Exhibit 4.1


 


 


CONFORMED COPY


 


 


FIRST AMENDMENT dated as of October 3,
2003 (this “Amendment”), to the Credit Agreement dated as of
April 16, 2002 (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 4 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.  Limitation on Borrowings. 
The Borrower agrees that for the period from October 1, 2003
through December 31, 2003 the total Revolving Exposure shall not exceed
$50,000,000 (no more than $40,000,000 of which shall be in the form of Loans)
in the aggregate at any time outstanding. 
The Borrower further agrees that it shall not request any Borrowing or
request the issuance of any Letter of Credit that would result in the total
Revolving Exposure exceeding the amount set forth in the preceding sentence,
and that any such request delivered during such period shall be ineffective.


 


SECTION 3.  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 4.  Conditions to Effectiveness.  This Amendment
shall become effective as of the date (the “Effective Date”) on which
each of the following conditions has been satisfied:


 


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


 


(b)  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 3 hereof are true and correct;


 


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(c)  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 5 hereof; and


 


(d)  the Borrower’s Credit
Agreement dated as of May 31, 2000 shall have been 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.


 


SECTION 5.  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 1.00% of the
sum of such Lender’s outstanding Loans and unused Commitments.


 


SECTION 6.  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 7.  Applicable Law.  THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.


 


SECTION 8.  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.


 


5

















 


SECTION 9.  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 10.  Headings.  The
headings of this Amendment are for purposes of reference only and shall not
limit or otherwise affect the meaning hereof.


 


6

















 


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 Kowalczak

  
	
   

  	
  Name:

  	
  John Kowalczak

  
	
   

  	
  Title:

  	
  Vice President

  
					



 


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