Exhibit 4.2


 


FOURTH
AMENDMENT dated as of October 3, 2003 (this “Amendment”), to the
Credit Agreement dated as of May 31, 2000 (as heretofore amended, the “Credit  Agreement”)
among MCLEODUSA INCORPORATED, a Delaware corporation (the “Borrower”),
the lenders party thereto (the “Lenders”) and JPMORGAN CHASE BANK
(formerly known as The Chase Manhattan Bank), as Administrative Agent (in such
capacity, the “Administrative Agent”) and Collateral Agent.


 


The Borrower
has requested that the Lenders agree to amend certain provisions of the Credit
Agreement.  The Lenders party hereto are
willing so to amend the Credit Agreement on the terms and subject to the
conditions set forth herein.  Capitalized
terms used but not defined herein have the meanings assigned to them in the
Credit Agreement, amended hereby.


 


Accordingly,
in consideration of the mutual agreements herein contained and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:


 


SECTION 1.  Amendment of
Credit Agreement.  Upon
effectiveness of this Amendment in accordance with Section 3 hereof, the Credit
Agreement is amended as follows:


 


(a)           Amendment of Section 5.01.  Section 5.01 of the Credit Agreement is
amended by replacing the word “quarterly” in clause (e) with the word
“monthly”, deleting the word “and” immediately after the semicolon in clause
(f), redesignating clause (g) as clause (h) and adding a new clause (g) to read
as follows:


 


“(g) (i) on or prior to October 31, 2003, a financial forecast for the
Borrower and its Restricted Subsidiaries covering the periods from
(x) October 1, 2003 through December 31, 2003, prepared to show
information on a monthly basis, and (y) January 1, 2004 through
December 31, 2005, prepared to show information on a quarterly basis,
(ii) on or prior to January 31, 2004, a financial forecast of the
Borrower and its Restricted Subsidiaries covering the period from
January 1, 2004 through December 31, 2004, prepared to show
information on a monthly basis and (iii)  within 30 days after the
end of each fiscal month (or 50 days if such fiscal month is the last month of
a fiscal quarter or 60 days if such fiscal month is the last month of a
fiscal year) of the Borrower, (A) an unaudited consolidated balance sheet of
the Borrower and its Restricted Subsidiaries as of the end of such fiscal
month, setting forth in comparative form (including a column indicating
percentage variance) the figures as of the end of the


 

















 


previous fiscal year and the applicable month end as set forth in the
applicable financial forecast delivered pursuant to this clause (g),
(B) unaudited consolidated statements of operations and cash flows of the
Borrower and its Restricted Subsidiaries for such fiscal month and the then
elapsed portion of such fiscal year, setting forth in each case in comparative
form (including a column indicating percentage variance) the figures for the
corresponding monthly period and year-to-date period of the previous fiscal
year and the applicable monthly and year-to-date figures set forth in the
applicable financial forecast delivered pursuant to this clause (g), (C) a
reasonably detailed managements’ discussion and analysis, including a narrative
discussion of key balance sheet accounts and key income statement line items
(including, but not limited to, a description and discussion of each
significant factor contributing to revenue changes), in each case, including a
comparison to the relevant accounts and line items included in the applicable financial
forecast delivered pursuant to this clause (g) and (D) a reasonably
detailed cash flow discussion and analysis (including operating cash flow,
working capital, Capital Expenditures, actual Borrowings hereunder during such
period compared to projected Borrowings as set forth in the applicable
financial forecast delivered pursuant to this clause (g) and unused
Revolving Commitments as of the end of such fiscal month).  The financial statements delivered pursuant
to clauses (A) and (B) above shall be certified by one of the Borrower’s
Financial Officers as presenting fairly in all material respects the financial
condition and results of operations of the Borrower and its Restricted
Subsidiaries on a consolidated basis and as having been prepared in accordance
with GAAP consistently applied, subject to normal year-end audit adjustments,
regular quarterly adjustments, adjustments resulting from differences in
procedures in the closing of the Borrower’s month-end and quarter-end books
(including, but not limited to, accrual of line costs) and the absence of
footnotes.  It is understood and agreed
that the Administrative Agent may at any time, upon reasonable advance notice
to the Borrower, elect to have the benchmark for the comparative information
required under this clause (g) be the information set forth in the most recent
budget provided under clause (e) above instead of the applicable financial
forecast delivered pursuant this clause (g), and that the benchmark for
the comparative information required under this clause (g) for the fiscal
year 2005 and thereafter shall be the information set forth in the budget
provided under clause (e) for such fiscal year; and”


 


(b)           Amendment of Section 6.13.  The table set forth in Section 6.13 of the
Credit Agreement is amended to read as follows:


 


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  Period

  	
   

  	
  Ratio

  
	
   

  	
   

  	
   

  
	
  July 1, 2003
  through September 30, 2003

  	
   

  	
  13.00 to 1.00

  
	
   

  	
   

  	
   

  
	
  October 1,
  2003 through December 31, 2003

  	
   

  	
  15.00 to 1.00

  
	
   

  	
   

  	
   

  
	
  January 1,
  2004 through June 30, 2004

  	
   

  	
  13.50 to 1.00

  
	
   

  	
   

  	
   

  
	
  July 1, 2004
  through September 30, 2004

  	
   

  	
  11.00 to 1.00

  
	
   

  	
   

  	
   

  
	
  October 1,
  2004 through December 31, 2004

  	
   

  	
  8.50 to 1.00

  
	
   

  	
   

  	
   

  
	
  January 1,
  2005 through March 31, 2005

  	
   

  	
  6.00 to 1.00

  
	
   

  	
   

  	
   

  
	
  April 1,
  2005 to September 30, 2005

  	
   

  	
  5.00 to 1.00

  
	
   

  	
   

  	
   

  
	
  October 1,
  2005 and thereafter

  	
   

  	
  4.00 to 1.00

  



 


(c)           Amendment of Section 6.14.  Section 6.14 of the Credit Agreement is
amended to read as follows:


 


SECTION
6.14.  Capital Expenditure
Limitation.  The Borrower shall not
permit the Capital Expenditures of the Borrower and the Restricted Subsidiaries
for any fiscal year of the Borrower to exceed (i) with respect to the fiscal
years ending December 31, 2003 and 2004, $100,000,000 and (ii) with respect to
the fiscal years ending December 31, 2005 and thereafter, $200,000,000 (the
applicable amount under clause (i) or clause (ii), the “Capex Limit”).  The Capex Limit in respect of any fiscal
year commencing with the fiscal year ending on December 31, 2004, shall be
increased (but not decreased) by the amount of unused permitted Capital
Expenditures for the immediately preceding fiscal year (such amount, the “Capex
Carryforward”); provided, however, that in no event shall the
Capex Limit for any fiscal year be increased by more than $50,000,000.  Any Capex Carryforward that is not permitted
to be used in any fiscal year as a result of the proviso to the preceding
sentence may, subject to such proviso, be applied to any subsequent fiscal
year.


 


(d)           Amendment of Section 6.18.  The table set forth in Section 6.18 of the
Credit Agreement is amended to read as follows:


 


	
  Period

  	
   

  	
  Minimum

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  July 1, 2003 through September 30, 2003

  	
   

  	
  $

  	
  900,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  October 1, 2003 through March 31, 2004

  	
   

  	
  $

  	
  850,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  April 1, 2004 through June 30, 2004

  	
   

  	
  $

  	
  875,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  July 1, 2004 through September 30, 2004

  	
   

  	
  $

  	
  900,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  October 1, 2004 through December 31, 2004

  	
   

  	
  $

  	
  950,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  January 1, 2005 and thereafter

  	
   

  	
  no minimum

  	
   

  



 


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SECTION 2.  Representations
and Warranties.  To induce the other
parties hereto to enter into this Amendment, the Borrower represents to each of
the Lenders and the Administrative Agent that, as of the Effective Date:


 


(a)           after giving effect to this
Amendment, the representations and warranties of the Borrower set forth in
Article III of the Credit Agreement are true and correct on and as of the
Effective Date with the same effect as if made on and as of the Effective Date,
except to the extent such representations and warranties expressly relate to an
earlier date, in which case such representations and warranties were true and
correct as of such earlier date;


 


(b)           after giving effect to this
Amendment, no Default has occurred and is continuing under the Credit
Agreement; and


 


(c)           this Amendment has been duly executed
and delivered by the Borrower and the Credit Agreement, as amended hereby,
constitutes a legal, valid and binding obligation of the Borrower, enforceable
against the Borrower in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors’ rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding in equity or at law.


 


SECTION 3.  Conditions to
Effectiveness; Condition to Continuing Effectiveness.


 


(a)           This Amendment shall become effective
as of the date (the “Effective Date”) on which each of the following
conditions has been satisfied:


 


(i)            the Administrative Agent shall have
received counterparts of this Amendment that, when taken together, bear the
signatures of the Borrower and the Required Lenders;


 


(ii)           the Administrative Agent shall have
received a certificate of a Financial Officer of the Borrower, dated the
Effective Date, to the effect that the representations and warranties set forth
in Section 2 hereof are true and correct;


 


(iii)          the Borrower shall have paid to the
Administrative Agent, in immediately available funds, for the account of each
of the Lenders entitled thereto, the Amendment Fee referred to in
Section 4 hereof; and


 


(iv)          the Borrower’s Credit Agreement dated
as of April 16, 2002 (the “Exit Credit Agreement”) shall have
been


 


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amended to
effect modifications to the covenants therein equivalent to those effected to
the Credit Agreement by this Amendment, and all conditions to the effectiveness
of such amendment shall have been satisfied on the Effective Date.


 


(b)           Notwithstanding the occurrence of the
Effective Date, if at any time during the period from October 1, 2003
through December 31, 2003, the total Revolving Exposure (as defined in the Exit
Credit Agreement), under the Exit Credit Agreement shall exceed $50,000,000 (or
if at any time during such period the total outstanding Loans (as defined in
the Exit Credit Agreement) exceed $40,000,000) then the modifications to the
covenants contained in the Credit Agreement effected by Sections 1(b) and
1(d) of this Amendment shall thereupon terminate and be of no further force and
effect, and the covenants contained in Sections 6.13 and 6.18 of the Credit
Agreement (as in effect immediately prior to the Effective Date) shall
thereupon apply and continue in full force and effect.


 


SECTION 4.  Amendment Fee.  The Borrower agrees to pay to the
Administrative Agent, for the account of each Lender that delivers (including
by fax) an executed counterpart of this Amendment prior to 12:00 p.m., New York
City time, on October 15, 2003, an amendment fee (the “Amendment Fee”)
in an amount equal to .40% of the sum of such Lender’s outstanding Loans.


 


SECTION 5.  Effect of
Amendment.  Except as expressly set
forth herein, this Amendment shall not by implication or otherwise limit,
impair, constitute a waiver of, amend, or otherwise affect the rights and
remedies of the Lenders or the Administrative Agent under the Credit Agreement
or any other Loan Document and shall not alter, modify, amend or in any way
affect any of the terms, conditions, obligations, covenants or agreements contained
in the Credit Agreement or any other Loan Document, all of which are ratified
and affirmed in all respects and shall continue in full force and effect.  This Amendment shall apply and be effective
with respect only to the matters expressly referred to herein, and nothing
herein shall be deemed to entitle the Borrower to a consent to, or a waiver,
amendment, modification or other change of, any of the terms, conditions,
obligations, covenants or agreements contained in the Credit Agreement or any
other Loan Document in similar or different circumstances.  The modifications to the covenants effected
by this Amendment shall apply retroactively to the periods covered thereby, and
the Lenders hereby waive any Default or Event of Default that may have arisen
under the Credit Agreement (absent such retroactive modification) to the
extent, but only to the extent, that such Default or Event of Default would be,
and is, cured solely as a result of such retroactive modifications.  This Amendment shall constitute a “Loan
Document” for all purposes of the Credit Agreement.


 


SECTION 6.  Applicable Law.  THIS  AMENDMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.


 


5

















 


SECTION 7.  Counterparts.  This Amendment may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed an original but all of
which when taken together shall constitute but one and the same
instrument.  Delivery of an executed
signature page of this Amendment by facsimile transmission shall be effective
as delivery of a manually executed counterpart hereof.


 


SECTION 8.  Costs and
Expenses.  The Borrower agrees to reimburse
the Administrative Agent for its reasonable out-of-pocket expenses in
connection with this Amendment, including the reasonable fees, charges and
disbursements of counsel for the Administrative Agent.


 


SECTION 9.  Headings.  The headings of this Amendment are for
purposes of reference only and shall not limit or otherwise affect the meaning
hereof.


 


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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their authorized officers as of the day and year first written
above.


 


	
   

  	
  MCLEODUSA INCORPORATED,

  
	
   

  
	
   

  
	
   

  	
  by:

  
	
   

  	
   

  	
  /s/ G. Kenneth Burckhardt

  
	
   

  	
   

  	
  Name:

  	
  G. Kenneth Burckhardt

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President and

  Chief Financial Officer

  
	
   

  
	
   

  
	
   

  	
  JPMORGAN CHASE BANK,

  
	
   

  	
  individually and as Administrative Agent,

  
	
   

  
	
   

  
	
   

  	
  by:

  
	
   

  	
   

  	
  /s/ John Kowalczuk

  
	
   

  	
   

  	
  Name:

  	
  John Kowalczuk

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
					



 


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