**Exhibit 4.1**

 

 

CONFORMED COPY

 

 

FIRST AMENDMENT dated as of October 3,2003 (this “Amendment”), to the Credit Agreement dated as ofApril 16, 2002 (as heretofore amended, the “Credit**Agreement”) amongMCLEODUSA INCORPORATED, a Delaware corporation (the “Borrower”), thelenders party thereto (the “Lenders”) and JPMORGAN CHASE BANK (formerlyknown as The Chase Manhattan Bank), as Administrative Agent (in such capacity,the “Administrative Agent”) and Collateral Agent.

 

The Borrowerhas requested that the Lenders agree to amend certain provisions of the CreditAgreement.  The Lenders party hereto arewilling so to amend the Credit Agreement on the terms and subject to theconditions set forth herein. Capitalized terms used but not defined herein have the meanings assignedto them in the Credit Agreement, amended hereby.

 

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

 

# SECTION 1.  Amendment ofCredit Agreement.  Uponeffectiveness of this Amendment in accordance with Section 4 hereof, theCredit Agreement is amended as follows:

#  

## (a)  Amendment ofSection 5.01. Section 5.01 of the Credit Agreement is amended by replacing theword “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 forthe Borrower and its Restricted Subsidiaries covering the periods from(x) October 1, 2003 through December 31, 2003, prepared to showinformation on a monthly basis, and (y) January 1, 2004 through December 31,2005, prepared to show information on a quarterly basis, (ii) on or priorto January 31, 2004, a financial forecast of the Borrower and itsRestricted Subsidiaries covering the period from January 1, 2004 throughDecember 31, 2004, prepared to show information on a monthly basis and(iii)  within 30 days after the end of each fiscal month (or 50 daysif such fiscal month is the last month of a fiscal quarter or 60 days ifsuch fiscal month is the last month of a fiscal year) of the Borrower, (A) an unauditedconsolidated balance sheet of the Borrower and its Restricted Subsidiaries asof the end of

 

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such fiscal month, setting forth in comparative form (including acolumn indicating percentage variance) the figures as of the end of theprevious fiscal year and the applicable month end as set forth in theapplicable financial forecast delivered pursuant to this clause (g),(B) unaudited consolidated statements of operations and cash flows of theBorrower and its Restricted Subsidiaries for such fiscal month and the thenelapsed portion of such fiscal year, setting forth in each case in comparativeform (including a column indicating percentage variance) the figures for thecorresponding monthly period and year-to-date period of the previous fiscal yearand the applicable monthly and year-to-date figures set forth in the applicablefinancial forecast delivered pursuant to this clause (g), (C) a reasonablydetailed managements’ discussion and analysis, including a narrative discussionof key balance sheet accounts and key income statement line items (including,but not limited to, a description and discussion of each significant factorcontributing to revenue changes), in each case, including a comparison to therelevant accounts and line items included in the applicable financial forecastdelivered pursuant to this clause (g) and (D) a reasonably detailed cashflow discussion and analysis (including operating cash flow, working capital,Capital Expenditures, actual Borrowings hereunder during such period comparedto projected Borrowings as set forth in the applicable financial forecastdelivered pursuant to this clause (g) and unused Revolving Commitments asof the end of such fiscal month).  Thefinancial statements delivered pursuant to clauses (A) and (B) above shall becertified by one of the Borrower’s Financial Officers as presenting fairly inall material respects the financial condition and results of operations of theBorrower and its Restricted Subsidiaries on a consolidated basis and as havingbeen prepared in accordance with GAAP consistently applied, subject to normalyear-end audit adjustments, regular quarterly adjustments, adjustmentsresulting from differences in procedures in the closing of the Borrower’smonth-end and quarter-end books (including, but not limited to, accrual of linecosts) and the absence of footnotes.  Itis understood and agreed that the Administrative Agent may at any time, uponreasonable advance notice to the Borrower, elect to have the benchmark for thecomparative information required under this clause (g) be the information setforth in the most recent budget provided under clause (e) above instead ofthe applicable financial forecast delivered pursuant this clause (g), andthat the benchmark for the comparative information required under thisclause (g) for the fiscal year 2005 and thereafter shall be theinformation set forth in the budget provided under clause (e) for suchfiscal year; and”

 

## (b)  Amendment ofSection 6.13.  The table setforth in Section 6.13 of the Credit Agreement is amended to read asfollows:

 

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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 ofSection 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 CapitalExpenditures of the Borrower and the Restricted Subsidiaries for any fiscalyear of the Borrower to exceed (i) with respect to the fiscal years endingDecember 31, 2003 and 2004, $100,000,000 and (ii) with respect to thefiscal years ending December 31, 2005 and thereafter, $200,000,000 (theapplicable amount under clause (i) or clause (ii), the “Capex Limit”).  The Capex Limit in respect of any fiscalyear commencing with the fiscal year ending on December 31, 2004, shall beincreased (but not decreased) by the amount of unused permitted CapitalExpenditures for the immediately preceding fiscal year (such amount, the “CapexCarryforward”); provided, however, that in no event shall theCapex Limit for any fiscal year be increased by more than $50,000,000.  Any Capex Carryforward that is not permittedto be used in any fiscal year as a result of the proviso to the precedingsentence may, subject to such proviso, be applied to any subsequent fiscalyear.

 

## (d)  Amendment ofSection 6.18.  The table setforth in Section 6.18 of the Credit Agreement is amended to read asfollows:

 
| **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, 2003through 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 orrequest the issuance of any Letter of Credit that would result in the totalRevolving 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 Agentthat, as of the Effective Date:

 

## (a)  after giving effect to thisAmendment, the representations and warranties of the Borrower set forth inArticle III of the Credit Agreement are true and correct on and as of theEffective 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 anearlier date, in which case such representations and warranties were true andcorrect as of such earlier date;

 

## (b)  after giving effect to thisAmendment, no Default has occurred and is continuing under the CreditAgreement; and

 

## (c)  this Amendment has beenduly executed and delivered by the Borrower and the Credit Agreement, asamended hereby, constitutes a legal, valid and binding obligation of theBorrower, enforceable against the Borrower in accordance with its terms,subject to applicable bankruptcy, insolvency, reorganization, moratorium orother similar laws affecting creditors’ rights generally and subject to generalprinciples of equity, regardless of whether considered in a proceeding inequity or at law.

 

# SECTION 4.  Conditions to Effectiveness*.  *This Amendmentshall become effective as of the date (the “Effective Date”) on whicheach of the following conditions has been satisfied:

 

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

 

## (b)  the Administrative Agentshall have received a certificate of a Financial Officer of the Borrower, datedthe Effective Date, to the effect that the representations and warranties setforth in Section 3 hereof are true and correct;

 

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## (c)  the Borrower shall havepaid to the Administrative Agent, in immediately available funds, for theaccount of each of the Lenders entitled thereto, the Amendment Fee referred toin Section 5 hereof; and

 

## (d)  the Borrower’s CreditAgreement dated as of May 31, 2000 shall have been amended to effectmodifications to the covenants therein equivalent to those effected to theCredit Agreement by this Amendment, and all conditions to the effectiveness ofsuch amendment shall have been satisfied on the Effective Date.

 

# SECTION 5.  Amendment Fee.  TheBorrower agrees to pay to the Administrative Agent, for the account of eachLender that delivers (including by fax) an executed counterpart of thisAmendment prior to 12:00 p.m., New York City time, on October 15, 2003, anamendment fee (the “Amendment Fee”) in an amount equal to 1.00% of thesum of such Lender’s outstanding Loans and unused Commitments.

 

# SECTION 6.  Effect of Amendment. Except as expressly set forth herein, this Amendment shall not byimplication or otherwise limit, impair, constitute a waiver of, amend, orotherwise affect the rights and remedies of the Lenders or the AdministrativeAgent under the Credit Agreement or any other Loan Document and shall notalter, modify, amend or in any way affect any of the terms, conditions,obligations, covenants or agreements contained in the Credit Agreement or anyother Loan Document, all of which are ratified and affirmed in all respects andshall continue in full force and effect. This Amendment shall apply and be effective with respect only to thematters expressly referred to herein, and nothing herein shall be deemed toentitle the Borrower to a consent to, or a waiver, amendment, modification orother change of, any of the terms, conditions, obligations, covenants oragreements contained in the Credit Agreement or any other Loan Document insimilar or different circumstances.  Themodifications to the covenants effected by this Amendment shall applyretroactively to the periods covered thereby, and the Lenders hereby waive anyDefault 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 aresult of such retroactive modifications. This Amendment shall constitute a “Loan Document” for all purposes ofthe Credit Agreement.

 

# SECTION 7.  Applicable Law.  **THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED INACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.**

 

# SECTION 8.  Counterparts.  ThisAmendment may be executed in any number of counterparts and by differentparties hereto in separate counterparts, each of which when so executed anddelivered shall be deemed an original but all of which when taken togethershall constitute but one and the same instrument.  Delivery of an executed signature page of this Amendment byfacsimile transmission shall be effective as delivery of a manually executedcounterpart hereof.

 

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# SECTION 9.  Costs and Expenses. The Borrower agrees to reimburse the Administrative Agent for itsreasonable out-of-pocket expenses in connection with this Amendment, includingthe reasonable fees, charges and disbursements of counsel for the AdministrativeAgent.

 

# SECTION 10.  Headings.  Theheadings of this Amendment are for purposes of reference only and shall notlimit or otherwise affect the meaning hereof.

 

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IN WITNESSWHEREOF, the parties hereto have caused this Amendment to be duly executed bytheir 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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