<PAGE>

                                                                  EXHIBIT 4.25

                          SECOND AMENDED AND RESTATED
                      JANUARY 1999 STOCKHOLDERS' AGREEMENT

         This Second Amended and Restated January 1999 Stockholders' Agreement
(this "Agreement") is entered into as of December 17, 1999, by and among
McLeodUSA Incorporated, a Delaware corporation (the "Company"); Alliant Energy
Corporation, a Wisconsin corporation ("AEC"); IES Investments Inc., an Iowa
corporation (n/k/a Alliant Energy Investments, Inc.) and indirect wholly owned
subsidiary of AEC ("IES"); Heartland Properties, Inc., a Wisconsin corporation
and indirect wholly owned subsidiary of AEC ("Heartland"); Alliant Energy
Foundation, Inc., a Wisconsin corporation (non-profit) ("AEF" and together with
AEC, IES and Heartland, the "AEC Entities"); Clark E. McLeod ("McLeod"); Mary E.
McLeod (together with McLeod, the "McLeods"); Richard A. Lumpkin ("Lumpkin") and
each of the former shareholders of Consolidated Communications Inc. ("CCI") and
certain permitted transferees of the former CCI shareholders in each case who
are listed in Schedule I hereto (the "CCI Shareholders"); and M/C Investors
L.L.C., a Delaware limited liability company ("M/C Investors") and
Media/Communications Partners III Limited Partnership, a Delaware limited
partnership ("M/C Partners" and together with M/C Investors, the "M/C
Stockholders"). The AEC Entities, the McLeods, Lumpkin and the CCI Shareholders
party hereto are referred to herein collectively as the "Original Stockholders"
and individually as an "Original Stockholder."

         WHEREAS, the Company, IES, the McLeods, Lumpkin, the CCI Shareholders
party hereto and the M/C Stockholders are parties to an Amended and Restated
January 1999 Stockholders' Agreement, entered into as of September 15, 1999 (the
"Amended and Restated January 1999 Stockholders' Agreement");

         WHEREAS, the Company, IES, the McLeods, Lumpkin, the CCI Shareholders
party hereto and the M/C Stockholders desire to add each of AEC, Heartland and
AEF as a party to this Agreement and to make certain other changes in accordance
with the terms herein set forth;

         WHEREAS, the Company, the Original Stockholders and the M/C
Stockholders deem it to be in the best interests of the Company and its
stockholders to provide for the continuity and stability of the business and
policies of the Company on the terms and conditions hereinafter set forth;

         WHEREAS, concurrently with execution and delivery of this Agreement,
the Company and the Original Stockholders are entering into an amendment and
restatement of the Amended and Restated November 1998 Stockholders' Agreement,
entered into as of September 15, 1999; and

         WHEREAS, the Company, the Original Stockholders and the M/C
Stockholders desire to amend and restate the Amended and Restated January 1999
Stockholders' Agreement in its entirety with the terms and conditions
hereinafter set forth;

         NOW, THEREFORE, for and in consideration of the foregoing and of the
mutual covenants and agreements contained herein, the parties hereto agree as
follows:

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1.                [INTENTIONALLY DELETED]


2.                VOTING AGREEMENT


         2.1      Board of Directors

         For the period commencing on the Effective Date (as defined in Section
2.2) and ending on the Expiration Date (as defined in Section 2.2), each
Original Stockholder and the M/C Stockholders, for so long as each such Original
Stockholder and the M/C Stockholders beneficially and continuously owns at least
five million (5,000,000) shares of the Company's Class A common stock, $.01 par
value per share (the "Class A Common Stock"), subject to adjustment pursuant to
Section 5.1, shall take or cause to be taken all such action within their
respective power and authority as may be required:

               (a)     to establish and maintain the authorized size of the
                       Board of Directors of the Company (the "Board of
                       Directors" or the "Board") at up to thirteen (13)
                       directors;

               (b)     to cause to be elected to the Board one (1) director
                       designated by the AEC Entities, for so long as the AEC
                       Entities collectively beneficially and continuously own
                       at least five million (5,000,000) shares of Class A
                       Common Stock (subject to adjustment pursuant to Section
                       5.1);

               (c)     to cause Lumpkin to be elected to the Board, for so long
                       as Lumpkin and the CCI Shareholders collectively
                       beneficially and continuously own at least five million
                       (5,000,000) shares of Class A Common Stock (subject to
                       adjustment pursuant to Section 5.1);

               (d)     to cause to be elected to the Board three (3) directors
                       who are executive officers of the Company designated by
                       McLeod, for so long as the McLeods collectively
                       beneficially and continuously own at least five million
                       (5,000,000) shares of Class A Common Stock (subject to
                       adjustment pursuant to Section 5.1);

               (e)     to cause to be elected to the Board one (1) director
                       designated by the M/C Stockholders, for so long as the
                       M/C Stockholders collectively beneficially and
                       continuously own at least five million (5,000,000) shares
                       of Class A Common Stock (subject to adjustment pursuant
                       to Section 5.1);

               (f)     to cause to be elected to the Board a director or
                       directors nominated by the Board to replace a director or
                       directors designated pursuant to paragraphs (b) through
                       (e) above upon the earlier to occur of such designated
                       director's or directors' resignation (and the acceptance
                       of such resignation by the Board) and the expiration of
                       such director's or directors' term as a result of any
                       party or parties identified in paragraphs (b) through (e)
                       above no longer collectively beneficially and
                       continuously owning at least five million (5,000,000)
                       shares of Class A Common Stock (subject to adjustment
                       pursuant to Section 5.1) at any time during the period
                       commencing on the Effective Date and ending on the
                       Expiration Date; it being understood that within three
                       (3) business days following such time that the party or
                       parties identified in paragraphs (b) through (e) above no
                       longer collectively beneficially and continuously own at
                       least five million (5,000,000) shares of Class A Common
                       Stock (subject to adjustment pursuant to Section 5.1)
                       during such period, such party or parties shall use its
                       or their respective best efforts to cause the director or
                       directors designated by such party or parties to tender

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<PAGE>

                       their immediate resignation to the Board which the Board
                       may accept or reject; and

               (g)     to cause to be elected to the Board, if and as nominated
                       by the Board, up to seven (7) non-employee directors.

         For purposes of this Section 2.1, (i) the McLeods shall be deemed to be
a single Original Stockholder of the Company, (ii) the M/C Stockholders shall be
deemed to be a single stockholder of the Company, and the M/C Stockholders shall
be deemed to own shares "continuously" as long as the shares of the M/C
Stockholders are owned by the M/C Stockholders or an M/C Stockholder Permitted
Transferee (as defined in Section 3.1), (iii) Lumpkin and all of the CCI
Shareholders shall be deemed to be a single Original Stockholder of the Company,
and the CCI Shareholders shall be deemed to own shares "continuously" as long as
the shares of the CCI Shareholders are owned by the CCI Shareholders or a CCI
Permitted Transferee (as defined in the Second Amended and Restated November
1998 Stockholders' Agreement (as defined in Section 2.2)), and (iv) the AEC
Entities shall be deemed to be a single Original Stockholder of the Company, and
the AEC Entities shall be deemed to own shares "continuously" as long as the
shares of the AEC Entities are owned by the AEC Entities or an AEC Permitted
Transferee (as defined in the Second Amended and Restated November 1998
Stockholders' Agreement).

         2.2      Definitions

         For purposes of this Agreement, the following terms have the meanings
indicated:

               (a)     "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 under the Securities Exchange Act
of 1934, as amended (the "Exchange Act").

               (b)     A person shall be deemed the "beneficial owner" of and
shall be deemed to "beneficially own" any securities:


                             (i)   which such person or any of such person's
                                   Affiliates or Associates, directly or
                                   indirectly, has the right to acquire (whether
                                   such right is exercisable immediately or only
                                   after the passage of time) pursuant to any
                                   agreement, arrangement or understanding
                                   (whether or not in writing), or upon the
                                   exercise of conversion rights, exchange
                                   rights, other rights, warrants or options, or
                                   otherwise;

                             (ii)  which such person or any of such person's
                                   Affiliates or Associates, directly
                                   orindirectly, has the right to vote or
                                   dispose of or has "beneficial ownership" of
                                   (as determined pursuant to Rule 13d-3 under
                                   the Exchange Act), including pursuant to any
                                   agreement, arrangement or understanding,
                                   whether or not in writing; or

                             (iii) which are beneficially owned, directly or
                                   indirectly, by any other person (or any
                                   Affiliate or Associate thereof) with which
                                   such person or any of such person's
                                   Affiliates or Associates has any agreement,
                                   arrangement or understanding (whether or not
                                   in writing), for the purpose of acquiring,
                                   holding, voting or disposing of any voting
                                   securities of the Company.

For purposes of the definition of "beneficial owner" and "beneficially own," the
terms "agreement," "arrangement" and "understanding" shall not include this
Agreement or the Second Amended and Restated November 1998 Stockholders'
Agreement.

(c)      "Effective Date" shall mean December  17, 1999.
(d)      "Expiration Date" shall mean December 31, 2001.
(e)      "Merger" shall mean the merger of Ovation Communications, Inc. with and
         into Bravo Acquisition Corporation pursuant to the terms and conditions
         of the Merger Agreement.
(f)      "Merger Agreement" shall mean the Agreement and Plan of Merger, dated
         as of January 7, 1999, by and among the Company, Bravo Acquisition
         Corporation, Ovation Communications, Inc. and certain of the

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<PAGE>

         stockholders of Ovation Communications, Inc.
(g)      "Second Amended and Restated November 1998 Stockholders' Agreement"
         shall mean the Second Amended and Restated November 1998 Stockholders'
         Agreement, entered into as of December 17, 1999, by and among the
         Company and the Original Stockholders.
(h)      "Stock Split" shall mean that certain two-for-one stock split in the
         form of a stock dividend paid on July 26, 1999 to stockholders of
         record on July 12, 1999 effected by the Company with respect to its
         Class A Common Stock.

3.                TRANSFERS OF SECURITIES


         3.1      Restrictions on Transfers

         (a) Except as otherwise provided in this Section 3.1 or Section 3.2,
the M/C Stockholders hereby agree that until the Expiration Date, the M/C
Stockholders will not offer, sell, contract to sell, grant any option to
purchase, or otherwise dispose of, directly or indirectly, ("Transfer"), any
equity securities of the Company or any other securities convertible into or
exercisable for such equity securities ("Securities") beneficially owned by such
M/C Stockholders as a result of the Merger (including distributions of
Securities with respect to such Securities and Securities acquired as a result
of a stock split with respect to such Securities) without submitting a written
request to, and receiving the prior written consent of, the Board of Directors;
provided, however, that the M/C Stockholders may transfer Securities to any
beneficial owner or Affiliate of the M/C Stockholders, in each case provided
that (i) such transfer is done in accordance with the transfer restrictions
applicable to such Securities under federal and state securities laws and (ii)
the transferee agrees to be bound by the terms hereof (as this Agreement may be
amended or amended and restated from time to time) as an M/C Stockholder with
respect to the shares being transferred pursuant to this Section (any such M/C
Stockholder transferee pursuant to the foregoing proviso, an "M/C Stockholder
Permitted Transferee"), and any such transfer shall not constitute a "Transfer"
for purposes of this Agreement. Notwithstanding the foregoing, no party hereto
shall avoid the provisions of this Agreement by making one or more transfers to
one or more M/C Stockholder Permitted Transferees and then at any time directly
or indirectly disposing of all or any portion of such party's interest in any
such M/C Stockholder Permitted Transferee. In the event that the Board of
Directors consents to any Transfer of Securities by a Principal Stockholder (for
purposes of this Agreement, the term "Principal Stockholder" shall have the same
meaning as ascribed to such term in the Second Amended and Restated November
1998 Stockholders' Agreement) pursuant to Section 3.1(a) of the Second Amended
and Restated November 1998 Stockholders' Agreement upon the written request of
such Principal Stockholder (the "Transferring Principal Stockholder") during the
period commencing on January 1, 2000 and ending on the Expiration Date and
except as otherwise provided in Section 3.1(b) and Section 3.2 of this
Agreement, the M/C Stockholders shall, notwithstanding the provisions of this
Section 3.1(a), have the right to Transfer a percentage of the total number of
Securities beneficially owned by the M/C Stockholders equal to the percentage of
the total number of Securities beneficially owned by the Transferring Principal
Stockholder that the Board of Directors has consented may be Transferred by such
Transferring Principal Stockholder. In the event the Board of Directors consents
to any Transfer of Securities by the M/C Stockholders pursuant to this Section
3.1(a) upon the written request of the M/C Stockholders (the "Transferring M/C
Stockholders"), and except as otherwise provided in Section 3.1(b) and Section
3.2 of the Second Amended and Restated November 1998 Stockholders' Agreement,
each Principal Stockholder shall, notwithstanding the provisions of Section
3.1(a) of the Second Amended and Restated November 1998 Stockholders' Agreement,
have the right to Transfer a percentage of the total number of Securities
beneficially owned by such Principal Stockholder equal to the percentage of the
total number of Securities beneficially owned by the Transferring M/C
Stockholders that the Board of Directors has consented may be Transferred by
such Transferring M/C Stockholders.

         (b) In addition to the provisions of Section 3.1(a), for the period
commencing for the quarter ending December 31, 1999 and ending on the Expiration
Date, the Board shall determine prior to the public release of the Company's
consolidated financial results with respect to each such financial reporting
quarter during such period, the aggregate number, if any, of shares of Class A

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<PAGE>

Common Stock (not to exceed in the aggregate one hundred thousand (100,000)
shares of Class A Common Stock per quarter, subject to adjustment pursuant to
Section 5.1) that may be Transferred by the M/C Stockholders (the "Transfer
Amount") during the period commencing on the third (3rd) business day and ending
on the twenty-third (23rd) business day following such public release of the
Company's quarterly or annual financial results or such other trading period
designated or permitted by the Board with respect to the purchase and sale of
its Securities (each such period, a "Transfer Period"). Notwithstanding the
provisions of Section 3.1(a), the M/C Stockholders shall be entitled to Transfer
during each Transfer Period, provided such Transfer is effected in accordance
with all applicable federal and state securities laws, a number of shares of
Class A Common Stock equal to the Transfer Amount, if any, for such Transfer
Period. In no event shall any portion of a Transfer Amount that is not utilized
by the M/C Stockholders during a Transfer Period be reallocated or otherwise
credited to any subsequent Transfer Periods. Notwithstanding the foregoing
provisions of this Section 3.1(b), to the extent that the Company permits the
Principal Stockholders the opportunity to Transfer shares of Class A Common
Stock pursuant to Section 3.1(b) of the Second Amended and Restated November
1998 Stockholders' Agreement during the period commencing on January 1, 2000 and
ending on the Expiration Date, the Company shall grant the M/C Stockholders the
opportunity to Transfer on the same terms and conditions a number of shares of
Class A Common Stock equal to the number of shares which each Principal
Stockholder is entitled to Transfer pursuant to such Section 3.1(b), without
considering those provisions of Section 3.1(b) of the Second Amended and
Restated November 1998 Stockholders' Agreement relating to the reallocation of
amounts among the Principal Stockholders. To the extent the Board determines a
Transfer Amount with respect to the M/C Stockholders for any particular quarter
pursuant to this Section 3.1(b), the Board shall determine an equal Transfer
Amount for such quarter with respect to each Principal Stockholder pursuant to
Section 3.1(b) of the Second Amended and Restated November 1998 Stockholders'
Agreement.

         (c) For the period commencing for the quarter ending December 31, 1999
and ending on the Expiration Date, the Company shall give the M/C Stockholders
prompt written notice (in any event no later than fifty (50) days prior to the
beginning of the applicable Transfer Period) of its determination of any
Transfer Amount. Within seven (7) days of receipt of such notice, the M/C
Stockholders shall provide written notice to the Company of the number of shares
of Class A Common Stock that the M/C Stockholders desire to Transfer pursuant to
Section 3.1(b).

         (d) During the year ending December 31, 1999, to the extent the Company
participates in a strategic transaction with an outside investor(s) pursuant to
which such investor(s) acquires Securities of the Company at a premium to the
then average trading price of the Company's Securities, and after the Company
has been paid or otherwise received its consideration or proceeds from such
transaction as determined by the Company, the Original Stockholders and the M/C
Stockholders may be entitled to participate in such transaction on a pro rata
basis as determined by the Board of Directors.

         (e) For purposes of this Section 3.1, the M/C Stockholders shall be
deemed to be a single stockholder of the Company, the McLeods shall be deemed to
be a single Principal Stockholder of the Company, Lumpkin and all of the CCI
Shareholders shall be deemed to be a single Principal Stockholder of the Company
and the AEC Entities shall be deemed to be a single Principal Stockholder of the
Company.

         3.2      Registration Rights

         (a) In the event that the Board of Directors consents pursuant to
Section 3.1(a) of the Second Amended and Restated November 1998 Stockholders'
Agreement to a Principal Stockholder's request for a Transfer during the period
commencing on January 1, 2000 and ending on the Expiration Date and in
connection therewith, the Company agrees to register Securities with respect to
such Transfer under the Securities Act of 1933, as amended (the "Securities
Act"), the Company shall grant the M/C Stockholders the opportunity (subject to
reduction in the event the registered Transfer is underwritten) to register for
Transfer under the Securities Act a percentage of the total number of Securities
beneficially owned by the M/C Stockholders equal to the percentage of the total

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<PAGE>

number of Securities beneficially owned by the Transferring Principal
Stockholder that such Transferring Principal Stockholder is registering for
Transfer under the Securities Act, on the same terms and conditions as the
Transferring Principal Stockholder. In the event that the Board of Directors
consents pursuant to Section 3.1(a) of this Agreement to the M/C Stockholders'
request for a Transfer, and in connection therewith the Company agrees to
register Securities with respect to such Transfer under the Securities Act, the
Company shall grant each Principal Stockholder pursuant to Section 3.1(a) of the
Second Amended and Restated November 1998 Stockholders' Agreement the
opportunity (subject to reduction in the event the registered Transfer is
underwritten) to register for Transfer under the Securities Act a percentage of
the total number of Securities beneficially owned by such Principal Stockholder
equal to the percentage of the total number of Securities beneficially owned by
the Transferring M/C Stockholders that such Transferring M/C Stockholders are
registering under the Securities Act, on the same terms and conditions as the
Transferring M/C Stockholders.

         (b) To the extent that the Company grants pursuant to Section 3.1(b) of
the Second Amended and Restated November 1998 Stockholders' Agreement a
Principal Stockholder the opportunity to register shares of Class A Common Stock
for Transfer under the Securities Act during the period commencing on January 1,
2000 and ending on the Expiration Date, the Company shall grant the M/C
Stockholders the opportunity (subject to reduction in the event the registered
Transfer is underwritten) to register an equal number of shares of Class A
Common Stock for Transfer under the Securities Act on the same terms and
conditions, without considering those provisions of Section 3.1(b) of the Second
Amended and Restated November 1998 Stockholders' Agreement relating to the
reallocation of amounts among the Principal Stockholders. To the extent that the
Company grants pursuant to Section 3.1(b) of this Agreement the M/C Stockholders
the opportunity to register shares of Class A Common Stock for Transfer under
the Securities Act, the Company shall grant each Principal Stockholder pursuant
to Section 3.1(b) of the Second Amended and Restated November 1998 Stockholders'
Agreement the opportunity (subject to reduction in the event the registered
Transfer is underwritten) to register an equal number of shares of Class A
Common Stock for Transfer under the Securities Act on the same terms and
conditions.

         (c) For the period commencing on January 1, 2000 and ending on the
Expiration Date, in the event the Company proposes to register any shares of
Class A Common Stock under the Securities Act pursuant to an underwritten
primary offering (other than pursuant to a registration statement on Form S-4 or
Form S-8 or any successor forms thereto or other form which would not permit the
inclusion of the shares of Class A Common Stock of the M/C Stockholders), the
Company, as determined by the Board of Directors, shall give written notice to
the M/C Stockholders of its intention to effect such a registration. Following
any such notice, the Board of Directors shall undertake to determine the
aggregate number, if any, of shares of Class A Common Stock held by the M/C
Stockholders (not to exceed in the aggregate on a per year basis a number of
shares of Class A Common Stock equal to fifteen percent (15%) of the total
number of shares of Class A Common Stock beneficially owned by the M/C
Stockholders as of the Effective Time (as defined in the Merger Agreement) in
connection with the consummation of the Merger, subject to appropriate and
proportionate adjustment as a result of the Stock Split and subject to
adjustment pursuant to Section 5.1) to be registered by the Company under the
Securities Act (the "Registrable Amount") for Transfer by the M/C Stockholders
in connection with such offering during such period. If the Board determines to
register shares of Class A Common Stock held by the M/C Stockholders pursuant to
this Section 3.2(c), the Company will promptly give written notice of such
determination to the M/C Stockholders, and thereupon the Company will use
commercially reasonable efforts to effect the registration of that portion of
the Registrable Amount that the M/C Stockholders indicate a desire to register.
All terms, conditions and rights with respect to such registration (including
but not limited to any determination to reduce the Registrable Amount) shall be
determined by the Board, provided that (i) the representations and warranties of
the M/C Stockholders shall be customary taking into account, among other things,
the nature of the offering and the M/C Stockholders' relationship with the
Company, and (ii) the Company shall be responsible for all expenses with respect
to such registration other than underwriting discounts and commissions allocable
to the Class A Common Stock of the M/C Stockholders, which underwriting
discounts and commissions shall be the responsibility of the M/C Stockholders.
Notwithstanding the foregoing provisions of this Section 3.2(c), to the extent

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that the Company grants pursuant to Section 3.2(c) of the Second Amended and
Restated November 1998 Stockholders' Agreement the Principal Stockholders the
opportunity to register shares of Class A Common Stock for Transfer under the
Securities Act during the period commencing on January 1, 2000 and ending on the
Expiration Date, the Company shall grant the M/C Stockholders the opportunity to
register shares of Class A Common Stock on a substantially similar basis. To the
extent that the Company grants pursuant to Section 3.2(c) of this Agreement the
M/C Stockholders the opportunity to register shares of Class A Common Stock for
Transfer under the Securities Act, the Company shall grant each Principal
Stockholder pursuant to Section 3.2(c) of the Second Amended and Restated
November 1998 Stockholders' Agreement the opportunity to register shares of
Class A Common Stock on a substantially similar basis.

         (d) In addition to the registration rights granted pursuant to Sections
3.2(a), (b) and (c), no more frequently than once during each of the calendar
years ending December 31, 2000 and 2001 (each such year, an "Annual Period"),
and upon either (i) the receipt of a written request of the M/C Stockholders or
(ii) a determination by the Board of Directors, the Board shall undertake to
determine the Registrable Amount, if any, for Transfer by the M/C Stockholders.
If the Board determines to register shares of Class A Common Stock held by the
M/C Stockholders pursuant to this Section 3.2(d), the Company will promptly give
written notice of such determination to the M/C Stockholders, and thereupon the
Company will use commercially reasonable efforts to effect the registration of
that portion of the Registrable Amount that the M/C Stockholders indicate a
desire to register. All terms, conditions and rights with respect to such
registration (including but not limited to any determination to reduce the
Registrable Amount) shall be determined by the Board, provided that (i) the
representations and warranties of the M/C Stockholders shall be customary taking
into account, among other things, the nature of the offering and the M/C
Stockholders' relationship with the Company, and (ii) the Company shall be
responsible for all expenses with respect to such registration other than
underwriting discounts and commissions allocable to the Class A Common Stock of
the M/C Stockholders, which underwriting discounts and commissions shall be the
responsibility of the M/C Stockholders. Notwithstanding the foregoing provisions
of this Section 3.2(d), to the extent that the Company grants pursuant to
Section 3.2(d) of the Second Amended and Restated November 1998 Stockholders'
Agreement the Principal Stockholders the opportunity to register shares of Class
A Common Stock for Transfer under the Securities Act during the period
commencing on January 1, 2000 and ending on the Expiration Date, the Company
shall grant the M/C Stockholders the opportunity to register shares of Class A
Common Stock on a substantially similar basis. To the extent that the Company
grants pursuant to Section 3.2(d) of this Agreement the M/C Stockholders the
opportunity to register shares of Class A Common Stock for Transfer under the
Securities Act, the Company shall grant each Principal Stockholder pursuant to
Section 3.2(d) of the Second Amended and Restated November 1998 Stockholders'
Agreement the opportunity to register shares of Class A Common Stock on a
substantially similar basis.

         (e) For purposes of this Section 3.2, the M/C Stockholders shall be
deemed to be a single stockholder of the Company, the McLeods shall be deemed to
be a single Principal Stockholder of the Company, Lumpkin and all of the CCI
Shareholders shall be deemed to be a single Principal Stockholder of the Company
and the AEC Entities shall be deemed to be a single Principal Stockholder of the
Company.

         (f) Notwithstanding any other provision of this Agreement, to the
extent the Company has undertaken to register Securities of the M/C Stockholders
pursuant to this Section 3.2, the Company may subsequently determine not to
register such Securities and may either not file a registration statement or
otherwise withdraw or abandon a registration statement previously filed with
respect to the registration of such Securities; provided that to the extent the
Principal Stockholders are also participating in such registration, the M/C
Stockholders and the Principal Stockholders will be treated on a substantially
similar basis with respect to any such determination not to register Securities
or the withdrawal or abandonment of a registration statement previously filed as
contemplated by this Section 3.2(f).

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4.                REPRESENTATIONS AND WARRANTIES

         4.1      Representations and Warranties of Non-individual Stockholders

         Each non-individual party to this Agreement hereby represents and
     warrants, as of the date of this Agreement, to the Company and to each
     other party as follows:

                  4.1.1    Authorization

         Such party has taken all action necessary for it to enter into this
     Agreement and to consummate the transactions contemplated hereby.

                  4.1.2    Binding Obligation

         This Agreement constitutes a valid and binding obligation of such
     party, enforceable in accordance with its terms, except to the extent that
     such enforceability may be limited by bankruptcy, insolvency, and similar
     laws affecting the rights and remedies of creditors generally, and by
     general principles of equity and public policy; and each document and
     instrument to be executed by such party pursuant hereto, when executed and
     delivered in accordance with the provisions hereof, shall be a valid and
     binding obligation of such party, enforceable in accordance with its terms
     (with the aforesaid exceptions).

         4.2      Representations and Warranties of Individual Stockholders

         Each party to this Agreement who is an individual hereby represents and
     warrants, as of the date of this Agreement, to the Company and to each
     other party as follows:

                  4.2.1    Power and Authority

         Such party has the legal capacity and all other power and authority
     necessary to enter into this Agreement and to consummate the transactions
     contemplated hereby.

                  4.2.2    Binding Obligation

         This Agreement constitutes a valid and binding obligation of such
     party, enforceable in accordance with its terms, except to the extent that
     such enforceability may be limited by bankruptcy, insolvency, and similar
     laws affecting the rights and remedies of creditors generally, and by
     general principles of equity and public policy; and each document and
     instrument to be executed by such party pursuant hereto, when executed and
     delivered in accordance with the provisions hereof, shall be a valid and
     binding obligation of such party, enforceable in accordance with its terms
     (with the aforesaid exceptions).

         4.3      Representations and Warranties of the Company

         The Company hereby represents and warrants, as of the date of this
     Agreement, to each party as follows:

                  4.3.1    Authorization

         The Company has taken all corporate action necessary for it to enter
     into this Agreement and to consummate the transactions contemplated hereby.

                  4.3.2    Binding Obligation

         This Agreement constitutes a valid and binding obligation of the
     Company, enforceable in accordance with its terms, except to the extent
     that such enforceability may be limited by bankruptcy, insolvency, and
     similar laws

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<PAGE>

affecting the rights and remedies of creditors generally, and by general
principles of equity and public policy; and each document and instrument to be
executed by the Company pursuant hereto, when executed and delivered in
accordance with the provisions hereof, shall be a valid and binding obligation
of the Company, enforceable in accordance with its terms (with the aforesaid
exceptions).

5.                MISCELLANEOUS


         5.1      Effect of Changes in Capitalization

         All share amounts of the Company's capital stock referred to in this
Agreement shall be appropriately and proportionally adjusted for any
recapitalization, reclassification, stock split-up, combination of shares,
exchange of shares, stock dividend or other distribution payable in capital
stock, or other increase or decrease in such shares effected without receipt of
consideration by the Company, occurring after the date of this Agreement.

         5.2      Additional Actions and Documents

         Each of the parties hereto hereby agrees to take or cause to be taken
such further actions, to execute, deliver and file or cause to be executed,
delivered and filed such further documents and instruments, and to obtain such
consents, as may be necessary or as may be reasonably requested in order to
fully effectuate the purposes, terms and conditions of this Agreement, whether
before, at or after the Effective Date.

         5.3      Entire Agreement; Amendment

         Other than the Second Amended and Restated November 1998 Stockholders'
Agreement with respect to the parties thereto and as set forth therein, this
Agreement constitutes the entire agreement among the parties hereto as of the
date hereof with respect to the specific matters contemplated herein, and it
supersedes all prior oral or written agreements, commitments or understandings
with respect to the matters provided for herein. No amendment, modification or
discharge of this Agreement shall be valid or binding unless set forth in
writing and duly executed by the Company and by the party against whom
enforcement of the amendment, modification or discharge is sought. Any
amendment, modification or discharge of this Agreement to be enforced against
the M/C Stockholders shall be valid and binding with respect to all M/C
Stockholders if such amendment, modification or discharge is executed by those
M/C Stockholders holding a majority of the shares of Class A Common Stock issued
to the M/C Stockholders in the Merger (including distributions of Securities
with respect to such Securities and Securities acquired as a result of a stock
split with respect to such Securities).

         5.4      Limitation on Benefit

         It is the explicit intention of the parties hereto that no person or
entity other than the parties hereto is or shall be entitled to bring any action
to enforce any provision of this Agreement against any of the parties hereto,
and the covenants, undertakings and agreements set forth in this Agreement shall
be solely for the benefit of, and shall be enforceable only by, the parties
hereto or their respective successors, heirs, executors, administrators, legal
representatives and permitted assigns.

         5.5      Binding Effect; Specific Performance

         This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors, heirs, executors,
administrators, legal representatives and permitted assigns. No party shall
assign this Agreement without the written consent of the other parties hereto;

                                       9
<PAGE>

and such consent shall not be unreasonably withheld. The parties hereto agree
that irreparable damage would occur in the event any provision of this Agreement
was not performed in accordance with the terms hereof and that the parties shall
be entitled to specific performance of the terms hereof, in addition to any
other remedy at law or in equity.

         5.6      Governing Law

         This Agreement, the rights and obligations of the parties hereto, and
any claims or disputes relating thereto, shall be governed by and construed in
accordance with the laws of Delaware (excluding the choice of law rules
thereof).

         5.7      Notices

         All notices, demands, requests, or other communications which may be or
are required to be given, served, or sent by any party to any other party
pursuant to this Agreement shall be in writing and shall be hand-delivered or
mailed by first-class, registered or certified mail, return receipt requested,
postage prepaid, or transmitted by telegram, telecopy, facsimile transmission or
telex, addressed as follows:

                (i)        If to the Company or to the McLeods:

                                         McLeodUSA Incorporated
                                         McLeodUSA Technology Park
                                         6400 C Street, SW, P.O. Box 3177
                                         Cedar Rapids, IA  52406-3177
                                         Attention:  Randall Rings
                                         Facsimile:  (319) 790-7901

                (ii)       If to the AEC Entities:

                                         IES Investments Inc. (n/k/a Alliant
                                         Energy Investments, Inc.)
                                         200 1st Street SE
                                         Cedar Rapids, IA 52401
                                         Attention:  James E. Hoffman
                                         Facsimile:  (319) 398-4204

                (iii)      If to Lumpkin or any CCI Shareholder:

                                         P.O. Box 1234
                                         Mattoon, IL  61938
                                         Attention:  Richard A. Lumpkin
                                         Facsimile:  (217) 234-9934

                with a copy to :

                Schiff Hardin & Waite
                6600 Sears Tower
                Chicago, Illinois  60606

                Attention:  David R. Hodgman, Esq.
                Facsimile:  (312) 258-5600

                (iv)       If to the M/C Stockholders:
                                     c/o Media/Communications Partners III
                                     Limited Partnership
                                     75 State Street
                                     Boston, Massachusetts 02109

                                       10
<PAGE>

                                     Attention:  James F. Wade
                                     Facsimile:  (617) 345-7201

                                     with a copy to:

                                     Edwards & Angell, LLP
                                     101 Federal Street
                                     Boston, MA  02110
                                     Attention:  Stephen O. Meredith, Esq.
                                     Facsimile:  (617) 439-4170

         Each party may designate by notice in writing a new address to which
any notice, demand, request or communication may thereafter be so given, served
or sent. Each notice, demand, request or communication which shall be
hand-delivered, mailed, transmitted, telecopied or telexed in the manner
described above, or which shall be delivered to a telegraph company, shall be
deemed sufficiently given, served, sent, received or delivered for all purposes
at such time as it is delivered to the addressee (with the return receipt, the
delivery receipt, or the answerback being deemed conclusive, but not exclusive,
evidence of such delivery) or at such time as delivery is refused by the
addressee upon presentation.

         5.8      Termination

         (a) This Agreement shall terminate and be of no further force or effect
as to an Original Stockholder (and not as to the Company and the M/C
Stockholders) at such time as the Second Amended and Restated November 1998
Stockholders' Agreement shall terminate and be of no further force or effect
with respect to such Original Stockholder.

         (b) If (i) during any Annual Period the Board of Directors has not
provided the M/C Stockholders a reasonable opportunity to Transfer shares of
Class A Common Stock pursuant to the registration of such shares under the
Securities Act pursuant to Section 3.2 in an aggregate amount equal to not less
than fifteen percent (15%) of the total number of shares of Class A Common Stock
beneficially owned by the M/C Stockholders as of the Effective Time in
connection with the consummation of the Merger, subject to appropriate and
proportionate adjustment as a result of the Stock Split and subject to
adjustment pursuant to Section 5.1 or (ii) after January 1, 2000, the Second
Amended and Restated November 1998 Stockholders' Agreement has been terminated
by all parties thereto, then the M/C Stockholders may terminate this Agreement
by providing written notice of termination to all other parties (x) in the case
of clause (b)(i) above, no later than thirty (30) days following the end of such
Annual Period and (y) in the case of clause (b)(ii) above, at any time after
January 1, 2000, such that all rights and obligations hereunder shall cease, and
this Agreement shall be of no further force or effect.

         (c) Unless otherwise previously terminated by the M/C Stockholders
pursuant to Section 5.8(b), this Agreement shall terminate on the Expiration
Date.

         (d) For purposes of this Section 5.8, the M/C Stockholders shall be
deemed to be a single stockholder of the Company, the McLeods shall be deemed to
be a single Original Stockholder of the Company, Lumpkin and all of the CCI
Shareholders shall be deemed to be a single Original Stockholder of the Company,
and the AEC Entities shall be deemed to be a single Original Stockholder of the
Company.

         5.9      Publicity

         The M/C Stockholders will use their reasonable best efforts to consult
with the Company prior to issuing any press release, making any filing with any
governmental entity or national securities exchange or making any other public
dissemination of information by the M/C Stockholders within which this Agreement
or the contents hereof are referenced or described.

                                       11
<PAGE>

         5.10     Appointment of Representative

            (a) Each of the M/C Stockholders hereby appoints M/C Partners, with
power of substitution, as its exclusive agent to act on its behalf with respect
to any and all actions to be taken under or amendments or modifications to be
made to this Agreement (the "M/C Representative"). The M/C Representative shall
take, and the M/C Stockholders agree that the M/C Representative shall take, any
and all actions which the M/C Representative believes are necessary or advisable
under this Agreement for and on behalf of each of the M/C Stockholders, as fully
as if each of the M/C Stockholders was acting on its own behalf, including,
without limitation, dealing with the Company and the other parties hereto with
respect to all matters arising under this Agreement, entering into any amendment
or modification to this Agreement deemed advisable by the M/C Representative and
taking any and all other actions specified in or contemplated by this Agreement.
The Company and the other parties hereto shall have the right to rely upon all
actions taken or not taken by the M/C Representative pursuant to this Agreement,
all of which actions or omissions shall be legally binding upon each of the M/C
Stockholders.

         (b) Each of the CCI Shareholders hereby appoints Lumpkin, with power of
substitution, as its exclusive agent to act on its behalf with respect to any
and all actions to be taken under or amendments or modifications to be made to
this Agreement (the "CCI Representative"). The CCI Representative shall take,
and the CCI Shareholders agree that the CCI Representative shall take, any and
all actions which the CCI Representative believes are necessary or advisable
under this Agreement for and on behalf of each of the CCI Shareholders, as fully
as if each of the CCI Shareholders was acting on its own behalf, including,
without limitation, dealing with the Company and the other parties hereto with
respect to all matters arising under this Agreement, entering into any amendment
or modification to this Agreement deemed advisable by the CCI Representative and
taking any and all other actions specified in or contemplated by this Agreement.
The Company and the other parties hereto shall have the right to rely upon all
actions taken or not taken by the CCI Representative pursuant to this Agreement,
all of which actions or omissions shall be legally binding upon each of the CCI
Shareholders.

         5.11     Execution in Counterparts

         To facilitate execution, this Agreement may be executed in as many
counterparts as may be required; and it shall not be necessary that the
signatures of, or on behalf of, each party, or that the signatures of all
persons required to bind any party, appear on each counterpart; but it shall be
sufficient that the signature of, or on behalf of, each party, or that the
signatures of the persons required to bind any party, appear on one or more of
the counterparts. All counterparts shall collectively constitute a single
agreement. It shall not be necessary in making proof of this Agreement to
produce or account for more than a number of counterparts containing the
respective signatures of, or on behalf of, all of the parties hereto.

                  [Remainder of Page Intentionally Left Blank]

                                       12
<PAGE>

         IN WITNESS WHEREOF, the undersigned have duly executed and delivered
this Second Amended and Restated January 1999 Stockholders' Agreement, or have
caused this Second Amended and Restated January 1999 Stockholders' Agreement to
be duly executed and delivered on their behalf, as of the day and year first
hereinabove set forth.

MCLEODUSA INCORPORATED



By:  /s/ J. Lyle Patrick
     --------------------------------
     Name:  J. Lyle Patrick

     Title:  Group Vice President/CFO

     /s/ Clark E. McLeod                      /s/ Mary E. McLeod
     --------------------------------         --------------------------------
     Clark E. McLeod                          Mary E. McLeod


M/C INVESTORS L.L.C.



By:  /s/ Peter H.O. Claudy
     --------------------------------
     Name:  Peter H.O. Claudy
     Title: Manager

MEDIA/COMMUNICATIONS PARTNERS III LIMITED PARTNERSHIP

By:  M/C III L.L.C., its General Partner



By:  /s/ Peter H.O. Claudy
     --------------------------------
     Name:  Peter H.O. Claudy
     Title: Manager

ALLIANT ENERGY CORPORATION, INC.



By:  /s/ James E. Hoffman
     --------------------------------
     Name:  James E. Hoffman
     Title:  Executive Vice President
                Business Development

ALLIANT ENERGY FOUNDATION

                                       13
<PAGE>

By:  /s/ Edward M. Gleason
     --------------------------------
     Name:  Edward M. Gleason
     Title:  Treasurer

IES INVESTMENTS INC. (n/k/a ALLIANT ENERGY INVESTMENTS, INC.)



By:  /s/ James E. Hoffman
     --------------------------------
     Name:  James E. Hoffman
     Title:  President, Alliant Energy Resources



HEARTLAND PROPERTIES, INC.



By:  /s/ Henry Wertheimer
     --------------------------------
     Name:  Henry Wertheimer
     Title:  Vice President/Treasurer

     /s/ Richard A. Lumpkin                   /s/ Gail G. Lumpkin
     --------------------------------         --------------------------------
     Richard A. Lumpkin                       Gail G. Lumpkin


Margaret Lumpkin Keon Trust                   Mary Lee Sparks Trust
dated May 13, 1978                            dated May 13, 1978


     /s/ Margaret Lumpkin Keon                /s/ Mary Lee Sparks
     --------------------------------         --------------------------------
     Margaret Lumpkin Keon, as Trustee        Mary Lee Sparks, as Trustee


                                              /s/ Steven L. Grissom
                                              --------------------------------
                                              Steven L. Grissom, as Trustee
     /s/ Mary Lee Sparks
     --------------------------------
     Mary Lee Sparks

                                       14
<PAGE>

The twelve trusts created under the Mary Green Lumpkin Gallo Trust Agreement
dated December 29, 1989 one for the benefit of each of:

      Joseph John Keon III,
      Katherine Stoddert Keon,
      Lisa Anne Keon,
      Margaret Lynley Keon,
      Pamela Keon Vitale,
      Susan Tamara Keon DeWyngaert,
      Benjamin Iverson Lumpkin,
      Elizabeth Arabella Lumpkin,
      Anne Romayne Sparks,
      Barbara Lee Sparks,
      Christina Louise Sparks, and
      John Woodruff Sparks



Bank One, Texas, N.A., Trustee

By:   /s/ Frank A. Glispin
      --------------------------------
      Name:  Frank A. Glispin
      Title:  Relationship Manager





The twelve trusts created under the Richard Adamson Lumpkin Grandchildren's
Trust dated September 5, 1980, one for the benefit of each of:

      Joseph John Keon III,
      Katherine Stoddert Keon,
      Lisa Anne Keon,
      Margaret Lynley Keon,
      Pamela Keon Vitale,
      Susan Tamara Keon DeWyngaert,
      Benjamin Iverson Lumpkin,
      Elizabeth Arabella Lumpkin,
      Anne Romayne Sparks,
      Barbara Lee Sparks,
      Christina Louise Sparks, and
      John Woodruff Sparks

Bank One, Texas, N.A., Trustee



By:   /s/ Frank A. Glispin
      --------------------------------
      Name:  Frank A. Glispin
      Title:  Relationship Manager

                                       15
<PAGE>

The three trusts established by Richard Adamson Lumpkin under Trust Agreement
dated February 6, 1970, one for the benefit of each of:

      Richard Anthony Lumpkin,
      Margaret Anne Keon, and
      Mary Lee Sparks

Bank One, Texas, N.A., Trustee



By:   /s/ Frank A. Glispin
      --------------------------------

      Name:  Frank A. Glispin
      Title:  Relationship Manager

The twelve 1990 Personal Income Trusts established by Margaret L. Keon, Mary Lee
Sparks, and Richard A. Lumpkin, each dated April 20, 1990, one for the benefit
of each of:

      Joseph John Keon III,
      Katherine Stoddert Keon,
      Lisa Anne Keon,
      Margaret Lynley Keon,
      Pamela Keon Vitale,
      Susan Tamara Keon DeWyngaert,
      Benjamin Iverson Lumpkin,
      Elizabeth Arabella Lumpkin,
      Anne Romayne Sparks,
      Barbara Lee Sparks,
      Christina Louise Sparks, and
      John Woodruff Sparks

/s/ David R. Hodgman
--------------------------------
David R. Hodgman, Trustee

/s/ Steven L. Grissom
--------------------------------
Steven L. Grissom, Trustee

                                 16
<PAGE>

                                   SCHEDULE I

Richard A. Lumpkin

Gail G. Lumpkin

Margaret Lumpkin Keon, as Trustee under the Margaret Lumpkin Keon Trust dated
May 13, 1978

Mary Lee Sparks and Steven L. Grissom, as Trustees of the Mary Lee Sparks Trust
dated May 13, 1978

Mary Lee Sparks

Bank One, Texas, N.A., as Trustee of the twelve trusts created under the Mary
Green Lumpkin Gallo Trust Agreement dated December 29, 1989, one for the benefit
of each of Joseph John Keon III, Katherine Stoddert Keon, Lisa Anne Keon,
Margaret Lynley Keon, Pamela Keon Vitale, Susan Tamara Keon DeWyngaert, Benjamin
Iverson Lumpkin, Elizabeth Arabella Lumpkin, Anne Romayne Sparks, Barbara Lee
Sparks, Christina Louise Sparks, and John Woodruff Sparks

Bank One, Texas, N.A., as Trustee of the twelve trusts created under the Richard
Adamson Lumpkin Grandchildren's Trust dated September 5, 1980, one for the
benefit of each of Joseph John Keon III, Katherine Stoddert Keon, Lisa Anne
Keon, Margaret Lynley Keon, Pamela Keon Vitale, Susan Tamara Keon DeWyngaert,
Benjamin Iverson Lumpkin, Elizabeth Arabella Lumpkin, Anne Romayne Sparks,
Barbara Lee Sparks, Christina Louise Sparks, and John Woodruff Sparks

Bank One, Texas, N.A., as Trustee of the three trusts established by Richard
Adamson Lumpkin under the Trust Agreement dated February 6, 1970, one for the
benefit of each of Richard Anthony Lumpkin, Margaret Anne Keon, and Mary Lee
Sparks

David R. Hodgman and Steven L. Grissom, as Trustees of the twelve 1990 Personal
Income Trusts established by Margaret L. Keon, Mary Lee Sparks, and Richard A.
Lumpkin, each dated April 20, 1990, one for the benefit of each of Joseph John
Keon III, Katherine Stoddert Keon, Lisa Anne Keon, Margaret Lynley Keon, Pamela
Keon Vitale, Susan Tamara Keon DeWyngaert, Benjamin Iverson Lumpkin, Elizabeth
Arabella Lumpkin, Anne Romayne Sparks, Barbara Lee Sparks, Christina Louise
Sparks, and John Woodruff Sparks

                                       17