**Exhibit 4.2**

 

FIFTH AMENDMENT dated as ofApril 21, 2004 (this “Amendment”) to the Credit Agreement dated asof May 31, 2000 (as amended, supplemented or otherwise modified from time totime, the “Credit**Agreement”) among MCLEODUSAINCORPORATED, a Delaware corporation (the “Borrower”), the lenders fromtime to time party thereto (the “Lenders”) and JPMORGAN CHASE BANK, asAdministrative Agent (in such capacity, the “Administrative Agent”) andCollateral 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, as 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.  Effective as ofthe Effective Date (as defined in Section 3 hereto), the Credit Agreementis amended as follows:

#  

## (a)  Amendment of Section 5.01.  Section 5.01(g) of the Credit Agreementis hereby amended by restating clause (ii) thereof in its entirety as follows:

##  

“(ii) on or prior to May 14, 2004,a financial forecast of the Borrower and its Restricted Subsidiaries coveringthe period from April 1, 2004 through December 31, 2004, prepared to showinformation on a monthly basis and”

 

## (b)  Amendment of Section 6.13.  Section 6.13 of the Credit Agreement ishereby amended in its entirety as follows:

##  

“SECTION6.13.  Minimum Consolidated EBITDAand Leverage Ratio.  The Borrower(a) will not permit Consolidated EBITDA for any period set forth below (ineach case, taken as a single accounting period) to be less than the amount setforth opposite such period below:

 
| **Period**                                  |   | **Minimum  Consolidated  EBITDA** |       |
|---------------------------------------------|--------|-----------------------------------|------------|
|                                        |   |                              |       |   |
| January 1, 2004 through March 31, 2004 |   | $                                 | 8,000,000  |   |
|                                        |   |                              |       |
| January 1, 2004 through June 30, 2004       |   | $                                 | 16,000,000 |   |

 

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| January 1, 2004 through September 30, 2004 |   | $               | 24,000,000  |   |
|--------------------------------------------|--------|-----------------|-------------|--------|
|                                       |   |            |        |
| January 1, 2004 through December 31, 2004  |   | $               | 34,000,000  |   |
|                                       |   |            |        |
| April 1, 2004 through March 31, 2005       |   | $               | 49,000,000  |   |
|                                       |   |            |        |
| July 1, 2004 through June 30, 2005         |   | $               | 69,000,000  |   |
|                                       |   |            |        |
| October 1, 2004 through September 30, 2005 |   | $               | 89,000,000  |   |
|                                       |   |            |        |
| January 1, 2005 through December 31, 2005  |   | $               | 114,000,000 |   |
|                                       |   |            |        |
| January 1, 2006 and thereafter        |   | Not Applicable; |        |

 

and (b) shall not permit theLeverage Ratio to exceed 4.00 to 1.00 on any date on or after January 1,2006.”

 

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

##  

## “SECTION6.14.  Capital ExpenditureLimitation.  The Borrower shall notpermit the Capital Expenditures of the Borrower and the Restricted Subsidiariesfor any fiscal year of the Borrower to exceed (i) with respect to the fiscalyear ending December 31, 2004, $75,000,000 (ii) with respect to the fiscalyears ending December 31, 2005, $100,000,000, and (iii) with respect tofiscal years ending December 31, 2006 and thereafter, $200,000,000 (theapplicable amount under clause (i), (ii) or (iii), the “Capex Limit”).  The Capex Limit in respect of any fiscalyear commencing with the fiscal year ending on December 31, 2005, shall beincreased by the amount of unused permitted Capital Expenditures for theimmediately preceding fiscal year (such amount, the “Capex Carryforward”);provided, however, that in no event shall the Capex Limit for anyfiscal year be increased by more than $50,000,000.  Any Capex Carryforward that is not permitted to be used in anyfiscal year as a result of the proviso to the preceding sentence may, subjectto such proviso, be applied to any subsequent fiscal year.”

##  

## (d)  Amendment of Section 6.17.  Section 6.17 is amended in its entirety asfollows:

##  

“SECTION 6.17.Interest Expense Coverage Ratio. The Borrower will not permit the ratio of (a) Consolidated EBITDA to (b)Consolidated Cash Interest Expense, in each case for any period of fourconsecutive fiscal quarters ending during any period set forth below, to beless than the ratio set forth opposite such period:  

 
| **Period**                             |   | **Ratio**    |   |
|----------------------------------------|--------|--------------|--------|
|                                   |   |         |   |
| January 1, 2004 through March 31, 2005 |   | 1.00 to 1.00 |   |

 

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| April 1, 2005 through June 30, 2005       |   | 1.50 to 1.00        |   |
|-------------------------------------------|--------|---------------------|--------|
|                                      |   |                |   |
| July 1, 2005 through September 30, 2005   |   | 2.00 to 1.00        |   |
|                                      |   |                |   |
| October 1, 2005 through December 31, 2005 |   | 2.00 to 1.00        |   |
|                                      |   |                |   |
| January 1, 2006 and thereafter            |   | 2.50 to 1.00.” |   |

##  

## (e)  Amendment of Section 6.18.  The table set forth in Section 6.18 of theCredit Agreement is hereby amended in its entirety as follows:

 
| **“Period**                          |   | **Minimum**           |        |
|-------------------------------------------|--------|-----------------------|-------------|
|                                      |   |                  |        |
| January 1, 2004 through March 31, 2004    |   | $                     | 825,000,000 |   |
|                                      |   |                  |        |
| April 1, 2004 through June 30, 2004       |   | $                     | 780,000,000 |   |
|                                      |   |                  |        |
| July 1, 2004 through September 30, 2004   |   | $                     | 760,000,000 |   |
|                                      |   |                  |        |
| October 1, 2004 through December 31, 2004 |   | $                     | 770,000,000 |   |
|                                      |   |                  |        |
| January 1, 2005 and thereafter       |   | Not Applicable.” |        |

 

# SECTION 2.  Representationsand Warranties.  To induce the otherparties hereto to enter into this Amendment, the Borrower represents to each ofthe Lenders and the Administrative Agent that, as of the Effective Date:

#  

## (a)  after giving effect to this Amendment, therepresentations and warranties of the Borrower set forth in Article III of theCredit Agreement are true and correct on and as of the Effective Date with thesame effect as if made on and as of the Effective Date, except to the extentsuch representations and warranties expressly relate to an earlier date, inwhich case such representations and warranties were true and correct as of suchearlier date;

##  

## (b)  after giving effect to this Amendment, noDefault has occurred and is continuing under the Credit Agreement; and

##  

## (c)  this Amendment has been duly executed anddelivered by the Borrower and each of this Amendment and the Credit Agreement,as amended 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.

 

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# SECTION 3.  Conditions toEffectiveness; Condition to Continuing Effectiveness*.*  (a)  This Amendment shallbecome effective on the date (the “Effective Date”) on which each of thefollowing conditions has been satisfied (or waived by the AdministrativeAgent):

#  

### (i)  the Administrative Agent shall have receivedcounterparts of this Amendment that, when taken together, bear the signaturesof the Borrower and the Required Lenders;

###  

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

###  

### (iii)  the Borrower shall have paid to theAdministrative Agent, in immediately available funds, for the account of eachof the Lenders entitled thereto, the Amendment Fee (as defined below); and

###  

### (iv)  the Amendment, dated the date hereof, to theBorrower’s credit agreement dated as of April 16, 2002 (the “Exit CreditAgreement”) shall have become effective pursuant to its terms.

###  

## (b)  Notwithstanding the occurrence of theEffective Date, if (i) at any time during the period from April 1,2004 through June 30, 2004, the total Revolving Exposure (as defined inthe Exit Credit Agreement), under the Exit Credit Agreement shall exceed$80,000,000 or (ii) at any time during the period from July 1, 2004through September 30, 2004 such total Revolving Exposure under the ExitCredit Agreement shall exceed $95,000,000 then, in either such case, themodifications to the covenants contained in Sections 6.13, 6.17 and 6.18of the Credit Agreement effected by Section 1 of this Amendment shallthereupon terminate and be of no further force and effect, and the covenantscontained in Sections 6.13, 6.17 and 6.18 of the Credit Agreement (as ineffect immediately prior to the Effective Date) shall thereupon apply andcontinue in full force and effect.

##  

# SECTION 4.  Amendment Fee.  The Borrower agrees to pay to theAdministrative Agent, for the account of each Lender (including JPMorgan ChaseBank) that delivers an executed counterpart of this Amendment prior to 5:00p.m., New York City time, on April 28, 2004, an amendment fee (the “AmendmentFee”) in an amount equal to 0.25% of the sum of such Lender’s outstandingLoans, LC Exposure and unused Commitments.

#  

# SECTION 5.  Effect ofAmendment.  Except as expressly setforth herein, this Amendment shall not by implication or otherwise limit,impair, constitute a waiver of, amend, or otherwise affect the rights andremedies of the

 

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# Lenders or theAdministrative Agent under the Credit Agreement or any other Loan Document andshall not alter, modify, amend or in any way affect any of the terms,conditions, obligations, covenants or agreements contained in the CreditAgreement or any other Loan Document, all of which are ratified and affirmed inall respects and shall continue in full force and effect.  This Amendment shall apply and be effectivewith respect only to the matters expressly referred to herein, and nothingherein 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 anyother Loan Document in similar or different circumstances.  This Amendment shall constitute a “LoanDocument” for all purposes of the Credit Agreement.

#  

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

#  

# SECTION 7.  Counterparts.  This Amendment may be executed in any numberof counterparts and by different parties hereto in separate counterparts, eachof which when so executed and delivered shall be deemed an original but all ofwhich when taken together shall constitute but one and the sameinstrument.  Delivery of an executedsignature page of this Amendment by facsimile transmission shall be effectiveas delivery of a manually executed counterpart hereof.

#  

# SECTION 8.  Costs andExpenses.  The Borrower agrees toreimburse the Administrative Agent for its reasonable out-of-pocket expenses inconnection with this Amendment, including the reasonable fees, charges anddisbursements of counsel for the Administrative Agent.

#  

# SECTION 9.  Headings.  The headings of this Amendment are forpurposes of reference only and shall not limit or otherwise affect the meaninghereof.

 

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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 Kowalczuk |   |
|   |                                      |   | Name: | John Kowalczuk |
|   |                                      |   | Title: | Vice President |
|        |                                           |  |  |  |  |

 

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