Document:

Exhibit
10.1

REAL ESTATE PURCHASE CONTRACT

AND ESCROW INSTRUCTIONS

 

BETWEEN

 

McLeodusa
incorporated

A delaware corporation

(“SELLER”)

 

AND

 

LIFE
INVESTORS INSURANCE COMPANY OF AMERICA,

AN IOWA CORPORATION

(“BUYER”)

 

 

REAL ESTATE PURCHASE CONTRACT AND
ESCROW INSTRUCTIONS

 

October 28, 2005

 

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

 

McLeodUSA Incorporated, a
Delaware corporation, as Seller

 

Life Investors Insurance Company
of 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

  	
   

  

 

 

REAL ESTATE PURCHASE CONTRACT

AND 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 Insurance
Company of America, an Iowa
corporation (“Buyer”).

DEFINITIONS

Defined terms used in this Contract shall have the
following 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 United
States 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 form
attached hereto as Exhibit F, dated as of the Closing Date and conveying to
Buyer 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 on
which banking institutions in Cedar Rapids, Iowa are authorized or obligated by
law 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 “Closing
Date” 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 as
Exhibit E, fully executed and acknowledged by Seller, dated as of the Closing
Date, conveying the Real Property to Buyer.

“Deposit” means an earnest money deposit in the form of cash and in the amount of
Five 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, the
period expiring at 5:00 PM Central Standard Time on November 28, 2005.

“Elected Operating
Contracts” shall have the meaning set forth
in 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 any
Governmental Authority in effect as of the Closing Date to the extent that they
pertain 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 and
Reauthorization 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 amended
by the Clean Water Act, 33 U.S.C. §1251 et seq., the
Clean Air Act, 42 U.S.C. §7401 et seq., the
Toxic Substances Control Act, 15 U.S.C. §2601 et seq.,
all similar state statutes and local ordinances, and all regulations
promulgated under any of those statutes.

“Environmental Reports” means all tests, studies, reports or surveys with respect to the
environmental condition of the Property which were made by or on behalf of
Seller 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 for
the purpose of accumulating and distributing funds and documents of the parties
in 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 judgment
liens.

“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 or
element 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 the
operation, maintenance or repair of the Property, including, but not limited
to, maintenance, service and utility contracts; and guarantees and warranties
of manufacturers, contractors, subcontractors, servicers, suppliers and
installers.

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

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

 

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prior to Closing by payment or
order of the Bankruptcy Court (whether contained in the Confirmation Order or
otherwise).

“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 the
Assigned 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 Agreement
Assignment” shall have the meaning set forth
in Section 5.5.

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

“Reorganized Seller” means any successor to Seller by merger, consolidation, or otherwise, on
or after the effective date of the Plan, after giving effect to the
transactions 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 that
are 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 Surviving
Obligations” shall have the meaning set forth
in Section 12.5.

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

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

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

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

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

“Title Company” means Republic Title, of Texas, Inc., at its office located at 1909
Woodall 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 to
the Purchase Price, issued by Title Company, insuring that Buyer is the owner
of fee simple title to the Real Property and including such customary
endorsements as may be required by Buyer (to the extent the same are available
in the State of Iowa), subject only to the Permitted Encumbrances.

“Title Report” means a new preliminary title report or title commitment from Title
Company for the Real Property, together with copies of all documents referred
to 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 and
Seller hereby agrees to sell the Property. The Property includes marketable
title in fee simple to that parcel of land comprising approximately 168.92
acres commonly referred to as McLeodUSA Technology Park situated in the City of
Cedar 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 and
interest in and to the following:

(a)                               Improvements

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

(b)                               Personal Property

All of the
Personal Property; and

(c)                                Assigned Property

All Elected
Operating Contracts; all development, construction and engineering plans,
specifications, drawings and survey materials for all existing Improvements and
all other contemplated improvements on the Real Property; to the extent
assignable, all licenses, permits and certificates of occupancy affecting the
ownership, maintenance, or operation of the Real Property; and all other
intangible rights relating to the ownership, maintenance or operation of the
Real Property (but excluding any intellectual property of Seller or its
affiliates, 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 shall
be conveyed by Seller to Buyer, free and clear of all Encumbrances (except for
the Permitted Encumbrances) and pursuant to the Confirmation Order or the Sale
Order, as applicable.

2.2                                LEASES TO SELLER

Concurrently with the
Closing, Buyer and Seller shall enter into a lease agreement in substantially
the form attached hereto as Exhibit G (the “Property
Lease”) with respect to (i) the areas of the Office Building
commonly known as (A) the Central Office, (B) the Data Center, (C) the Network
Control 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 form
attached 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 in
Hiawatha, Iowa (the “Martha’s Way Building”).  The premises to be leased by Seller from
Buyer pursuant to the Leases are hereinafter referred to as the “Premises”.  Exhibit G and Exhibit H set forth the terms
and conditions of the respective Leases, including, without limitation, the
term, rent, extension options and, in the case of the Martha’s Way Lease, the 

 

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tenant improvement
allowance, and such terms and conditions may not be modified without the
written 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 Million
Three Hundred Forty-Four Thousand Dollars ($27,344,000.00), which amount shall
be allocated among the Real Property and the Personal Property in a manner to
be reasonably determined by Buyer and Seller. 
Buyer and Seller shall provide the Title Company with the results of
such determination prior to Closing. After applying the Escrow Money, and after
making all adjustments and prorations and paying any closing costs provided for
in this Contract (as reflected on the closing statement to be executed and
delivered by Seller and Buyer at the Closing), the balance of the Purchase
Price shall be payable in cash at Closing.

4.                                      ESCROW

Unless this Contract is terminated by Buyer in
accordance with Section 5.7,
within two (2) Business Days following the earlier of the (i) the expiration of
the Due Diligence Period and (ii) the entry of the Confirmation Order by the
Bankruptcy Court, Buyer shall deliver the Deposit to Title Company.  The Deposit shall be placed by Title Company
in an interest bearing escrow account, and except as otherwise provided in this
Contract, all interest earned on the Deposit shall remain the property of
Buyer. The cost of the investment of the Deposit shall be paid from the
interest earned thereon.  If the Closing
does not occur, the Escrow Money shall be disbursed in accordance with the
terms of this Agreement.  At Closing, the
Title Company shall pay the Escrow Money to Seller and credit Buyer toward the
Purchase Price in the amount of the Deposit. 
Seller acknowledges and agrees that, so long as the Escrow Money is
deposited with the Title Company and until such time as Seller shall have the
right to such Escrow Money pursuant to this Contract, Seller shall have no
legal or equitable interest in the Escrow Money, as such term is defined in
Section 541(d) of the Bankruptcy Code, including, without limitation, any
residual or other interest in the Escrow Money. 
Seller and Buyer shall execute any separate escrow instructions as shall
be required by Title Company in connection with the holding and disbursement of
the Escrow Money.

5.                                      DUE DILIGENCE PERIOD

5.1                               DELIVERY OF DOCUMENTS

Seller has, prior to the
date of this Agreement and at its sole cost and expense, delivered or cause to
be delivered to Buyer all of the Property Information. Buyer shall treat the
Property Information and any documentation obtained by Buyer in connection with
its 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 with
the transaction contemplated under this Contract, except as required by law or
as needed in connection with the prosecution or defense of a dispute between
Buyer and Seller with respect to this Contract or the transactions contemplated
hereby. Notwithstanding the foregoing, Buyer may, to the extent reasonably and
actually necessary to Buyer’s investigation of the Property and proper
performance of Buyer’s obligations under this Contract, disclose the Property
Information and such other Property-related documentation to Buyer’s
consultants, legal counsel, experts or engineers (provided that such
consultants, legal counsel, experts and engineers use the Property Information
and such other Property-related documentation only in connection with services
rendered to Buyer in connection with the transaction contemplated under this
Contract and maintain the confidentiality of the Property Information and such
other 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 the
Closing, except as may otherwise be agreed by the parties.   In the event that the Closing is not
consummated, Buyer shall promptly return to Seller the Property Information and
any other documents relating to the Property as have been provided to Buyer by
Seller.  Buyer hereby acknowledges that,
except as expressly provided in Section 7.1 of
this Contract, neither Seller, nor any agents, representatives, employees or
attorneys of Seller have made any representations or warranties, direct or
implied, verbal or written, with respect to the accuracy, completeness or
reliability of 

 

5

 

the Property Information.
During the Due Diligence Period, Buyer shall be allowed the use of reasonably
acceptable, secure office space in the Office Building from which Buyer may
conduct its due diligence efforts with respect to the Property in accordance
with this Agreement.

5.2                               TITLE AND SURVEY OBJECTIONS

Buyer shall order the
Title Report within two (2) Business Days following receipt of the updated
abstract of title to the Property from Seller.  
Buyer shall order the Survey not later than two (2) Business Days
following the date of this Contract. Buyer shall deliver or cause to be
delivered copies of the Title Report and the Survey to Seller promptly
following Buyer’s receipt thereof.   No
later than ten (10) Business Days following the date hereof (the “Title Review Period”), Buyer shall notify Seller in writing
(the “Title Objection Notice”) of any
objections Buyer may have with respect to the Encumbrances disclosed by the
Survey or the Title Report. All Encumbrances disclosed in the Title Report
and/or Survey to which Buyer does not timely object in writing shall be deemed
to be Permitted Encumbrances; however, Buyer shall be deemed to have timely
objected to all Financing Encumbrances, and Seller covenants and agrees that
all Financing Encumbrances shall be removed at or prior to Closing, whether by
payment, pursuant to the Confirmation Order or otherwise. All Encumbrances which are not Financing Encumbrances
and to which Buyer timely objects in writing are referred to herein as “Additional Encumbrances”.   Within five (5) Business Days following
receipt 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 removed
from the Title Report on or before Closing (or, in the alternative, and subject
to 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 be
occasioned by such Additional Encumbrance) or (ii) not so cause such Additional
Encumbrance to be removed from the Title Report on or before Closing (or
insured over). Seller’s failure to timely give Seller’s Election with respect
to any particular Additional Encumbrance shall be conclusively presumed to be
Seller’s election not to cause such Additional Encumbrance to be removed (or
insured 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 the
purchase of the Property on or before the Closing Date, subject to such
Additional Encumbrances as Seller has elected not to remove, without any cause
of action or claim against Seller (including any abatement or reduction in the
Purchase Price) arising out of such Additional Encumbrances; or (b) terminate
this Contract by written notice to Seller, whereupon the Escrow Money shall be
returned to Buyer by Title Company and neither party shall have any further
rights or obligations under this Contract except for those rights which by the
terms of this Contract expressly survive termination. Buyer’s election to
terminate pursuant to the foregoing clause (b) may be made any time prior to
the date that is ten (10) calendar days following Buyer’s receipt of Seller’s
Response (the “Title Review Deadline”). If Buyer
fails to timely notify Seller of its election to terminate this Contract in
accordance with the foregoing clause (b) on or before the Title Review
Deadline, then Buyer shall be deemed to have elected to proceed with the
Closing as set forth in the foregoing clause (a).  If Seller elects to cause the removal of (or
insurance over) any Additional Encumbrance, then such removal (or insurance)
shall be accomplished on or prior to Closing, and upon a failure of the
foregoing, Buyer may either (i) remove or insure over the Additional
Encumbrances at Seller’s expense, or (ii) elect to terminate this Contract by
written notice to Seller on or before the scheduled date of Closing, whereupon
the Escrow Money shall be returned to Buyer by Title Company and neither party
shall have any further rights or obligations hereunder except those which are
expressly provided in this Contract to survive termination. If Buyer does not
so elect to terminate this Contract, Buyer shall consummate the purchase of the
Property and, at the Closing, Buyer shall receive a credit to the Purchase
Price in the amount of all costs incurred by Buyer to remove the Additional
Encumbrances.

 

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5.3                               PHYSICAL INSPECTION

(a)                               Inspections

During the Due
Diligence Period, Buyer, its engineers and other representatives, shall be
permitted to inspect the physical condition of the Property, including all
structural, mechanical and other components and systems thereof. All fees and
expenses incurred by Buyer in the making of such inspections shall be the sole
responsibility of Buyer. Seller shall fully cooperate with Buyer in connection
with such inspections and shall provide access to all relevant documents and
records relating to the Property in Seller’s possession or control for on-site
inspection and copying. Buyer shall have the right to interview any persons
involved in the management or operation of the Property, provided that Seller
shall have the right to have a designated representative available at any such
interview. All inspections shall take place during normal business hours, and
Buyer shall notify Seller not less than twenty-four (24) hours in advance of
making any inspection and shall not unreasonably disrupt the conduct of Seller’s
business at the Property in connection with any inspections.   Buyer shall provide to Seller copies of any
reports generated by or at the direction of Buyer and relating to the physical
condition of the Property.

(b)                               Environmental Inspection

Prior to
expiration of the Due Diligence Period, Buyer shall have the right to conduct a
Phase I Environmental Report on the Real Property. The scope of any
environmental inspection shall not include any intrusive testing or soil
sampling without the prior written consent of Seller.  Buyer shall deliver a copy of any Phase I
Environmental Report to Seller and shall maintain the confidentiality of any
such report in accordance with Section 5.1 above
and Section 20 below.

(c)                                Indemnification and Insurance

Buyer shall
indemnify, 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 any
person caused by (a) the occupancy and use of the office spaces pursuant to the
last sentence of Section 5.1 by Buyer, its employees and agents, including
representatives with whom Buyer contracts for the performance of any such
inspection at the Property (each, a “Contract Inspector”),
and (b) the undertaking of the inspections described in this Section 5.3 by Buyer, its employees and
agents, including any Contract Inspector and (ii) liens filed against the Real
Property because of Buyer’s nonpayment of any Contract Inspector retained by
Buyer to perform inspections hereunder or otherwise resulting from such
inspections. Upon the request of Seller, Buyer shall cause any Contract
Inspector to furnish to Seller a certificate of insurance evidencing
comprehensive general liability insurance insuring such Contract Inspector and
listing Seller and Buyer as additional insureds thereunder.  The indemnification obligations set forth in
this clause (c) shall survive the Closing or the termination of this Contract.

5.4                               ADDITIONAL PROPERTY DOCUMENTATION

During the Due Diligence
Period, upon reasonable notice and during normal business hours, Buyer shall
have the right to inspect, and Seller shall make available to Buyer, all
property tax, insurance, maintenance, repair, utility, and other expense or
cost records relating to the Property and
all agreements and documents relating to the construction, maintenance and
operation of the Property and in the possession or control of, or readily
available to, Seller and/or its property manager and/or any of their respective
affiliates.  No original records,
agreements or documents shall be removed from the Office Building without the
prior consent of Seller, but Buyer may

 

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remove copies of any such
records, agreements or documents from the Office Building, subject to
compliance with the confidentiality provisions set forth in Section 5.1 above.

5.5                               CITY FINANCIAL INCENTIVES; ASSIGNMENT OF
REDEVELOPMENT AGREEMENT

Upon request of Buyer,
Seller will assist Buyer in its negotiations with the City of Cedar Rapids  (the “City”) with
respect to financial incentives by furnishing information relating to the
Property (to the extent in Seller’s possession) which may be useful in
obtaining such financial incentives, provided that the confidentiality of any
such information is maintained by the City. 
In addition, Seller and Buyer shall jointly negotiate with the City
during the Due Diligence Period to obtain the commitment of the City to execute
an Assignment of Rights Pursuant to Amended and Restated Agreement for Private
Redevelopment (Phase II) AND Termination substantially in the form of Exhibit J
attached hereto (the “Redevelopment Agreement
Assignment”).  In the event
that the City shall agree to execute the Redevelopment Agreement Assignment in
the form of Exhibit J (any modifications thereto requiring the approval of each
of Seller and Buyer) and the Closing shall be consummated, Seller and Buyer
shall each execute and deliver the Redevelopment Agreement Assignment at the
Closing.

5.6                               ELECTED OPERATING CONTRACTS

Not later than the
expiration of the Due Diligence Period, Buyer shall provide a written notice
(the “Elected Operating Contract List”) to
Seller listing the Operating Contracts which Buyer designates to be assumed by
Seller and assigned to Buyer at the Closing (the “Elected
Operating 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 by
giving written notice thereof to Seller at any time prior to the expiration of the
Due Diligence Period, in which event neither party shall have any further
rights or obligations hereunder, except for such rights and obligations which
expressly survive the Closing or the termination of this Contract.  If Buyer fails to notify Seller in writing of
such termination prior to the expiration of the Due Diligence Period, Buyer’s
right 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 set
forth in this Contract have been met, on a day and at a time agreed by the
parties, at the offices of Title Company or at such other place as the parties
shall agree (provided that, to the extent practicable, the Closing may be
conducted via mail and without personal attendance by the parties).  In the event that the Closing Date fails to
occur on or before December 31, 2005, unless such failure results from a default
by either of Seller or Buyer pursuant to this Contract, this Contract shall
automatically terminate effective at 11:59 PM Central Standard Time on December
31, 2005, the Escrow Money shall be refunded to Buyer and neither party shall
have any further rights or obligations hereunder, except for such rights and
obligations which expressly survive the termination of this Contract; provided,
however, that Buyer shall have the right to extend the Closing Date as provided
in Section 7.5.  The actual date of Closing is hereinafter
referred 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 to
Buyer, all documents and instruments listed on Exhibit C, each of which shall be in form and substance
reasonably acceptable to each of Seller and Buyer (provided that Seller and
Buyer agree and acknowledge that the form of any document or instrument which
is attached to this Contract as an exhibit is reasonably acceptable to each
such party).

 

8

 

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 Seller
through Escrow: (i) after application of the Escrow Money and a credit to Buyer
for the amount of the Security Deposits and current Rent (each as defined in
the Leases), and subject to the adjustments and prorations set forth herein and
to be reflected on the closing statement, the balance of the Purchase Price by
wire transfer (which transfer shall be made no later than 11:00 a.m. Central
Standard Time on the day of Closing); and (ii) executed counterparts of a
closing statement, the Bill of Sale, the Leases, the Redevelopment Agreement
Assignment (subject to the terms and provisions of Section 5.5 of the
Contract), real estate transfer declarations (if applicable) and such other
documents as may be reasonably required by Title Company in order to issue the
Title Policy and to otherwise consummate the Closing.

6.4                               PRORATIONS

All real estate taxes,
assessments, utilities expenses, trash pickup and other services (if Buyer
continues such services) and amounts payable pursuant to the Elected Operating
Agreements, and all other periodic expenses of the Property shall be prorated as
of the Closing Date.  All prorations
shall be made such that Buyer is credited or debited with all items for the day
on which the Closing occurs. If, following Closing, either party discovers that
any item prorated, charged, or credited pursuant to the provisions of this Section 6.4 was erroneous or was based upon
an inaccurate estimate, then such party shall notify the other party of such
error and an appropriate adjustment shall be made between the parties so that
any such item will have been correctly and accurately prorated, charged, or
credited between the parties. Any such amount shall be due and payable ten (10)
days following demand for payment thereof accompanied by such documents as may
reasonably be required to establish the accuracy of such adjustment. In the
event 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 estate
taxes and the parties agree to reprorate such real estate taxes when the
amounts thereof become known (and the party owing the other party any amounts
in connection with such reproration shall pay such amounts to the other party
with ten (10) days following the completion of such reproration).  Except as otherwise provided in this Section 6.4, all prorations are final and
there shall be no reprorations.  The
provisions of this Section 6.4
shall survive the Closing.

6.5                               CLOSING COSTS

Each party shall pay its
own attorneys’ fees and costs relating to the preparation and negotiation of
this Contract and the closing documents hereunder. Buyer shall pay (i) any
expenses in connection with obtaining the Survey, (ii) with respect to the
Title Policy, the difference between the premium cost for a standard owner’s
policy of title insurance and the premium cost payable for an Owner’s ALTA
extended coverage policy of title insurance, (iii) any endorsements to the
Title 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 of
the Title Report, (B) with respect to the Title Policy, all premiums for a
standard owner’s policy of title insurance, (C) recording costs (other than
with respect to the Deed), (D) any transfer tax or documentary stamps
applicable to the transaction contemplated by this Contract (to the extent the
same are not exempted pursuant to the Confirmation Order) and (E) one-half of
any escrow and closing fees. Title Company shall allocate any other Closing costs
between Buyer and Seller in the manner set forth in Section 6.4. Buyer and Seller shall review a preliminary
closing statement no later than the Business Day immediately preceding the
Closing Date, and shall advise Title Company of any adjustments to be made
thereto.

6.6                               TRANSFER OF TITLE AND DELIVERY OF
POSSESSION

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

 

9

 

same condition as it
exists on the date of this Contract (ordinary wear and tear and alterations to
prepare the Premises for occupancy by Seller excepted and except as provided in
Section 9 and Section 10 below), but subject to the
Property Lease. With the exception of the Premises leased to Seller pursuant to
the Property Lease and any property of Seller located in easements which are
Permitted Encumbrances, all furniture, fixtures, equipment and other personal
property of Seller, its predecessors or affiliates which is not a part of the
Property being conveyed to Buyer under this Contract (such excluded property, the
“Seller’s Property”) shall have been
removed from the Real Property prior to Closing. Any such property which is not
so removed shall be deemed to have been abandoned by Seller, and Buyer may
remove, sell, discard or otherwise dispose of such property (at Seller’s
expense)  or use the same as Buyer sees
fit and without any further notice to, or ownership interest in, Seller.

6.7                               STAGING PLAN

Notwithstanding the
provisions of Section 6.6 above,
during the Due Diligence Period, Seller and Buyer shall cooperate in good faith
to agree upon a staging plan to accommodate the move of Seller’s employees from
the Property to the Martha’s Way Building and other facilities and Buyer’s
employees from the Martha’s Way Building and other Buyer facilities to the
Property (the “Staging Plan”).  The Staging Plan shall incorporate the terms
and provisions set forth in Exhibit I attached hereto.  The Staging Plan shall be attached to both
Property 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 may
agree by amendment in writing.  As reflected in Exhibit I, Seller
shall complete its relocation from the first floor of the Building (other than
portions 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 (such
obligation to survive the Closing in the event that the Closing occurs prior to
December 31, 2005).  Seller shall keep
Buyer apprised as to the progress of such relocation and, upon a request by
Buyer, Seller shall permit Buyer to enter the Building to review such progress,
provided that any such review shall take place during normal business hours and
Buyer shall not unreasonably disrupt the conduct of Seller’s business at the
Property in connection therewith.

6.8                               JOINT SECURITY ALTERATIONS

It is anticipated that
Seller may commence certain Joint Security Alterations (as defined in Section
48.3 of the Property Lease attached hereto as Exhibit H).  Buyer shall reimburse Seller for one-half of
the costs and expenses of such Joint Security Alterations (either at Closing,
if a Closing shall occur, or otherwise within ten (10) days after receipt by
Buyer 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 result
of a default on the part of Buyer under any other provision of this
Contract.  The provisions of this Section 6.8 shall survive the Closing or the termination of
this Contract.

7.                                      REPRESENTATIONS AND WARRANTIES;
COVENANTS

7.1                               SELLER’S REPRESENTATIONS AND WARRANTIES

Subject to the provisions
of Section 7.5, Seller makes the
following representations and warranties as of the date hereof, agrees that all
such representations and warranties shall be true and correct on the Closing
Date, and acknowledges that Buyer is relying on said representations and
warranties. Buyer acknowledges that the term “Seller’s
Knowledge,” as used herein, means the actual knowledge, without
independent investigation or duty of inquiry, of Roy McGraw, Group Vice
President of Material Management, and Alex Mills, Manager of Facility Site
Engineering, who Seller represents to be the person most likely to have current
information regarding the items addressed.  
All representations and warranties of Seller set forth in this Section 7.1 shall survive the Closing or
the termination of this Contract to the extent provided

 

10

 

in Section 12 and shall be binding upon Seller’s
successors 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;

  

 

11

 

	
  (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 covenants
to 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

  

 

12

 

	
   

  	
   

  	
  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 of
the 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

  

 

13

 

	
   

  	
   

  	
  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 foregoing
conditions have not occurred or been satisfied (or waived by Buyer) within the
periods 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 to
Seller, in which event the Escrow Money shall be returned to Buyer by the Title
Company, all obligations of the parties hereunder shall thereupon cease and
this Contract shall be of no further force and effect (except for those rights
and obligations of the parties which by the express terms of this Contract are
intended to survive termination), unless failure of the condition constitutes
or is caused by a default on the part of Buyer under any other provision of
this Contract.

 

14

(b)                                     Seller’s obligation to sell the Property
to Buyer and to consummate the Closing is subject to each of the following
conditions:

	
  (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 foregoing
conditions have not occurred or been satisfied (or waived by Seller) within the
periods 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 on
the part of Seller under any other provision of this Contract, Seller shall
have the right to terminate this Contract by written notice to Buyer, in which
event, provided that the failure of the condition does not constitute and is
not caused by a default on the part of Buyer under any other provision of this
Contract, (A) the Escrow Money shall be returned to Buyer by the Title Company
and (B) all obligations of the parties hereunder shall thereupon cease and this
Contract shall be of no further force and effect (except for those rights and
obligations of the parties which by the express terms of this Contract are
intended to survive termination).

7.5                               CONFIRMATION ORDER OR SALE  ORDER

Within one (1) Business
Day after the execution of this Contract by Seller, provided that Buyer shall
have 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 and
its Affiliated Debtors (the “Plan”). 
Prior to Closing, Seller shall obtain a final non-appealable order of
the Bankruptcy Court confirming the Plan pursuant to section 1129 of the
Bankruptcy Code (the “Confirmation Order”); provided, however, that if
the provisions of the next succeeding paragraph become applicable and if Buyer
shall make an election pursuant thereto, Seller shall obtain a final
non-appealable order of the Bankruptcy Court, in a form reasonably acceptable
to Buyer, approving the transaction pursuant to the terms of this Contract and
authorizing the sale of the Property to Buyer pursuant to Section 363 of the
Bankruptcy Code, free and clear of Encumbrances (the “Sale Order”).  The Plan shall provide for the sale of the
Property by Seller “free and clear” of Encumbrances for the Purchase
Price.  Not later than the earlier to
occur of the date that is (a) five (5) Business Days after the expiration of
the Due Diligence Period (or such earlier date upon which Buyer delivers to
Seller a written waiver of its right to terminate this Contract pursuant to Section 5.7) or (b) five (5) Business Days
prior to the date set for the confirmation hearing for the Plan, Seller shall
file a supplement to the Plan disclosing and attaching this Contract (including
the Leases and all other exhibits thereto). 
The Confirmation 

 

15

 

Order or Sale Order (as
applicable) shall include provisions, in form and substance reasonably
acceptable to Buyer, (i) approving this Agreement and the sale of the Property
to Buyer in accordance with the terms and provisions hereof “free and clear” of
Encumbrances and (ii) providing for the assumption of the Elected Operating
Contracts and the assignment of the same to Buyer, with Seller being solely and
exclusively responsible for any cure costs associated with such Elected
Operating Contracts and solely responsible for the termination of, and/or
payment of amounts due pursuant to, the Operating Contracts that are not
Elected Operating Contracts, (iii) approving the Leases and the security
deposit required thereunder, and specifically stating that, during the pendency
of the bankruptcy case, Tenant shall have no legal, equitable, or residual
interest in the Security Deposit and providing that Buyer shall have an
administrative expense claim pursuant to Section 503(b)(1) of the Bankruptcy
Code for any obligations under the Leases, (iv) providing that Buyer shall have
additional administrative expense claims pursuant to Section 503(b)(1) of the
Bankruptcy Code for any claims it may have against Seller for any damages it
may suffer as a result of Seller’s breach of this Agreement; and (v) providing
that this Agreement and all of Seller’s representations and other obligations
to Buyer hereunder shall be fully enforceable against the Seller and the
Reorganized Seller and shall otherwise survive Seller’s bankruptcy case.  Seller shall provide proper notice of the
Plan (in the event that a Confirmation Order is applicable) or the 363 Sale
Motion (as defined below)(in the event that a Sale Order is applicable) to all
parties who may claim to have an Encumbrance on the Property or are otherwise
required to be given notice under the Bankruptcy Code.

If the Confirmation Order
is not entered on or before December 15, 2005, Buyer, in its sole and absolute
discretion, may elect by written notice delivered to Seller prior to the entry
of the Confirmation Order, to require Seller to file a motion in its bankruptcy
case to sell the Property to Buyer pursuant to Section 363 of the Bankruptcy
Code and the terms of this Contract (a “363 Sale Motion”), such 363 Sale
Motion to be filed by Seller within five (5) Business Days after receipt of
Buyer’s written notice of such election. 
The 363 Sale Motion shall provide that, in the event that Buyer is not
the 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 Hundred
Fifty Thousand and No/100 Dollars ($550,000.00).  Seller shall use reasonable efforts to obtain
an expedited hearing with respect to any such 363 Sale Motion.  If Seller fails to timely file the 363 Sale
Motion other than for reasons that are outside of Seller’s and/or Seller’s
Lenders’ control (in which case Seller shall file such 363 Sale Motion
immediately upon the removal of the impediment to filing), it shall be deemed
to have rejected this Contract and shall be required to pay liquidated damages
to Buyer pursuant to Section 8.3
below.  In the event that Buyer makes an election in accordance with the
foregoing and directs Seller to file a 363 Sale Motion, Buyer may elect, by
written notice to Seller  (a “363
Closing Extension Notice”) on or
prior 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 forth
in Section 7.4(a)(iv) and Section
7.4(b)(iv).  Buyer may specify in its 363 Closing Extension
Notice a date which shall be deemed the outside date for Closing (the “363
Outside Closing Date”).  At any time
prior to the Business Day immediately preceding the 363 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 or more additional 363 Closing Extension
Notice(s) and to specify therein a new 363 Outside Closing Date (but not beyond
December 31, 2006) and the provisions of this sentence shall be applicable with
respect to such new date.  In the event
that (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 foregoing
and (iii) neither party is in default under this Contract, this Contract shall
automatically terminate effective at 11:59 PM Central Standard Time on
the 363 Outside Closing Date, the
Escrow Money shall be refunded to Buyer and neither party shall have any
further rights or obligations hereunder, except for such rights and obligations
which expressly survive the termination of this Contract.

 

16

 

If the Confirmation Order
has not been entered on or prior to December 31, 2005 and Buyer has not
delivered written notice to Seller of its election for the filing of a 363 Sale
Motion pursuant to the foregoing paragraph, this Contract shall terminate in
which event the Escrow Money shall be returned to Buyer and neither party shall
have any further liability hereunder (except for that which by the express
terms of this Contract survives the expiration hereof), or which has accrued
prior to such expiration.  Notwithstanding the foregoing, Buyer may elect,
by written notice to Seller  (a “Confirmation
Closing Extension Notice”) on or
prior 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 forth
in Section 7.4(a)(iv) and Section
7.4(b)(iv).  Buyer may specify in its Confirmation Closing
Extension 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 the
Confirmation 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 or
more additional Confirmation Closing Extension Notice(s) and to specify therein
a new Confirmation Outside Closing Date (but not beyond December 31, 2006) and
the provisions of this sentence shall be applicable with respect to such new
date.  In the event that (i) the Closing
Date has not occurred by the Confirmation Outside Closing Date, (ii) Buyer has
not timely extended such date in accordance with the foregoing and (iii)
neither party is in default under this Contract, this Contract shall
automatically terminate effective at 11:59 PM Central Standard Time on the
Confirmation Outside Closing Date, the
Escrow Money shall be refunded to Buyer and neither party shall have any
further rights or obligations hereunder, except for such rights and obligations
which expressly survive the termination of this Contract.

8.                                      BREACH

8.1                               BY SELLER

If any of Seller’s
representations or warranties herein shall not be true and correct in all
material respects when made, or if Seller defaults in the performance of any of
its covenants or obligations hereunder for any reason (other than the
termination of this Contract by Seller or Buyer pursuant to a right to
terminate expressly set forth in this Contract or as a result of Buyer’s
failure to perform its obligations under this Contract) and fails to cure such
default within five (5) days after obtaining knowledge thereof, then Buyer, at
its 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.

  

 

Buyer
shall not be entitled to record a lien or lis pendens
against the Property other than in connection and concurrently with the filing
of a specific performance action.

8.2                               BY BUYER.

IF ANY
OF BUYER’S REPRESENTATIONS OR WARRANTIES HEREIN SHALL NOT BE TRUE AND CORRECT
IN ALL MATERIAL RESPECTS WHEN MADE, OR IF BUYER DEFAULTS IN THE PERFORMANCE ANY
OF ITS COVENANTS OR OBLIGATIONS HEREUNDER FOR ANY REASON (OTHER THAN THE
TERMINATION OF THIS CONTRACT BY SELLER OR BUYER PURSUANT TO A RIGHT TO
TERMINATE EXPRESSLY SET FORTH IN THIS CONTRACT OR AS A RESULT OF SELLER’S
FAILURE TO PERFORM ITS OBLIGATIONS UNDER THIS CONTRACT) AND FAILS TO CURE SUCH
DEFAULT WITHIN FIVE (5) DAYS AFTER OBTAINING WRITTEN NOTICE THEREOF, THEN SELLER, AS ITS SOLE AND EXCLUSIVE REMEDY, SHALL
HAVE THE RIGHT TO TERMINATE THIS CONTRACT BY GIVING
WRITTEN NOTICE THEREOF TO BUYER, WHEREUPON 

 

17

 

THE
ESCROW MONEY SHALL BE DELIVERED TO SELLER AS LIQUIDATED DAMAGES FREE AND CLEAR
OF ALL RIGHTS AND CLAIMS WITH RESPECT THERETO BY BUYER, AND NEITHER PARTY SHALL
HAVE ANY FURTHER RIGHTS OR OBLIGATIONS HEREUNDER EXCEPT FOR THOSE RIGHTS
AND OBLIGATIONS WHICH BY THE EXPRESS TERMS HEREOF ARE INTENDED TO SURVIVE
TERMINATION.   SUCH
AMOUNT IS AGREED UPON BY AND BETWEEN SELLER AND BUYER AS LIQUIDATED DAMAGES DUE
TO THE DIFFICULTY AND INCONVENIENCE OF ASCERTAINING AND MEASURING ACTUAL
DAMAGES, AND THE UNCERTAINTY THEREOF; SELLER AND BUYER AGREE THAT SUCH AMOUNT
IS A REASONABLE ESTIMATE OF SELLER’S POTENTIAL DAMAGES; AND NO OTHER DAMAGES,
RIGHTS OR REMEDIES SHALL IN ANY CASE BE COLLECTIBLE, ENFORCEABLE OR AVAILABLE
TO SELLER OTHER THAN SUCH LIQUIDATED DAMAGES, BUT SELLER SHALL ACCEPT SAID
PAYMENT 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 THIS
CONTRACT, (B) SELLER OR SELLER’S LENDERS FAIL TO SUPPORT ENTRY OF THE
CONFIRMATION ORDER BY THE BANKRUPTCY COURT OR (C) IF THE PROVISIONS OF THE
SECOND PARAGRAPH OF SECTION 7.5 ABOVE BECOME APPLICABLE AND EITHER (I) SELLER
FAILS TO TIMELY FILE A 363 SALE MOTION AS REQUIRED THEREBY OR (II) BUYER IS NOT
THE SUCCESSFUL BIDDER IN ANY AUCTION CONDUCTED PURSUANT TO THE 363 SALE MOTION,
BUYER SHALL BE ENTITLED TO LIQUIDATED DAMAGES FROM SELLER OF FIVE HUNDRED FIFTY
THOUSAND DOLLARS ($550,000) WHICH REPRESENTS THE PARTIES’ GOOD FAITH ESTIMATE
OF THE COMPENSATORY DAMAGES WHICH WILL BE SUFFERED BY BUYER AS A RESULT OF ANY
ACTION, INACTION, OR OCCURRENCE SPECIFIED IN CLAUSES (A) THROUGH (C)
ABOVE.  SUCH AMOUNT IS AGREED UPON BY AND
BETWEEN SELLER AND BUYER AS LIQUIDATED DAMAGES DUE TO THE DIFFICULTY AND
INCONVENIENCE OF ASCERTAINING AND MEASURING ACTUAL DAMAGES, AND THE UNCERTAINTY
THEREOF; SELLER AND BUYER AGREE THAT SUCH AMOUNT IS A REASONABLE ESTIMATE OF
BUYER’S POTENTIAL ACTUAL DAMAGES; AND IN THE EVENT OF ANY
ACTION OR INACTION SPECIFIED IN CLAUSES (A) THROUGH (C) ABOVE, NO OTHER DAMAGES, RIGHTS OR
REMEDIES SHALL IN ANY CASE BE COLLECTIBLE, ENFORCEABLE OR AVAILABLE TO BUYER
OTHER THAN SUCH LIQUIDATED DAMAGES, EXCEPT THAT,  IN ADDITION TO THE PAYMENT OF SUCH LIQUIDATED
DAMAGES, THE ESCROW MONEY SHALL BE RETURNED TO BUYER FREE AND CLEAR OF ALL
RIGHTS AND CLAIMS BY SELLER OR DEBTOR WITH RESPECT THERETO.

 

/s/ Stan Springel                                                               /s/
David L. Blankenship                        

Seller                                                                                  Buyer

9.                                      TAKING BY EMINENT
DOMAIN

Seller and Buyer agree that if all or any portion of
the Real Property is taken or threatened to be taken by eminent domain prior to
the 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 such
taking, to either (i) require Seller to perform its obligations under this
Contract 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 (except
for those which by the express terms of this 

 

18

 

Contract are intended to survive such termination) and
to require the return of the Escrow Money; provided, however, if such taking
does not involve a “material portion” of the Real Property (which shall mean
either (1) any part of the Real Property reasonably required for the operation
of the Real Property in manner operated on the date of this Contract or (2) any
portion 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) or
clause (ii) above; however, Seller shall have the right in such event to demand
by written notice to Buyer, that Buyer makes such election. If Buyer fails to
make an election by notice in writing to Seller within five (5) days
thereafter, Buyer shall be deemed to have elected to terminate this Contract
pursuant to clause (ii) above.

10.                               INSURANCE; DAMAGE OR DESTRUCTION
PRIOR TO CLOSING

10.1                        SELLER’S INSURANCE

Seller shall maintain in
effect through the Closing Date worker’s compensation insurance as required by
law and commercial general liability insurance with commercially reasonable
limits but in no event less than Five Million Dollars ($5,000,000.00). Seller
shall also maintain all-risk property insurance on the Improvements with limits
at replacement value. Seller shall, within ten (10) days of the date hereof,
provide Buyer with ACORD 27 (property) and ACORD 25 (liability) certificates of
insurance, issued by a duly authorized agent, evidencing the insurance required
hereunder. No such policy shall be subject to cancellation or modification
except upon at least thirty (30) days prior written notice to Buyer. Seller
shall have the right to provide any of its required insurance under blanket
policies, but only upon furnishing Buyer with a “per location” endorsement confirming
that 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 the
Closing, any of the Improvements or Personal Property are destroyed or damaged
by fire or other casualty, Seller shall provide Buyer with written notice of
such event within ten (10) days of the damage, which notice shall include the
reasonably estimated cost of repair or replacement and written confirmation of
the amount of insurance proceeds Seller’s insurer has agreed to pay as a result
of such loss, as evidenced by written confirmation from such insurer
(collectively, “Seller’s Damage Notice”). In the
event of any such damage or destruction, provided Buyer has not elected to
terminate this Contract as permitted herein, the Closing shall occur on the
later of (i) the date the Closing would have been required to occur in the
absence of any such damage or (ii) thirty (30) days following Buyer’s receipt
of Seller’s notice of the casualty as required above.

(b)                               Repair Cost $250,000 or Less

If such damage is
required hereunder to be insured against by Seller and the repair or
replacement of the damaged Property would cost Two Hundred Fifty Thousand
Dollars ($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 not
paid by Seller for repairs prior to Closing, (B) any insurance proceeds paid to
Seller prior to Closing, and (C) in the event that Seller fails to maintain the
all risk casualty insurance required pursuant to Section 10.1, all uninsured restoration expenses which would
have been covered by such insurance had the same been maintained by
Seller.  If the damage is not required to
be insured against by Seller and Seller does not elect to credit Buyer at
Closing with the uninsured restoration expenses (which election shall be set
forth in Seller’s Damage Notice), Buyer may elect to terminate the Contract by
written notice to Seller within ten (10) days following Buyer’s receipt of
Seller’s Damage Notice or proceed to Closing 

 

19

 

without a credit
for such uninsured restoration expenses. 
If Buyer timely elects to terminate this Contract as aforesaid, then the
Escrow Money shall be returned to Buyer and neither party shall have any
further liability hereunder (except for that which by the express terms of this
Contract is intended to survive such termination).  In the event Buyer elects to proceed with
Closing notwithstanding the existence of uninsured restoration expenses which
Seller is not required to, and has not elected to, credit to Buyer at the
Closing, 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 of
such repair or restoration exceeds Two Hundred Fifty Thousand Dollars
($250,000.00), then Buyer shall have the option, which must be exercised by it
within twenty (20) days after its receipt of Seller’s Damage Notice, to either
terminate 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 have
any further liability hereunder (except for that which by the express terms of
this Contract is intended to survive such termination). If Buyer elects to
proceed with the Closing, then, as conditions to Closing, (i) Seller shall take
such action as is necessary to assign all of the all risk casualty insurance
proceeds 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 Seller
for repairs prior to Closing, (B) any insurance proceeds paid to Seller prior
to Closing, and (C) in the event that Seller fails to maintain the all risk
casualty insurance required pursuant to Section
10.1, all uninsured restoration expenses which would have been covered
by such insurance had the same been maintained by Seller.

10.3                        BUYER’S FAILURE TO PROVIDE NOTICE

If Buyer fails to provide
the 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 for
either terminating the Contract or proceeding with the Closing; however, Seller
shall have the right in such event to demand by written notice to Buyer, that Buyer
make such election. If Buyer fails to make an election by notice in writing to
Seller within five (5) days thereafter, Buyer shall be deemed to have elected
to terminate this Contract.

11.                               AGENTS

Each of Seller and Buyer represents and warrants to
the other that it has not dealt with any brokers, finders or agents with
respect to the transactions contemplated by this Agreement.  If any broker or finder claims any commission
or finder’s fee in connection herewith, the party upon whose acts such claim rests
shall be responsible therefore. Each party hereby agrees to indemnify, defend,
protect and hold harmless the other party against any and all claims of any
agent, broker, finder or other similar party to the extent such claims arise
out 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 to
indemnify and hold Buyer harmless from and against any and all liabilities,
claims, demands, and expenses, of any kind or nature accruing prior to the
Closing Date and which are in any way related to the ownership, maintenance, or
operation of the Property by Seller, and all expenses related thereto,
including, without limitation, court costs and reasonable attorneys’ fees.  Notwithstanding the foregoing, in no event
shall Seller be obligated to indemnify Buyer for any liability, claim, demand
or 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 indemnify
and hold Seller harmless from and against any and all liabilities, claims,
demands and expenses of any kind or nature accruing after the Closing Date and
which are in any way related to the ownership, maintenance or operation of the
Property by Buyer, and all expenses related thereto, including without
limitation, court costs and reasonable attorneys’ fees. Notwithstanding the
foregoing, in no event shall Buyer be obligated to indemnify Seller for any
liability, claim, demand or expense arising out of (i) any breach of any of
Seller’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 party
hereto receives notice of a claim or demand against which it is entitled to
indemnification pursuant to this Section 12,
such party shall promptly give notice thereof to the other party. The party
obligated to indemnify shall immediately take such measures as may be
reasonably required to properly and effectively defend such claim, and may
defend same with counsel of its own choosing approved by the other party (which
approval shall not be unreasonably withheld or delayed). In the event the party
obligated to indemnify refuses to defend such claim or fails to properly and
effectively defend such claim, then the party entitled to indemnification may
defend such claim with counsel of its own choosing at the expense of the party
obligated to indemnify. In such event, the indemnified party may settle such
claim without the consent of the indemnifying party.

12.4                        SURVIVAL OF REPRESENTATIONS

All representations and
warranties made by the parties under this Contract shall survive the Closing
for a period of six (6) months following the Closing, except for Seller’s
representations set forth in Section 7.1(xiv)
which shall survive indefinitely.  Any
proceeding relating to the breach of any representations and warranties (other
than the representations set forth in Section
7.1(xiv)) shall be commenced, if at all, within six (6) months
following the Closing.

12.5                        ESCROW

Three Hundred Thousand
and 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 to
secure Seller’s obligations hereunder that survive Closing (collectively, “Seller’s Surviving Obligations”) and shall be held by the
Title Company in accordance with this Section
12.5 (and any separate agreement required by the Title
Company).  Buyer shall make all claims
for monies from the Holdback Account in respect of a breach by Seller of Seller’s
Surviving Obligations (“Holdback Claims”)
in writing to both the Escrow Agent and to Seller on or before the date that is
six (6) months after the Closing Date (the “Holdback
Expiration Date”).   All
monies left in the Holdback Account after payment of any Holdback Claims timely
made by Buyer in accordance with the foregoing and determined to be due to
Buyer in accordance with this Section 12.5
(including any interest earned on the Holdback Amount) shall be disbursed to
Seller and the Holdback Account shall be terminated.  If no Holdback Claims are timely made by
Buyer, 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) all
matters Buyer reasonably believes constitute a breach of Seller’s Surviving
Obligations, (ii) Buyer’s estimated cost of correcting or curing each such
breach, and (iii) the amount of each such repair or cure cost (identified per
item) which Buyer proposes should be refunded to Buyer out of the Holdback
Account. 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 be
deducted from the Holdback Amount for such line item, and (B) for each
disapproved line item, Seller’s reason for such disapproval and the alternative
amount which Seller would be willing to accept as a deduction 

 

21

 

from the Holdback Amount
for such line item, if any. Seller shall be deemed to have provided a Holdback
Claim Response approving each line item in the Holdback Claim (and Buyer’s
proposed deduction from the Holdback Amount) to which Seller does not timely
specify its disapproval in accordance with the foregoing requirements, and the
Title Company shall, within three (3) business days following receipt of the
Claim Response, release to Buyer that portion of the Holdback Amount which is
equal to the aggregate cost of repairing the line items which Seller has
approved (including any alternative amounts specified by Seller). Each line
item specified in the Holdback Claim to which Seller has expressed disapproval
in Seller’s Claim Response (whether by disapproving the line item entirely or
by proposing an alternative amount for the correction of such item) is referred
to herein as a “Disputed Item”.  The amount of the Holdback Amount allocable
to any Disputed Item shall be held in the Escrow Account until joint
instructions to release the amount are received by Title Company from Seller
and Buyer or until the Disputed Item is resolved in arbitration in accordance
with this Section 12.5. Buyer and Seller shall negotiate
with each other in good faith to reach a mutually satisfactory solution with
respect to any and all Disputed Items, and, within thirty (30) days following
Buyer’s receipt of Seller’s Claim Response, shall issue a joint instruction to
Title Company confirming, with respect to each line item, what portion of the
Holdback Amount should be (A) released to Buyer, or (B) retained by Title
Company pending further Holdback Claims or resolution of Disputed Item(s). The
portion of the Holdback Amount retained by Title Company from time to time is
hereinafter referred to as the “Remaining Holdback
Amount.” In the event that Seller and Buyer are not able to reach a
mutually 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 shall
continue to be held in the Holdback Account and shall be submitted to binding
arbitration in accordance with the terms of the remainder of this Section 12.5.  Any fees and costs awarded to Buyer in any
arbitration pursuant to this Section 12.5,
or incurred by Buyer in connection with enforcing any arbitration award against
Seller following entry of judgment thereon, are included in and shall be
recoverable against the Holdback Amount.

(a)                               Agreement to Arbitrate

The parties agree
that all disputes and disagreements regarding the allocation of the Holdback
Amount with respect to all Disputed Items which are not resolved (as evidenced
by 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 arbitration
administered by the American Arbitration Association (“AAA”)
through its offices in Minneapolis, Minnesota, in accordance with its
commercial arbitration rules. Notwithstanding the foregoing, the parties intend
to depart from the AAA commercial arbitration rules to the extent any provision
of this Section 12.5 conflicts
with such rules. Buyer and Seller agree that arbitration shall be the sole and
exclusive method, means and procedure to resolve the Disputes. The parties
irrevocably waive any and all rights to the contrary, shall conduct themselves
in strict, full, complete and timely accordance with the provisions of the
remainder of this Section 12.5,
and agree that any attempt to circumvent the provisions hereof shall be null
and void and of no force or effect whatsoever, provided, however, if the
Holdback Amount comes, at any time, under the jurisdiction of the Bankruptcy
Court or other state or Federal jurisdiction which does not honor this
arbitration agreement, the other party (the party not subject to such
jurisdiction) shall be released from this agreement to arbitrate and may pursue
any remedy available to it under law or equity.

(b)                               Arbitration Panel

The arbitration
shall take place before a panel (the “Panel”) of
three (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 

 

22

 

accountant, (ii)
an attorney, and (iii) an engineer or general contractor. Each Arbitrator shall
have had at least ten (10) years experience with commercial real estate
transactions, and at least three (3) years of arbitration experience. If an
Arbitrator refuses to act or becomes incapable of acting before the Panel makes
its award, and the parties fail to agree in writing on the appointment of a
replacement Arbitrator, either party may serve on the other a notice demanding
such agreement, and if such appointment is not made within twenty (20) days
following delivery of such notice, then the remaining Arbitrators shall have
power, following the written request of either party, to appoint such
replacement Arbitrator who shall have the same authority in the arbitration as
if such Arbitrator were a part of the original Panel. The Panel shall be at
liberty to proceed ex parte in
case of the nonattendance of any party or its witnesses after ten (10) days
prior written notice from the Panel specifying the time and place to appear.

(c)                                Rules of Procedure

The Panel shall
fix and establish any and all rules as it shall consider appropriate in its
sole and absolute discretion to govern the arbitration, including any and all
rules of evidence, discovery and procedure. The Panel shall not be bound by
strict rules of evidence and may hear such evidence as may seem right and
proper to it. The Panel shall schedule a pre-hearing conference to resolve
procedural matters, arrange for the exchange of information, obtain
stipulations, and narrow the issues. The parties shall submit proposed
discovery schedules to the Panel at the pre-hearing conference. The scope and
duration of discovery will be within the sole discretion of the Panel, and any
applicable statute limiting the scope of discovery in arbitration proceedings
is hereby waived. The Panel’s discretion shall be exercised in favor of
discovery reasonable under the circumstances. The arbitration shall be
conducted in Linn County, Iowa. Any party may be represented by counsel or
other authorized representative. In rendering its decision, the Panel shall
determine the rights and obligations of the parties according to the substantive
and procedural laws of Iowa and the terms and provisions of this Contract. The
Panel’s decision shall be based on the evidence introduced at the hearing,
including all logical and reasonable inferences therefrom. All evidence
received by the Panel shall be recorded by a certified court reporter and the
written record thereof shall be made available to the Panel and to the parties.

(d)                               Conclusiveness of Decision

The award of the
Panel shall be final and binding. Either party shall have the ex parte right to cause the award to be entered as a final
judgment in the District Court of Linn County, Iowa, and execution may
thereupon be issued on such judgment. Such judgment may not be appealed unless
(i) the award was fraudulently obtained; (ii) the Panel determined the award on
the basis of a material error of applicable law, and the award would have been
substantially more beneficial to the appealing party in the absence of such
error; or (iii) the Panel was arbitrary or capricious in determining the award,
and the award would have been substantially more beneficial to the appealing
party had the Panel not been arbitrary or capricious. Any such permitted appeal
shall be filed, if at all, no later than thirty (30) days following the date
the Panel delivers the award to the parties. If any controversy arises
following 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 shall
retain jurisdiction over the Disputes until the award has been fully
implemented. No suit at law or in equity based on any Dispute shall be
instituted by either party hereto other than to enforce the award following
entry of judgment thereon.

 

23

 

(e)                                Scope of Arbitration; Requirements of
Award

The scope of the
arbitration shall be limited to allocating the Remaining Holdback Amount
between the parties (which allocation shall be made in accordance with the
applicable terms of this Contract), and awarding reasonable attorneys’ fees and
costs (including the cost of the arbitration) to the prevailing party in the
arbitration. The Panel shall have no authority to reform the Contract, to
determine the parties’ respective rights and obligations as to any matter arising
under the Contract other than the Disputes, or to award punitive, consequential
or other damages; the Panel shall, however, have power to order that the
parties or either of them shall execute, acknowledge and deliver such releases
or other documents as may, in the sole discretion of the Panel, be necessary to
implement the Award, and the party so directed shall promptly perform all such
acts. The award shall be in writing, and shall specify (i) the legal and
factual bases for the award; (ii) which portion, if any, of the Remaining
Holdback Amount shall be payable to Buyer in connection with each Disputed Item
set forth in Seller’s Claim Response, (iii) the aggregate portions of the
Remaining Holdback Amount to be released to Buyer and/or Seller (if the Holdback
Expiration Date has occurred), and (iv) the amount of fees and costs (and the
parties to whom such amounts are owed) payable by each of the parties. If the
Panel determines that there is no clearly prevailing party, the Panel shall, in
its sole and absolute discretion, allocate responsibility for such fees and
costs between the parties. The award shall be delivered by the Panel to both
parties and to Title Company.

(f)                                   Implementation

Within three (3)
business days following receipt thereof, Title Company shall distribute the
Remaining Holdback Amount as directed by the terms of the award. If the award
provides that any portion of the Remaining Holdback Amount is to be released to
a party responsible for the payment of any fees and costs, such fees and costs
shall be debited by Title Company from such party’s share of the Remaining
Holdback Amount prior to release of such party’s share of the Remaining
Holdback Amount, and Title Company shall directly pay such fees and costs in
the manner directed by the award. If the amount of such fees and costs to be
paid 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 by
Title Company out of such party’s share of the Remaining Holdback Amount, and
which shall be paid by such party directly (provided, however, if such party is
responsible for any fees and costs of the opposing party, the responsible party’s
share, if any, of the Remaining Holdback Amount shall be allocated first to the
fees and costs of the opposing party). The parties acknowledge and agree that
Title Company shall be authorized to rely on and comply with the award without
making any independent investigation into the matters determined therein, and
each of them hereby waives all claims against Title Company arising out of such
compliance.

(g)                               Holdback Amount Not a Limitation

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

 

24

 

12.6                        SURVIVAL

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

13.                               NOTICES

Any notice required or permitted hereunder shall be in
writing, addressed as provided below and with copies as provided below. Notice
shall be deemed effective: (i) upon receipt by the party to be notified; or
(ii) five (5) days following deposit in the United States mail, postage
prepaid, registered or certified mail, return receipt requested; or (iii) the
next Business Day following deposit with Federal Express or other overnight air
courier with instructions to deliver on the next Business Day, or (iv) as to
facsimile transmission on the day received provided that receipt is on a
Business 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 for
notice 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 (which
shall 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 Company
of America              
                c/o AEGON USA Realty
Advisors, Inc.           
                4333 Edgewood Road NE   
                Cedar Rapids, IA
52499-5556             
                Attn:       Dennis Ford          
                                Maureen
DeWald                
                Fax Number: (319) 369-2188

 

25

 

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 shall
be binding upon, the parties hereto and their respective successors and
assigns, including, as to Seller, Reorganized Seller. This Contract may be
transferred or assigned by Buyer to any other entity affiliated with Buyer at
or prior to Closing upon written notice to Seller, provided that such transfer
or assignment shall not relieve Buyer of any of its obligations under this Contract
and the Buyer and such transferee/assignee shall thereafter be jointly liable
with respect to such obligations.  In the
event of any permitted assignment hereof by either party hereto, any reference
herein to such party shall refer to such party’s assignee.

15.                               GOVERNING LAW; JURISDICTION

This Contract shall be governed by and construed in
accordance with the laws of the State of Iowa. 
The parties agree that, from and after the filing of the Plan, the
Bankruptcy Court shall retain jurisdiction over the enforcement of this
Contract.

16.                               COUNTERPARTS

It is specifically agreed that this Contract may be
executed in one or more counterparts, all of which shall be taken together to
constitute but one and the same instrument and shall be binding upon each party
who may sign a counterpart of this instrument.

17.                               WAIVER

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

18.                               CONSTRUCTION

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

19.                               ATTORNEYS’ FEES

In the event of any litigation, arbitration or
proceeding between the parties with respect to any rights or obligations
hereunder, the prevailing party shall be entitled to all costs and expenses,
including, but not limited to, court costs and reasonable attorneys’ fees
incurred by the prevailing party, which costs, expenses and reasonable
attorneys’ fees shall be included in, and as a part of, any judgment or award
rendered in such litigation, arbitration or proceeding. If any such work is
performed by in-house counsel for Buyer or Seller, the value of such work shall
be determined at a reasonable hourly rate for comparable outside counsel.

20.                               CONFIDENTIALITY

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

 

26

 

the results of any inspection, test, survey, or study
conducted. Prior to Closing, Buyer shall not deliver any of the documents
theretofore delivered to Buyer by Seller pursuant to this Agreement, or
otherwise knowingly transmit any of the information contained in any such
documents, to any third party except Buyer’s legal advisors and Contract
Inspectors.

21.                               ENTIRE AGREEMENT

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

22.                               NEGOTIATED TERMS

The terms of this Contract have been negotiated at
arms’ length by parties sophisticated in real estate transactions who have had
the opportunity to be represented by counsel. Accordingly, any rule of law that
would require the Contract to be construed against the party drafting same is
agreed to be inapplicable to this transaction and is waived.

23.                               TIME IS OF THE
ESSENCE

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

24.                               “AS IS” SALE

EXCEPT FOR THE EXPRESS REPRESENTATIONS AND WARRANTIES
OF SELLER SET FORTH IN THIS CONTRACT, BUYER ACKNOWLEDGES AND AGREES THAT IT
WILL BE PURCHASING THE PROPERTY BASED SOLELY UPON ITS INSPECTIONS AND
INVESTIGATIONS OF THE PROPERTY, AND THAT BUYER WILL BE PURCHASING THE PROPERTY “AS
IS” AND “WITH ALL FAULTS”, BASED UPON THE CONDITION OF THE PROPERTY AS OF THE
DATE OF THIS AGREEMENT, EXCEPT (A) ORDINARY WEAR AND TEAR AND ALTERATIONS
(APPROVED BY BUYER TO THE EXTENT REQUIRED BY THE TERMS OF THIS CONTRACT) TO
PREPARE THE PREMISES FOR OCCUPANCY BY SELLER AND (B) AS PROVIDED IN SECTION 9 AND SECTION 10 ABOVE. SELLER HEREBY DISCLAIMS ANY AND ALL
WARRANTIES OF MERCHANTABILITY AND WARRANTIES OF FITNESS FOR A PARTICULAR
PURPOSE WITH RESPECT TO THE PERSONAL PROPERTY. 
WITHOUT LIMITING THE FOREGOING, BUYER ACKNOWLEDGES THAT, EXCEPT AS MAY
OTHERWISE BE SPECIFICALLY SET FORTH ELSEWHERE IN THIS CONTRACT, NEITHER SELLER
NOR ITS CONSULTANTS OR AGENTS HAVE MADE ANY REPRESENTATIONS OR WARRANTIES OF
ANY 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) ANY
DEVELOPMENT RIGHTS, TAXES, BONDS, COVENANTS, CONDITIONS AND RESTRICTIONS
AFFECTING THE PROPERTY; (IV) THE NATURE AND EXTENT OF ANY RIGHT OF WAY, LEASE,
ENCUMBRANCE, LICENSE, RESERVATION OR OTHER TITLE MATTER; (V) THE SUITABILITY OF
THE PROPERTY FOR ANY AND ALL ACTIVITIES AND USES WHICH BUYER MAY ELECT TO
CONDUCT THEREON; OR (VI) THE COMPLIANCE OF THE PROPERTY WITH ANY ZONING,
ENVIRONMENTAL, BUILDING OR OTHER LAWS, RULES OR REGULATIONS AFFECTING THE
PROPERTY.   THE PROVISIONS OF THIS SECTION 24 SHALL SURVIVE THE CLOSING DATE.

 

 

[Signature Page Follows]

 

27

 

IN
WITNESS WHEREOF, this
Contract has been entered into by the undersigned Buyer and Seller as of the
date 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                                                

   

  

 

1

 

SCHEDULE OF EXHIBITS

A                             Legal
Description of the Land

B                             Personal
Property

C                             Closing
Documents

D                             Property
Information

E                              Form
of Deed

F                              Bill of Sale and General Assignment

G                             Property
Lease Form

H                             Martha’s Way Lease Form

I                               Staging Plan
Term Sheet

J                              Redevelopment
Agreement Assignment

K                             Steering
Committee Letter

 

2Exhibit 4.1

 

FIFTH
SUPPLEMENTAL INDENTURE

THIS FIFTH SUPPLEMENTAL INDENTURE, dated as of September
30, 2005 (this “Fifth Supplemental Indenture”), to the Indenture (as defined
below), among Inverness Medical Innovations, Inc., a Delaware corporation (the “Issuer”),
the Guarantors (as defined in the Indenture), Thermo BioStar Inc., a Delaware
corporation (the “Additional Guarantor”) and U.S.  Bank Trust National Association, as Trustee
(the “Trustee”).

RECITALS

WHEREAS, the Issuer has issued its 8 3/4% Senior
Subordinated Notes due 2012 (the “Notes”) in the aggregate principal amount of
$150,000,000 under and pursuant to the Indenture, dated as of February 10,
2004, among the Issuer, the Guarantors listed therein and the Trustee, as
amended or supplemented (the “Indenture”).

WHEREAS, unless the context requires otherwise, all
capitalized terms used but not otherwise defined herein will have the meanings
ascribed thereto in the Indenture.

WHEREAS, the Additional Guarantor has become a
Restricted Subsidiary and pursuant to Section 4.14 of the Indenture is entering
into this Fifth Supplemental Indenture to thereby become a Guarantor as
provided in Article Eleven of the Indenture.

WHEREAS, pursuant to Section 9.01(5) of the Indenture,
the Issuer, the Guarantors, the Additional Guarantor and the Trustee may enter
into this Fifth Supplemental Indenture without the consent of any Holder.

AGREEMENT

NOW, THEREFORE, for and in consideration of the
premises and the mutual covenants and agreements hereinafter set forth, the
parties hereto agree as follows:

ARTICLE I

ADDITIONAL GUARANTOR

Section 1.01.        Additional
Guarantor.   The Additional Guarantor hereby agrees,
jointly and severally with all of the Guarantors, to unconditionally guarantee
all of the Issuer’s obligations under the Notes and the Indenture as a
Guarantor thereunder on the terms and subject to the conditions set forth in
the Indenture and to be bound by all provisions of the Indenture applicable to
a Guarantor.

Section 1.02.        Fifth
Supplemental Indenture.   This Fifth Supplemental Indenture
is supplemental to, and is entered into, in accordance with Section 9.01 of the
Indenture, and except as modified, amended and supplemented by this Fifth
Supplemental Indenture, the provisions of the Indenture will remain in full
force and effect.

 

ARTICLE II

MISCELLANEOUS

Section 2.01.        Duplicates.   All parties may sign any number of copies of
this Fifth Supplemental Indenture.   Each signed copy or counterpart shall be an
original, but all of them together shall represent the same agreement.

Section 2.02.        Successors and Assigns.   All
agreements of the Issuer, the Guarantors and the Additional Guarantor in this Fifth
Supplemental Indenture shall bind their respective successors.   All agreements of the Trustee in this Fifth Supplemental
Indenture shall bind its successor.

Section 2.03.        Severability.  
To the
extent permitted by applicable law, in case any one or more of the provisions
in this Fifth Supplemental Indenture shall be held invalid, illegal or
unenforceable, in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions shall not in any way be affected or impaired thereby, it
being intended that all of the provisions hereof shall be enforceable to the
full extent permitted by law.

Section 2.04.        Governing
Law.   This Fifth
Supplemental Indenture will be governed by and construed in accordance with the laws of the State of New York.

 

[The remainder of
this page has been intentionally left blank.]

 

2

IN WITNESS WHEREOF, the parties hereto have caused
this Indenture to be duly executed all as of the date first written above.

	
  INVERNESS MEDICAL
  INNOVATIONS, INC.,

  	
   

  
	
  as Issuer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By: 

  	
  /s/ Dave Teitel

  	
   

  
	
   

  	
  Name: 

  	
   Dave Teitel

  	
   

  
	
   

  	
  Title: 

  	
  Vice President,
  Finance

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  APPLIED BIOTECH, INC.,

  	
   

  
	
  ADVANTAGE DIAGNOSTICS
  CORPORATION,

  	
   

  
	
  BINAX, INC.,

  	
   

  
	
  FOREFRONT DIAGNOSTICS,
  INC.,

  	
   

  
	
  INNOVATIONS RESEARCH,
  LLC,

  	
   

  
	
  INVERNESS MEDICAL
  INTERNATIONAL HOLDING CORP.,

  	
   

  
	
  INVERNESS MEDICAL
  INTERNATIONAL HOLDING CORP. II,

  	
   

  
	
  INVERNESS MEDICAL,
  INC.,

  	
   

  
	
  ISCHEMIA
  TECHNOLOGIES, INC.,

  	
   

  
	
  IVC INDUSTRIES,
  INC.,

  	
   

  
	
  MORPHEUS ACQUISITION
  CORP.,

  	
   

  
	
  OSTEX INTERNATIONAL,
  INC.,

  	
   

  
	
  SELFCARE TECHNOLOGY,
  INC., and

  	
   

  
	
  WAMPOLE LABORATORIES,
  LLC,

  	
   

  
	
  as Guarantors

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:  

  	
  /s/ Dave Teitel

  	
   

  
	
   

  	
  Name: 

  	
  Dave Teitel

  	
   

  
	
   

  	
  Title: 

  	
  Vice President,
  Finance; Vice President, Finance; Vice President, Finance; Vice President,
  Finance; Vice President, Finance; President; President; Vice President,
  Finance; Vice President, Finance; Vice President, Finance; Vice President,
  Finance; Vice President, Finance; Vice President, Finance; and Vice
  President; respectively

  	
   

  
					

 

	
  UNIPATH ONLINE, INC.,

  	
   

  
	
  as a Guarantor

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By: 

  	
  /s/ Duane L.
  James

  	
   

  
	
   

  	
  Name: 

  	
  Duane L.  James

  	
   

  
	
   

  	
  Title: 

  	
  Treasurer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  THERMO BIOSTAR INC.

  	
   

  
	
  as Additional Guarantor

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By: 

  	
  /s/ Dave Teitel

  	
   

  
	
   

  	
  Name: 

  	
  Dave Teitel

  	
   

  
	
   

  	
  Title: 

  	
  Vice President,
  Finance

  	
   

  
					

 

 

	
  U.S. BANK TRUST
  NATIONAL 

  ASSOCIATION,

  
	
  as Trustee

  
	
   

  
	
  By:

  	
  /s/ Cheryl L.
  Clarke

  
	
   

  	
  Name: Cheryl L.
  Clarke

  
	
   

  	
  Title: Assistant
  Vice President

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