**Exhibit 4.1**

 

SECOND AMENDMENT dated as ofApril 21, 2004 (this “Amendment”) to the Credit Agreement dated as ofApril 16, 2002 (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:

 

# SECTION1.  Amendment of Credit Agreement.  Effective as of the Effective Date (asdefined in Section 3 hereof), the Credit Agreement is 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 fiscal yearsending December 31, 2005, $100,000,000, and (iii) with respect to fiscalyears 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 fiscal yearcommencing with the fiscal year ending on December 31, 2005, shall be increasedby the amount of unused permitted Capital Expenditures for the immediatelypreceding fiscal year (such amount, the “Capex Carryforward”); provided,however, that in no event shall the Capex Limit for any fiscal year beincreased by more than $50,000,000.  AnyCapex Carryforward that is not permitted to be used in any fiscal year as aresult of the proviso to the preceding sentence may, subject to 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 |   |
|                                   |   |         |   |
| April 1, 2005 through June 30, 2005    |   | 1.50 to 1.00 |   |

 

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| 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.” |        |

 

# SECTION2.  Limitation on Borrowings.  The Borrower agrees that (i) for theperiod from April 1, 2004 through June 30, 2004 the total RevolvingExposure shall not exceed $75,000,000 in the aggregate at any time outstandingand (ii) for the period from July 1, 2004 through September 30,2004 the total Revolving Exposure shall not exceed $90,000,000 in the aggregateat any time outstanding.  The Borrowerfurther agrees that it will not request any Borrowing or request the issuanceof any Letter of Credit that would result in the total Revolving Exposureexceeding the then applicable amount set forth in the preceding sentence, andthat any such request delivered during such period shall be ineffective.

#  

# SECTION3.  Representations and Warranties.  To induce the other parties hereto to enterinto this Amendment, the Borrower represents to each of the Lenders and theAdministrative 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

 

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## (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.

##  

# SECTION4.  Conditions to Effectiveness*. *This Amendment shall becomeeffective on the date (the “Effective Date”) on which each of thefollowing conditions has been satisfied (or would by the Administrative Agent):

#  

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

##  

## (b)  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 3hereof are true and correct;

##  

## (c)  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

##  

## (d)  the Amendment, dated the date hereof, to theBorrower’s credit agreement dated as of May 31, 2000 shall have becomeeffective pursuant to its terms.

##  

# SECTION5.  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 outstandingRevolving Exposure and unused Commitments.

#  

# SECTION6.  Effect of Amendment.  Except as expressly set forth herein, thisAmendment shall not by implication or otherwise limit, impair, constitute awaiver of, amend, or otherwise affect the rights and remedies of the Lenders orthe Administrative Agent under the Credit Agreement or any other Loan Documentand shall 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 

 

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# Amendment shall constitute a “Loan Document”for all purposes of the Credit Agreement.

#  

# SECTION7.  Applicable Law.  **THISAMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OFTHE STATE OF NEW YORK.**

#  

# SECTION8.  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.

#  

# SECTION9.  Costs and Expenses.  The Borrower agrees to reimburse theAdministrative Agent for its reasonable out-of-pocket expenses in connectionwith this Amendment, including the reasonable fees, charges and disbursementsof counsel for the Administrative Agent.

#  

# SECTION10.  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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