation.” Theterm “person” includes legal entities as well as natural persons. Any section orparagraph headings used in this Contract are solely for convenience ofreference and shall not affect the meaning, construction or effect of theContract. Words denoting the singular shall include the plural and vice versa.Words of the masculine gender shall be deemed to include correlative words ofthe feminine and neuter genders.

# **19.**                               ATTORNEYS’ FEES

## In the event of any litigation, arbitration orproceeding between the parties with respect to any rights or obligationshereunder, the prevailing party shall be entitled to all costs and expenses,including, but not limited to, court costs and reasonable attorneys’ feesincurred by the prevailing party, which costs, expenses and reasonableattorneys’ fees shall be included in, and as a part of, any judgment or awardrendered in such litigation, arbitration or proceeding. If any such work isperformed by in-house counsel for Buyer or Seller, the value of such work shallbe determined at a reasonable hourly rate for comparable outside counsel.

# **20.**                               CONFIDENTIALITY

## Each party agrees that it has no present intention ofmaking and shall not make (except to the extent required by law), withoutreceiving the prior written approval of the other party, any publicannouncement about the purchase and sale transaction contemplated hereby or ofany of the terms hereof, including, without limitation, 

##  

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## 

##  

## the results of any inspection, test, survey, or studyconducted. Prior to Closing, Buyer shall not deliver any of the documentstheretofore delivered to Buyer by Seller pursuant to this Agreement, orotherwise knowingly transmit any of the information contained in any suchdocuments, to any third party except Buyer’s legal advisors and ContractInspectors.

# **21.**                               ENTIRE AGREEMENT

## This Contract, including the Exhibits hereto,constitutes the entire agreement between the parties pertaining to the subjectmatter hereof and supersedes all prior agreements and understandings of theparties in connection therewith. No amendment to or modification of thisContract shall be binding or enforceable unless it is in writing and signed bythe parties.

# **22.**                               NEGOTIATED TERMS

## The terms of this Contract have been negotiated atarms’ length by parties sophisticated in real estate transactions who have hadthe opportunity to be represented by counsel. Accordingly, any rule of law thatwould require the Contract to be construed against the party drafting same isagreed to be inapplicable to this transaction and is waived.

# **23.**                               TIME IS OF THEESSENCE

## Time is of the essence of this Contract and each andevery covenant hereof.

# **24.**                               “AS IS” SALE

## EXCEPT FOR THE EXPRESS REPRESENTATIONS AND WARRANTIESOF SELLER SET FORTH IN THIS CONTRACT, BUYER ACKNOWLEDGES AND AGREES THAT ITWILL BE PURCHASING THE PROPERTY BASED SOLELY UPON ITS INSPECTIONS ANDINVESTIGATIONS OF THE PROPERTY, AND THAT BUYER WILL BE PURCHASING THE PROPERTY “ASIS” AND “WITH ALL FAULTS”, BASED UPON THE CONDITION OF THE PROPERTY AS OF THEDATE OF THIS AGREEMENT, EXCEPT (A) ORDINARY WEAR AND TEAR AND ALTERATIONS(APPROVED BY BUYER TO THE EXTENT REQUIRED BY THE TERMS OF THIS CONTRACT) TOPREPARE THE PREMISES FOR OCCUPANCY BY SELLER AND (B) AS PROVIDED IN **SECTION 9**AND **SECTION 10** ABOVE. SELLER HEREBY DISCLAIMS ANY AND ALLWARRANTIES OF MERCHANTABILITY AND WARRANTIES OF FITNESS FOR A PARTICULARPURPOSE WITH RESPECT TO THE PERSONAL PROPERTY. WITHOUT LIMITING THE FOREGOING, BUYER ACKNOWLEDGES THAT, EXCEPT AS MAYOTHERWISE BE SPECIFICALLY SET FORTH ELSEWHERE IN THIS CONTRACT, NEITHER SELLERNOR ITS CONSULTANTS OR AGENTS HAVE MADE ANY REPRESENTATIONS OR WARRANTIES OFANY KIND UPON WHICH BUYER IS RELYING AS TO ANY MATTERS CONCERNING THE PROPERTY,INCLUDING, BUT NOT LIMITED TO: (I) THE CONDITION OF THE REAL PROPERTY; (II)ECONOMIC PROJECTIONS OR MARKET STUDIES CONCERNING THE PROPERTY; (III) ANYDEVELOPMENT RIGHTS, TAXES, BONDS, COVENANTS, CONDITIONS AND RESTRICTIONSAFFECTING THE PROPERTY; (IV) THE NATURE AND EXTENT OF ANY RIGHT OF WAY, LEASE,ENCUMBRANCE, LICENSE, RESERVATION OR OTHER TITLE MATTER; (V) THE SUITABILITY OFTHE PROPERTY FOR ANY AND ALL ACTIVITIES AND USES WHICH BUYER MAY ELECT TOCONDUCT THEREON; OR (VI) THE COMPLIANCE OF THE PROPERTY WITH ANY ZONING,ENVIRONMENTAL, BUILDING OR OTHER LAWS, RULES OR REGULATIONS AFFECTING THEPROPERTY.   THE PROVISIONS OF THIS **SECTION 24** SHALL SURVIVE THE CLOSING DATE.

##  

##  

## [Signature Page Follows]

##  

## 27

## 

##  

**INWITNESS WHEREOF,**thisContract has been entered into by the undersigned Buyer and Seller as of thedate first set forth above.
| **SELLER:**

**McLeodUSA Incorporated**

a Delaware corporation

 

 

By: /s./ Stan Springel                                                     

Name: Stan Springel                                                      

Its: Chief Restructuring Officer                                    

 

 

** ** | **BUYER:**

**Life Investors Insurance Company of America,**an Iowa  corporation

 

 

By: /s/ David L. Blankenship                                       

Name: David L. Blankenship                                        

Its: Vice President                                                          

 

 

By: /s/ Maureen DeWald                                              

Name: Maureen DeWald                                              

Its: Assistant Secretary                                                

** ** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

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**SCHEDULE OF EXHIBITS**

**A**                             LegalDescription of the Land

**B**                             PersonalProperty

**C**                             ClosingDocuments

**D**                             PropertyInformation

**E**                              Formof Deed

**F                             **Bill of Sale and General Assignment

**G**                             PropertyLease Form

**H                            **Martha’s Way Lease Form

**I                              **Staging PlanTerm Sheet

**J                             **RedevelopmentAgreement Assignment

**K                            **SteeringCommittee Letter

 

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